Exhibit 4.1
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ABRAXAS PETROLEUM CORPORATION
as Issuer,
THE SUBSIDIARY GUARANTORS PARTY HERETO
and
U.S. BANK, N.A.,
as Trustee
INDENTURE
Dated as of January 23, 2003
11-1/2% Secured Notes due 2007
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------
310(a)(1)...................................................................7.10
(a)(2)..................................................................7.10
(a)(3)..................................................................N.A.
(a)(4)..................................................................N.A.
(a)(5)..................................................................7.08; 7.10,
........................................................................7.11
(b).....................................................................7.08; 7.10,
.......................................................................10.02
(c).....................................................................N.A.
311(a)......................................................................7.11
(b).....................................................................7.11
(c).....................................................................N.A.
312(a)......................................................................2.05
(b)....................................................................10.03
(c)....................................................................10.03
313(a)......................................................................7.06
(b)(1)..................................................................N.A.
(b)(2)..................................................................7.06
(c).....................................................................7.06; 10.02
(d).....................................................................7.06
314(a)......................................................................4.06; 4.08;
.......................................................................11.02
(b)....................................................................12.02
(c)(1)..................................................................7.02, 10.04
(c)(2)..................................................................7.02, 10.04
(c)(3)..................................................................N.A.
(d)....................................................................12.03
(e)....................................................................10.05
(f).....................................................................N.A.
315(a)......................................................................7.01(b)
(b).....................................................................7.05; 10.02
(c).....................................................................7.01(a)
(d).....................................................................7.01(c)
(e).....................................................................6.11
316(a)(last sentence).......................................................2.09
(a)(1)(A)...............................................................6.05
(a)(1)(B)...............................................................6.04
(a)(2)..................................................................N.A.
(b).....................................................................6.07
(c).....................................................................9.04
317(a)(1)...................................................................6.08
(a)(2)..................................................................6.09
(b).....................................................................2.04
318(a).....................................................................10.01
(c)....................................................................10.01
----------
N.A. means Not Applicable
NOTE: This Cross-Reference Table is not and shall not, for any purpose, be
deemed to be a part of the
Indenture.
TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS........................................................................................1
SECTION 1.02. INCORPORATION BY REFERENCE OF TIA.................................................................20
SECTION 1.03. RULES OF CONSTRUCTION.............................................................................20
ARTICLE TWO
THE NOTES
SECTION 2.01. PRINCIPAL AMOUNT; FORM AND DATING.................................................................21
SECTION 2.02. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT..........................................22
SECTION 2.03. REGISTRAR AND PAYING AGENT........................................................................22
SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST..............................................................23
SECTION 2.05. HOLDER LISTS......................................................................................23
SECTION 2.06. TRANSFER AND EXCHANGE.............................................................................23
SECTION 2.07. REPLACEMENT NOTES.................................................................................24
SECTION 2.08. OUTSTANDING NOTES.................................................................................24
SECTION 2.09. TREASURY NOTES....................................................................................24
SECTION 2.10. TEMPORARY NOTES...................................................................................24
SECTION 2.11. CANCELLATION......................................................................................24
SECTION 2.12. DEFAULTED INTEREST................................................................................25
SECTION 2.13. CUSIP NUMBER......................................................................................25
SECTION 2.14. DEPOSIT OF MONIES.................................................................................25
SECTION 2.15. RESTRICTIVE LEGENDS...............................................................................26
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.........................................................27
SECTION 2.17. SPECIAL TRANSFER PROVISIONS.......................................................................28
ARTICLE THREE
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE................................................................................30
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.................................................................30
SECTION 3.03. OPTIONAL REDEMPTION...............................................................................30
SECTION 3.04. NOTICE OF REDEMPTION..............................................................................31
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION....................................................................31
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE.......................................................................31
SECTION 3.07. NOTES REDEEMED IN PART............................................................................32
ARTICLE FOUR
COVENANTS
i
SECTION 4.01. PAYMENT OF NOTES..................................................................................32
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY...................................................................32
SECTION 4.03. CORPORATE EXISTENCE...............................................................................32
SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS.................................................................32
SECTION 4.05. MAINTENANCE OF PROPERTIES AND INSURANCE...........................................................33
SECTION 4.06. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.........................................................33
SECTION 4.07. COMPLIANCE WITH LAWS..............................................................................33
SECTION 4.08. REPORTS TO HOLDERS................................................................................34
SECTION 4.09. WAIVER OF STAY, EXTENSION OR USURY LAWS...........................................................34
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.................................................................34
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES........................................................35
SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS...............................................35
SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES......................36
SECTION 4.14. LEVERAGE..........................................................................................36
SECTION 4.15. CHANGE OF CONTROL.................................................................................36
SECTION 4.16. LIMITATION ON ASSET SALES.........................................................................37
SECTION 4.17. LIMITATIONS WITH RESPECT TO CAPITAL STOCK OF SUBSIDIARIES.........................................38
SECTION 4.18. LIMITATION ON LIENS...............................................................................38
SECTION 4.19. LIMITATION ON CONDUCT OF BUSINESS.................................................................39
SECTION 4.20. ADDITIONAL SUBSIDIARY GUARANTEES..................................................................39
SECTION 4.21. LIMITATION ON ABRAXAS WAMSUTTER, LTD..............................................................39
SECTION 4.22. IMPAIRMENT OF SECURITY INTEREST...................................................................39
SECTION 4.23. ACCOUNTING........................................................................................39
SECTION 4.24. MAINTENANCE OF LIEN; ADDITIONAL COLLATERAL........................................................39
SECTION 4.25. EXCESS CASH FLOW AND EXCESS CASH..................................................................40
SECTION 4.26. LIMITATION ON EXPENDITURES FOR SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.......................40
SECTION 4.27. LIMITATIONS ON CAPITAL EXPENDITURES...............................................................41
SECTION 4.28. LIMITATION ON TAX SHARING ARRANGEMENTS............................................................42
SECTION 4.29. LIMITATION ON USES OF CASH........................................................................42
SECTION 4.30. PROCEEDS FROM ISSUANCES OF EQUITY AND SUBORDINATED DEBT...........................................43
SECTION 4.31. FARMOUTS..........................................................................................44
SECTION 4.32. CEO NOTE OPTIONS..................................................................................44
SECTION 4.33. CONDUCT OF BUSINESS IN THE INTERIM PERIOD.........................................................45
SECTION 4.34. CALCULATION OF ORIGINAL ISSUE DISCOUNT............................................................45
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. MERGER, CONSOLIDATION AND SALE OF ASSETS..........................................................45
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.................................................................46
ARTICLE SIX
REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.................................................................................46
SECTION 6.02. ACCELERATION......................................................................................47
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SECTION 6.03. OTHER REMEDIES....................................................................................48
SECTION 6.04. WAIVER OF PAST DEFAULTS...........................................................................48
SECTION 6.05. CONTROL BY MAJORITY...............................................................................48
SECTION 6.06. LIMITATION ON SUITS...............................................................................49
SECTION 6.07. RIGHT OF HOLDERS TO RECEIVE PAYMENT...............................................................49
SECTION 6.08. COLLECTION SUIT BY TRUSTEE........................................................................49
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM..................................................................49
SECTION 6.10. PRIORITIES........................................................................................49
SECTION 6.11. UNDERTAKING FOR COSTS.............................................................................50
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES................................................................50
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.................................................................................50
SECTION 7.02. RIGHTS OF TRUSTEE.................................................................................51
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE......................................................................52
SECTION 7.04. TRUSTEE'S DISCLAIMER..............................................................................52
SECTION 7.05. NOTICE OF DEFAULT.................................................................................52
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.....................................................................53
SECTION 7.07. COMPENSATION AND INDEMNITY........................................................................53
SECTION 7.08. REPLACEMENT OF TRUSTEE............................................................................53
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, Etc..................................................................54
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.....................................................................54
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER..................................................54
SECTION 7.12. OTHER CAPACITIES..................................................................................54
ARTICLE EIGHT
DISCHARGE OF
INDENTURE; DEFEASANCE
SECTION 8.01. TERMINATION OF ISSUER'S OBLIGATIONS...............................................................55
SECTION 8.02. APPLICATION OF TRUST MONEY........................................................................56
SECTION 8.03. REPAYMENT TO THE ISSUER...........................................................................56
SECTION 8.04. REINSTATEMENT.....................................................................................57
SECTION 8.05. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE............................................................57
ARTICLE NINE
MODIFICATION OF
INDENTURE
SECTION 9.01. WITHOUT CONSENT OF HOLDERS........................................................................57
SECTION 9.02. WITH CONSENT OF HOLDERS...........................................................................57
SECTION 9.03. COMPLIANCE WITH TIA...............................................................................58
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.................................................................58
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES..................................................................58
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, Etc...................................................................58
SECTION 9.07. EVIDENCE OF AMENDMENTS, SUPPLEMENTS, WAIVERS......................................................59
iii
SECTION 9.08. AMENDMENT OF INTERCREDITOR AGREEMENT..............................................................59
iv
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA CONTROLS.....................................................................................59
SECTION 10.02. NOTICES..........................................................................................59
SECTION 10.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.....................................................60
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT...............................................60
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION....................................................60
SECTION 10.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR........................................................60
SECTION 10.07. LEGAL HOLIDAYS...................................................................................61
SECTION 10.08. GOVERNING LAW....................................................................................61
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS....................................................61
SECTION 10.10. NO PERSONAL LIABILITY............................................................................61
SECTION 10.11. SUCCESSORS.......................................................................................61
SECTION 10.12. DUPLICATE ORIGINALS..............................................................................61
SECTION 10.13. SEVERABILITY.....................................................................................61
SECTION 10.14. INDEPENDENCE OF COVENANTS........................................................................61
SECTION 10.15. CURRENCY INDEMNITY...............................................................................62
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. UNCONDITIONAL GUARANTEE..........................................................................62
SECTION 11.02. LIMITATIONS ON GUARANTEES........................................................................63
SECTION 11.03. EXECUTION AND DELIVERY OF GUARANTEE..............................................................63
SECTION 11.04. RELEASE OF A SUBSIDIARY GUARANTOR................................................................63
SECTION 11.05. WAIVER OF SUBROGATION............................................................................64
SECTION 11.06. IMMEDIATE PAYMENT................................................................................64
SECTION 11.07. NO SET-OFF.......................................................................................64
SECTION 11.08. OBLIGATIONS ABSOLUTE.............................................................................64
SECTION 11.09. OBLIGATIONS CONTINUING...........................................................................65
SECTION 11.10. OBLIGATIONS NOT REDUCED..........................................................................65
SECTION 11.11. OBLIGATIONS REINSTATED...........................................................................65
SECTION 11.12. OBLIGATIONS NOT AFFECTED.........................................................................65
SECTION 11.13. WAIVER...........................................................................................66
SECTION 11.14. NO OBLIGATION TO TAKE ACTION AGAINST THE ISSUER..................................................66
SECTION 11.15. DEALING WITH THE ISSUER AND OTHERS...............................................................66
SECTION 11.16. DEFAULT AND ENFORCEMENT..........................................................................67
SECTION 11.17. ACKNOWLEDGMENT...................................................................................67
SECTION 11.18. COSTS AND EXPENSES...............................................................................67
SECTION 11.19. NO MERGER OR WAIVER; CUMULATIVE REMEDIES.........................................................67
SECTION 11.20. GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.......................................................67
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ARTICLE TWELVE
SECURITY
SECTION 12.01. GRANT OF SECURITY INTEREST; REMEDIES.............................................................68
SECTION 12.02. RECORDING AND OPINIONS...........................................................................68
SECTION 12.03. RELEASE OF COLLATERAL............................................................................69
SECTION 12.04. SPECIFIED RELEASES OF COLLATERAL.................................................................69
SECTION 12.05. RIGHTS OF PURCHASERS; FORM AND SUFFICIENCY OF RELEASE............................................71
SECTION 12.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE SECURITY DOCUMENTS.................71
SECTION 12.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE SECURITY DOCUMENTS....................72
SECTION 12.08. USE OF TRUST MONEYS..............................................................................72
vi
Exhibit A-1 - Form of Initial Note...............................................................................A-1
Exhibit A-2 - Form of Exchange Note..............................................................................A-2
Exhibit B - Form of Additional Provisions in Form of Assignment
for Restricted Securities.......................................................................................B-1
Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers to
Non-QIB Accredited Investors..................................................................................C-1
Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers
Pursuant to Regulation S .......................................................................................D-1
Exhibit E - Guarantee............................................................................................E-1
Exhibit F - Form of Supplemental
Indenture.......................................................................F-1
Note: This Table of Contents is not, and shall not, for any purpose, be deemed
to be part of the
Indenture.
vii
THIS
INDENTURE, dated as of January 23, 2003, is among
Abraxas
Petroleum Corporation, a Nevada corporation (the "ISSUER"), Sandia Oil & Gas
Corporation, a Texas corporation and wholly-owned subsidiary of the Issuer
("SANDIA"), Wamsutter Holdings, Inc., a Wyoming corporation and wholly-owned
subsidiary of the Issuer ("WAMSUTTER"), Sandia Operating Corp., a Texas
corporation and wholly-owned subsidiary of Sandia ("SANDIA OPERATING"), Western
Associated Energy Corporation, a Texas corporation and wholly-owned subsidiary
of the Issuer ("WESTERN ASSOCIATED"), Eastside Coal Company, Inc., a Colorado
corporation and wholly-owned subsidiary of Western Associated ("EASTSIDE COAL"),
Grey Wolf Exploration Inc., an Alberta corporation and wholly-owned subsidiary
of the Issuer ("NEWCO CANADA") and U.S. Bank, N.A., as Trustee (the "TRUSTEE").
The Issuer has duly authorized the creation of its (i) 11-1/2% Secured
Notes due 2007, Series A (the "INITIAL NOTES"), (ii) 11-1/2% Secured Notes due
2007, Series B (the "EXCHANGE NOTES") to be issued in exchange for the Initial
Notes, or PIK Notes (as defined herein) issued in relation to the Initial Notes,
pursuant to the Registration Rights Agreement (as defined herein) and (iii) PIK
Notes (as defined herein) issuable from time to time in lieu of the payment of
cash interest on the Initial Notes, the Exchange Notes or other PIK Notes in
accordance with Section 2.14, and, to provide therefor, the Issuer has duly
authorized the execution and delivery of this
Indenture. The Notes (as defined
herein) will be guaranteed by Sandia, Wamsutter, Sandia Operating, Western
Associated, Eastside Coal, Newco Canada and each of the Issuer's future
Subsidiaries (as defined herein) each of which shall become Subsidiary
Guarantors as required in this
Indenture. All things necessary to make the
Notes, when duly issued and executed by the Issuer, and authenticated and
delivered hereunder, the valid obligations of the Issuer, and to make this
Indenture a valid and binding agreement of the Issuer, have been done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"2003 CAPEX AMOUNT" equals the lesser of $15 million and the 2003 CapEx
Annual Budget.
"2003 CAPEX ANNUAL BUDGET" equals the 2003 Closing CapEx Ratio
multiplied by Total Assets at December 31, 2003.
"2003 CLOSING CAPEX RATIO" equals, for calendar year 2003, (a) $15
million or such lower amount budgeted prior to the Issue Date by the Issuer for
Capital Expenditures for such calendar period, divided by (b) Total Assets at
the end of the calendar quarter in which the Issue Date occurs.
"2004-PLUS CAPEX ANNUAL AMOUNT" equals for any annual calendar period,
the lesser of $10 million and the 2004-Plus CapEx Annual Budget.
"2004-PLUS CAPEX ANNUAL BUDGET" equals, for any annual calendar period,
2004-Plus Closing CapEx Ratio multiplied by the Total Assets at the start of
such calendar period.
"2004-PLUS CAPEX QUARTERLY AMOUNT" equals, the lesser of $2.5 million
and one quarter of the 2004-Plus CapEx Annual Amount.
"2004-PLUS CLOSING CAPEX RATIO" equals, for any annual calendar period
starting January 1, 2004, (a) $10 million or such lower amount budgeted prior to
the Issue Date by the Issuer for Capital Expenditures for such calendar period,
divided by (b) the Total Assets at the end of the calendar quarter in which the
Issue Date occurs.
"ACCREDITED INVESTOR" shall have the meaning specified in Rule 501
promulgated under the Securities Act.
"ACQUIRED INDEBTEDNESS" means Subordinated Indebtedness of a Person or
any of its Subsidiaries the incurrence of which does not violate this Indenture:
(a) existing at the time such Person becomes a Subsidiary of the Issuer or at
the
1
time it merges or consolidates with the Issuer or any of its Subsidiaries, or
(b) which becomes Indebtedness of the Issuer or any of its Subsidiaries in
connection with the acquisition of assets from such Person, in each case not
incurred in connection with, or in anticipation or contemplation of, such Person
becoming a Subsidiary of the Issuer or such acquisition, merger or
consolidation.
"ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS" means (without
duplication), as of the date of determination: (1) the sum of: (A) discounted
future net revenues from the proved oil and gas reserves of the Issuer and its
Subsidiaries, calculated in accordance with Commission guidelines (before any
state or federal income tax), as estimated by a nationally recognized firm of
independent petroleum engineers as of a date no earlier than the date of the
Issuer's latest annual consolidated financial statements, as increased by, as of
the date of determination, the estimated discounted future net revenues from (i)
estimated proved oil and gas reserves acquired since the date of the Issuer's
year-end reserve report and (ii) estimated oil and gas reserves attributable to
upward revisions of estimates of proved oil and gas reserves since the date of
such year-end reserve report due to exploration, development or exploitation
activities, in each case calculated in accordance with Commission guidelines
(utilizing the prices utilized in such year-end reserve report), and decreased
by, as of the date of determination, the estimated discounted future net
revenues from (iii) estimated proved oil and gas reserves produced or disposed
of since the date of such year-end reserve report and (iv) estimated oil and gas
reserves attributable to downward revisions of estimates of proved oil and gas
reserves since the date of such year-end reserve report due to changes in
geological conditions or other factors which would, in accordance with standard
industry practice, cause such revisions, in each case calculated in accordance
with Commission guidelines (utilizing the prices utilized in such year-end
reserve report); PROVIDED, HOWEVER, that, in the case of each of the
determinations made pursuant to clauses (i) through (iv), such increases and
decreases shall be as estimated by the Issuer's petroleum engineers, unless in
the event that there is a Material Change as a result of such acquisitions,
dispositions or revisions, then the discounted future net revenues utilized for
purposes of this clause (1)(A) shall be confirmed in writing, by a nationally
recognized firm of independent petroleum engineers (which may be the Issuer's
independent petroleum engineers who prepare the Issuer's annual reserve report),
PLUS (B) the capitalized costs that are attributable to oil and gas properties
of the Issuer and its Subsidiaries to which no proved oil and gas reserves are
attributable, based on the books and records of the Issuer and its Subsidiaries
as of a date no earlier than the date of the Issuer's latest annual or quarterly
financial statements, PLUS (C) the Net Working Capital plus cash of the Issuer
and its Subsidiaries on a date no earlier than the date of the Issuer's latest
consolidated annual or quarterly financial statements, PLUS (D) with respect to
each other tangible asset of the Issuer and its Subsidiaries specifically
including, but not to the exclusion of any other qualifying tangible assets, the
Issuer's or its Subsidiaries' gas producing facilities and unproved oil and gas
properties (less any remaining deferred income taxes which have been allocated
to such gas processing facilities in connection with the acquisition thereof),
land, equipment, leasehold improvements, investments carried on the equity
method, restricted cash and the carrying value of marketable securities, the
greater of (i) the net book value of such other tangible assets on a date no
earlier than the date of the Issuer's latest consolidated annual or quarterly
financial statements or (ii) the appraised value, as estimated by a qualified
Independent Advisor, of such other tangible assets of the Issuer and its
Subsidiaries, as of a date no earlier than the date of the Issuer's latest
audited financial statements MINUS (2) the sum of minority interests and, to the
extent not otherwise taken into account in determining Adjusted Consolidated Net
Tangible Assets, any gas balancing liabilities of the Issuer and its
Subsidiaries reflected in the Issuer's latest audited financial statements.
In addition to, but without duplication of, the foregoing, for purposes
of this definition, "ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS" shall be
calculated after giving effect, on a pro forma basis, to: (1) any Investment not
prohibited by this Indenture, to and including the date of the transaction
giving rise to the need to calculate Adjusted Consolidated Net Tangible Assets
(the "ASSETS TRANSACTION DATE"), in any other Person that, as a result of such
Investment, becomes a Subsidiary of the Issuer, (2) the acquisition, to and
including the Assets Transaction Date (by merger, consolidation or purchase of
stock or assets), of any business or assets, including, without limitation,
Permitted Industry Investments, and (3) any sales or other dispositions of
assets permitted by this Indenture (other than sales of Hydrocarbons or other
mineral products in the ordinary course of business) occurring on or prior to
the Assets Transaction Date.
