EXHIBIT 99.2
FORM OF
THIRD SUPPLEMENTAL INDENTURE
THIS THIRD SUPPLEMENTAL INDENTURE dated as of April 30, 2002 (this
"Supplemental Indenture"), among Pioneer Natural Resources Company, a Delaware
corporation (the "Company"), Pioneer Natural Resources USA, Inc., a Delaware
corporation, as the subsidiary guarantor (the "Guarantor"), and The Bank of New
York, a New York banking association, as trustee (the "Trustee"). Capitalized
terms used herein and not otherwise defined have the meanings set forth in the
Indenture referred to below.
RECITALS
A. The Company and the Trustee are parties to that certain Indenture,
dated as of January 13, 1998 (the "Indenture"), pursuant to which the Company
may from time to time issue its debentures, notes, bonds or other evidences of
indebtedness (collectively, the "Debt Securities").
B. Article IX of the Indenture provides that the Company, when
authorized by a resolution of the Board of Directors of the Company, and the
Trustee may, without the consent of the holders of the Debt Securities, enter
into a supplemental indenture to establish the form or terms of Debt Securities
of any series as permitted by Sections 2.01 and 2.03 of the Indenture.
C. The Company desires to issue, and the Guarantor desires to
guarantee, $150,000,000 aggregate principal amount of 7.50% Senior Notes Due
2012 (the "Notes") and in connection therewith, the Company and the Guarantor
have duly determined to make, execute and deliver to the Trustee this
Supplemental Indenture to set forth the terms and provisions of the Notes and
the Guarantor's guarantee thereof (the "Guarantee") as required by the
Indenture.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, the parties hereto agree, subject to the terms and conditions
hereinafter set forth, as follows for the benefit of the Trustee and the Holders
of the Notes:
Section 1. Notes. Pursuant to Section 2.03 of the Indenture, the terms
and provisions of the Notes are as follows:
(a) The title of the Notes shall be "7.50% Senior Notes Due
2012."
(b) The Notes shall be initially limited to $150,000,000
aggregate principal amount. The Company may, without the consent of the Holders
of the Notes, increase such aggregate principal amount in the future, on the
same terms and conditions and with the same CUSIP numbers as the Notes. The
Company shall not issue any such additional Notes unless the additional Notes
are fungible with the Notes for United States federal income tax purposes.
(c) The Notes shall not require any principal or premium
payments prior to maturity on April 15, 2012.
(d) The rate at which the Notes shall bear interest shall be
7.50% per annum; interest on the notes shall accrue from April 30, 2002, for the
first interest payment and from the most recent interest payment date
thereafter; the interest payment dates on which such interest
shall be payable shall be April 15 and October 15, beginning October 15, 2002;
and the record dates for the determination of the holders of the Notes to whom
such interest is payable shall be the immediately preceding April 1 (for April
15 payment dates) and October 1](for October 15 payment dates); the rate at
which the overdue principal shall bear interest shall be 1% per annum in excess
of the rate stated initially in this clause; and the rate at which overdue
installments of interest shall bear interest shall be 1% per annum in excess of
the rate stated initially in this clause to the extent lawful.
(e) Payments of principal of and interest on the Notes
represented by one or more Global Senior Notes initially registered in the name
of The Depository Trust Company (the "Depositary") or its nominee with respect
to the Notes shall be made by the Company through the Trustee in immediately
available funds to the Depositary or its nominee, as the case may be.
(f) The Notes shall be redeemable at any time, at the option
of the Company, in whole or from time to time in part, at the price, and
otherwise in accordance with the terms and provisions, set forth in Section 2 of
this Supplemental Indenture and (to the extent they do not conflict with Section
2 of this Supplemental Indenture) the terms and provisions of Sections 3.03 and
3.04 of the Indenture.
(g) The Notes shall be represented by one or more Global
Senior Notes deposited with the Depositary and registered in the name of the
nominee of the Depositary.
(h) There shall be no mandatory sinking fund for the payments
of the Notes.
(i) In addition to the Events of Default set forth in Section
6.01 of the Indenture, failure on the part of the Guarantor to comply with
Section 3(c) of this Supplemental Indenture shall be an Event of Default with
respect to the Notes.
(j) The obligations of the Guarantor with respect to the Notes
shall be defeased if the Notes are defeased or if the Company's covenants under
the Indenture are defeased.
(k) As long as the Depositary or its nominee, or a successor
Depositary or its nominee, is the registered owner of the Global Senior Notes
relating to the Notes, owners of the beneficial interests in such Global Senior
Notes shall not be entitled to have the Notes registered in their names and
shall not receive or be entitled to receive physical delivery of Notes in
definitive form except (i) as provided in Section 2.15(c) of the Indenture or
(ii) if an Event of Default with respect to the Notes has occurred and is
continuing.
(l) The Bank of New York shall be the Trustee for the Notes
under the Indenture.
(m) Article X of the Indenture shall apply to the Notes.
(n) The Guarantor shall execute and deliver its guarantee,
substantially in the form attached hereto as Exhibit A (the "Guarantee"), of the
payment of principal of, and premium, if any, and interest on the Notes in
accordance with Section 3 hereof.
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(o) The Notes shall not be subordinated pursuant to the
provisions of Article XII of the Indenture. The Notes shall be senior unsecured
obligations of the Company ranking pari passu with other existing and future
senior unsecured indebtedness of the Company.
(p) The Company shall be subject to all the covenants set
forth in Article IV of the Indenture with respect to the Notes.
(q) To the extent not set forth herein, the provisions of
Section 2.03 of the Indenture are not applicable.
Section 2. Optional Redemption of Notes. The Notes will be redeemable
at any time, at the option of the Company, in whole or from time to time in
part, upon not less than 30 and not more than 60 days' notice as provided in the
Indenture, on any date prior to maturity (the "Redemption Date") at a price
equal to 100% of the principal amount thereof 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 any interest payment date that
is on or prior to the Redemption Date) plus a Make-Whole Premium, if any (the
"Redemption Price"). In no event will a Redemption Price ever be less than 100%
of the principal amount of the Notes plus accrued and unpaid interest, if any,
to the Redemption Date.
The amount of the Make-Whole Premium with respect to any of the Notes
(or portion thereof) to be redeemed will be equal to the excess, if any, of:
(a) the sum of the present values, calculated as of the
Redemption Date, of:
(i) each interest payment that, but for such
redemption, would have been payable on such Note (or portion thereof)
being redeemed on each interest payment date occurring after the
Redemption Date (excluding any accrued interest for the period prior to
the Redemption Date); and
(ii) the principal amount that, but for such
redemption, would have been payable at the final maturity of such Note
(or portion thereof) being redeemed; over
(b) the principal amount of such Note (or portion thereof)
being redeemed.
The present values of interest and principal payments referred to in
clause (a) above will be determined in accordance with generally accepted
principles of financial analysis. Such present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
Redemption Date at a discount rate equal to the Treasury Yield (as defined
below) plus 50 basis points.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided that
if the Company fails to make such appointment at least 45 business days prior to
the Redemption Date, or if the institution so appointed is unwilling or unable
to make such calculation, such calculation will be made by Credit Suisse First
Boston Corporation (or its successor) or, if such firm is unwilling or unable to
make such calculation, by an independent investment banking institution of
national standing appointed by the Trustee (in any such case, an "Independent
Investment Banker").
