SWIFT ENERGY COMPANY, as Issuer SWIFT ENERGY OPERATING, LLC, as Subsidiary Guarantor and WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee FIRST SUPPLEMENTAL INDENTURE Dated as of June 1, 2007 To Indenture Dated as of May 16, 2007 Providing for...
SWIFT
ENERGY COMPANY,
as
Issuer
SWIFT
ENERGY OPERATING, LLC,
as
Subsidiary Guarantor
and
▇▇▇▇▇
FARGO BANK,
NATIONAL
ASSOCIATION
as
Trustee
Dated
as of June 1, 2007
To
Indenture Dated as of May 16, 2007
Providing
for Issuance of
7⅛%
Senior Notes due 2017
TABLE
OF CONTENTS
Page
|
SECTION
1.
|
Creation
of 7⅛% Notes
|
2
|
|
SECTION
2.
|
Definitions
|
3
|
|
SECTION
3.
|
Amendments
to Article III of the Original Indenture
|
33
|
|
SECTION
4.
|
Amendments
to Article IV of the Original Indenture
|
35
|
|
SECTION
5.
|
Amendments
to Article V of the Original Indenture
|
49
|
|
SECTION
6.
|
Amendments
to Article VI of the Original Indenture
|
49
|
|
SECTION
7.
|
Amendments
to Article VII of the Original Indenture
|
51
|
|
SECTION
8.
|
Amendments
to Article IX of the Original Indenture
|
51
|
|
SECTION
9.
|
Amendments
to Article X of the Original Indenture
|
52
|
|
SECTION
10.
|
Applicability
of and Amendments to Article XI of the Original
Indenture
|
53
|
|
SECTION
11.
|
Inapplicability
of Article XII of the Original Indenture
|
55
|
|
SECTION
12.
|
Governing
Law.
|
55
|
|
SECTION
13.
|
Subsidiary
Guaranties
|
55
|
|
SECTION
14.
|
Governing
Law
|
58
|
| SECTION 15. | Counterparts | 58 |
| SECTION 16. | Supplemental Indenture Controls | 59 |
|
Exhibit
A
|
Form
of the 7⅛% Notes
|
A-1
|
|
Exhibit
B
|
Form
of Supplemental Indenture
|
B-1
|
THIS
FIRST SUPPLEMENTAL INDENTURE, dated as of June 1, 2007 (this “First Supplemental
Indenture”), to the Indenture dated as of May 16, 2007 (the “Original
Indenture”) is among SWIFT ENERGY COMPANY, a Texas corporation, as issuer (the
“Company”), SWIFT ENERGY OPERATING, LLC, a Texas limited liability company
(“Opco”), as Subsidiary Guarantor, and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as trustee (the “Trustee”).
WHEREAS,
the Company and the Trustee have heretofore executed and delivered the Original
Indenture to provide for the issuance of its securities to be issued in one
or
more registered series;
WHEREAS,
Section 9.01 of the Original Indenture provides, among other things, that the
Company and the Trustee may without the consent of Holders enter into indentures
supplemental to the Original Indenture to, among other things, (a) add to,
change or eliminate any of the provisions of the Original Indenture in respect
of one or more series of Debt Securities; provided, however, that any such
addition, change or elimination not otherwise permitted under Section 9.01
shall
(i) neither (A) apply to any Debt Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such previously issued
Debt Security with respect to such provision or (ii) shall become effective
only
when there is no such Debt Security Outstanding, (b) add Guarantees with respect
to the Debt Securities and (c) establish the form or terms of Debt Securities
of
any series as permitted by Sections 2.01 and 2.03;
WHEREAS,
the Company desires to provide for the issuance of a new series of Debt
Securities to be designated as the “7⅛% Senior Notes due 2017” (the “7⅛%
Notes”), to be guaranteed by Opco, and to set forth the terms that will be
applicable thereto;
WHEREAS,
all action on the part of the Company necessary to authorize the issuance of
the
7⅛% Notes under the Original Indenture and this First Supplemental Indenture
(the Original Indenture, as amended and supplemented by this First Supplemental
Indenture, being hereinafter called the “Indenture”) has been duly taken;
and
WHEREAS,
all acts and things necessary to make the 7⅛% Notes, when executed by the
Company and authenticated and delivered by the Trustee as provided in the
Original Indenture, the legal, valid and binding obligations of the Company,
and
to constitute these presents a valid and binding supplemental indenture
according to its terms binding on the Company and Opco, have been done and
performed, and the execution of this First Supplemental Indenture and the
creation and issuance under the Indenture of the 7⅛% Notes have in all respects
been duly authorized, and the Company in the exercise of the legal right and
power vested in it, executes this First Supplemental Indenture and proposes
to
create, execute, issue and deliver the 7⅛% Notes.
NOW,
THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That,
in
order to establish the designation, form, terms and provisions of, and to
authorize the authentication and delivery of the 7⅛% Notes and in consideration
of the acceptance of the
1
7⅛%
Notes
by the Holders thereof and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
SECTION
1. Creation of 7⅛% Notes. Pursuant to
Sections 2.01 and 2.03 of the Original Indenture, there is hereby created a
new
series of Debt Securities designated as the “7⅛% Senior Notes due 2017”, limited
in aggregate principal amount to $250,000,000 (which are hereinafter defined
as
the “7⅛% Notes” for purposes this First Supplemental Indenture). The
Trustee shall authenticate 7⅛% Notes for original issue in the aggregate
principal amount of $250,000,000 (the “Original 7⅛% Notes”). The
Original 7⅛% Notes shall be in the form specified in Exhibit A to this First
Supplemental Indenture, shall have the terms set forth therein and shall be
entitled to the benefits of the other provisions of the Original Indenture
as
modified by this First Supplemental Indenture and specified herein.
The
Place
of Payment with respect to the Notes, in addition to the corporate trust office
of the Trustee, shall be New York, New York, and at such time, if ever, the
7⅛%
Notes are no longer represented by one or more Global Securities, the Company
shall appoint and maintain a paying agent for the 7⅛% Notes in New York, New
York, the intention of the Company being that, after giving effect to the
procedures of the Depositary respecting payments on Global Securities, the
7⅛%
Notes shall at all times be payable in New York, New York.
With
respect to any 7⅛% Notes issued after the Issue Date (except for 7⅛% Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other 7⅛% Notes pursuant to Section 2.07, 2.08, 2.09, 2.15,
3.03 or 9.04 of the Original Indenture) (the “Additional 7⅛% Notes”), there
shall be established in or pursuant to a resolution of the Board of Directors
of
the Company:
(a) that
such Additional 7⅛% Notes shall be issued as part of the same or a different
series as the Original 7⅛% Notes;
(b) the
aggregate principal amount of such Additional 7⅛% Notes which may be
authenticated and delivered under the Indenture, which, subject to compliance
with Article IV of the Original Indenture, may be in an unlimited aggregate
principal amount or which may be in a limited principal amount (except for
Additional 7⅛% Notes authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other 7⅛% Notes pursuant to Section 2.07,
2.08, 2.09, 2.15, 3.03 or 9.04 of the Original Indenture);
(c) the
issue price and issuance date of such Additional 7⅛% Notes, including the date
from which interest on such Additional 7⅛% Notes shall accrue;
(d) if
applicable, that such Additional 7⅛% Notes shall be issuable in whole or in part
in the form of one or more Global Securities and, in such case, the respective
Depositaries for such Global Securities, the form of any legend or legends
that
shall be borne by any such Global Security in addition to or in lieu of that
set
forth in Section 2.15 or Exhibit A and any circumstances in addition to or
in
lieu of those set forth in the Indenture in which any such Global Security
may
be exchanged in whole or in part for 7⅛% Notes registered, and any
2
transfer
of such Global Security in whole or in part may be registered, in the name
or
names of Persons other than the Depositary for such Global Security or a nominee
thereof; and
(e) if
applicable, that such Additional 7⅛% Notes shall not be registered under the
Securities Act, but shall be issued pursuant to an exemption from registration
under the Securities Act bearing additional appropriate legends and shall have
the benefit of registration rights. Except as set forth above, such
Additional 7⅛% Notes shall have the terms set forth in Exhibit A to this First
Supplemental Indenture and shall be entitled to the benefits of the other
provisions of the Original Indenture as modified by this First Supplemental
Indenture and as specified herein.
SECTION
2. Definitions
(a) Capitalized
terms used herein and not otherwise defined shall have the respective meanings
assigned thereto in the Original Indenture.
(b) Section
1.01 of the Original Indenture is amended and supplemented by inserting or
restating, as the case may be, in their appropriate alphabetical position,
the
following definitions:
“Additional
Assets” means:
(a) any
Property (other than cash, Permitted Short-Term Investments or securities)
used
in the Oil and Gas Business or any business ancillary thereto;
(b) Investments
in any other Person engaged in the Oil and Gas Business or any business
ancillary thereto (including the acquisition from third parties of Capital
Stock
of such Person) as a result of which such other Person becomes a Restricted
Subsidiary in compliance with Section 4.19;
(c) the
acquisition from third parties of Capital Stock of a Restricted Subsidiary;
or
(d) Permitted
Business Investments.
“Adjusted
Consolidated Net Tangible Assets” means (without duplication), as of the
date of determination, the remainder of:
(a) the
sum of:
(1) discounted
future net revenues from proved oil and gas reserves of the Company and its
Restricted Subsidiaries calculated in accordance with SEC guidelines before
any
state, federal or foreign income taxes, as estimated by the Company and
confirmed by a nationally recognized firm of independent petroleum engineers
in
a reserve report prepared as of the end of the Company’s most recently completed
fiscal year for which audited financial statements are available, as increased
by, as of the date of determination, the estimated discounted future net
revenues from:
3
(A) estimated
proved oil and gas reserves acquired since such year end, which reserves were
not reflected in such year end reserve report, and
(B) estimated
oil and gas reserves attributable to upward revisions of estimates of proved
oil
and gas reserves since such year end due to exploration, development or
exploitation activities, in each case calculated in accordance with SEC
guidelines (utilizing the prices utilized in such year end reserve
report),
and
decreased by, as of the date of determination, the estimated discounted future
net revenues from:
(C) estimated
proved oil and gas reserves produced or disposed of since such year end,
and
(D) estimated
oil and gas reserves attributable to downward revisions of estimates of proved
oil and gas reserves since such year end due to changes in geological conditions
or other factors that would, in accordance with standard industry practice,
cause such revisions, in each case calculated in accordance with SEC guidelines
(utilizing the prices utilized in such year end reserve report),
provided
that, in the case of each of the determinations made pursuant to clauses (A)
through (D), such increases and decreases shall be as estimated by the Company’s
petroleum engineers, unless there is a Material Change as a result of such
acquisitions, dispositions or revisions, in which event the discounted future
net revenues utilized for purposes of this clause (a)(1) shall be confirmed
in
writing by a nationally recognized firm of independent petroleum
engineers,
(2) the
capitalized costs that are attributable to oil and gas properties of the Company
and its Restricted Subsidiaries to which no proved oil and gas reserves are
attributable, based on the Company’s books and records as of a date no earlier
than the date of the Company’s latest annual or quarterly financial
statements,
(3) the
Net Working Capital on a date no earlier than the date of the Company’s latest
annual or quarterly financial statements, and
(4) the
greater of the net book value or the appraised value as estimated by independent
appraisers of other tangible assets (including, without duplication, Investments
in unconsolidated Restricted Subsidiaries) of the Company and its Restricted
Subsidiaries, as of a date no earlier than the date of the Company’s latest
audited financial statements. For these purposes, net book value
shall be determined as of a date no earlier than the date of the Company’s
latest annual or quarterly financial statements, and on a date no earlier than
the date of the Company’s latest annual or quarterly financial
statements;
(b) minus
the sum of:
4
(1) minority
interests,
(2) any
net gas balancing liabilities of the Company and its Restricted Subsidiaries
reflected in the Company’s latest audited financial statements,
(3) to
the extent included in (a)(1) above, the discounted future net revenues,
calculated in accordance with SEC guidelines (utilizing the prices utilized
in
the Company’s year end reserve report), attributable to reserves that are
required to be delivered to third parties to fully satisfy the obligations
of
the Company and its Restricted Subsidiaries with respect to Volumetric
Production Payments (determined, if applicable, using the schedules specified
with respect thereto), and
(4) the
discounted future net revenues, calculated in accordance with SEC guidelines,
attributable to reserves subject to Dollar-Denominated Production Payments
that,
based on the estimates of production and price assumptions included in
determining the discounted future net revenues specified in (a)(1) above, would
be necessary to fully satisfy the payment obligations of the Company and its
Restricted Subsidiaries with respect to Dollar-Denominated Production Payments
(determined, if applicable, using the schedules specified with respect
thereto).
If
the
Company changes its method of accounting from the full cost method to the
successful efforts method or a similar method of accounting, “Adjusted
Consolidated Net Tangible Assets” will continue to be calculated as if the
Company were still using the full cost method of accounting.
“Adjusted
Treasury Rate” means, with respect to any redemption date:
(a) (1) the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated “H.15(519)” or any successor publication which is published weekly by
the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant
maturity under the caption “Treasury Constant Maturities,” for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after June 1, 2012, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue shall be determined
and the Adjusted Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month) or
(2) if
such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to
the
Comparable Treasury Price for such redemption date, in each case calculated
on
the third Business Day immediately preceding the redemption date,
plus
(b) 0.50%.
“Affiliate”
of any specified Person means any other Person:
5
(a) that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person;
or
(b) that
beneficially owns or holds directly or indirectly 10% or more of any class
of
the Voting Stock of such specified Person or of any Subsidiary of such specified
Person.
For
the
purposes of this definition, “control,” when used with respect to any specified
Person, means the power to direct the management and policies of such Person
directly or indirectly, whether through the ownership of Voting Stock, by
contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.
“Applicable
Premium” means, with respect to a Note at any redemption date, the greater
of:
(a) 1.0%
of the principal amount of such Note and
(b) the
excess of (1) the present value at such redemption date of (A) the redemption
price of such Note on June 1, 2012 (such redemption price being described in
the
first paragraph and accompanying table of Section 3.06, exclusive of any accrued
interest) plus (B) all required remaining scheduled interest payments due on
such Note through June 1, 2012, computed using a discount rate equal to the
Adjusted Treasury Rate, over (2) the principal amount of such Note on such
redemption date.
“Asset
Sale” means, with respect to any Person, any transfer, conveyance, sale,
lease or other disposition (collectively, “dispositions,” and including
dispositions pursuant to any consolidation or merger) by such Person or any
of
its Restricted Subsidiaries in any single transaction or series of transactions
of:
(a) shares
of Capital Stock or other ownership interests of another Person (including
Capital Stock of Restricted Subsidiaries and Unrestricted Subsidiaries);
or
(b) any
other Property of such Person or any of its Restricted
Subsidiaries;
provided,
however, that the term “Asset Sale” shall not include:
(1) the
disposition of Permitted Short-Term Investments, inventory, accounts receivable,
surplus or obsolete equipment or other Property (excluding the disposition
of
oil and gas in place and other interests in real property unless made in
connection with a Permitted Business Investment) in the ordinary course of
business;
(2) the
abandonment, assignment, lease, sublease or farm-out of oil and gas properties,
or the forfeiture or other disposition of such properties pursuant to standard
form operating agreements, in each case in the ordinary course of business
in a
manner that is customary in the Oil and Gas Business;
(3) the
disposition of Property received in settlement of debts owing to the Company
or
any Restricted Subsidiary as a result of foreclosure, perfection or enforcement
of any Lien or debt, which debts were owing to the Company or any
6
Restricted
Subsidiary in the ordinary course of business of the Company or such Restricted
Subsidiary;
(4) any
disposition that constitutes a Restricted Payment made in compliance with
Section 4.12;
(5) when
used with respect to the Company, any disposition of all or substantially all
of
the Property of the Company and its Restricted Subsidiaries taken as a whole
permitted pursuant to Article X;
(6) the
disposition of any Property by the Company or a Restricted Subsidiary to the
Company or a Wholly Owned Subsidiary;
(7) the
disposition of any Property with a Fair Market Value of less than $5.0 million;
or
(8) any
Production Payments and Reserve Sales, provided that any such Production
Payments and Reserve Sales, other than incentive compensation programs on terms
that are reasonably customary in the Oil and Gas Business for geologists,
geophysicists and other providers of technical services to the Company or a
Restricted Subsidiary, shall have been created, Incurred, issued, assumed or
Guaranteed in connection with the financing of, and within 60 days after the
acquisition of, the Property that is subject thereto.