"ADJUSTED ISSUE PRICE" means an amount for the most recent accrual
period equal to the initial issue price of the Notes increased by the amount of
original issue discount previously includable in the gross income of a Holder,
reduced by the amount of any payment previously made on the Notes other than a
payment of qualified stated interest on the Notes.
"AFFILIATE" means, with respect to any specified Person, (a) any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or under common control with, such specified Person, and
(b) any Related Person of such Person. For purposes of this definition, the term
"control" means the possession, directly or
2
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.
"AFFILIATE TRANSACTION" has the meaning provided in Section 4.11.
"AGENT" means any Registrar, Paying Agent, co-Registrar, authenticating
agent or securities custodian.
"AGENT MEMBERS" has the meaning provided in Section 2.16.
"ASSET ACQUISITION" means: (a) an Investment by the Issuer or any
Subsidiary in any other Person pursuant to which such Person shall become a
Subsidiary, or shall be merged with or into the Issuer or any Subsidiary, or (b)
the acquisition by the Issuer or any Subsidiary of the assets of any Person
(other than a Subsidiary) which constitute all or substantially all of the
assets of such Person or comprise any division or line of business of such
Person or any other properties or assets of such Person other than in the
ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, exchange, lease (other than operating leases entered into in the
ordinary course of business consistent with past practices), assignment or other
transfer for value by the Issuer or any Subsidiary (including any Sale and
Leaseback Transaction) to any Person other than the Issuer or any Subsidiary of:
(a) any Capital Stock of any Subsidiary, or (b) any other property or assets
(including any interests therein) of the Issuer or any Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction;
PROVIDED, HOWEVER, that the following will not be deemed to be an Asset Sale:
(i) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Issuer in a transaction which is made in
compliance with Article Five, (ii) disposals or replacements of obsolete
equipment in the ordinary course of business, (iii) the sale, lease, conveyance,
disposition or other transfer of assets or property to the Issuer or one or more
Wholly Owned Subsidiaries, (iv) any disposition of Hydrocarbons or other mineral
products for value in the ordinary course of business, (v) the abandonment,
surrender, termination, cancellation, release, lease or sublease of undeveloped
oil and gas properties in the ordinary course of business or oil and gas
properties which are not capable of production in economic quantities, (vi) the
sale, lease, conveyance, disposition or other transfer by the Issuer or any
Subsidiary of assets or property in the ordinary course of business; PROVIDED,
HOWEVER, that the aggregate amount (valued at the fair market value of such
assets or property at the time of such sale, lease, conveyance, disposition or
transfer) of all such assets and property so sold, leased, conveyed, disposed or
transferred since the Issue Date pursuant to this clause (vi) shall not exceed
$200,000.00 in any one year.
"AUTHENTICATING AGENT" has the meaning provided in Section 2.02.
"AVAILABLE PROCEEDS AMOUNT" means (a) the sum of all Collateral
Proceeds and all Non-Collateral Proceeds remaining after application to repay
any Indebtedness secured by the assets that are the subject of the Asset Sale
giving rise to such Non-Collateral Proceeds; and (b) for purposes of determining
whether the Issuer must Pay Down Debt in connection with an Asset Sale and for
determining the amount the Issuer must use to Pay Down Debt, an amount equal to
the amount set forth under clause (a) above minus the aggregate amount of all
such Asset Sale proceeds previously spent in compliance with the terms of
Section 12.08.
"BANK PRODUCTS AGREEMENT" means any agreement for any service or
facility extended to the Issuer or any of its Subsidiaries by the Senior Credit
Facility Representative or any Senior Credit Facility Lender or any Affiliate of
the Senior Credit Facility Representative or any such lender including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
cards, (e) cash management or related services (including the Automated Clearing
House processing of electronic funds transfers through the direct Federal
Reserve Fedline system), (f) cash management, including controlled disbursement,
accounts or services, or (g) Hedge Agreements.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, as for any Person, the board of directors
of such Person or any duly authorized committee thereof.
3
"BOARD RESOLUTION" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"BUSINESS DAY" means any day other than a Saturday, Sunday or any other
day on which banking institutions in the City of
New York are required or
authorized by law or other governmental action to be closed.
"CAPEX DEFICIT AMOUNT" equals, in any calendar quarter, the amount by
which the Capital Expenditures in any such calendar quarter (excluding the
amount of Capital Expenditures due to any Rollover Decrease because of a prior
quarter's CapEx Excess Amount) is less than the applicable CapEx Quarterly
Amount.
"CAPEX EXCESS AMOUNT" equals, in any calendar quarter, the amount by
which Capital Expenditures in any such quarter (excluding the amount of Capital
Expenditures due to any Rollover Increase because of a prior quarter's CapEx
Deficit Amount) exceed the applicable CapEx Quarterly Amount.
"CAPEX QUARTERLY AMOUNT" means the Q1-2003 CapEx Amount, the
▇▇,▇,▇-▇▇▇▇ ▇▇▇▇▇ Amount or the 2004-Plus CapEx Quarterly Amount, as applicable.
"CAPITAL EXPENDITURES" means, for any period, any direct or indirect
expenditure made in such period, in each case, whether expensed or capitalized,
in respect of the use of assets, including all Drilling Expenditures, and shall
include all investments and cash expenses and other cash outflows of the Issuer
and its Subsidiaries related to any Permitted Investments including but not
limited to those relating to joint ventures, royalty arrangements, off-balance
sheet financing, and farmout expenditures made by the Issuer or its
Subsidiaries, and expenditures made in such period in any Investment other than
Investments in cash equivalents or government backed securities, but excluding
from the definition of "Capital Expenditures" any expenditures by the Issuer or
any of its Subsidiaries to the extent the source of funds for which expenditures
was the proceeds of an equity offering by the Issuer consummated after the Issue
Date or the proceeds of any Subordinated Indebtedness incurred by the Issuer or
any of its Subsidiaries after the Issue Date in compliance with the terms of
this Indenture, and further excluding from the definition of "Capital
Expenditures" any expenditures by the Issuer or any of its Subsidiaries to the
extent such expenditures constitute SG&A not prohibited by the terms of this
Indenture, and further excluding from the definition of "Capital Expenditures"
any expenditures by the Issuer or any of its Subsidiaries for Qualified Lease
Operating Costs.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the discounted
present value of the rental obligations of such Person under a lease of (or
other agreement conveying the right to use) any property (whether real, personal
or mixed) that is required to be classified and accounted for as a capital lease
obligation at such date, determined in accordance with GAAP.
"CAPITAL STOCK" means: (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and including any
warrants, options or rights to acquire any of the foregoing and instruments
convertible into any of the foregoing, and (b) with respect to any Person that
is not a corporation, any and all partnership or other equity interests of such
Person.
"CASH COUPON" means 11 1/2% or such higher coupon payable in cash to
the holders of the Notes pursuant to this Indenture.
"CASH EQUIVALENTS" means: (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or ▇▇▇▇▇'▇; (c) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from ▇▇▇▇▇'▇; (d)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any United States branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000; (e)
repurchase obligations with a term of not more than seven days for underlying
4
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above; and (f) money market
mutual or similar funds having assets in excess of $100,000,000.
"CEO NOTE OPTIONS" has the meaning set forth in Section 4.32.
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events: (a) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Issuer to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "GROUP") (whether or not otherwise in
compliance with the provisions of this Indenture); (b) the adoption by the
holders of Capital Stock of the Issuer of any plan or proposal for the
liquidation or dissolution of the Issuer (whether or not otherwise in compliance
with the provisions of this Indenture); (c) any Person or Group shall become the
owner, directly or indirectly, beneficially or of record, of shares representing
more than 35% of the aggregate ordinary voting power represented by the issued
and outstanding Capital Stock of the Issuer; or (d) the replacement of a
majority of the Board of Directors of the Issuer over a two-year period from the
directors who constituted the Board of Directors of the Issuer at the beginning
of such period with directors whose replacement shall not have been approved (by
recommendation, nomination or election, as the case may be) by a vote of at
least a majority of the Board of Directors of the Issuer then still in office
who either were members of such Board of Directors at the beginning of such
period or whose election as a member of such Board of Directors was previously
so approved.
"CHANGE OF CONTROL OFFER" has the meaning provided in Section 4.15.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning provided in Section
4.15.
"CLOSING SG&A RATIO" means, for any applicable calendar period, (a) $5
million or such lower amount budgeted prior to the Issue Date by the Issuer for
SG&A for such calendar period divided by (b) the Total Assets at the end of the
calendar quarter in which the Issue Date occurs.
"COLLATERAL" means, collectively, all of the property and assets
(including, without limitation, Trust Moneys) that are from time to time subject
to, or purported to be subject to, the Lien of this Indenture or any of the
Security Documents.
"COLLATERAL ACCOUNT" shall have the meaning provided in Section 12.08.
"COLLATERAL PROCEEDS" means any Net Cash Proceeds received from an
Asset Sale involving Collateral.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"CONSOLIDATED EBITDA" means, for any period, the sum (without
duplication) of: (a) Consolidated Net Income, and (b) to the extent Consolidated
Net Income has been reduced thereby, (i) all income taxes of the ISSUER or any
Subsidiary paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions outside the ordinary
course of business), (ii) Consolidated Interest Expense, (iii) the amount of any
Preferred Stock dividends paid by the Issuer, and (iv) Consolidated Non-cash
Charges, less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for the Issuer and its
Subsidiaries in accordance with GAAP.
"CONSOLIDATED EBITDA COVERAGE RATIO" means, with respect to the Issuer,
the ratio of: (a) Consolidated EBITDA of the Issuer during the four full fiscal
quarters for which financial information in respect thereof is available (the
"FOUR QUARTER PERIOD") ending on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated EBITDA Coverage Ratio (the
"TRANSACTION DATE") to (b) Consolidated Fixed Charges of the Issuer for the Four
Quarter Period.
5
For purposes of this definition, "CONSOLIDATED EBITDA" and "CONSOLIDATED FIXED
CHARGES" shall be calculated after giving effect (without duplication) on a pro
forma basis for the period of such calculation to: (a) the incurrence or
repayment of any Indebtedness of the Issuer or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period, and (b) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of the Issuer or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness, and also including, without limitation, any Consolidated EBITDA
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period. If the
Issuer or any Subsidiary directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if the Issuer or such Subsidiary, as the case may be,
had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "CONSOLIDATED FIXED CHARGES" for purposes of
determining the denominator (but not the numerator) of this "CONSOLIDATED EBITDA
COVERAGE RATIO": (i) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (ii) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; (iii) notwithstanding clauses (i)
and (ii) above, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"CONSOLIDATED EBITDA TO CASH INTEREST EXPENSE RATIO" means, with
respect to the last day of a particular fiscal quarter of the Issuer, the ratio
of: (1) Consolidated EBITDA during such fiscal quarter to; (2) Consolidated
Interest Expense paid in cash for such fiscal quarter.
For purposes of this definition, "Consolidated EBITDA" and "Consolidated
Interest Expense" will be calculated after giving effect, without duplication,
on a pro forma basis for the calculation period to: (1) the incurrence or
repayment of Indebtedness, other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the relevant fiscal
quarter as if such incurrence or repayment, as the case may be, occurred on the
first day of the relevant fiscal quarter, and (2) any Asset Sales or Asset
Acquisitions occurring during the relevant fiscal quarter as if such Asset Sale
or Asset Acquisition occurred on the first day of the relevant fiscal quarter.
If the Issuer or any Subsidiary guarantees Indebtedness of a third Person, the
preceding sentence will give effect to the incurrence of such guaranteed
Indebtedness as if the Issuer or such Subsidiary had directly incurred or
otherwise assumed such guaranteed Indebtedness.
In addition, in calculating "Consolidated Interest Expense" for purposes of
determining the denominator (but not the numerator) of the Consolidated EBITDA
to Cash Interest Expense Ratio: (1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the last day of the relevant fiscal
quarter of the Issuer and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate equal to the rate of interest on
such Indebtedness in effect on such day; (2) if interest on any Indebtedness
actually incurred on the last day of the relevant fiscal quarter of the Issuer
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on such day will be deemed to have been in effect during
the relevant fiscal quarter; and (3) notwithstanding clauses (1) and (2) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Swap Obligations, will be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"CONSOLIDATED FIXED CHARGES" means, with respect to the Issuer for any
period, the sum, without duplication, of: (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
6
Indebtedness of the Issuer and its Subsidiaries prior to the stated maturity
thereof pursuant to the agreements governing such Indebtedness), PLUS (b) the
product of (i) the amount of all dividend payments on any series of Preferred
Stock of the Issuer (other than dividends paid in Qualified Capital Stock) paid,
accrued or scheduled to be paid or accrued during such period times (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local income
tax rate of such Person, expressed as a decimal.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to the Issuer for
any period, the sum of, without duplication: (a) the aggregate of the interest
expense of the Issuer and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without limitation, (i)
any amortization of original issue discount, (ii) the net costs under Interest
Swap Obligations, (iii) all capitalized interest and (iv) the interest portion
of any deferred payment obligation; and (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by the Issuer and its Subsidiaries during such period, as determined on
a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to the Issuer for any
period, the aggregate net income (or loss) of the Issuer and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
PROVIDED, HOWEVER, that there shall be excluded therefrom: (a) after-tax gains
from Asset Sales or abandonments or reserves relating thereto, (b) after-tax
items classified in accordance with GAAP as extraordinary or nonrecurring gains,
(c) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary or is merged or
consolidated with the Issuer or any Subsidiary, (d) the net income of any
Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by charter,
contract, operation of law or otherwise, (e) the net income of any Person in
which the Issuer or any Subsidiary has an interest, other than a Subsidiary,
except to the extent of cash dividends or distributions actually paid to the
Issuer or to a Subsidiary by such Person, (f) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (g) in the case of a successor to the Issuer by consolidation
or merger or as a transferee of the Issuer's assets, any net income of the
successor corporation prior to such consolidation, merger or transfer of assets.
"CONSOLIDATED NET WORTH" of any Person as of any date means the
consolidated stockholders' equity of such Person, determined on a consolidated
basis in accordance with GAAP, less (without duplication) amounts attributable
to Disqualified Capital Stock of such Person.
"CONSOLIDATED NON-CASH CHARGES" means, with respect to the Issuer, for
any period, the aggregate depreciation, depletion, amortization and other
non-cash expenses of the Issuer and its Subsidiaries reducing Consolidated Net
Income of the Issuer for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"CONSOLIDATION" or "CONSOLIDATION" means, with respect to any Person,
the consolidation of the accounts of the Subsidiaries of such Person with those
of such Person, all in accordance with GAAP. The term "consolidated" has a
correlative meaning to the foregoing.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"COVENANT DEFEASANCE" has the meaning set forth in Section 8.01.
"CRUDE OIL AND NATURAL GAS BUSINESS" means (i) the acquisition,
exploration, development, operation and disposition of interests in oil, gas and
other hydrocarbon properties located in North America, and (ii) the gathering,
marketing, treating, processing, storage, selling and transporting of any
production from such interests or properties of the Issuer or of others.
"CRUDE OIL AND NATURAL GAS HEDGE AGREEMENTS" means, with respect to any
Person, any oil and gas agreements and other agreements or arrangements or any
combination thereof entered into by such Person in the ordinary course of
business and that is designed to provide protection against oil and natural gas
price fluctuations.
7
"CRUDE OIL AND NATURAL GAS PROPERTIES" means all Properties, including
equity or other ownership interests therein, owned by any Person which have been
assigned "proved oil and gas reserves" as defined in Rule 4-10 of Regulation S-X
of the Securities Act as in effect on the Issue Date.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Issuer or any Subsidiary of the Issuer against fluctuations in currency values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"DEFAULT INTEREST PAYMENT DATE" has the meaning set forth in Section
2.12.
"DEPOSITORY" means The Depository Trust Company, its nominees and
successors.
"DISQUALIFIED CAPITAL STOCK" means that portion of 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), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is mandatorily redeemable at the sole option of the
holder thereof, in whole or in part, in either case, on or prior to the final
maturity of the Notes.
"DRILLING EXPENDITURES" means any direct or indirect expenditure, in
each case, whether expensed or capitalized, in respect of drilling.
"EASTSIDE COAL" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.
"EXCESS CASH FLOW" means, for any period, Consolidated EBITDA of the
Issuer and its Subsidiaries for such period, minus any increase in the Net
Working Capital of the Issuer and its Subsidiaries from the beginning of such
period to the end of a such period or plus any decrease in the Net Working
Capital of the Issuer and its Subsidiaries from the beginning of such period to
the end of a such period (as the case may be), minus Capital Expenditures made
by the Issuer and its Subsidiaries during that period to the extent such Capital
Expenditures did not reduce Consolidated EBITDA, minus any cash interest paid by
the Issuer and its Subsidiaries during that period, minus any cash taxes paid by
the Issuer and its Subsidiaries during that period, minus any amount applied by
the Issuer and its Subsidiaries to Pay Down Debt during that period, minus (to
the extent included in Consolidated EBITDA) any proceeds received during that
period from any equity offering by the Issuer or from any Subordinated
Indebtedness of the Issuer or any of its Subsidiaries.
"EQUITY OFFERING" means an offering of Qualified Capital Stock of the
Issuer.
"EVENT OF DEFAULT" has the meaning provided in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"EXCHANGE NOTES" has the meaning set forth in the second paragraph of
this Indenture.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing seller and an informed and willing buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Issuer acting reasonably and in good faith and shall be evidenced by a Board
Resolution of the Issuer delivered to the Trustee; PROVIDED, HOWEVER, that if
the aggregate non-cash consideration to be received by the Issuer or any
Subsidiary from any Asset Sale shall reasonably be expected to exceed
$5,000,000, then fair market value shall be determined by an Independent
Advisor.
8
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board as of any date of determination.
"GLOBAL NOTES" has the meaning provided in Section 2.01.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part) (but if in part, only to the extent thereof); PROVIDED,
HOWEVER, that the term "GUARANTEE" shall not include (A) endorsements for
collection or deposit in the ordinary course of business and (B) guarantees
(other than guarantees of Indebtedness) by the Issuer in respect of assisting
one or more Subsidiaries in the ordinary course of their respective businesses,
including without limitation guarantees of trade obligations and operating
leases, on ordinary business terms. The term "GUARANTEE" used as a verb has a
corresponding meaning.
"GUARANTEES" has the meaning set forth in Section 11.01.
"HEDGE AGREEMENTS" means any and all transactions, agreements, or
documents now existing or hereafter entered into between the Issuer or any of
its Subsidiaries and the Senior Credit Facility Representative or any Affiliate
of the Senior Credit Facility Representative, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging the Issuer's or any of its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"HOLDER" means any Person holding a Note of record.
"HYDROCARBONS" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all constituents, elements or compounds thereof and products processed
therefrom.
"INCUR" means, with respect to any Indebtedness, to create, incur,
assume, guarantee, acquire, become liable, contingently or otherwise, with
respect to such Indebtedness, or otherwise become responsible for the payment
thereof.
"INDEBTEDNESS" means with respect to any Person, without duplication:
(a) all Obligations of such Person for borrowed money, (b) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all Capitalized Lease Obligations of such Person, (d) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable), (e) all Obligations for the
reimbursement of any obligor on a letter of credit, banker's acceptance or
similar credit transaction, (f) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (a) through (e) above and clause
(h) below, (g) all Obligations of any other Person of the type referred to in
clauses (a) through (f) above which are secured by any Lien on any property or
asset of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the amount of the
Obligation so secured, (h) all Obligations under Currency Agreements and
Interest Swap Obligations, (i) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed redemption price or repurchase price, and (j)
all Obligations in respect of production payments and forward sales.
For purposes hereof, the "MAXIMUM FIXED REPURCHASE PRICE" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
9
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the Issuer.
The "AMOUNT" or "PRINCIPAL AMOUNT" of Indebtedness at any time of determination
as used herein represented by: (1) any Indebtedness issued at a price that is
less than the principal amount at maturity thereof shall be the face amount of
the liability in respect thereof, (2) any Capitalized Lease Obligation shall be
the amount determined in accordance with the definition thereof, (3) any
Interest Swap Obligations included in the definition of Permitted Indebtedness
shall be zero, (4) all other unconditional obligations shall be the amount of
the liability thereof determined in accordance with GAAP, and (5) all other
contingent obligations shall be the maximum liability at such date of such
Person.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INDEPENDENT ADVISOR" means a reputable accounting, appraisal or
nationally recognized investment banking, engineering or consulting firm which:
(a) does not, and whose directors, officers and employees or Affiliates do not,
have a direct or indirect material financial interest in the Issuer, and (b) in
the judgment of the Board of Directors of the Issuer, is otherwise
disinterested, independent and qualified to perform the task for which it is to
be engaged.
