Exhibit T3C
SOUTHWEST ROYALTIES, INC.
as Issuer
$60,000,000 Senior Notes due 2004
THE GUARANTORS NAMED HEREIN
_______________________________________
INDENTURE
dated as of April _____, 2002
WILMINGTON TRUST COMPANY,
as Trustee
CROSS-REFERENCE TABLE
TIA Section Indenture Section
310(a)(1)........................................................7.10
(a)(2)................................................. 1.01, 7.10
(a)(3)........................................................N.A.
(a)(4)........................................................N.A.
(a)(5)..................................................7.08, 7.10
(b)...........................................7.08, 7.10, 10.02
(c)........................................................N.A.
3.11(a)........................................................7.11
(b)........................................................7.11
(c)........................................................N.A.
312(a)........................................................2.05
(b).......................................................10.03
(c).......................................................10.03
313(a)........................................................7.06
(b)(1)........................................................7.06
(b)(2)........................................................7.06
(c).................................................7.06, 10.02
(d)........................................................7.06
314(a)...........................................4.06, 4.08, 10.02
(b).......................................................11.02
(c)(1).......................................................10.04
(c)(2).......................................................10.04
(c)(3)........................................................N.A.
(d)....................................................11.03(c)
(e).......................................................10.05
(f)........................................................N.A.
315(a).....................................................7.01(b)
(b).................................................7.05, 10.02
(c).....................................................7.01(a)
(d).....................................................7.01(c)
(e)........................................................6.11
3.16(a) (last sentence)...................................................2.09
(a)(1)(A)........................................................6.05
(a)(1)(B)........................................................6.04
(a)(2)........................................................N.A.
(b)........................................................6.07
(c)........................................................9.04
i
317(a)(1)....................................................... 6.08
(a)(2)....................................................... 6.09
(b)....................................................... 2.04
318(a)....................................................... 10.01
(c)....................................................... 10.01
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N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions............................................................... 1
Section 1.02 Incorporation by Reference of TIA......................................... 18
Section 1.03 Rules of Construction..................................................... 19
ARTICLE TWO
THE SENIOR NOTES
Section 2.01 Form and Dating........................................................... 19
Section 2.02 Execution and Authentication; Aggregate Principal Amount.................. 20
Section 2.03 Registrar and Paying Agent................................................ 20
Section 2.04 Paying Agent to Hold Assets in Trust...................................... 21
Section 2.05 Holder Lists.............................................................. 21
Section 2.06 Transfer and Exchange..................................................... 21
Section 2.07 Replacement Notes......................................................... 22
Section 2.08 Outstanding Notes......................................................... 22
Section 2.09 Notes Deemed Not Outstanding.............................................. 23
Section 2.10 Temporary Notes........................................................... 23
Section 2.11 Cancellation.............................................................. 23
Section 2.12 Defaulted Interest........................................................ 23
Section 2.13 CUSIP Numbers............................................................. 24
Section 2.14 Deposit of Monies......................................................... 24
ARTICLE THREE
REDEMPTION AND CONVERSION
Section 3.01 Notices to Trustee........................................................ 25
Section 3.02 Selection of Notes to Be Redeemed..................................... 25
Section 3.03 Optional Redemption................................................... 25
Section 3.04 Mandatory Redemption.................................................. 26
Section 3.05 Notice of Redemption.................................................. 26
Section 3.06 Effect of Notice of Redemption........................................ 27
Section 3.07 Deposit of Redemption Price........................................... 27
Section 3.08 Notes Redeemed in Part................................................ 27
ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Senior Notes; Authentication............................... 28
Section 4.02 Maintenance of Office or Agency....................................... 28
Section 4.03 Corporate Existence................................................... 28
Section 4.04 Payment of Taxes and Other Claims..................................... 29
Section 4.05 Maintenance of Properties and Insurance............................... 29
Section 4.06 Compliance Certificate; Financial Statements; Notice of Default....... 30
Section 4.07 Compliance with Laws.................................................. 31
Section 4.08 Reports to Holders.................................................... 32
Section 4.09 Waiver of Stay, Extension or Usury Laws............................... 32
Section 4.10 Limitation on Restricted Payments..................................... 32
Section 4.11 Limitation on Transactions with Affiliates............................ 34
Section 4.12 Limitation on Incurrence of Additional Indebtedness and
Issuances of Disqualified Capital Stock............................... 35
Section 4.13 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries................................................ 36
Section 4.14 Reserved.............................................................. 37
Section 4.15 Change of Control..................................................... 37
Section 4.16 Limitation on Asset Sales............................................ 39
Section 4.17 Limitation on Sale or Issuance of Capital Stock of Subsidiaries...... 41
Section 4.18 Limitations on Liens................................................. 41
Section 4.19 Limitation on Lines of Business...................................... 41
Section 4.20 Guarantees of Subsidiaries........................................... 42
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Merger, Consolidation and Sale of Assets............................. 42
Section 5.02 Successor Corporation Substituted.................................... 43
ARTICLE SIX
REMEDIES
Section 6.01 Events of Default.................................................... 44
Section 6.02 Acceleration......................................................... 45
Section 6.03 Other Remedies....................................................... 46
Section 6.04 Waiver of Past Defaults.............................................. 47
Section 6.05 Control by Majority.................................................. 47
Section 6.06 Limitation on Suits.................................................. 47
Section 6.07 Right of Holders to Receive Payment.................................. 48
Section 6.08 Collection Suit by Trustee........................................... 48
Section 6.09 Trustee May File Proofs of Claim..................................... 48
Section 6.10 Priorities........................................................... 49
Section 6.11 Undertaking for Costs................................................ 49
Section 6.12 Restoration of Rights and Remedies................................... 49
Section 6.13 Collateral Trust Agreement; Limitation Rights........................ 50
ARTICLE SEVEN
TRUSTEE
Section 7.01 Duties of Trustee.................................................... 50
Section 7.02 Rights of Trustee.................................................... 51
Section 7.03 Individual Rights of Trustee......................................... 52
Section 7.04 Trustee's Disclaimer................................................. 52
Section 7.05 Notice of Default.................................................... 53
Section 7.06 Reports by Trustee to Holders........................................ 53
Section 7.07 Compensation and Indemnity........................................... 53
Section 7.08 Replacement of Trustee............................................... 54
Section 7.09 Successor Trustee by Merger, Etc..................................... 55
Section 7.10 Eligibility; Disqualification........................................ 55
Section 7.11 Preferential Collection of Claims Against Company.................... 55
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01 Satisfaction and Discharge of the Indenture; Legal Defeasance........ 56
Section 8.02 Application of Trust Money........................................... 58
Section 8.03 Repayment to the Issuer.............................................. 58
Section 8.04 Reinstatement........................................................ 58
ARTICLE NINE
MODIFICATION OF THE INDENTURE
Section 9.01 Without Consent of Holders........................................... 59
Section 9.02 With Consent of Holders.............................................. 59
Section 9.03 Compliance with TIA.................................................. 60
Section 9.04 Revocation and Effect of Consents.................................... 60
Section 9.05 Notation on or Exchange of Notes..................................... 60
Section 9.06 Trustee.............................................................. 61
ARTICLE TEN
MISCELLANEOUS
Section 10.01 TIA Controls............................................. 61
Section 10.02 Notices.................................................. 61
Section 10.03 Communications by Holders with Other Holders............. 63
Section 10.04 Certificate and Opinion as to Conditions Precedent....... 63
Section 10.05 Statements Required in Certificate or Opinion............ 63
Section 10.06 Rules by Trustee, Paying Agent, Registrar................ 64
Section 10.07 Legal Holidays........................................... 64
Section 10.08 Governing Law............................................ 64
Section 10.09 No Adverse Interpretation of Other Agreements............ 64
Section 10.10 No Personal Liability.................................... 65
Section 10.11 Successors............................................... 65
Section 10.12 Duplicate Originals...................................... 65
Section 10.13 Severability............................................. 65
Section 10.14 Independence of Covenants................................ 65
ARTICLE ELEVEN
SECURITY
Section 11.01 Security Documents....................................... 65
Section 11.02 Recording and Opinions................................... 66
Section 11.03 Release of Collateral.................................... 67
Section 11.04 Specified Releases of Collateral......................... 67
Section 11.05 Form and Sufficiency of Release.......................... 68
Section 11.06 Purchaser Protected...................................... 68
Section 11.07 Authorization of Actions to be Taken by the Collateral
Agent and the Trustee Under the Security Documents....... 68
Section 11.08 Authorization of Receipt of Funds by the Trustee Under
the Security Documents.................................. 69
ARTICLE TWELVE
GUARANTEES
Section 12.01 Unconditional Guarantees................................ 69
Section 12.02 Limitations on Guarantees............................... 71
Section 12.03 Execution and Delivery of Guarantees.................... 72
Section 12.04 Release of a Subsidiary Guarantor....................... 72
Section 12.05 Waiver of Subrogation................................... 73
Section 12.06 Immediate Payment....................................... 73
Section 12.07 No Set-Off.............................................. 73
Section 12.08 Obligations Absolute.................................... 74
Section 12.09 Obligations Continuing.................................. 74
Section 12.10 Obligations Not Reduced................................. 74
Section 12.11 Obligations Reinstated.................................. 74
Section 12.12 Obligations Not Affected................................ 74
Section 12.13 Waiver.................................................. 76
Section 12.14 No Obligation to Take Action Against the Issuer......... 76
Section 12.15 Dealing with the Issuer and Others...................... 76
Section 12.16 Default and Enforcement................................. 77
Section 12.17 Amendment, Etc.......................................... 77
Section 12.18 Acknowledgment.......................................... 77
Section 12.19 Costs and Expenses...................................... 77
Section 12.20 No Merger or Waiver; Cumulative Remedies................ 77
Section 12.21 Survival of Obligations................................. 77
Section 12.22 Guarantee in Addition to Other Obligations.............. 78
Section 12.23 Severability ............................................ 78
Section 12.24 Successors and Assigns .................................. 78
THIS INDENTURE, dated as of April ___, 2002, among SOUTHWEST ROYALTIES
HOLDINGS, INC. (the "Company"), a Delaware corporation, as guarantor, MRO
HOLDINGS, INC. ("MRO") a Delaware corporation, as guarantor, BLUE HEEL COMPANY
("Blue Heel"), a Delaware corporation, as guarantor, SOUTHWEST ROYALTIES, INC.
(the "Issuer"), a Delaware corporation, as issuer, and WILMINGTON TRUST COMPANY
(the "Trustee"), as Trustee.
R E C I T A L S
The Issuer has duly authorized the creation of an issue of Senior Notes
due June 30, 2004, and, to provide therefor, the Company, the Issuer, Blue Heel
and MRO have duly authorized the execution and delivery of this Indenture and
the Guarantees contained herein. The Senior Notes, as defined, shall be secured
by a lien and security interest in the Collateral, junior in priority only to
Liens securing the Permitted Credit Facility and, solely with respect to the
securities pledged pursuant to the MRO Pledge Agreement and the Company Pledge
Agreement (as those terms are defined below), junior in priority to Liens
securing the Junior Notes, subject to release of such Collateral as provided
herein. The Guarantees, as defined, shall be supported by certain collateral, as
well as a secondary pledge of Red Oak, Basic and Issuer Stock. All things
necessary to make the Senior Notes, when duly issued and executed by the Issuer,
authenticated and delivered hereunder, the valid obligations of the Issuer, and
to make this Indenture a valid and binding agreement of the Issuer, the Company,
Blue Heel and MRO have been done.
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Senior Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions. As used in this Indenture (including the
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Recitals), the following terms have the following meanings:
"Adjusted Consolidated Net Income" of the Issuer for any period means
the Net Income (Loss) of the Issuer and its Subsidiaries for such period,
determined in accordance with GAAP.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, (a) the sum of (i) discounted
future net revenue from proved oil and gas reserves of the Issuer and its
Subsidiaries calculated in accordance with Commission guidelines before any
state or federal income taxes, as estimated or audited by independent petroleum
engineers in one or more Reserve Reports prepared as of the date of
determination, increased by the discounted future net revenue of (A) estimated
proved oil and gas reserves of the Issuer and its Subsidiaries attributable to
any acquisition consummated since the effective date of such year-end Reserve
Reports and (B) estimated oil and gas reserves of the Issuer and its
Subsidiaries attributable to extensions, discoveries and other additions and
upward revisions of estimates of proved oil and gas reserves due to exploration,
development or exploitation, production or other activities conducted or
otherwise occurring since the effective date of such year-end Reserve Reports
which, in the case of sub-clauses (A) and (B), would, in accordance with
standard industry practice, result in such increases, in each case calculated in
accordance with Commission guidelines (utilizing the prices utilized in such
year-end Reserve Reports), and decreased by, as of the date of determination,
the discounted future net revenue of (C) estimated proved oil and gas reserves
of the Issuer and its Subsidiaries produced or disposed of since the effective
date of such year-end Reports and (D) reductions in the estimated oil and gas
reserves of the Issuer and its Subsidiaries since the effective date of such
year-end Reserve Reports attributable to downward revisions of estimates of
proved oil and gas reserves due to exploration, development or exploitation,
production or other activities conducted or otherwise occurring since the
effective date of such year-end Reserve Reports which would, in accordance
with standard industry practice result in such reductions, in each case
calculated in accordance with Commission guidelines (utilizing the prices
utilized in such year-end Reserve Reports); provided that, in the case of each
of the determinations made pursuant to sub-clauses (A) through (D) above, such
increases and decreases shall be as estimated by the Issuer's engineers, except
that if there is a Material Change and in connection with the incurrence of
Indebtedness for which the Consolidated Fixed Charge Coverage Ratio must be
determined, all or any part of an increase in discounted future net revenue
resulting from the matters described in sub-clauses (A) and (B) above is needed
to permit the incurrence of such Indebtedness, then the discounted future net
revenue utilized for purposes of this clause (a)(i) shall be confirmed in
writing by independent petroleum engineers, provided further that, if the events
referred to in sub-clauses (C) and (D) above, when taken alone, would not cause
a Material Change, then such written confirmation need only cover the
incremental additions to discounted future net revenue resulting from the
determinations made pursuant to sub-clauses (A) and (B) above to the extent
needed to permit the incurrence of such Indebtedness, (ii) the capitalized costs
that are attributable to oil and gas properties of the Issuer and its
Subsidiaries to which no proved oil and gas reserves are attributed, based on
the Issuer's books and records as of a date no earlier than the date of the
Issuer's latest annual or quarterly financial statements, (iii) the Net Working
Capital on a date no earlier than the date of the Issuer's latest annual or
quarterly financial statements and (iv) the greater of (A) the net book value on
a date no earlier than the date of the Issuer's latest annual or quarterly
financial statements and (B) the appraised value, as estimated by independent
appraisers, of other tangible assets (including the amount of Investments in
unconsolidated Subsidiaries, Affiliates or other Persons) of the Issuer and its
Subsidiaries, as of a date no earlier than the date of the Issuer's latest
audited financial statements, minus (b) the sum of (i) minority interests, (ii)
any non-current portion of gas balancing liabilities of the Issuer and its
Subsidiaries reflected in the Issuer's latest annual or quarterly financial
statements, (iii) the discounted future net revenue, calculated in accordance
with Commission guidelines (utilizing the prices utilized in the Issuer's
year-end Reserve Reports), attributable to reserves which are required to be
delivered to third parties to fully satisfy the obligations of the Issuer and
its Subsidiaries with respect to Production Payments on the schedules specified
with respect thereto, (iv) the discounted future net revenue, calculated in
accordance with Commission guidelines (utilizing the same prices utilized in the
Issuer's initial or year-end Reserve Reports), 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 and (v) the amount of environmental liabilities payable by the
Issuer or any Subsidiary. If the Issuer changes its method of accounting from
the full cost method to the successful efforts method or a similar method of
accounting,
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Adjusted Consolidated Net Tangible Assets will continue to be calculated as if
the Issuer was still using the full cost method of accounting.
"Affiliate" means, with respect to any Person, (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such Person or any officer, director, or employee of such
Person or such other Person, (ii) the spouse, any immediate family member, or
any other relative who has the same principal residence of any Person described
in clause (i) above, and any Person, directly or indirectly, controlling or
controlled by or under direct or indirect common control with, such spouse,
family member or other relative, and (iii) any trust in which any Person
described in clause (i) or (ii), above, is a fiduciary or has a beneficial
interest. For purposes of this definition, the term "control" means the
beneficial ownership of 15% or more of the total voting power of the outstanding
Voting Stock of such Person (on a fully diluted basis) or of warrants or other
rights to acquire such equity (whether or not presently exercisable). For
purposes of determining "control" with respect to the Issuer, all of the
Issuer's common stock, Class A common stock and special stock shall be
considered identical with respect to voting power.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means (i) any direct or indirect conveyance, sale,
transfer or other disposition (including through damage or destruction for which
Insurance Proceeds are paid or by condemnation), in one transaction or a series
of related transactions, of any of the properties, businesses or assets of the
Issuer or any Subsidiary of the Issuer, whether owned on the Issue Date or
thereafter acquired or (ii) any sale or other disposition by the Issuer of any
Capital Stock of any Affiliate or any Subsidiary of the Issuer or its
Subsidiaries. Notwithstanding the foregoing, the following will not be deemed to
be an Asset Sale: (a) the conveyance, sale, lease, transfer or other disposition
by any of the Issuer's Subsidiaries of any or all of its assets (upon voluntary
liquidation or otherwise) to the Issuer; (b) the conveyance, sale, lease,
transfer or other disposition by any Subsidiary of any or all of its assets
(upon voluntary liquidation or otherwise) to another Subsidiary; (c)
non-material dispositions of assets in the ordinary course of business; (d)
Asset Sales not otherwise permitted by clauses (a) through (c) or (f) and (g) of
this sentence, provided that the aggregate proceeds from all such Asset Sales do
not exceed $2.5 million in any twelve-month period; (e) the disposition of all
or substantially all of the assets of (i) the Issuer and its Subsidiaries, taken
as a whole, or (ii) the Issuer, if such disposition is governed by Section 4.15
or Section 5.01; (f) a conveyance, sale, assignment, lease, license, transfer,
abandonment or other disposal by the Issuer and its Subsidiaries of (i) damaged,
worn out, unserviceable or other obsolete property in the ordinary course of
business or (ii) other property no longer necessary for the proper conduct of
their business; and (g) the conveyance, sale, transfer or otherwise disposition
by the Issuer and its Subsidiaries of crude oil and natural gas production and
refined products in the ordinary course of business.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal,
state or foreign law for the relief of debtors.
"Basic" means Basic Energy Services, Inc., a Delaware corporation.
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"Blue Heel" means Blue Heel Company, a Delaware corporation.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a day on which commercial banks
are authorized or required to close in New York, New York.
"Capital Expenditures" of a Person means expenditures (whether paid in
cash or accrued as a liability) by such Person or any of its Subsidiaries that,
in conformity with GAAP, are or would be included in "capital expenditures,"
"additions to property, plant, or equipment" or comparable items in the
consolidated financial statements of such Person consistent with prior
accounting practices.
"Capital Stock" means, with respect to any Person, any capital stock of
such Person and shares, interests, participations, or other ownership interests
(however designated) of such Person and any rights (other than debt securities
convertible into corporate stock), warrants or options to purchase any of the
foregoing, including without limitation, each class of common stock and
preferred stock of such Person, if such Person is a corporation, and each
general or limited partnership interest or other equity interest of such Person,
if such Person is a partnership or limited liability company.
"Capitalized Lease Obligation" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Cash Equivalents" means (a) U.S. Legal Tender, (b) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (c) certificates of deposit with maturities
of one year or less from the date of acquisition, bankers' acceptances with
maturities not exceeding one year, and overnight bank deposits, in each case,
with any Eligible Institution, (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) entered into with any Eligible Institution, (e) commercial paper
rated "P-1," "A-1" or the equivalent thereof by Moody's or S&P, respectively,
and in each case maturing within 180 days after the date of acquisition, (f)
shares of money market funds, including those of the Trustee, that invest solely
in U.S. Legal Tender and securities of the types described in clauses (a)
through (e), and (g) demand and time deposits and certificates of deposit with
an Eligible Institution.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by merger
or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Issuer and its
4
Subsidiaries, taken as a whole, to any person (as such term is used in Section
13(d)(3) of the Exchange Act) other than to the Issuer or a Subsidiary of the
Issuer; (ii) the sale, lease, transfer, conveyance or other disposition, in one
or a series of related transactions, of all or substantially all of the assets
of the Issuer to any person (as such term is used in Section 13(d)(3) of the
Exchange Act) other than to a Subsidiary; (iii) the Issuer consolidates with or
merges into another Person or any Person consolidates with, or merges into, the
Issuer, in any such event pursuant to a transaction in which the then
outstanding Voting Stock of the Issuer is changed into or exchanged for cash,
securities or other property, other than any such transaction where (a) the then
outstanding Voting Stock of the Issuer is changed into or exchanged for Voting
Stock of the surviving or resulting Person that is Qualified Capital Stock and
(b) the holders of the Voting Stock of the Issuer immediately prior to such
transaction own, directly or indirectly, not less than a majority of the Voting
Stock of the surviving or resulting Person immediately after such transaction;
(iv) the adoption of a plan relating to the liquidation or dissolution of the
Issuer not involving a merger or consolidation or a sale or other disposition of
assets described in clause (i) or (ii) above; or (v) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any person (as defined above), excluding the Permitted
Holders, becomes the "beneficial owner" (as that term is used in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the
total voting power of the Issuer's then outstanding Voting Stock; provided that
the sale of Voting Stock of the Issuer to a Person or Persons acting as
underwriters in connection with a firm commitment underwriting shall not
constitute a Change of Control. For purposes of this definition, any transfer of
an equity interest of an entity that was formed for the purpose of acquiring
Voting Stock of the Issuer shall be deemed to be a transfer of such portion of
such Voting Stock as corresponds to the portion of the equity of such entity
that has been so transferred.
"Change of Control Offer" has the meaning provided in Section 4.15.
"Change of Control Payment Date" has the meaning provided in Section
4.15.
"Change of Control Purchase Price" has the meaning provided in Section
4.15.
"Collateral" means all property in which a Lien has been granted under
the Security Documents as security for the obligations of the Company, the
Issuer and the Guarantors under this Indenture, the Guarantees and the Senior
Notes.