“Average
Life” means, with respect to any Indebtedness, at any date of
determination, the quotient obtained by dividing:
(a) the
sum of the products of:
(1) the
number of years (and any portion thereof) from the date of determination to
the
date or dates of each successive scheduled principal payment (including any
sinking fund or mandatory redemption payment requirements) of such Indebtedness,
multiplied by
(2) the
amount of each such principal payment,
(b) by
the sum of all such principal payments.
“Bank
Credit Facilities” means, with respect to any Person, one or more debt
facilities or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables or
inventory financing (including through the sale of receivables or inventory
financing to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables or inventory) or trade or standby letters
of credit, in each case together with any extensions, revisions, refinancings
or
replacements thereof by a lender or syndicate of lenders.
“Capital
Lease Obligations” means any obligation that is required to be classified
and accounted for as a capital lease obligation in accordance with GAAP, and
the
amount of
7
Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment date of rent or any other amount due
in
respect of such obligation.
“Capital
Stock” means, with respect to any Person, any shares or other equivalents
(however designated) of any class of corporate stock or partnership interests
or
any other participations, rights, warrants, options or other interests in the
nature of an equity interest in such Person, including Preferred Stock, but
excluding any debt security convertible or exchangeable into such equity
interest.
“Change
of Control” means the occurrence of any of the following, if followed by a
Rating Decline within 90 days thereof:
(a) any
“person” or “group” (within the meaning of Section 13(d)(3) and 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person will be deemed to have “beneficial ownership”
of all shares that any such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time) of 40 percent
or
more of the total voting power of all classes of the Voting Stock of the
Company;
(b) the
sale, lease, transfer or other disposition, directly or indirectly, of all
or
substantially all the Property of the Company and the Restricted Subsidiaries
taken as a whole (other than a disposition of such Property as an entirety
or
virtually as an entirety to any Wholly Owned Subsidiary) shall have
occurred;
(c) the
shareholders of the Company shall have approved any plan of liquidation or
dissolution of the Company;
(d) the
Company consolidates with or merges into another Person or any Person
consolidates with or merges into the Company in any such event pursuant to
a
transaction in which the outstanding Voting Stock of the Company is reclassified
into or exchanged for cash, securities or other Property, other than any such
transaction where the outstanding Voting Stock of the Company is reclassified
into or exchanged for Voting Stock of the surviving Person and the holders
of
the Voting Stock of the Company immediately prior to such transaction own,
directly or indirectly, not less than a majority of the Voting Stock of the
surviving Person immediately after such transaction in substantially the same
proportion as before the transaction; or
(e) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Company’s Board of Directors (together with any new
directors whose election or appointment by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by
a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously approved by
8
such
vote) cease for any reason to constitute a majority of the Company’s Board of
Directors then in office.
“Comparable
Treasury Issue” means the United States Treasury security selected by the
Quotation Agent as having a maturity comparable to the remaining term from
the
redemption date to June 1, 2012, that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of a maturity most nearly equal to June
1,
2012.
“Comparable
Treasury Price” means, with respect to any redemption date, if clause
(a)(2) of the Adjusted Treasury Rate is applicable, the average of three, or
such lesser number as is obtained by the Trustee, Reference Treasury Dealer
Quotations for such redemption date.
“Consolidated
Interest Coverage Ratio” means, as of the date of the transaction (the
“Transaction Date”) giving rise to the need to calculate the Consolidated
Interest Coverage Ratio, the ratio of:
(a) the
aggregate amount of EBITDA of the Company and its consolidated Restricted
Subsidiaries for the four full fiscal quarters immediately prior to the
Transaction Date for which financial statements are available; to
(b) the
aggregate Consolidated Interest Expense of the Company and its Restricted
Subsidiaries that is anticipated to accrue during a period consisting of the
fiscal quarter in which the Transaction Date occurs and the three fiscal
quarters immediately subsequent thereto (based upon the pro forma amount and
maturity of, and interest payments in respect of, Indebtedness of the Company
and its Restricted Subsidiaries expected by the Company to be outstanding on
the
Transaction Date), assuming for the purposes of this measurement the
continuation of market interest rates prevailing on the Transaction Date and
base interest rates in respect of floating interest rate obligations equal
to
the base interest rates on such obligations in effect as of the Transaction
Date; provided, that if the Company or any of its Restricted Subsidiaries is
a
party to any Interest Rate Protection Agreement that would have the effect
of
changing the interest rate on any Indebtedness of the Company or any of its
Restricted Subsidiaries for such four quarter period (or a portion thereof),
the
resulting rate shall be used for such four quarter period or portion thereof;
provided further that any Consolidated Interest Expense with respect to
Indebtedness Incurred or retired by the Company or any of its Restricted
Subsidiaries during the fiscal quarter in which the Transaction Date occurs
shall be calculated as if such Indebtedness was so Incurred or retired on the
first day of the fiscal quarter in which the Transaction Date
occurs.
In
addition, if at any time since the beginning of the four full fiscal quarter
period preceding the Transaction Date through and including the Transaction
Date:
(a) the
Company or any of its Restricted Subsidiaries shall have engaged in any Asset
Sale, EBITDA for such period shall be reduced by an amount equal to the EBITDA
(if positive), or increased by an amount equal to the EBITDA (if negative),
directly attributable to the Property that is the subject of such Asset Sale
for
such period calculated on a pro forma basis
9
as
if
such Asset Sale and any related retirement of Indebtedness had occurred on
the
first day of such period; or
(b) (1) the
Company or any of its Restricted Subsidiaries shall have acquired or made any
Investment in any material assets, or
(2) the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio is such an Investment or acquisition.
EBITDA
shall be calculated on a pro forma basis as if such Investments or asset
acquisitions had occurred on the first day of such four fiscal quarter
period.
“Consolidated
Interest Expense” means, with respect to any Person for any period, without
duplication:
(a) the
sum of:
(1) the
aggregate amount of cash and noncash interest expense (including capitalized
interest) of such Person and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP in respect of
Indebtedness, including:
(A) any
amortization of debt discount,
(B) net
costs associated with Interest Rate Protection Agreements (including any
amortization of discounts),
(C) the
interest portion of any deferred payment obligation,
(D) all
accrued interest, and
(E) all
commissions, discounts, commitment fees, origination fees and other fees and
charges owed with respect to Bank Credit Facilities and other Indebtedness
paid
, accrued or scheduled to be paid or accrued during such period,
(2) Disqualified
Stock Dividends of such Person (and of its Restricted Subsidiaries if paid
to a
Person other than such Person or its Restricted Subsidiaries) and Preferred
Stock Dividends of such Person’s Restricted Subsidiaries if paid to a Person
other than such Person or its other Restricted Subsidiaries,
(3) the
portion of any obligation of such Person or its Restricted Subsidiaries in
respect of any Capital Lease Obligation allocable to interest expense in
accordance with GAAP,
(4) the
portion of any rental obligation of such Person or its Restricted Subsidiaries
in respect of any Sale and Leaseback Transaction that is
Indebtedness
10
allocable
to interest expense (determined as if such obligation were treated as a Capital
Lease Obligation), and
(5) to
the extent any Indebtedness of any other Person (other than Restricted
Subsidiaries) is Guaranteed by such Person or any of its Restricted
Subsidiaries, the aggregate amount of interest paid, accrued or scheduled to
be
paid or accrued by such other Person during such period attributable to any
such
Indebtedness;
less
(b) to
the extent included in (a) above, amortization or write-off of deferred
financing costs (other than debt discounts) of such Person and its Restricted
Subsidiaries during such period;
in
the
case of both (a) and (b) above, after elimination of intercompany accounts
among
such Person and its Restricted Subsidiaries and as determined in accordance
with
GAAP.
“Consolidated
Net Income” of any Person means, for any period, the aggregate net income
(or net loss, as the case may be) of such Person and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom, without
duplication:
(a) items
classified as extraordinary gains or losses net of tax (less all fees and
expenses relating thereto);
(b) any
gain or loss net of taxes (less all fees and expenses relating thereto) realized
on the sale or other disposition of Property, including the Capital Stock of
any
other Person (but in no event shall this clause (b) apply to any gains or losses
on the sale in the ordinary course of business of oil, gas or other hydrocarbons
produced or manufactured);
(c) the
net income of any Restricted Subsidiary of such specified Person to the extent
the transfer to that Person of that income is restricted by contract or
otherwise, except for any cash dividends or cash distributions actually paid
by
such Restricted Subsidiary to such Person during such period;
(d) the
net income (or loss) of any other Person in which such specified Person or
any
of its Restricted Subsidiaries has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income
of
such specified Person in accordance with GAAP or is an interest in a
consolidated Unrestricted Subsidiary), except to the extent of the amount of
cash dividends or other cash distributions actually paid to such Person or
its
consolidated Restricted Subsidiaries by such other Person during such
period;
(e) any
gain or loss, net of taxes, realized on the termination of any employee pension
benefit plan;
(f) any
adjustments of a deferred tax liability or asset pursuant to Statement of
Financial Accounting Standards No. 109 that result from changes in enacted
tax
laws or rates;
11
(g) the
cumulative effect of a change in accounting principles;
(h) any
write-downs of non-current assets, provided that any ceiling limitation
write-downs under SEC guidelines shall be treated as capitalized costs, as
if
such write-downs had not occurred; and
(i) any
non-cash compensation expense realized upon issuance of stock under an employee
stock purchase plan or for grants of performance shares, stock options or stock
awards to officers, directors and employees of the Company or any of its
Restricted Subsidiaries.
In
addition, notwithstanding the preceding, there shall be excluded from
Consolidated Net Income, for purposes of Section 4.12, any nonrecurring charges
relating to any premium or penalty paid or write off of deferred finance costs
or original issue discount in connection with redeeming or otherwise retiring
any Indebtedness prior to its Stated Maturity.
“Default”
means any event, act or condition the occurrence of which is, or after notice
or
the passage of time or both would be, an Event of Default.
“Disqualified
Stock” means, with respect to any Person, any Capital Stock that by its
terms (or by the terms of any security into which it is convertible or for
which
it is exchangeable, in either case at the option of the holder thereof) or
otherwise:
(a) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise;
(b) is
or may become redeemable or repurchasable at the option of the holder thereof,
in whole or in part; or
(c) is
convertible or exchangeable at the option of the holder thereof for debt or
any
other Disqualified Stock;
in
each
case on or prior to the first anniversary of the Stated Maturity of the 7⅛%
Notes.
“Disqualified
Stock Dividends” means all dividends with respect to Disqualified Stock of
the Company held by Persons other than a Wholly Owned Subsidiary. The
amount of any such dividend shall be equal to the quotient of such dividend
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to
the
Company.
“Dollar-Denominated
Production Payments” means production payment obligations recorded as
liabilities in accordance with GAAP, together with all undertakings and
obligations in connection therewith.
“EBITDA”
means with respect to any Person for any period, the Consolidated Net Income
of
such Person for such period:
(a) plus
the sum of, to the extent reflected in the consolidated income statement of
such
Person and its Restricted Subsidiaries for such period from which
12
Consolidated
Net Income is determined and deducted in the determination of such Consolidated
Net Income, without duplication:
(1) income
tax expense (but excluding income tax expense relating to sales or other
dispositions of Property, including the Capital Stock of any other Person,
the
gains from which are excluded in the determination of such Consolidated Net
Income),
(2) Consolidated
Interest Expense,
(3) depreciation
and depletion expense,
(4) amortization
expense,
(5) exploration
expense (if applicable to the Company after the Issue Date), and
(6) any
other noncash charges including unrealized foreign exchange losses (excluding,
however, any such other noncash charge that requires an accrual of or reserve
for cash charges for any future period);
(b) less
the sum of, to the extent reflected in the consolidated income statement of
such
Person and its Restricted Subsidiaries for such period from which Consolidated
Net Income is determined and added in the determination of such Consolidated
Net
Income, without duplication:
(1) income
tax recovery (excluding, however, income tax recovery relating to sales or
other
dispositions of Property, including the Capital Stock of any other Person,
the
losses from which are excluded in the determination of such Consolidated Net
Income), and
(2) unrealized
foreign exchange gains.
“Equity
Offering” means a bona fide underwritten sale to the public of common stock
of the Company pursuant to an effective registration statement (other than
a
Form S-8 or any other form relating to securities issuable under any employee
benefit plan of the Company) that is filed with the SEC following the Issue
Date.
“Exchanged
Properties” means Properties used or useful in the Oil and Gas Business
received by the Company or a Restricted Subsidiary in trade or as a portion
of
the total consideration for other such Properties.
“Exchange
Rate Contract” means, with respect to any Person, any currency swap
agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or any combination thereof, entered into by such
Person in the ordinary course of its business for the purpose of limiting or
managing exchange rate risks to which such Person is subject.
13
“Exempt
Foreign Subsidiary” means any Restricted Subsidiary that is a foreign
corporation if more than 50% of the
(a) total
combined voting power of all Voting Stock of the corporation, or
(b) the
total value of all Capital Stock of the corporation is owned or is considered
as
owned by United States shareholders on any day during the taxable year of the
foreign corporation,
and,
that, in any case, is so designated by the Company in an Officers’ Certificate
delivered to the Trustee, and which Restricted Subsidiary is not a guarantor
of,
and has no Lien (other than a Lien with respect to less than two-thirds of
the
Capital Stock of an Exempt Foreign Subsidiary) to secure the Bank Credit
Facilities or any other Indebtedness of the Company or any Restricted Subsidiary
other than an Exempt Foreign Subsidiary. A United States shareholder,
as used in this definition, means any Person who owns or is considered as owning
10% or more of the total combined voting power of all Voting Stock of the
foreign corporation. Ownership is determined by applying the
attribution rules of ownership in Internal Revenue Code Section
958. References to Internal Revenue sections in this definition
include such sections as amended or superceded, including Treasury regulations
promulgated thereunder. The Company may revoke the designation of
any Exempt Foreign Subsidiary by notice to the Trustee.
“Fair
Market Value” means, with respect to any Property to be transferred
pursuant to any Asset Sale or Sale and Leaseback Transaction or any noncash
consideration or Property transferred or received by any Person, the fair market
value of such consideration or other Property as determined by:
(a) any
officer of the Company if such fair market value is greater than $2.0 million
but less than $10.0 million; and
(b) the
Board of Directors of the Company as evidenced by a certified resolution
delivered to the Trustee if such fair market value is equal to or in excess
of
$10.0 million.
“GAAP”
means United States generally accepted accounting principles as in effect on
the
Issue Date, unless stated otherwise.