"INITIAL NOTES" has the meaning set forth in the second paragraph of
this Indenture.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"INTERCREDITOR AGREEMENT" means the Intercreditor and Subordination
Agreement to be dated on or about the Issue Date entered into by and between the
Senior Credit Facility Representative and the Trustee and also acknowledged by
the Issuer and certain Subsidiaries of the Issuer, or any successor or
replacement agreement, as such agreement has been or may be amended (including
any amendment and restatement thereof), supplemented, replaced, restated or
otherwise modified from time to time.
"INTEREST" when used with respect to any Note means the amount of all
interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12 and any Liquidated Damages pursuant to the Registration
Rights Agreement.
"INTEREST PAYMENT DATE" means the stated maturity of an installment of
interest on the Notes.
"INTEREST SWAP OBLIGATION" means the obligations of any Person pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means, with respect to any Person, any direct or indirect:
(a) loan, advance or other extension of credit (including, without limitation, a
guarantee) or capital contribution (by means of any transfer of cash or other
property (valued at the fair market value thereof as of the date of transfer) to
others or any payment for property or services for the account or use of
others), (b) purchase or acquisition by such Person of any Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by any
other Person (whether by merger, consolidation, amalgamation or otherwise and
whether or not purchased directly from the issuer of such securities or
evidences of Indebtedness), (c) guarantee or assumption of the Indebtedness of
any other Person (other than the guarantee or assumption of Indebtedness of such
Person or a Subsidiary of such Person which guarantee or assumption is made in
compliance with Section 4.12), and (d) other items that would be classified as
investments on a balance sheet of such Person prepared in accordance with GAAP.
Notwithstanding the foregoing, "INVESTMENT" shall exclude extensions of trade
credit by the Issuer and its Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Issuer or such Subsidiary, as the
case may be. The amount of any Investment shall not be adjusted for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment. If the Issuer or
10
any Subsidiary sells or otherwise disposes of any Capital Stock of any
Subsidiary such that, after giving effect to any such sale or disposition, it
ceases to be a Subsidiary of the Issuer, the Issuer shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Capital Stock of such Subsidiary not sold or disposed of.
"ISSUE DATE" means the date of original issuance of the Notes.
"ISSUER" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to this Indenture and
thereafter such successor.
"ISSUER PROPERTIES" means all Properties, and equity, partnership or
other ownership interests therein, that are related or incidental to, or used or
useful in connection with, the conduct or operation of any business activities
of the Issuer or any of its Subsidiaries, which business activities are not
prohibited by the terms of this Indenture.
"ISSUER'S CEO" has the meaning set forth in Section 4.32.
"LEGAL DEFEASANCE" has the meaning set forth in Section 8.01.
"LEGAL HOLIDAY" has the meaning provided in Section 10.07.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, floating or other charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof and any agreement to give any security interest).
"LIQUIDATED DAMAGES" shall have the meaning assigned to such term in
the Registration Rights Agreement.
"MATERIAL CHANGE" means an increase or decrease of more than 10% during
a fiscal quarter in the discounted future net cash flows (excluding changes that
result solely from changes in prices) from proved oil and gas reserves of the
Issuer and its Subsidiaries (before any state or federal income tax); PROVIDED,
HOWEVER, that the following will be excluded from the Material Change
calculation: (i) any acquisitions during such fiscal quarter of oil and gas
reserves that have been estimated by independent petroleum engineers and on
which a report or reports exist, (ii) any disposition of properties existing at
the beginning of such fiscal quarter that have been disposed of as provided in
Section 4.16, and (iii) any reserves added during such fiscal quarter
attributable to the drilling or recompletion of ▇▇▇▇▇ not included in previous
reserve estimates, but which will be included in future quarters.
"MATURITY DATE" means May 1, 2007.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"MORTGAGE" means any mortgage, deed of trust, assignment of production,
security agreement, fixture filing, guarantee of debts and liabilities, general
security agreement, financing statement or other instrument executed and
delivered by the Issuer or any Subsidiary and granting a Lien in favor of the
Trustee for the benefit of the Trustee and the Holders, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
thereof and of this Indenture.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, sale,
transfer or other disposition, the proceeds in the form of cash or Cash
Equivalents including payments in respect of deferred payment obligations when
received in the form of cash or Cash Equivalents received by the Issuer or any
Subsidiary from such Asset Sale, sale, transfer or other disposition net of: (a)
reasonable out-of-pocket expenses and fees relating to such Asset Sale, sale,
transfer or other disposition (including, without limitation, legal, accounting
and investment banking fees and sales commissions), (b) taxes paid or payable
after taking into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
appropriate amounts (determined by the Chief Financial Officer of the Issuer) to
be provided by the Issuer or any Subsidiary, as the case may be, as a reserve,
in accordance with GAAP, against any post closing adjustments or liabilities
associated with such Asset Sale, sale, transfer or other disposition and
retained by the Issuer or any Subsidiary, as the case may be, after such Asset
Sale, sale, transfer or other disposition including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, sale, transfer or other
11
disposition (but excluding any payments which, by the terms of the indemnities
will not, be made during the term of the Notes), and (d) the aggregate amount of
cash and Cash Equivalents so received which is used to retire any then existing
Indebtedness (other than Indebtedness under the Senior Credit Agreement,
Qualified Senior Affiliate Indebtedness or the Notes) of the Issuer or such
Subsidiary which is secured by a Lien on the property subject of the Asset Sale,
sale, transfer or other disposition.
"NET WORKING CAPITAL" means: (a) all current assets of the Issuer and
its consolidated Subsidiaries, MINUS (b) all current liabilities of the Issuer
and its consolidated Subsidiaries, except current liabilities included in
Indebtedness, MINUS (c) all cash of the Issuer and its Subsidiaries, in each
case as set forth in financial statements of the Issuer prepared in accordance
with GAAP.
"NEWCO CANADA" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.
"NON-COLLATERAL PROCEEDS" means any Net Cash Proceeds received from an
Asset Sale, to the extent such Asset Sale did not involve the sale, transfer, or
disposition of Collateral.
"NON-U.S. PERSON" means a Person who is not a U.S. person, as defined
in Regulation S.
"NOTES" means the Initial Notes, the Exchange Notes and the PIK Notes,
as amended or supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to this Indenture.
"OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"OFFER TO EXCHANGE" means the confidential Offer to Exchange dated
December 9, 2002 of the Issuer relating to the offering of the Notes, as amended
or supplemented.
"OFFICER" means, with respect to any Person, the Chairman of the Board
of Directors, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers of
the Issuer complying with the requirements of Sections 10.04 and 10.05, as they
relate to the giving of an Officers' Certificate.
"OIL AND GAS ASSETS" means the Crude Oil and Natural Gas Properties and
natural gas processing facilities of the Issuer and/or any of its Subsidiaries.
"OPINION OF COUNSEL" means a written opinion addressed to the Trustee
from legal counsel who is reasonably acceptable to the Trustee complying with
the requirements of Sections 10.04 and 10.05, as they relate to the giving of an
Opinion of Counsel.
"PAY DOWN DEBT" means: (a) first, making a payment under the Senior
Credit Agreement with a permanent reduction of the indebtedness outstanding
under the Senior Credit Agreement to the extent making a payment on the Senior
Credit Agreement with a permanent reduction of the indebtedness outstanding
under the Senior Credit Agreement is required under the terms of the Senior
Credit Agreement and/or the Intercreditor Agreement; (b) second, making a
payment of principal and/or accrued interest on, or redeeming, exchanging,
discharging, defeasing, or purchasing and retiring, Notes in whole or in part,
to the extent permitted by the Senior Credit Agreement and the Intercreditor
Agreement; (c) third, (i) first, making scheduled or mandatory paydowns on
Indebtedness under the Senior Credit Agreement and paying down any term loans
under the Senior Credit Agreement to the extent permitted by the Senior Credit
Agreement, whether or not then due and payable ("Term Loan Paydowns"), and if
all Term Loan Paydowns are made (the "Term Loan Amounts") so that such
outstanding amounts under the Senior Credit Agreement have been paid down
completely, then (ii) second, any amount remaining after payment of the Term
Loan Amounts will be applied to outstanding amounts under any revolving credit
tranche under the Senior Credit Agreement for permanent reduction of the
commitment under the revolving credit tranche, and if no amounts are outstanding
under any such revolving credit tranche, then at that time the Issuer will
terminate that credit facility, and (d) fourth, making a payment of principal
and/or
12
accrued interest on, or redeeming, exchanging, discharging, defeasing, or
purchasing and retiring, Notes in whole or in part.
"PAYING AGENT" has the meaning provided in Section 2.03, and includes
any additional Paying Agent.
"PAYMENT RESTRICTION" shall have the meaning set forth in Section 4.13.
"PERMITTED FARMOUT AGREEMENTS" shall have the meaning set forth in
Section 4.31.
"PERMITTED INDEBTEDNESS" means, without duplication, each of the
following: (a) Indebtedness under the Notes, this Indenture, the Guarantees and
the Security Documents; (b) Obligations under Interest Swap Obligations of the
Issuer or a Subsidiary covering Indebtedness of the Issuer or any of its
Subsidiaries; PROVIDED that such Interest Swap Obligations are entered into to
protect the Issuer and its Subsidiaries against fluctuations in interest rates
on Indebtedness incurred in accordance with this Indenture to the extent the
notional principal amount of such Interest Swap Obligations does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates; (c) Indebtedness of a Subsidiary to the Issuer or to a Wholly Owned
Subsidiary for so long as such Indebtedness is held by the Issuer or a Wholly
Owned Subsidiary, in each case subject to no Lien held by a Person other than
the Issuer or a Wholly Owned Subsidiary; PROVIDED, HOWEVER, that if as of any
date any Person other than the Issuer or a Wholly Owned Subsidiary owns or holds
any such Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness; (d) Indebtedness of the Issuer
to a Wholly Owned Subsidiary for so long as such Indebtedness is held by a
Wholly Owned Subsidiary, in each case subject to no Lien; PROVIDED, HOWEVER,
that (i) any Indebtedness of the Issuer to any Wholly Owned Subsidiary that is
not a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written
agreement, to the Issuer's Obligations under this Indenture and the Notes and
(ii) if as of any date any Person other than a Wholly Owned Subsidiary owns or
holds any such Indebtedness or holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Issuer; (e) Indebtedness arising from the honoring
by a bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that
such Indebtedness is extinguished within two Business Days of incurrence; (f)
Indebtedness of the Issuer or any of its Subsidiaries represented by letters of
credit for the account of the Issuer or any of its Subsidiaries, as the case may
be, in order to provide security for workers' compensation claims, payment
obligations in connection with self-insurance or similar requirements in the
ordinary course of business; (g) Capitalized Lease Obligations and Purchase
Money Indebtedness of the Issuer or any of its Subsidiaries not to exceed
$2,000,000 at any one time outstanding; (h) Permitted Operating Obligations in
an aggregate amount at any time outstanding not to exceed $750,000; (i)
Obligations arising in connection with Crude Oil and Natural Gas Hedge
Agreements with financial institutions (excluding forward sales and production
payments); (j) Indebtedness under Currency Agreements with financial
institutions; PROVIDED, HOWEVER, that in the case of Currency Agreements which
relate to Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Issuer and its Subsidiaries outstanding other than as a
result of fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder; (k) additional Indebtedness of
the Issuer or any of its Subsidiaries in an aggregate principal amount at any
time outstanding not to exceed $500,000; (l) Indebtedness outstanding on the
Issue Date (to the extent the Indebtedness thereunder is not taken up by the
Notes); (m) Indebtedness under the Senior Credit Agreement (including (i) any
fees and expenses incurred by the Issuer or any of its Subsidiaries incurred in
connection with the Senior Credit Agreement (including, but not limited to,
those owed to any Person not affiliated to the Issuer or any of its
Subsidiaries) in connection with any amendment (including any amendment and
restatement thereof), supplement, replacement, restatement or other modification
from time to time, including any agreements (and related instruments and
documents) extending the maturity of, refinancing, replacement or other
restructuring of all or any portion of the Indebtedness under such Senior Credit
Agreement (and related instruments and documents) or any successor or
replacement agreements (and related instruments and documents) and (ii) any
capitalized interest, fees, or other expenses incurred by the Issuer or any of
its Subsidiaries whether or not charged to a loan account or any similar account
created under the Senior Credit Agreement (clauses (i) and (ii), the "Related
Indebtedness")); provided, that the principal amount of the Indebtedness under
the Senior Credit Agreement (excluding the Related Indebtedness and excluding
any Qualified Senior Affiliate Indebtedness) shall not at any time exceed the
sum of (1) $50 million less the aggregate amount applied from time to time by
the Issuer or any of its Subsidiaries to repay the Senior Credit Agreement
Indebtedness which is accompanied by a corresponding permanent reduction of the
Revolver Commitment (as defined in the Senior Credit Agreement) plus (2) (x) $15
million, if the then applicable Revolver Commitment under the Senior Credit
Agreement is $25 million or greater, (y) $10 million, if the then applicable
Revolver Commitment under the Senior Credit Agreement is less than $25 million
and greater than or equal to $15
13
million or (z) $5 million, if the then applicable Revolver Commitment under the
Senior Credit Agreement is less than $15 million ("Indebtedness under the Senior
Credit Agreement"); provided further that, the aggregate amount that has been
applied by the Issuer or any of its Subsidiaries to repay the Indebtedness under
the Senior Credit Agreement which was accompanied by a corresponding permanent
commitment reduction can be established by the Issuer at any time by providing
the Trustee with an Officers' Certificate stating such amount; (n) Qualified
Senior Affiliate Indebtedness; and (o) Permitted Subordinated Indebtedness.
"PERMITTED INDUSTRY INVESTMENTS" means: (a) capital expenditures,
including, without limitation, acquisitions of Issuer Properties and interests
therein; (b) (i) entry into operating agreements, joint ventures, working
interests, royalty interests, mineral leases, unitization agreements, pooling
arrangements or other similar or customary agreements, transactions, properties,
interests or arrangements, and Investments and expenditures in connection
therewith or pursuant thereto, in each case made or entered into in the ordinary
course of the oil and gas business, and (ii) exchanges of Issuer Properties for
other Issuer Properties of at least equivalent value as determined in good faith
by the Board of Directors of the Issuer; and (c) Investments of operating funds
on behalf of co-owners of Crude Oil and Natural Gas Properties of the Issuer or
the Subsidiaries pursuant to joint operating agreements.
"PERMITTED INVESTMENTS" means: (a) Investments by the Issuer or any
Subsidiary in any Person that (i) is or will become immediately after such
Investment a Subsidiary or that will merge or consolidate into the Issuer or a
Subsidiary, and (ii) is not subject to any Payment Restriction; (b) Investments
in the Issuer by any Subsidiary; PROVIDED, HOWEVER, that any Indebtedness
evidencing any such Investment held by a Subsidiary that is not a Subsidiary
Guarantor is unsecured and subordinated, pursuant to a written agreement, to the
Issuer's Obligations under the Notes and this Indenture; (c) investments in cash
and Cash Equivalents; (d) Investments made by the Issuer or its Subsidiaries as
a result of consideration received in connection with an Asset Sale made in
compliance with Section 4.16; (e) Permitted Industry Investments; and (f)
Investments in any Person so long as such Investments are made on an
arm's-length basis.
"PERMITTED LIENS" means each of the following types of Liens: (a) Liens
arising under this Indenture or the Security Documents; (b) Liens securing the
Notes and the Guarantees ; (c) Liens for taxes, assessments or governmental
charges or claims either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which the Issuer or a Subsidiary, as the case
may be, shall have set aside on its books such reserves as may be required
pursuant to GAAP; (d) statutory and contractual Liens of landlords to secure
rent arising in the ordinary course of business to the extent such Liens relate
only to the tangible property of the lessee which is located on such property
and Liens of carriers, warehousemen, mechanics, builders, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good faith,
if such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof; (e) Liens incurred on deposits
made in the ordinary course of business: (i) in connection with workers'
compensation, unemployment insurance and other types of social security,
including any Lien securing letters of credit issued in the ordinary course of
business consistent with past practice in connection therewith, or (ii) to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money); (f) easements, rights-of-way, zoning restrictions, restrictive
covenants, minor imperfections in title and other similar charges or
encumbrances in respect of real property not interfering in any material respect
with the ordinary conduct of the business of the Issuer or any of its
Subsidiaries; (g) any interest or title of a lessor under any Capitalized Lease
Obligation not prohibited by the terms of this Indenture; PROVIDED that such
Liens do not extend to any Property which is not leased Property subject to such
Capitalized Lease Obligation; (h) Liens securing reimbursement obligations, not
to exceed $100,000 in the aggregate at any time outstanding, with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof; (i) Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of the Issuer or any of its
Subsidiaries, including rights of offset and set-off; (j) Liens securing
Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness
that is otherwise permitted under this Indenture and Liens securing Crude Oil
and Natural Gas Hedge Agreements; (k) statutory Liens on pipeline or pipeline
facilities, Hydrocarbons or Properties of the Issuer and its Subsidiaries which
arise out of operation of law; (l) royalties, overriding royalties, net profit
interests, reversionary interests, operating agreements and other similar
interests, properties, arrangements and agreements, all as ordinarily exist with
respect to Properties of the Issuer and its Subsidiaries or otherwise as are
customary in the oil and gas business and all as relate to mineral leases and
mineral interests of the Issuer and its Subsidiaries; (m) Liens arising under
Permitted Farmout Agreements; ; (n) any (i) interest or title of a lessor or
sublessor under any lease, (ii) restriction or encumbrance that the interest or
title of such lessor or sublessor may be subject to (including, without
limitation, ground leases or other prior leases of the demised premises,
mortgages, mechanics' Liens, builders' Liens, tax Liens, and
14
easements), or (iii) subordination of the interest of the lessee or sublessee
under such lease to any restrictions or encumbrance referred to in the preceding
clause (ii); (o) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or instruments of
the Issuer or any Subsidiary on deposit with or in possession of such bank; (p)
judgment and attachment Liens not giving rise to an Event of Default; (q) Liens
securing Acquired Indebtedness incurred in accordance with Section 4.12;
PROVIDED, HOWEVER, that (i) such Liens secured such Acquired Indebtedness at the
time of and prior to the incurrence of such Acquired Indebtedness by the Issuer
or a Subsidiary and were not granted in connection with, or in anticipation of,
the incurrence of such Acquired Indebtedness by the Issuer or a Subsidiary and
(ii) such Liens do not extend to or cover any property or assets of the Issuer
or of any of its Subsidiaries other than the property or assets that secured the
Acquired Indebtedness (and the proceeds of such property and assets) prior to
the time such Indebtedness became Acquired Indebtedness of the Issuer or a
Subsidiary and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by
the Issuer or a Subsidiary; (r) Liens existing on the Issue Date; (s) Liens
securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness permitted under this Indenture and which has been secured by a Lien
permitted under this Indenture and which has been incurred in accordance with
the provisions of this Indenture; PROVIDED, HOWEVER, that such Liens (i) are no
less favorable to the Holders and are not more favorable to the lienholders with
respect to such Liens than the Liens in respect of the Indebtedness being
Refinanced and (ii) do not extend to or cover any Property of the Issuer or any
of its Subsidiaries that would not have secured the Indebtedness so Refinanced
under the terms of the documents governing the Liens securing the Indebtedness
being Refinanced; (t) Liens securing Indebtedness of the Issuer or any
Subsidiary in an aggregate principal amount at any time outstanding not to
exceed the sum of $500,000; and (u) Liens arising under the Senior Credit
Agreement or the guarantees and security documents entered into in connection
with the Senior Credit Agreement, and Liens securing Qualified Senior Affiliate
Indebtedness.
"PERMITTED OPERATING OBLIGATIONS" means Indebtedness of the Issuer or
any Subsidiary in respect of one or more standby letters of credit, bid,
performance or surety bonds, or other reimbursement obligations, issued for the
account of, or entered into by, the Issuer or any Subsidiary in the ordinary
course of business consistent with past practices (excluding obligations related
to the purchase by the Issuer or any Subsidiary of Hydrocarbons for which the
Issuer or such Subsidiary has contracts to sell), or in lieu of any thereof or
in addition to any thereto, guarantees and letters of credit supporting any such
obligations and Indebtedness (in each case, other than for an obligation for
borrowed money, other than borrowed money represented by any such letter of
credit, bid, performance or surety bond, or reimbursement obligation itself, or
any guarantee and letter of credit related thereto).
"PERMITTED SUBORDINATED INDEBTEDNESS" has the meaning provided in
Section 4.30.
"PERSON" means an individual, partnership, corporation, unincorporated
organization, limited liability company, trust, estate, or joint venture, or a
governmental agency or political subdivision thereof.
"PHYSICAL NOTES" has the meaning provided in Section 2.01.