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For purposes of determining the Make-whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the applicable Notes, calculated to the
nearest 1/12th of a year (the "Remaining Term"). The Treasury Yield will be
determined as of the third business day immediately preceding the applicable
Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15 (519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States Treasury
Notes having a constant maturity that is the same as the Remaining Term, then
the Treasury Yield will be equal to such weekly average yield. In all other
cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100th of 1%, with any figure of
1/200th of 1% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in the H.15 Statistical Release or
otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no such Note of $1,000 in original principal amount or
less shall be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption relating to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note.
Section 3. Guarantee.
(a) The Guarantee. The Guarantor hereby unconditionally
guarantees to each Holder of the Notes authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Supplemental Indenture, the Indenture, the
Notes or the obligations of the Company hereunder or thereunder, that: (i) the
principal of and premium, if any, and interest, on the Notes shall be promptly
paid in full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on premium, if
any, and interest, on the Notes if any, if lawful, and all other obligations of
the Company to the Holders of the Notes or the Trustee hereunder or thereunder
shall be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time of payment or
renewal of any of the Notes or any of such other obligations, that the same
shall be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantor shall be obligated
to pay or perform the same immediately. The Guarantor hereby agrees that its
obligations hereunder shall
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be unconditional, irrespective of the validity, regularity or enforceability of
the Notes, this Supplemental Indenture or the Indenture, the absence of any
action to enforce the same, any amendment or modification of or waiver or
consent by any Holder with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same,
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor, or any change in the ownership of the
Guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that the Guarantor's
guarantee under this Section shall not be discharged except by complete
performance of the obligations of the Company and the Guarantor contained in the
Notes, this Supplemental Indenture and the Indenture. If any Holder or the
Trustee is required by any court or otherwise to return to the Company, the
Guarantor or any custodian, trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantor any amount paid by any
thereof to the Trustee or such Holder, the Guarantor's guarantee under this
Section, to the extent theretofore discharged, shall be reinstated in full force
and effect. The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of the Notes in respect of any
obligations guaranteed hereby until payment in full in cash of all obligations
with respect to the Notes guaranteed hereby. The Guarantor further agrees that,
as between itself as guarantor, on the one hand, and the Holders of the Notes
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article VI of the Indenture
for the purposes of the Guarantor's guarantee hereunder, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations with respect to the Notes guaranteed hereby and (y) in the event
of any declaration of acceleration of such obligations as provided in Article VI
of the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purposes of its
guarantee hereunder. The Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorney's fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
(b) Execution and Delivery of Guarantee. To evidence its
Guarantee, set forth in Section 3(a), the Guarantor may, but is not required, to
endorse a notation of such Guarantee by an officer of the Guarantor on each of
the Notes authenticated and delivered by the Trustee, that this Supplemental
Indenture shall be executed on behalf of the Guarantor by its President or one
of its Vice Presidents and that the Company on behalf of the Guarantor shall
deliver to the Trustee an Opinion of Counsel that the foregoing have been duly
authorized, executed and delivered by the Guarantor and that such Guarantee is a
valid and legally binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms. The Guarantor hereby agrees that its
Guarantee, set forth in Section 3(a), shall remain in full force and effect
notwithstanding any failure to endorse on each of the Notes a notation of the
Guarantee. If an officer of the Guarantor whose signature is on this
Supplemental Indenture or on the Guarantee no longer holds that office at the
time the Trustee authenticates the Notes on which the Guarantee is endorsed, the
Guarantee shall be valid nevertheless. The delivery of any of the Notes by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of the Guarantee set forth in this Supplemental Indenture on behalf of
the Guarantor.
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(c) Guarantor May Consolidate, etc., on Certain Terms. The
Guarantor shall not consolidate with or merge with or into any Person, or sell
all or substantially all its assets, unless the following conditions have been
satisfied:
(i) Either (1) the Guarantor shall be the continuing
Person in the case of a merger, or (2) the resulting, surviving or
transferee Person, if other than the Guarantor (the "Successor
Guarantor"), shall be a corporation organized and existing under the
laws of the United States, any State thereof, or the District of
Columbia and the Successor Guarantor shall expressly assume all of the
obligations of the Guarantor under the Guarantee;
(ii) Immediately after giving effect to the
transaction (and treating any Indebtedness that becomes an obligation
of the Successor Guarantor or any Subsidiary of the Guarantor as a
result of the transaction as having been Incurred by the Successor
Guarantor or the Subsidiary at the time of the transaction), no Default
or Event of Default would occur or be continuing; and
(iii) The Guarantor shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that the consolidation, merger or sale complies with this
Supplemental Indenture.
Upon any consolidation by the Guarantor with, or merger by the
Guarantor into, any other person or any sale of the properties and assets of the
Guarantor as an entirety or virtually as an entirety as described in the
preceding paragraph, the successor resulting from such consolidation or into
which the Guarantor is merged or the transferee of such sale, will succeed to,
and be substituted for, and may exercise every right and power of, the Guarantor
under this Supplemental Indenture, and thereafter the predecessor (if still in
existence) will be released from its obligations and covenants under this
Supplemental Indenture and all outstanding Notes.
(d) Release and Reinstatement of Guarantee. The Guarantor
shall be released and relieved of any obligations under its Guarantee upon
release or other termination of that certain Guaranty dated as of May 31, 2000
(the "Credit Facility Guarantee"), by the Subsidiary Guarantor with respect to
the $575,000,000 Credit Agreement dated as of May 31, 2000 (the "Credit
Facility"), among the Company, as the borrower, Bank of America, N.A., as the
administrative agent, Credit Suisse First Boston, as the documentation agent,
▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇, as the syndication agent, and certain lenders. The
obligations of the Guarantor under its Guarantee shall be reinstated upon the
reinstatement of the obligations of the Guarantor under the Credit Facility
Guarantee and the Guarantor hereby agrees to execute a guarantee substantially
in the form of the Guarantee upon such reinstatement. Any refinancing,
refunding, extension, renewal or replacement (or successive refinancings,
refundings, extensions, renewals or replacements), as a whole, or in part, of
the Credit Facility shall not be deemed a release or other termination of the
Credit Facility Guarantee if the Guarantor provides a guarantee with respect to
such refinancing, refunding, extension, renewal or replacement in substantially
the same form, and on substantially the same terms, as the Credit Facility
Guarantee. It is hereby understood and agreed that the Credit Facility may be
refinanced, refunded, extended, renewed or replaced (through one or
refinancings, refundings, extensions, renewals or replacements), as a whole, or
in part, from time to time after the termination of the Credit Facility.
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(e) Contribution. The Company agrees that, in the event a
payment shall be made by the Guarantor under the Guarantee, the Company shall
indemnify the 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
Company on the date hereof and the denominator of which shall be the aggregate
net worth of the Company and the Guarantor on the date hereof.
Section 4. Amendments to Sections 1.01, 2.07 and 2.15 and Article IV.