“Guarantee”
by any Person means any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness
of
any other Person (a “primary obligor”) in any manner, whether directly or
indirectly, and including any Lien on the assets of such Person securing
obligations to pay Indebtedness of the primary obligor, and any obligation
of
such Person:
(a) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such
Indebtedness or any security for the payment of such Indebtedness;
(b) to
purchase Property, securities or services for the purpose of assuring the holder
of such Indebtedness of the payment of such Indebtedness; or
14
(c) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to
pay
such Indebtedness (and “Guaranteed”, “Guaranteeing” and “Guarantor” shall have
meanings correlative to the foregoing);
provided,
however, that a Guarantee by any Person shall not include:
(a) endorsements
by such Person for collection or deposit, in either case, in the ordinary course
of business; or
(b) a
contractual commitment by one Person to invest in another Person for so long
as
such Investment is reasonably expected to constitute a Permitted Investment
under clause (b) of the definition of Permitted Investments.
“Holder”
means the Person in whose name a Note is registered on the Securities
Register.
“Incur”
means, with respect to any Indebtedness or other obligation of any Person,
to
create, issue, incur (by conversion, exchange or otherwise), assume, Guarantee
or become liable (including by reason of a merger or consolidation) in respect
of such Indebtedness or other obligation or the recording, as required pursuant
to GAAP or otherwise, of any such Indebtedness or obligation on the balance
sheet of such Person (and “Incurrence,” “Incurred,” “Incurrable” and “Incurring”
shall have meanings correlative to the foregoing); provided, however,
that a change in GAAP that results in an obligation of such Person that exists
at such time, and is not theretofore classified as Indebtedness, becoming
Indebtedness shall not be deemed an Incurrence of such Indebtedness;
provided further, however, that solely for purposes of determining
compliance with Section 4.11 amortization of debt discount shall not be deemed
to be the Incurrence of Indebtedness, provided that in the case of
Indebtedness sold at a discount, the amount of such Indebtedness shall at all
times be the aggregate principal amount at Stated Maturity. For
purposes of this definition, Indebtedness of the Company or a Restricted
Subsidiary held by a Wholly Owned Subsidiary shall be deemed to be Incurred
by
the Company or such Restricted Subsidiary in the event such Indebtedness is
transferred to a Person other than the Company or a Wholly Owned
Subsidiary.
“Indebtedness”
means at any time (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or
not
contingent:
(a) any
obligation of such Person for borrowed money;
(b) any
obligation of such Person evidenced by bonds, debentures, notes, Guarantees
or
other similar instruments, including any such obligations Incurred in connection
with the acquisition of Property, assets or business;
(c) any
reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such
Person;
(d) any
obligation of such Person issued or assumed as the deferred purchase price
of
Property or services (other than Trade Accounts Payable);
15
(e) any
Capital Lease Obligation of such Person;
(f) the
maximum fixed redemption or repurchase price of Disqualified Stock of such
Person at the time of determination;
(g) any
Preferred Stock of any Restricted Subsidiary, provided that such Restricted
Subsidiary is not a Subsidiary Guarantor;
(h) any
payment obligation of such Person under Exchange Rate Contracts, Interest Rate
Protection Agreements, Oil and Gas Hedging Contracts or under any similar
agreements or instruments;
(i) any
obligation to pay rent or other payment amounts of such Person with respect
to
any Sale and Leaseback Transaction to which such Person is a party;
(j) any
obligation of the type referred to in clauses (a) through (h) of this definition
of another Person and all dividends of another Person the payment of which,
in
either case, such Person has Guaranteed or is responsible or liable, directly
or
indirectly, as obligor, Guarantor or otherwise; and
(k) all
obligations of the type referred to in clauses (a) through (i) of this
definition of another Person secured by any Lien on any Property of such Person
(whether or not such obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such Property or the
amount of the obligation so secured;
provided,
however, that Indebtedness shall not include Production Payments and
Reserve Sales. For purposes of this definition, the maximum fixed
repurchase price of any Disqualified Stock that does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Disqualified
Stock as if such Disqualified Stock were repurchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture;
provided, however, that if such Disqualified Stock is not then permitted to
be
repurchased, the repurchase price shall be the book value of such Disqualified
Stock. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability at such date in respect of any
contingent obligations described above.
“Interest
Rate Protection Agreement” means, with respect to any Person, any interest
rate swap agreement, forward rate agreement, interest rate cap or collar
agreement or other financial agreement or arrangement entered into by such
Person in the ordinary course of its business for the purpose of limiting or
managing interest rate risks to which such Person is subject.
“Investment”
means, with respect to any Person:
(a) any
amount paid by such Person, directly or indirectly, to any other Person for
Capital Stock of, or as a capital contribution to, any other Person;
or
(b) any
direct or indirect loan or advance to any other Person (other than accounts
receivable of such Person arising in the ordinary course of
business);
16
provided,
however, that Investments shall not include:
(1) in
the case of clause (a) as used in the definition of “Restricted Payments” only,
any such amount paid through the issuance of Capital Stock of the Company (other
than Disqualified Stock); and
(2) in
the case of clause (a) or (b), extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and any increase
in
the equity ownership in any Person resulting from retained earnings of such
Person.
“Investment
Grade Rating” means a rating equal to or higher than Baa3 (or the
equivalent) by Moody’s and BBB- (or the equivalent) by S&P.
“Issue
Date” means the date on which the Original 7⅛% Notes first were issued
under this Indenture.
“Lien”
means, with respect to any Property, any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest, lien
(statutory or other), charge, easement, encumbrance, preference, priority or
other security or similar agreement or preferential arrangement of any kind
or
nature whatsoever on or with respect to such Property (including any conditional
sale or other title retention agreement having substantially the same economic
effect as any of the foregoing). For purposes of Section 4.10, a
Capital Lease Obligation shall be deemed to be secured by a Lien on the Property
being leased.
“Liquid
Securities” means securities:
(a) of
an issuer that is not an Affiliate of the Company;
(b) that
are publicly traded on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market; and
(c) as
to which the Company is not subject to any restrictions on sale or transfer
(including any volume restrictions under Rule 144 under the Securities Act
or
any other restrictions imposed by the Securities Act) or as to which a
registration statement under the Securities Act covering the resale thereof
is
in effect for as long as the securities are held;
provided
that securities meeting the requirements or clauses (a), (b) and (c) above
shall be treated as Liquid Securities from the date of receipt thereof until
and
only until the earlier of:
(1) the
date on which such securities are sold or exchanged for cash or Permitted
Short-Term Investments, and
(2) 240
days following the date of receipt of such securities. If such
securities are not sold or exchanged for cash or Permitted Short-Term
Investments within 240 days of receipt thereof, for purposes of determining
whether the transaction pursuant to which the Company or the Restricted
Subsidiary received the securities was in
17
compliance
with Section 4.14 such securities shall be deemed not to have been Liquid
Securities at any time.
“Material
Change” means an increase or decrease (except to the extent resulting from
changes in prices) of more than 30% during a fiscal quarter in the estimated
discounted future net revenues from proved oil and gas reserves of the Company
and its Restricted Subsidiaries, calculated in accordance with clause (a)(1)
of
the definition of Adjusted Consolidated Net Tangible Assets; provided,
however, that the following will be excluded from the calculation of
Material Change:
(a) any
acquisitions during the quarter of oil and gas reserves with respect to which
the Company’s estimate of the discounted future net revenues from proved oil and
gas reserves has been confirmed by independent petroleum engineers;
and
(b) any
dispositions of Properties during such quarter that were disposed of in
compliance with Section 4.14.
“Moody’s”
means ▇▇▇▇▇’▇ Investors Service, Inc. and its successors.
“Net
Available Cash” from an Asset Sale means cash proceeds received therefrom,
including:
(a) any
cash proceeds received by way of deferred payment of principal pursuant to
a
note or installment receivable or otherwise, but only as and when received;
and
(b) the
Fair Market Value of Liquid Securities and Permitted Short-Term Investments,
and
excluding:
(1) any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to the Property that is the
subject of such Asset Sale, and
(2) except
to the extent converted within 240 days after such Asset Sale to cash, Liquid
Securities or Permitted Short-Term Investments, consideration constituting
Exchanged Properties or consideration other than as identified in the
immediately preceding clauses (a) and (b),
in
each
case net of:
(a) all
legal, title and recording expenses, commissions and other fees and expenses
Incurred, and all federal, state, foreign and local taxes required to be paid
or
accrued as a liability under GAAP as a consequence of such Asset
Sale;
(b) all
payments made on any Indebtedness (but specifically excluding Indebtedness
of
the Company and its Restricted Subsidiaries assumed in connection with or in
anticipation of such Asset Sale) that is secured by any assets subject to such
Asset Sale, in accordance with the terms of any Lien upon such assets, or that
must by its terms, or in order to obtain a necessary consent to such Asset
Sale
or by applicable law, be repaid out of the proceeds
18
from
such
Asset Sale, provided that such payments are made in a manner that results in
the
permanent reduction in the balance of such Indebtedness and, if applicable,
a
permanent reduction in any outstanding commitment for future Incurrences of
Indebtedness thereunder;
(c) all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Sale;
and
(d) the
deduction of appropriate amounts to be provided by the seller as a reserve,
in
accordance with GAAP, against any liabilities associated with the assets
disposed of in such Asset Sale and retained by the Company or any Restricted
Subsidiary after such Asset Sale;
provided,
however, that if any consideration for an Asset Sale (which would otherwise
constitute Net Available Cash) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Available Cash only
at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow.
“Net
Working Capital” means:
(a) all
current assets of the Company and its Restricted Subsidiaries; less
(b) all
current liabilities of the Company and its Restricted Subsidiaries, except
current liabilities included in Indebtedness,
in
each
case as set forth in consolidated financial statements of the Company prepared
in accordance with GAAP.
“Non-recourse
Purchase Money Indebtedness” means Indebtedness (other than Capital Lease
Obligations) of the Company or any Restricted Subsidiary Incurred in connection
with the acquisition by the Company or such Restricted Subsidiary in the
ordinary course of business of fixed assets used in the Oil and Gas Business
(including office buildings and other real property used by the Company or
such
Restricted Subsidiary in conducting its operations) with respect to
which:
(a) the
holders of such Indebtedness agree that they will look solely to the fixed
assets so acquired that secure such Indebtedness, and neither the Company nor
any Restricted Subsidiary:
(1) is
directly or indirectly liable for such Indebtedness, or
(2) provides
credit support, including any undertaking, Guarantee, agreement or instrument
that would constitute Indebtedness (other than the grant of a Lien on such
acquired fixed assets); and
(b) no
Default or Event of Default with respect to such Indebtedness would cause,
or
permit (after notice or passage of time or otherwise), any holder of any
other
19
Indebtedness
of the Company or a Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment, repurchase, redemption, defeasance or other
acquisition or retirement for value thereof to be accelerated or payable prior
to any scheduled principal payment, scheduled sinking fund payment or
maturity.
“Oil
and Gas Business” means the business of exploiting, exploring for,
developing, acquiring, operating, producing, processing, gathering, marketing,
storing, selling, hedging, treating, swapping, refining and transporting
hydrocarbons and other related energy businesses.
“Oil
and Gas Hedging Contract” means, with respect to any Person, any agreement
or arrangement, or any combination thereof, relating to oil and gas or other
hydrocarbon prices, transportation or basis costs or differentials or other
similar financial factors, that is customary in the Oil and Gas Business and
is
entered into by such Person in the ordinary course of its business for the
purpose of limiting or managing risks associated with fluctuations in such
prices, costs, differentials or similar factors.
“Oil
and Gas Liens” means:
(a) Liens
on any specific Property or any interest therein, construction thereon or
improvement thereto to secure all or any part of the costs incurred for
surveying, exploration, drilling, extraction, development, operation,
production, construction, alteration, repair or improvement of, in, under or
on
such Property and the plugging and abandonment of ▇▇▇▇▇ located thereon (it
being understood that, in the case of oil and gas producing properties, or
any
interest therein, costs incurred for “development” shall include costs incurred
for all facilities relating to such properties or to projects, ventures or
other
arrangements of which such properties form a part or which relate to such
properties or interests);
(b) Liens
on an oil or gas producing property to secure obligations incurred or guarantees
of obligations incurred in connection with or necessarily incidental to
commitments for the purchase or sale of, or the transportation or distribution
of, the products derived from such Property;
(c) Liens
arising under partnership agreements, oil and gas leases, overriding royalty
agreements, net profits agreements, production payment agreements, royalty
trust
agreements, incentive compensation programs for geologists, geophysicists and
other providers of technical services to the Company or a Restricted Subsidiary,
master limited partnership agreements, farm-out agreements, farm-in agreements,
division orders, contracts for the sale, purchase, exchange, transportation,
gathering or processing of oil, gas or other hydrocarbons, unitizations and
pooling designations, declarations, orders and agreements, development
agreements, operating agreements, production sales contracts, area of mutual
interest agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or geophysical permits or agreements, and other agreements that are
customary in the Oil and Gas Business; provided, however, in all instances
that
such Liens are limited to the assets that are the subject of the relevant
agreement, program, order or contract;
20
(d) Liens
arising in connection with Production Payments and Reserve Sales;
and
(e) Liens
on pipelines or pipeline facilities that arise by operation of law.
“Permitted
Business Investments” means Investments and expenditures made in the
ordinary course of, and of a nature that is or shall have become customary
in,
the Oil and Gas Business as a means of actively engaging therein through
agreements, transactions, interests or arrangements that permit one to share
risks or costs, comply with regulatory requirements regarding local ownership
or
satisfy other objectives customarily achieved through the conduct of Oil and
Gas
Business jointly with third parties, including:
(a) ownership
interests in oil and gas properties or gathering, transportation, processing,
storage or related systems; 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) and other
similar agreements (including for limited liability companies) with third
parties, excluding, however, Investments in corporations other than Restricted
Subsidiaries.
“Permitted
Hedging Agreements” means:
(a) Exchange
Rate Contracts and Oil and Gas Hedging Contracts; and
(b) Interest
Rate Protection Agreements but only to the extent that the stated aggregate
notional amount thereunder does not exceed 100% of the aggregate principal
amount of the Indebtedness of the Company or a Restricted Subsidiary covered
by
such Interest Rate Protection Agreements at the time such agreements were
entered into.