"Collateral Trust Agreement" means that certain Collateral Trust
Agreement among the Issuer, the Subsidiary Guarantors, the Trustee, the Holders
and the several lenders from time to time party to the Permitted Credit
Facility, which, inter alia, establishes the relative rights of the Holders and
lenders party to the Permitted Credit Facility in and to the Collateral directly
owned by the Issuer and Blue Heel.
"Collateral Trustee" means the party named as such in the Collateral
Trust Agreement until a successor replaces it in accordance with the provisions
of the Collateral Trust Agreement, and thereafter means such successor.
"Commission" means the Securities and Exchange Commission.
5
"Company" means Southwest Royalties Holdings, Inc., a Delaware
corporation, until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor, provided, that with respect
to any financial information identified or defined as "Company" financial
information, such information will be deemed to exclude Red Oak financial
information.
"Company Pledge Agreement" means that certain Pledge Agreement, in
substantially the form of Exhibit A, from the Company in favor of the Trustee
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pursuant to which the capital stock in Basic shall be pledged to the Collateral
Trustee for the benefit of the Trustee and the Holders of the Senior Notes.
"Consolidated Fixed Charge Coverage Ratio" on any date means, with
respect to the Issuer, the ratio, on a pro forma basis, of (i) the aggregate
amount of EBITDA attributable to continuing operations and businesses and
exclusive of the amounts attributable to operations and businesses discontinued
or disposed of, on a pro forma basis as if such operations and businesses were
discontinued or disposed of on the first day of the Reference Period, for the
Reference Period to (ii) the aggregate Consolidated Interest Expense (exclusive
of amounts attributable to discontinued operations and businesses on a pro forma
basis as if such operations and businesses were discontinued or disposed of on
the first day of the Reference Period, but only to the extent that the
obligations giving rise to such Consolidated Interest Expense would no longer be
obligations contributing to Consolidated Interest Expense subsequent to the date
of discontinuation or disposal) during the Reference Period; provided, that for
purposes of such computation, in calculating EBITDA and Consolidated Interest
Expense, (a) the transaction giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio shall be assumed to have occurred on
the first day of the Reference Period, (b) the incurrence of any Indebtedness or
issuance of Disqualified Capital Stock or the retirement of any Indebtedness or
Capital Stock during the Reference Period or subsequent thereto shall be assumed
to have occurred on the first day of such Reference Period, and (c) Consolidated
Interest Expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the date of determination had been the applicable rate for the entire
period, unless the Issuer or any of its Subsidiaries is a party to a Swap
Obligation (that remains in effect for the 12-month period after the date of
determination) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used.
"Consolidated Interest Expense" of the Issuer means, for any period,
the aggregate interest expense (without duplication), during such period in
respect of all Indebtedness of the Issuer and its Subsidiaries (including all
commissions, discounts, other fees and charges owed with respect to letters of
credit and banker's acceptance financing and costs associated with Swap
Obligations, but excluding any interest accrued on intercompany payables among
the Issuer and its Subsidiaries) determined on a consolidated basis in
accordance with GAAP. For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board), and
(y) any interest with respect to Indebtedness guaranteed by the Issuer or any
Subsidiary of the Issuer other than with respect to
6
Indebtedness of the Issuer or a Subsidiary of the Issuer shall be included in
the computation of Consolidated Interest Expense.
"Consolidation" or "consolidated" means, with respect to any Person,
the consolidation of the accounts of the Subsidiaries of such Person with those
of such Person, all in accordance with GAAP. The term "consolidated" has a
correlative meaning to the foregoing.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time the trust created by this Indenture shall be principally
administered, which office at the date of execution of this Indenture is located
at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Default Interest Payment Date" has the meaning provided in Section
2.12.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Disqualified Capital Stock" means, with respect to any Person any
Capital Stock of such Person or its Subsidiaries that, by its terms or by the
terms of any security into which it is convertible or exchangeable, is, or upon
the happening of an event or the passage of time would be, required to be
redeemed or repurchased by such Person or its Subsidiaries, including at the
option of the holder, in whole or in part, or has, or upon the happening of an
event or passage of time would have, a redemption or similar payment due, on or
prior to the Stated Maturity Date.
"EBITDA" means for any period the sum of the Adjusted Consolidated Net
Income of the Issuer for such period, plus the sum, without duplication (and
only to the extent such amounts are deducted from net revenues in determining
such Adjusted Consolidated Net Income of the Issuer), of (i) the provision for
income taxes for such period for the Issuer, (ii) depreciation, depletion, and
amortization of the Issuer for such period and (iii) Consolidated Interest
Expense for such period, determined, in each case, on a consolidated basis for
the Issuer and its consolidated Subsidiaries otherwise in accordance with GAAP.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million and has long-term
debt that is rated "A" (or higher) according to Moody's or S&P at the time as of
which any investment or rollover therein is made.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Cash" has the meaning given to it in Section 4.16.
"Excess Cash Acceptance Amount" has the meaning given to it in Section
4.16.
"Excess Cash Offer" has the meaning given to it in Section 4.16.
7
"Excess Cash Offer Amount" has the meaning given to it in Section 4.16.
"Excess Cash Offer Price" has the meaning given to it in Section 4.16.
"Excess Cash Purchase Date" has the meaning given to it in Section
4.16.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission thereunder.
"Exchange Assets" means assets acquired by the Issuer or any Subsidiary
of the Issuer in exchange for assets of the Issuer or any Subsidiary of the
Issuer in connection with an Asset Sale, which acquired assets include proved
reserves with a value that, together with the cash or Cash Equivalents received
from the assets disposed of by the Issuer or such Subsidiary, is equal to or
greater than the value of the proved reserves included in the assets disposed of
by the Issuer or such Subsidiary in connection with such Asset Sale; provided,
that (i) ownership of such assets does not violate Section 4.19 and (ii) during
any fiscal year, the Issuer and its Subsidiaries can collectively acquire assets
(other than proved reserves, cash or Cash Equivalents) with a Fair Market Value
of up to $500,000 in exchange for assets of the Issuer and the Subsidiaries with
proved reserves, and such assets acquired by such Person shall constitute
"Exchange Assets" hereunder.
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing seller and an informed and willing buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair Market Value shall be determined by the Board of Directors of
the Issuer acting reasonably and in good faith and shall be evidenced by a Board
Resolution of the Issuer delivered to the Trustee.
"GAAP" means generally accepted accounting principles as in effect in
the United States on the Issue Date applied on a consistent basis.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generally of the foregoing, 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 or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statements conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part) (but if in part, only to the extent
thereof); provided, however, that the term "guarantee" shall not include (a)
endorsements for collection or deposit in the ordinary course of business and
(b) guarantees (other than guarantees of Indebtedness) by the Issuer in respect
of assisting one or more Subsidiaries in the ordinary course of their respective
businesses, including without limitation guarantees of trade obligations and
operating leases, on ordinary business terms. The term "guarantee" used as a
verb has a corresponding meaning.
8
"Guarantees" means the unconditional guarantee of the Senior Notes
given by the Company, MRO, Blue Heel or any Subsidiary Guarantor pursuant to the
terms of this Indenture.
"Guarantors" means the Company, MRO, Blue Heel and each Subsidiary
Guarantor.
"Holders" means any Person from time to time in whose name any Senior
Note is registered on the Senior Note Register.
"Hydrocarbons" means oil, natural gas, condensate, and natural gas
liquids.
"incur" and "incurrence" have the meanings set forth in Section 4.12.
"Indebtedness" means, with respect to any Person, without duplication
(i) all liabilities, contingent or otherwise, of such Person (a) for borrowed
money (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof), (b) evidenced by bonds, notes,
debentures, or similar instruments or letters of credit or representing the
balance deferred and unpaid of the purchase price of any property acquired by
such Person or services received by such Person, but excluding trade account
payables and accrued liabilities arising in the ordinary course of business that
are not overdue by 90 days or being contested in good faith by appropriate
proceedings, promptly instituted and diligently pursued, (c) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks or Swap
Obligations, (d) for the payment of money relating to a Capitalized Lease
Obligation or (e) for Production Payments that such Person or any of its
Subsidiaries elect to treat as Indebtedness; (ii) reimbursement obligations of
such Person with respect to letters of credit; (iii) all liabilities of others
of the kind described in the preceding clause (i) or (ii) that such Person has
guaranteed or that is otherwise its legal liability (to the extent of such
guaranty or other legal liability) other than for endorsements, with recourse,
of negotiable instruments in the ordinary course of business; and (iv) all
obligations secured by a Lien (other than Permitted Liens, except to the extent
the obligations secured by such Permitted Liens are otherwise included in clause
(i), (ii) or (iii) of this definition and are obligations of such Person) to
which the property or assets (including, without limitation, leasehold interests
and any other tangible or intangible property rights) of such Person are
subject, regardless of whether the obligations secured thereby shall have been
assumed by or shall otherwise be such Person's legal liability (but, if such
obligations are not assumed by such Person or are not otherwise such Person's
legal liability, the amount of such Indebtedness shall be deemed to be limited
to the Fair Market Value of such property or assets determined as of the end of
the preceding fiscal quarter).
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Insurance Proceeds" means the interest in and to all proceeds (net of
costs of collection, including attorneys' fees) which now or hereafter may be
paid under any insurance policies now or hereafter obtained by or on behalf of
the Issuer or any Subsidiary in connection with any assets thereof, together
with interest payable thereon and the right to collect and receive the same,
including, without limitation, proceeds of casualty insurance, title insurance,
business interruption insurance and any other insurance now or hereafter
maintained with respect to such assets.
9
"Interest" when used with respect to any Senior Note means the amount
of all interest accruing on such Senior Note, including applicable defaulted
interest pursuant to Section 2.12, in accordance with the following schedule: 10
1/2% per annum from February 1, 2002 (as if the Senior Notes were issued on such
date) through December 31, 2002, 11 1/2% per annum from January 1, 2003 through
December 31, 2003 and from January 1, 2004 until the Stated Maturity Date.
"Interest Payment Date" means April 15 and October 15 of each year,
commencing on April 15, 2002.
"Interest Rate or Currency Agreement" of any Person means any forward
contract, futures contract, swap, option or other financial agreement or
arrangement (including, without limitation, caps, floors, collars, puts and
similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" by any Person in any other Person means (i) the
acquisition (whether for cash, property, services, securities or otherwise) of
Capital Stock, bonds, notes, debentures, partnership, or other ownership
interests or other securities of such other Person or any agreement to make any
such acquisition; (ii) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) and (without duplication) any amount committed to be advanced, loaned or
extended to such other Person; (iii) the entering into of any guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
such other Person; (iv) the entering into of any Swap Obligation with such other
Person; or (v) the making of any capital contribution by such Person to such
other Person.
"Investment Grade Rating" means with respect to any Person or issue of
debt securities or preferred stock, a rating in one of the four highest letter
rating categories (without regard to "+" or "-" or other modifiers) by Moody's
or S&P or if any such rating agency has ceased using letter rating categories or
the four highest of such letter rating categories are not considered to
represent "investment grade" ratings, then the comparable "investment grade"
ratings (as designated by any such rating agency).
"Issue Date" means the date of first issuance of the Senior Notes under
this Indenture.
"Issuer" means Southwest Royalties, Inc., a Delaware corporation,
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Junior Notes" means those 10 1/2% Senior Notes due 2004, Series A and
B, issued by the Issuer as of October 15, 1997.
"Legal Defeasance" has the meaning set forth in Section 8.01.
10
"Legal Holiday" has the meaning provided in Section 10.07.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, regardless of whether filed, recorded, or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest and any option or other agreement to give any security interest).
"Material Change" means an increase or decrease (excluding changes that
result solely from changes in prices) of more than either (i) 10% from the end
of the immediately preceding fiscal quarter in the estimated discounted future
net revenue from proved oil and gas reserves of the Issuer and its Subsidiaries,
or (ii) 20% from the end of the immediately preceding fiscal year in the
estimated discounted future net revenue from proved oil and gas reserves of the
Issuer and its Subsidiaries, in each case calculated in accordance with clause
(a) (i) of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following shall be excluded from the calculation of
Material Change: (a) any acquisitions of oil and gas reserves made after the end
of the immediately preceding year for which the discounted future net revenues
have been estimated by independent petroleum engineers since the end of the
preceding year and on which a Reserve Report or Reserve Reports exist and (b)
any disposition of properties existing at the beginning of the current quarter
or current year, as the case may be, for purposes of clause (i) or clause (ii)
above, that have been disposed of in accordance with Section 4.16.
"MRO" means MRO Holdings, Inc., a Delaware corporation.
"MRO Pledge Agreement" means that certain Pledge Agreement, in
substantially the form of Exhibit B, issued by MRO in favor of the Collateral
---------
Trustee pursuant to which the Capital Stock in Red Oak directly owned by MRO has
been pledged to the Collateral Trustee for the benefit of the Trustee and the
Holders of the Senior Notes.
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
"Mortgages" means collectively all those certain mortgages and deeds of
trust, in substantially the form of Exhibit C, from the Issuer and Blue Heel for
---------
the benefit of the Collateral Trustee, as trustee for the benefit of the Holders
of the Senior Notes and the lenders under the Permitted Credit Facility, as
their interests may appear, pursuant to which the Issuer and Blue Heel shall
xxxxx x Xxxx on their respective interests in real property and fixtures.
"Net Cash Proceeds" means an amount equal to the aggregate amount of
cash and Cash Equivalents received by the Issuer or any Subsidiary of the Issuer
in respect of an Asset Sale (including cash and Cash Equivalents received by
Issuer or any of its Subsidiaries pursuant to any notes or other evidence of
indebtedness received by the Issuer or any of its Subsidiaries in respect of an
Asset Sale), less the sum of (i) all reasonable and customary out-of-pocket
fees, commissions, and other expenses incurred in connection with such Asset
Sale, including the amount (estimated in good faith by the Issuer) of income,
franchise, sales and other applicable taxes to be paid, payable or accrued by
the Issuer or such Subsidiary (in each case as estimated in good faith by the
Issuer without giving effect to tax attributes unrelated to such Asset Sale) in
connection with such Asset Sale, and (ii) the aggregate amount of cash and Cash
Equivalents so
11
received which is used to retire any then existing Indebtedness of the Issuer or
such Subsidiary (other than the Senior Notes), as the case may be, which is
secured by a Lien on the property subject of the Asset Sale or which is required
by the terms of such Indebtedness to be repaid in connection with such Asset
Sale.
"Net Income (Loss)" of any Person for any period means the net income
(loss) of such Person for such period, determined on a consolidated basis in
accordance with GAAP, excluding (without duplication) (i) all extraordinary,
unusual and nonrecurring gains, (ii) the net income, if positive, of any other
Person, in which such Person or any of its consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in cash to such Person or a consolidated Subsidiary of such Person
during such period, (iii) the net income, if positive, of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition and (iv) the net income, if positive, of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule, or
governmental regulation applicable to such Subsidiary.
"Net Proceeds" means (i) in the case of any sale by a Person of
Qualified Capital Stock or other securities, the aggregate Net Cash Proceeds
received by such Person from the sale of such securities (other than to a
Subsidiary) after payment of reasonable and customary out-of-pocket expenses,
commissions and discounts incurred in connection therewith, and (ii) in the case
of any exchange, exercise, conversion or surrender of any then outstanding
securities or Indebtedness of such Person for or into shares of Qualified
Capital Stock of such Person, the net book value of such outstanding securities
as adjusted on the books of such Person or Indebtedness of such Person to the
extent recorded in accordance with GAAP, in each case, on the date of such
exchange, exercise, conversion or surrender (plus any additional amount required
to be paid by the holder of such Indebtedness or securities to such Person upon
such exchange, exercise, conversion or surrender and less (a) any and all
payments made to the holders of such Indebtedness or securities and (b) all
other expenses incurred by such Person in connection therewith, in each case, in
so far as such payments or expenses are incident to such exchange, exercise,
conversion, or surrender).
"Net Working Capital" of any Person means (i) all current assets of
such Person and its consolidated Subsidiaries, minus (ii) all current
liabilities of such Person and its consolidated Subsidiaries other than the
current portion of long term Indebtedness, each item to be determined on a
consolidated basis in conformity with GAAP.
"Net Worth" of any Person means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of such Person and its consolidated
Subsidiaries (which shall be as of a date not more than 90 days prior to the
date of such computation), less any amounts included therein attributable to
Disqualified Capital Stock or any equity security convertible into or
exchangeable for Indebtedness, the cost of treasury stock (not otherwise
deducted from stockholder's equity), and the principal amount of any promissory
notes receivable from the sale of the Capital Stock of such Person or any of its
consolidated Subsidiaries each item to be determined in conformity with GAAP.
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
in Regulation S.
12
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board
of Directors, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.
"Officers' Certificate" from a Person means a certificate signed by two
Officers of such Person at least one of whom shall be the principal executive
officer, principal accounting officer or principal financial officer of such
Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
10.04 and 10.05, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Default" has the meaning set forth in Section 6.01.
"Permitted Credit Facility" means, with respect to the Issuer, the
revolving credit facility with Union Bank of California dated as of April ____,
2002,, the proceeds of which are to be used for working capital and other
general corporate purposes, as the same may be amended, extended or refinanced
from time to time.
"Permitted Hedging Transactions" means non-speculative transactions in
futures, forwards, swaps or option contracts (including both physical and
financial settlement transactions) engaged in by the Issuer and its Subsidiaries
as part of their normal business operations as a risk-management strategy or
hedge against adverse changes in the prices of natural gas, feedstock or refined
products; provided, that such transactions do not in the case of the Issuer and
its Subsidiaries, on a monthly basis, relate to more than 90% of their combined
average net oil and natural gas production per month for the most recent 3-month
period measured at the time of such transaction; provided, further, that, at the
time of such transaction (i) the counter party to any such transaction is an
Eligible Institution or a Person that has an Investment Grade Rating or has an
issue of debt securities or preferred stock then outstanding with an Investment
Grade Rating or (ii) such counter party's obligation pursuant to such
transaction is unconditionally guaranteed in full by, or secured by a letter of
credit issued by, an Eligible Institution or a Person that has an Investment
Grade Rating or that has an issue of debt securities or preferred stock then
outstanding with an Investment Grade Rating.
"Permitted Holders" means X.X. Xxxxxxx III (or his heirs, his estate or
any trust in which he or his immediate family members own, directly or
indirectly, a beneficial interest in excess of 50%), the Company or any Person
who was a Holder on the Issue Date or any of their respective Affiliates.
"Permitted Indebtedness" means, without duplication, each of the
following, as may be refinanced if permitted hereunder from time to time: (i)
the Indebtedness evidenced by the Senior
13
Notes or the Guarantees; (ii) Indebtedness owed by any Subsidiary of the Issuer
to the Issuer or any other Subsidiary of the Issuer or Indebtedness owed by the
Issuer to any Subsidiary of the Issuer; provided that, such Indebtedness is
Subordinated Indebtedness; (iii) Indebtedness then outstanding under the
Permitted Credit Facility so long as the aggregate principal amount of all
Indebtedness then outstanding under the Permitted Credit Facility does not
exceed $80,000,000; provided, however, that all indebtedness under the Permitted
Credit Facility shall not exceed $60,000,000 except as provided in Section 4.12
hereof; (iv) Swap Obligations of the Issuer or its Subsidiaries; (e)
Indebtedness then outstanding on the Issue Date; and (v) other Indebtedness owed
by the Issuer or its Subsidiaries in an aggregate principal amount then
outstanding not to exceed $1,000,000 at any one time.
"Permitted Investment" means, when used with reference to the Issuer or
any Subsidiary of the Issuer, (i) trade credit extended to Persons in the
ordinary course of business; (ii) purchases of Cash Equivalents; (iii)
Investments by the Issuer or its Subsidiaries in Persons which are Wholly-Owned
Subsidiaries and are engaged in the oil and gas exploration and production
business; (iv) Swap Obligations; (v) advances to officers and employees of the
Issuer or any Subsidiary in connection with the performance of their duties in
the ordinary course of business in an amount not to exceed $500,000 in the
aggregate outstanding at any time; (vi) margin deposits in connection with
Permitted Hedging Transactions; (vii) any Investments outstanding on the Issue
Date; (viii) repurchases of the Senior Notes on the open market with the prior
approval of the Board of Directors; (ix) Investments and expenditures made in
the ordinary course of business by the Issuer or its Subsidiaries, and of a
nature that is or shall have become customary in the oil and gas business as a
means of actively exploiting, exploring for, acquiring, developing, processing,
gathering, marketing or transporting oil or gas through agreements,
transactions, interests or arrangements which permit a Person to share risks or
costs, comply with regulatory requirements regarding local ownership or satisfy
other objectives customarily achieved through the conduct of the oil and gas
business jointly with third parties, including, without limitation, (a)
ownership interests in oil and gas properties or gathering systems including the
repurchase of interests in Issuer-sponsored partnerships owning oil and gas
properties and (b) Investments and expenditures 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 arrangements, joint bidding agreements, service
contracts, joint venture agreements, partnership agreements (whether general or
limited), subscription agreements, stock purchase agreements and other similar
agreements with third parties; provided that in the case of any joint venture
engaged in processing, gathering, marketing or transporting oil or gas (i) all
Indebtedness of such joint venture that would not otherwise constitute
Indebtedness of the Issuer or a Subsidiary shall be deemed Indebtedness of such
Person in proportion to its direct or indirect ownership interest in such joint
venture and (ii) such joint venture shall be reasonably calculated to enhance
the value of the reserves of such Person or marketability of production from
such reserves; (x) other Investments not in excess of $2,000,000 at any time
outstanding; and (xi) loans made to officers, directors and employees of the
Issuer or any of its Subsidiaries approved by the applicable Board of Directors
(or by an authorized officer), the proceeds of which are used solely to purchase
stock or to exercise stock options received pursuant to an employee stock option
plan or other incentive plan, in a principal amount not to exceed the purchase
price of such stock or the exercise price of such stock options, as applicable.