(a) Section 1.01. Section 1.01 is hereby amended, solely with
respect to the Notes, by:
(i) adding the definitions specified in Schedule I
hereto;
(ii) amending and restating the definitions specified
in Schedule II hereto; and
(iii) deleting clause (a)(iv)(A) of the definition of
"Adjusted Consolidated Net Tangible Assets" and substituting therefor
the following language "the net book value of other tangible assets of
the Company and its Subsidiaries, as of a date no earlier than the date
of the Company's latest annual or quarterly financial statement, and";
deleting the following language "Issue Date (including, without
limitation, under the Credit Agreements)" at the end of clause (e) of
the definition of "Permitted Liens" and substituting therefor the
following language "date on which the 6.50% Senior Notes due 2008 and
the 7.20% Senior Notes due 2028 of the Company were originally issued";
adding the following language "and Liens securing Non-Recourse
Indebtedness; provided, however, that the related purchase money
Indebtedness and Non-Recourse Indebtedness, as applicable, shall not be
secured by any Property or assets of the company or any Restricted
Subsidiary other than the Property acquired by the Company with the
proceeds of such purchase money Indebtedness or Non- Recourse
Indebtedness, as applicable" after "Purchase Money Liens" in clause (i)
of the definition of "Permitted Liens"; and deleting the definition of
"Credit Agreements" and substituting therefor the definition "Credit
Facility" specified in Schedule I hereto.
(b) Sections 2.07 and 2.15. Section 2.07 is hereby amended,
solely with respect to the Notes, by adding "the Underwriters," before "the
Company" in the last sentence of Section 2.07, and Section 2.15 is hereby
amended, solely with respect to the Notes, by adding "the Underwriters," before
"the Company" in the third sentence of subclause (v) of Section 2.15(c).
(c) Article IV. Article IV is hereby amended, solely with
respect to the Notes, by adding the Sections specified in Schedule III hereto.
Section 5. Ratification. This Supplemental Indenture is executed and
shall be construed as an indenture supplemental to the Indenture and, as
provided in the Indenture, this Supplemental Indenture forms a part of the
Indenture. Except to the extent amended by or supplemented by this Supplemental
Indenture, the Company, the Guarantor and the Trustee hereby ratify, confirm and
reaffirm the Indenture in all respects.
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Section 6. Counterparts. This Supplemental Indenture may be executed in
any number of counterparts, each of which so executed shall be an original, but
all such counterparts shall together constitute but one and the same instrument.
Section 7. Governing Law. The laws of the State of New York shall
govern the construction and interpretation of this Supplemental Indenture,
without regard to principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be signed on their behalf by their duly authorized representatives
as of the date first above written:
Pioneer Natural Resources Company
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Chief
Accounting Officer
Pioneer Natural Resources USA, Inc.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Chief
Accounting Officer
The Bank of New York, as Trustee
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Exhibit A - Form of Guarantee
[Signature Page - Third Supplemental Indenture]
SCHEDULE I
"Additional Assets" means (1) any Property (other than Indebtedness or
Capital Stock) used in Oil and Gas Business; (2) the Capital Stock of a Person
that becomes a Restricted Subsidiary as a result of the acquisition of such
Capital Stock by the Company or another Restricted Subsidiary; or (3) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary; provided, however, that any such Restricted Subsidiary
described in clauses (2) or (3) above is primarily engaged in the Oil and Gas
Business.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of
(1) any shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary),
(2) all or substantially all the assets of any division or
line of business of the Company or any Restricted Subsidiary or
(3) any other assets of the Company or any Restricted
Subsidiary outside of the ordinary course of business of the Company or such
Restricted Subsidiary
(other than, in the case of (1), (2) and (3) above, (A) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary; (B) for purposes of Section 4.15 only, a
disposition that constitutes a Restricted Payment permitted by Section 4.14 or a
Permitted Investment (including transfers of assets to an oil and gas royalty
trust); (C) a disposition of assets with a fair market value of less than
$5,000,000; (D) the sale or transfer (whether or not in the ordinary course of
business) of crude oil and natural gas properties or direct or indirect
interests in real property; provided, however, that at the time of such sale or
transfer such properties do not have associated with them any proved reserves;
(E) the abandonment, farm-out, lease or sublease of developed or undeveloped
crude oil and natural gas properties in the ordinary course of business; (F) the
trade or exchange by the Company or any Restricted Subsidiary of any crude oil
and natural gas Property owned or held by the Company or such Restricted
Subsidiary for any crude oil and natural gas Property owned or held by another
Person; (G) the sale or transfer of mineral products or surplus or obsolete
equipment, in each case in the ordinary course of business; and (H) any
disposition that constitutes a Change of Control.
"Average Life" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (1) the sum of the products
of the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of or redemption or similar payment with
respect to such Indebtedness multiplied by the amount of such payment by (2) the
sum of all such payments.
Schedule I - 1
"Change of Control" means the occurrence of any of the following
events:
(1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause (1) such person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of the Company; provided, however, that the
Permitted Holders do not have the right or ability by contract or otherwise to
elect or designate for election a majority of the Board of Directors (for the
purposes of this clause (1), such other person shall be deemed to beneficially
own any Voting Stock of a Person (the "specified person") held by any other
Person (the "parent entity"), if such other person is the beneficial owner (as
defined above in this clause (1)), directly, of more than 50% of the voting
power of the Voting Stock of such parent entity and the Permitted Holders do not
have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such parent
entity);
(2) individuals who on the date the Notes are issued
constituted the Board of Directors (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of 66-2/3% of the directors
of the Company then still in office who were either directors on the date the
Notes are issued or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office;
(3) the adoption of a plan relating to the liquidation or
dissolution of the Company; or
(4) the sale of all or substantially all the assets of the
Company (determined on a consolidated basis) to another Person (other than, in
all such cases, a Person that is controlled by the Permitted Holders), other
than a transaction following which the transferee Person becomes the obligor in
respect of the Notes and a Subsidiary of the transferor of such assets.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of:
(x) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to
(y) Consolidated Interest Expense for such four fiscal
quarters;
provided, however, that:
(1) if the Company or any Restricted Subsidiary has Incurred
any Indebtedness since the beginning of such period that remains outstanding or
if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period,
Schedule I - 2
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case other than Indebtedness Incurred
under any revolving credit facility unless such Indebtedness has been
permanently repaid and has not been replaced) on the date of the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and
Consolidated Interest Expense for such period shall be calculated on a pro forma
basis as if such discharge had occurred on the first day of such period and as
if the Company or such Restricted Subsidiary has not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness,
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset Disposition for
such period, or increased by an amount equal to the EBITDA (if negative),
directly attributable thereto for such period and Consolidated Interest Expense
for such period shall be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in connection
with such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no longer
liable for such Indebtedness after such sale),
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any person which becomes a Restricted Subsidiary)
or an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction requiring a calculation to be made hereunder,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the first day of
such period and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Asset Disposition, any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (3) or (4) above if made by
the Company or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or acquisition
occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company.