“Permitted
Indebtedness” means any and all of the following:
(a) Indebtedness
arising under this Indenture with respect to the Original 7⅛% Notes and any
Subsidiary Guaranties relating thereto;
(b) Indebtedness
under Bank Credit Facilities, provided that the aggregate principal amount
of
all Indebtedness under Bank Credit Facilities, at any one time outstanding
does
not exceed the greater of:
(1) $300.0
million and
(2) an
amount equal to the sum of:
(A) $150.0
million, and
21
(B) 25%
of Adjusted Consolidated Net Tangible Assets determined as of the date of
Incurrence of such Indebtedness,
and,
in
the case of either (1) or (2), plus all interest and fees and other obligations
thereunder and any Guarantee of such Indebtedness;
(c) Indebtedness
of the Company owing to and held by any Wholly Owned Subsidiary and Indebtedness
of a Restricted Subsidiary owing to and held by the Company or any Wholly Owned
Subsidiary; provided, however, that any subsequent issue or transfer of Capital
Stock or other event that results in any such Wholly Owned Subsidiary ceasing
to
be a Wholly Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness by the issuer
thereof;
(d) Indebtedness
in respect of bid, performance, reimbursement or surety obligations issued
by or
for the account of the Company or any Restricted Subsidiary in the ordinary
course of business, including Guarantees and letters of credit functioning
as or
supporting such bid, performance, reimbursement or surety obligations (in each
case other than for an obligation for money borrowed);
(e) Indebtedness
under Permitted Hedging Agreements;
(f) in-kind
obligations relating to oil or gas balancing positions arising in the ordinary
course of business;
(g) Indebtedness
outstanding on the Issue Date not otherwise permitted in clauses (a) through
(f)
above;
(h) Non-recourse
Purchase Money Indebtedness;
(i) Indebtedness
not otherwise permitted to be Incurred pursuant to this definition (excluding
any Indebtedness Incurred pursuant to clause (a) of Section 4.11), provided
that
the aggregate principal amount of all Indebtedness Incurred pursuant to this
clause (i), together with all Indebtedness Incurred pursuant to clause (j)
of
this definition in respect of Indebtedness previously Incurred pursuant to
this
clause (i), at any one time outstanding does not exceed the greater of (1)
$50.0
million and (2) 2.0% of Adjusted Consolidated Net Tangible Assets determined
as
of the date of Incurrence of such Indebtedness;
(j) Indebtedness
Incurred in exchange for, or the proceeds of which are used to
refinance:
(1) Indebtedness
referred to in clauses (a), (g), (h), (i) and (l) of this definition (including
Indebtedness previously Incurred pursuant to this clause (j)), and
(2) Indebtedness
Incurred pursuant to clause (a) of Section 4.11,
provided
that, in the case of each of the foregoing clauses (1) and (2), such
Indebtedness is Permitted Refinancing Indebtedness;
22
(k) Indebtedness
consisting of obligations in respect of purchase price adjustments, indemnities
or Guarantees of the same or similar matters in connection with the acquisition
or disposition of Property; and
(l) Acquired
Debt Incurred in connection with a transaction meeting either one of the
financial tests set forth in clause (d) of Section 10.01.
“Permitted
Investments” means any and all of the following:
(a) Permitted
Short-Term Investments;
(b) Investments
in property, plant and equipment used in the ordinary course of business and
Permitted Business Investments;
(c) Investments
by any Restricted Subsidiary in the Company;
(d) Investments
by the Company or any Restricted Subsidiary in any Restricted
Subsidiary;
(e) Investments
by the Company or any Restricted Subsidiary:
(1) in
any Person that will, upon the making of such Investment, become a Restricted
Subsidiary, or
(2) if
as a result of such Investment such Person is merged or consolidated with or
into, or transfers or conveys all or substantially all its Property to, the
Company or a Restricted Subsidiary;
(f) Investments
in the form of securities received from Asset Sales, provided that such Asset
Sales are made in compliance with Section 4.14;
(g) Investments
in negotiable instruments held for collection; lease, utility and other similar
deposits; and stock, obligations or other securities received in settlement
of
debts (including under any bankruptcy or other similar proceeding) owing to
the
Company or any of its Restricted Subsidiaries as a result of foreclosure,
perfection or enforcement of any Liens or Indebtedness, in each of the foregoing
cases in the ordinary course of business of the Company or such Restricted
Subsidiary;
(h) relocation
allowances for, and advances and loans in compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
of 2002 to, officers, directors and employees of the Company or any of its
Restricted Subsidiaries made in the ordinary course of business, provided such
items do not exceed in the aggregate $2.0 million at any one time
outstanding;
(i) Investments
intended to promote the Company’s strategic objectives in the Oil and Gas
Business in an amount not to exceed 6.0% of Adjusted Consolidated Net Tangible
Assets (determined as of the date of the making of any such Investment) at
any
one time outstanding, which Investments shall be deemed to be no longer
outstanding only to the extent of dividends, repayments of loans or advances
or
other transfers of Property or returns of capital
23
received
by the Company or any Restricted Subsidiary from such Persons, provided that,
for purposes of Section 4.12 the receiving of such amounts by the Company or
its
Restricted Subsidiaries does not increase the amount of Restricted Payments
that
the Company and its Restricted Subsidiaries may make pursuant to Section
4.12(c)(5)(A);
(j) Investments
made pursuant to Permitted Hedging Agreements of the Company and its Restricted
Subsidiaries; and
(k) Investments
pursuant to any agreement or obligation of the Company or any of its Restricted
Subsidiaries as in effect on the Issue Date (other than Investments described
in
clauses (a) through (j) above), provided that Investments made pursuant to
this
clause (k) shall be included in the calculation of Restricted
Payments.
“Permitted
Liens” means any and all of the following:
(a) Liens
on any Property of the Company and any Subsidiary Guarantor securing
Indebtedness and other obligations under Bank Credit Facilities that are
permitted to be Incurred by clause (b) of the definition of Permitted
Indebtedness;
(b) Liens
existing as of the Issue Date;
(c) Liens
securing the 7⅛% Notes, any Subsidiary Guaranties and other obligations arising
under this Indenture;
(d) any
Lien existing on any Property of a Person at the time such Person is merged
or
consolidated with or into the Company or a Restricted Subsidiary or becomes
a
Restricted Subsidiary (and not incurred in anticipation of or in connection
with
such transaction), provided that such Liens are not extended to other Property
of the Company or the Restricted Subsidiaries;
(e) any
Lien existing on any Property at the time of the acquisition thereof (and not
incurred in anticipation of or in connection with such transaction), provided
that such Lien is not extended to other Property of the Company or the
Restricted Subsidiaries;
(f) any
Lien incurred in the ordinary course of business incidental to the conduct
of
the business of the Company or the Restricted Subsidiaries or the ownership
of
their Property, including:
(1) easements,
rights of way and similar encumbrances,
(2) rights
or title of lessors under leases (other than Capital Lease
Obligations),
(3) rights
of collecting banks having rights of setoff, revocation, refund or chargeback
with respect to money or instruments of the Company or the Restricted
Subsidiaries on deposit with or in the possession of such banks,
24
(4) Liens
imposed by law, including Liens under workers’ compensation or similar
legislation and mechanics’, carriers’, warehousemen’s, materialmen’s, suppliers’
and vendors’ Liens,
(5) Liens
incurred to secure performance of obligations with respect to statutory or
regulatory requirements, performance or return-of-money bonds, surety bonds
or
other obligations of a like nature and incurred in a manner consistent with
industry practice, and
(6) Oil
and Gas Liens,
in
each
case that are not incurred in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred purchase price
of
Property (other than Trade Accounts Payable);
(g) Liens
for taxes, assessments and governmental charges not yet due or the validity
of
which is being contested in good faith by appropriate proceedings, promptly
instituted and diligently conducted, and for which adequate reserves have been
established to the extent required by GAAP as in effect at such
time;
(h) Liens
incurred to secure appeal bonds and judgment and attachment Liens, in each
case
in connection with litigation or legal proceedings that are being contested
in
good faith by appropriate proceedings so long as reserves have been established
to the extent required by GAAP as in effect at such time and so long as such
Liens do not encumber assets by an aggregate amount (together with the amount
of
any unstayed judgments against the Company or any Restricted Subsidiary but
excluding any such Liens to the extent securing insured or indemnified judgments
or orders) in excess of $20.0 million;
(i) Liens
securing Permitted Hedging Agreements of the Company and its Restricted
Subsidiaries;
(j) Liens
securing Capital Lease Obligations, provided that such Capital Lease Obligations
are permitted under Section 4.11 and the Liens attach only to the Property
acquired with the proceeds of such Capital Lease Obligations;
(k) Liens
securing Non-recourse Purchase Money Indebtedness granted in connection with
the
acquisition by the Company or any Restricted Subsidiary in the ordinary course
of business of fixed assets used in the Oil and Gas Business (including office
buildings and other real property used by the Company or such Subsidiary
Guarantor in conducting its operations), provided that:
(1) such
Liens attach only to the fixed assets acquired with the proceeds of such
Non-recourse Purchase Money Indebtedness, and
(2) such
Non-recourse Purchase Money Indebtedness is not in excess of the purchase price
of such fixed assets;
25
(l) Liens
resulting from the deposit of funds or evidences of Indebtedness in trust for
the purpose of decreasing or legally defeasing Indebtedness of the Company
or
any of its Subsidiaries so long as such deposit of funds is permitted under
Section 4.12;
(m) Liens
resulting from a pledge of Capital Stock of a Person that is not a Restricted
Subsidiary to secure obligations of such Person and any refinancings
thereof;
(n) Liens
to secure any permitted extension, renewal, refinancing, refunding or exchange
(or successive extensions, renewals, refinancings, refundings or exchanges),
in
whole or in part, of or for any Indebtedness secured by Liens referred to in
clauses (a), (b), (c), (d), (i) and (j) above; provided, however,
that:
(1) such
new Lien shall be limited to all or part of the same Property (including future
improvements thereon and accessions thereto) subject to the original Lien,
and
(2) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of:
(A) the
outstanding principal amount or, if greater, the committed amount of the
Indebtedness secured by such original Lien immediately prior to such extension,
renewal, refinancing, refunding or exchange, and
(B) an
amount necessary to pay any fees and expenses, including premiums, related
to
such refinancing, refunding, extension, renewal or replacement;
(o) Liens
in favor of the Company or a Restricted Subsidiary; and
(p) Liens
not otherwise permitted by clauses (a) through (o) above incurred in the
ordinary course of business of the Company and its Restricted Subsidiaries
and
encumbering Property having an aggregate Fair Market Value not in excess of
the
greater of (1) $10.0 million and (2) 0.5% of Adjusted Consolidated Net Tangible
Assets as of the date of Incurrence of any such Lien.
Notwithstanding
anything in this definition to the contrary, the term “Permitted Liens” does not
include Liens resulting from the creation, incurrence, issuance, assumption
or
Guarantee of any Production Payments and Reserve Sales other than:
(a) any
such Liens existing as of the Issue Date;
(b) Production
Payments and Reserve Sales in connection with the acquisition of any Property
after the Issue Date, provided that any such Lien created in connection
therewith is created, incurred, issued, assumed or guaranteed in connection
with
the financing of, and within 60 days after the acquisition of, such
Property;
26
(c) Production
Payments and Reserve Sales, other than those described in clauses (a) and (b)
of
this sentence, to the extent such Production Payments and Reserve Sales
constitute Asset Sales made pursuant to and in compliance with Section 4.14;
and
(d) incentive
compensation programs for geologists, geophysicists and other providers of
technical services to the Company or a Restricted Subsidiary;
provided,
however, that, in the case of the immediately foregoing clauses (a), (b),
(c) and (d), any Lien created in connection with any such Production Payments
and Reserve Sales shall be limited to the Property that is the subject of such
Product Payments and Reserve Sales.
“Permitted
Refinancing Indebtedness” means Indebtedness (“New Indebtedness”) Incurred
in exchange for, or proceeds of which are used to refinance, other Indebtedness
(“Old Indebtedness”); provided, however, that:
(a) such
New Indebtedness is in an aggregate principal amount not in excess of the sum
of:
(1) the
aggregate principal amount then outstanding of the Old Indebtedness (or, if
such
Old Indebtedness provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration thereof, such lesser
amount as of the date of determination), and
(2) an
amount necessary to pay any fees and expenses, including premiums, related
to
such exchange or refinancing;
(b) such
New Indebtedness has a Stated Maturity no earlier than the Stated Maturity
of
the Old Indebtedness;
(c) such
New Indebtedness has an Average Life at the time such New Indebtedness is
Incurred that is equal to or greater than the Average Life of the Old
Indebtedness at such time;
(d) such
New Indebtedness is subordinated in right of payment to the 7⅛% Notes (or, if
applicable, the Subsidiary Guaranties) to at least the same extent, if any,
as
the Old Indebtedness; and
(e) if
such Old Indebtedness is Non-recourse Purchase Money Indebtedness or
Indebtedness that refinanced Non-recourse Purchase Money Indebtedness, such
New
Indebtedness satisfies clauses (a) and (b) of the definition of “Non-recourse
Purchase Money Indebtedness.”
“Permitted
Short-Term Investments” means:
(a) Investments
in U.S. Government Obligations maturing within one year of the date
of acquisition thereof;
27
(b) Investments
in demand accounts, time deposit accounts, certificates of deposit, bankers’
acceptances and money market deposits maturing within one year of the date
of
acquisition thereof issued by a bank or trust company that is organized under
the laws of the United States of America or any State thereof or the District
of
Columbia that is a member of the Federal Reserve System having capital, surplus
and undivided profits aggregating in excess of $500.0 million and whose
long-term Indebtedness is rated “A” (or higher) according to
▇▇▇▇▇’▇;
(c) Investments
in deposits available for withdrawal on demand with any commercial bank that
is
organized under the laws of any country in which the Company or any Restricted
Subsidiary maintains an office or is engaged in the Oil and Gas Business,
provided that:
(1) all
such deposits have been made in such accounts in the ordinary course of
business, and
(2) such
deposits do not at any one time exceed $15.0 million in the
aggregate;
(d) repurchase
and reverse repurchase obligations with a term of not more than seven days
for
underlying securities of the types described in clause (a) entered into with
a
bank meeting the qualifications described in clause (b);
(e) Investments
in commercial paper or notes, maturing not more than one year after the date
of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or
any
State thereof or the District of Columbia with a short-term rating at the time
as of which any Investment therein is made of “P-1” (or higher) according to
▇▇▇▇▇’▇ or “A-1” (or higher) according to S&P or a long-term rating at the
time as of which any Investment is made of “A3” (or higher) according to ▇▇▇▇▇’▇
or “A-” (or higher) according to S&P;
(f) Investments
in any money market mutual fund having assets in excess of $250.0 million all
of
which consist of other obligations of the types described in clauses (a), (b),
(d) and (e) hereof; and
(g) Investments
in asset-backed securities maturing within one year of the date of acquisition
thereof with a long-term rating at the time as of which any Investment therein
is made of “A3” (or higher) according to ▇▇▇▇▇’▇ or “A-” (or higher) according
to S&P.
“Person”
means any individual, corporation, partnership, joint venture, limited liability
company, unlimited liability company, trust, estate, unincorporated organization
or government or any agency or political subdivision thereof.
“Preferred
Stock” of any Person means Capital Stock of such Person of any class or
classes (however designated) that ranks prior, as to the payment of dividends
or
as to the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
28
“Preferred
Stock Dividends” means all dividends with respect to Preferred Stock of
Restricted Subsidiaries held by Persons other than the Company or a Wholly
Owned
Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income rate (expressed as a decimal number between 1 and
0)
then applicable to the issuer of such Preferred Stock.
“Production
Payments and Reserve Sales” means the grant or transfer by the Company or a
Restricted Subsidiary to any Person of a royalty, overriding royalty, net
profits interest, production payment (whether volumetric or dollar denominated),
partnership or other interest in oil and gas properties, reserves or the right
to receive all or a portion of the production or the proceeds from the sale
of
production attributable to such properties where the holder of such interest
has
recourse solely to such production or proceeds of production, subject to the
obligation of the grantor or transferor to operate and maintain, or cause the
subject interests to be operated and maintained, in a reasonably prudent manner
or other customary standard or subject to the obligation of the grantor or
transferor to indemnify for environmental, title or other matters customary
in
the Oil and Gas Business, including any such grants or transfers pursuant to
incentive compensation programs on terms that are reasonably customary in the
Oil and Gas Business for geologists, geophysicists and other providers of
technical services to the Company or a Restricted Subsidiary.
“Property”
means, with respect to any Person, any interest of such Person in any kind
of
property or asset, whether real, personal, or mixed, or tangible or intangible,
including Capital Stock and other securities issued by any other Person (but
excluding Capital Stock or other securities issued by such first mentioned
Person).