14
"Permitted Liens" with respect to any Person means (i) Liens imposed by
governmental authorities for taxes, assessments, or other charges not yet due or
which are being contested in good faith and by appropriate proceedings, if
adequate reserves with respect thereto are maintained on the books of any of
such Person in accordance with GAAP; (ii) statutory Liens of landlords,
carriers, warehousemen, mechanics, materialmen, repairmen, mineral interest
owners, or other like Liens arising by operation of law in the ordinary course
of business provided that (a) the underlying obligations are not overdue for a
period of more than 30 days, or (b) such Liens are being contested in good faith
and by appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of any of such Person in accordance with GAAP; (iii)
deposits of cash or Cash Equivalents to secure the performance of bids, trade
contracts (other than borrowed money), leases, statutory obligations, surety
bonds, performance bonds, and other obligations of a like nature incurred in the
ordinary course of business (or to secure reimbursement obligations or letters
of credit issued to secure such performance or other obligations); (iv)
easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects incurred in the ordinary course of business which,
in the aggregate, are not material in amount and which do not, in any case,
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of such Person; (v) Liens
securing the Senior Notes, the Junior Notes, the Guarantees or the Permitted
Credit Facility that were in place on the Issue Date; (vi) pledges or deposits
made in the ordinary course of business in connection with worker's
compensation, unemployment insurance, other types of social security
legislation, property insurance and liability insurance; (vii) Liens on the
assets of any Person existing at the time such assets are acquired by such
Person, whether by merger, consolidation, purchase of assets or otherwise so
long as such Liens (a) are not created, incurred or assumed in contemplation of
such assets being acquired by such Person and (b) do not extend to any other
assets of such Person whether prior to or after such merger, consolidation,
purchase of assets or otherwise; (viii) leases or subleases granted to others
that do not materially interfere with the ordinary course of business of such
Person, and (a) any extension, renewal or replacement of the Liens created
pursuant to any of clauses (i) through (viii); provided that such Liens would
have otherwise been permitted under such clauses, and provided further that the
Liens permitted by this clause (a) do not secure any additional Indebtedness or
encumber any additional property.
"Person" means any corporation, individual, joint stock company, joint
venture, partnership, limited liability company, unincorporated association,
governmental regulatory entity, country, state, or political subdivision
thereof, trust, municipality, or other entity.
"Preferred Stock" means, with respect to any Person, any class or
classes (however designated) of Capital Stock of such Person that is preferred
as to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person over shares
of Capital Stock of any other class of such Person.
"Principal" of any Indebtedness (including the Senior Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Production Payment" means any volumetric or dollar-denominated
production payment or other similar burden on the property of the Issuer or any
of its Subsidiaries.
15
"Pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Issuer in consultation with its independent public
accountants.
"Public Equity Offering" means an underwritten public offering by a
nationally recognized member of the National Association of Securities Dealers
(or any other member of the National Association of Securities Dealers if the
Issuer will receive at least $10 million of Net Proceeds from such offering) of
Qualified Capital Stock of the Issuer pursuant to an effective registration
statement filed with the Commission pursuant to the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Record Date" means the Record Dates specified in the Senior Notes.
"Redemption Date" when used with respect to any Senior Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Senior Notes.
"Redemption Price" when used with respect to any Senior Note to be
redeemed, means the price fixed for such redemption, including principal,
without premium or penalty, pursuant to this Indenture and the Senior Notes.
"Red Oak" means Midland Red Oak Realty, Inc., a Delaware corporation.
"Reference Period" with regard to any Person means the four full fiscal
quarters of such Person ended on or immediately preceding any date upon which
any determination is to be made pursuant to the terms of the Senior Notes or
this Indenture.
"Registrar" has the meaning provided in Section 2.03.
"Regulation S" means Regulation S under the Securities Act.
"Released Interests" has the meaning provided in Section 11.04(b).
"Reserve Report" means a report prepared by independent petroleum
engineers with respect to Hydrocarbon reserves in accordance with guidelines
published by the Commission.
"Reserved Rights" has the meaning set forth in Section 8.01.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Payment" has the meaning set forth in Section 4.10.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Security Agreement" means collectively those certain security
agreements, in substantially the form of Exhibit D, from the Issuer and Blue
---------
Heel pursuant to which the Issuer and Blue Heel shall grant a security interest
in all of their respective personal property to the
16
Collateral Trustee for the benefit of the Holders of the Senior Notes and the
lenders under the Permitted Credit Facility, as their interests may appear.
"Security Documents" means the Security Agreement, the Company Pledge
Agreement, the MRO Pledge Agreement, the Mortgages, the Collateral Trust
Agreement, the Tri-Party Agreement and each other agreement granting or
evidencing a lien or security interest in, or the pledge of, assets to secure
and support the Senior Notes and the Guarantees that may be entered into on or
after the Issue Date pursuant to the terms of this Indenture.
"Senior Note Register" means the register maintained by or for the
Issuer in which the Issuer shall provide for the registration of the Senior
Notes and the transfer of the Senior Notes.
"Senior Notes" means notes, treated as a single class of securities, as
amended or supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"S&P" means Standard & Poor's Rating Services, a division of The
XxXxxx-Xxxx Companies, Inc. and its successors.
"Stated Maturity Date" means June 30, 2004.
"Subordinated Indebtedness" means Indebtedness of the Issuer or a
Subsidiary of the Issuer that (i) requires no payment of principal prior to or
on the Stated Maturity Date and (ii) is expressly subordinate and junior in
right of payment to the Senior Notes or the Guarantees.
"Subsidiary" with respect to any Person means (i) a corporation with
respect to which such Person or its Subsidiaries own, directly or indirectly, at
least 50% of such corporation's Voting Stock, or (ii) a partnership other than
the Issuer-sponsored oil and gas partnerships, in which such Person or a
Subsidiary of such Person is, at the time, a general partner of such partnership
and has more than 50% of the total voting power of partnership interests, or
(iii) any other Person (other than a corporation or a partnership) in which such
Person, one or more Subsidiaries of such Person, or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has (x) at least a 50% ownership interest or (y) the power
to elect or direct the election of a majority of the directors or other
governing body of such other Person.
"Subsidiary Guarantee" has the meaning set forth in Section 12.01(b).
"Subsidiary Guarantor" means each of the Issuer's Subsidiaries that in
the future executes a supplemental indenture in which such Subsidiary agrees to
be bound by the terms of this Indenture as a Subsidiary Guarantor; provided,
however, that any Person constituting a Subsidiary Guarantor as described above
shall cease to constitute a Subsidiary Guarantor when its Subsidiary Guarantee
is released in accordance with this Indenture.
"Super-Affiliate" means, with respect to the Issuer, any Holder which,
directly or indirectly, owns 15% or more of the total voting power of the
outstanding Voting Stock of the Issuer.
17
"Swap Obligation" of any Person means any Interest Rate or Currency
Agreement entered into with one or more financial institutions or one or more
futures exchanges in the ordinary course of business and not for purposes of
speculation that is designed to protect such Person against fluctuations in (x)
interest rates with respect to Indebtedness incurred and which shall have a
notional amount no greater than 100% of the principal amount of the Indebtedness
being hedged thereby or (y) currency exchange rate fluctuations.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
(S)(S)77aaa-77bbbb), as amended, as in effect on the date of this Indenture,
except as otherwise provided in Section 9.03.
"Tri-Party Agreement means the agreement to specify certain
arrangements between the Company, MRO, the Trustee and State Street Bank and
Trust Company, the trustee of holders of the Junior Notes, with respect to the
Collateral pledged under the Company Pledge Agreement and MRO Pledge Agreement.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture, or in the case of a
successor trustee, an officer assigned to the department, division or group
performing the corporate trust work of such successor and assigned to administer
this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"United States" means the United States of America.
"U.S. Government Obligations" means direct obligations of, and
obligations guaranteed by, the United States for the payment of which the full
faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
(which if paid by wire transfer, shall be in the form of immediately available
funds) as at the time of payment shall be legal tender for the payment of public
and private debts.
"Voting Stock" means Capital Stock of a Person having generally the
right to vote in the election of such Person's directors, managers, trustees or
other persons performing comparable functions to a corporation's board of
directors.
"Wholly-Owned Subsidiary" means any Subsidiary of which all the then
outstanding Voting Stock is owned by the Issuer or another Wholly-Owned
Subsidiary.
Section 1.02 Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Senior Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
18
"obligor" on the indenture securities means the Issuer, the Company or
any other Guarantor or any other obligor on the Senior Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
Section 1.03 Rules of Construction.
---------------------
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words in
the plural include the singular;
(i) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any particular article,
section or other subdivision; and
(ii) any reference to a statute, law or regulation means
that statute, law or regulation as amended and in effect from time to time and
includes any successor statute, law or regulation; provided, however, that any
reference to the Bankruptcy Law shall mean the Bankruptcy Law as applicable to
the relevant case.
ARTICLE TWO
THE SENIOR NOTES
Section 2.01 Form and Dating.
---------------
The Senior Notes, the notations thereon relating to the Guarantees and
the Trustee's certificate of authentication shall be substantially in the form
of Exhibit E. The Senior Notes may have notations, legends or endorsements
---------
required by law, stock exchange rule or usage. Subject to the foregoing, the
Issuer and the Trustee shall approve the form of the Senior Notes and any
notation, legend or endorsement on them. Each Senior Note shall be dated the
date of its authentication.
The terms and provisions contained in the Senior Notes and the
Guarantees shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Issuer, the Guarantors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
19
However, to the extent any provision of any Senior Note, the Security
Agreements or Guarantee conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
Section 2.02 Execution and Authentication; Aggregate Principal Amount.
--------------------------------------------------------
Two Officers, or an Officer and an Assistant Secretary of the Issuer,
shall sign, or one Officer shall sign and one Officer or an Assistant Secretary
(each of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Senior Notes for the Issuer by manual or
facsimile signature.
If any Officer or Assistant Secretary of the Issuer whose signature is
on a Senior Note was an Officer or Assistant Secretary of the Issuer at the time
of such execution but no longer holds that office or position at the time the
Trustee authenticates the Senior Note, the Senior Note shall nevertheless be
valid.
A Senior Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Senior Note.
Such signature shall be conclusive evidence that such Senior Note has been
authenticated under this Indenture.
The Trustee shall authenticate Senior Notes for original issue in the
aggregate principal amount of up to $60,000,000 upon a written order of the
Issuer in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Senior Notes to be authenticated and the date on which the
Senior Notes are to be authenticated. The aggregate principal amount of Senior
Notes outstanding at any time may not exceed $60,000,000, except as otherwise
provided herein. Upon the written order of the Issuer in the form of an
Officers' Certificate, the Trustee shall authenticate Senior Notes in
substitution of Senior Notes originally issued to reflect any name change of the
Issuer.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Issuer to authenticate Senior Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Senior Notes 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 an Agent to deal with the Issuer and Affiliates of the Issuer.
The Senior Notes shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
Section 2.03 Registrar and Paying Agent.
--------------------------
The Issuer shall maintain an office or agency in New York, New York,
where Senior Notes may be presented or surrendered for payment ("Paying Agent"),
and the Issuer shall also maintain an office or agency, either in New York, New
York or elsewhere in the United States, where (a) Senior Notes may be presented
or surrendered for registration of transfer or for exchange ("Registrar") and
(b) notices and demands to or upon the Issuer in respect of the Senior Notes and
this Indenture may be served. The Registrar shall keep the Senior Note Register.
The Issuer, upon prior written notice to the Trustee, may have one or more
co-Registrars and one or
20
more additional Paying Agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. The Issuer may act as its
own Paying Agent, except that for the purposes of payments on the Senior Notes
pursuant to Sections 4.15 and 4.16, neither the Issuer nor any Affiliate of the
Issuer may act as Paying Agent.
The Issuer shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Issuer shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Issuer fails to maintain a Registrar or Paying
Agent, or fails to give the foregoing notice, the Trustee shall act as such.
The Issuer initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Senior
Notes, until such time as the Trustee has resigned or a successor has been
appointed. Any of the Registrar, the Paying Agent or any other Agent may resign
upon 30 days' notice to the Issuer.
Section 2.04 Paying Agent to Hold Assets in Trust.
------------------------------------
The Issuer shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Senior Notes (whether such
assets have been distributed to it by the Issuer or any other obligor on the
Senior Notes), and the Issuer and the Paying Agent shall notify in writing the
Trustee of any Default by the Issuer in making any such payment. The Issuer at
any time may require a Paying Agent to distribute all assets held by it pursuant
hereto to the Trustee and account for any assets disbursed, and the Trustee may
at any time during the continuance of any payment Default, upon written request
to a Paying Agent, require such Paying Agent to distribute all assets held by it
pursuant hereto to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Issuer to the Paying Agent, the Paying Agent shall have no further liability for
such assets.
Section 2.05 Holder 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
the Holders. If the Trustee is not the Registrar, the Issuer shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
Section 2.06 Transfer and Exchange.
---------------------
When Senior Notes are presented to the Registrar or a co-Registrar with
a request to register the transfer of such Senior Notes or to exchange such
Senior Notes for an equal principal amount of Senior Notes of other authorized
denominations, the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its requirements for such transaction are met;
provided, however, that the Senior Notes presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in
21
form satisfactory to the Issuer, the Trustee and the Registrar or co-Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing.
To permit registration of transfers and exchanges, the Issuer shall execute and
the Trustee, upon written demand of the Issuer in the form of an Officers'
Certificate of the Issuer, shall authenticate Senior Notes at the Registrar's or
co-Registrar's request. No service charge shall be made for any registration of
transfer or exchange, but the Issuer may require repayment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.10, 4.15, 4.16 or
9.05, in which event the Issuer shall be responsible for the payment of such tax
or charge).
The Registrar or co-Registrar shall not be required to register the
transfer or exchange of any Senior Note (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Senior Notes and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Senior Note being redeemed in part.
Section 2.07 Replacement Notes.
-----------------
If a mutilated Senior Note is surrendered to the Trustee or the Holder
of a Senior Note claims that the Senior Note has been lost, destroyed or
wrongfully taken, the Issuer shall issue and the Trustee, upon written demand of
the Issuer in the form of an Officers' Certificate of the Issuer, shall
authenticate a replacement Senior Note if the Trustee's requirements are met. If
required by the Trustee or the Issuer, such Holder must provide an indemnity
bond or other indemnity of reasonable tenor, sufficient in the reasonable
judgment of the Issuer or the Trustee, as the case may be, to protect the
Issuer, the Trustee or any Agent from any loss which any of them may suffer if a
Senior Note is replaced. Every replacement Senior Note shall constitute an
additional obligation of the Issuer.
Section 2.08 Outstanding Notes.
-----------------
Senior Notes outstanding at any time are all the Senior Notes that have
been authenticated by the Trustee except those canceled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. Subject to the provisions of Section 2.09, a Senior Note does not
cease to be outstanding because the Issuer or any of its Affiliates holds the
Senior Note.
If a Senior Note is replaced pursuant to Section 2.07 (other than a
mutilated Senior Note surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Senior
Note is held by a bona fide purchaser. A mutilated Senior Note ceases to be
outstanding upon surrender of such Senior Note and replacement thereof pursuant
to Section 2.07.
If (i) by 11:00 a.m. New York City time on a Redemption Date or the
Stated Maturity Date the Paying Agent holds U.S. Legal Tender or (ii) the Issuer
has exercised Legal Defeasance and deposited U.S. Government Obligations, in
either case, sufficient to pay all of the principal, premium, if any, and
interest due on the Senior Notes payable on that date and is not prohibited
22
from paying such money to the Holders thereof pursuant to the terms of this
Indenture, then on and after that date such Senior Notes shall be deemed not to
be outstanding and interest on them shall cease to accrue.
Section 2.09 Notes Deemed Not Outstanding.
----------------------------
In determining whether the Holders of the required principal amount of
Senior Notes have concurred in any direction, waiver, consent or notice, Senior
Notes owned by the Issuer or a Super-Affiliate of the Issuer shall be considered
as though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Senior Notes which a Trust Officer of the Trustee actually
knows are so owned shall be so considered. The Issuer shall notify the Trustee,
in writing, when it or, to its knowledge, any of its Super-Affiliates
repurchases or otherwise acquires Senior Notes, of the aggregate principal
amount of such Senior Notes so repurchased or otherwise acquired and such other
information as the Trustee may reasonably request and the Trustee shall be
entitled to rely thereon.
Section 2.10 Temporary Notes.
---------------
Until definitive Senior Notes are ready for delivery, the Issuer may
prepare and the Trustee shall authenticate temporary Senior Notes upon receipt
of a written order of the Issuer in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Senior Notes to be
authenticated and the date on which the temporary Senior Notes are to be
authenticated. Temporary Senior Notes shall be substantially in the form of
definitive Senior Notes but may have variations that the Issuer considers
appropriate for temporary Senior Notes and so indicates in the Officers'
Certificate. Without unreasonable delay, the Issuer shall prepare, and the
Trustee shall authenticate upon receipt of a written order of the Issuer
pursuant to Section 2.02, definitive Senior Notes in exchange for temporary
Senior Notes.
Section 2.11 Cancellation.
------------
The Issuer at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Senior Notes surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and shall dispose, in its customary manner, of all
Senior Notes surrendered for transfer, exchange, payment or cancellation.
Subject to Section 2.07, the Issuer may not issue new Senior Notes to replace
Senior Notes that have been paid or delivered to the Trustee for cancellation.
If the Issuer shall acquire any of the Senior Notes, such acquisition shall not
operate as a redemption or satisfaction of the Indebtedness represented by such
Senior Notes unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
Section 2.12 Defaulted Interest.
------------------
If the Issuer shall default in the payment of any installment of
interest, or the principal of or premium, if any, on any Senior Notes, when the
same becomes due and payable, at maturity, upon redemption, by acceleration or
otherwise (including the failure to make a payment to purchase Senior Notes
tendered pursuant to a Change of Control Offer or an Excess Cash Offer),
23
then interest on the Senior Notes and all amounts then due thereunder shall
accrue interest at the rate of 18% per annum (the "Default Rate") until the
Senior Notes are paid in full or the Default in payment is cured. The Issuer
shall pay interest on all such overdue amounts (including installments of
interest, to the extent lawful) on demand without regard to any applicable grace
periods. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months, and, in the case of a partial month, the actual number of
days elapsed.
If the Issuer defaults in a payment of interest on the Senior Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Issuer for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Issuer shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Senior Note and the date of the proposed
payment (a "Default Interest Payment Date"), and at the same time the Issuer
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; provided, however, that in no event shall the Issuer deposit
monies proposed to be paid in respect of defaulted interest later than 11:00
a.m. New York City time of the proposed Default Interest Payment Date. At least
15 days before the subsequent special record date, the Issuer shall mail (or
cause to be mailed) to each Holder, as of a recent date selected by the Issuer,
with a copy to the Trustee, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(a) shall be paid to those Holders who are the
Holders as of the regular Record Date for the Interest Payment Date for which
interest has not been paid. Notwithstanding the foregoing, the Issuer may make
payment of any defaulted interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Senior Notes may
be listed, and upon such notice as may be required by such exchange.
Section 2.13 CUSIP Numbers.
-------------
The Issuer in issuing the Senior Notes of each series may use a "CUSIP"
number, and, if so, the Trustee shall use the appropriate CUSIP number in
notices of redemption or exchange as a convenience to Holders; provided,
however, that no representation is hereby deemed to be made by the Trustee as to
the correctness or accuracy of the CUSIP number printed in the notice or on the
Senior Notes, and that reliance may be placed only on the other identification
numbers printed on the Senior Notes. The Issuer shall promptly notify the
Trustee of any change in a CUSIP number.
Section 2.14 Deposit of Monies.
-----------------
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Stated Maturity Date, Redemption Date, Change of Control Payment Date and
Excess Cash Purchase Date, the Issuer shall have deposited with the Paying Agent
in immediately available funds U.S. Legal
24
Tender sufficient to make the cash payments, if any, due on such Interest
Payment Date, Stated Maturity Date, Redemption Date, Change of Control Payment
Date and Excess Cash Purchase Date, as the case may be, in a timely manner which
permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Stated Maturity Date, Redemption Date, Change of Control Payment
Date and Excess Cash Purchase Date, as the case may be. At the option of the
Issuer, payment of interest on Senior Notes may be made by wire transfer or by
check mailed to the Holders on or before the relevant Interest Payment Date at
their respective addresses as shown in the Senior Note Register as of the
relevant Interest Payment Date.
ARTICLE THREE
REDEMPTION AND CONVERSION
Section 3.01 Notices to Trustee.
------------------
If the Issuer elects to redeem Senior Notes pursuant to Section 3.03 or
Section 3.04, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Senior Notes to be redeemed.
The Issuer shall give each notice provided for in this Section 3.01 at
least 60 but not more than 75 days before the Redemption Date with respect to
redemption to Section 3.03 and at least 30 days, but no more than 45 days,
before the Redemption Date with respect to redemption pursuant to Section 3.04
(unless a shorter notice period shall be satisfactory to the Trustee, as
evidenced in a writing signed on behalf of the Trustee), together with an
Officers' Certificate stating that such redemption shall comply with the
conditions contained herein and in the Senior Notes.
Section 3.02 Selection of Notes to Be Redeemed.
---------------------------------
In the event that less than all of the Senior Notes are to be redeemed
at any time, selection of such Senior Notes, or portions thereof, for redemption
will be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Senior Notes are listed or,
if the Senior Notes are not then listed on a national securities exchange, on a
pro-rata basis or on as nearly a pro-rata basis as is practicable, unless such
method is otherwise prohibited, in which case the Trustee shall select Senior
Notes for redemption by lot or by such other method as the Trustee shall deem
fair and appropriate; provided, however, that no Senior Notes of a principal
amount of $1,000 or less shall be redeemed in part.
Section 3.03 Optional Redemption.
-------------------
At any time or from time to time or prior to maturity, the Issuer may,
at its option, redeem, without premium or penalty, all or a portion of the
Senior Notes for a redemption price equal to 100% of the principal amount of the
Senior Notes so redeemed, plus accrued but unpaid interest, if any, thereon to
the Redemption Date.
25
Section 3.04 Mandatory Redemption.