Schedule I - 3
If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Protection
Agreement applicable to such Indebtedness if such Interest Rate Protection
Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
plus, to the extent not included in such total interest expense, and to the
extent incurred by the Company or its Restricted Subsidiaries, without
duplication,
(1) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a Sale and
Leaseback Transaction,
(2) amortization of debt discount or premium and debt issuance
cost,
(3) capitalized interest,
(4) non-cash interest expenses,
(5) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing,
(6) net payments or receipts pursuant to Interest Rate
Protection Agreements,
(7) Disqualified Stock dividends in respect of all
Disqualified Stock held by Persons other than the Company or a Wholly Owned
Subsidiary (other than dividends payable solely in Capital Stock (other than
Disqualified Stock) of the issuer of such Disqualified Stock),
(8) interest incurred in connection with Investments in
discontinued operations,
(9) interest accruing on any Indebtedness of any other Person
to the extent such Indebtedness is Guaranteed by (or secured by the assets of)
the Company or any Restricted Subsidiary and
(10) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust;
provided, however, "Consolidated Interest Expense" shall not include (a) any
Consolidated Interest Expense with respect to any Production Payments and
Reserve Sales, (b) to the extent included in total interest expense,
amortization or write-off of deferred financing costs of such Person or (c)
accretion of interest charges on future plugging and abandonment obligations,
future retirement benefits and other obligations that do not constitute
Indebtedness.
Schedule I - 4
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that subject to the exclusion
contained in clause (4) below, the Company's equity in the net income of any
such Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause (3) below);
(2) any net income (or loss) of any Person acquired by the
Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that
(A) subject to the exclusion contained in clause (4)
below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause) and
(B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining
such Consolidated Net Income;
(4) any gain or loss net of taxes realized upon the sale or
other disposition of any assets of the Company, its consolidated Subsidiaries or
any other Person (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of business
and any gain or loss realized upon the sale or other disposition of any Capital
Stock of any Person;
(5) extraordinary gains or losses net of taxes;
(6) any non-▇▇▇▇ ▇▇▇▇-to-market adjustments to assets or
liabilities or write-downs of non-current assets net of taxes, provided,
however, that any ceiling limitation write-downs in accordance with GAAP shall
be treated as capitalized costs, as if such write-downs had not occurred; and
(7) the cumulative effect of a change in accounting principles
net of taxes.
Schedule I - 5
Notwithstanding the foregoing, for the purpose of Section 4.14 only, there shall
be excluded from Consolidated Net Income any repurchases, repayments or
redemptions of Investments, proceeds realized on the sale of Investments or
return of capital to the Company or a Restricted Subsidiary to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount of
Restricted Payments permitted under such Section pursuant to Section
4.14(a)(3)(D).
"Credit Facility" means, with respect to the Company, the credit
facility made available to the Company pursuant to the $575,000,000 Credit
Agreement dated as of May 31, 2000, among the Company and the lenders named
therein, together with any Refinancings thereof by a lender or a syndicate of
lenders. It is understood and agreed that the Credit Facility may be refinanced,
refunded, extended, renewed or replaced (through one or more such refinancings,
refundings, extensions, renewals or replacements), as a whole, or in part, from
time to time after the termination of the applicable Credit Facility.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
the following to the extent deducted in calculating such Consolidated Net
Income:
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries,
(2) Consolidated Interest Expense,
(3) depreciation and amortization expense of the Company and
its consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash in a
prior period),
(4) exploration and abandonments expense (if applicable) and
(5) all other non-cash charges of the Company and its
consolidated Restricted Subsidiaries (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash expenditures in any
future period); and
in each case for such period, and less, to the extent included in calculating
such Consolidated Net Income and in excess of any costs or expenses attributable
thereto and deducted in calculating such Consolidated Net Income, the sum of (x)
the amount of deferred revenues that are amortized during such period and are
attributable to reserves that are subject to Volumetric Production Payments, and
(y) amounts recorded in accordance with GAAP as repayments of principal and
interest pursuant to Dollar-Denominated Production Payments. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization and non-cash charges of, a Restricted Subsidiary
shall be added to Consolidated Net Income to compute EBITDA only to the extent
(and in the same proportion) that the net income of such Restricted Subsidiary
was included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
Schedule I - 6
"Guarantor" means Pioneer Natural Resources USA, Inc.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person.
For purposes of the definition of "Unrestricted Subsidiary", the
definition of "Restricted Payment" and Section 4.14,
(1) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and
(2) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) by ▇▇▇▇▇'▇ Investors Services, Inc. or BBB- (or the
equivalent) by Standard & Poor's Ratings Group, Inc.
"Net Available Cash" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of
(1) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state, provincial,
foreign and local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Disposition,
(2) all payments made on any Indebtedness which is secured by
any assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary consent to
such Asset Disposition, or by applicable law, be repaid out of the proceeds from
such Asset Disposition,
Schedule I - 7
(3) all distributions and other payments required to be made
to minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition and
(4) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the Property or other assets disposed in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or a Restricted Subsidiary incurred in connection
with the acquisition by the Company or a Restricted Subsidiary of any Property
and as to which:
(1) the holders of such Indebtedness agree in writing that
they will look solely to the Property so acquired and securing such Indebtedness
for payment on or in respect of such Indebtedness and
(2) no default with respect to such Indebtedness would permit
(after notice or passage of time or both), according to the terms of any other
Indebtedness of the Company or a Restricted Subsidiary, any holder of such other
Indebtedness to declare a default under such other Indebtedness or cause the
payment of such other Indebtedness to be accelerated or payable prior to its
stated maturity.
"Permitted Business Investment" means any investment made in the
ordinary course of, and of a nature that is or shall have become customary in,
the Oil and Gas Business including investments or expenditures for actively
exploiting, exploring for, acquiring, developing, producing, processing,
gathering, marketing or transporting oil and gas through agreements,
transactions, interests or arrangements which permit one to share risks or
costs, comply with regulatory requirements regarding local ownership or satisfy
other objectives customarily achieved through the conduct of Oil and Gas
Business jointly with third parties, including (i) ownership interests in oil
and gas properties, processing facilities, gathering systems, pipelines or
ancillary real property interests and (ii) Investments in the form of or
pursuant to operating agreements, processing agreements, farm-in agreements,
farm-out agreements, development agreements, area of mutual interest agreements,
unitization agreements, pooling agreements, joint bidding agreements, service
contracts, joint venture agreements, partnership agreements (whether general or
limited), subscription agreements, stock purchase agreements and other similar
agreements (including for limited liability companies) with third parties,
excluding, however, Investments in corporations other than Restricted
Subsidiaries.
"Permitted Holders" means Southeastern Asset Management Inc. and its
Affiliates; provided, however, that a Person shall cease to be a Permitted
Holder upon making a filing with the Securities and Exchange Commission that
indicates such Person has acquired or holds the
Schedule I - 8
Company's Voting Stock with a purpose or effect of changing or influencing
control of the Company or in connection with or as a participant in any
transaction having that purpose or effect.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that
will, upon the making of such Investment, become a Restricted Subsidiary;
(2) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted Subsidiary;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted
Subsidiary if created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the Company
or any such Restricted Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course
of business consistent with past practices of the Company or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the
non-cash portion of the consideration received for an Asset Disposition as
permitted pursuant to Section 4.15;
(9) Permitted Business Investments;
(10) Investments intended to promote the Company's strategic
objectives in the Oil and Gas Business in an aggregate amount not to exceed
$50.0 million at any one time outstanding, measured as of the date such
Investments are made, without giving effect to any subsequent changes in value
(which Investments shall be deemed no longer outstanding only upon the return of
capital thereof);
(11) Investments in any units of any oil and gas royalty
trust; and
(12) Investments made pursuant to Hedging Obligations of the
Company and the Restricted Subsidiaries.