“Quotation
Agent” means the Reference Treasury Dealer selected by the Trustee after
consultation with the Company.
“Rating
Category” means:
(1) with
respect to S&P, any of the following categories: AAA, AA, A, BBB,
BB, B, CCC, CC, C and D (or equivalent successor categories); and
(2) with
respect to ▇▇▇▇▇’▇, any of the following categories: Aaa, Aa, A, Baa,
Ba, B, Caa, Ca, C and D (or equivalent successor categories).
“Rating
Decline” means a decrease in the rating of the 7⅛% Notes by either ▇▇▇▇▇’▇
or S&P by one or more gradations (including gradations within Rating
Categories as well as between Rating Categories). In determining
whether the rating of the 7⅛% Notes has decreased by one or more gradations,
gradations within Rating Categories, namely + or – for S&P, and 1, 2, and 3
for ▇▇▇▇▇’▇, will be taken into account; for example, in the case of S&P, a
rating decline either from BB+ to BB or BB– to B+ will constitute a decrease of
one gradation.
“Reference
Date” means April 1, 2004.
“Reference
Treasury Dealer” means ▇.▇.▇▇▇▇▇▇ Securities Inc. and its successors and
assigns and Credit Suisse Securities (USA) LLC and its successors and assigns
and one other
29
nationally
recognized investment banking firm selected by the Company that is a primary
U.S. Government securities dealer.
“Reference
Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee,
of
the bid and asked prices for the Comparable Treasury Issue, expressed in each
case as a percentage of its principal amount, quoted in writing to the Trustee
by such Reference Treasury Dealer at 5:00 p.m., New York City Time, on the
third
Business Day immediately preceding such redemption date.
“Restricted
Payment” means:
(a) a
dividend or other distribution declared or paid on the Capital Stock of the
Company or to the Company’s shareholders (other than dividends, distributions or
payments made solely in Capital Stock (other than Disqualified Stock of the
Company) of the Company or in options, warrants or other rights to purchase
or
acquire Capital Stock (other than Disqualified Stock)), or declared and paid
to
any Person other than the Company or any of its Restricted Subsidiaries (and,
if
such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the other
shareholders of such Restricted Subsidiary on a pro rata basis or on a basis
that results in the receipt by the Company or a Restricted Subsidiary of
dividends or distributions of greater value than it would receive on a pro
rata
basis) on the Capital Stock of any Restricted Subsidiary;
(b) a
payment made by the Company or any of its Restricted Subsidiaries (other than
to
the Company or any Restricted Subsidiary) to purchase, redeem, acquire or retire
any Capital Stock, or any options, warrants or other rights to acquire Capital
Stock, of the Company or of a Restricted Subsidiary;
(c) a
payment made by the Company or any of its Restricted Subsidiaries to redeem,
repurchase, legally defease or otherwise acquire or retire for value (including
pursuant to mandatory repurchase covenants), prior to any scheduled maturity,
scheduled sinking fund or scheduled mandatory redemption, any Subordinated
Indebtedness of the Company or a Guarantor, provided that this clause (c) shall
not include any such payment with respect to:
(1) any
such Subordinated Indebtedness to the extent of Excess Proceeds (as defined
in
Section 4.14) remaining after compliance with Section 4.14 and to the extent
required by this Indenture or other agreement or instrument pursuant to which
such Subordinated Indebtedness was issued, or
(2) the
purchase, repurchase or other acquisition of any such subordinated Indebtedness
purchased in anticipation of satisfying a scheduled maturity, scheduled sinking
fund or scheduled mandatory redemption, in each case due within one year of
the
date of acquisition; or
(d) an
Investment (other than a Permitted Investment) by the Company or a Restricted
Subsidiary in any Person.
“Restricted
Subsidiary” means any Subsidiary of the Company that has not been
designated an Unrestricted Subsidiary pursuant Section 4.19.
30
“7⅛%
Notes” means the 7⅛% Senior Notes due 2017 of the Company.
“S&P”
means Standard & Poor’s Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., and its successors.
“Sale
and Leaseback Transaction” means, with respect to any Person, any direct or
indirect arrangement (excluding, however, any such arrangement between such
Person and a Wholly Owned Subsidiary of such Person or between one or more
Wholly Owned Subsidiaries of such Person) pursuant to which Property is sold
or
transferred by such Person or a Restricted Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Restricted Subsidiaries.
“SEC”
means the Securities and Exchange Commission.
“Senior
Indebtedness” when used with respect to the Company means the obligations
of the Company with respect to Indebtedness of the Company, whether outstanding
on the Issue Date or thereafter Incurred, and any renewal, refunding,
refinancing, replacement or extension thereof, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall be subordinate in right of payment to the 7⅛% Notes;
provided, however, that Senior Indebtedness of the Company shall not
include:
(a) Indebtedness
of the Company to a Subsidiary of the Company;
(b) Indebtedness
Incurred in violation of this Indenture;
(c) amounts
payable or any other Indebtedness to employees of the Company or any Subsidiary
of the Company;
(d) any
Indebtedness of the Company that, when Incurred and without regard to any
election under Section 1111(b) of the United States Bankruptcy Code, was without
recourse to the Company;
(e) Subordinated
Indebtedness of the Company;
(f) obligations
with respect to any Capital Stock of the Company; and
(g) in-kind
obligations relating to net oil and gas balancing positions.
“Senior
Indebtedness” of any Subsidiary Guarantor has a correlative
meaning.
“Senior
Indebtedness Offer” means an offer by us or a Subsidiary Guarantor to
purchase all or a portion of Senior Indebtedness to the extent required by
the
indenture or other agreement or instrument pursuant to which such Senior
Indebtedness was issued.
“Significant
Subsidiary” means, at any date of determination, any Restricted Subsidiary
that would be a “Significant Subsidiary” of the Company within the meaning of
Rule 1-02 under Regulation S-X promulgated by the SEC.
31
“Stated
Maturity” when used with respect to any security or any installment of
principal thereof or interest thereon, means the date specified in such security
as the fixed date on which the principal of such security or such installment
of
principal or interest is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of
any
contingency unless such contingency has occurred).
“Subordinated
Indebtedness” means Indebtedness of the Company (or a Subsidiary Guarantor)
that is subordinated or junior in right of payment to the 7⅛% Notes (or a
Subsidiary Guaranty, as appropriate) pursuant to a written agreement to that
effect.
“Subsidiary”
of a Person means:
(a) another
Person that is a corporation a majority of whose Voting Stock is at the time,
directly or indirectly, owned or controlled by:
(1) the
first Person,
(2) the
first Person and one or more of its Subsidiaries, or
(3) one
or more of the first Person’s Subsidiaries; or
(b) another
Person that is not a corporation (x) at least 50% of the Capital Stock of which,
and (y) the power to elect or direct the election of a majority of the directors
or other governing body of which are controlled by Persons referred to in clause
(1), (2) or (3) above.
“Subsidiary
Guarantors” means, unless released from their Subsidiary Guaranties as
permitted by this Indenture, (i) Swift Energy Operating, LLC, (ii) any
Restricted Subsidiary that becomes a guarantor of the 7⅛% Notes in compliance
with the provisions of this Indenture and executes a supplemental indenture
agreeing to be bound by the terms of this Indenture, and (iii) their respective
successors.
“Subsidiary
Guaranty” means an unconditional senior guaranty of the 7⅛% Notes given by
any Restricted Subsidiary pursuant to the terms of this Indenture.
“Trade
Accounts Payable” means accounts payable or other obligations of the
Company or any Restricted Subsidiary to trade creditors created or assumed
by
the Company or such Restricted Subsidiary in the ordinary course of business
in
connection with the obtaining of goods or services.
“Unrestricted
Subsidiary” means:
(a) each
Subsidiary of the Company that the Company has designated pursuant to Section
4.19 as an Unrestricted Subsidiary; and
(b) any
Subsidiary of an Unrestricted Subsidiary.
32
“U.S.
Government Obligations” means securities that are:
(a) direct
obligations of the United States of America for the timely payment of which
its
full faith and credit is pledged; or
(b) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America, the timely payment of which
is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America
that,
in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian, with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest
on
any such U.S. Government Obligation held by such custodian for the account
of
the holder of such depository receipt; provided, however, that (except as
required by law) such custodian is not authorized to make any deduction from
the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment or principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.
“Volumetric
Production Payments” means production payment obligations recorded as
deferred revenue in accordance with GAAP, together with all undertakings and
obligations in connection therewith.
“Voting
Stock” of any Person means Capital Stock of such Person that ordinarily has
voting power for the election of directors (or persons performing similar
functions) of such Person whether at all times or only so long as no senior
class of securities has such voting power by reason of any
contingency.
“Wholly
Owned Subsidiary” means, at any time, a Restricted Subsidiary of the
Company all the Voting Stock of which (other than directors’ qualifying shares)
is at such time owned, directly or indirectly, by the Company and its other
Wholly Owned Subsidiaries.
SECTION
3. Amendments
to Article III of the Original Indenture
(a) The
second paragraph of Section 3.02 of the Original Indenture is amended by adding
the words “(or, if the redemption price is not then determinable, the manner in
which it will be determined)” immediately after the words “are to be redeemed”
in the second line thereof.
(b) The
fourth paragraph of Section 3.02 of the Original Indenture is amended in its
entirety to read as follows:
“At
or
prior to 11:00 a.m., New York City time, on the redemption date for any
Registered Securities, the Company shall deposit with the Trustee or with a
paying agent (or, if the Company is acting as its own paying agent, segregate
and hold in trust) an amount of money in the Currency in which such Debt
Securities are denominated (except as provided pursuant to Section 2.03)
sufficient to pay the redemption price of and accrued interest on (subject
to
the
33
right
of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date) such Registered Securities or any portions
thereof that are to be redeemed on that date.”
(c) The
first sentence of the fifth paragraph of Section 3.02 of the Original Indenture
is amended in its entirety with respect to the 7⅛% Notes to read as
follows:
“If
less
than all the 7⅛% Notes are to be redeemed at any time, selection of 7⅛% Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the 7⅛% Notes
are listed, or, if the 7⅛% Notes are not so listed, on a pro rata
basis.”
(d) The
first paragraph of Section 3.03 of the Original Indenture is amended in its
entirety to read as follows:
“If
notice of redemption has been given as provided in Section 3.02, the Debt
Securities or portions of Debt Securities of the series with respect to which
such notice has been given shall become due and payable on the date and at
the
Place or Places of Payment stated in such notice at the applicable redemption
price, together with any interest accrued to the date fixed for redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date that is on or prior
to
the date of redemption), and on and after said date (unless the Company shall
default in the payment of such Debt Securities at the applicable redemption
price, together with any interest accrued to said date) the interest on the
Debt
Securities or portions of Debt Securities of any series so called for redemption
shall cease to accrue and any original issue discount in the case of Original
Issue Discount Debt Securities shall cease to accrue. On presentation
and surrender of such Debt Securities at the Place or Places of Payment in
said
notice specified, the said Debt Securities or the specified portions thereof
shall be paid and redeemed by the Company at the applicable redemption price,
together with any interest accrued thereon to the date fixed for
redemption.”
(e) Article
III of the Original Indenture is amended with respect to the 7⅛% Notes by adding
Section 3.06 and Section 3.07 as follows:
“SECTION
3.06. Optional Redemption. Except as set forth in
this Section 3.06 or in the final paragraph of Section 4.20, the 7⅛% Notes will
not be redeemable at the option of the Company prior to their Stated
Maturity. On or after June 1, 2012, the Company may redeem all or any
portion of the 7⅛% Notes, upon no less than 30 nor more than 60 days’ prior
notice, at the redemption prices set forth below, plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date). The following prices are for 7⅛% Notes
redeemed during the 12-month period commencing on June 1 of the years set forth
below, and are expressed as percentages of principal amount:
|
Year
|
|
Redemption
Price
|
|
2012
|
|
103.563%
|
|
2013
|
102.375%
|
|
|
2014
|
101.188%
|
|
|
2015
and thereafter
|
100.000%
|
The
Company may on any one or more occasions prior to June 1, 2010, redeem up to
35%
of the aggregate principal amount of the 7⅛% Notes originally issued with the
net proceeds of one or more Equity Offerings at a redemption price of 107.125%
of the principal amount thereof, plus accrued and unpaid interest, if any,
to
the date of redemption, subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date, provided that at least 65% of the aggregate principal amount of
the 7⅛% Notes originally issued remains Outstanding after the occurrence of such
redemption. Any such redemption shall occur not later than 90 days
after the date of the closing of any such Equity Offering upon not less than
30
nor more than 60 days’ prior notice. The redemption shall be made in
accordance with procedures set forth in this Indenture.
At
any
time prior to June 1, 2012, the Company will be entitled, at its option, to
redeem all or any portion of the 7⅛% Notes at a redemption price equal to 100%
of the principal amount of the 7⅛% Notes plus the Applicable Premium as of, and
accrued and unpaid interest to, the redemption date (subject to the right of
Holders on the relevant record date to receive interest due on the relevant
interest payment date). Notice of such redemption must be mailed by
first-class mail to each Holder’s registered address, not less than 30 nor more
than 60 days prior to the redemption date.”
SECTION
3.07. No Mandatory Sinking Fund. There will be no
mandatory sinking fund payments for the 7⅛% Notes.
SECTION
4. Amendments to Article IV of the Original
Indenture
(a) Sections
4.07, 4.08 and 4.09 of the Original Indenture shall not be applicable to the
7⅛%
Notes.
(b) Section
4.10 of the Original Indenture is amended in its entirety with respect to the
7⅛% Notes to read as follows:
“SECTION
4.10. Limitation on Liens. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, enter
into, create, Incur, assume or suffer to exist any Lien, other than Permitted
Liens, on or with respect to any Property of the Company or such Restricted
Subsidiary, whether owned on the Issue Date or acquired after the Issue Date,
or
any interest therein or any income or profits therefrom, unless the 7⅛% Notes or
any Subsidiary
34
Guaranty
of such Restricted Subsidiary are secured equally and ratably with, or prior
to,
any and all other obligations secured by such Lien.”
(c) Article
IV of the Original Indenture is amended with respect to the 7⅛% Notes by adding
Sections 4.11 through 4.20, inclusive, as follows:
“SECTION
4.11. Limitation on Indebtedness. The Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, Incur any Indebtedness unless, after giving pro forma effect to
the
Incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, no Default or Event of Default would occur as a consequence of, or
be
continuing following, such Incurrence and application and either:
(a) after
giving pro forma effect to such Incurrence and application, the Consolidated
Interest Coverage Ratio would exceed 2.25 to 1.0; or
(b) such
Indebtedness is Permitted Indebtedness.
For
purposes of determining compliance with this Section 4.11, in the event that
an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (a) through (l) of
the
definition of Permitted Indebtedness, or is entitled to be Incurred pursuant
to
clause (a) of this Section 4.11, the Company will be permitted to classify
such
item of Indebtedness on the date of its Incurrence, or later reclassify all
or a
portion of such item of Indebtedness, in any manner that complies with this
Section 4.11.