--------------------
Subject to any restrictions on payment of the Senior Notes contained in the
Collateral Trust Agreement, in the event the Issuer has available funds to
repurchase all of the Senior Notes at par from the Permitted Credit Facility and
a new subordinated credit facility with a maturity date of June 30, 2005 or
later (the "Subordinated Credit Facility") and the weighted average interest
cost of the Permitted Credit Facility and the Subordinated Credit Facility is
12% or less, then the Issuer shall redeem, and the holders shall tender, without
premium or penalty, all of the Senior Notes for a redemption price equal to 100%
of the principal amount of the Senior Notes so redeemed, plus accrued but unpaid
interest, if any, thereon to the Redemption Date; provided, however, that the
Board of Directors may, by unanimous vote, direct the Issuer not to effect such
repurchase; and provided further, that the Issuer shall not effect a repurchase
if such repurchase would cause the Issuer to become insolvent.
Section 3.05 Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date, the
Issuer shall mail or cause to be mailed a notice of redemption by first class
mail to each Holder of Senior Notes to be redeemed at its last address as then
shown on the Senior Note Register, with a copy to the Trustee and any Paying
Agent. At the Issuer's request, the Trustee shall give the notice of redemption
in the Issuer's name and at the Issuer's expense. The Issuer shall provide such
notices of redemption to the Trustee at least five days before the intended
mailing date.
Each notice of redemption shall identify (including the CUSIP number) the
Senior Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest, if
any, to be paid;
(c) the name and address of the Paying Agent;
(d) the subparagraph of the Senior Notes pursuant to which such
redemption is being made;
(e) that any Senior Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price plus accrued
interest, if any;
(f) that, unless the Issuer defaults in making the redemption
payment, interest on Senior Notes (or applicable portions thereof) called for
redemption ceases to accrue, on and after the Redemption Date, and the only
remaining right of the Holders of such Senior Notes is to receive payment of the
Redemption Price plus accrued interest as of the Redemption Date, if any, upon
surrender to the Paying Agent of the Senior Notes redeemed;
(g) if any Senior Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon surrender of such Senior Note, a new Senior Note or Senior Notes
in the aggregate principal amount equal to the unredeemed portion thereof will
be issued; and
26
(h) if fewer than all the Senior Notes are to be redeemed, the
identification of any particular Senior Notes (or portions thereof) to be
redeemed, as well as the aggregate principal amount of Senior Notes to be
redeemed and the aggregate principal amount of Senior Notes to be outstanding
after such partial redemption.
The Company and the Issuer shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
purchase of Senior Notes.
Section 3.06 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.05, such
notice of redemption shall be irrevocable and Senior Notes called for redemption
become due and payable on the Redemption Date at the Redemption Price plus
accrued interest as of such date, if any. Upon surrender to the Trustee or
Paying Agent, such Senior Notes called for redemption shall be redeemed at the
Redemption Price plus accrued interest thereon to the Redemption Date, but
installments of interest, the maturity of which is on or prior to the Redemption
Date, shall be payable to Holders of record at the close of business on the
relevant Record Dates referred to in the Senior Notes. Interest shall accrue on
or after the Redemption Date and shall be payable only if the Issuer defaults in
payment of the Redemption Price on the Redemption Date.
Section 3.07 Deposit of Redemption Price.
---------------------------
On or before 11:00 a.m. (New York time) on the Redemption Date and in
accordance with Section 2.14, the Issuer shall deposit with the Paying Agent,
U.S. Legal Tender sufficient to pay the Redemption Price plus accrued interest,
if any, on all Senior Notes to be redeemed. The Paying Agent shall promptly
return to the Issuer any U.S. Legal Tender so deposited which is not required
for that purpose, except with respect to monies owed as obligations to the
Trustee pursuant to Article Seven.
Unless the Issuer fails to comply with the preceding paragraph and defaults
in the payment on or before the Redemption Date of such Redemption Price plus
accrued interest, if any, interest on the Senior Notes to be redeemed will cease
to accrue, as the case may be, on and after the applicable Redemption Date,
whether or not such Senior Notes are presented for payment.
Section 3.08 Notes Redeemed in Part.
----------------------
Upon surrender of a Senior Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Senior Note or Senior Notes equal in
principal amount to the unredeemed portion of the Senior Note surrendered.
27
ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Senior Notes; Authentication.
---------------------------------------
(a) The Issuer shall pay the principal of, premium, if any, and
interest on the Senior Notes on the dates and in the manner provided in the
Senior Notes and this Indenture.
(b) An installment of principal of, premium, if any, or interest
on the Senior Notes shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Issuer or any of its Affiliates) holds,
on or before 11:00 a.m. New York City time on that date, U.S. Legal Tender
designated for and sufficient to pay the installment in full and is not
prohibited from paying such money to the Holders pursuant to the terms of this
Indenture or the Senior Notes.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Issuer or the Trustee, as the case may be, may, to the extent it
is required to do so by law, deduct or withhold income or other similar taxes
imposed on the Holders of the Senior Notes by the United States from principal
or interest payments hereunder.
(d) The Issuer shall promptly make demand upon the Trustee, in
the form of an Officers' Certificate, to authenticate and deliver Senior Notes
as contemplated in Sections 2.06 and 2.07 of this Indenture.
Section 4.02 Maintenance of Office or Agency.
-------------------------------
The Issuer shall maintain the offices or agencies required under Section
2.03. The Issuer shall give prior written notice to the Trustee of the location,
and any change in the location, of such offices or agencies. If at any time the
Issuer shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 10.02.
Section 4.03 Corporate Existence.
-------------------
Except as otherwise provided in Article Five, the Issuer shall do or cause
to be done, at its own cost and expense, all things necessary to preserve and
keep in full force and effect its corporate existence and the corporate
existence of each of its Subsidiaries in accordance with the organizational
documents of the Issuer and each such Subsidiary and the material rights
(charter and statutory) and franchises of each such Person; provided, however,
that the Issuer shall not be required to preserve, with respect to itself and
any of its Subsidiaries, any such existence, material right or franchise, if the
Board of Directors of the Issuer shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Issuer and its Subsidiaries, taken as a whole.
Except as otherwise provided in Article Five, each of the Guarantors shall
do or cause to be done, at its own cost and expense, all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate existence of each of its Subsidiaries in accordance
28
with the organizational documents of the Guarantor and each of its Subsidiaries
and the material rights (charter and statutory) and franchises of the Guarantor
and its Subsidiaries; provided, however, that each such Guarantor shall not be
required to preserve any such existence, material right or franchise, if the
Board of Directors of such Guarantor shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
such Guarantor and its Subsidiaries taken as a whole.
Section 4.04 Payment of Taxes and Other Claims.
---------------------------------
The Issuer shall pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Issuer or any of its
Subsidiaries or the properties of the Issuer or any of its Subsidiaries and (b)
all material lawful claims for labor, materials and supplies that, if unpaid,
might by law become a Lien upon the property of the Issuer or any of its
Subsidiaries; provided, however, that the Issuer shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate negotiations or proceedings properly instituted and diligently
conducted for which adequate reserves, to the extent required under GAAP, have
been taken.
Each of the Guarantors shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon such
Guarantor or any of its Subsidiaries or the properties of such Guarantor or any
of its Subsidiaries and (b) all material lawful claims for labor, materials and
supplies that, if unpaid, might by law become a Lien upon the property of such
Guarantor or its Subsidiary; provided, however, that such Guarantor or any of
its Subsidiaries shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
negotiations or proceedings properly instituted and diligently conducted for
which adequate reserves, to the extent required under GAAP, have been taken.
Section 4.05 Maintenance of Properties and Insurance.
---------------------------------------
(a) The Issuer shall, and shall cause each of its Subsidiaries
to, maintain all properties used or useful in the conduct of its business in
good working order and condition (subject to ordinary wear and tear) and make
all necessary repairs, renewals, replacements, additions, betterments and
improvements thereto and actively conduct and carry on its business; provided,
however, that nothing in this Section 4.05 shall prevent the Issuer or any of
its Subsidiaries from discontinuing the operation and maintenance of any of its
properties, if such discontinuance is (i) in the ordinary course of business
pursuant to customary business terms or (ii) in the good faith judgment of the
Board of Directors of the Issuer, desirable in the conduct of its or its
Subsidiaries' businesses and is not disadvantageous in any material respect to
the Holders.
(b) Each of the Guarantors shall, and shall cause each of its
Subsidiaries to, maintain all properties used or useful in the conduct of its
business in good working order and
29
condition (subject to ordinary wear and tear) and make all necessary repairs,
renewals, replacements, additions, betterments and improvements thereto and
actively conduct and carry on its business; provided, however, that nothing in
this Section 4.05 shall prevent any such Guarantor or any of its Subsidiaries
from discontinuing the operation and maintenance of any of its properties, if
such discontinuance is (i) in the ordinary course of business pursuant to
customary business terms or (ii) in the good faith judgment of the Board of
Directors of such Guarantor, desirable in the conduct of its or its
Subsidiaries' business and is not disadvantageous in any material respect to the
Holders.
(c) The Issuer shall provide or cause to be provided, for itself
and each of its Subsidiaries insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Issuer, are adequate and appropriate for the conduct of the business of the
Issuer and its Subsidiaries in a prudent manner, with reputable insurers or with
the government of the United States or an agency or instrumentality thereof, in
such amounts, with such deductibles, and by such methods as shall be customary,
in the good faith judgment of the Issuer, for companies similarly situated in
the same industry. The Issuer shall cause the Trustee to be named as a mortgagee
and a loss payee on any policies of casualty insurance covering any tangible
Collateral pledged by the Issuer or any of its Subsidiaries under the Security
Documents.
(d) Each of the Guarantors shall provide or cause to be provided
for itself and for its Subsidiaries insurance (including appropriate
self-insurance) against loss or damage of the kind that, in the good faith
judgment of such Guarantor, are adequate and appropriate for the conduct of the
business of such Guarantor and its Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the good faith judgment of such Guarantor, for
companies similarly situated in the same industry. Such Guarantor shall cause
the Trustee to be named as a mortgagee and a loss payee on any policies of
casualty insurance covering any tangible Collateral pledged by such Guarantor
under the Security Documents.
Section 4.06 Compliance Certificate; Financial Statements; Notice of
-------------------------------------------------------
Default.
-------
(a) In addition to the delivery requirements of Section 11.02,
the Issuer and each Guarantor shall deliver to the Trustee, within 60 days after
the end of each fiscal quarter that is not also the fiscal year end and 90 days
after the end of the fiscal quarter that is also the end of a fiscal year an
Officers' Certificate stating that a review of the activities of the Issuer and
its Subsidiaries and each Guarantor, as the case may be, during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Issuer, its Subsidiaries and each Guarantor, as
the case may be, have kept, observed, performed and fulfilled their obligations
under this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his knowledge the Issuer and each of its
Subsidiaries or the Guarantor, as the case may be, has kept, observed, performed
and fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have knowledge
and what action the Issuer is taking or proposes to take with respect thereto)
and that, to the best of
30
his knowledge, no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Senior Notes
are prohibited or if such event has occurred, a description of the event and
what action the Issuer or the Guarantor, as the case may be, is taking or
proposes to take with respect thereto. The Issuer shall also notify the Trustee
of any changes in the composition of the Board of Directors of the Issuer or any
of its Subsidiaries or of any amendment to the charter or bylaws of the Issuer
or any of its Subsidiaries
(b) So long as the Issuer is required under the Permitted Credit
Facility to cause the report described in this Section 4.06(b) to be furnished
to the provider of the Permitted Credit Facility and so long as not contrary to
the then current recommendations of the American Institute of Certified Public
Accountants, the annual financial statements delivered pursuant to Section 4.08
shall be accompanied by a written report of the Issuer's independent certified
public accountants (who shall be a firm of established national reputation)
stating (A) that their audit examination has included a review of the terms of
this Indenture and the form of the Senior Notes as they relate to accounting
matters, and (B) that the calculation by the Issuer of the financial ratios
required to be calculated under this Indenture are numerically accurate and that
the amounts contained in such ratios and such ratios have been calculated in
accordance with the definitions contained in this Indenture; provided, however,
that, without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event or Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.
(c) The Issuer shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, as soon as possible and in any event within
five days after any Officer of the Issuer becoming aware of any Default or Event
of Default an Officers' Certificate specifying such Default or Event of Default
what action the Issuer is taking or proposes to take with respect thereto.
Section 4.07 Compliance with Laws.
--------------------
(a) The Issuer shall comply, and shall cause each of its
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States, all states and municipalities thereof,
and of any governmental department, commission, board, regulatory authority,
bureau, agency and instrumentality of the foregoing, in respect of the conduct
of their respective businesses and the ownership of their respective properties,
except for such noncompliance as could not singly or in the aggregate;
reasonably be expected to have a material adverse effect on the financial
condition, business, prospects or results of operations of the Issuer and its
Subsidiaries taken as a whole.
(b) Each of the Guarantors shall, and shall cause the
Subsidiaries to, comply with all applicable statutes, rules, regulations, orders
and restrictions of the United States, all states and municipalities thereof,
and of any governmental department, commission, board, regulatory authority,
bureau, agency and instrumentality of the foregoing, in respect to the conduct
of their respective businesses and the ownership of their respective properties,
except for such noncompliance as could not, singly or in the aggregate,
reasonably be expected to have a
31
material adverse effect on the financial condition, business, prospects or
results of operations of such Guarantor and its Subsidiaries taken as a whole.
Section 4.08 Reports to Holders.
------------------
The Issuer and each of its Subsidiaries, as applicable, shall deliver to
the Trustee copies of quarterly and annual reports and of the information,
documents and other reports, if any, which the Issuer or such Subsidiary is
required to file or would file, if so required, with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act within 15 days following the date such
filing is or would be required. Notwithstanding that the Issuer may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Issuer shall file with the Commission, to the extent permitted, and
provide the Trustee with such annual and quarterly reports and such information,
documents and other reports specified in Section 13 of the Exchange Act. The
Company and the Issuer shall also comply with the other provisions of Section
314(a) of the TIA. Each of the Company and MRO shall deliver to the Trustee
copies of unaudited quarterly and annual reports within 105 days following the
end of the fiscal year of the Company or MRO or 60 days following the end of the
quarter of the Company and MRO, as the case may be.
If requested in writing by a Holder, any beneficial holder of the Senior
Notes or a prospective purchaser of the Senior Notes designated by such Holder,
the Issuer shall deliver to such Person annual and quarterly financial
statements of the Issuer or such other information required to be delivered
pursuant to Rule 144A(d)(4) of the Securities Act.
Section 4.09 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Issuer and each of the Guarantors covenant (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Issuer from paying all or any portion of the principal of, premium, if any, or
interest on the Senior Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Issuer and each of the Guarantors hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit execution of every such power as though no such law had been
enacted.
Section 4.10 Limitation on Restricted Payments.
---------------------------------
(a) The Issuer shall not, and shall not cause or permit any of
its Subsidiaries, to, directly or indirectly,
(i) declare or pay any dividend on, or make any other
distribution to holders of, any shares of Capital Stock of the Issuer or any
Subsidiary (other than dividends or distributions payable solely in shares of
Qualified Capital Stock of the Issuer or any Subsidiary or dividends or
distributions payable to the Issuer or any Wholly-Owned Subsidiary of the Issuer
or warrants, rights or options to acquire Qualified Capital Stock of the Issuer
or any Subsidiary),
32
(ii) purchase, redeem or otherwise acquire or retire for
value any such shares of Capital Stock of the Issuer or any Affiliate (other
than any Capital Stock owned by the Issuer or any of its Wholly-Owned
Subsidiaries) or any options, warrants or other rights to acquire such Capital
Stock,
(iii) make any principal payment on or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to any scheduled
principal payment, scheduled sinking fund payment or maturity, any Subordinated
Indebtedness, or
(iv) make any Restricted Investment,
(such payments or other actions described in clauses (i) through (iv) being
collectively referred to as a "Restricted Payment"), unless at the time of and
after giving effect to the proposed Restricted Payment (the amount of any such
Restricted Payment, if other than cash, shall be the amount determined by the
Board of Directors of the Issuer, whose determination shall be conclusive and
evidenced by a Board Resolution) (1) no Default or Event of Default shall have
occurred and be continuing, (2) the Issuer could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in accordance with Section
4.12(a), and (3) the aggregate amount of all Restricted Payments declared or
made after the Issue Date shall not exceed the sum (without duplication) of the
following:
(A) 50% of the Adjusted Consolidated Net Income of the
Issuer accrued on a cumulative basis during the period commencing with the first
full quarter after the Issue Date and ending on the last day of the Issuer's
last fiscal quarter ending prior to the date of such proposed Restricted Payment
(or if Adjusted Consolidated Net Income is a loss, minus 100% of such loss),
plus
(B) the aggregate Net Proceeds received after the
Issue Date by the Issuer from the issuance or sale (other than to any of its
Subsidiaries) of shares of Qualified Capital Stock of the Issuer or any options,
warrants or rights to purchase such shares of Qualified Capital Stock of the
Issuer, plus
(C) the aggregate Net Proceeds received after the
Issue Date by the Issuer (other than from any of its Subsidiaries) upon the
exercise of any options, warrants or rights to purchase shares of Qualified
Capital Stock of the Issuer, plus
(D) the aggregate Net Proceeds received after the
Issue Date by the Issuer from the issuance or sale (other than to any of its
Subsidiaries) of Indebtedness or shares of Disqualified Capital Stock that have
been converted into or exchanged for Qualified Capital Stock of the Issuer,
together with the aggregate cash received by the Issuer at the time of such
conversion or exchange, minus
(E) the amount of any write-downs, writeoffs, other
negative revaluations, and other negative extraordinary charges not otherwise
reflected in Adjusted Consolidated Net Income of the Issuer during such period.
33
(b) Notwithstanding the foregoing paragraph (a) of this Section
4.10, the Issuer and its Subsidiaries may take the following actions so long as
(in the case of clauses (ii), (iii), (iv) and (v) below) no Default or Event of
Default shall have occurred and be continuing:
(i) the payment of any dividend on Capital Stock of the
Issuer or any Subsidiary within 60 days after the date of declaration thereof,
if at such declaration date such declaration complied with the provisions of
Section 4.10(a);
(ii) the repurchase, redemption or other acquisition or
retirement of any shares of any class of Capital Stock of the Issuer or any
Subsidiary, in exchange for, or out of the aggregate Net Proceeds from, a
substantially concurrent issue and sale (other than to a Subsidiary) of shares
of Qualified Capital Stock of the Issuer;
(iii) the repurchase, redemption, repayment, defeasance or
other acquisition or retirement for value of any Subordinated Indebtedness in
exchange for, or out of the aggregate Net Proceeds from, a substantially
concurrent issue and sale (other than to a Subsidiary) of (A) Subordinated
Indebtedness (provided such Indebtedness is on terms no less favorable to the
Holders of the Senior Notes than the terms of the Subordinated Indebtedness
being redeemed) or (B) shares of Qualified Capital Stock of the Issuer;
(iv) the repurchase, redemption or other acquisition of any
Capital Stock of any Affiliate organized as a limited partnership in which the
Issuer is a general partner pursuant to a redemption which is mandatory under
the terms of such partnership's limited partnership agreement;
(v) the repurchase or other acquisition of any Capital
Stock of any Subsidiary, whether in one or a series of substantially
contemporaneous transactions, which causes such Person to become a Wholly-Owned
Subsidiary of the Issuer;
(vi) the payment on behalf of any Subsidiary or Affiliate
of the Issuer of its allocated pro rata costs associated with the issuance of
the Senior Notes and any Investment in Capital Stock of such Person taken by the
Issuer in payment thereof.
(c) The actions described in clause (i) of Section 4.10(b) shall
be Restricted Payments that shall be permitted to be made in accordance with
Section 4.10(b) but shall reduce the amount that would otherwise be available
for Restricted Payments under clause (3) of Section 4.10(a), provided that any
dividend paid pursuant to clause (i) of Section 4.10(b) shall reduce the amount
that would otherwise be available under clause (iii) of Section 4.10(a) when
declared, but not also when subsequently paid pursuant to clause (i) of Section
4.10(b), and provided that any Net Proceeds received under clause (ii) or
(iii)(B) of Section 4.10(a) shall not be included in subclauses (B) or (C) of
clause (iv) of Section 4.10(a).
Section 4.11 Limitation on Transactions with Affiliates.
------------------------------------------
The Issuer and each Guarantor shall not, and shall not permit any of their
respective Subsidiaries to, enter directly or indirectly into, or permit to
exist, any transaction or series of related transactions with or for the benefit
of any Affiliate of the Issuer, such Guarantor or any of their respective
Subsidiaries as the case may be, except for transactions made in good faith, the
terms of which are fair and
34
reasonable to the Issuer, such Guarantor or their respective Subsidiaries, as
the case may be, and are at least as favorable as the terms which could be
obtained by the Issuer, Guarantor or their respective Subsidiaries, as the case
may be, in a comparable transaction made on an arm's length basis with Persons
who are not Affiliates of the Issuer, such Guarantor or their respective
Subsidiaries, as the case may be, and the Issuer, such Guarantor or their
respective Subsidiaries, as the case may be, delivers to the Trustee: (i) with
respect to any transaction or series of transactions with an Affiliate of the
Issuer, Guarantor or their respective Subsidiaries involving aggregate
consideration in excess of $1,000,000, an Officers' Certificate from the Issuer,
such Guarantor or their respective subsidiaries certifying that such transaction
or transactions comply with this Section 4.11, (ii) with respect to any
transaction or series of transactions with an Affiliate of the Issuer, Guarantor
or their respective Subsidiaries involving aggregate consideration in excess of
$2,000,000, a resolution of the Board of Directors set forth in an Officers'
Certificate from the Issuer, such Guarantor or their respective subsidiaries
certifying that such transaction or transactions comply with this Section 4.11
and that such transaction or transactions have been approved in good faith by a
majority of the members of the Board of Directors who are independent (which
resolution shall be conclusive evidence of compliance with this provision),
provided that if there is not a majority of independent directors able to
approve such transaction, the Issuer, such Guarantor or their respective
Subsidiaries shall also deliver an opinion as to the fairness to the Issuer,
such Guarantor or their respective Subsidiaries of such transaction or
transactions from a financial point of view issued by an investment banking firm
of recognized national standing, which opinion shall be conclusive evidence of
compliance with this provision; and (iii) with respect to any transaction or
series of transactions with an Affiliate of the Issuer, Guarantor or their
respective Subsidiaries involving aggregate consideration in excess of
$5,000,000, an Officers' Certificate as described in subclause (ii) above and an
opinion as to the fairness to the Issuer, Guarantor or their respective
Subsidiaries of such transaction or transactions from a financial point of view
issued by an investment banking firm of recognized national standing, which
resolution and opinion shall be conclusive evidence of compliance with this
provision; provided, however, that this Section 4.11 shall not restrict: (1)
transactions between the Issuer or Guarantor and any of their respective
Subsidiaries or transactions between Subsidiaries of the Issuer or Subsidiaries
of any Guarantor, (2) transactions pursuant to the Security Documents, (3)
Restricted Payments permitted by Section 4.10, (4) any employee compensation
arrangements by the Issuer or any of its Subsidiaries or by any Guarantor or any
of its Subsidiaries which has been approved by a majority of such Person's
disinterested directors and found in good faith by such directors to be in the
best interests of the Issuer, Guarantor or any of its Subsidiaries, as the case
may be; (5) customary directors' fees and indemnification and similar
arrangements; and (6) purchases of the Senior Notes as permitted hereunder.