Schedule I - 9
"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).
"Rating Agency" means Standard & Poor's Ratings Group, Inc. and ▇▇▇▇▇'▇
Investors Services, Inc. or if Standard & Poor's Ratings Group, Inc. or ▇▇▇▇▇'▇
Investors Services, Inc. or both shall not make a rating on the Notes publicly
available, a nationally recognized statistical rating agency or agencies, as the
case may be, selected by the Company (as certified by a resolution of the Board
of Directors) which shall be substituted for Standard & Poor's Ratings Group,
Inc. or ▇▇▇▇▇'▇ Investors Services, Inc. or both, as the case may be.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no
earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the
time such Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being Refinanced, and
(3) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Restricted Payment" with respect to any Person means
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any payment
in connection with any merger or consolidation involving such Person) or similar
payment to the direct or indirect holders of its Capital Stock (other than
dividends or distributions payable solely in its Capital Stock (other than
Disqualified Stock) and dividends or distributions payable solely to the Company
or a Restricted Subsidiary, and other than pro rata dividends or other
distributions made by a Subsidiary that is
Schedule I - 10
not a Wholly Owned Subsidiary to minority stockholders (or owners of an
equivalent interest in the case of a Subsidiary that is an entity other than a
corporation)),
(2) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company held by any Person or
of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock), provided, however, that the Company may
purchase, redeem or otherwise acquire or retire for value common stock of the
Company in an amount not to exceed $10.0 million in the aggregate in any fiscal
year for all such transactions after April 11, 2000, made pursuant to this
proviso and the amount of such purchase, redemption or other acquisition or
retirement for value shall be excluded in the calculation of the amount of
Restricted Payments;
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations of
such Person (other than the purchase, repurchase, or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of such purchase, repurchase or other acquisition) or
(4) the making of any Investment (other than a Permitted
Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is not
an Unrestricted Subsidiary.
"Subordinated Obligation" means, with respect to a Person, any
Indebtedness of such Person (whether outstanding on the date the Notes are
issued or thereafter Incurred) which is subordinate or junior in right of
payment to the Notes or a Subsidiary Guaranty of such Person, as the case may
be, pursuant to a written agreement to that effect.
"Subsidiary Guarantor" means any Subsidiary of the Company, including
the Guarantor, which incurs a Guarantee under Section 4.13(b)(12) hereof.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor
permitted under Section 4.13(b)(12).
"Underwriters" means Credit Suisse First Boston Corporation and ▇.▇.
▇▇▇▇▇▇ Securities Inc.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors in the manner provided below; and
Schedule I - 11
(2) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary of the Company) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.14. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (A) the Company could Incur $1.00 of
additional Indebtedness under Section 4.13(a) and (B) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a Restricted
Subsidiary) is owned by the Company or one or more Wholly Owned Subsidiaries."
Schedule I - 12
SCHEDULE II
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.14 and 4.15 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 5% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof. For purposes of Section 4.16 only,
"Affiliate" shall not include Prize Energy Corp.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder) or upon
the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder
for Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the
occurrence of certain events or otherwise, in whole or in part,
in each case on or prior to the first anniversary of the Stated Maturity of the
Notes; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if (1) the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the terms applicable to the Debt Securities in Sections 4.15
and 4.17 of this Indenture and (2) any such requirement only becomes operative
after compliance with such terms applicable to the Notes, including the purchase
of any Debt Securities tendered pursuant thereto.
"Indebtedness" means, with respect to any Person, at any date, any of
the following, without duplication:
(1) any liability, contingent or otherwise, of such Person
(A) for borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a
portion thereof),
Schedule II - 1
(B) evidenced by a note, bond, debenture or similar
instrument or
(C) for the payment of money relating to a
Capitalized Lease Obligation or other obligation (whether issued or
assumed) relating to the deferred purchase price of property;
(2) all conditional sale obligations and all obligations under
any title retention agreement (even if the rights and remedies of the seller
under such agreement in the event of default are limited to repossession or sale
of such property);
(3) all obligations for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction other
than as entered into in the ordinary course of business;
(4) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock of
such Person or, with respect to any Preferred Stock of any Subsidiary of such
Person, the principal amount of such Preferred Stock to be determined in
accordance with the Indenture (but excluding, in each case, any accrued
dividends);
(5) all indebtedness of others of the type referred to in
clauses (i) through (iv) hereof secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on any asset or property (including, without limitation, leasehold
interests and any other tangible or intangible property) of such Person, whether
or not such indebtedness is assumed by such Person or is not otherwise such
Person's legal liability; provided that if the obligations so secured have not
been assumed in full by such Person or are otherwise not such Person's legal
liability in full, the amount of such indebtedness for the purposes of this
definition shall be limited to the lesser of the amount of such indebtedness
secured by such Lien or the fair market value of the assets or the property
securing such lien;
(6) all indebtedness of others of the type referred to in
clauses (i) through (v) hereof (including all interest and dividends on any
Indebtedness or Preferred Stock of any other Person the payment of which is)
guaranteed, directly or indirectly, by such Person or that is otherwise its
legal liability or which such Person has agreed to purchase or repurchase or in
respect of which such Person has agreed contingently to supply or advance funds;
and
(7) to the extent not otherwise included in this definition,
obligations in respect of Hedging Obligations.
Notwithstanding the preceding, Indebtedness shall not include (a) accounts
payable arising in the ordinary course of business, (b) any obligations in
respect of prepayments for gas or oil production or gas or oil imbalances, (c)
estimated asset retirement obligations required to be recorded as liabilities
under GAAP, and (d) Production Payments and Reserve Sales.
"Oil and Gas Business" means (a) the acquisition, exploration,
exploitation, development, production, operation and disposition of interests in
oil, gas and other hydrocarbon properties, (b) the gathering, marketing,
treating, processing, storage, refining, selling and transporting of any
production from such interests or properties and products produced in
association therewith, (c)
Schedule II - 2
any power generation and electrical transmission business and (d) any business
or activity relating to, arising from, or necessary, appropriate or incidental
to the activities described in the foregoing clauses (a) through (c) of this
definition.