"PIK NOTES" has the meaning provided in Section 2.14.
"PREFERRED STOCK" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"PRINCIPAL" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Notes constituting Restricted Securities in the form set forth in the initial
paragraph of Section 2.15.
"PRO FORMA" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Issuer in consultation with its independent public
accountants.
"PROPERTY" or "PROPERTY" means, with respect to any Person, any
interests of such Person in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
Capital Stock, partnership interests and other equity or ownership interests in
any other Person.
15
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness the net proceeds of
which are used to finance the cost (including the cost of construction) of
property or assets acquired in the normal course of business by the Person
incurring such Indebtedness.
"Q1-2003 BUDGET" equals the Q1-2003 Closing Budget Ratio multiplied by
the Total Assets at March 31, 2003.
"Q1-2003 CAPEX AMOUNT" equals the lesser of $8 million and the Q1-2003
Budget.
"Q1-2003 CLOSING BUDGET RATIO" equals (a) $8 million or such lower
amount budgeted prior to the Issue Date by the Issuer for Capital Expenditures
for the first calendar quarter of 2003 divided by (b) Total Assets at the end of
the calendar quarter in which the Issue Date occurs.
"Q2,3,4-2003 BUDGET" equals, for each of the last three calendar
quarters of 2003, the applicable Q2,3,4-2003 Closing Budget Ratio multiplied by
the Total Assets at the start of the applicable calendar quarter in 2003.
"Q2,3,4-2003 CAPEX AMOUNT" equals, for each of the last three calendar
quarters of 2003, the lesser of $2.5 million and the Q2,3,4-2003 Budget.
"Q2,3,4-2003 CLOSING BUDGET RATIO" equals, for each of the last three
calendar quarters of 2003, (a) $2.5 million or such lower amount budgeted prior
to the Issue Date by the Issuer for Capital Expenditures for such calendar
quarter divided by (b) Total Assets at the end of the calendar quarter in which
the Issue Date occurs.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not
Disqualified Capital Stock.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"QUALIFIED LEASE OPERATING COSTS" means lease operating costs
reasonably incurred in the ordinary course of business consistent with past
practices and industry standards pursuant to a budget approved by the Board of
Directors of the Issuer and relating to proved developed oil and gas properties.
"QUALIFIED SENIOR AFFILIATE INDEBTEDNESS" means Indebtedness of the
Issuer to the Senior Credit Facility Representative, any Senior Credit Facility
Lender or any Affiliate of the Senior Credit Facility Representative or any such
lender in connection with (x) hedging activities (i.e., Indebtedness under Hedge
Agreements) or (y) cash management services entered into in the ordinary course
of business with any such Person (i.e., Indebtedness under Bank Products
Agreements).
"RECORD DATE" means the record dates specified in the Notes.
"REDEMPTION DATE," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"REDEMPTION PRICE," when used with respect to any Note to be redeemed,
means the price fixed for such redemption, including principal and premium, if
any, pursuant to this Indenture and the Notes.
"REFINANCE" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "REFINANCED" and "REFINANCING"
shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means any Indebtedness that is the result of
Refinancing by the Issuer or any Subsidiary of Indebtedness incurred in
accordance with Section 4.12 (other than pursuant to clause (a), (b), (c), (d),
(e), (f), (g), (h), (i), (j), (k), (l) or (o) of the definition of Permitted
Indebtedness), in each case that does not: (1) result in an increase in the
aggregate principal amount of Indebtedness of the Issuer or such Subsidiary as
of the date of such proposed Refinancing (other than increases from any premium
required to be paid under the terms of the instrument governing such
Indebtedness, capitalized interest, and the amount of reasonable expenses
incurred by the Issuer or such Subsidiary in connection with such Refinancing,
all of which are included in the term "Refinancing Indebtedness"), or (2) create
Indebtedness with (A) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a
final maturity earlier than the final maturity of the Indebtedness
16
being Refinanced; PROVIDED, HOWEVER, that (a) if such Indebtedness being
Refinanced is Indebtedness solely of the Issuer or a Subsidiary Guarantor or is
Indebtedness of the Issuer and any Subsidiary Guarantor or Subsidiary
Guarantors, then such Refinancing Indebtedness shall be Indebtedness solely of
the Issuer or such Subsidiary Guarantor or of the Issuer and such Subsidiary
Guarantor or Subsidiary Guarantors, as the case may be, and (b) if such
Indebtedness being Refinanced is subordinate or junior to the Notes or a
Guarantee, then such Refinancing Indebtedness shall be subordinate to the Notes
or such Guarantee, as the case may be, at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"REGISTRAR" has the meaning provided in Section 2.03.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement, entered into effective January 23, 2003, by and among ▇▇▇▇▇▇▇▇▇ &
Company, Inc. as the dealer manager, the Issuer and the Subsidiary Guarantors.
"REGULATION S" means Regulation S under the Securities Act.
"RELATED PERSON" of any Person means any other Person directly or
indirectly owning 10% or more of the outstanding voting Common Stock of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person).
"RELEASED INTERESTS" has the meaning provided in Section 12.04.
"RESTRICTED PAYMENT" shall have the meaning set forth in Section 4.10.
"RESTRICTED SECURITY" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; PROVIDED, HOWEVER, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.
"RESTRICTED CASH" means, at any time, the lesser of (i) $5 million and
(ii) the minimum amount of cash required to be maintained at that time by the
Issuer pursuant to the terms of the Senior Credit Agreement.
"ROLLOVER DECREASE" means, for a particular calendar quarter, the
amount of reduced availability of SG&A or Capital Expenditures, as the case may
be, due to any a prior quarter's SG&A Excess Amount or CapEx Excess Amount.
"ROLLOVER INCREASE" means, for a particular calendar quarter, the
amount of increased availability of SG&A or Capital Expenditures, as the case
may be, due to any a prior quarter's SG&A Deficit Amount or CapEx Deficit
Amount.
"RULE 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Rating Services, a division of The McGraw
Hill Companies, Inc., and its successors.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Issuer or any Subsidiary of any Property, whether owned
by the Issuer or any Subsidiary at the Issue Date or later acquired which has
been or is to be sold or transferred by the Issuer or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced by
such Person on the security of such Property.
"SANDIA" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.
"SANDIA OPERATING" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.
"SEC" means the Securities and Exchange Commission
17
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"SECURITY DOCUMENTS" means, collectively, the Mortgages and all
security agreements, mortgages, deeds of trust, collateral assignments or other
instruments evidencing or creating any security interests in favor of the
Trustee in all or any portion of the Collateral, in each case as amended,
supplemented or modified from time to time in accordance with their terms and
the terms of this Indenture.
"SENIOR CREDIT AGREEMENT" means the Loan and Security Agreement, dated
as of January 22, 2003, entered into by the Issuer, each Subsidiary of the
Issuer signatory thereto, and the lenders named therein, or any successor or
replacement agreements, whether with the same or any other lender, group of
lenders, trustee, agent, note holder or group of note holders, together with the
related documents thereto (including, without limitation, any promissory notes,
guarantee agreements, security documents), in each case as such agreements,
instruments and documents have been or may be amended (including any amendment
and restatement thereof), supplemented, replaced, restated or otherwise modified
from time to time, including any agreements (and related instruments and
documents) extending the maturity of, refinancing, replacing or otherwise
restructuring all or any portion of the Indebtedness under such agreements (and
related instruments and documents) or any successor or replacement agreements
(and related instruments and documents).
"SENIOR CREDIT FACILITY LENDERS" means any holders of any Indebtedness
under the Senior Credit Agreement.
"SENIOR CREDIT FACILITY REPRESENTATIVE" means the Person designated in
the Intercreditor Agreement as the Senior Credit Facility Representative with
respect to the Senior Credit Agreement or any other Person designated to the
Trustee in a Senior Credit Facility Representative Change Notice.
"SENIOR CREDIT FACILITY REPRESENTATIVE CHANGE NOTICE" means a written
notice of a change in the identity and/or address of the Senior Credit Facility
Representative which certifies to the Trustee (a) with respect to such a notice
that gives notice of a new Senior Credit Facility Representative, that the
Persons executing such notice constitute the holders of at least 51% in
aggregate principal amount of Indebtedness under the Senior Credit Agreement, or
(b) with respect to such a notice that only gives notice of a new address for
the Senior Credit Facility Representative, that the Person executing such notice
is the then current Senior Credit Facility Representative, and which sets forth
the new identity (by name, and by jurisdiction of organization as applicable)
and/or the new address of the Senior Credit Facility Representative.
"SG&A" means, for any period, amounts expended by the Issuer and its
Subsidiaries on selling, general and administrative expenses (as determined in
accordance with GAAP consistent with past practices), but excluding (without
duplication with respect to such exclusions): (a) costs and expenses of the
Issuer incurred in connection with (i) issuing the Notes and shares of common
stock contemporaneously issued by the Issuer, (ii) obtaining the loan evidenced
by the Senior Credit Agreement, and (iii) the sale to PrimeWest Energy Inc. of
all of the outstanding capital stock of Canadian Abraxas Petroleum Limited and
Grey Wolf Exploration, Inc. held by the Issuer; (b) legal and accounting fees
not to exceed $40,000 in any calendar year incurred by the Issuer in connection
with preparing and filing the reports, information and documents required to be
delivered to the Trustee as described in Section 4.08; (c) bonuses paid to
officers and employees of the Issuer to the extent not in violation of Section
4.11; (d) expenditures with respect to any non-cash compensation to officers and
employees of the Issuer and its Subsidiaries; (e) amounts expended by the Issuer
and its Subsidiaries on selling, general and administrative expenses for
Canadian Abraxas Petroleum Limited and Grey Wolf Exploration, Inc.; and (f) the
▇▇▇▇▇ Fees.
"SG&A ANNUAL AMOUNT" equals, for any annual calendar period, the lesser
of $5 million and the SG&A Budget.
"SG&A BUDGET" means, for any annual or quarter calendar period, as the
case may be, Closing SG&A Ratio multiplied by the Total Assets at the start of
such calendar period.
"SG&A DEFICIT AMOUNT" means, for any calendar quarter, the amount by
which the SG&A in any such quarter (excluding the amount of SG&A due to any
Rollover Decrease because of a prior quarter's SG&A Excess Amount) is less than
the applicable SG&A Quarterly Amount.
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"SG&A EXCESS AMOUNT" means, for any calendar quarter, the amount by
which SG&A in any such quarter (excluding the amount of SG&A due to any Rollover
Increase because of a prior quarter's SG&A Deficit Amount) exceeds the
applicable SG&A Quarterly Amount.
"SG&A QUARTERLY AMOUNT" means, for any calendar quarter, the lesser of
(a) $1.5 million and (b) one quarter of the SG&A Budget.
"▇▇▇▇▇ FEES" shall have the meaning set forth in Section 4.31.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Issuer or a
Subsidiary Guarantor that is subordinated or junior in right of payment to the
Notes, the relevant Guarantee and the Security Documents, as applicable,
pursuant to a written agreement to that effect.
"SUBSIDIARY," with respect to any Person, means: (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person, or (b) any
other Person of which at least a majority of the voting interests under ordinary
circumstances is at the time, directly or indirectly, owned by such Person; or
(c) any other Person required to be consolidated with such Person for financial
reporting purposes under GAAP. Unless otherwise specified, the term "Subsidiary"
shall mean a Subsidiary of the Issuer.
"SUBSIDIARY GUARANTOR" means Sandia, Wamsutter, Sandia Operating,
Western Associated, Eastside Coal, and Newco Canada and each of the Issuer's
Subsidiaries that in the future executes a supplemental indenture in which such
Subsidiary agrees to be bound by the terms of this Indenture as a Subsidiary
Guarantor; PROVIDED, HOWEVER, that any Person constituting a Subsidiary
Guarantor as described above shall cease to constitute a Subsidiary Guarantor
when its Guarantee is released in accordance with the terms of this Indenture.
"SURVIVING ENTITY" shall have the meaning set forth in Section 5.01.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, except as otherwise provided in Section 9.03.
"TOTAL ASSETS" means, as of any date, total assets of the Issuer and
its Subsidiaries as reflected on the Issuer's consolidated balance sheet as of
such date prepared in accordance with GAAP.
"TRUST OFFICER" means any officer or assistant officer within the
Corporate Trust Office of the Trustee (or any successor group of the Trustee)
assigned by the Trustee or successor Trustee to administer this Indenture, or in
the case of a successor trustee, an officer assigned to the department, division
or group performing the corporation trust work of such successor and assigned to
administer this Indenture.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of Article Seven of this
Indenture and thereafter means such successor.
"TRUST MONEYS" means all cash or Cash Equivalents received by the
Trustee: (a) upon the release of Collateral from the Lien of this Indenture and
the Security Documents, including investment earnings thereon; or (b) pursuant
to the provisions of any Mortgage; or (c) as proceeds of any other sale or other
disposition of all or any part of the Collateral by or on behalf of the Trustee
or any collection, recovery, receipt, appropriation or other realization of or
from all or any part of the Collateral pursuant to this Indenture or any of the
Security Documents or otherwise; or (d) for application under this Indenture as
provided for in this Indenture or the Security Documents, or whose disposition
is not elsewhere specifically provided for in this Indenture or in the Security
Documents; PROVIDED, HOWEVER, that Trust Moneys shall not include any property
deposited with the Trustee pursuant to any Change of Control Offer, a payment to
Pay Down Debt, or redemption or defeasance of any Notes.
"U.S. GOVERNMENT OBLIGATIONS" mean direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
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"VALUATION DATE" has the meaning provided in Section 12.04.
"WAMSUTTER" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter means such successor.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying: (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"WESTERN ASSOCIATED" means the party named as such in the first
paragraph of this Indenture until a successor replaces it pursuant to this
Indenture and thereafter means such successor.
"WHOLLY OWNED SUBSIDIARY" means any Subsidiary of which all the
outstanding voting securities normally entitled to vote in the election of
directors are owned by the Issuer or another Wholly Owned Subsidiary.
SECTION 1.02. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Holder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the indenture securities means the Issuer, any Subsidiary
Guarantor or any other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP of any date of determination;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(6) any reference to a statute, law or regulation means that
statute, law or regulation as amended and in effect from time to time
and includes any successor statute, law or regulation; PROVIDED,
HOWEVER, that any reference to the Bankruptcy Law shall mean the
Bankruptcy Law as applicable to the relevant case.
20
ARTICLE TWO
THE NOTES
SECTION 2.01. PRINCIPAL AMOUNT; FORM AND DATING.
(a) PRINCIPAL AMOUNT.
The aggregate principal amount of Notes which may be originally issued,
executed and authenticated under this Indenture is $118,250,000.00, plus such
additional principal amounts as may be necessary with respect to the issuance of
PIK Notes for the payment of interest as provided in Section 2.14 hereof.
(b) FORM AND DATING.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of EXHIBIT A-1 hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of EXHIBIT A-2 hereto. The PIK Notes and the
Trustee's certificate of authentication relating thereto shall be substantially
in the form of EXHIBIT A-1 hereto if the PIK Notes are Restricted Securities
when issued, and the PIK Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of EXHIBIT A-2 hereto if the
PIK Notes are not Restricted Securities when issued. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Issuer and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its issuance and shall show the date of its authentication.
Each Note shall have an executed Guarantee endorsed thereon substantially in the
form of EXHIBIT E hereto.
The terms and provisions contained in the Notes, annexed hereto as
EXHIBITS A-1 AND A-2, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Issuer and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. The rights of the Holders under this
Indenture, the Notes and the Security Documents shall be subject to the terms of
the Intercreditor Agreement.
Initial Notes offered and originally issued on the Issue Date to
Qualified Institutional Buyers and Initial Notes offered and originally issued
on the Issue Date to Accredited Investors shall each be issued in the form of
one or more permanent global Notes in registered form, substantially in the form
set forth in EXHIBIT A-1 (the "GLOBAL NOTES"), deposited with the Trustee, as
custodian for the Depository, duly executed by the Issuer (and having an
executed Guarantee endorsed thereon) and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in the second paragraph
of Section 2.15. The aggregate principal amount of the Global Notes may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided. Notes issued
in exchange for interests in a Global Note pursuant to Section 2.16 may be
issued in the form of permanent certificated Notes in registered form in
substantially the form set forth in EXHIBIT A-1 (the "PHYSICAL NOTES").
Initial Notes offered and originally issued on the Issue Date to
Persons who are not QIBs or Accredited Investors, and Initial Notes issued upon
the exercise of the CEO Note Options, shall be issued in the form of one or more
Physical Notes, substantially in the form set forth in EXHIBIT A-1, duly
executed by the Issuer (and having an executed Guarantee endorsed thereon) and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in the initial paragraph of Section 2.15.
PIK Notes issued in lieu of cash interest payments with respect to any
Physical Notes shall be issued in the form of Physical Notes. PIK Notes issued
in lieu of cash interest payments with respect to Global Notes shall be issued
in the form of Global Notes.
The Initial Notes, the Exchange Notes and the PIK Notes shall be
treated as a single class or series of Notes for purposes of determining whether
Holders of the requisite principal amount of Notes have given any notice,
consent or waiver or taken any other action permitted hereunder.
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SECTION 2.02. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT.
Two Officers, or an Officer and an Assistant Secretary of each Issuer
and each Subsidiary Guarantor, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each case, have been
duly authorized by all requisite corporate actions) shall attest to, the Notes
for the Issuer and the Guarantees for the Subsidiary Guarantors by manual or
facsimile signature.
If an Officer or Assistant Secretary whose signature is on a Note or a
Guarantee was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue on
the Issue Date or afterwards upon exercise of the CEO Note Options in the
aggregate principal amount not to exceed $118,250,000.00, (ii) Exchange Notes
from time to time for issue only in exchange for a like principal amount of
Initial Notes or PIK Notes issued in relation to the Initial Notes and (iii) PIK
Notes from time to time for issue as provided in Section 2.14 hereof, in each
case upon the Trustee's receipt of a written order of the Issuer in the form of
an Officers' Certificate. Each such written order shall specify the amount of
Notes to be authenticated and the date on which the Notes are to be
authenticated, and whether the Notes are to be issued as Initial Notes, Exchange
Notes or PIK Notes and whether the Notes are to be issued in the form of
Physical Notes or Global Notes or such other information as the Trustee may
reasonably request. In addition, with respect to authentication pursuant to
clause (ii) of the first sentence of this paragraph, such written order from the
Issuer shall be accompanied by and Opinion of Counsel of the Issuer in a form
reasonably satisfactory to the Trustee stating that the issuance of the Exchange
Notes does not give rise to an Event of Default, complies with this Indenture
and has been duly authorized by the Issuer. The aggregate principal amount of
Notes outstanding at any time may not exceed $118,250,000.00, except as provided
in Sections 2.07 and 2.08, plus such principal amounts as may be necessary with
respect to the issuance of PIK Notes for the payment of interest as provided in
Section 2.14 hereof.
The Trustee may appoint an authenticating agent (the "AUTHENTICATING
AGENT") reasonably acceptable to the Issuer to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Issuer or with any Affiliate of the Issuer.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1.00 and any integral multiple thereof.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Issuer shall maintain an office or agency where (a) Notes may be
presented or surrendered for registration of transfer or for exchange
("REGISTRAR") which shall initially be the Corporate Trust Office, (b) Notes may
be presented or surrendered for payment ("PAYING AGENT") which shall initially
be the agency of the Trustee located in the Borough of Manhattan in the City of
New York, State of
New York, and (c) notices and demands to or upon the Issuer
in respect of the Notes and this Indenture or to or upon the Subsidiary
Guarantors in respect of their Guarantee and this Indenture may be served which
shall initially be the office of the Paying Agent or the Corporate Trust Office.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Issuer, upon prior written notice to the Trustee, may have one or
more co-Registrars and one or more additional Paying Agents reasonably
acceptable to the Trustee. The Issuer may act as its own Paying Agent, except
that for the purposes of payments on the Notes pursuant to Section 4.15 ,
neither the Issuer nor any Affiliate of the Issuer may act as Paying Agent;
provided that any such co-Registrar or Paying Agent shall deliver a certificate
to the Trustee certifying that it agrees to perform its duties in accordance
with the procedures established by the Trustee and with the terms of this
Indenture.
The Issuer shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such
22
Agent. The Issuer shall notify the Trustee, in advance, of the name and address
of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent,
or fails to give the foregoing notice, the Trustee shall act as such.
The Issuer and the Subsidiary Guarantors initially appoint the Trustee
as Registrar, Paying Agent and agent for service of demands and notices in
connection with the Notes and the Guarantees, until such time as the Trustee has
resigned or a successor has been appointed. Any of the Registrar, the Paying
Agent or any other agent may resign upon 30 days' notice to the Issuer. The
Issuer may change the Paying Agent, Registrar and the agent for service of
demands and notices in connection with the Notes and the Guarantees without
notice to the Holders.
SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Issuer shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Issuer or any other obligor on the Notes),
and the Issuer and the Paying Agent shall notify the Trustee of any Default by
the Issuer (or any other obligor on the Notes) in making any such payment. The
Issuer at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Issuer to the Paying
Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Issuer shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06. TRANSFER AND EXCHANGE.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes or other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; PROVIDED, HOWEVER, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Issuer, the Trustee and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registration of transfers and exchanges, the Issuer shall execute and the
Trustee shall authenticate Notes and the Subsidiary Guarantors shall execute
Guarantees thereon at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Issuer may require payment of a sum sufficient to cover any transfer tax, fee or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.04, 4.15 or 9.05, in which event the
Issuer shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer or exchange of any Note (i) during a period beginning at the opening of
15 Business Days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Note may be effected only through a book entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry system.
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SECTION 2.07. REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims that the Note has been lost, destroyed or wrongfully taken and
submits evidence thereof satisfactory to the Trustee, the Issuer shall issue and
the Trustee, upon receipt of a written order in the form of an Officers'
Certificate, shall authenticate a replacement Note and the Subsidiary Guarantors
shall execute a Guarantee thereon if the Trustee's requirements are met. If
required by the Trustee or the Issuer, such Holder must provide an indemnity
bond or other indemnity of reasonable tenor, sufficient in the reasonable
judgment of the Issuer, the Subsidiary Guarantors and the Trustee, to protect
the Issuer, the Subsidiary Guarantors, the Trustee or any Agent from any loss
which any of them may suffer if a Note is replaced. Every replacement Note shall
constitute an additional obligation of the Issuer and the Subsidiary Guarantors.
SECTION 2.08. OUTSTANDING NOTES.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Issuer or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date, the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal, premium, if any, and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes shall be
deemed not to be outstanding and interest on them shall cease to accrue.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Issuer or an Affiliate of the Issuer shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so considered. The Issuer shall notify the Trustee, in writing, when it or, to
its knowledge, any of its Affiliates repurchases or otherwise acquires Notes, of
the aggregate principal amount of such Notes so repurchased or otherwise
acquired and such other information as the Trustee may reasonably request and
the Trustee shall be entitled to rely thereon.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Issuer may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Issuer in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Issuer considers appropriate for temporary Notes and so indicate in the
Officers' Certificate. Without unreasonable delay, the Issuer shall prepare, the
Trustee shall authenticate and the Subsidiary Guarantors shall execute
Guarantees on, upon receipt of a written order of the Issuer pursuant to Section
2.02, definitive Notes in exchange for temporary Notes.
SECTION 2.11. CANCELLATION.
The Issuer at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Issuer, shall dispose,
in its customary manner, of all Notes surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Issuer may not issue new
Notes to replace Notes that have been paid or delivered to the Trustee for
cancellation. If the Issuer shall acquire any of the Notes, such acquisition
shall not operate as
24
a redemption or satisfaction of the Indebtedness represented by such Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
The Issuer will pay interest on overdue principal from time to time on
demand at the rate of interest of 16.5% per annum, unless the Registration
Rights Agreement provides for a higher rate of interest. The Issuer shall, to
the extent lawful, pay interest on overdue installments of interest from time to
time on demand at the rate of interest of 16.5% per annum, unless the
Registration Rights Agreement provides for a higher rate of interest. Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay the defaulted interest, plus (to the extent lawful) any
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Issuer for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Issuer shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "DEFAULT INTEREST PAYMENT DATE"), and at the same time the Issuer shall
deposit with the Trustee an amount of money, or (if cash payment of interest is
prohibited by the terms of the Senior Credit Agreement or the Intercreditor
Agreement) PIK Notes in an amount, equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to the date of the
proposed payment, such money or PIK Notes when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; PROVIDED, HOWEVER, that in no event shall the Issuer deposit
monies or PIK Notes proposed to be paid in respect of defaulted interest later
than 11:00 a.m.
New York City time of the proposed Default Interest Payment
Date. At least 15 days before the subsequent special record date, the Issuer
shall mail (or cause to be mailed) to each Holder, as of a recent date selected
by the Issuer, with a copy to the Trustee, a notice that states the subsequent
special record date, the Default Interest Payment Date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid. Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(a) shall be paid to
Holders as of the regular record date for the Interest Payment Date for which
interest has not been paid. Notwithstanding the foregoing, the Issuer may make
payment of any defaulted interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange.
SECTION 2.13. CUSIP NUMBER.
The Issuer in issuing the Notes may use one or more "CUSIP" numbers,
and, if so, the Trustee shall use the appropriate CUSIP number in notices of
redemption or exchange as a convenience to Holders; PROVIDED, HOWEVER, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of a CUSIP number contained in notice or on the Notes, and that
reliance may be placed only on the other identification numbers contained on the
Notes. The Issuer shall promptly notify the Trustee in writing of any change in
a CUSIP number.
SECTION 2.14. DEPOSIT OF MONIES; PIK NOTES.
Prior to 11:00 a.m.
New York City time on each Interest Payment Date
(to the extent a cash payment for interest is not prohibited by the terms of the
Senior Credit Agreement or the Intercreditor Agreement), Maturity Date,
Redemption Date and Change of Control Payment Date, the Issuer shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date (to the extent
a cash payment for interest is not prohibited by the terms of the Senior Credit
Agreement or the Intercreditor Agreement), Maturity Date, Redemption Date and
Change of Control Payment Date, as the case may be, in a timely manner which
permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Maturity Date, Redemption Date and Change of Control Payment Date,
as the case may be.
If on a particular Interest Payment Date the payment of interest in the
form of cash is prohibited by the terms of the Senior Credit Agreement or the
Intercreditor Agreement, that interest will be paid at the time stated above
with respect to such Interest Payment Date in the form of Notes (the "PIK
Notes") in a principal amount equal to the amount of accrued and unpaid interest
on the Notes plus an additional 1% per annum accrued interest for the applicable
period.
25
SECTION 2.15. RESTRICTIVE LEGENDS.
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "PRIVATE PLACEMENT LEGEND") on the
face thereof, and the assignment form that is part of such Note shall include
the additional provisions set forth in EXHIBIT B, until after the second
anniversary of the later of the Issue Date and the last date on which the Issuer
or any Affiliate of Issuer was the owner of such Note (or any predecessor
security) (or such shorter period of time as permitted by Rule 144(k) under the
Securities Act or any successor provision thereunder or such longer period of
time as may be required under the Securities Act or applicable state securities
laws in the opinion of counsel for the Issuer), unless otherwise agreed by the
Issuer and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (D) IF IT IS NOT
AN ACCREDITED INVESTOR, IT WAS NEVERTHELESS PERMITTED TO PARTICIPATE IN
THE EXCHANGE OFFER DESCRIBED IN THE OFFER TO EXCHANGE, (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO AN
ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT (PROVIDED THAT ANY SUCH SALE OR TRANSFER IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT MUST BE EFFECTED PURSUANT TO
AN EXEMPTION FROM THE PROSPECTUS AND REGISTRATION REQUIREMENTS UNDER
APPLICABLE CANADIAN SECURITIES LAWS), (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR (G) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFER IS PURSUANT TO
SUBCLAUSE (C), (D), (E) OR (G) OF THIS CLAUSE (2), THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS ANY OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall bear the following legend on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
26
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY
OR ANY SUCH NOMINEE OF THE DEPOSITORY TO ANOTHER NOMINEE OF THE
DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF THE DEPOSITORY TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), TO ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION
2.17 OF THE INDENTURE.
Each Note shall bear the following legends on the face thereof:
THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO THE
PRIOR PAYMENT IN FULL OF THE SENIOR INDEBTEDNESS (AS DEFINED IN THE
INTERCREDITOR AND SUBORDINATION AGREEMENT HEREINAFTER REFERRED TO)
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THE INTERCREDITOR AND
SUBORDINATION AGREEMENT, DATED AS OF JANUARY 23, 2003, AMONG FOOTHILL
CAPITAL CORPORATION, IN ITS CAPACITY AS AGENT FOR THE LENDERS FROM TIME
TO TIME PARTY TO THE LOAN AND SECURITY AGREEMENT DATED JANUARY 22,
2003, AND U.S. BANK, N.A., AS TRUSTEE TO THE HOLDERS OF ISSUER'S
11-1/2% SECURED NOTES DUE 2007.
THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER
INTERNAL REVENUE CODE SECTIONS 1273, 1274 AND 1275. INFORMATION
REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, AND
THE YIELD TO MATURITY OF THIS SECURITY MAY BE OBTAINED BY SENDING A
REQUEST IN WRITING NO EARLIER THAN TEN DAYS AFTER THE ISSUE DATE
ADDRESSED TO THE CHIEF FINANCIAL OFFICER OF
ABRAXAS PETROLEUM
CORPORATION AT ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇.
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.
(a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
the second paragraph of Section 2.15.
Members of, or participants in, the Depository ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Notes, and the Depository may be treated by the Issuer, the Trustee and
any Agent of the Issuer or the Trustee as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Issuer, the Trustee or any Agent of the Issuer or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in a Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, Physical Notes shall
be transferred to all beneficial owners in exchange for their beneficial
interests in a Global
27
Note if (i) the Depository notifies the Issuer that it is unwilling or unable to
continue as Depository for the Global Notes and a successor depositary is not
appointed by the Issuer within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a written
request from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Issuer shall execute, the
Subsidiary Guarantors shall execute Guarantees on, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b), such Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuer shall execute,
the Subsidiary Guarantors shall execute Guarantees on and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.15.
(f) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-QIB ACCREDITED INVESTORS AND NON-U.S. PERSONS.
The following provisions shall apply with respect to the registration of any
proposed transfer of a Note constituting a Restricted Security to any Accredited
Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the Issue Date (PROVIDED, HOWEVER, that neither
the Issuer nor any Affiliate of the Issuer has held any beneficial
interest in such Note, or portion thereof, at any time on or prior to
the second anniversary of the Issue Date) or (y) (1) in the case of a
transfer prior to such second anniversary to an Accredited Investor
which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate substantially
in the form of EXHIBIT C hereto or (2) in the case of a transfer prior
to such second anniversary to a Non-U.S. Person, the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of EXHIBIT D hereto, together with in any case described in
this clause (y), if the Issuer or the Trustee shall so request, an
opinion of counsel addressed to it confirming the availability of an
exemption from the registration requirements of the Securities Act; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
written instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Issuer shall execute, the Subsidiary Guarantors shall
execute the Guarantees on and the Trustee shall authenticate and deliver one or
more Physical Notes of like tenor and amount.
28
(b) TRANSFERS TO QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of assignment in EXHIBIT B hereto stating, or has
otherwise advised the Issuer and the Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
assignment in EXHIBIT B hereto stating, or has otherwise advised the
Issuer and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within
the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Issuer as it has requested pursuant to
Rule 144A or has determined not to request such information and that it
is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in a Global Note, upon receipt by
the Registrar of written instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of such Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the requested transfer is after the second anniversary of the Issue
Date (PROVIDED, HOWEVER, that neither the Issuer nor any Affiliate of the Issuer
has held any beneficial interest in such Note, or portion thereof, at any time
prior to or on the second anniversary of the Issue Date), or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Issuer and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will not transfer such Note unless such transfer is
made in strict compliance with the provisions restricting the transfer of the
Notes as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Issuer shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
(e) TRANSFERS OF NOTES HELD BY AFFILIATES. Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of the Issuer within
two years after the Issue Date, as evidenced by a notation on the assignment
form for such transfer or in the representation letter delivered in respect
thereof or (ii) evidencing a Note that has been acquired from an Affiliate
(other than by an Affiliate) in a transaction or a chain of transactions not
involving any public offering, shall, until two years after the last date on
which the Issuer or any Affiliate of the Issuer was an owner of such Note, in
each case, bear a legend in substantially the form set forth in the initial
paragraph of Section 2.15 hereof, unless otherwise agreed by the Issuer (with
written notice thereof to the Trustee).
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ARTICLE THREE
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Issuer elects to redeem Notes pursuant to Section 3.03, it shall
notify the Trustee and the Paying Agent in writing of the Redemption Date and
the principal amount of the Notes to be redeemed.
The Issuer shall give each notice provided for in this Section 3.01 not
less than 5, but not more than 30, days (unless a shorter notice period shall be
satisfactory to the Trustee, as evidenced in a writing signed on behalf of the
Trustee) before the intended mailing date of the Notice of Redemption relating
thereto, together with an Officers' Certificate stating that such redemption
shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes, or portions thereof, for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a PRO RATA basis, by lot
or by such other method as the Trustee shall deem fair and appropriate;
PROVIDED, HOWEVER, that if a partial redemption is made with the proceeds of an
Equity Offering, selection of the Notes or portions thereof for redemption shall
be made by the Trustee only on a PRO RATA basis or on as nearly a PRO RATA basis
as is practicable (subject to the procedures of the Depository), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail in accordance with the provisions of Section 3.04. If any Note
is to be redeemed in part only, the notice of redemption that relates to such
Note shall state the portion of the principal amount thereof to be redeemed. A
new Note in a principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original Note.
On and after the applicable Redemption Date, interest will cease to accrue on
Notes or portions thereof called for redemption as long as the Issuer has
deposited with the Paying Agent for the Notes funds in satisfaction of the
applicable Redemption Price plus accrued and unpaid interest, if any, thereon to
the Redemption Date.
SECTION 3.03. OPTIONAL REDEMPTION.
The Notes will be redeemable, at the Issuer's option, in whole at any
time or in part from time to time, at the Redemption Prices (expressed as
percentages of the principal amount thereof) set forth below. If the Issuer
redeems all or any Notes, the Issuer must also pay all interest accrued and
unpaid to the applicable Redemption Date. The Redemption Prices for the Notes
during the indicated time periods are as follows:
PERIOD PERCENTAGE
------ ----------
On the Issue Date.................................................................100.0000%
On the next Business Day after the Issue Date......................................78.6266%
From the next Business Day after the Issue Date to 6 months after the Issue Date...80.0429%
From 6 months after the Issue Date to 12 months after the Issue Date...............91.4592%
From 12 months after the Issue Date to 18 months after the Issue Date..............97.1674%
From 18 months after the Issue Date to 24 months after the Issue Date..............98.5837%
Thereafter .....................................................................100.0000%
Notwithstanding the foregoing, the Redemption Price for Notes to be redeemed
will in no event be less than the then current Adjusted Issue Price.
The Issuer can call Notes for redemption on the Issue Date without
giving any notice of redemption to the Holders, and Notes called for redemption
on the Issue Date will be deemed not to have accrued interest. The Issuer shall
deliver notice to the Trustee and any Paying Agent on or before 11 a.m.,
New
York City time, on the Issue Date if it elects to redeem the Notes on the Issue
Date.
30
SECTION 3.04. NOTICE OF REDEMPTION.
With the exception of Notes being redeemed on the Issue Date, as
provided above, at least 30 days but not more than 60 days before a Redemption
Date, the Issuer shall mail or cause to be mailed a notice of redemption by
first class mail to each Holder of Notes to be redeemed at its registered
address, with a copy to the Trustee and any Paying Agent. At the Issuer's
request, the Trustee shall give the notice of redemption in the Issuer's name
and at the Issuer's expense.
Each notice of redemption shall identify (including the CUSIP number)
the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest,
if any, to be paid;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued interest,
if any;
(5) that, unless the Issuer defaults in making the redemption
payment, interest on Notes or applicable portions thereof called for
redemption ceases to accrue on and after the Redemption Date, and the
only remaining right of the Holders of such Notes is to receive payment
of the Redemption Price plus accrued interest as of the Redemption
Date, if any, upon surrender to the Paying Agent of the Notes redeemed;
(6) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes
in the aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
(7) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.04,
such notice of redemption shall be irrevocable and Notes called for redemption
become due and payable on the Redemption Date at the Redemption Price plus
accrued interest as of such date, if any. Upon surrender to the Trustee or
Paying Agent, such Notes called for redemption shall be paid at the Redemption
Price plus accrued interest thereon to the Redemption Date, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant record
dates referred to in the Notes. Interest shall accrue on or after the Redemption
Date and shall be payable only if the Issuer defaults in payment of the
Redemption Price plus any accrued and unpaid interest as of the Redemption Date.
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE.
On or before the Redemption Date and in accordance with Section 2.14,
the Issuer shall deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the Redemption Price plus accrued interest, if any, of all Notes to be
redeemed on that date. The Paying Agent shall promptly return to the Issuer any
U.S. Legal Tender so deposited which is not required for that purpose, except
with respect to monies owed as obligations to the Trustee pursuant to Article
Seven.
Unless the Issuer fails to comply with the preceding paragraph and
default in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
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SECTION 3.07. NOTES REDEEMED IN PART.
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
(a) The Issuer shall pay the principal of, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture. If the payment of such interest in cash is prohibited by the
terms of the Senior Credit Agreement or the Intercreditor Agreement, then the
Issuer shall pay such interest in the form of PIK Notes as provided in Section
2.14 hereof.
(b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
an Issuer or any of its Affiliates) holds, prior to 11:00 a.m.
New York City
time on that date, U.S. Legal Tender (or PIK Notes for certain installments of
interest, in accordance with Section 2.14 of this Indenture) designated for and
sufficient to pay the installment in full and is not prohibited from paying such
money to the Holders pursuant to the terms of this Indenture or the Notes.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Issuer may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer shall maintain the office or agency required under Section
2.03. The Issuer shall give prior written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time the
Issuer shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 10.02.
SECTION 4.03. CORPORATE EXISTENCE.
Except as otherwise permitted by Article Five, the Issuer shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of its Subsidiaries in accordance with the respective
organizational documents of each such Subsidiary and the material rights
(charter and statutory) and franchises of the Issuer and each such Subsidiary;
PROVIDED, HOWEVER, that the Issuer shall not be required to preserve, with
respect to itself, any material right or franchise and, with respect to any of
its Subsidiaries, any such existence, material right or franchise, if the Board
of Directors of the Issuer shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Issuer and
its Subsidiaries, taken as a whole.
SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS.
The Issuer shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
its properties or any of its Subsidiaries' properties and (ii) all material
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon the property of the Issuer or any of its Subsidiaries;
PROVIDED, HOWEVER, that the Issuer shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate negotiations or proceedings properly instituted and diligently
conducted for which adequate reserves, to the extent required under GAAP, have
been taken.
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SECTION 4.05. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Issuer shall, and shall cause its Subsidiaries to, maintain
all properties used or useful in the conduct of its business in good working
order and condition (subject to ordinary wear and tear) and make all necessary
repairs, renewals, replacements, additions, betterments and improvements thereto
and actively conduct and carry on its business; PROVIDED, HOWEVER, that nothing
in this Section 4.05 shall prevent the Issuer or any of its Subsidiaries from
discontinuing the operation and maintenance of any of its properties, if such
discontinuance is (i) in the ordinary course of business pursuant to customary
business terms or (ii) in the good faith judgment of the respective Boards of
Directors or other governing body of the Issuer or Subsidiary, as the case may
be, desirable in the conduct of their respective businesses and is not
disadvantageous in any material respect to the Holders.
(b) The Issuer shall provide or cause to be provided, for itself and
each of the Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Issuer, is adequate and appropriate for the conduct of the business of the
Issuer and its Subsidiaries in a prudent manner, with reputable insurers or with
the government of the United States of America, Canada or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the good faith judgment of the Issuer, for
companies similarly situated in the industry.
SECTION 4.06. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Issuer shall deliver to the Trustee, within 105 days after
the end of each of its fiscal quarters, an Officers' Certificate (PROVIDED,
HOWEVER, that one of the signatories to such Officers' Certificate shall be the
Issuer's principal executive officer, principal financial officer or principal
accounting officer), as to such Officers' knowledge, without independent
investigation, of the Issuer's compliance with all conditions and covenants
under this Indenture (without regard to any period of grace or requirement of
notice provided hereunder) and in the event any Default exists, such Officers
shall specify the nature of such Default. Each such Officers' Certificate shall
also notify the Trustee should the Issuer elect to change the manner in which it
fixes its fiscal year end.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Issuer's independent certified public accountants (who shall be a
firm of established national reputation) stating (A) that their audit
examination has included a review of the terms of this Indenture and the form of
the Notes as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default or Event of Default has come to their
attention and if such a Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; PROVIDED, HOWEVER, that,
without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Issuer shall
deliver to the Trustee, at its address set forth in Section 10.02 hereof, by
registered or certified mail or by facsimile transmission followed by hard copy
by registered or certified mail an Officers' Certificate specifying such event,
notice or other action within 10 days of its becoming aware of such occurrence.
SECTION 4.07. COMPLIANCE WITH LAWS.