Section 4.12 Limitation on Incurrence of Additional Indebtedness and
-------------------------------------------------------
Issuances of Disqualified Capital Stock.
---------------------------------------
The Issuer shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, or otherwise become
liable for, contingently or otherwise (to "incur" or, as appropriate, an
"incurrence"), any Indebtedness, including, for this purpose, borrowings in
excess of $60,000,000 in aggregate principal amount under the Permitted Credit
Facility, or issue any Disqualified Capital Stock, except that the Issuer or a
Subsidiary may incur Indebtedness and the Issuer may issue shares of
Disqualified Capital Stock if:
35
(a) the Consolidated Fixed Charge Coverage Ratio for the
Issuer's Reference Period for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Capital Stock is issued would have been at least 1.75 to
1.0 if such additional Indebtedness is incurred or such Disqualified Capital
Stock is issued;
(b) no Default or Event of Default shall have occurred and be
continuing at the time such additional Indebtedness is incurred or such
Disqualified Capital Stock is issued or would occur as the result of such
incurrence of such additional Indebtedness or the issuance of such Disqualified
Capital Stock; and
(c) the Issuer's Adjusted Consolidated Net Tangible Assets are
equal to or greater than 150% of the consolidated Indebtedness of the Issuer and
its Subsidiaries.
Notwithstanding the foregoing, if no Default or Event of Default shall have
occurred and be continuing at the time or as a consequence of the incurrence of
such Indebtedness, the Issuer and any Subsidiary of the Issuer may incur
Permitted Indebtedness.
Any Indebtedness incurred or Disqualified Capital Stock issued by any
Person that is not a Subsidiary of the Issuer or any of its Subsidiaries, as the
case may be, which Indebtedness or Disqualified Capital Stock is outstanding at
the time such Person becomes a Subsidiary of, or is merged into, or consolidated
with the Issuer or such Subsidiary, as the case may be, shall be deemed to have
been incurred or issued, as the case may be, at the time such Person becomes a
Subsidiary of, or is merged into, or consolidated with the Issuer or such
Subsidiary.
For purposes of determining any particular amount of Indebtedness under
this Section 4.12, guarantees of Indebtedness otherwise included in the
determination of such amount shall not also be included.
Section 4.13 Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Subsidiaries.
----------------------
The Issuer shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, or permit or suffer to exist or become effective
any consensual encumbrance or restriction on the ability of any Subsidiary of
the Issuer to (i) pay dividends or make other distributions on its Capital Stock
to the Issuer or any of its other Subsidiaries, (ii) make loans or advances or
pay any Indebtedness or other obligations owed to the Issuer or to any other
Subsidiary, or (iii) transfer any of its properties or assets to the Issuer or
to any other Subsidiary, except encumbrances and restrictions existing under (a)
this Indenture, any of the Security Documents, any credit agreement or other
documents relating to the Permitted Credit Facility as in effect on the Issue
Date, the indenture and all security documents relating to the Junior Notes and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive with respect to such
dividend and other payment or transfer restrictions than those contained in the
Permitted Credit Facility and the indenture and security documents relating to
the Junior Notes as in effect on the Issue Date and (b) any agreement of a
Person
36
acquired by the Issuer or a Subsidiary of the Issuer, which restrictions existed
at the time of acquisition, were not put in place in anticipation of such
acquisition, and are not applicable to any Person or property, other than the
Person or any property of the Person so acquired.
Section 4.14 Reserved.
--------
Section 4.15 Change of Control.
-----------------
(a) Subject to any restrictions on payment of the Senior Notes
contained in the Collateral Trust Agreement, upon the occurrence of a Change of
Control, each Holder shall have the right, at such Holder's option, subject to
the terms and conditions of this Indenture, to require the Issuer to repurchase
all or any part of such Holder's Senior Notes pursuant to an irrevocable,
unconditional offer (a "Change of Control Offer") as described below at a cash
purchase price equal to 101% of the principal amount thereof (the "Change of
Control Purchase Price"), plus accrued and unpaid interest thereon to a date
that is no later than 60 Business Days after the occurrence of such Change of
Control (the date on which the repurchase is effected being referred to herein
as the "Change of Control Payment Date").
(b) The Issuer shall notify the Trustee within five Business
Days after each date upon which a Change of Control has occurred. Within 20
Business Days after the occurrence of each Change of Control, the Issuer shall
make a Change of Control Offer to the Holders of Senior Notes to purchase all of
the Notes at the Change of Control Purchase Price, plus accrued and unpaid
interest thereon to the Change of Control Payment Date, by sending written
notice of a Change of Control Offer, by first class mail, to each Holder at its
registered address, with a copy to the Trustee, which notice shall govern the
terms of the Change of Control Offer. The notice to the Holders shall contain
all instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Change of Control Offer. Such notice shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 4.15, that all Senior Notes tendered and not withdrawn
will be accepted for payment and that the Change of Control Offer shall remain
open for a period of 20 Business Days or for such longer period as may be
required by law;
(ii) the Change of Control Purchase Price (including the
amount of any accrued interest) and the Change of Control Purchase Date;
(iii) that any Senior Note not tendered will continue to
accrue interest;
(iv) that, unless the Issuer defaults in making payment
therefor, any Senior Note accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest, after the Change of Control Payment Date;
(v) that Holders electing to have a Senior Note purchased
pursuant to a Change of Control Offer will be required to surrender the Senior
Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Senior Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day prior to the
Change of Control Payment Date;
37
(vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the second Business Day
prior to the Change of Control Payment Date, a telegram, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Senior Notes the Holder delivered for purchase and a statement that such Holder
is withdrawing his election to have such Senior Notes purchased;
(vii) that Holders whose Senior Notes are purchased only in
part will be issued new Senior Notes in a principal amount equal to the
unpurchased portion of the Senior Notes surrendered; provided, however, that
each Senior Note purchased and each new Senior Note issued shall be in an
original principal amount of $1,000 or integral multiples thereof; and
(viii) the circumstances and relevant facts regarding such
Change of Control.
(c) On or before the Change of Control Payment Date, the Issuer
shall, to the extent lawful, (i) accept for payment Senior Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent in accordance with Section 2.14 U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all
Senior Notes so tendered and (iii) deliver to the Trustee any Senior Notes so
accepted together with an Officers' Certificate stating the Senior Notes or
portions thereof being purchased by the Issuer. Upon receipt by the Paying Agent
of the monies specified in clause (ii) above and a copy of the Officers'
Certificate specified in clause (iii) above, the Paying Agent shall promptly
mail to the Holders of Senior Notes so accepted payment in an amount equal to
the purchase price plus accrued interest, if any; the Trustee shall promptly
cancel all Senior Notes so accepted by the Issuer pursuant to the Change of
Control Offer; and the Trustee, upon written demand of the Issuer in the form of
an Officer's Certificate of the Issuer, shall promptly authenticate and mail to
the Holders of any Senior Notes so accepted new Senior Notes equal in principal
amount to any unpurchased portion of the Senior Notes surrendered. Any Senior
Notes not so accepted shall be promptly mailed by the Paying Agent to the
Holder thereof. For purposes of this Section 4.15, the Trustee shall act as the
Paying Agent. The Issuer shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date.
The Issuer shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by the Issuer and
repurchases all Senior Notes validly tendered and not withdrawn under such
Change of Control Offer.
Neither the Board of Directors of the Issuer nor the Trustee may waive the
provisions of this Section 4.15 relating to the Issuer's obligation to make a
Change of Control Offer.
To the extent applicable and if required by law, the Issuer shall comply
with Section 14 of the Exchange Act, the provisions of Regulation 14E and any
other tender offer rules under the Exchange Act and other securities laws,
rules, and regulations which may then be applicable to any offer by the Issuer
to repurchase the Senior Notes at the option of Holders upon a Change of
Control; and, if such laws, rules, and regulations require or prohibit any
action inconsistent with the provisions of this Section 4.15, compliance by the
Issuer with such laws, rules, and
38
regulations will not constitute a breach of the Issuer's obligations with
respect to the provisions of this Section 4.15 by virtue thereof.
Section 4.16 Limitation on Asset Sales.
-------------------------
(a) The Issuer shall not, and shall not permit any Subsidiary
to, consummate an Asset Sale without the consent of the Holders of not less than
66% in aggregate principal amount of the then outstanding Senior Notes unless:
(i) the Issuer or such Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the Fair
Market Value (as determined in good faith by resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee, which
determination shall be conclusive evidence of compliance with this provision) of
the assets or Capital Stock being sold or issued or otherwise disposed of; and
(ii) at least 75% of the value of the consideration for
such Asset Sales consists of cash, Cash Equivalents or Exchange Assets or any
combination thereof; provided that the amount of any liabilities (as shown on
the Issuer's or such Subsidiary's most recent balance sheet) of the Issuer or
any Subsidiary (other than contingent liabilities and liabilities that are
Subordinated Indebtedness or otherwise by their terms subordinated to the Senior
Notes or the Guarantees) that are assumed by the transferee of such assets
pursuant to a customary novation agreement that releases the Issuer and such
Subsidiary from further liability shall also be deemed to be cash for purposes
of this provision.
(b) Within 180 days after the receipt of any Net Cash Proceeds
from an Asset Sale, the Issuer or such Subsidiary may only apply such Net Cash
Proceeds: (i) to repay and permanently reduce the maximum amount that can be
borrowed under the Permitted Credit Facility, (ii) to make Capital Expenditures
or (iii) to make other acquisitions of assets to be used in the Issuer's and its
Subsidiaries' oil and gas business, provided, however, that if a Default or
Event of Default shall have occurred and is continuing under this Indenture
before or at the time application of such Net Cash Proceeds would be made under
this subsection (b), then the Issuer or such Subsidiary shall apply such Net
Cash Proceeds: (x) to cure any Default or Event of Default that is a default in
the payment of any Obligation hereunder, or (y) to repay and permanently reduce
the maximum amount that can be borrowed under the Permitted Credit Facility.
Pending the final application of any such Net Cash Proceeds, the Issuer or such
Subsidiary may temporarily invest such Net Cash Proceeds in any manner that is
not prohibited by the terms of this Indenture. Any Net Cash Proceeds from Asset
Sales that are not applied as provided in clauses (i) through (iii) of this
subsection (b) will (after expiration of the relevant periods) be deemed to
constitute "Excess Cash."
(c) Subject to any restrictions in payment of the Senior Notes
contained in the Collateral Trust Agreement, when the amount of Excess Cash
exceeds $10,000,000, the Issuer shall make an irrevocable, unconditional offer
(an "Excess Cash Offer") to the Holders to purchase the maximum amount of Senior
Notes which could be acquired by application of such amount of Excess Cash as
described herein (the "Excess Cash Offer Amount"), in cash at the purchase price
equal to 100% of the principal amount thereof (the "Excess Cash Offer Price"),
together with accrued and unpaid interest to the Excess Cash Purchase Date.
39
(d) Notice of an Excess Cash Offer will be sent at least 20 and
not more than 30 Business Days prior to the Excess Cash Purchase Date, by
first-class mail, by the Issuer to each Holder at the address on the Note
Register, with a copy to the Trustee. Such notice will set forth a date on which
the Senior Notes tendered shall be accepted (the "Excess Cash Purchase Date")
and the Excess Cash Offer shall remain open for at least 20 Business Days and
close no later than 30 Business Days after the date such notice is given. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Senior Notes pursuant to the Excess Cash Offer and shall state
the following terms:
(i) that the Excess Cash Offer is being made pursuant to
this Section 4.16 and that all Senior Notes or portions thereof properly
tendered will be accepted for payment; provided, however, that if the aggregate
principal amount of Senior Notes tendered in an Excess Cash Offer plus any
accrued interest at the expiration of such offer exceeds the aggregate amount of
the Excess Cash Offer, the offeror shall select the Senior Notes to be purchased
on a pro rata basis with such adjustments as may be deemed appropriate by the
Issuer (so that only Senior Notes in denominations of $1,000 or multiples
thereof shall be purchased) and that the Excess Cash Offer shall remain open for
a period of 20 Business Days or such longer period as may be required by law;
(ii) the Excess Cash Offer Price (including the amount of
any accrued interest) and the Excess Cash Purchase Date;
(iii) that any Senior Note not tendered will continue to
accrue interest;
(iv) that, unless the Issuer defaults in making payment
therefor, any Senior Note accepted for payment pursuant to the Excess Cash Offer
shall cease to accrue interest, after the Excess Cash Purchase Date;
(v) that Holders electing to have a Senior Note purchased
pursuant to a Excess Cash Offer will be required to surrender the Senior Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Senior Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day prior to the
Excess Cash Purchase Date;
(vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the second Business Day
prior to the Excess Cash Purchase Date, a telegram, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Senior
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Senior Note purchased; and
(vii) that Holders whose Senior Notes are purchased only in
part will be issued new Senior Notes in a principal amount equal to the
unpurchased portion of the Senior Notes surrendered; provided, however, that
each Senior Note purchased and each new Senior Note issued shall be in an
original principal amount of $1,000 or integral multiples thereof.
(e) On or before the Excess Cash Purchase Date, the offeror
shall (i) accept for payment Senior Notes or portions thereof tendered pursuant
to the Excess Cash Offer which are to be purchased in accordance with clause
(d)(i) above, (ii) deposit with the Paying Agent in
40
accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase
price plus accrued but unpaid interest thereon to the Excess Cash Purchase Date,
if any, of all Senior Notes to be purchased and (iii) deliver to the Trustee any
Senior Notes so accepted together with an Officers' Certificate stating the
Senior Notes or portions thereof being purchased by the offeror. Upon receipt by
the Paying Agent of the monies specified in clause (ii) above and a copy of the
Officers' Certificate specified in clause (iii) above, the Paying Agent shall
promptly mail to the Holders of Senior Notes so accepted payment in an amount
equal to the purchase price plus accrued interest, if any; the Trustee shall
promptly cancel all Senior Notes accepted by the offeror pursuant to the Excess
Cash Offer; and the Trustee shall promptly authenticate and mail to the Holders
of any Senior Notes so accepted new Senior Notes equal in principal amount to
any unpurchased portion of the Senior Notes surrendered. Any Senior Notes not so
accepted shall be promptly mailed by the Paying Agent to the Holder thereof. For
purposes of this Section 4.16, the Trustee shall act as the Paying Agent. The
Issuer shall publicly announce the results of the Excess Cash Offer on or as
soon as practicable after the Excess Cash Purchase Date.
(f) If the amount required to acquire all Senior Notes tendered by
Holders pursuant to the Excess Cash Offer (the "Excess Cash Acceptance Amount")
shall be less than the aggregate Excess Cash Offer Amount, then the excess of
the Excess Cash Offer Amount over the Excess Cash Acceptance Amount may be used
by the Issuer or any Subsidiary in any manner permitted by this Indenture. Upon
consummation of any Excess Cash Offer made in accordance with the terms of this
Indenture, the amount of Excess Cash shall be reduced to zero.
(g) To the extent applicable and if required by law, the Issuer
shall comply with Section 14 of the Exchange Act, the provisions of Regulation
14E and any other tender offer rules under the Exchange Act and other securities
laws, rules, and regulations which may then be applicable to any Excess Cash
Offer by the Issuer; and, if such laws, rules, and regulations require or
prohibit any action inconsistent with the foregoing, compliance by the Issuer
with such laws, rules, and regulations will not constitute a breach of its
obligations with respect to the foregoing.
Section 4.17 Limitation on Sale or Issuance of Capital Stock of
--------------------------------------------------
Subsidiaries.
------------
The Issuer shall not sell or otherwise dispose of any shares of Capital
Stock of any Subsidiary and shall not permit any Subsidiary, directly or
indirectly, to issue or sell or otherwise dispose of any of its Capital Stock
except (a) to the Issuer or a Wholly-Owned Subsidiary, or (b) if all shares of
Capital Stock of such Subsidiary are sold or otherwise disposed of, or (c) if
such sale is a Public Equity Offering.
Section 4.18 Limitations on Liens.
--------------------
The Issuer shall not, and shall not permit any Subsidiary to, directly or
indirectly, incur, or suffer to exist any Lien upon any of their respective
properties or assets, whether now owned or hereafter acquired, other than
Permitted Liens.
Section 4.19 Limitation on Lines of Business.
-------------------------------
The Issuer shall not engage in, and shall not permit any Subsidiaries of
the Issuer to engage in, any line of business other than the oil and gas
exploration and production business
41
and such business activities as are reasonably related or incidental thereto and
any other business activities of the Issuer and its Subsidiaries conducted as of
the Issue Date.
Section 4.20 Guarantees of Subsidiaries.
--------------------------
The Issuer shall cause each Subsidiary of the Issuer hereafter formed or
acquired, to (a) execute and deliver to the Trustee a supplemental indenture in
form reasonably satisfactory to the Trustee pursuant to which such Subsidiary
shall unconditionally guarantee all of the Issuer's obligations under the Senior
Notes and this Indenture on the terms set forth in this Indenture and (b)
deliver to the Trustee an Opinion of Counsel and an Officers' Certificate,
stating that such supplemental indenture has been duly authorized, executed and
delivered by such Subsidiary and constitutes a legal, valid, binding and
enforceable obligation of such Subsidiary. Thereafter, such Subsidiary shall be
a Guarantor for all purposes of this Indenture.
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Merger, Consolidation and Sale of Assets.
----------------------------------------
No Guarantor shall consolidate with or merge with or into any other Person
or, directly or indirectly, sell, lease, assign, transfer, or convey all or
substantially all of its assets (computed on a consolidated basis), to another
Person or group of Persons acting in concert, whether in a single transaction or
through a series of related transactions, unless (i) either (a) the Guarantor is
the continuing Person or (b) the resulting, surviving, or transferee entity is a
corporation organized under the laws of the United States, any state thereof, or
the District of Columbia, and shall expressly assume all of the obligations of
the Guarantor under this Indenture, the Guarantees and the Security Documents by
appropriate documents supplemental hereto and thereto, executed and delivered to
the Trustee on or prior to the consummation of such transaction, in form
satisfactory to the Trustee and in either such case the priority of the Liens
created by this Indenture and the Security Documents in the Collateral are
unaffected; (ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect to such transaction; and (iii) immediately after
giving effect to such transaction on a pro forma basis, the Net Worth of the
resulting, surviving or transferee entity is at least equal to the Net Worth of
the Guarantor immediately prior to such transaction.
The Issuer shall not consolidate with or merge with or into any other
Person, or, directly or indirectly, sell, lease, assign, transfer, or convey all
or substantially all of its assets (computed on a consolidated basis), to
another Person or group of Persons acting in concert, whether in a single
transaction or through a series of related transactions, unless (i) either (a)
the Issuer is the continuing Person or (b) the resulting, surviving, or
transferee entity is a corporation organized under the laws of the United
States, any state thereof, or the District of Columbia, and shall expressly
assume all of the obligations of the Issuer under this Indenture and the Senior
Notes by a supplemental indenture, executed and delivered to the Trustee on or
prior to the consummation of such transaction, in form satisfactory to the
Trustee and in either such case the priority of the Liens created by this
Indenture and the Security Documents in the Collateral are unaffected; (ii) no
Default or Event of Default shall exist or shall occur immediately after giving
effect to such transaction; (iii) immediately after giving effect to such
transaction on a pro forma basis, the Net Worth of the resulting, surviving or
transferee entity is at least equal to the Net Worth of the Issuer immediately
prior to such transaction; (iv) except for a consolidation or merger of the
Issuer with or into any Wholly-Owned Subsidiary, the resulting, surviving or
transferee entity would immediately
42
thereafter be permitted to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.12(a); (v) each
Guarantor shall have executed and delivered to the Trustee, in form satisfactory
to the Trustee, a supplemental indenture confirming its obligation to pay the
principal of, premium, if any, and interest on the Senior Notes pursuant to
their respective Guarantees and to perform all their respective covenants
hereunder and under the Guarantees; (vi) the Trustee shall have received an
Opinion of Counsel to the effect that such consolidation, merger, sale,
assignment, conveyance, transfer or lease will not result in the Issuer being
required to make any deduction for or on account of taxes from payments made
under or in respect of the Senior Notes. For purposes of this Section 5.01, the
Consolidated Fixed Charge Coverage Ratio shall be determined on a pro forma
consolidated basis (giving effect to the transaction) for the Reference Period
immediately preceding such transaction.
The Issuer shall not permit or allow any Subsidiary to consolidate with or
merge with or into any other Person or, directly or indirectly, sell, lease,
assign, transfer, or convey all or substantially all of its assets (computed on
a consolidated basis), to another Person or group of Persons acting in concert,
whether in a single transaction or through a series of related transactions,
unless (i) the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary) or the transferee entity (A) is a corporation
organized and existing under the laws of the United States, any state thereof,
or the District of Columbia and (B) expressly assumes all the obligations of
such Subsidiary pursuant to a supplemental indenture, in a form satisfactory to
the Trustee, under the Senior Notes and this Indenture, (ii) immediately before
and after giving effect to such transaction, no Default or Event of Default
exists and immediately after giving effect to such transaction, the resulting,
surviving or transferee entity could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.12(a), and (iii) such
Subsidiary or the Person formed by or surviving any such consolidation or merger
or the transferee entity on a pro forma basis will have Net Worth (immediately
after the transaction) equal to or greater than the Net Worth of such Subsidiary
immediately preceding the transaction; provided that, the foregoing shall not
apply to a merger, consolidation, sale or other such transaction between
Subsidiaries and between the Issuer and any Subsidiary.