SECTION
4.12. Limitation on Restricted Payments. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, make any Restricted Payment if, at the time of and
after
giving effect to the proposed Restricted Payment:
(a) any
Default or Event of Default would have occurred and be continuing;
(b) the
Company could not Incur at least $1.00 of additional Indebtedness pursuant
to
clause (a) of Section 4.11; or
(c) the
aggregate amount expended or declared for all Restricted Payments from the
Issue
Date would exceed the sum of (without duplication):
(1) 50%
of the aggregate Consolidated Net Income of the Company accrued during the
period (treated as one accounting period) commencing on the Reference Date
and
ending on the last day of the fiscal quarter immediately preceding the date
of
such proposed Restricted Payment (or, if such aggregate Consolidated Net Income
shall be a loss, minus 100% of such loss),
(2) the
aggregate net cash proceeds, or the Fair Market Value of Property other than
cash (provided that, in the case of Property that is
35
Capital
Stock, such Capital Stock falls within the meaning of clause (b) of the
definition of “Additional Assets”), received by the Company from the issuance or
sale (other than to a Subsidiary of the Company or an employee stock ownership
plan or trust established by the Company or any such Subsidiary for the benefit
of their employees) by the Company of its Capital Stock (other than Disqualified
Stock) after the Reference Date, net of attorneys’ fees, accountants’ fees,
underwriters’ or placement agents’ fees, discounts or commissions and brokerage,
consultant and other fees actually Incurred in connection with such issuance
or
sale and net of taxes paid or payable as a result thereof,
(3) the
aggregate net cash proceeds, or the Fair Market Value of Property other than
cash, received by the Company as capital contributions to the Company (other
than from a Subsidiary of the Company) on or after the Issue Date,
(4) the
aggregate net cash proceeds received by the Company from the issuance or sale
(other than to any Subsidiary of the Company or an employee stock ownership
plan
or trust established by the Company or any such Subsidiary for the benefit
of
their employees) on or after the Issue Date of convertible Indebtedness that
has
been converted into or exchanged for Capital Stock (other than Disqualified
Stock) of the Company, together with the aggregate cash received by the Company
at the time of such conversion or exchange or received by the Company from
any
conversion or exchange of convertible Indebtedness issued or sold (other than
to
any Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of their
employees) prior to the Issue Date, excluding:
(A) any
such Indebtedness issued or sold to the Company or a Subsidiary of the Company
or an employee stock ownership plan or trust established by the Company or
any
such Subsidiary for the benefit of their employees, and
(B) the
aggregate amount of any cash or other Property distributed by the Company or
any
Restricted Subsidiary upon any such conversion or exchange,
(5) to
the extent not otherwise included in the Company’s Consolidated Net Income, an
amount equal to the net reduction in Investments made by the Company and its
Restricted Subsidiaries subsequent to the Issue Date in any Person resulting
from:
(A) payments
of interest on debt, dividends, repayments of loans or advances or other
transfers or distributions of Property, in each case to the Company or any
Restricted Subsidiary from any
36
Person
other than the Company or a Restricted Subsidiary, and in an amount not to
exceed the book value of such Investments previously made in such Person that
were treated as Restricted Payments, or
(B) the
designation of any Unrestricted Subsidiary as a Restricted Subsidiary, and
in an
amount not to exceed the lesser of:
(i) the
book value of all Investments previously made in such Unrestricted Subsidiary
that were treated as Restricted Payments, and
(ii) the
Fair Market Value of the Company’s and its Restricted Subsidiaries’ interest in
such Unrestricted Subsidiary, and
(6) $30.0
million.
The
limitations set forth in the preceding paragraph will not prevent the Company
or
any Restricted Subsidiary from making the following Restricted Payments so
long
as, at the time thereof, no Default or Event of Default shall have occurred
and
be continuing:
(a) the
payment of any dividend on Capital Stock of the Company or any Restricted
Subsidiary within 60 days after the declaration thereof, if at such declaration
date such dividend could have been paid in compliance with the preceding
paragraph;
(b) the
repurchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company or any of its Subsidiaries pursuant to the terms
of
agreements (including employment agreements) or plans (including employee stock
ownership plans but excluding other plans to purchase such Capital Stock in
open
market transactions, together with, in the case of employee stock ownership
plans, loans to or Investments therein in an amount sufficient to fund such
repurchase, redemption or other acquisition or retirement by such plan) approved
by the Company’s Board of Directors, including any such repurchase, redemption,
acquisition or retirement of shares of such Capital Stock that is deemed to
occur upon the exercise of stock options or vesting of restricted stock grants
or similar rights if such shares represent all or a portion of the exercise
price or are netted out or surrendered in connection with satisfying Federal
income tax obligations; provided, however, that the aggregate amount of such
repurchase, redemptions, acquisitions and retirements (but disregarding any
transaction that does not result in the payment of cash by the Company or any
Restricted Subsidiary to or on behalf of another Person) shall not exceed the
sum of:
(1) $7.5
million in any twelve-month period, and
37
(2) the
aggregate net proceeds, if any, received by the Company during such twelve-month
period from any issuance of such Capital Stock pursuant to such agreements
or
plans;
(c) the
purchase, redemption or other acquisition or retirement for value of any Capital
Stock of the Company or any Restricted Subsidiary, in exchange for, or out
of
the aggregate net cash proceeds of, a substantially concurrent issuance and
sale
(other than to a Subsidiary of the Company or an employee stock ownership plan
or trust established by the Company or any of its Subsidiaries, for the benefit
of their employees) of Capital Stock of the Company (other than Disqualified
Stock);
(d) the
purchase, redemption, legal defeasance, acquisition or retirement for value
of
any Subordinated Indebtedness in exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
of the Company or an employee stock ownership plan or trust established by
the
Company or any such Subsidiary for the benefit of their employees);
(e) the
making of any principal payment on or the repurchase, redemption, legal
defeasance or other acquisition or retirement for value of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of a substantially
concurrent Incurrence (other than a sale to a Subsidiary of the Company) of
(i)
any other Subordinated Indebtedness so long as such new Indebtedness is
Permitted Refinancing Indebtedness or (ii) with respect only to the Company’s
9⅜% senior subordinated notes due 2012, Senior Indebtedness, so long as at the
time of and after giving effect to such Incurrence, the Company could Incur
at
least $1.00 of Indebtedness pursuant to clause (a) of Section 4.11 of this
Indenture.
(f) loans,
in an aggregate principal amount at any one time outstanding of not more than
$2.0 million, made to officers, directors or employees of the Company or any
Restricted Subsidiary approved by the Board of Directors (or by a duly
authorized officer) and in compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002,
the
net cash proceeds of which are used solely:
(1) to
purchase common stock of the Company in connection with a restricted stock
or
employee stock purchase plan, or to exercise stock options received pursuant
to
an employee or director stock option plan or other incentive plan, in a
principal amount not to exceed the purchase price of such common stock or the
exercise price of such stock options, or
(2) to
refinance loans, together with accrued interest thereon, made pursuant to item
(1) of this clause (f).
38
The
actions described in clauses (a) and (b) of this paragraph shall be included
in
the calculation of the amount of Restricted Payments. The actions
described in clauses (c), (d), (e) and (f) of this paragraph shall be excluded
in the calculation of the amount of Restricted Payments, provided that the
net
cash proceeds from any issuance or sale of Capital Stock or Indebtedness of
the
Company pursuant to such clause (c), (d) or (e) shall be excluded from any
calculations pursuant to clause (2), (3) or (4) under the immediately preceding
paragraph.
SECTION
4.13. [This Section is intentionally omitted.]
SECTION
4.14. Limitation on Asset Sales. The Company will
not, and will not permit any Restricted Subsidiary to, consummate any Asset
Sale
unless:
(a) the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the Property subject to such Asset Sale; and
(b) all
of the consideration paid to the Company or such Restricted Subsidiary in
connection with such Asset Sale is in the form of cash, Permitted Short-Term
Investments, Liquid Securities, Exchange Properties or the assumption by the
purchaser of liabilities of the Company (other than liabilities of the Company
that are by their terms subordinated to the 7⅛% Notes) or liabilities of any
Subsidiary Guarantor that made such Asset Sale (other than liabilities of a
Subsidiary Guarantor that are by their terms subordinated to such Subsidiary
Guarantor’s Subsidiary Guaranty), in each case as a result of which the Company
and its remaining Restricted Subsidiaries are no longer liable for such
liabilities, such consideration being defined as “Permitted Consideration”;
provided, however, that the Company and its Restricted Subsidiaries shall be
permitted to receive Property other than Permitted Consideration, so long as
the
aggregate Fair Market Value of all such Property other than Permitted
Consideration received from Asset Sales and held by the Company or any
Restricted Subsidiary at any one time shall not exceed 10.0% of Adjusted
Consolidated Net Tangible Assets.
The
Net
Available Cash from Asset Sales by the Company or a Restricted Subsidiary may
be
applied by the Company or such Restricted Subsidiary, to the extent the Company
or such Restricted Subsidiary elects (or is required by the terms of any Senior
Indebtedness of the Company or a Subsidiary Guarantor), to:
(a) prepay,
repay or purchase Senior Indebtedness of the Company or a Subsidiary Guarantor
(in each case excluding Indebtedness owed to the Company or an Affiliate of
the
Company);
39
(b) to
reinvest in Additional Assets (including by means of an Investment in Additional
Assets by a Restricted Subsidiary with Net Available Cash received by the
Company or another Restricted Subsidiary);
(c) purchase
7⅛% Notes or purchase both 7⅛% Notes and one or more series or issues of other
Senior Indebtedness on a pro rata basis (excluding 7⅛% Notes and Pari Passu
Indebtedness owed to the Company or any of its Affiliates) in accordance with
the next paragraph; or
(d) enter
into a bona fide binding contract with a Person other than an Affiliate of
the
Company to apply the Net Available Cash pursuant to clause (b) above, provided
that such binding contract shall be treated as a permitted application of the
Net Available Cash from the date of such contract until the earlier
of
(1) the
date on which such reinvestment is consummated, and
(2) the
90th day following the expiration of the 365-day period referred to in the
next
following sentence.
Any
Net
Available Cash from an Asset Sale not applied in accordance with the preceding
paragraph within 365 days from the date of such Asset Sale shall constitute
“Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $25.0
million, the Company will be required to make an offer (a “Prepayment Offer”) to
purchase 7⅛% Notes having an aggregate principal amount equal to the aggregate
amount of Excess Proceeds at a purchase price equal to 100% of the principal
amount of such 7⅛% Notes plus accrued and unpaid interest, if any, to the
Purchase Date (as defined) in accordance with the procedures (including
proration in the event of oversubscription) set forth in this Indenture, but,
if
the terms of any other Senior Indebtedness require that a Senior Indebtedness
Offer be made contemporaneously with the Prepayment Offer, then the Excess
Proceeds shall be prorated between the Prepayment Offer and such Senior
Indebtedness Offer in accordance with the aggregate Outstanding principal
amounts of the 7⅛% Notes and such other Senior Indebtedness, and the aggregate
principal amount of 7⅛% Notes for which the Prepayment Offer is made shall be
reduced accordingly. If the aggregate principal amount of 7⅛% Notes
tendered by Holders thereof exceeds the amount of available Excess Proceeds,
then such Excess Proceeds will be allocated pro rata according to the principal
amount of the 7⅛% Notes tendered and the Trustee will select the 7⅛% Notes to be
purchased in accordance with this Indenture. To the extent that any
portion of the amount of Excess Proceeds remains after compliance with the
second sentence of this paragraph and provided that all Holders of 7⅛% Notes
have been given the opportunity to tender their 7⅛% Notes for purchase as
described in the following paragraph in accordance with this Indenture, the
Company and its Restricted
40
Subsidiaries
may use such remaining amount for purposes permitted by this Indenture and
the
amount of Excess Proceeds will be reset to zero.
Within
30
days after the 365th day following the date of an Asset Sale, the Company shall,
if it is obligated to make an offer to purchase the 7⅛% Notes pursuant to the
preceding paragraph, send a written Prepayment Offer notice, by first-class
mail, to the Holders of the 7⅛% Notes (the “Prepayment Offer Notice”),
accompanied by such information regarding the Company and its Subsidiaries
as
the Company believes will enable such Holders of the 7⅛% Notes to make an
informed decision with respect to the Prepayment Offer. The
Prepayment Offer Notice will state, among other things:
(a) that
the Company is offering to purchase 7⅛% Notes pursuant to the provisions of this
Indenture;
(b) that
any 7⅛% Note (or any portion thereof) accepted for payment (and duly paid on the
Purchase Date) pursuant to the Prepayment Offer shall cease to accrue interest
on the Purchase Date;
(c) that
any 7⅛% Notes (or portions thereof) not properly tendered will continue to
accrue interest;
(d) the
purchase price and purchase date, which shall be, subject to any contrary
requirements of applicable law, no less than 30 days nor more than 60 days
after
the date the Prepayment Offer Notice is mailed (the “Purchase
Date”);
(e) the
aggregate principal amount of 7⅛% Notes to be purchased;
(f) a
description of the procedure that Holders of 7⅛% Notes must follow in order to
tender their 7⅛% Notes for payment; and
(g) all
other instructions and materials necessary to enable Holders to tender 7⅛% Notes
pursuant to the Prepayment Offer.
The
Company will comply, to the extent applicable, with the requirements of Section
14(e) under the Exchange Act and any other securities laws or regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of 7⅛% Notes as described above. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions relating to the Prepayment Offer, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations described above by virtue thereof.
SECTION
4.15. Covenant Termination. If at any time (a) the
rating assigned to the 7⅛% Notes by each of S&P and ▇▇▇▇▇’▇ is an Investment
Grade Rating and (b) no Default has occurred and is continuing, the Company
and
its
41
Restricted
Subsidiaries will no longer be subject to the covenants set forth in Sections
4.11, 4.12, 4.14, 4.16, 4.17 and 4.18, and clause (d) of Section
10.01.
SECTION
4.16. Limitation on Transactions with
Affiliates. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, conduct any business or
enter into any transaction or series of transactions (including the sale,
transfer, disposition, purchase, exchange or lease of Property, the making
of
any Investment, the giving of any Guarantee or the rendering of any service)
with or for the benefit of any Affiliate of the Company (other than the Company
or a Wholly Owned Subsidiary), unless:
(a) such
transaction is set forth in writing;
(b) such
transaction or series of transactions is on terms no less favorable to the
Company or such Restricted Subsidiary than those that could be obtained in
a
comparable arm’s-length transaction with a Person that is not an Affiliate of
the Company or such Restricted Subsidiary; and
(c) with
respect to a transaction or series of transactions involving aggregate payments
by or to the Company or such Restricted Subsidiary having a Fair Market Value
equal to or in excess of:
(1) $15.0
million but less than $25.0 million, the Board of Directors of the Company
(including a majority of the disinterested members of such Board of Directors)
approves such transaction or series of transactions and certifies that such
transaction or series of transactions complies with clause (b) of this
paragraph, as evidenced by a certified resolution delivered to the Trustee,
or
(2) $25.0
million,
(A) the
Company receives from an independent, nationally recognized investment banking
firm or appraisal firm, in either case specializing or having a specialty in
the
type and subject matter of the transaction (or series of transactions) at issue,
a written opinion that such transaction (or series of transactions) is fair,
from a financial point of view, to the Company or such Restricted Subsidiary,
and
(B) such
Board of Directors (including a majority of the disinterested members of the
Board of Directors of the Company) approves such transaction or series of
transactions and certifies that such transaction or series of transactions
complies with clause (b) of this paragraph, as evidenced by a certified
resolution delivered to the Trustee.