"Senior Indebtedness" means, with respect to a Person,
(1) Indebtedness of such Person, whether outstanding on the
Issue Date or thereafter Incurred, and
(2) accrued and unpaid interest (including interest accruing
on or after the filing of any petition in bankruptcy or for reorganization
relating to such Person to the extent post-filing interest is allowed in such
proceeding) in respect of (A) indebtedness of such Person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable
unless, in the case of (1) and (2), in the instrument creating or evidencing the
same or pursuant to which the same is outstanding it is provided that such
obligations are subordinate in right of payment to the Debt Securities;
provided, however, that Senior Indebtedness of such Person shall not include:
(1) any obligation of such Person to any Subsidiary,
(2) any liability for Federal, state, local or other taxes
owed or owing by such Person,
(3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities),
(4) any Indebtedness of such Person (and any accrued and
unpaid interest in respect thereof) which is subordinate or junior in any
respect to any other Indebtedness or other obligation of such Person or
(5) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of this Indenture.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States
of America or any agency thereof or obligations guaranteed by the United States
of America or any agency thereof,
(2) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$50,000,000 (or the foreign currency equivalent thereof) and has outstanding
debt that is rated "A" (or such
Schedule II - 3
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) or any money-market fund sponsored by a registered broker dealer or mutual
fund distributor,
(3) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in clause (2)
above,
(4) investments in commercial paper, maturing not more than 90
days 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 foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to ▇▇▇▇▇'▇ Investors Services, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group, and
(5) investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by ▇▇▇▇▇'▇ Investors Services, Inc.
Schedule II - 4
SCHEDULE III
Section 4.13. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided,
however, that the Company and its Restricted Subsidiaries shall be entitled to
Incur Indebtedness if, on the date of such Incurrence and after giving effect
thereto on a pro forma basis, no Default has occurred and is continuing and the
Consolidated Coverage Ratio exceeds 2.0 to 1.
(b) Notwithstanding the foregoing paragraph (a), so long as no
Default has occurred and is continuing, the Company and the Restricted
Subsidiaries shall be entitled to Incur any or all of the following
Indebtedness:
(1) Indebtedness Incurred pursuant to the Credit
Facility, including any amendment, modification, supplement, extension,
restatement, replacement (including replacement after the termination
of such Credit Facility), restructuring, increase, renewal, or
Refinancing thereof from time to time in one or more agreements or
instruments; provided, however, that, after giving effect to any such
Incurrence, the aggregate principal amount of such Indebtedness then
outstanding does not exceed the greater of (i) $675.0 million less the
sum of all principal payments since April 11, 2000, with respect to
such Indebtedness pursuant to Section 4.16(a)(3)(A) and (ii) the sum of
(x) $100 million and (y) 20% of the Adjusted Consolidated Net Tangible
Assets determined as of the date of the Incurrence of such
Indebtedness;
(2) Indebtedness owed to and held by the Company or a
Restricted Subsidiary; provided, however, that any subsequent issuance
or transfer of any Capital Stock which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or a
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the obligor thereon;
(3) the Debt Securities;
(4) Indebtedness outstanding on April 11, 2000 (other
than Indebtedness described in clause (1), (2) or (3) of this Section
4.13(b));
(5) Indebtedness of a Restricted Subsidiary Incurred
and outstanding on or prior to the date on which such Subsidiary was
acquired by the Company (other than Indebtedness Incurred in connection
with, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or
was acquired by the Company);
(6) Refinancing Indebtedness in respect of
Indebtedness Incurred pursuant to Section 4.13(a) or pursuant to clause
(3), (4) or (5) of this Section 4.13(b) or
Schedule III - 1
this clause (6); provided, however, that to the extent such Refinancing
Indebtedness directly or indirectly Refinances Indebtedness of a
Subsidiary Incurred pursuant to clause (5), such Refinancing
Indebtedness shall be Incurred only by such Subsidiary;
(7) Hedging Obligations consisting of Interest Rate
Protection Agreements directly related to Indebtedness permitted to be
Incurred by the Company pursuant to this Indenture;
(8) Non-Recourse Indebtedness;
(9) 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);
(10) 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;
(11) Indebtedness under Commodity Price Protection
Agreements and Currency Exchange Protection Agreements entered into in
the ordinary course of business for the purpose of limiting risks that
arise in the ordinary course of business of the Company and its
Restricted Subsidiaries;
(12) Indebtedness consisting of the Subsidiary
Guarantee of the Guarantor (including any reinstatement of such
Subsidiary Guarantee) and any Subsidiary Guarantee by the Company or a
Subsidiary Guarantor of Indebtedness Incurred pursuant to paragraph (a)
or pursuant to clause (1), (2), (3), (4), (7), (11) or (13) or pursuant
to clause (6) to the extent the Refinancing Indebtedness Incurred
thereunder directly or indirectly Refinances Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clauses (3) or (4); and
(13) Indebtedness in an aggregate principal amount
which, when taken together with all other Indebtedness of the Company
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (12) of this Section 4.13(b) or
Section 4.13(a)), does not exceed $50 million.
(c) Notwithstanding the foregoing, neither the Company nor any
Subsidiary Guarantor shall Incur any Indebtedness pursuant to Section 4.13(b) if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of the Company or a Subsidiary Guarantor unless such
Indebtedness shall be subordinated to the Debt Securities or to the Subsidiary
Guaranty of such Subsidiary Guarantor to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with this Section
4.13, (1) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described herein, the Company, in its sole
discretion, shall classify such item of
Schedule III - 2
Indebtedness at the time of Incurrence and only be required to include the
amount and type of such Indebtedness in one of the above clauses and (2) the
Company shall be entitled at the time of such Incurrence to divide and classify
an item of Indebtedness in more than one of the types of Indebtedness described
herein.
(e) For purposes of determining compliance with any U.S.
dollar denominated restriction on the Incurrence of Indebtedness where the
Indebtedness Incurred is denominated in a different currency, the amount of such
Indebtedness will be the U.S. Dollar Equivalent determined on the date of the
Incurrence of such Indebtedness, provided, however, that if any such
Indebtedness denominated in a different currency is subject to a Currency
Exchange Protection Agreement with respect to U.S. dollars covering all
principal, premium, if any, and interest payable on such Indebtedness, the
amount of such Indebtedness expressed in U.S. dollars will be as provided in
such Currency Exchange Protection Agreement. The principal amount of any
Refinancing Indebtedness Incurred in the same currency as the Indebtedness being
Refinanced will be the U.S. Dollar Equivalent of the Indebtedness Refinanced,
except to the extent that (1) such U.S. Dollar Equivalent was determined based
on a Currency Exchange Protection Agreement, in which case the Refinancing
Indebtedness will be determined in accordance with the preceding sentence, and
(2) the principal amount of the Refinancing Indebtedness exceeds the principal
amount of the Indebtedness being Refinanced, in which case the U.S. Dollar
Equivalent of such excess, will be determined on the date such Refinancing
Indebtedness is Incurred.
Section 4.14. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to make a Restricted Payment if at the time
the Company or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing
(or would result therefrom);
(2) the Company is not entitled to Incur an
additional $1.00 of Indebtedness under Section 4.13(a); or
(3) the aggregate amount of such Restricted Payment
and all other Restricted Payments since April 11, 2000, would exceed
the sum of (without duplication):
(A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period)
from July 1, 2000, to the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit); plus
(B) 100% of the aggregate Net Cash Proceeds
received by the Company from the issuance or sale of its
Capital Stock (other than Disqualified Stock) after April 11,
2000 (other than an issuance or sale to a Subsidiary of the
Company and other than an issuance or sale to an employee
stock ownership plan
Schedule III - 3
or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees) and 100% of
any cash capital contribution received by the Company from its
shareholders after April 11, 2000; plus
(C) the amount by which Indebtedness of the
Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the
Company) after April 11, 2000, of any Indebtedness of the
Company convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the amount of
any cash, or the fair value of any other property, distributed
by the Company upon such conversion or exchange); plus
(D) an amount equal to the sum of (x) the
net reduction in the Investments (other than Permitted
Investments) made by the Company or any Restricted Subsidiary
in any Person resulting from repurchases, repayments or
redemptions of such Investments by such Person, proceeds
realized on the sale of such Investment, proceeds representing
the return of capital (excluding dividends and distributions),
in each case received by the Company or any Restricted
Subsidiary and (y) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Unrestricted Subsidiary
at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing
sum shall not exceed, in the case of any such Person or
Unrestricted Subsidiary, the amount of Investments (excluding
Permitted Investments) previously made (and treated as a
Restricted Payment) by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary; plus
(E) $25 million.