In connection with any consolidation, merger, sale, lease, assignment,
transfer or conveyance that is subject to the provisions of this Section 5.01,
the Issuer shall deliver to the Trustee, in form and substance satisfactory to
the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating
that such transaction, the supplemental indenture and any other supplemental
document delivered pursuant to this Section 5.01 comply with this Section 5.01
and that all conditions precedent in this Indenture provided for in relation to
such transaction have been complied with.
Section 5.02 Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger, sale, assignment,
conveyance, lease or transfer in accordance with Section 5.01, in which either
the Issuer or the applicable Guarantor, as the case may be, is not the
continuing corporation, the resulting surviving or transferee entity shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer or the Guarantor, as the case may be, under this Indenture, the
Guarantees and the Senior Notes, as applicable, with the same effect as if such
resulting, surviving or transferee entity had been
43
named as the Issuer or the Guarantors, as the case may be, herein and therein,
as applicable, and thereafter (except in the case of a lease) the predecessor
corporation shall be relieved of all further obligations and covenants under
this Indenture, the Guarantees and the Senior Notes.
ARTICLE SIX
REMEDIES
Section 6.01 Events of Default.
-----------------
An "Event of Default" means any of the following events:
(a) the failure to pay interest on any Senior Notes when the same
becomes due and payable and such default continues for a period of 30 days:
(b) the failure to pay the principal of or premium, if any, on any
Senior Notes, when the same becomes due and payable, at maturity, upon
redemption, by acceleration or otherwise (including the failure to make a
payment to purchase Senior Notes tendered pursuant to a Change of Control Offer
or an Excess Cash Offer);
(c) a default in the performance or breach of the provisions of
Section 5.01, failure to make or consummate a Change of Control Offer in
accordance with Section 4.15, or failure to make or consummate an Excess Cash
Offer in accordance with Section 4.16;
(d) a default in the observance or performance of any covenant or
agreement contained in this Indenture, the Senior Notes or any Guarantee which
default continues for a single period of 30 days after the Issuer receives
written notice specifying the default (and demanding that such default be
remedied) from the Trustee, or the Issuer and the Trustee receive such a notice
from the Holders of at least 25% of the then outstanding principal amount of the
Senior Notes; provided, however, that such 30-day cure period shall be extended
for an additional 30-day period if it is possible for the Issuer to cure such
default within such additional 30-day period and the Issuer is diligently
pursuing such cure;
(e) a default in the observance or performance of any covenant or
agreement contained in any Security Document which default continues after
notice of such default is given, if such notice is required therein, and beyond
the expiration of any applicable grace or cure period provided for therein;
(f) a default which extends beyond any stated period of grace
applicable thereto (including any extension thereof) under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Issuer or of any Subsidiary of the
Issuer, having a principal amount in excess of $1 million, whether such
Indebtedness now exists or is created after the Issue Date, or a failure to pay
any such Indebtedness at its stated maturity;
(g) one or more judgments in an aggregate amount in excess of
$1,000,000 (unless covered by insurance by a reputable insurer as to which the
insurer has acknowledged coverage) shall have been rendered against the Issuer
or any of its Subsidiaries and such
44
judgments remain undischarged, unvacated, unpaid or unstayed for a period of 60
days after such judgment or judgments become final and non-appealable;
(h) the Senior Notes, this Indenture or any the Security Documents
shall, at any time, cease to be in full force and effect (unless released by the
Trustee or where no material adverse effect on the Holders would result) or
shall be declared null and void, or the validity or enforceability thereof shall
be contested by the Issuer, any Guarantor or any of their Affiliates, or any of
the Liens intended to be created by the Security Documents shall cease to be or
shall not be a valid and perfected Lien having the priority contemplated thereby
(other than by reason of release in accordance with the terms of this
Indenture);
(i) the Issuer or any Subsidiary of the Issuer, pursuant to or
under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against
it in an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) shall generally not pay its debts when such debts
become due or shall admit in writing its inability to pay its debts generally;
or
(j) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Issuer or any Subsidiary of
the Issuer, in an involuntary case or proceeding;
(ii) appoints a Custodian of the Issuer or any Subsidiary
of the Issuer, for all or substantially all of its properties; or
(iii) orders the liquidation of the Issuer or any Subsidiary
of the Issuer;
(k) any of the Guarantees ceases to be in full force and effect or
any of the Guarantees is declared to be null and void or invalid and
unenforceable or any Guarantor denies or disaffirms its liability under its
Guarantee (other than by reason of release of a Guarantor in accordance with the
terms of this Indenture).
Section 6.02 Acceleration.
------------
Upon the happening of any Event of Default specified in Section 6.01 (other
than an Event of Default specified in Section 6.01(i) or (j)), the Trustee may,
or the Holders of at least 25% in aggregate principal amount of the then
outstanding Senior Notes may, declare the
45
principal of, premium, if any, and accrued and unpaid interest on all the Senior
Notes to be due and payable by notice in writing to the Issuer (and the Trustee
if given by the Holders) specifying the respective Event of Default and that it
is a "notice of acceleration," and the same shall become immediately due and
payable. If an Event of Default of the type described in Section 6.01(i) or (j)
occurs, then such amount shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
At any time after a declaration of acceleration with respect to the Senior
Notes as described in the preceding paragraph, the Holders of a majority in
aggregate principal amount of the Senior Notes then outstanding by written
notice to the Issuer and the Trustee may rescind and cancel such declaration and
its consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal of, premium, if any, or interest that has become due
solely because of such acceleration, (iii) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal and premium, if any, which have become due otherwise than by such
declaration of acceleration, has been paid, (iv) if the Issuer has paid the
Trustee its reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in Section 6.01(i) or (j), the Trustee
shall have received an Officers' Certificate and an Opinion of Counsel that such
Event of Default has been cured or waived; provided, however, that such counsel
may rely, as to matters of fact, on a certificate or certificates of Officers of
the Issuer. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
Notwithstanding the foregoing, if an Event of Default specified in Section
6.01(f) hereof shall have occurred and be continuing, such Event of Default and
any consequential acceleration shall be automatically rescinded if the
Indebtedness that is the subject of such Event of Default has been repaid, or if
the default relating to such Indebtedness is waived or cured and if such
Indebtedness has been accelerated, then the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness (provided, in each
case, that such repayment, waiver, cure or rescission is effected within a
period of 10 days from the continuation of such default beyond the applicable
grace period (including any extension thereof) or the occurrence of such
acceleration), and written notice of such repayment or cure or waiver and
rescission, as the case may be, shall have been given to the Trustee by the
Issuer and countersigned by the holders of such Indebtedness or a trustee,
fiduciary or agent for such holders or other evidence satisfactory to the
Trustee of such events is provided to the Trustee, within 30 days after any such
acceleration in respect of the Senior Notes and so long as such rescission of
any such acceleration of the Senior Notes does not conflict with any judgment or
decree as certified to the Trustee by the Issuer.
Section 6.03 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may, and upon
the written request of not less than the Holders of at least a majority in
aggregate principal amount of the then outstanding Senior Notes shall, pursue
any available right or remedy by proceeding at law or in equity to collect the
payment of the principal of, premium, if any, or interest on the Senior Notes,
to realize upon any Collateral under the Security Documents, or to exercise any
right or
46
remedy under or enforce the performance of any provision of the Senior Notes,
this Indenture or the Security Documents.
All rights of action, remedies and claims under this Indenture, the Senior
Notes or the Security Documents may be enforced by the Trustee even if it does
not possess any of the Senior Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder 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
to the extent permitted by law.
Section 6.04 Waiver of Past Defaults.
-----------------------
Prior to the declaration of acceleration of the Senior Notes, the Holders
of not less than a majority of the principal amount of the Senior Notes then
outstanding by notice to the Trustee may, on behalf of the Holders of all the
Senior Notes, waive any existing Default or Event of Default and its
consequences under this Indenture, except a Default or Event of Default
specified in Section 6.01(a) or (b) or in respect of any provision hereof which
cannot be modified or amended without the consent of the Holders of a greater
percentage of the principal amount of the Senior Notes then outstanding pursuant
to Section 9.02. When a Default or Event of Default is so waived, it shall be
deemed cured and shall cease to exist. This Section 6.04 shall be in lieu of
Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA is
hereby expressly excluded from this Indenture and the Senior Notes, as permitted
by the TIA.
Section 6.05 Control by Majority.
-------------------
Holders of the Senior Notes may not enforce this Indenture, the Senior
Notes or the Security Documents except as provided in this Article Six or under
the TIA. The Holders of not less than a majority of the principal amount of the
then outstanding Senior Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided, however,
that the Trustee may refuse to follow any direction (a) that conflicts with any
rule of law or this Indenture, (b) that the Trustee determines may be unduly
prejudicial to the rights of another Holder, or (c) that may expose the Trustee
to personal liability for which reasonable indemnity provided to the Trustee
against such liability shall be inadequate; provided, further, however, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction or this Indenture. This Section 6.05 shall be
in lieu of Section 316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the
TIA is hereby expressly excluded from this Indenture and the Senior Notes, as
permitted by the TIA.
Section 6.06 Limitation on Suits.
-------------------
No Holder of any Senior Notes shall have any right to institute any
proceeding with respect to this Indenture or the Senior Notes or any remedy
hereunder, unless (i) the Holders of at least 25% in aggregate principal amount
of the then outstanding Senior Notes have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee
under the Senior Notes and this Indenture, (ii) the Trustee has failed to
institute such
47
proceeding within 30 days after receipt of such notice, request and offer of
indemnity and (iii) the Trustee, within such 30-day period, has not received
directions inconsistent with such written request by Holders of not less than a
majority in aggregate principal amount of the then outstanding Senior Notes.
The foregoing limitations shall not apply to a suit instituted by a Holder
of a Senior Note for the enforcement of the payment of the principal of,
premium, if any, or interest on, such Senior Notes on or after the respective
due dates expressed or provided for in such Senior Note.
A Holder may not use this Indenture to prejudice the rights of any other
Holders or to obtain priority or preference over such other Holders.
Section 6.07 Right of Holders to Receive Payment.
-----------------------------------
Notwithstanding any other provision in this Indenture, and except as
otherwise agreed by the Holder, the right of any Holder of a Senior Note to
receive payment of the principal of, premium, if any, and interest on such
Senior Note, on or after the respective due dates expressed or provided for in
such Senior Note, or to bring suit for the enforcement of any such payment on or
after the respective due dates, is absolute and unconditional and shall not be
impaired or affected without the consent of the Holder.
Section 6.08 Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Issuer, or any other obligor on the Senior Notes,
for the whole amount of the principal of, premium, if any, and accrued interest,
remaining unpaid, together with interest on overdue principal and, to the extent
that payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate per annum then provided for by the Senior
Notes and this Indenture and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
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
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents, counsel, accountants and experts) and
the Holders allowed in any judicial proceedings relative to the Issuer or any of
its Subsidiaries, or any other obligor upon the Senior Notes, their creditors or
their property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such 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 to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any
48
plan of reorganization, arrangement, adjustment or composition affecting the
Senior Notes or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article Six, it shall
pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for interest accrued on the Senior Notes, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Senior Notes for interest;
Third: to Holders for the principal amounts (including any premium) owing
under the Senior Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Senior Notes for the principal
thereof (including any premium); and
Fourth: the balance, if any, to the Issuer or to any other Person as may be
directed by any court of competent jurisdiction.
The Trustee, upon prior written notice to the Issuer, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court may in its discretion require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to any suit by the Trustee, any suit by a Holder pursuant to
Section 6.07, or a suit by a Holder or Holders of more than 10% of the principal
amount of the then outstanding Senior Notes.
Section 6.12 Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture, any Senior Note or any Security Documents
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every
such case the Company, the Issuer, the other Guarantors, the Trustee and the
Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
49
Section 6.13 Collateral Trust Agreement; Limitation Rights.
---------------------------------------------
(a) Each Holder of the Senior Notes, by acceptance thereof,
specifically consents to the terms of the Collateral Trust Agreement and agrees
to be a party to same as fully as if each such Holder executed a counterpart
thereof. Notwithstanding anything to the contrary contained in this Article Six,
Article Eleven, or elsewhere in this Indenture, by acceptance of the Senior
Notes, each Holder acknowledges that (i) the Mortgages and Security Agreement
have been and will be made and entered into by the Issuer and Blue Heel in favor
of the Collateral Trustee which, pursuant to the Collateral Trust Agreement,
shall hold the liens and security interests created by the Mortgages and
Security Agreement for the benefit of the Trustee and the Holder and the lenders
under the Permitted Credit Facility, and (ii) for as long as Indebtedness exists
or can be incurred under the Permitted Credit Facility, the Collateral Trust
Agreement, by its express terms, limits the rights of the Trustee and the
Holders to take certain actions and to exercise certain rights granted to the
Trustee and the Holders under this Indenture, the Mortgages and the Security
Agreement, including, without limitation, the rights of the Trustee and the
Holders to: (a) accelerate the Indebtedness evidenced by the Senior Notes and
the Indenture under Section 6.02; (b) pursue or direct the pursuit of remedies
under Section 6.03 or 6.05; (c) institute proceedings under Section 6.06; and
(d) receive payment under Section 6.07.
(b) Whenever a provision of this Article Six or elsewhere in this
Indenture provides for or requires any action to be taken (including any action
to direct or instruct the Trustee hereunder) by any percentage of Holders of
Senior Notes or any majority of Holders of Senior Notes, such percentage of such
majority, as the case may be, shall constitute the "Required Percentage" of the
Holders of such Senior Notes, as such term is used in the Collateral Trust
Agreement.
ARTICLE SEVEN TRUSTEE
Section 7.01 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and under the Security Documents and use the same degree of care and
skill in its exercise thereof as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or obligations shall
be implied in this Indenture that are adverse to the Trustee.
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
50
requirements of this Indenture, but need not verify the truth or accuracy of the
statements made therein.
(c) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of Section
7.01(b).
(ii) 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.
(iii) 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 6.02, 6.03, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to Section 7.01 (a), (b), (c) and (d) and Section 7.02.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Issuer. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
Section 7.02 Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting
or refraining from acting upon 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
consult with counsel of its selection and may require an Officers' Certificate
or an Opinion of Counsel, which shall conform to Sections 10.04 and 10.05. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
51
(d) The Trustee shall not be liable for any action that it takes
or omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
makes such further inquiry or investigation into such facts or matters as it may
see fit; and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the Issuer or the
Guarantors, as the case may be, to examine the books, records, and premises of
the Issuer, the Guarantors and any of their Subsidiaries, personally or by agent
or attorney and to consult with the Officers and representatives of the Issuer,
the Guarantors and any of their Subsidiaries, including the Issuer's accountants
and attorneys.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or the Security Documents at
the request, order or direction of any of the Holders pursuant to the provisions
of this Indenture, unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred by it in compliance with such
request, order or direction.
(g) The Trustee shall not be required to give any bond or surety
in respect of the performance of its powers and duties hereunder.
(h) Delivery of reports, information and documents to the
Trustee under Section 4.08 is for informational purposes only, and the Trustee's
receipt of the foregoing shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Issuer's and each Guarantor's compliance with any of
their respective covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers' Certificates).
Section 7.03 Individual Rights of Trustee.
----------------------------
The Trustee and any Agent, and any Affiliate of the Trustee or Agent, in
its individual or any other capacity, may become the owner or pledgee of Senior
Notes and may otherwise deal with the Issuer and any of its Subsidiaries or
Affiliates, with the same rights it would have if it were not the Trustee or
Agent, provided, however, such dealing with the Issuer or any of its
Subsidiaries does not create a conflict of interest for such Trustee or Agent in
the performance of its duties and obligations under this Indenture. The Trustee
must, in any event, comply with Sections 7.10 and 7.11.
Section 7.04 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of this
Indenture, the Senior Notes or the Security Documents, and it shall not be
accountable for the Issuer's use of the proceeds from the Senior Notes, and it
shall not be responsible for any statement of the Issuer in this Indenture or
the Senior Notes or the Security Documents or any other document in connection
with the issuance of the Senior Notes other than the Trustee's certificate of
authentication.
52
Section 7.05 Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if it is
known to a Trust Officer, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 60 days after the Event of Default
occurs. Except in the case of a Default or an Event of Default in payment of
principal of, premiums, if any, or interest on, any Senior Note, including an
accelerated payment or a Default in payment on the Change of Control Payment
Date pursuant to a Change of Control Offer or on the Excess Cash Purchase Date
pursuant to a Excess Cash Offer, the Trustee may withhold the notice if and so
long as its Board of Directors, the executive committee of its Board of
Directors or a committee of its directors and/or Trust Officers in good faith
determines that withholding the notice is in the interest of the Holders. The
foregoing sentence of this Section 7.05 shall be in lieu of the proviso to
Section 315(b) of the TIA and such proviso to Section 315(b) of the TIA is
hereby expressly excluded from this Indenture and the Senior Notes, as permitted
by the TIA.
Section 7.06 Reports by Trustee to Holders.
-----------------------------
Within 60 days after May 15 of each year beginning with 2002, the Trustee
shall, to the extent that any of the events described in TIA Section 313(a)
occurred within the previous twelve months, but not otherwise, mail to each
Holder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be mailed
to the Issuer and filed with the Commission and each stock exchange, if any, on
which the Senior Notes are listed.
The Issuer shall promptly notify the Trustee if the Senior Notes become
listed on any stock exchange and the Trustee shall comply with TIA Section
313(d).
The Trustee shall provide the Holders, upon request by any such Holder,
with any notice provided to the Trustee under Section 4.02.
Section 7.07 Compensation and Indemnity.
--------------------------
The Issuer shall pay to the Trustee from time to time such compensation for
its services as has been agreed to in writing signed by the Issuer and the
Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuer shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it (including costs and expenses of enforcing the Indenture and defending
itself against any claim, whether asserted by the Issuer, any Guarantor, a
Holder or any other person, or liability in connection with the exercise of its
powers hereunder) in connection with the performance of its duties under this
Indenture. Such expenses shall include the reasonable fees and expenses of the
Trustee's agents, counsel, accountants and experts.
The Issuer shall indemnify each of the Trustee (or any predecessor Trustee)
and its agents, employees, stockholders, Affiliates and directors and officers
for, and hold them each harmless against, any and all loss, liability, damage,
claim or expense (including reasonable fees and expenses of counsel), including
taxes (other than taxes based on the income of the Trustee) incurred by them,
except for such actions to the extent caused by any negligence, bad faith or
willful misconduct on their part, arising out of or in connection with the
acceptance of
53
administration of this trust including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder or
under any Security Document. The Trustee shall notify the Issuer promptly of any
claim asserted against the Trustee for which it may seek indemnity. At the
Trustee's sole discretion, the Issuer shall defend the claim and the Trustee
shall cooperate and may participate in the defense, provided, however, that any
settlement of a claim shall be approved in writing by the Trustee if such
settlement would result in an admission of liability by the Trustee or if such
settlement would not be accompanied by a full release of the Trustee for all
liability arising out of the events giving rise to such claims. Alternatively,
the Trustee may at its option have separate counsel of its own choosing and the
Issuer shall pay the reasonable fees and expenses of such counsel.
To secure the Issuer's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Senior Notes on all assets or money held
or collected by the Trustee, in its capacity as Trustee, except the Collateral
and any other assets or money held in trust to pay principal of or premium, if
any, or interest on particular Senior Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(i) or (j) occurs, such expenses and the
compensation for such services (including reasonable fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of this
Indenture.
Section 7.08 Replacement of Trustee.
----------------------
The Trustee may resign at any time by so notifying the Issuer. By notice to
the Issuer and the Trustee, and with the consent of the Issuer, the Holders of a
majority in aggregate principal amount of the then outstanding Senior Notes may
remove the Trustee and appoint a successor Trustee provided that the Issuer's
consent shall not be unreasonably withheld, provided further, that if a Default
or Event of Default shall have occurred and is continuing, the consent of the
Issuer shall not be required. The Issuer may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Issuer shall notify each Holder of such event and
shall promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in principal amount of the then
outstanding Senior Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuer.
54
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuer. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee, subject to the Lien provided in Section 7.07, 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 Issuer shall mail notice of such successor Trustee's appointment
to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of at least 10% in principal amount of the then outstanding Senior Notes
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 Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee pursuant to
this Section 7.08, the Issuer's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.
Section 7.09 Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee; provided, however, that such
corporation shall be otherwise qualified and eligible under this Article Seven.
Section 7.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the requirement of
TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case of a Trustee
that is a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least $75
million as set forth in its most recent published annual report of condition,
and have an office or agency in The City of New York sufficient to permit
payments on the Senior Notes in such City as required by Section 2.03. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA Section 310(a)(2). 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 Issuer are outstanding, if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to
the Issuer, as obligor of the Senior Notes.
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
55
the extent indicated therein. The provisions of TIA Section 311(a) shall apply
to the Issuer, as obligor on the Senior Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01 Satisfaction and Discharge of the Indenture; Legal
--------------------------------------------------
Defeasance.
----------
This Indenture, the Guarantees, and each of the Security Documents will
cease to be of further effect as to all then outstanding Senior Notes, and the
Trustee, at the Issuer's request and expense, shall execute and deliver proper
instruments acknowledging satisfaction and discharge of this Indenture, when (a)
either (i) all Senior Notes, theretofore authenticated and delivered (except
lost, stolen or destroyed Senior Notes which have been replaced or paid and
Senior Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust) have been delivered to the Trustee for
cancellation or (ii) all Senior Notes not therefore delivered to the Trustee for
cancellation have become due and payable and the Issuer has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Senior Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Senior Notes to the date of deposit
together with irrevocable instructions from the Issuer directing the Trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be; (b) the Issuer has paid all other sums payable under this Indenture by
the Issuer; and (c) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions precedent
under this Indenture relating to the satisfaction and discharge of this
Indenture have been complied with; provided, however, that such counsel may
rely, as to matters of fact, on a certificate or certificates of Officers of the
Issuer.
Notwithstanding the satisfaction and discharge of this Indenture
pursuant to the preceding paragraph of this Section 8.01, the obligations of the
Issuer to the Trustee under Section 7.07 and, if funds shall have been deposited
with the Trustee pursuant to such paragraph, the obligations of the Trustee
under Section 8.02 and 8.03 shall survive.