The Issuer shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as could not singly or in the
aggregate reasonably be expected to have a material adverse effect on the
financial condition, business, prospects or results of operations of the Issuer
and its Subsidiaries taken as a whole.
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SECTION 4.08. REPORTS TO HOLDERS.
The Issuer will deliver to the Trustee within 15 days after filing the
same with the Commission, copies of the quarterly and annual reports and of the
information, documents and other reports, if any, which the Issuer is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Issuer may not be subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, the Issuer will file with the
Commission, to the extent permitted, and provide the Trustee and Holders with
such annual reports and such information, documents and other reports specified
in Sections 13 and 15(d) of the Exchange Act. The Issuer will also comply with
the other provisions of Section 314(a) of the TIA.
The reports and information delivered pursuant to the preceding
paragraph shall include quarterly financial statements, including details
regarding sources and uses of cash or of any assets of the Issuer and its
Subsidiaries. Such financial statements will provide details on both a
consolidated and unconsolidated basis.
SECTION 4.09. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Issuer and each Subsidiary Guarantor covenant (to the extent that
they may lawfully do so) that they will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Issuer or such Subsidiary Guarantor from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may lawfully do so)
the Issuer and each Subsidiary Guarantor hereby expressly waive all benefit or
advantage of any such law, and covenant that they will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.
The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than
dividends or distributions payable solely in Qualified Capital
Stock of the Issuer) on or in respect of shares of the Issuer's
Capital Stock to holders of such Capital Stock,
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Issuer or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock
other than through the exchange therefor solely of Qualified
Capital Stock of the Issuer or warrants, rights or options to
purchase or acquire shares of Qualified Capital Stock of the
Issuer,
(c) make any principal payment on, purchase, defease, redeem, prepay,
decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Indebtedness of the Issuer
or a Subsidiary Guarantor, or
(d) make any Investment (other than a Permitted Investment).
(each of the foregoing actions set forth in clauses (a) through (d) being
referred to as a "RESTRICTED PAYMENT").
Notwithstanding the foregoing, the Issuer may take the following
actions:
(1) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any shares of Capital Stock of the
Issuer, solely in exchange for shares of Qualified Capital Stock
of the Issuer, and
(2) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any Indebtedness of the Issuer or
a Subsidiary Guarantor that is subordinate or junior in right of
payment to the Notes or such Subsidiary Guarantor's Guarantee, as
the case may be, the incurrence of which was not in violation of
the terms of this Indenture, solely in exchange for shares of
Qualified Capital Stock of the Issuer.
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SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, enter into, amend or permit or suffer
to exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property, the
guaranteeing of any Indebtedness or the rendering of any service) with, or for
the benefit of, any of their respective Affiliates (each an "AFFILIATE
TRANSACTION"), other than (i) Affiliate Transactions permitted under Section
4.11(b) and (ii) Affiliate Transactions not otherwise prohibited by the terms of
this Indenture that are on terms that are fair and reasonable to the Issuer or
the applicable Subsidiary and are no less favorable to the Issuer or the
applicable Subsidiary than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Issuer or such Subsidiary. All Affiliate Transactions
(and each series of related Affiliate Transactions which are similar or part of
a common plan) involving aggregate payments or other property with a fair market
value in excess of $250,000 shall be approved by the Board of Directors of the
Issuer, such approval to be evidenced by a Board Resolution stating that the
Board of Directors has determined that such transaction complies with the
foregoing provisions. If the Issuer or any Subsidiary enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $2,000,000, the
Issuer shall, prior to the consummation thereof, obtain a favorable opinion as
to the fairness of such transaction or series of related transactions to the
Issuer or the relevant Subsidiary, as the case may be, from a financial point of
view, from an Independent Advisor and file the same with the Trustee.
(b) The restrictions set forth in Section 4.11(a) shall not apply to
(i) reasonable fees and compensation paid to and indemnity provided on behalf
of, officers, directors, employees or consultants of the Issuer or any
Subsidiary as determined in good faith by the Board of Directors or senior
management of the Issuer or such Subsidiary, as the case may be; (ii)
transactions exclusively between or among the Issuer and any of its Subsidiaries
or exclusively between or among such Subsidiaries; PROVIDED, HOWEVER, that such
transactions are not otherwise prohibited by this Indenture; and (iii)
Restricted Payments permitted by this Indenture, or any guarantee or assumption
by the Issuer or any of its Subsidiaries of Indebtedness of the Issuer or any of
its Subsidiaries if the incurrence of such Indebtedness was not prohibited by
this Indenture.
SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
Other than Permitted Indebtedness, the Issuer will not, and will not
cause or permit any of its Subsidiaries to, directly or indirectly, incur any
Indebtedness.
Indebtedness of a Person existing at the time such Person becomes a
Subsidiary (whether by merger, consolidation, acquisition of Capital Stock or
otherwise) or is merged with or into the Issuer or any Subsidiary or which is
secured by a Lien on an asset acquired by the Issuer or a Subsidiary (whether or
not such Indebtedness is assumed by the acquiring Person) shall be deemed
incurred at the time the Person becomes a Subsidiary or at the time of the asset
acquisition, as the case may be.
The Issuer will not, and will not permit any Subsidiary Guarantor to,
incur any Indebtedness which by its terms (or by the terms of any agreement
governing such Indebtedness) is subordinated in right of payment to any other
Indebtedness (other than to Indebtedness under the Senior Credit Agreement and
Qualified Senior Affiliate Indebtedness) of the Issuer or such Subsidiary
Guarantor unless such Indebtedness is also by its terms (or by the terms of any
agreement governing such Indebtedness) made expressly subordinate in right of
payment to the Notes or the Guarantee of such Subsidiary Guarantor, as the case
may be, pursuant to subordination provisions that are substantively identical to
the subordination provisions of such Indebtedness (or such agreement) that are
most favorable to the holders of any other Indebtedness (other than to
Indebtedness under the Senior Credit Agreement and Qualified Senior Affiliate
Indebtedness) of the Issuer or such Subsidiary Guarantor, as the case may be.
The Issuer will not, and will not permit any Subsidiary to, incur or suffer to
exist Indebtedness that is senior in right of payment to the Notes or any
Guarantee, as the case may be, and expressly contractually subordinate in right
of payment to any other Indebtedness of the Issuer or such Subsidiary, as the
case may be. Notwithstanding the foregoing, the provisions of this paragraph do
not prohibit tranches of Indebtedness under the Senior Credit Agreement being
subordinated to other tranches of Indebtedness under the Senior Credit
Agreement.
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SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to:
(a) pay dividends or make any other distributions on or in respect of
its Capital Stock,
(b) make loans or advances to, or pay any Indebtedness or other
obligation owed to, the Issuer or any other Subsidiary,
(c) guarantee any Indebtedness or any other obligation of the Issuer
or any Subsidiary, or
(d) transfer any of its property or assets to the Issuer or any other
Subsidiary (each such encumbrance or restriction, a "PAYMENT
RESTRICTION").
The preceding will not apply, however, to encumbrances or restrictions
existing under or by reason of the following (which are excluded from the term
"Payment Restriction"): (i) applicable law, (ii) this Indenture, the Senior
Credit Agreement, any security document or any of the security documents entered
into in connection with the Senior Credit Agreement, and any document or
instrument evidencing, governing or securing any of the Qualified Senior
Affiliate Indebtedness, (iii) customary non-assignment provisions of any
contract or any lease governing a leasehold interest of any Subsidiary, (iv) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to such Subsidiary, or the properties or assets of such
Subsidiary, other than the Person or the properties or assets of the Person so
acquired, (v) agreements existing on the Issue Date to the extent and in the
manner such agreements were in effect on the Issue Date, (vi) customary
restrictions with respect to a Subsidiary of the Issuer pursuant to an agreement
that has been entered into for the sale or disposition of Capital Stock or
assets of such Subsidiary to be consummated in accordance with the terms of this
Indenture solely in respect of the assets or Capital Stock to be sold or
disposed of, (vii) any instrument governing a Permitted Lien, to the extent and
only to the extent such instrument restricts the transfer or other disposition
of assets subject to such Permitted Lien, or (viii) an agreement governing
Refinancing Indebtedness incurred to Refinance the Indebtedness issued, assumed
or incurred pursuant to an agreement referred to in clause (ii), (iv) or (v)
above; PROVIDED, HOWEVER, that the provisions relating to such encumbrance or
restriction contained in any such Refinancing Indebtedness are no less favorable
to the Holders in any material respect as determined by the Board of Directors
of the Issuer in its reasonable and good faith judgment than the provisions
relating to such encumbrance or restriction contained in the applicable
agreement referred to in such clause (ii), (iv) or (v).
SECTION 4.14. LEVERAGE.
The Issuer's Consolidated EBITDA to Cash Interest Expense Ratio, as of
the last day of any calendar quarter after the Issue Date, shall not be less
than 3.0:1, except on the last day of the first calendar quarter of 2003, at
which time this ratio must not be less than 2.0:1.
SECTION 4.15. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Issuer repurchase all or a portion of such
Holder's Notes pursuant to the offer described below (the "CHANGE OF CONTROL
OFFER"), at a purchase price equal to the percentage of the principal amount
thereof then applicable to optional redemptions by the Issuer, plus all accrued
and unpaid interest thereon to the date of purchase.
(b) Within 30 days following the date upon which the Change of
Control occurred, the Issuer must send, by first class mail, a notice to each
Holder at such Holder's last registered address, with a copy to the Trustee,
which notice shall govern the terms of the Change of Control Offer. The notice
to the Holders shall contain all instructions and materials necessary to enable
such Holders to tender Notes pursuant to the Change of Control Offer. Such
notice shall state:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.15, that all Notes tendered and not withdrawn will be
accepted for payment and that the Change of Control Offer shall remain
open for a period of 20 Business Days or such longer period as may be
required by law;
36
(ii) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than
as may be required by law) (the "CHANGE OF CONTROL PAYMENT DATE");
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Issuer defaults in making payment
therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that Holders electing to have a Note purchased pursuant to
a Change of Control Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day
prior to the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day
prior to the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Notes the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such
Notes purchased;
(vii) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; and
(viii) the circumstances and relevant facts regarding such Change
of Control.
On or before the Change of Control Payment Date, the Issuer shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent in accordance with Section
2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes so tendered and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Issuer. Upon receipt by the Paying Agent
of the monies specified in clause (ii) above and a copy of the Officers'
Certificate specified in clause (iii) above, the Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price plus accrued interest, if any, and the Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so accepted shall be
promptly mailed by the Issuer to the Holder thereof. For purposes of this
Section 4.15, the Trustee shall act as the Paying Agent.
The Issuer shall not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer at the
Change of Control Purchase Price, at the same times and otherwise in compliance
with the requirements applicable to a Change of Control Offer made by the Issuer
and purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Neither the Board of Directors of the Issuer nor the Trustee may waive
the provisions of this Section 4.15 relating to the Issuer's obligation to make
a Change of Control Offer.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.15, the Issuer shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the provisions of this Section 4.15 by virtue thereof.
SECTION 4.16. LIMITATION ON ASSET SALES.
(a) The Issuer will not, and will not cause or permit any of its
Subsidiaries to, consummate an Asset Sale unless:
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(i) the Issuer or the applicable Subsidiary, as the case may
be, receives consideration at least equal to the fair market value of
the assets sold or otherwise disposed of (as determined in good faith
by the Issuer's Board of Directors or senior management of the Issuer);
and
(ii) at least 95% of the consideration received by the Issuer
or the Subsidiary, as the case may be, from such Asset Sale shall be in
the form of cash or Cash Equivalents and is received at the time of
such disposition.
(b) The Issuer must apply the Net Cash Proceeds received from any
Asset Sale to Pay Down Debt.
If at any time any consideration (other than cash or Cash Equivalents)
received by the Issuer or any Subsidiary of the Issuer, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash, then such conversion or disposition shall be deemed to constitute
an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in
accordance with this Section 4.16.
The Issuer may defer the action to Pay Down Debt until there is an
aggregate Available Proceeds Amount equal to or in excess of $500,000.00
resulting from one or more Asset Sales (at which time the entire unutilized
Available Proceeds Amount, and not just the amount in excess of $500,000.00,
shall be applied as required pursuant to this Section 4.16).
All Collateral Proceeds delivered to the Trustee shall constitute Trust
Moneys and all Collateral Proceeds shall be delivered by the Issuer (A) so long
as any Indebtedness under the Senior Credit Agreement or any Qualified Senior
Affiliate Indebtedness remains outstanding, to the Senior Credit Facility
Representative, and (B) otherwise to the Trustee, and all Collateral Proceeds
delivered to the Trustee shall be deposited in the Collateral Account in
accordance with this Indenture. Collateral Proceeds so deposited may be
withdrawn from the Collateral Account for application by the Issuer as set forth
above or otherwise pursuant to this Indenture in accordance with Section 12.08.
In the event of the transfer of substantially all (but not all) of the
consolidated assets of the Issuer as an entirety to a Person in a transaction
permitted under Section 5.01, the successor corporation shall be deemed to have
sold the consolidated assets of the Issuer not so transferred for purposes of
this covenant, and shall comply with the provisions of this Section 4.16 with
respect to such deemed sale as if it were an Asset Sale. In addition, the fair
market value of such consolidated assets of the Issuer deemed to be sold shall
be deemed to be Net Cash Proceeds for purposes of this Section 4.16.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes as a result of an action to Pay Down Debt.
SECTION 4.17. LIMITATIONS WITH RESPECT TO CAPITAL STOCK OF
SUBSIDIARIES.
The Issuer will not cause or permit any of its Subsidiaries to issue
any Preferred Stock (other than to the Issuer or to a Wholly Owned Subsidiary)
or permit any Person (other than the Issuer or a Wholly Owned Subsidiary) to own
any Preferred Stock of any Subsidiary. The Issuer will not, and will not cause
or permit any of its Subsidiaries to, sell or otherwise dispose of any shares of
Capital Stock of any Subsidiary, and shall not permit any of its Subsidiaries,
directly or indirectly, to issue or sell or otherwise dispose of any of its
Capital Stock except: (a) to the Issuer or a Wholly Owned Subsidiary of the
Issuer, or (b) if all shares of Capital Stock of such Subsidiary owned by the
Issuer and its Subsidiary are sold or otherwise disposed of. In connection with
any sale or disposition of Capital Stock of any Subsidiary of the Issuer under
clause (b), the Issuer will be required to comply with Section 4.16 and the
Guarantee given by such Subsidiary, if any, as well as all Collateral owned by
such Person shall be released.
SECTION 4.18. LIMITATION ON LIENS.
The Issuer will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist or remain in effect any Liens upon any Properties of the Issuer
or of any of its Subsidiaries, whether owned on the Issue Date or acquired after
the Issue Date, or on any income or profits therefrom, or assign or otherwise
convey any right to receive income or profits thereon, other than Permitted
Liens..
38
SECTION 4.19. LIMITATION ON CONDUCT OF BUSINESS.
The Issuer will not, and will not permit any of its Subsidiaries to,
engage in the conduct of any business other than the Crude Oil and Natural Gas
Business.
SECTION 4.20. ADDITIONAL SUBSIDIARY GUARANTEES.
All Subsidiaries of the Issuer shall be Subsidiary Guarantors. If any
Subsidiary of the Issuer is formed after the Issue Date, or if a Person
otherwise becomes a Subsidiary of the Issuer after the Issue Date, the Issuer
shall cause such Subsidiary to (a) execute and deliver to the Trustee a
supplement to this Indenture substantially in the form of EXHIBIT F, pursuant to
which such Subsidiary shall unconditionally guarantee all of the Issuer's
obligations under the Notes and this Indenture on the terms set forth in this
Indenture; (b) grant to the Trustee a second priority Lien (subject to certain
Permitted Liens) on all of the current and future Oil and Gas Assets of such
Subsidiary, and substantially all of its other current and future assets using
applicable Security Documents substantially in the same form as those executed
and delivered on the Issue Date; and (c) deliver to the Trustee an Opinion of
Counsel and an Officers' Certificate, stating that no Event of Default shall
occur as a result of such supplemental indenture or Security Documents, that
each such instrument complies with the terms of this Indenture and that each
such instrument has been duly authorized, executed and delivered by such
Subsidiary and constitutes a legal, valid, binding and enforceable obligation of
such Subsidiary. Thereafter, such Subsidiary shall be a Subsidiary Guarantor for
all purposes of this Indenture.
SECTION 4.21. LIMITATION ON ABRAXAS WAMSUTTER, LTD..
So long as the Issuer continues to have a partnership interest in
Abraxas Wamsutter, Ltd., the Issuer will not permit Abraxas Wamsutter, Ltd. to
be an operating entity.
SECTION 4.22. IMPAIRMENT OF SECURITY INTEREST.
Neither the Issuer nor any of its Subsidiaries will take or omit to
take any action which action or omission would have the result of adversely
affecting or impairing the security interest in favor of the Trustee, for its
benefit and the benefit of the Holders, with respect to the Collateral, and
neither the Issuer nor any of its Subsidiaries shall grant to any Person, or
suffer any Person (other than the Issuer and its Subsidiaries) to have (other
than to the Trustee on behalf of the Trustee and the Holders) any interest
whatsoever in the Collateral other than Permitted Liens. Neither the Issuer nor
any of its Subsidiaries will enter into any agreement or instrument that by its
terms requires the proceeds received from any sale of Collateral to be applied
to repay, redeem, defease or otherwise acquire or retire any Indebtedness, other
than Indebtedness under Senior Credit Agreement, Qualified Senior Affiliate
Indebtedness, and the security documents entered into in connection therewith,
and other than pursuant to this Indenture and the Security Documents. This
Section shall not, however, be construed as requiring the Issuer or any of its
Subsidiaries to interfere with the enforcement of rights and remedies with
respect to the Collateral pursuant to the Senior Credit Agreement.
SECTION 4.23. ACCOUNTING.
The Issuer shall keep its financial accounts in accordance with GAAP
and (except as GAAP may require) consistent with past practices.
SECTION 4.24. MAINTENANCE OF LIEN; ADDITIONAL COLLATERAL.
(a) If, after the Issue Date, the Issuer or any of its Subsidiaries
shall (i) acquire any material assets or (ii) engage in successful drilling and
exploration activities resulting in the creation of new Crude Oil and Natural
Gas Properties, then the Issuer shall, and shall cause each of its Subsidiaries
to, execute and file in the appropriate filing offices mortgages, deeds of
trust, security agreements, financing statements and other instruments granting
to the Trustee for the benefit of the Holders a second priority Lien, subject
only to Permitted Liens, as is necessary or appropriate to ensure that the Lien
of this Indenture and the Security Documents covers all of the Oil and Gas
Assets of the Issuer and its Subsidiaries and substantially all other assets of
the Issuer and its Subsidiaries (other than assets securing Acquired
Indebtedness to the extent granting additional Liens would be prohibited by the
terms of the instruments relating to such Acquired Indebtedness).
39
(b) In connection with any Security Documents executed and filed
under clause (a) of this Section 4.24, the Issuer shall also comply with the
terms of Section 12.02 to the extent applicable.
(c) On March 15th in each year, beginning with March 15, 2003, the
Issuer shall review its and its Subsidiaries' assets to ascertain whether or not
all of the Oil and Gas Assets of the Issuer and its Subsidiaries and
substantially all other assets of the Issuer and its Subsidiaries are then
subject to the Lien of this Indenture and the Security Documents. If such is not
the case, then the Issuer shall, and shall cause its Subsidiaries, to execute
and file in the appropriate filing offices mortgages, deeds of trust, security
agreements, financing statements and other instruments granting to the Trustee
for the benefit of the Holders a second priority Lien, subject only to Permitted
Liens, as is necessary or appropriate to accomplish such objective.
SECTION 4.25. EXCESS CASH FLOW AND EXCESS CASH.
(a) Without duplication with respect to the requirement to Pay Down
Debt set forth in clause (b) of this Section 4.25, within 30 days after the last
day of each calendar quarter ending after the Issue Date, the Issuer must apply
an amount to Pay Down Debt equal to 90% of the Excess Cash Flow of the Issuer
for such calendar quarter.