(b) The provisions of Section 4.14(a) shall not prohibit:
(1) any Restricted Payment (other than a Restricted
Payment described in clause (1) of the definition of "Restricted
Payment") made out of the Net Cash Proceeds of the substantially
concurrent sale of, or made by exchange for, Capital Stock of the
Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees) or a substantially
concurrent cash capital contribution received by the Company from its
shareholders; provided, however, that (A) such Restricted Payment shall
be excluded in the calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds from such sale or such cash capital
contribution (to the extent so used for such Restricted Payment) shall
be excluded from the calculation of amounts under Section
4.14(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value of Subordinated
Obligations of the Company or a Subsidiary Guarantor made by exchange
for, or out of the proceeds of the substantially
Schedule III - 4
concurrent sale of, Indebtedness which is permitted to be Incurred
pursuant to Section 4.13; provided, however, that such purchase,
repurchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded in the calculation of the amount of
Restricted Payments;
(3) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 4.14; provided, however, that such
dividend shall be included in the calculation of the amount of
Restricted Payments; or
(4) so long as no Default has occurred and is
continuing the repurchase or other acquisition of shares of or options
to purchase shares of, Capital Stock of the Company or any of its
Subsidiaries from employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto) approved by the
Board of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such Capital Stock;
provided, however, that the aggregate amount of such repurchases and
other acquisitions shall not exceed $3 million in any calendar year;
provided further, however, that such repurchases and other acquisitions
shall be excluded in the calculation of the amount of Restricted
Payments.
Section 4.15. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition unless
(1) the Company or such Restricted Subsidiary receives consideration at the time
of such Asset Disposition at least equal to the fair market value (including as
to the value of all non-cash consideration), as determined in good faith by the
Board of Directors, of the shares and assets subject to such Asset Disposition;
(2) at least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash, cash equivalents, Additional
Assets or any combination thereof ("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, as determined in the good faith of the Board of Directors, of
all such Property other than Permitted Consideration received from Asset
Dispositions and held by the Company and the Restricted Subsidiaries at any one
time shall not exceed 10% of Adjusted Consolidated Net Tangible Assets; and (3)
an amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (A)
first, to the extent the Company elects (or is required by the terms of any
Indebtedness), to prepay, repay, redeem or purchase Senior Indebtedness of the
Company or Indebtedness (other than any Disqualified Stock) of a Restricted
Subsidiary (in each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within one year from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; (B) second, to the
extent of the balance of such Net Available Cash after application in accordance
with clause (A), to the extent the Company elects, to acquire Additional Assets
within one year from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash;
Schedule III - 5
and (C) third, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B), to make an Offer to the
holders of the Debt Securities (and to holders of other Senior Indebtedness of
the Company designated by the Company) to purchase Debt Securities (and such
other Senior Indebtedness) pursuant to and subject to the conditions of Section
4.15(b); provided, however, that in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A) or (C) above, the Company or
such Restricted Subsidiary shall permanently retire such Indebtedness and shall
cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 4.15, the Company and
the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this Section 4.15(a) except to the extent that the
aggregate Net Available Cash from all Asset Dispositions which are not applied
in accordance with this Section 4.15(a) exceeds $20.0 million. Pending
application of Net Available Cash pursuant to this Section 4.15(a), such Net
Available Cash shall be invested in Temporary Cash Investments or applied to
temporarily reduce revolving credit indebtedness.
For the purposes of this Section 4.15(a), the following are deemed to
be cash or cash equivalents: (1) the assumption of Indebtedness of the Company
or any Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset
Disposition and (2) securities received by the Company or any Restricted
Subsidiary from the transferee that are promptly converted by the Company or
such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Debt Securities (and other Senior Indebtedness) pursuant to Section
4.15(a)(3)(C), the Company shall purchase Debt Securities tendered pursuant to
an offer by the Company for the Debt Securities and such other Senior
Indebtedness (the "Offer") at a purchase price of 100% of their principal amount
(or, in the event such other Senior Indebtedness was issued with significant
original issue discount, 100% of the accreted value thereof), without premium,
plus accrued but unpaid interest (or, in respect of such other Senior
Indebtedness, such lesser price, if any, as may be provided for by the terms of
such Senior Indebtedness in accordance with the procedures (including
prorationing in the event of over subscription) set forth in Section 4.15(c). If
the aggregate purchase price of Debt Securities (and any other Senior
Indebtedness tendered pursuant to the Offer) exceeds the Net Available Cash
allotted to their purchase, the Company shall select the Debt Securities and
other Senior Indebtedness to be purchased on a pro rata basis but in round
denominations, which in the case of the Debt Securities will be denominations of
$1,000 principal amount or multiples thereof. The Company shall not be required
to make an Offer to purchase Debt Securities (and other Senior Indebtedness
pursuant to this Section 4.15 if the Net Available Cash available therefor is
less than $20.0 million (which lesser amount shall be carried forward for
purposes of determining whether such an Offer is required with respect to the
Net Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days
after the Company becomes obligated to make an Offer, the Company shall
deliver to the Trustee and send, by first-class mail to each Holder, a
written notice stating that the Holder may elect to have his Debt
Securities purchased by the Company either in whole or in part (subject
to prorating as described in Section 4.15(b) in the event the Offer is
Schedule III - 6
oversubscribed) in integral multiples of $1,000 of principal amount, at
the applicable purchase price. The notice shall specify a purchase date
not less than 30 days nor more than 60 days after the date of such
notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith
believes will enable such Holders to make an informed decision (which
at a minimum will include (A) the most recently filed Annual Report on
Form 10-K (including audited consolidated financial statements) of the
Company, the most recent subsequently filed Quarterly Report on Form
10-Q and any Current Report on Form 8-K of the Company filed subsequent
to such Quarterly Report, other than Current Reports describing Asset
Dispositions otherwise described in the offering materials (or
corresponding successor reports), (B) a description of material
developments in the Company's business subsequent to the date of the
latest of such Reports, and (C) if material, appropriate pro forma
financial information) and all instructions and materials necessary to
tender Debt Securities pursuant to the Offer, together with the
information contained in clause (3).