The Issuer may, at its option and at any time, elect to have its
obligations and the corresponding obligations of each Guarantor discharged with
respect to the outstanding Senior Notes ("Legal Defeasance"). Such Legal
Defeasance means that the Issuer shall be deemed to have paid and discharged the
entire indebtedness represented by the outstanding Senior Notes and satisfied
all of its obligations with respect to the Senior Notes (except as to (i) rights
of registration of transfer, substitution, and exchange of Senior Notes and the
Issuer's right of optional redemption, (ii) rights of Holders to receive
payments of principal of premium, if any, and interest on the Senior Notes (but
not the Change of Control Purchase Price or the Excess Cash Purchase Price),
solely from the trust fund described in this Article Eight and as more fully set
forth below, when such payments are due (or at such time as the Senior Notes
would be subject to redemption at the option of the Issuer in accordance with
this Indenture), (iii) the rights, obligations and immunities of the Trustee
under this Indenture, and (iv) the rights and obligations of the Issuer under
this Article Eight (the foregoing exceptions (i) through (iv) are collectively
referred to as the "Reserved Rights").
56
In order to exercise Legal Defeasance:
(a) the Issuer must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders cash in U.S. Legal Tender, non-callable
U.S. Government Obligations, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of independent
public accountants or investment bank, to pay the principal of, premium, if any,
and interest on the Senior Notes on the stated date for payment thereof or on
the applicable Redemption Date, as the case may be, and at such time the Issuer
must specify to the Trustee whether the Senior Notes are being defeased to the
Stated Maturity Date or to a particular Redemption Date;
(b) the Issuer shall have delivered to the Trustee an Opinion
of Counsel (who may be outside counsel to the Issuer but shall not be employed
by the Issuer or any of its Affiliates) acceptable to the Trustee confirming
that (i) the Issuer 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 Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal 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;
(c) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default under
Section 6.01(i) or (j) from bankruptcy or insolvency events are concerned, at
any time in the period ending on the 91st day after the date of deposit (or one
day after such other greater period of time in which any such deposit may remain
subject to set aside or avoidance under applicable Bankruptcy Law, e.g., one
year after such deposit);
(d) such Legal Defeasance shall not result in a breach or
violation of, or constitute a default under this Indenture or any other
agreement or instrument to which the Issuer or any of its Subsidiaries is a
party or by which the Issuer or any its Subsidiaries is bound;
(e) the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuer with the intent
of preferring the Holders over any other creditors of the Issuer or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Issuer or others;
(f) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance have been complied
with; provided, however, that such counsel may rely, as to matters of fact, on a
certificate or certificates of Officers of the Issuer; and
(g) the Issuer shall have delivered to the Trustee an Opinion
of Counsel (who may be outside counsel to the Issuer but shall not be employed
by the Issuer or any if its Affiliates) to the effect that (i) after the passage
of 90 days (or any greater period of time in which any such deposit of trust
funds may remain subject to any Bankruptcy Law insofar as such law applies to
the Issuer or any Guarantor) following such deposit, such funds will not be
subject
57
to set aside or avoidance under any Bankruptcy Law or other similar laws
affecting creditors' rights generally and (ii) such deposit will not result in
the Issuer or any Guarantor, the trust or the Trustee being subject to
regulation under the Investment Company Act of 1940, as amended.
Section 8.02 Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal
of, premium, if any, and interest on the Senior Notes. The Trustee shall be
under no obligation to invest said U.S. Legal Tender or U.S. Government
Obligations except as it may agree in writing with the Issuer.
The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or the principal,
premium, if any, and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of
outstanding Senior Notes.
Section 8.03 Repayment to the Issuer.
-----------------------
Subject to Section 8.01, the Trustee and the Paying Agent shall
promptly pay to the Issuer upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Issuer upon request any money held by them for the payment of
principal, premium, if any, or interest that remains unclaimed for one year;
provided, however, that the Trustee or such Paying Agent, before being required
to make any payment, may at the expense of the Issuer cause to be published once
in the national edition of The Wall Street Journal or mail to each Holder
-----------------------
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Issuer. After payment to the Issuer, Holders entitled to such
money must look to the Issuer for payment as general creditors unless an
applicable law designates another Person.
Section 8.04 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.01 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 Issuer's obligations under this Indenture and the Senior Notes,
any Guarantor's obligations under its Guarantee and the obligations and Liens
under the Security Documents shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government
Obligations in accordance with Section 8.01; provided, however, that if the
Issuer has made any payment of interest or premium on or principal of any Senior
Notes because of the reinstatement of its obligations, the Issuer shall be
58
subrogated to the rights of the Holders of such Senior Notes to receive such
payment from the U.S. Legal Tender or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE NINE
MODIFICATION OF THE INDENTURE
Section 9.01 Without Consent of Holders.
--------------------------
Subject to the provisions of Section 9.02, the Issuer, the Guarantors
and the Trustee may modify or amend, waive or supplement the provisions of this
Indenture (including the Senior Notes and any Guarantee) without notice to or
consent of any Holder: (a) to cure any ambiguity, defect or inconsistency; (b)
to comply with Section 5.01 of this Indenture, (c) to provide for uncertificated
Senior Notes in addition to certificated Senior Notes; (d) to comply with any
requirements of the Commission in order to effect or maintain the qualification
of this Indenture under the TIA; (e) to make any change that would provide any
additional benefits or rights in favor of the Holders; or (f) to make any other
change with respect to matters or questions arising under this Indenture
provided that such change shall not materially adversely affect the interests of
the Holders.
Section 9.02 With Consent of Holders.
-----------------------
The provisions of this Indenture (including the Senior Notes and any
Guarantee) and the Security Documents may be modified or amended with the
consent of the Holders of not less than a majority of the principal amount of
the then outstanding Senior Notes, provided that no such modification or
amendment may, without the consent of the Holders of not less than 66% of the
aggregate principal amount of the Senior Notes then outstanding, (i) prior to
the date on which a Change of Control Offer is required to be made, reduce the
Change of Control Purchase Price or alter the provisions of Section 4.15, or
(ii) prior to the date upon which an Excess Cash Offer is required to be made,
reduce the Excess Cash Offer Price or alter the provisions of Section 4.16 in a
manner adverse to the Holders; provided further that no such modification or
amendment may, without the consent of the Holders of all of the Senior Notes
then outstanding, directly or indirectly, (i) change the Stated Maturity Date or
the date any installment of principal of, or any installment of interest on, any
Senior Note is due, or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Senior Note or
any premium or the interest thereon is payable or impair the right to institute
suit for the enforcement of any such payment on or after the stated maturity
date thereof (or, in the case of redemption, on or after the Redemption Date),
or, (x) after the date upon which a Change of Control Offer is required to be
made, reduce the Change of Control Purchase Price or alter the provisions of
Section 4.15 or (y) after the date upon which an Excess Cash Offer is required
to be made, reduce the Excess Cash Offer Price or alter the provisions of
Section 4.16 in a manner adverse to the Holders, (ii) reduce the percentage of
the outstanding Senior Notes whose consent is required for any such amendment,
supplemental indenture, or waiver provided for in this Indenture, (iii) modify
the provisions of Section 6.04, except to increase any required percentage or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of all Holders of the Notes, (iv) adversely affect
the ranking of the Senior Notes or the Guarantees; or (v) release any Collateral
59
from the Liens created pursuant to the Security Documents or release any of the
Guarantees, in any case otherwise than in accordance with the terms of this
Indenture.
Section 9.03 Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture shall comply
with the TIA as then in effect; provided, however, that this Section 9.03 shall
not of itself require that this Indenture or the Trustee be qualified under the
TIA or constitute any admission or acknowledgment by any party hereto that any
such qualification is required prior to the time this Indenture and the Trustee
are required by the TIA to be so qualified.
Section 9.04 Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Senior Note or portion of a Senior Note that evidences the same debt
as the consenting Holder's Senior Note, even if notation of the consent is not
made on any Senior Note. Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's Senior Note or
portion of such Senior Note by notice to the Trustee or the Company and the
Issuer received before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite principal amount of
Senior Notes have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver. An amendment, supplement or waiver becomes
effective upon receipt by the Trustee of such Officers' Certificate and evidence
of consent by the Holders of the requisite percentage in aggregate principal
amount of then outstanding Senior Notes.
The Issuer may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which Record Date shall be at least 30 days prior to the
first solicitation of such consent. If a Record Date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such Record Date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date unless consents from Holders of the requisite percentage
in principal amount of then outstanding Senior Notes required hereunder for the
effectiveness of such consents shall have also been given and not revoked within
such 90 day period.
Section 9.05 Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver to the provisions of this
Indenture changes the terms of a Senior Note, the Trustee may require the Holder
of such Senior Note to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Senior Note about the changed terms and return it to
the Holder. Alternatively, if the Issuer or the Trustee so determines, the
Issuer in exchange for the Senior Note shall issue and the Trustee shall
authenticate a new Senior Note that reflects the changed terms.
60
Section 9.06 Trustee.
-------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided, however, that the Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or immunities under this
Indenture. In executing such amendment, supplement or waiver, the Trustee shall
be entitled to receive indemnity reasonably satisfactory to it and shall be
fully protected in relying upon an Opinion of Counsel and an Officers'
Certificate of the Issuer, each stating that no Event of Default shall occur as
a result of such amendment, supplement or waiver and that the execution of any
amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture, provided the legal counsel delivering
such Opinion of Counsel may rely as to matters of fact on one or more Officers'
Certificates of the Issuer. Such Opinion of Counsel shall not be an expense of
the Trustee.
ARTICLE TEN
MISCELLANEOUS
Section 10.01 TIA 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; provided, however, that this Section 10.01
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.
Section 10.02 Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Issuer:
Southwest Royalties, Inc.
000 Xxxxx Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopier Number: (000) 000-0000
Attn: Xxxx X. Xxxxxx
if to MRO:
MRO Holdings, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier Number (000) 000-0000
Attn: Xxxx X. Xxxxxx
61
if to Blue Heel:
Blue Heel Company
000 Xxxxx Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopier Number (000) 000-0000
Attn: Xxxx X. Xxxxxx
if to the Company:
Southwest Royalties Holdings, Inc.
000 Xxxxx Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopier Number: (000) 000-0000
Attn: Xxxx X. Xxxxxx
with a copy to:
Baker, Donelson, Bearman & Xxxxxxxx, P.C.
1800 Republic Centre
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Telecopier Number: (000) 000-0000
Attn: X. Xxxxxx Durham, Jr.
if to the Trustee:
Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopier Number: (000) 000-0000
Attn: Corporate Trust Administration
Ref: Southwest Royalties Indenture 2002
Each of the Company, the Issuer, Blue Heel, MRO and the Trustee by
written notice to the other parties may designate additional or different
addresses for notices to such Person. Any notice or communication to the
Company, the Issuer, Blue Heel, MRO or the Trustee shall be deemed to have been
given or made as of the date so delivered if hand delivered; when receipt is
acknowledged, if faxed; and five calendar days after mailing, if sent by
registered or certified mail, postage prepaid (except that a notice of change of
address and notice to the Trustee shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar ten days prior to such mailing and shall
be sufficiently given to him if so mailed within the time prescribed.
62
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 10.03 Communications by Holders with Other Holders.
--------------------------------------------
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Senior Notes. The
Company, the Issuer, the Trustee, the Registrar and any other Person shall have
the protection of TIA (S) 312(c).
Section 10.04 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Issuer to the Trustee to take
any action under this Indenture, the Issuer shall furnish to the Trustee:
(a) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the signers, all
conditions precedent to be performed by the Issuer provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel, in form and substance satisfactory
to the Trustee, stating that, in the opinion of such counsel, all such
conditions precedent to be performed by the Issuer provided for in this
Indenture relating to the proposed action have been complied with (which
counsel, as to factual matters, may rely on an Officers' Certificate).
Section 10.05 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.06, shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is reasonably necessary to enable him
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
63
Section 10.06 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
Section 10.07 Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment is
a Saturday, Sunday or a day on which banking institutions in New York, New York,
or at such place of payment are not required to be open. If a payment date is a
Legal Holiday at such other place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 10.08 Governing Law.
-------------
THIS INDENTURE, THE GUARANTEES AND THE SENIOR NOTES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. Each of
the parties hereto agrees to submit to the non-exclusive jurisdiction of the
competent courts of the State of New York sitting in The City of New York or the
United States District Court for the Southern District of New York, in any
action or proceeding arising out of or relating to this Indenture or the Senior
Notes. The Company, the Issuer, Blue Heel and MRO each hereby irrevocably
designates CT Corporation System, located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, as its designee, appointee and agent to receive, for and on its behalf,
service of process in the State of New York in any legal action or proceeding
with respect to this Indenture, the Senior Notes, the Guarantees or the Security
Documents to which any of them is a party. It is understood that a copy of such
process served on such agent will be promptly forwarded by overnight courier to
the Company, the Issuer, Blue Heel and/or MRO, as the case may be, at its
respective address set forth in Section 10.02 hereof or such substitute address
designated pursuant to Section 10.02, but the failure of such party, as the case
may be, to receive such copy shall not affect in any way the service of such
process. The Company, Issuer, Blue Heel and MRO further irrevocably consent to
the service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it, as the case may be, at its said address, such service to
become effective 30 days after such mailing. Nothing herein shall affect the
right of the Trustee or any Holder of a Senior Note to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Company, the Issuer, Blue Heel or MRO in any other
jurisdiction.
Section 10.09 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company, the Issuer, Blue Heel, MRO or any of their
respective Subsidiaries. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
64
Section 10.10 No Personal Liability.
---------------------
No director, officer, employee or stockholder, as such, of the Company,
MRO, the Issuer, Blue Heel or any of their respective Subsidiaries shall have
any liability for any obligations of the Company, the Issuer, MRO, Blue Heel or
any of their respective Subsidiaries under the Senior Notes, the Guarantees,
this Indenture or the Security Documents or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of Senior
Notes by accepting a Senior Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Senior
Notes.
Section 10.11 Successors.
----------
All agreements of the Company, the Issuer and any Guarantor in this
Indenture or the Senior Notes or under any Guarantee, as the case may be, shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 10.12 Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
Section 10.13 Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Senior Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 10.14 Independence of Covenants.
-------------------------
All covenants and agreements in this Indenture and the Senior Notes
shall be given independent effect so that if any particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
Section 10.15 Collateral Trust Agreement; Limitations.
---------------------------------------
Each Holder of the Senior Notes, by acceptance thereof, specifically
consents to the terms of the Collateral Trust Agreement and agrees to be a party
to same as fully as if each such Holder executed a counterpart thereof.
Notwithstanding anything to the contrary contained in Indenture, by acceptance
of the Senior Notes, each Holder acknowledges that, for as long as Indebtedness
exists or can be incurred under the Permitted Credit Facility, the Collateral
Trust Agreement, by its express terms, limits the ability of the Issuer to make,
and the rights of the Holders to receive, payment on the Senior Notes,
including, without limitation, the rights and obligations of the Holders and the
Issuer under Section 3.04 regarding Mandatory Redemption, Section 4.15 regarding
a Change of Control Offer, and Section 4.16 regarding Excess Cash Offer.
ARTICLE ELEVEN
SECURITY
Section 11.01 Security Documents.
------------------
The due and punctual payment of the principal of and interest on the
Senior Notes when and as the same shall be due and payable, whether on an
Interest Payment Date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Senior Notes and performance of all other
obligations of the Issuer and the Guarantors to the Holders of Senior Notes or
the Trustee under this Indenture, the Guarantees and the Senior Notes according
to the terms hereunder or
65
thereunder, shall be secured as provided in the Security Documents which the
Company, the Issuer, MRO and Blue Heel have entered into simultaneously with the
execution of this Indenture. Each Holder of Senior Notes, by its acceptance
thereof, consents and agrees to the terms of the Security Documents as the same
may be in effect or may be amended from time to time in accordance with their
terms and authorizes and directs the Trustee, to enter into the Security
Documents and to perform its obligations and exercise its rights thereunder in
accordance therewith. The Issuer and the Guarantors shall deliver to the Trustee
copies of all documents delivered to the Collateral Trustee pursuant to any
Security Agreement or Mortgage, and shall do or cause to be done all such acts
and things as may be necessary or proper, or as may be required by the
provisions of the Security Documents, to assure and confirm to the Trustee
and/or the Collateral Trustee the security interests in the Collateral, by the
Security Documents or any part thereof, as from time to time constituted, so as
to render the same available for the security and benefit of this Indenture and
of the Senior Notes secured thereby, according to the intent and purposes herein
or therein expressed. The Issuer and the Guarantors shall take, and the Issuer
and the Guarantors shall cause their Subsidiaries to take, upon request of the
Trustee or the Collateral Trustee, any and all actions reasonably required to
cause the Security Documents to create and maintain, as security for the
obligations of the Issuer and the Guarantors under this Indenture, the
Guarantees and the Senior Notes, a valid and enforceable Lien and Pledge in and
on all the Collateral (junior only in right to payment to the Permitted Credit
Facility and, in the case of collateral pledged under the MRO Pledge Agreement
and the Company Pledge Agreement, junior only in priority to the Junior Notes),
in favor of the Collateral Trustee and/or the Trustee, as the case may be, for
the benefit of the Holders.
Section 11.02 Recording and Opinions.
----------------------
(a) The Company, the Issuer, MRO or Blue Heel, as the case may
be, shall take or cause to be taken all action required to perfect, maintain,
preserve and protect the Lien in the Collateral granted by the Security
Documents, including, without limitation, the filing of financing statements,
continuation statements and any instruments of further assurance, in such manner
and in such places as may be required by law fully to preserve and protect the
rights of the Holders, the Trustee and/or the Collateral Trustee under this
Indenture and the Security Documents to all property comprising the Collateral.
The Company shall from time to time promptly pay all financing and continuation
statement recording and/or filing fees, charges and taxes relating to this
Indenture, the Security Documents, any amendments thereto and any other
instruments of further assurance required pursuant to the Security Documents.
(b) The Issuer shall furnish to the Trustee, at closing and at
such other time as required by Section 314(b) of the TIA, Opinions of Counsel
either (a) substantially to the effect that, in the opinion of such counsel,
this Indenture and the grant of a Lien in the Collateral intended to be made by
the Security Documents and all other instruments of further assurance,
including, without limitation, financing statements, have been properly recorded
and filed to the extent necessary to perfect the Lien in the Collateral created
by the Security Documents and reciting the details of such action, and stating
that as to the Lien created pursuant to the Security Documents, such recordings
and filings are the only recordings and filings necessary to give notice thereof
and that no re-recordings or refilings are necessary to maintain such notice
(other than as stated in such opinion), or (b) to the effect that, in the
opinion of such counsel, no such action is necessary to perfect such Lien.
66
(c) The Issuer shall furnish to the Trustee on September 1 in
each year, beginning with 2002, an Opinion of Counsel, dated as of such date,
either (i)(A) stating that, in the opinion of such counsel, action has been
taken with respect to the recording, filing, re-recording and refiling of all
supplemental indentures, Security Documents, financing statements, continuation
statements and other documents as is necessary to maintain the Lien of the
Security Documents and reciting with respect to the Lien in the Collateral the
details of such action or referring to prior Opinions of Counsel in which such
details are given, and (B) stating that, based on relevant laws as in effect on
the date of such Opinion of Counsel, all financing statements, continuation
statements and other documents have been executed and filed that are necessary
as of such date to maintain the Lien of the Holders, the Trustee and any agent
for the Collateral hereunder and under the Security Documents with respect to
the Collateral, or (ii) stating that, in the opinion of such counsel, no such
action is necessary to maintain such Lien.
Section 11.03 Release of Collateral.
---------------------
(a) The Trustee shall not at any time release Collateral from
any Lien created by any Security Document unless such release is in accordance
with the provisions of this Indenture and the Security Documents.
(b) At any time when an Event of Default shall have occurred
and be continuing, no release of Collateral pursuant to the provisions of this
Indenture and the Security Documents shall be permitted or shall be effective as
against the Holders of the Senior Notes.
(c) The release of any Collateral from the terms of the
Security Documents shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to this Indenture and the Security Documents. To
the extent applicable, the Company shall cause TIA Section 314(d) relating to
the release of property from the Lien of the Security Documents and relating to
the substitution therefor of any property to be subjected to the Lien of the
Security Documents to be complied with. Any certificate or opinion required by
TIA Section 314(d) may be made by an Officer of the Issuer, except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee in the exercise of reasonable
care. A Person is "independent" if such Person (a) is in fact independent, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer or in any Affiliate of the Issuer and (c) is not an
officer, employee, promoter, underwriter, trustee, partner or director or person
performing similar functions to any of the foregoing for the Issuer or any
Affiliate of the Issuer. The Trustee shall be entitled to receive and rely upon
a certificate provided by any such Person confirming that such Person is
independent within the foregoing definition.
Section 11.04 Specified Releases of Collateral.
--------------------------------
(a) The Issuer shall be entitled to obtain a full release of
all of the Liens evidenced by the Company Pledge Agreement and MRO Pledge
Agreement upon compliance with the conditions precedent set forth in Section
8.01 for satisfaction and discharge of this Indenture or for Legal Defeasance
pursuant to Section 8.01. The Issuer shall be entitled to obtain a full release
of all of the Collateral from the Lien of this Indenture and of the Security
Documents upon (i) complinace with the conditions precedent set forth in Section
8.01 for satisfaction and discharge of this Indenture or for Legal Defeasance
pursuant to Section 8.01 and (ii) payment in full of all Indebtedness under the
Permitted Credit Facility. Upon delivery by the Issuer to the Trustee of an
67
Officers' Certificate and an Opinion of Counsel, each to the effect that such
conditions precedent have been complied with (and which may the same Officers'
Certificate and Opinion of Counsel required by Article Eight), the Trustee shall
forthwith take all necessary action (as the request of and the expense of the
Issuer) to release and reconvey to the Issuer all of the Collateral on which it
then holds any Lien, and shall deliver such Collateral then in its possession to
the Issuer, including, without limitation, the execution and delivery of
releases and satisfactions wherever required.