42
The
preceding limitations of this Section 4.16 do not apply to:
(a) the
payment of reasonable and customary regular fees to directors of the Company
or
any of its Restricted Subsidiaries who are not employees of the Company or
any
of its Restricted Subsidiaries;
(b) indemnities
of officers and directors of the Company or any Subsidiary consistent with
such
Person’s charter, bylaws and applicable statutory provisions;
(c) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and employee stock purchase and ownership plans approved by the Board
of
Directors of the Company;
(d) loans
made in compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002:
(1) to
officers, directors or employees of the Company or any Restricted Subsidiary
approved by the Board of Directors of the Company, the net proceeds of which
are
used solely to purchase common stock of the Company in connection with a
restricted stock or employee stock purchase plan, or to exercise stock options
received pursuant to an employee or director stock option plan or other
incentive plan, in a principal amount not to exceed the purchase price of such
common stock or the exercise price of such stock options, or
(2) to
refinance loans, together with accrued interest thereon, made pursuant to this
clause (d);
(e) advances
and loans made in compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 to officers,
directors and employees of the Company or any Subsidiary in the ordinary course
of business (including, without limitation, non-cash loans for the purchase
of
joint interests in exploratory and developmental oil and gas prospects or other
similar ventures offered by the Company), provided such loans and advances
(excluding loans or advances made pursuant to the preceding clause (d)) do
not
exceed $2.0 million at any one time outstanding;
(f) any
Restricted Payment permitted to be paid pursuant to Section 4.12;
(g) any
transaction or series of transactions between the Company and one or more
Restricted Subsidiaries or between two or more Restricted Subsidiaries in the
ordinary course of business, provided that no more than 10% of the total voting
power of the Voting Stock of any such
43
Restricted
Subsidiary is owned by an Affiliate of the Company (other than a Restricted
Subsidiary); and
(h) any
transaction or series of transactions pursuant to any agreement or obligation
of
the Company or any of its Restricted Subsidiaries in effect on the Issue
Date.
SECTION
4.17. Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or
restriction on the legal right of any Restricted Subsidiary to:
(a) pay
dividends, in cash or otherwise, or make any other distributions on or in
respect of its Capital Stock, or pay any Indebtedness or other obligation owed,
to the Company or any other Restricted Subsidiary;
(b) make
loans or advances to the Company or any other Restricted Subsidiary;
or
(c) transfer
any of its Property to the Company or any other Restricted
Subsidiary.
Such
limitation will not apply:
(1) with
respect to clauses (a), (b) and (c), to encumbrances and
restrictions:
(A) in
agreements and instruments (including any Bank Credit Facilities) as in effect
on the Issue Date,
(B) relating
to Indebtedness of a Restricted Subsidiary and existing at the time it became
a
Restricted Subsidiary if such encumbrance or restriction was not created in
anticipation of or in connection with the transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary, or
(C) that
result from the renewal, refinancing, extension or amendment of an agreement
that is the subject of clause (c)(1)(A) or (B) above or clause (c)(2)(A) or
(B)
below, provided that such encumbrance or restriction is not materially less
favorable to the Holders of 7⅛% Notes than those under or pursuant to the
agreement so renewed, refinanced, extended or amended, as determined in good
faith by the Board of Directors of the Company and,
44
(2) with
respect to clause (c) only, to:
(A) restrictions
pursuant to Liens permitted to be Incurred and secured without also securing
the
7⅛% Notes under Section 4.10 and that limit the right of the debtor to dispose
of the Property subject to such Lien,
(B) any
encumbrance or restriction applicable to Property at the time it is acquired
by
the Company or a Restricted Subsidiary, so long as such encumbrance or
restriction relates solely to the Property so acquired and was not created
in
anticipation of or in connection with such acquisition,
(C) customary
provisions restricting subletting or assignment of leases and customary
provisions in other agreements that restrict assignment of such agreements
or
rights thereunder, and
(D) customary
restrictions contained in asset sale agreements limiting the transfer of such
assets pending the closing of such sale.
SECTION
4.18. Future Subsidiary Guarantors. The Company
shall cause each Restricted Subsidiary (except an Exempt Foreign Subsidiary)
that:
(a) Incurs
Indebtedness or issues Preferred Stock following the Issue Date; or
(b) has
Indebtedness or Preferred Stock outstanding on the date on which such Restricted
Subsidiary becomes a Restricted Subsidiary,
to
execute and deliver to the Trustee a supplemental indenture providing for a
Subsidiary Guaranty pursuant to Section 14.06 at the time such Restricted
Subsidiary Incurs such Indebtedness or becomes a Restricted Subsidiary;
provided, however, that such Restricted Subsidiary shall not be required to
deliver a supplemental indenture providing for a Subsidiary Guaranty if the
aggregate amount of such Indebtedness or Preferred Stock, together with all
other Indebtedness and Preferred Stock then outstanding among Restricted
Subsidiaries (including Exempt Foreign Subsidiaries) that are not Subsidiary
Guarantors, is less than $10.0 million.
Any
Subsidiary Guarantor that no longer has any outstanding Indebtedness or
Preferred Stock or that again qualifies as an Exempt Foreign Subsidiary shall
be
released from and relieved of its obligations under its Subsidiary Guaranty
upon
execution and delivery of a supplemental indenture in form satisfactory to
the
Trustee.
45
SECTION
4.19. Restricted and Unrestricted
Subsidiaries. Unless defined or designated as an Unrestricted
Subsidiary, any Person that becomes a Subsidiary of the Company or any of its
Restricted Subsidiaries shall be classified as a Restricted Subsidiary subject
to the provisions of the next paragraph. The Company may designate a
Subsidiary (including a newly formed or newly acquired Subsidiary) of the
Company or any of its Restricted Subsidiaries as an Unrestricted Subsidiary
if:
(a) such
Subsidiary does not at such time own any Capital Stock or Indebtedness of,
or
own or hold any Lien on any Property of, the Company or any other Restricted
Subsidiary;
(b) such
Subsidiary does not at such time have any Indebtedness or other obligations
that, if in default, would result (with the passage of time or notice or
otherwise) in a default on any Indebtedness of the Company or any Restricted
Subsidiary; and
(c) (1) such
designation is effective immediately upon such Subsidiary becoming a Subsidiary
of the Company or of a Restricted Subsidiary,
(2) the
Subsidiary to be so designated has total assets of $1,000 or less,
or
(3) if
such Subsidiary has assets greater than $1,000, then such redesignation as
an
Unrestricted Subsidiary is deemed to constitute a Restricted Payment in an
amount equal to the Fair Market Value of the Company’s direct and indirect
ownership interest in such Subsidiary, and such Restricted Payment would be
permitted to be made at the time of such designation under Section
4.12.
Except
as
provided in the immediately preceding sentence, no Restricted Subsidiary may
be
redesignated as an Unrestricted Subsidiary. The designation of an
Unrestricted Subsidiary or removal of such designation shall be made by the
Board of Directors of the Company or a committee thereof pursuant to a certified
resolution delivered to the Trustee and shall be effective as of the date
specified in the applicable certified resolution, which shall not be prior
to
the date such certified resolution is delivered to the Trustee. Any
Subsidiary Guarantor that is designated an Unrestricted Subsidiary in accordance
with the terms of this Section 4.19 shall be released from and relieved of
its
obligations under its Subsidiary Guaranty upon execution and delivery of a
supplemental indenture in form satisfactory to the Trustee.
SECTION
4.20. Change of Control. Upon the occurrence of a
Change of Control, each Holder of 7⅛% Notes shall have the right to require the
Company to repurchase all or any part (equal to $1,000 in principal amount
or an
integral
46
multiple
thereof) of such Holder’s 7⅛% Notes pursuant to the offer described below (the
“Change of Control Offer”) at a purchase price in cash (a “Change of Control
Payment”) equal to 101% of the principal amount of the 7⅛% Notes repurchased,
plus accrued and unpaid interest, if any, to the date of purchase, subject
to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date.
Within
30
days following any Change of Control, the Company shall:
(a) cause
a notice of the Change of Control Offer to be sent at least once to the Dow
▇▇▇▇▇ News Service or similar business news service in the United States;
and
(b) send,
by first-class mail, with a copy to the Trustee, to each Holder of 7⅛% Notes, at
such Holder’s address appearing in the Debt Security Register, a notice stating,
among other things:
(1) that
a Change of Control has occurred and a Change of Control Offer is being made
pursuant to this Indenture and that all 7⅛% Notes (or portions thereof) properly
tendered will be accepted for payment,
(2) the
Change of Control Payment and the purchase date, which shall be, subject to
any
contrary requirements of applicable law, a business day no earlier than 30
days
nor later than 60 days from the date the Company mails such notice (the “Change
of Control Payment Date”),
(3) that
any 7⅛% Note (or portion thereof) accepted for payment (and duly paid on the
Change of Control Payment Date) pursuant to the Change of Control Offer shall
cease to accrue interest on the Change of Control Payment Date,
(4) that
any 7⅛% Note (or portions thereof) not properly tendered will continue to accrue
interest,
(5) a
description of the transaction or transactions constituting the Change of
Control,
(6) the
procedures that the Holders of the 7⅛% Notes must follow in order to tender
their 7⅛% Notes (or portions thereof) for payment and the procedures that
Holders of 7⅛% Notes must follow in order to withdraw an election to tender 7⅛%
Notes (or portions thereof) for payment, and
(7) all
other instructions and materials necessary to enable Holders to tender 7⅛% Notes
pursuant to the Change of Control Offer.
47
The
Company will comply, to the extent applicable, with the requirements of Section
14(e) 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 7⅛% Notes pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions relating to the Change of Control
Offer, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.20 by virtue of such compliance.
The
Company will 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
Section 4.20 applicable to a Change of Control Offer made by the Company and
purchases all 7⅛% Notes validly tendered and not withdrawn under such Change of
Control Offer.
In
the
event that Holders of not less than 90% of the aggregate principal amount of
the
outstanding 7⅛% Notes accept a Change of Control Offer and the Company purchases
all of the 7⅛% Notes held by such Holders, the Company will have the right, upon
not less than 30 nor more than 60 days’ prior notice, given not more than 30
days following the purchase pursuant to the Change of Control Offer referred
to
above, to redeem all of the 7⅛% Notes that remain outstanding following such
purchase at a redemption price equal to the Change of Control Payment plus,
to
the extent not included in the Change of Control Payment, accrued and unpaid
interest on the 7⅛% Notes that remain outstanding, to the date of redemption
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).”
SECTION
5. Amendments to Article V of the Original
Indenture. Section 5.03 of the Original Indenture is amended in
its entirety with respect to the 7⅛% Notes to read as follows:
Notwithstanding
that the Company may not be subject to the reporting requirements of Sections
13
and 15(d) of the Exchange Act, the Company shall file with the SEC and provide
the Trustee and, upon their request, Holders with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a United States corporation subject
to such Sections, such information, documents and reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections; provided, however, that the Company shall
not
be so obligated to file such information, documents and reports with the SEC
if
the SEC does not permit such filings. To the extent such reports are
available to the public via the SEC’s ▇▇▇▇▇ system, they will be deemed as being
provided to the Trustee on the date they become available.
SECTION
6. Amendments to Article VI of the Original
Indenture
48
(a) Sections
6.01(a) and 6.01(b) of the Original Indenture are amended with respect to the
7⅛% Notes by deleting in each the phrase “,whether or not such payment may have
been prohibited by Article XII, if applicable;”.
(b) Section
6.01(e) of the Original Indenture is amended with respect to the 7⅛% Notes by
deleting the number “60” and substituting the number “30” in its
place.
(c) Section
6.01(f) of the Original Indenture is amended in its entirety with respect to
the
7⅛% Notes to read as follows: “(f) a default by the Company or any Restricted
Subsidiary under any Indebtedness for borrowed money in an aggregate amount
greater than $25.0 million (other than Non-recourse Purchase Money Indebtedness)
that results in acceleration of the maturity of such Indebtedness, or failure
to
pay any such Indebtedness at maturity, if such Indebtedness is not discharged
or
such acceleration is not rescinded or annulled within 30 days after written
notice as provided in this Indenture; or”.
(d) Sections
6.01(g) and 6.01(h) of the Original Indenture are amended with respect to the
7⅛% Notes by deleting each reference to “Restricted Subsidiary” and “Restricted
Subsidiaries” therein and substituting “Significant Subsidiary” or “Significant
Subsidiaries”, respectively, in its place.
(e) Section
6.01 of the Original Indenture is amended with respect to the 7⅛% Notes by
adding the following provisions after clause (i) of the first paragraph
thereof:
“(j) one
or more final judgments or orders by a court of competent jurisdiction are
entered against the Company or any Restricted Subsidiary in an uninsured or
unindemnified aggregate amount outstanding at any time in excess of $25.0
million and such judgments or orders are not discharged, waived, stayed,
satisfied or bonded for a period of 60 consecutive days; or
(k) a
Subsidiary Guaranty ceases to be in full force and effect (other than in
accordance with the terms of this Indenture and such Subsidiary Guaranty) or
a
Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary
Guaranty.”
(f) Section
6.01 of the Original Indenture is amended by adding the following sentence
to
the end of the first paragraph thereof: “Notwithstanding anything to
the contrary herein, if an Event of Default described under clause (g) or (h)
of
this paragraph shall occur, the principal amount of all Debt Securities of
any
series then Outstanding will automatically, and without any action by the
Trustee or any Holder, become immediately due and payable.”
(g) Article
VI of the Original Indenture is amended by adding Section 6.09 as
follows:
“SECTION
6.09. Waiver of
Stay or Extension Laws. The Company (to the extent it may
lawfully do so) shall not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or
49
advantage
of any such law, and shall not hinder, delay or impede the execution of any
power herein granted to the Trustee, but shall suffer and permit the execution
of every such power as though no such law had been enacted.”
SECTION
7. Amendments to Article VII of the Original
Indenture
(a) Section
7.08 of the Original Indenture is amended by deleting the number “25%” in the
fourth paragraph thereof and substituting “10%” in its place.
SECTION
8. Amendments to Article IX of the Original
Indenture
(a) Section
9.01 of the Original Indenture is amended with respect to the 7⅛% Notes by (i)
adding the words “in any material respect” to the end of the final clause of
paragraph (c) thereof, (ii) deleting the word “and” from the end of clause (j)
of the first paragraph thereof, (iii) substituting a “;” for the “.” at the end
of clause (k) of the first paragraph thereof and (iv) adding the following
provisions to the end of the first paragraph thereof:
“(l) to
provide for uncertificated 7⅛% Notes in addition to or in place of certificated
7⅛% Notes;
(m) to
make any change that does not adversely affect the rights of any Holder of
7⅛%
Notes in any material respect;
(n) to
add or remove any Subsidiary Guarantors pursuant to the procedures set forth
herein; and
(o) to
provide for the issuance pursuant to an exemption from registration under the
Securities Act of additional Debt Securities of a series after the original
date
of issuance of such series; provided that such additional Debt Securities bear
appropriate legends and have the benefit of registration rights; provided,
further, that the supplemental indenture pursuant to which such series was
established provides for the issuance of additional Debt Securities of such
series pursuant to an exemption from registration under the Securities
Act.”
(b) Section
9.01 of the Original Indenture is further amended by adding the words “in the
Trustee’s opinion” immediately after the word “which” and immediately before the
words “affects the Trustee’s own rights” in the first sentence of the second
paragraph of Section 9.01.
(c) Section
9.02 of the Original Indenture is amended with respect to the 7⅛% Notes by
deleting the word “or” from the end of clause (vii) of the first paragraph
thereof, deleting the “.” at the end of clause (viii) of the first paragraph
thereof and by adding the following provisions to the end of the first paragraph
thereof:
“;
(ix) reduce the relative ranking of
any 7⅛% Notes; (x) at any time after a Change of Control has occurred, change
the repurchase price or the time at which the Change of Control Offer relating
thereto must be made or at which the 7⅛% Notes must be repurchased pursuant to
such Change of Control Offer or (xi)
50
impair
the right of any Holder to receive payment of principal of and interest on
such
Holder’s Debt Securities on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such Holder’s Debt
Securities or any Subsidiary Guaranty.”