(b) Without duplication with respect to the requirement to Pay Down
Debt set forth in clause (a) of this Section 4.25, with respect to each calendar
quarter ending after the Issue Date and on the same date that the Issuer applies
an amount to Pay Down Debt pursuant to clause (a) of this Section 4.25 with
respect to such calendar quarter, and on a date that is 7 days after the Issue
Date, the Issuer must apply an amount to Pay Down Debt equal to all cash of the
Issuer and its Subsidiaries as of such date (each such date a "CASH SWEEP
PAYMENT DATE"), after the application of an amount to Pay Down Debt pursuant to
clause (a) of this Section 4.25, on that date (provided that if there is no
Excess Cash Flow with respect to such calendar quarter, the Cash Sweep Payment
Date with respect to such calendar quarter shall be the first Business Day that
is 30 days after the last day of such calendar quarter), minus
(i) $2.5 million,
(ii) Restricted Cash as of such Cash Sweep Payment Date,
(iii) the amount of Capital Expenditures the Issuer is permitted
to make pursuant to the terms of this Indenture during the
next calendar quarter (or, with respect to the Cash Sweep
Payment Date that is 7 days after the Issue Date, during
the first calendar quarter of 2003) pursuant to Section
4.27, minus amounts available for making Capital
Expenditures under any revolving credit facility under the
Senior Credit Agreement as of such Cash Sweep Payment
Date,
(iv) cash of the Issuer as of such Cash Sweep Payment Date
otherwise applied or required to be applied to Pay Down
Debt, and
(v) without duplication with respect to clause (iv) of this
Subsection 4.25(b), any cash of the Issuer and its
Subsidiaries as of the Cash Sweep Payment Date
constituting proceeds of any equity offering by the Issuer
or proceeds of any Subordinated Indebtedness of the Issuer
or any of its Subsidiaries complying with Section 4.30 of
this Indenture.
(c) The Issuer will manage the cash of the Issuer and its
Subsidiaries in the ordinary course of business consistent with past practices
and in compliance with the terms of the Senior Credit Agreement.
SECTION 4.26. LIMITATION ON EXPENDITURES FOR SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.
With respect to expenditures by the Issuer and its Subsidiaries on
SG&A:
(a) The amount expended by the Issuer and its Subsidiaries on SG&A in
any calendar quarter ending after the Issue Date shall not exceed the applicable
SG&A Quarterly Amount, subject, however, to the following carryforward and
carryback provisions:
(i) to the extent the SG&A in any one quarter (excluding the
amount of SG&A due to any Rollover Increase because of a prior
quarter's SG&A Deficit Amount) exceeds the applicable SG&A Quarterly
Amount, the SG&A Quarterly
40
Amount, for the two succeeding quarters shall be reduced in the
aggregate by an amount equal to the applicable SG&A Excess Amount, and
(ii) to the extent the SG&A in any one quarter (excluding the
amount of SG&A due to any Rollover Decrease because of a prior
quarter's SG&A Excess Amount) is less than the applicable SG&A
Quarterly Amount the SG&A Quarterly Amount for the two succeeding
quarters shall be increased in the aggregate by an amount equal to the
applicable SG&A Deficit Amount,
(b) In no event shall the amount expended by the Issuer and its
Subsidiaries on SG&A in any calendar year ending after the Issue Date exceed the
SG&A Annual Amount.
SECTION 4.27. LIMITATIONS ON CAPITAL EXPENDITURES.
With respect to Capital Expenditures by the Issuer and its
Subsidiaries:
(a) For the first calendar quarter in 2003, Capital Expenditures of
the Issuer and its Subsidiaries shall not exceed the Q1-2003 CapEx Amount, and
for each other calendar quarter in 2003, Capital Expenditures of the Issuer and
its Subsidiaries shall not exceed the Q2,3,4-2003 CapEx Amount, subject,
however, to the following carryforward and carryback provisions:
(i) to the extent Capital Expenditures in the first calendar
quarter of 2003 (excluding the amount of Capital Expenditures due to
any Rollover Increase because of a prior quarter's CapEx Deficit
Amount) exceed the Q1-2003 CapEx Amount or to the extent Capital
Expenditures in any other calendar quarter of 2003 (excluding the
amount of Capital Expenditures due to any Rollover Increase because of
a prior quarter's CapEx Deficit Amount) exceed the ▇▇,▇,▇-▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, as applicable, the CapEx Quarterly Amount for the two
succeeding quarters shall be decreased in the aggregate by an amount
equal to the applicable CapEx Excess Amount, and
(ii) to the extent Capital Expenditures in the first calendar
quarter of 2003 (excluding the amount of Capital Expenditures due to
any Rollover Decrease because of a prior quarter's CapEx Excess
Amount) fall below the Q1-2003 CapEx Amount or to the extent Capital
Expenditures in any other calendar quarter of 2003 (excluding the
amount of Capital Expenditures due to any Rollover Decrease because of
a prior quarter's CapEx Excess Amount) fall below the ▇▇,▇,▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, as applicable, the CapEx Quarterly Amount for the two
succeeding quarters shall be increased in the aggregate by an amount
equal to the applicable CapEx Deficit Amount.
(b) In no event shall the Capital Expenditures of the Issuer and its
Subsidiaries for calendar year 2003 exceed the 2003 CapEx Amount.
(c) For each calendar quarter in calendar year 2004 and each calendar
quarter in any following calendar year, Capital Expenditures of the Issuer and
its Subsidiaries shall not exceed the applicable ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, subject, however, to the following carryforward and carryback
provisions:
(i) to the extent Capital Expenditures in any such quarter
(excluding the amount of Capital Expenditures due to any Rollover
Increase because of a prior quarter's CapEx Deficit Amount) exceed the
applicable ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the 2004-Plus CapEx
Quarterly Amount for the two succeeding quarters shall be decreased in
the aggregate by an amount equal to the applicable CapEx Excess Amount,
and
(ii) to the extent the Capital Expenditures in any such
quarter (excluding the amount of Capital Expenditures due to any
Rollover Decrease because of a prior quarter's CapEx Excess Amount)
fall below the applicable ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the
2004-Plus CapEx Quarterly Amount for the two succeeding quarters shall
be increased in the aggregate by an amount equal to the applicable
CapEx Deficit Amount.
(d) In no event shall the Capital Expenditures of the Issuer and its
Subsidiaries for calendar year 2004 or any following calendar year exceed the
2004-Plus CapEx Annual Amount.
41
With respect to the limitations on Capital Expenditures set forth
above, the Issuer may reallocate capacity for making up to an aggregate of $3
million of Capital Expenditures which are to be used for satisfying capital
calls with respect to non-operating mineral interests of the Issuer and its
Subsidiaries for development expenses with respect to such non-operating mineral
interests as follows:
(1) any such reallocation will increase the annual permissible
Capital Expenditures by the amount of such reallocation for the
calendar year to which such reallocation was made, and will
decrease the annual permissible Capital Expenditures by the
amount of such reallocation for the calendar year from which such
reallocation was made;
(2) the amount reallocated to a calendar year must be allocated by
the Issuer to the calendar quarters within that calendar year to
increase the permissible Capital Expenditures for such calendar
quarters, and the amount reallocated from a calendar year must be
allocated by the Issuer to the calendar quarters within that
calendar year to decrease the permissible Capital Expenditures
for such calendar quarters; and
(3) any amount reallocated to a particular period (i.e., to a
particular calendar year or a particular calendar quarter) can be
used only for Capital Expenditures to satisfy capital calls with
respect to non-operating mineral interests of the Issuer and its
Subsidiaries for development expenses with respect to such
non-operating mineral interests.
SECTION 4.28. LIMITATION ON TAX SHARING ARRANGEMENTS.
Neither the Issuer nor any of its Subsidiaries may enter into any
agreement, arrangement or understanding with respect to liability for payment or
sharing of any other Person's taxes, including any tax sharing or similar
arrangement, except to the extent of any covenant pursuant to which funds or
money actually paid or transferred to or from the Issuer or its Subsidiary, as
the case may be, are thereupon actually used to pay the applicable taxes.
SECTION 4.29. LIMITATION ON USES OF CASH.
The Issuer and its Subsidiaries will make cash expenditures only for
the following and only to the extent not otherwise prohibited by the terms of
this Indenture:
(a) Qualified Lease Operating Costs, SG&A costs, taxes (e.g., income,
severance, ad valorem, franchise) in each case not prohibited by
the terms of this Indenture;
(b) cash interest requirements;
(c) Capital Expenditures not prohibited by the terms of this
Indenture;
(d) any oil and gas hedge settlements requiring a cash payment from
the Issuer pursuant to oil and gas hedge agreements entered into
(i) pursuant to approval by the Board of Directors of the Issuer,
(ii) in the ordinary course of business, and (iii) to provide
protection against oil and gas price fluctuations with respect to
reasonably anticipated oil and gas production of the Issuer and
its Subsidiaries and not for the purpose of speculating;
(e) any payment to reduce debt to the extent such payment is not
prohibited by the terms of this Indenture, provided that the
average days outstanding for payables paid shall not be less than
the greater of (i) 45 days and (ii) the industry standard
therefor, subject to adjustment by the Board of Directors of the
Issuer;
(f) payments due to the settling of a natural gas balancing
deficiency not to exceed $45,000 in the aggregate in any calendar
year unless a higher amount is approved by the Board of Directors
of the Issuer;
(g) payment of judgments rendered by a court of law;
42
(h) assessments issued by any governmental entity;
(i) additional cash expenditures not to exceed $2 million in the
aggregate in any calendar year; provided, however, that the
Issuer and its Subsidiaries may make aggregate cash expenditures
in excess of $2 million in any calendar year under this
Subsection 4.29(i) if the Board of Directors of the Issuer
approves such expenditures;
(j) obligations under the Senior Credit Agreement and Qualified
Senior Affiliate Indebtedness including, but not limited to, fees
and expenses incurred in connection therewith and fees related to
any amendment, waiver, consent or similar actions taken by the
agent and lenders related thereto (the payment of which
obligations will not be prohibited by the terms of this
Indenture); and
(k) payment of any ▇▇▇▇▇ Fees.
SECTION 4.30. PROCEEDS FROM ISSUANCES OF EQUITY AND SUBORDINATED DEBT.
(a) The Issuer may issue common equity, or preferred equity with no
maturity or required or allowed cash dividend, at any time and may use the net
proceeds from any such issuance in any manner consistent with other provisions
of this Indenture. Such net proceeds will not be included in the calculation of
Excess Cash Flow.
(b) The Issuer may also issue preferred equity with a maturity or
required or allowed cash dividends if such issuance complies with the following
requirements:
(i) no portion of any such equity may be redeemed or
repurchased or, except as permitted under clause (iii) below, have any
other cash distribution or dividend until the Notes are completely
repaid,
(ii) at least 50% of the proceeds of such issuance must
immediately be used to Pay Down Debt, and
(iii) no cash dividends can be paid on such equity unless:
(A) at least 75% of such proceeds are used to Pay Down
Debt,
(B) the cash dividend payable to the holders of such
equity does not exceed the Cash Coupon on the Notes, and
(C) the holders of the Notes receive in cash (in full)
current interest payments due and payable.
(c) The Issuer and its Subsidiaries may also incur Subordinated
Indebtedness that complies with the following requirements (such Indebtedness is
referred to as "Permitted Subordinated Indebtedness"):
(i) no portion of any principal of any such Subordinated
Indebtedness may be repaid, or refinanced if such refinancing results
in a shorter Weighted Average Life to Maturity or in the terms of such
Subordinated Indebtedness being less favorable to the holders of the
Notes, until the Notes are completely repaid,
(ii) at least 50% of the proceeds of such issuance must
immediately be used to Pay Down Debt, and
(iii) no cash interest can be paid on such Subordinated
Indebtedness unless:
(A) at least 75% of such proceeds are used to Pay Down
Debt,
(B) the cash portion of any interest payable to the
holders of such Subordinated Indebtedness does not exceed the Cash
Coupon on the Notes, and
43
(C) the holders of the Notes receive in cash (in full)
current interest payments due and payable.
SECTION 4.31. FARMOUTS.
(a) The Issuer and its Subsidiaries may enter into and perform with
respect to farmouts covering any of their undeveloped ▇▇▇▇▇ and properties,
provided that the Issuer must, prior to any properties being transferred
pursuant to such farmout, obtain written confirmation from F. ▇▇▇▇ ▇▇▇▇▇, III
stating that such farmout is in the best interests of the Holders of the Notes,
and file the same with the Trustee, further provided that such written
confirmation will not be required for any farmout with a farmout value (as
determined as provided below) of less than $100,000, but the total aggregate
farmout value of farmouts so exempted from the written confirmation requirement
cannot exceed $500,000 in any twelve calendar month period. For the purposes of
this Section 4.31, the value of a farmout will be the portion of the capital
commitments made by the farmee(s) under the farmout relating to the interests of
the Issuer or its Subsidiaries being farmed out. The Issuer anticipates entering
into a retainer arrangement with F. ▇▇▇▇ ▇▇▇▇▇, III in connection with his
services with respect to such written confirmations, with such retainer
arrangement calling for the payment to him of fees for his services with respect
to such written confirmations (the "▇▇▇▇▇ FEES"), with the ▇▇▇▇▇ Fees being
excluded from the calculation of SG&A.
(b) In addition, the Issuer and its Subsidiaries may enter into and
perform farmouts not complying with Section 4.31(a) if consent to such farmout
is obtained from the Holders of not less than a majority of the principal amount
of the then outstanding Notes issued under this Indenture.
(c) The farmouts referenced in the Purchase and Sale Agreement dated
November 21, 2002 between the Issuer, as seller, and PrimeWest Gas Inc., as
purchaser, (the "FARMOUT AGREEMENT") and included as Schedule P in such
agreement, are permitted farmouts under this Indenture.
(d) Farmouts permitted by the preceding three paragraphs are referred
to as "PERMITTED FARMOUT AGREEMENTS." The following shall apply to each
Permitted Farmout Agreement:
(i) the applicable portions of Liens of the Security
Documents securing the Notes will be released with respect to the
undeveloped ▇▇▇▇▇ and/or properties that are subject to such Permitted
Farmout Agreement, provided that all retained interests of the Issuer
and the Subsidiaries in such ▇▇▇▇▇ and/or properties will remain
subject to such Liens;
(ii) such Permitted Farmout Agreement will be deemed not to
be an Asset Sale, including, but not limited to, the purchase options
in the Farmout Agreement referenced in Section 4.31(c) above;
(iii) obligations of the Issuer and its Subsidiaries under
such Permitted Farmout Agreement that constitute Indebtedness will be
Permitted Indebtedness so long as any such Indebtedness is non-recourse
with respect to the Issuer and its Subsidiaries and their properties
and assets other than the ▇▇▇▇▇ and/or properties that are the subject
of such Permitted Farmout Agreement; and
(iv) to the extent such Permitted Farmout Agreement would
constitute an Investment by the Issuer or any of its Subsidiaries, such
Investment will be a Permitted Investment.
SECTION 4.32. CEO NOTE OPTIONS.
The Issuer may issue to its Chief Executive Officer (the "ISSUER'S
CEO") options to purchase Notes ("CEO NOTE OPTIONS") as follows:
(a) Issuance to the Issuer's CEO on the Issue Date of options to
purchase $750,000 principal amount of Notes for the market price
therefor at the Issue Date;
(b) Issuance to the Issuer's CEO of options to purchase $250,000
principal amount of Notes for the market price therefor at the
Issue Date if the Notes trade for greater than 70% of the face
amount thereof for 60 consecutive trading days, with the first of
such consecutive 60 days being in January of 2003;
44
(c) Issuance to the Issuer's CEO of options to purchase $500,000
principal amount of Notes for the market price therefor at the
Issue Date if the Notes trade for greater than 70% of the face
amount thereof for any 60 consecutive trading days during the
first 365 calendar days after the Issue Date; and
(d) Issuance to the Issuer's CEO of options to purchase $250,000
principal amount of Notes for the market price therefor at the
Issue Date if the Notes trade for greater than 90% of the face
amount thereof for any 60 consecutive trading days during the 365
calendar day period commencing on the 366th day after the Issue
Date, provided that if the condition set forth in clause (c)
immediately above is not achieved, the amount applicable for this
clause (d) shall be increased from $250,000 to $750,000.
For determining consecutive trading days with respect to the Notes, a
trading day will be a day on which there are at least $500,000 in aggregate
principal amount of Notes traded and either ▇▇▇▇▇▇▇▇▇ and Company, Inc., or its
successor, or Imperial Capital, LLC, or its successor, (as long as they did not
execute the trade) confirms to the Issuer that the trade was in the context of
the market.
SECTION 4.33. CONDUCT OF BUSINESS IN THE INTERIM PERIOD.
The Issuer shall have, and shall have caused its Subsidiaries to,
conduct business consistent with past practices during the interim period
between the date that the Offer to Exchange was made and the Issue Date.
SECTION 4.34. CALCULATION OF ORIGINAL ISSUE DISCOUNT.
The Issuer shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount accrued on the outstanding Notes as of the end of such year and (ii)
such other specific information relating to such original issue discount as may
then be relevant under the Internal Revenue Code or applicable U.S. Treasury
regulation.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. MERGER, CONSOLIDATION AND SALE OF ASSETS.
The Issuer will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all
or substantially all of the assets owned directly or indirectly by the Issuer
(determined on a consolidated basis for the Issuer and its Subsidiaries),
whether as an entirety or substantially as an entirety to any Person unless: (a)
either (i) the Issuer shall be the surviving or continuing corporation or (ii)
the Person (if other than the Issuer) formed by such consolidation or into which
the Issuer is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the assets of the Issuer and its
Subsidiaries substantially as an entirety (the "SURVIVING ENTITY") (x) shall be
a corporation organized and validly existing under the laws of the United States
or any state thereof or the District of Columbia; and (y) shall expressly
assume, by supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and punctual payment of
the principal of, premium, if any, and interest on all of the Notes and the
performance of every covenant of the Notes, this Indenture and the Security
Documents on the part of the Issuer to be performed or observed; (b) immediately
after giving effect to such transaction and the assumption contemplated by
clause (a)(ii)(y) above (including giving effect to any Indebtedness incurred or
anticipated to be incurred and any Lien granted in connection with or in respect
of such transaction), the Issuer or such Surviving Entity, as the case may be,
(i) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Issuer immediately prior to such transaction, and
(ii) both (x) the Issuer's or such Surviving Entity's (calculated as if such
Surviving Entity was the Issuer) as the case may be, Consolidated EBITDA
Coverage Ratio is at least equal to 2.5 to 1.0; and (y) the Issuer's or such
Surviving Entity's (calculated as if such Surviving Entity was the Issuer), as
the case may be, Adjusted Consolidated Net Tangible Assets are equal to or
greater than 150% of the aggregate consolidated Indebtedness of the Issuer and
its Subsidiaries; (c) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (a)(ii)(y) above
(including, without limitation, giving effect to any Indebtedness incurred or
anticipated to be incurred and any Lien
45
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and (d) the Issuer or the
Surviving Entity, as the case may be, shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
hereof and that all conditions precedent in this Indenture relating to such
transaction have been satisfied; PROVIDED, HOWEVER, that such counsel may rely,
as to matters of fact, on a certificate or certificates of officers of the
Issuer.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the assets of one or more Subsidiaries the Capital Stock of
which constitutes all or substantially all of the assets of the Issuer, shall be
deemed to be the transfer of all or substantially all of the assets of the
Issuer.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with the provisions
of this Indenture described under this Section 5.01) will not, and the Issuer
will not cause or permit any Subsidiary Guarantor to, consolidate with or merge
with or into any Person other than the Issuer or another Subsidiary Guarantor
that is a Wholly Owned Subsidiary unless: (a) the entity formed by or surviving
any such consolidation or merger (if other than the Subsidiary Guarantor) is a
Person organized and existing under the laws of the United States or any state
thereof or the District of Columbia (or if such Subsidiary Guarantor was formed
under the laws of Canada or any province or territory thereof, such Surviving
Entity shall be a Person organized and validly existing under the laws of Canada
or any province or territory thereof); (b) such entity assumes by execution of a
supplemental indenture all of the obligations of the Subsidiary Guarantor under
its Guarantee; (c) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and (d)
immediately after giving effect to such transaction and the use of any net
proceeds therefrom on a PRO FORMA basis, the Issuer could satisfy the provisions
of clause (b) of the first paragraph of this Section 5.01. Any merger or
consolidation of a Subsidiary Guarantor with and into the Issuer (with the
Issuer being the Surviving Entity) need only comply with clause (d) of the first
paragraph of this Section 5.01.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Issuer in accordance with the foregoing,
in which the Issuer is not the Surviving Entity, the Surviving Entity formed by
such consolidation or into which the Issuer is merged or to which such transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer under this Indenture and the Notes with the same effect
as if such Surviving Entity had been named as such, and thereafter (except in
the case of a lease), the predecessor corporation will be relieved of all
further obligations and covenants under this Indenture and the Notes.