(2) Not later than the date upon which written notice
of an Offer is delivered to the Trustee as provided below, the Company
shall deliver to the Trustee an Officers' Certificate as to (A) the
amount of the Offer (the "Offer Amount"), including information as to
any other Senior Indebtedness included in the Offer, (B) the allocation
of the Net Available Cash from the Asset Dispositions pursuant to which
such Offer is being made and (C) the compliance of such allocation with
the provisions of Section 4.15(a) and (b). On such date, the Company
shall also irrevocably deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate and
hold in trust) in Temporary Cash Investments, maturing on the last day
prior to the Purchase Date or on the Purchase Date if funds are
immediately available by open of business, an amount equal to the Offer
Amount to be held for payment in accordance with the provisions of this
Section. If the Offer includes other Senior Indebtedness, the deposit
described in the preceding sentence may be made with any other paying
agent pursuant to arrangements satisfactory to the Trustee. Upon the
expiration of the period for which the Offer remains open (the "Offer
Period"), the Company shall deliver to the Trustee for cancellation the
Debt Securities or portions thereof which have been properly tendered
to and are to be accepted by the Company. The Trustee shall, on the
Purchase Date, mail or deliver payment (or cause the delivery of
payment) to each tendering Holder in the amount of the purchase price.
In the event that the aggregate purchase price of the Debt Securities
delivered by the Company to the Trustee is less than the Offer Amount
applicable to the Debt Securities, the Trustee shall deliver the excess
to the Company immediately after the expiration of the Offer Period for
application in accordance with this Section 4.15.
(3) Holders electing to have a Debt Security
purchased shall be required to surrender the Debt Security, with an
appropriate form duly completed, to the Company at the address
specified in the notice at least three Business Days prior to the
Purchase Date. Holders shall be entitled to withdraw their election if
the Trustee or the Company receives not later than one Business Day
prior to the Purchase Date, a telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Debt
Security which was delivered for purchase by the Holder and a statement
that such Holder is withdrawing his election to have such Debt Security
purchased. Holders
Schedule III - 7
whose Debt Securities are purchased only in part shall be issued new
Debt Securities equal in principal amount to the unpurchased portion of
the Debt Securities surrendered.
(4) At the time the Company delivers Debt Securities
to the Trustee which are to be accepted for purchase, the Company shall
also deliver an Officers' Certificate stating that such Debt Section. A
Debt Security shall be deemed to have been accepted for purchase at the
time the Trustee, directly or through an agent, mails or delivers
payment therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Debt Securities
pursuant to this Section. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this Section, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue of its
compliance with such securities laws or regulations.
Section 4.16. Limitation on Affiliate Transactions.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with any Affiliate of the Company
(an "Affiliate Transaction") unless (1) the terms thereof are no less favorable
to the Company or such Restricted Subsidiary than those that could be obtained
at the time of such transaction in arm's-length dealings with a Person who is
not an Affiliate; (2) if such Affiliate Transaction involves an amount in excess
of $1.0 million but less than $5.0 million, an officer of the Company certifies
that such Affiliate Transaction complies with clause (1) of this paragraph,
evidenced by an Officer's Certificate delivered to the Trustee; (3) if such
Affiliate Transaction involves an amount equal to or in excess of $5.0 million
but less than $20.0 million, the terms of the Affiliate Transaction are set
forth in writing and a majority of the non-employee directors of the Company
disinterested with respect to such Affiliate Transactions have determined in
good faith that the criteria set forth in clause (1) are satisfied and have
approved the relevant Affiliate Transaction as evidenced by a Board of Directors
resolution; and (4) if such Affiliate Transaction involves an amount equal to or
in excess of $20.0 million, the Board of Directors shall also have received a
written opinion from an investment banking firm of national prominence that is
not an Affiliate of the Company to the effect that such Affiliate Transaction is
fair, from a financial standpoint, to the Company and its Restricted
Subsidiaries.
(b) The provisions of Section 4.16(a) shall not prohibit (1)
any Investment or other Restricted Payment, in each case permitted to be made
pursuant to Section 4.14; (2) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved by
the Board of Directors, (3) loans or advances to officers, directors or
employees in the ordinary course of business of the Company or its Restricted
Subsidiaries; (4) the payment of reasonable fees to directors of the Company and
its Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries; (5) any transaction with a Restricted Subsidiary or
joint venture or similar entity which would constitute an Affiliate
Schedule III - 8
Transaction solely because the Company or a Restricted Subsidiary owns an equity
interest in or otherwise controls such Restricted Subsidiary, joint venture or
similar entity; (6) the issuance or sale of any Capital Stock (other than
Disqualified Stock) of the Company; (7) indemnities of officers, directors or
employees of the Company or any Subsidiary consistent with such Person's
charter, bylaws and applicable statutory provisions; (8) any severance or
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business; and (9) 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. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require that the Company purchase such Holder's Debt
Securities at a purchase price in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on the relevant record date to
receive interest on the relevant interest payment date), in accordance with the
terms contemplated in Section 4.17(b).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee (the
"Change of Control Offer") stating:
(1) that a Change of Control has occurred and that
such Holder has the right to require the Company to purchase such
Holder's Debt Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest on the relevant interest
payment date);
(2) the circumstances and relevant facts regarding
such Change of Control (including information with respect to pro forma
historical income and capitalization, each after giving effect to such
Change of Control);
(3) the purchase date (which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed);
and
(4) the instructions determined by the Company,
consistent with this Section, that a Holder must follow in order to
have its Debt Securities purchased.
(c) Holders electing to have a Debt Security purchased will be
required to surrender the Debt Security, with an appropriate form duly
completed, to the Company at the address specified in the notice at least three
Business Days prior to the purchase date. Holders will be entitled to withdraw
their election if the Trustee or the Company receives not later than one
Business Day prior to the purchase date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Debt Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Debt
Security purchased.
(d) On the purchase date, all Debt Securities purchased by the
Company under this Section shall be delivered by the Company to the Trustee for
cancellation, and the Company
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shall pay the purchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section,
the Company shall not be required to make a Change of Control Offer 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 Section applicable to a Change of Control Offer made by the Company and
purchases all Debt Securities validly tendered and not withdrawn under such
Change of Control Offer.
(f) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Debt Securities
pursuant to this Section. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this Section, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue of its
compliance with such securities laws or regulations.
Section 4.18. Suspension of Covenants. During any period time that (a)
the Notes have an Investment Grade Rating from either of the Rating Agencies and
(b) no Default or Event of Default has occurred and is continuing under the
Indenture, the Company and the Restricted Subsidiaries will not be subject to
the provisions in Sections 4.13, 4.14, 4.15 and 4.16 of the Indenture
(collectively, the "Suspended Covenants"). In the event that the Company and the
Restricted Subsidiaries are not subject to the Suspended Covenants for any
period of time as a result of the preceding sentence and, subsequently, one or
both of the Rating Agencies withdraws its ratings or downgrades the ratings
assigned to the Notes below the required Investment Grade Ratings so that the
Notes do not have an Investment Grade Rating from either Rating Agency, or a
Default or Event of Default occurs and is continuing, then the Company and the
Restricted Subsidiaries will thereafter again be subject to the Suspended
Covenants and compliance with the Suspended Covenants with respect to Restricted
Payments made after the time of such withdrawal, downgrade, Default or Event of
Default will be calculated in accordance with the terms of Section 4.14 as
though such covenant had been in effect during the entire period of time from
the date the Notes are issued.
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