(d) Section
9.02 of the Original Indenture is further amended by adding the words “in the
Trustee’s opinion” immediately after the third occurrence of the word
“Indenture” and immediately before the words “adversely affects the Trustee’s
own rights” in the first sentence of the third paragraph of Section
9.02.
(e) Article
IX of the Original Indenture is amended by adding Section 9.05 as
follows:
“SECTION
9.05. Payment
for Consent. Neither the Company nor any Affiliate of the Company
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of Debt Securities
of a series for or as an inducement to any consent, waiver or amendment of
any
of the terms or provisions of this Indenture or the Debt Securities of such
series unless such consideration is offered to be paid to all Holders of such
series that so consent, waive or agree to amend in the time frame set forth
in
solicitation documents relating to such consent, waiver or
agreement.”
(f) The
first sentences of both Section 9.01 and 9.02 of the Original Indenture are
amended with respect to the 7⅛% Notes by adding the words “any Subsidiary
Guarantors” immediately before the words “and the Trustee.”
SECTION
9. Amendments to Article X of the Original
Indenture
(a) Section
10.01 of the Original Indenture is amended in its entirety with respect to
the
7⅛% Notes to read as follows:
“SECTION
10.01. Consolidations and Mergers of the
Company. The Company shall not consolidate with or merge with or
into any Person, or sell, transfer, lease or otherwise dispose of, in one
transaction or series of transactions, all or substantially all of the Property
of the Company and the Restricted Subsidiaries taken as whole,
unless:
(a) the
resulting, surviving or transferee Person (the “Successor Company”) shall be a
Person organized or existing under the laws of the United States of America,
any
State thereof or the District of Columbia and the Successor Company (if not
the
Company) shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the 7⅛% Notes and this Indenture;
(b) in
the case of a disposition of all or substantially all the Property of the
Company and the Restricted Subsidiaries taken as a whole, such
Property
51
shall
have been so disposed of, as an entirety or virtually as an entirety to one
Person;
(c) immediately
after giving effect to such transaction (and treating, for purposes of this
clause (c) and clause (d) below, any Indebtedness that becomes or is anticipated
to become an obligation of the Successor Company or any Restricted Subsidiary
as
a result of such transaction as having been Incurred by such Successor Company
or such Restricted Subsidiary at the time of such transaction), no Default
or
Event of Default shall have occurred and be continuing;
(d) either:
(1) the
Successor Company will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be permitted
to
Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated
Interest Coverage Ratio test set forth in clause (a) of Section 4.11;
or
(2) immediately
after giving effect to such transaction on a pro forma basis and any related
financing transactions as if the same had occurred at the beginning of the
applicable four-quarter period, the Consolidated Interest Coverage Ratio of
the
Successor Company will be equal to or greater than the Consolidated Interest
Coverage Ratio of the Company immediately before such transaction;
and
(e) the
Company shall have delivered to the Trustee an Officers’ Certificate and an
opinion of counsel, each stating that such consolidation, merger or disposition
and such supplemental indenture (if any) comply with this
Indenture;
provided,
however, that clause (d) will not be applicable to (1) a Restricted Subsidiary
consolidating with, merging with or into or selling, transferring, leasing
or
otherwise disposing of all or substantially all its Property to the Company
or a
Subsidiary Guarantor that is a Wholly Owned Subsidiary or (2) the Company
merging with or into an Affiliate of the Company solely for the purpose and
with
the sole effect of reincorporating the Company in another
jurisdiction.”
(b) Section
10.02 of the Original Indenture is amended by deleting the period at the end
of
the first sentence of the first paragraph thereof and by substituting the
following in its place:
“;
provided, however, that in the case
of a lease of all or substantially all of the Company’s Property, the Company
shall not be released from any of the obligations or covenants under this
Indenture, including the obligation to pay the principal of and interest on
the
Debt Securities.”
SECTION
10. Applicability of and Amendments to Article XI of
the Original Indenture
52
(a) Article
XI of the Original Indenture shall be applicable to the 7⅛% Notes.
(b) Section
11.02(b) of the Original Indenture is superseded with respect to the 7⅛% Notes
by the following provisions:
“(b)
Subject to Sections 11.02(c) and 11.03, the Company at any time may terminate
(i) all its obligations under the 7⅛% Notes and this Indenture with respect to
the 7⅛% Notes (“legal defeasance option”) or (ii) its obligations under Sections
4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20 and 10.01(d), the
operation of Sections 6.01(d) (to the extent relating to Section 10.01(d),
6.01(e) (to the extent relating to Sections 4.10, 4.11, 4.12, 4.14, 4.15, 4.16,
4.17, 4.18, 4.19 and 4.20), 6.01(f), 6.01(g) (to the extent relating to
Significant Subsidiaries), 6.01(h) (to the extent relating to Significant
Subsidiaries), 6.01(j) and 6.01(k) (“covenant defeasance
option”). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance
option.
If
the
Company exercises its legal defeasance option, payment of the 7⅛% Notes may not
be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the 7⅛% Notes may not be
accelerated because of an Event of Default specified in Sections 6.01(d) and
6.01(e) (with respect to the provisions of Articles IV and X referred to in
the
immediately preceding paragraph) and Sections 6.01(f), 6.01(g) and 6.01(h)
(in
each case to the extent relating to Significant Subsidiaries), 6.01(j) and
6.01(k). If the Company exercises its legal defeasance option or its
covenant defeasance option, each Subsidiary Guarantor, if any, shall be released
from all its obligations under its Subsidiary Guaranty.
Upon
satisfaction of the conditions set forth herein and upon request of the Company,
the Trustee shall acknowledge in writing the discharge of those obligations
that
the Company terminates.”
(c) Section
11.02(c) of the Original Indenture is amended in its entirety with respect
to
the 7⅛% Notes to read as follows:
“(c) Notwithstanding
clauses (a) and (b) above, the Company’s obligations in Sections 2.07, 2.09,
4.02, 4.04, 5.01, 7.06, 7.08, 7.10, 11.05, 11.06 and 11.07 shall survive until
the 7⅛% Notes have been paid in full. Thereafter, the Company’s
obligations in Sections 7.06, 11.05 and 11.06 shall survive.”
(d) (Section
11.03(c) of the Original Indenture is amended by deleting each instance of
the
number “91” and substituting “123” in its place.
(e) Section
11.03(g)(ii) of the Original Indenture is amended by deleting the words “date of
this Indenture” and substituting the words “Issue Date” in their
place.
(f) Section
11.07 of the Original Indenture is amended by deleting the “.” at the end
thereof and by substituting the following in its place:
53
“;
provided, however, that, if the Company has made any payment of interest on
or
principal of any Debt Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Debt Securities to receive such payment from the money or
U.S. Government Obligations held by the Trustee or paying
agent.”
SECTION
11. Inapplicability of Article XII of the Original
Indenture
Article
XII of the Original Indenture shall not be applicable to the 7⅛%
Notes. The Notes shall be Senior Indebtedness of the Company, and the
Subsidiary Guaranties shall be Senior Indebtedness of each Subsidiary
Guarantor.
SECTION
12. Governing Law.
The
Original Indenture is amended with respect to the 7⅛% Notes by revising Section
13.04 to read as follows:
This
Indenture shall be governed by and construed in accordance with the laws of
the
State of New York without giving effect to applicable principles of conflicts
of
laws to the extent that the application of the law of another jurisdiction
would
be required thereby, except to the extent that the laws of the State of New
York
would require the application of the laws of another jurisdiction regarding
the
validity of the 7⅛% Notes.
SECTION
13. Subsidiary Guaranties
(a) The
Original Indenture is amended with respect to the 7⅛% Notes by adding Article
XIV as follows:
“ARTICLE
XIV
Subsidiary
Guaranties
SECTION
14.01. Subsidiary Guaranties. Each Subsidiary
Guarantor hereby unconditionally Guaranties, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the 7⅛% Notes when due, whether
at Stated Maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture and the 7⅛% Notes and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture and the 7⅛% Notes (all the
foregoing being hereinafter collectively called the
“Obligations”). Each Subsidiary Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice
or
further assent from such Subsidiary Guarantor, and that such Subsidiary
Guarantor will remain bound under this Article XIV notwithstanding any extension
or renewal of any Obligation.
Each
Subsidiary Guarantor waives presentation to, demand of, payment from and protest
to the Company of any of the Obligations and also waives notice of protest
for
nonpayment. Each Subsidiary Guarantor waives notice of
any
54
Default
under the 7⅛% Notes or the Obligations. The obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of
any
Holder or the Trustee to assert any claim or demand or to enforce any right
or
remedy against the Company or any other Person under this Indenture, the 7⅛%
Notes or any other agreement or otherwise; (b) any extension or renewal of
any
thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the 7⅛% Notes or any other agreement; (d)
the release of any security held by any Holder or the Trustee for the
Obligations or any of them; (e) the failure of any Holder or the Trustee to
exercise any right or remedy against any other Guarantor of the Obligations;
or
(f) any change in the ownership of such Subsidiary Guarantor.
Each
Subsidiary Guarantor further agrees that its Subsidiary Guaranty constitutes
a
Guarantee of payment, performance and compliance when due (and not a Guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the
Obligations.
Upon
the
sale or other disposition of all of the Capital Stock of a Subsidiary Guarantor
(other than to the Company or an Affiliate thereof) in compliance with Section
4.14, such Subsidiary Guarantor shall be released from all obligations under
its
Subsidiary Guaranty. Except as expressly set forth in this Section
14.01 and Sections 4.18, 4.19 and 11.02, the obligations of each Subsidiary
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Subsidiary Guarantor herein shall not be
discharged or impaired or otherwise affected by the failure of any Holder or
the
Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the 7⅛% Notes or any other agreement, by any waiver or modification
of any thereof, by any Default, failure or delay, willful or otherwise, in
the
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of such Subsidiary Guarantor or would otherwise operate
as
a discharge of such Subsidiary Guarantor as a matter of law or
equity.
Each
Subsidiary Guarantor further agrees that its Subsidiary Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time payment,
or
any part thereof, of principal of or interest on any Obligation is rescinded
or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy
or
reorganization of the Company or otherwise.
In
furtherance of the foregoing and not in limitation of any other right which
any
Holder or the Trustee has at law or in equity against any
Subsidiary
55
Guarantor
by virtue hereof, upon the failure of the Company to pay the principal of or
interest on any Obligation when and as the same shall become due, whether at
Stated Maturity, by acceleration, by redemption or otherwise, or to perform
or
comply with any other Obligation, each Subsidiary Guarantor hereby promises
to
and will, upon receipt of written demand by the Trustee, forthwith pay, or
cause
to be paid, in cash, to the Holders or the Trustee an amount equal to the sum
of
(i) the unpaid amount of such Obligations, (ii) accrued and unpaid interest
on
such Obligations (but only to the extent not prohibited by law) and (iii) all
other monetary Obligations of the Company to the Holders and the
Trustee. Each Subsidiary Guarantor further agrees that, as between
it, on the one hand, and the Holders and the Trustee, on the other hand, (x)
the
maturity of the Obligations Guaranteed hereby may be accelerated as provided
in
Article VI for the purposes of such Subsidiary Guarantor’s Subsidiary Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations Guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article VI, such Obligations (whether or not due and payable) shall forthwith
become due and payable by such Subsidiary Guarantor for the purposes of this
Section.
Each
Subsidiary Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys’ fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section 14.01.
SECTION
14.02. Contribution. Each of the Company and any
Subsidiary Guarantor (a “Contributing Party”) agrees that, in the event a
payment shall be made by any other Subsidiary Guarantor under any Subsidiary
Guaranty (the “Claiming Guarantor”), the Contributing Party shall indemnify the
Claiming Guarantor in an amount equal to the amount of such payment multiplied
by a fraction, the numerator of which shall be the net worth of the Contributing
Party on the date hereof and the denominator of which shall be the aggregate
net
worth of the Company and all the Subsidiary Guarantors on the date hereof (or,
in the case of any Subsidiary Guarantor becoming a party hereto pursuant to
Section 9.01(n), the determination of indemnification amounts shall be based
upon net worth on the date of the supplemental indenture executed and delivered
by such Subsidiary Guarantor.)
SECTION
14.03. Successors and Assigns. This Article XIV
shall be binding upon each Subsidiary Guarantor and its successors and assigns
and shall inure to the benefit of the successors and assigns of the Trustee
and
the Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges conferred upon that party
in
this Indenture and in the 7⅛% Notes shall automatically extend to and be vested
in such transferee or assignee, all subject to the terms and conditions of
this
Indenture.
SECTION
14.04. No Waiver. Neither a failure nor a delay on
the part of either the Trustee or the Holders in exercising any right, power
or
privilege under this Article XIV shall operate as a waiver thereof, nor shall
a
single or partial
56
exercise
thereof preclude any other or further exercise of any right, power or
privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any
other
rights, remedies or benefits which either may have under this Article XIV at
law, in equity, by statute or otherwise.
SECTION
14.05. Modification. No modification, amendment or
waiver of any provision of this Article XIV, nor the consent to any departure
by
any Subsidiary Guarantor therefrom, shall in any event be effective unless
the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for
which given. No notice to or demand on any Subsidiary Guarantor in
any case shall entitle such Subsidiary Guarantor to any other or further notice
or demand in the same, similar or other circumstances.
SECTION
14.06. Execution of Supplemental Indenture for Future Subsidiary
Guarantors. Each Subsidiary which is required to become a
Subsidiary Guarantor pursuant to Section 4.18 shall promptly execute and deliver
to the Trustee a supplemental indenture in the form of Exhibit B hereto pursuant
to which such Subsidiary shall become a Subsidiary Guarantor under this Article
XIV and shall Guarantee the Obligations. Concurrently with the
execution and delivery of such supplemental indenture, the Company shall deliver
to the Trustee an Opinion of Counsel to the effect that such supplemental
indenture has been duly authorized, executed and delivered by such Subsidiary
and that, subject to the application of bankruptcy, insolvency, moratorium,
fraudulent conveyance or transfer and other similar laws relating to creditors’
rights generally and to the principles of equity, whether considered in a
proceeding at law or in equity, the Subsidiary Guaranty of such Subsidiary
Guarantor is a legal, valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its
terms.”
(b) Opco
shall guarantee the 7⅛% Notes in accordance with the provisions of Article XIV
of the Original Indenture.
SECTION
14. Governing Law. The 7⅛% Notes shall be
governed by and construed in accordance with the laws of the State of New
York. The Trustee, the Company and each of the Subsidiary Guarantors
agree to submit to the non-exclusive jurisdiction of the competent courts of
the
State of New York sitting in New York City in any action or proceeding arising
out of or relating to the Indenture or the 7⅛% Notes.
SECTION
15. Counterparts. This First Supplemental
Indenture may be executed in any number of counterparts, each of which shall
be
an original but such counterparts shall together constitute but one and the
same
instrument.
SECTION
16. Supplemental Indenture Controls. In the
event there is any conflict or inconsistency between the Original Indenture
and
this First Supplemental Indenture, the provisions of this First Supplemental
Indenture shall control.
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IN
WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the day and year first above
written.
|
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SWIFT ENERGY COMPANY | ||
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. | |
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇,
▇▇.
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||
| Executive Vice President & Chief Financial Officer | |||
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SWIFT
ENERGY OPERATING, LLC
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||
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. | |
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇,
▇▇.
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||
| Executive Vice President & Chief Financial Officer | |||
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▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as Trustee | ||
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By:
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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||
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Vice
President
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|||
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