(b) Upon compliance with the conditions and requirements set
forth in Section 4.16, 11.03(a), 11.03(b), and this subsection 11.04(b)
regarding the delivery of an Officers' Certificate and an Opinion of Counsel,
the Issuer shall be entitled to obtain a release or the Trustee's consent to a
release of any Liens on Collateral disposed of in an Asset Sale or the proceeds
of such Collateral held in any cash collateral account pursuant to the
Collateral Trust Agreement or otherwise. The Trustee shall take all necessary
action (at the request of and the expense of the Issuer) to consent to a release
or to release the Liens on such Collateral, inclduing delivering such Collateral
in its possession to the Issuer, only after the Issuer delivers to the Trustee
an Officers' Certificate and an Opinion of Counsel, each to the effect that all
of the conditions for the sale or disposition of, or the release of Liens on,
the Collateral set forth under Sections 4.16, 11.30(a) and 11.03(b) have been
complied with. The Issuer covenants and agrees that it shall not give the
Collateral Trustee (i) a Release Notice under Section 2.4 of the Collateral
Trust Agreement or (ii) a Release Notice under Section 4.4(c) of the Collateral
Trust Agreement until all conditions and requirements set forth in Section 4.16,
11.03(a), 11.03(b) and this subsection 11.04(b) of this Indenture have been met.
Section 11.05 Authorization of Actions to Be Taken by the Trustees
----------------------------------------------------
Under the Security Documents.
----------------------------
(a) Subject to the provisions of the applicable Security Documents
and Article Six hereof, (a) the Trustee may take all actions it deems necessary
or appropriate in order to (i) enforce any of the terms of the Security
Documents and (ii) collect and receive any and all amounts payable in respect of
the Obligations of the Guarantors and/or the Issuer hereunder and (b) the
Trustee shall have power to institute and to maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Collateral by any act
that may be unlawful or in violation of the Security Documents or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders in the
Collateral (including the power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with such enactment, rule or
order would impair the security interest thereunder or be prejudicial to the
interests of the Holders or of the Trustee).
(b) Subject to the provisions of the applicable Security
Documents regarding the appointment of a successor Collateral Trustee, the
Trustee is hereby authorized to become the Collateral Trustee under the
Mortgages, the Security Agreement and Collateral Trust Agreement.
Section 11.06 Authorizaiton of Receipt of Funds by the Trustee Under
------------------------------------------------------
the Security Documents.
----------------------
The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders in accordance with the provisions
of Section 6.10 and the other provisions of this Indenture.
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ARTICLE TWELVE
GUARANTEES
Section 12.01 Unconditional Guarantees.
------------------------
(a) The Company, MRO and Blue Heel hereby jointly and severally
unconditionally and irrevocably guarantee to each Holder of a Senior Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Senior Notes and the Obligations of the Issuer or any Guarantors to the
Holders or the Trustee hereunder or thereunder, that:
(i) the principal and interest on the Senior Notes shall be
duly and punctually paid in full when due, whether at maturity, upon redemption
at the option of Holders pursuant to the provisions of the Senior Notes relating
thereto, by acceleration or otherwise, and interest (to the extent permitted by
law) on the overdue principal, premium, if any, and interest, if any, on the
Senior Notes and all other Obligations of the Issuer to the Holders or the
Trustee thereunder or hereunder (including amounts due the Trustee under Section
7.07 hereof) and all other Obligations shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal
of any Senior Notes or any of such other Obligations, the same shall be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed, or failing
performance of any other Obligation of the Issuer to the Holders under this
Indenture or under the Senior Notes, for whatever reason, the Company, MRO and
Blue Heel shall be obligated to pay, or to perform or
69
cause the performance of, the same immediately. An Event of Default under this
Indenture or the Senior Notes shall constitute an event of default under this
Guarantee and shall entitle the Holders of Senior Notes to accelerate the
Obligations of the Company, MRO and Blue Heel in the same manner and to the same
extent as the Obligations of the Issuer.
(b) Subject to the provisions of this Article Twelve, each future
Subsidiary of the Issuer (a "Subsidiary Guarantor"), if any, shall, jointly and
severally, unconditionally and irrevocably guarantee, on a senior basis (such
guarantee to be referred to herein as a "Subsidiary Guarantee"), to each Holder
of a Senior Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Senior Notes or the Obligations of the Issuer, the
Company, Blue Heel, MRO or any other Subsidiary Guarantors to the Holders or the
Trustee hereunder or thereunder, that:
(i) the principal of, premium, if any, and interest on the Senior
Notes shall be duly and punctually paid in full when due, whether at maturity,
upon redemption at the option of Holders pursuant to the provisions of the
Senior Notes relating thereto, by acceleration or otherwise, and interest (to
the extent permitted by law) on the overdue principal, premium, if any, and
interest, if any, on the Senior Notes and all other Obligations of the Issuer to
the Holders or the Trustee hereunder (including amounts due the Trustee under
Section 7.07 hereof) and all other Obligations shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of any
Senior Notes or any of such other Obligations, the same shall be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed, or failing
performance of any other Obligation of the Issuer to the Holders under this
Indenture or under the Senior Notes, for whatever reason, each Subsidiary
Guarantor shall be obligated to pay, or to perform or cause the performance of,
the same immediately. An Event of Default under this Indenture or the Senior
Notes shall constitute an event of default under each such Subsidiary Guarantee,
and shall entitle the Holders of Senior Notes to accelerate the Obligations of
the Subsidiary Guarantors in the same manner and to the same extent as the
Obligations of the Issuer.
(c) Each Guarantor agrees that its Obligations under its Guarantee are
and shall be unconditional, irrespective of the validity, regularity or
enforceability of the Senior Notes or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Senior Notes
with respect to any provisions thereof, any release of any other Guarantor, the
recovery of any judgment against the Issuer, any action to enforce the same,
whether or not a notation of any Guarantee is affixed to any particular Senior
Note, or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. Each Guarantor waives the benefit
of diligence, presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, protest, notice and all demands whatsoever
and covenants that its Guarantee shall not be discharged except by complete
performance of the Obligations contained in the Senior Notes, this Indenture,
the Guarantees and the Subsidiary
70
Guarantees. Each Guarantee is and shall be a guarantee of payment and not of
collection. If any Holder or the Trustee is required by any court or otherwise
to return to the Issuer or to any Guarantor, or any Custodian acting in relation
to the Issuer or such Guarantor, any amount paid by the Issuer or such Guarantor
to the Trustee or such Holder, the Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor further
agrees that, as between it, on the one hand, and the Holders of Senior Notes and
the Trustee, on the other hand, (i) subject to this Article Twelve, the maturity
of the Obligations guaranteed may be accelerated as provided in Article Six
hereof for the purposes of its Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the Obligations
guaranteed thereby, and (ii) in the event of any acceleration of such
Obligations as provided in Article Six hereof, such Obligations (whether or not
due and payable) shall forthwith become due and payable by each Guarantor for
the purpose of its Guarantee.
(d) Subject to the terms of Section 12.04, each Guarantor that
makes a payment or distribution under its Guarantee shall be entitled to a
contribution from each other Guarantor in a pro rata amount, based on the net
assets of each Guarantor, determined in accordance with GAAP, but nothing in
this Section shall limit any Guarantor's obligations hereunder.
Section 12.02 Limitations on Guarantees.
-------------------------
(a) The obligations of the Company, MRO, Blue Heel and each
Subsidiary Guarantor under the Guarantees will be limited to the maximum amount
which, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such Guarantor
under its Guarantee or pursuant to its contribution obligations under this
Indenture, will result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law.
(b) Notwithstanding any other provision of the Indenture or
the Security Documents and Guarantees to the contrary, the Guarantee of MRO
shall be with recourse only to the Red Oak Capital Stock and any distributions
to MRO by Red Oak because of its status as a stockholder of Red Oak, as
described in the MRO Pledge Agreement.
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Section 12.03 Execution and Delivery of Guarantees.
------------------------------------
To further evidence each Guarantee referred to in Section 12.01, each
Guarantor agrees that a notation of such Guarantee, substantially in the form of
Exhibit F herein, may be endorsed on each Senior Note authenticated and
---------
delivered by the Trustee. Such notation shall be executed on behalf of each
Guarantor by either manual or facsimile signature of two Officers of each
Guarantor, each of whom, in each case, shall have been duly authorized to so
execute by all requisite corporate action. The validity and enforceability of
any Guarantee shall not be affected by the fact that a notation thereof is not
affixed to any particular Senior Note.
Each Guarantor agrees that its Guarantee set forth in Section 12.01 shall
remain in full force and effect notwithstanding any failure to endorse on each
Senior Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on a notation no longer
holds that office at the time the Trustee authenticates the Senior Note on which
such notation is endorsed or at any time thereafter, such Guarantor's Guarantee
of such Senior Note shall be valid nevertheless.
The delivery of any Senior Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the applicable Guarantee set
forth in this Indenture on behalf of each Guarantor.
Section 12.04 Release of a Subsidiary Guarantor.
---------------------------------
(a) If no Default exists or would exist under this Indenture,
in the event of (i) a sale or other disposition of all or substantially all of
the properties or assets of any Subsidiary Guarantor to a third party, by way of
merger, consolidation or otherwise with or into any Person in compliance with
Article Five (in each case, other than to a Guarantor, the Issuer or a
Subsidiary of the Issuer or any Guarantor), or (ii) a sale or other disposition
of all of the Capital Stock of any Subsidiary Guarantor, then such Subsidiary
Guarantor (in the event of such a designation or a sale or other disposition, by
way of such a merger, consolidation or otherwise, or a disposition of all of the
Capital Stock of such Subsidiary Guarantor) or the Person acquiring such
properties or assets (in the event of a sale or other disposition of all or
substantially all of the properties or assets of such Subsidiary Guarantor) will
be released from all Obligations under this Article Twelve and its Subsidiary
Guarantee without any further action required on the part of the Trustee or any
Holder; provided that any Net Cash Proceeds of such sale or other disposition
are applied in accordance with the covenant described under Section 4.16, and
provided, further, however, that any such termination shall occur only to the
extent that all obligations of such Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests that secure, any other Indebtedness of the Issuer or its Subsidiaries
shall also terminate upon such release, sale or disposition. Any Subsidiary
Guarantor not so released or the entity surviving such Subsidiary Guarantor, as
applicable, shall remain or be liable under its Subsidiary Guarantee as provided
in this Article Twelve.
(b) The Trustee shall deliver an appropriate instrument
evidencing the release of a Subsidiary Guarantor upon receipt of a request by
the Issuer or such Subsidiary Guarantor accompanied by an Officers' Certificate
and an Opinion of Counsel certifying as to the
72
compliance with this Section 12.04, provided the legal counsel delivering such
Opinion of Counsel may rely as to matters of fact on one or more Officers'
Certificates of the Issuer.
Except as set forth in Articles Four and Five and this Section 12.04,
nothing contained in this Indenture or in any of the Senior Notes shall prevent
any consolidation or merger of a Subsidiary Guarantor with or into the Issuer or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Issuer or another Subsidiary Guarantor.
Section 12.05 Waiver of Subrogation.
---------------------
Until this Indenture is discharged and all of the Senior Notes are
discharged and paid in full, each Guarantor irrevocably waives and agrees not to
exercise any claim or other rights which it may hereafter acquire against the
Issuer that arise from the existence, payment, performance or enforcement of the
Issuer's Obligations under the Senior Notes or this Indenture and such
Guarantor's Obligations under its Guarantee and this Indenture, in any such
instance including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, and any right to participate in any
claim, remedy or right arising in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Issuer, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and any amounts owing to the Trustee or the Holders of Senior Notes
under the Senior Notes, this Indenture, or any other document or instrument
delivered under or in connection with such agreements or instruments, shall not
have been paid in full, such amount shall have been deemed to have been paid to
such Guarantor for the benefit of, and held in trust for the benefit of, the
Trustee or the Holders and shall forthwith be paid to the Trustee for the
benefit of itself or such Holders to be credited and applied to the obligations
in favor of the Trustee or the Holders, as the case may be, whether matured or
unmatured, in accordance with the terms of this Indenture. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 12.05 is knowingly made in contemplation of such benefits.
Section 12.06 Immediate Payment.
-----------------
Each Guarantor agrees to make immediate payment to the Trustee on behalf
of the Holders of all Obligations owing or payable to the respective Holders
upon receipt of a demand for payment therefor by the Trustee to such Guarantor
in writing.
Section 12.07 No Set-Off.
----------
Each payment to be made by a Guarantor hereunder in respect of the
Obligations shall be payable in the currency or currencies in which such
Obligations are denominated, and shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.
73
Section 12.08 Obligations Absolute.
--------------------
The Obligations of each Guarantor are absolute and unconditional and any
monies or amounts expressed to be owing or payable by each Guarantor which may
not be recoverable from such Guarantor on the basis of a Guarantee shall be
recoverable from such Guarantor as a primary obligor and principal debtor in
respect thereof.
Section 12.09 Obligations Continuing.
----------------------
The Obligations of each Guarantor are and shall be continuing and shall
remain in full force and effect until all the Obligations have been paid and
satisfied in full or until earlier released. Each Guarantor agrees with the
Trustee that it will from time to time deliver to the Trustee suitable
acknowledgments of this continued liability hereunder and under any other
instrument or instruments in such form as counsel to the Trustee may advise and
as will prevent any action brought against it in respect of any default
hereunder being barred by any statute of limitations now or hereafter in force
and, in the event of the failure of a Guarantor so to do, it hereby irrevocably
appoints the Trustee the attorney and agent of such Guarantor to make, execute
and deliver such written acknowledgment or acknowledgments or other instruments
as may from time to time become necessary or advisable, in the judgment of the
Trustee on the advice of counsel, to fully maintain and keep in force the
liability of such Guarantor under its Guarantee.
Section 12.10 Obligations Not Reduced.
-----------------------
The Obligations of each Guarantor shall not be satisfied, reduced or
discharged solely by the payment of such principal, premium, if any, interest,
fees and other monies or amounts as may at any time prior to discharge of this
Indenture pursuant to Article Eight be or become owing or payable under or by
virtue of or otherwise in connection with the Senior Notes or this Indenture.
Section 12.11 Obligations Reinstated.
----------------------
The Obligations of each Guarantor shall continue to be effective or shall
be reinstated, as the case may be, if at any time any payment which would
otherwise have reduced the Obligations of any Guarantor (whether such payment
shall have been made by or on behalf of the Issuer or by or on behalf of a
Guarantor) is rescinded or reclaimed from any of the Holders upon the
insolvency, bankruptcy, liquidation or reorganization of the Company, the Issuer
or any Guarantor or otherwise, all as though such payment had not been made. If
demand for, or acceleration of the time for, payment by the Issuer is stayed
upon the insolvency, bankruptcy, liquidation or reorganization of the Issuer,
all such indebtedness otherwise subject to demand for payment or acceleration
shall nonetheless by payable by each Guarantor as provided herein.
Section 12.12 Obligations Not Affected.
------------------------
The Obligations of each Guarantor shall not be affected, impaired or
diminished in any way by any act, omission, matter or thing whatsoever,
occurring before, upon or after any demand for payment (and whether or not known
or consented to by any Guarantor or any of the Holders) which, but for this
provision, might constitute a whole or partial defense to a claim
74
against any Guarantor under its Guarantee or might operate to release or
otherwise exonerate any Guarantor from any of its Obligations or otherwise
affect such Obligations, whether occasioned by default of any of the Holders or
otherwise, including, without limitation:
(a) any limitation of status or power, disability, incapacity
or other circumstance relating to the Issuer or any other Person, including any
insolvency, bankruptcy, liquidation, reorganization, readjustment, composition,
dissolution, winding-up or other proceeding involving or affecting either Issuer
or any other Person;
(b) any irregularity, defect, unenforceability or invalidity
in respect of any indebtedness or other Obligation of the Issuer or any other
Person under this Indenture, the Senior Notes or any other document or
instrument;
(c) any failure of the Issuer, whether or not without fault on
its part, to perform or comply with any of the provisions of this Indenture or
the Senior Notes, or to give notice thereof to a Guarantor;
(d) the taking or enforcing or exercising or the refusal or
neglect to take or enforce or exercise any right or remedy from or against the
Issuer or any other Person or their respective assets or the release or
discharge of any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the Issuer
or any other Person;
(f) any change in the time, manner or place of payment of, or
in any other term of, any of the Senior Notes, or any other amendment,
variation, supplement, replacement or waiver of, or any consent to departure
from, any of the Senior Notes or this Indenture, including, without limitation,
any increase or decrease in the principal amount of or premium, if any, or
interest on any of the Senior Notes;
(g) any change in the ownership, control, name, objects,
businesses, assets, capital structure or constitution of the Issuer or a
Guarantor;
(h) any merger or amalgamation of the Issuer or a Guarantor
with any Person or Persons;
(i) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction by any present or future action of
any governmental authority or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of the
Obligations of the Issuer under this Indenture or the Senior Notes or the
Obligations of a Guarantor under its Guarantee; and
(j) any other circumstance, including release of any Guarantor
pursuant to Section 12.04 (other than by complete, irrevocable payment) that
might otherwise constitute a legal or equitable discharge or defense of the
Issuer under this Indenture or the Senior Notes or of a Guarantor in respect of
its Guarantee.
75
Section 12.13 Waiver.
------
Without in any way limiting the provisions of Section 12.01 hereof,
each Guarantor waives notice of acceptance hereof, notice of any liability of
any Guarantor under its Guarantee, notice or proof of reliance by the Holders
upon the Obligations of any Guarantor, and diligence, presentment, demand for
payment on the Issuer, protest, notice of dishonor or non-payment of any of the
Issuer's Obligations under this Indenture or the Senior Notes, or other notice
or formalities to the Issuer or any Guarantor of any kind whatsoever.
Section 12.14 No Obligation to Take Action Against the Issuer.
-----------------------------------------------
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Issuer's Obligations under this Indenture or the Senior Notes,
or against the Issuer or any other Person or any property of the Issuer or any
other Person before the Trustee is entitled to demand payment and performance by
any or all Guarantors of their liabilities and obligations under their
Guarantees or under this Indenture.
Section 12.15 Dealing with the Issuer and Others.
----------------------------------
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
hereunder and without the consent of or notice to any Guarantor, may
(a) grant time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the Issuer
or any other Person;
(b) take or abstain from taking security or collateral from
the Issuer or from perfecting security or collateral of the Company;
(c) release, discharge, compromise, realize, enforce or
otherwise deal with or do any act or thing in respect of (with or without
consideration) any and all collateral, mortgages or other security given by the
Issuer or any third party with respect to the Issuer's Obligations under, or
matters contemplated by, this Indenture or the Senior Notes;
(d) accept compromises or arrangements from the Issuer;
(e) apply all monies at any time received from the Issuer or
from any security upon such part of the Issuer's Obligations under this
Indenture or the Senior Notes as the Holders may see fit or change any such
application in whole or in part from time to time as the Holders may see fit;
and
(f) otherwise deal with, or waive or modify their right to
deal with, the Issuer and all other Persons and any security as the Holders or
the Trustee may see fit.
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Section 12.16 Default and Enforcement.
-----------------------
If any Guarantor fails to pay in accordance with Section 12.06 hereof, the
Trustee may proceed in its name as trustee hereunder in the enforcement of its
Guarantee and such Guarantor's Obligations thereunder and hereunder by any
remedy provided by law, whether by legal proceedings or otherwise, and to
recover from such Guarantor the Issuer's Obligations under this Indenture and
the Senior Notes.
Section 12.17 Amendment, Etc.
--------------
No amendment, modification or waiver of any provision of this Indenture
relating to any Guarantor or consent to any departure by any Guarantor or any
other Persons from any such provision will in any event be effective unless it
is signed by such Guarantor and the Trustee.
Section 12.18 Acknowledgment.
--------------
Each Guarantor acknowledges communication of the terms of this Indenture
and the Senior Notes and consents to and approves of the same.
Section 12.19 Costs and Expenses.
------------------
Each Guarantor agrees to pay on demand by the Trustee any and all costs,
fees and expenses (including, without limitation, legal fees) incurred by the
Trustee, its agents, advisors and counsel or any of the Holders in enforcing any
of their rights under any Guarantee.
Section 12.20 No Merger or Waiver; Cumulative Remedies.
----------------------------------------
No Guarantee shall operate as a waiver by way of merger or otherwise, of
any of the obligations of a Guarantor under any other agreement, including,
without limitation, this Indenture. No failure to exercise and no delay in
exercising, on the part of the Trustee or the Holders, any right, remedy, power
or privilege hereunder or under the Senior Notes, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or the Senior Notes preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges in each Guarantee and under this
Indenture, the Senior Notes and any other document or instrument between a
Guarantor and/or the Issuer and the Trustee are cumulative and not exclusive of
any rights, remedies, powers and privilege provided by law.
Section 12.21 Survival of Obligations.
-----------------------
Without prejudice to the survival of any of the other obligations of each
Guarantor, the obligations of each Guarantor under Section 12.01 shall survive
the payment in full of the Issuer's Obligations under this Indenture and the
Senior Notes and shall be enforceable against such Guarantor without regard to
and without giving effect to any defense, right of offset or counterclaim
available to or which may be asserted by the Issuer or any Guarantor.
77
Section 12.22 Guarantee in Addition to Other Obligations.
------------------------------------------
The obligations of each Guarantor under its Guarantee and this Indenture
are in addition to and not in substitution for any other obligations to the
Trustee or to any of the Holders in relation to this Indenture or the Senior
Notes and any other guarantees or security at any time held by or for the
benefit of any of them.
Section 12.23 Severability.
------------
Any provision of this Article Twelve which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any jurisdiction unless its removal would
substantially defeat the basic intent, spirit and purpose of this Indenture and
this Article Twelve.
Section 12.24 Successors and Assigns.
----------------------
Each Guarantee shall be binding upon and inure to the benefit of each
Guarantor and the Trustee and the Holders and their respective successors and
permitted assigns, except that no Guarantor may assign any of its obligations
hereunder or thereunder except as expressly permitted by the terms of this
Indenture.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
SOUTHWEST ROYALTIES HOLDINGS, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SOUTHWEST ROYALTIES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
MRO HOLDINGS, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
BLUE HEEL COMPANY
By:___________________________________
Name:_________________________________
Title:________________________________
WILMINGTON TRUST COMPANY
By:___________________________________
Name:_________________________________
Title:________________________________
79