ARTICLE SIX
REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" means any of the following events:
(a) the failure to pay interest on any Notes when the same
becomes due and payable;
(b) the failure to pay the principal of any Notes when such
principal becomes due and payable, at the Maturity Date, upon
redemption or otherwise (including the failure to make a payment to
purchase Notes tendered pursuant to a Change of Control Offer or to Pay
Down Debt in connection with an Asset Sale);
(c) a default in the observance or performance of any other
covenant or agreement contained in this Indenture which default
continues for a period of 30 days after Issuer or any Subsidiary
Guarantor receives written notice specifying the default (and demanding
that such default be remedied) from the Trustee or the Holders of at
least 25% of the outstanding principal amount of the Notes (except in
the case of a default with
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respect to observance or performance of any of the terms or provisions
of Section 4.15, 4.16 or 5.01 which will constitute an Event of
Default with such notice requirement but without such passage of time
requirement);
(d) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Issuer or any Subsidiary (or the
payment of which is guaranteed by the Issuer or any Subsidiary),
whether such Indebtedness now exists, or is created after the Issue
Date, which default (i) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness after any applicable
grace period provided in such Indebtedness (a "PAYMENT DEFAULT") or
(ii) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a payment default or the
maturity of which has been so accelerated, aggregates $2,000,000.00 or
more;
(e) one or more judgments in an aggregate amount in excess of
$2,000,000.00 (unless covered by insurance by a reputable insurer as to
which the insurer has acknowledged coverage) shall have been rendered
against the Issuer or any of its Subsidiaries and such judgments remain
undischarged, unvacated, unpaid or unstayed for a period of 60 days
after such judgment or judgments become final and non-appealable;
(f) the Issuer or any of its Subsidiaries pursuant to or under
or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) shall generally not pay its debts when such debts
become due or shall admit in writing its inability to pay its
debts generally;
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Issuer or any Subsidiary
of the Issuer in an involuntary case or proceeding,
(ii) appoints a Custodian of the Issuer or any
Subsidiary of the Issuer for all or substantially all of its
Properties, or
(iii) orders the liquidation of the Issuer or any
Subsidiary of the Issuer,
and in each case the order or decree remains unstayed and in effect for
60 days; or
(h) any of the Guarantees or any of the Security Documents
ceases to be in full force and effect or any of the Guarantees or the
Security Documents is declared to be null and void or invalid and
unenforceable or any of the Subsidiary Guarantors denies or disaffirms
its liability under its Guarantee (other than by reason of release of a
Subsidiary Guarantor in accordance with the terms of this Indenture) or
any obligor or any Related Person denies or disaffirms its liability
under any Security Document to which it is party.
SECTION 6.02. ACCELERATION.
Upon the happening of any Event of Default specified in Section 6.01,
the Trustee may, or the Holders of at least 25% in aggregate principal amount of
outstanding Notes may, declare the principal of, premium, if any, and accrued
and unpaid interest on all the Notes to be due and payable by notice in writing
to the Issuer and the Trustee specifying the
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respective Event of Default and that it is a "notice of acceleration" and the
same shall become immediately due and payable. If an Event of Default of the
type described in clause (f) or (g) above occurs and is continuing, then such
amount will IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
aggregate principal amount of the Notes then outstanding by written notice to
the Issuer and the Trustee may rescind and cancel such declaration and its
consequences (a) if the rescission would not conflict with any judgment or
decree, (b) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of such
acceleration, (c) to the extent the payment of such interest is lawful, interest
on overdue installments of interest and overdue principal, which have become due
otherwise than by such declaration of acceleration, has been paid, (d) if the
Issuer has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances, and (e) in the event of
the cure or waiver of an Event of Default of the type described in clause (f) or
(g) of the description of Events of Default above, the Trustee shall have
received an Officers' Certificate and an Opinion of Counsel that such Event of
Default has been cured or waived; PROVIDED, HOWEVER, that such counsel may rely,
as to matters of fact, on a certificate or certificates of officers of the
Issuer. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
SECTION 6.03. OTHER REMEDIES.
Subject to the terms of the Intercreditor Agreement, if an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of the principal of,
premium, if any, or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
All rights of action and claims under this Indenture or the Notes may
be enforced by the Trustee even if it does not possess any of the Notes or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Prior to the declaration of acceleration of the Notes, the Holders of
not less than a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may, on behalf of the Holders of
all the Notes, waive any existing Default or Event of Default and its
consequences under this Indenture, except a Default or Event of Default
specified in Section 6.01(a) or (b) or in respect of any provision hereof which
cannot be modified or amended without the consent of the Holder so affected
pursuant to Section 9.02. When a Default or Event of Default is so waived, it
shall be deemed to be cured and shall cease to exist. This Section 6.04 shall be
in lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the
TIA is hereby expressly excluded from this Indenture and the Notes, as permitted
by the TIA.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of the Notes may not enforce this Indenture or the Notes except
as provided in this Article Six and under the TIA. Subject to the terms of the
Intercreditor Agreement, the Holders of not less than a majority in aggregate
principal amount of the outstanding Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee;
PROVIDED, HOWEVER, that the Trustee may refuse to follow any direction (a) that
conflicts with any rule of law or this Indenture, (b) that the Trustee
determines may be unduly prejudicial to the rights of another Holder, or (c)
that may expose the Trustee to personal liability for which reasonable security
and indemnity provided to the Trustee against such liability shall be
inadequate; PROVIDED, FURTHER, HOWEVER, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such direction
or this Indenture. This Section 6.05 shall be in lieu of Section 316(a)(1)(A) of
the TIA, and such Section 316(a)(1)(A) of the TIA is hereby expressly excluded
from this Indenture and the Notes, as permitted by the TIA.
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SECTION 6.06. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any proceeding
with respect to this Indenture, the Notes, any Guarantee or any Security
Document or any remedy hereunder or thereunder, unless the Holders of at least
25% in aggregate principal amount of the outstanding Notes have made written
request, and offered reasonable security and indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and this Indenture, the
institution of such proceeding is consistent with the terms of the Intercreditor
Agreement, the Trustee has failed to institute such proceeding within 60 days
after receipt of such notice, request and offer of security and indemnity and
the Trustee, within such 60-day period, has not received directions inconsistent
with such written request by Holders of not less than a majority in aggregate
principal amount of the outstanding Notes.
Subject to the terms of the Intercreditor Agreement, the foregoing
limitations shall not apply to a suit instituted by a Holder of a Note for the
enforcement of the payment of the principal of, premium, if any, or interest on,
such Note on or after the respective due dates expressed or provided for in such
Note.
A Holder may not use this Indenture to prejudice the rights of any
other Holders or to obtain priority or preference over such other Holders.
SECTION 6.07. RIGHT OF HOLDERS TO RECEIVE PAYMENT.
Subject to the terms of the Intercreditor Agreement (to which this
provision is subject), the right of any Holder of a Note to receive payment of
the principal of, premium, if any, and interest on such Note, on or after the
respective due dates expressed or provided for in such Note, or to bring suit
for the enforcement of any such payment on or after the respective due dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Trustee may, subject to the terms of the
Intercreditor Agreement, recover judgment in its own name and as trustee of an
express trust against the Issuer, or any other obligor on the Notes for the
whole amount of the principal of, premium, if any, and accrued interest
remaining unpaid, together with interest on overdue principal and, to the extent
that payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate per annum provided for by the Notes and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, fees, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, fees, expenses,
disbursements and advances of the Trustee, its agents, counsel, accountants and
experts) and the Holders allowed in any judicial proceedings relative to the
Issuer, any Subsidiary Guarantor or Subsidiary (or any other obligor upon the
Notes), their creditors or their property and shall be entitled and empowered to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, fees, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article Six it
shall, subject to the terms of the Intercreditor Agreement, pay out such money
in the following order:
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First: to the Trustee (including any predecessor Trustee) for
amounts due under Section 7.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Notes for interest;
Third: to Holders for the principal amounts (including any
premium) owing under the Notes, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for the principal (including any premium); and
Fourth: the balance, if any, to the Issuer.
The Trustee, upon prior written notice to the Issuer, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may in its discretion require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to any suit by the Trustee, any suit by a
Holder pursuant to Section 6.06, or a suit by a Holder or Holders of more than
10% in aggregate principal amount of the outstanding Notes.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture, any Guarantee or any Note and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Issuer, the Subsidiary Guarantors, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise thereof as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
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(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate security and indemnity against such risk or
liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Issuer. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the
Issuer, personally or by agent or attorney.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to Sections
10.04 and 10.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action that it
takes or omits to take in good faith which it reasonably believes to be
authorized or within the discretion, rights or powers conferred upon it
by this Indenture.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent,
order, bond, debenture, or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice to the Issuer, to examine the books,
records, and premises of the Issuer, personally or by agent or attorney
and to consult with the officers and representatives of the Issuer,
including the Issuer's accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered, and if
requested, provided to the Trustee security and indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which may be
incurred by it in compliance with such request, order, direction or
exercise.
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(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder.
(h) Delivery of reports, information and documents to the
Trustee under Section 4.08 is for informational purposes only and the
Trustee's receipt of the foregoing shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Issuer's and any
Subsidiary Guarantor's compliance with any of their covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
(i) No permissive right of the Trustee to act hereunder shall
be construed as a duty.
(j) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate, a written Opinion of Counsel, or both.
(k) Except with respect to Section 4.01 hereof, the Trustee
shall have no duty to inquire as to the performance of the Issuer's
covenants in Article Four hereof. In addition, the Trustee shall not be
deemed to have knowledge of any Default or Event of Default except (i)
any Event of Default occurring pursuant to Sections 6.01(a) and 6.01(b)
hereof or (ii) any Default or Event of Default of which the Trustee
shall have received written notification or obtained actual knowledge.
(l) The Trustee shall not be deemed to have notice or
knowledge of any matter unless a Trust Officer has actual knowledge
thereof or unless written notice thereof is received by the Trustee at
the Corporate Trust Office of the Trustee and such notice references
the Notes generally, the Issuer or this Indenture.
(m) The Trustee shall be authorized to exercise its rights and
remedies under this Indenture and the Security Documents through one or
more agents.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuer, any of its
Subsidiaries, or its Affiliates with the same rights it would have if it were
not Trustee. Any Agent may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture, the Guarantees or the Notes, and it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuer in this Indenture or the Notes other than the
Trustee's certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if (i)
the Trustee receives written notice thereof or (ii) such default is an Event of
Default under Section 6.01(a) or (b), the Trustee shall mail to each Holder and
to the Senior Credit Facility Representative notice of the uncured Default or
Event of Default within 90 days after obtaining knowledge thereof. Except in the
case of a Default or an Event of Default in payment of principal of, or interest
on, any Note, including an accelerated payment, a Default in payment on the
Change of Control Payment Date pursuant to a Change of Control Offer, a Default
in any requirement under this Indenture to Pay Down Debt, and a Default in
compliance with Article Five hereof, the Trustee may withhold the notice if and
so long as its Board of Directors, the executive committee of its Board of
Directors or a committee of its directors and/or Trust Officers in good faith
determines that withholding the notice is in the interest of the Holders. The
foregoing sentence of this Section 7.05 shall be in lieu of the proviso to
Section 315(b) of the TIA and such proviso to Section 315(b) of the TIA is
hereby expressly excluded from this Indenture and the Notes, as permitted by the
TIA.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after May 15 of each year beginning with 2003, the
Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Holder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Issuer and filed with the Commission and each stock exchange, if
any, on which the Notes are listed.
The Issuer shall promptly notify the Trustee if the Notes become listed
on any stock exchange and the Trustee shall comply with TIA Section 313(d).
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuer shall pay to the Trustee from time to time such compensation
for its services as has been agreed to by the Issuer and the Trustee. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee upon request
for all reasonable out-of-pocket expenses incurred or made by it in connection
with the performance of its duties under this Indenture. Such expenses shall
include the reasonable fees and expenses of the Trustee's agents, counsel,
accountants and experts.
The Issuer and the Subsidiary Guarantors shall jointly and severally
indemnify each of the Trustee (or any predecessor Trustee) and its agents,
employees, stockholders, Affiliates and directors and officers for, and hold
them each harmless against, any and all loss, liability, damage, claim or
expense (including reasonable fees and expenses of counsel), including taxes
(other than taxes based on the income of the Trustee) incurred by them except
for such actions to the extent caused by any negligence, bad faith or willful
misconduct on their part, relating to or arising out of or in connection with
(i) the acceptance or administration of this trust including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder, or (ii) the validity, invalidity, adequacy or inadequacy of
this Indenture, the Subsidiary Guarantees, the Notes, the Security Documents and
the Offer to Exchange. The Trustee shall notify the Issuer promptly of any claim
asserted against the Trustee for which it intends to seek indemnity. At the
Trustee's sole discretion, the Issuer shall defend the claim and the Trustee
shall cooperate and may participate in the defense; PROVIDED, HOWEVER, that any
settlement of a claim shall be approved in writing by the Trustee if such
settlement would result in an admission of liability by the Trustee or if such
settlement would not be accompanied by a full release of the Trustee for all
liability arising out of the events giving rise to such claim. Alternatively,
the Trustee may at its option have separate counsel of its own choosing and the
Issuer shall pay the reasonable fees and expenses of such counsel.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
The Trustee may resign at any time by so notifying the Issuer. The
Holders of a majority in aggregate principal amount of the outstanding Notes may
remove the Trustee and appoint a successor Trustee with the Issuer's consent, by
so notifying the Issuer and the Trustee. The Issuer may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuer.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. The Issuer shall mail notice of
such successor Trustee's appointment to each Holder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee pursuant
to this Section 7.08, the Issuer's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; PROVIDED, HOWEVER, that
such corporation shall be otherwise qualified and eligible under this Article
Seven.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case
of a Trustee that is a corporation included in a bank holding company system,
the related bank holding company) shall have a combined capital and surplus of
at least $100 million as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); PROVIDED, HOWEVER, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Issuer are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Issuer and the Subsidiary Guarantors, as obligors
of the Notes.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Issuer and the
Subsidiary Guarantors, as obligors on the Notes.
SECTION 7.12. OTHER CAPACITIES.
All references in this Indenture to the Trustee shall be deemed to
refer to the Trustee in its capacity as Trustee and in its capacities as any
Agent, to the extent acting in such capacities, and every provision of this
Indenture relating to the conduct or affecting the liability or offering
protection, immunity or indemnity to the Trustee shall be deemed to apply with
the same force and effect to the Trustee acting in its capacities as any Agent.
54
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. TERMINATION OF ISSUER'S OBLIGATIONS.
This Indenture, the Guarantees and the Security Documents will be
discharged and will cease to be of further effect (except as to surviving rights
of registration of transfer or exchange of the Notes, as expressly provided for
in this Indenture) as to all outstanding Notes when (a) either (i) all Notes,
theretofore authenticated and delivered (except lost, stolen or destroyed Notes
which have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust by the Issuer or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or discharged from such
trust) have been delivered to the Trustee for cancellation or (ii) all Notes not
theretofore delivered to the Trustee for cancellation have become due and
payable, or are to become due and payable within 180 days, and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable written instructions in the form of an Officers' Certificate from
the Issuer directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be; (b) the Issuer has paid all other
sums payable under this Indenture by the Issuer; and (c) the Issuer has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent under this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with; PROVIDED,
HOWEVER, that such counsel may rely, as to matters of fact, on a certificate or
certificates of officers of the Issuer.
The Issuer may, at its option and at any time, elect to have its
obligations and the corresponding obligations of the Subsidiary Guarantors
discharged with respect to the outstanding Notes ("LEGAL DEFEASANCE"). Such
Legal Defeasance means that the Issuer and the Subsidiary Guarantors shall be
deemed to have paid and discharged the entire indebtedness represented by the
outstanding Notes, and satisfied all of their obligations with respect to the
Notes, except for (a) the rights of Holders to receive payments from the trust
referred to below in respect of the principal of, premium, if any, and interest
on the Notes when such payments are due, (b) the Issuer's obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
replacement of mutilated, destroyed, lost or stolen Notes and the maintenance of
an office or agency for payments, (c) the rights, powers, trust, duties and
immunities of the Trustee and the Issuer's obligations in connection therewith
and (d) the Legal Defeasance provisions of this Section 8.01. In addition, the
Issuer may, at its option and at any time, elect to have the obligations of the
Issuer and the Subsidiary Guarantors, if any, released with respect to covenants
contained in Sections 4.04, 4.05, 4.06(b), 4.07, 4.08 and 4.10 through 4.21,
4.23 and 4.25 through 4.33 and Articles Five and Twelve ("COVENANT DEFEASANCE")
and thereafter any omission to comply with such obligations shall not constitute
a Default or Event of Default with respect to the Notes. In the event of
Covenant Defeasance, those events described under Section 6.01 (except those
events described in Section 6.01(a), (b), (f), (g) and (h) as it relates to the
Guarantees) will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders U.S. Legal Tender, non-callable
U.S. Government Obligations, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if
any, and interest on the Notes on the stated date for payment thereof
or on the applicable Redemption Date, as the case may be;
(b) in the case of Legal Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Issuer has
received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the Issue Date, there has been a change
in the applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that, the
Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
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(c) in the case of Covenant Defeasance, the Issuer shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
under Section 6.01(f) or (g) from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under this
Indenture or any other agreement or instrument to which the Issuer or
any of its Subsidiaries is a party or by which the Issuer or any of its
Subsidiaries is bound;
(f) the Issuer shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Issuer with the intent of preferring the Holders over any other
creditors of the Issuer or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Issuer or others;
(g) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied
with; PROVIDED, HOWEVER, that such counsel may rely, as to matters of
fact, on a certificate or certificates of officers of the Issuer; and
(h) the Issuer shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
SECTION 8.02. APPLICATION OF TRUST MONEY.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations except as it may agree in
writing with the Issuer.
The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Legal Tender or U.S. Government
Obligations deposited pursuant to Section 8.01 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Notes. The provisions of
this Section 8.02 shall survive the termination of this Indenture.
SECTION 8.03. REPAYMENT TO THE ISSUER.
Subject to Section 8.01, the Trustee and the Paying Agent shall
promptly pay to the Issuer upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Issuer upon receipt of a written order in the form of an
Officers' Certificate requesting any money held by them for the payment of
principal or interest that remains unclaimed for one year; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any
payment, may at the expense of the Issuer cause to be published once in a
newspaper of general circulation in the City of
New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Issuer. After payment to the Issuer, Holders entitled to such
money must look to the Issuer for payment as general creditors unless an
applicable law designates another Person.
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SECTION 8.04. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.02 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuer's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.02; PROVIDED, HOWEVER, that if the Issuer has made any payment of
interest on or principal of any Notes because of the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of such
Notes to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.
SECTION 8.05. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.
After (i) the conditions of Section 8.01 have been satisfied, (ii) the
Issuer has paid or caused to be paid all other sums payable hereunder by the
Issuer and (iii) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written
request of the Issuer in the form of an Officers' Certificate shall acknowledge
in writing the discharge of the Issuer's obligations under this Indenture except
for those surviving obligations specified in Sections 7.07 and 8.02.
ARTICLE NINE
MODIFICATION OF INDENTURE
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
Subject to the terms of the Intercreditor Agreement, the Issuer, the
Subsidiary Guarantors and the Trustee may amend, waive or supplement this
Indenture, the Notes, the Guarantees, the Intercreditor Agreement or any
Security Document without notice to or consent of any Holder: (a) to cure any
ambiguity, defect or inconsistency; (b) to comply with Section 4.20 or 5.01 of
this Indenture; (c) to provide for uncertificated Notes in addition to
certificated Notes; (d) to comply with any requirements of the Commission in
order to effect or maintain the qualification of this Indenture under the TIA;
or (e) to make any change that would provide any additional benefit or rights to
the Holders or that does not adversely affect the rights of any Holder.
Notwithstanding the foregoing, subject to Section 9.02, the Trustee and the
Issuer may not make any change that adversely affects the rights of any Holder
under this Indenture, the Intercreditor Agreement or any Security Document
without the consent of such Holder. In formulating its opinion on such matters,
the Trustee will be entitled to rely on such evidence as it deems appropriate,
including, without limitation, solely on an Opinion of Counsel; PROVIDED,
HOWEVER, that in delivering such Opinion of Counsel, such counsel may rely as to
matters of fact, on a certificate or certificates of officers of the Issuer.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to the terms of the Intercreditor Agreement, all other
amendments, supplements or waivers of this Indenture, the Notes, the Guarantees,
the Intercreditor Agreement or any Security Document may be made with the
consent of the Holders of not less than a majority of the then outstanding
principal amount of the then outstanding Notes, except that, without the consent
of each Holder of the Notes affected thereby, no amendment, supplement or waiver
may, directly or indirectly: (i) reduce the amount of Notes whose Holders must
consent to any amendment; (ii) reduce the rate of or change or have the effect
of changing the time for payment of interest, including defaulted interest, on
any Notes or reduce the amount of Liquidated Damages payable under the
Registration Rights Agreement; (iii) reduce the principal of or change the fixed
maturity of any Notes, or change the date on which any Notes may be subject to
redemption or repurchase, or reduce the redemption or repurchase price therefor;
(iv) make any Notes payable in currency other than that stated in the Notes; (v)
make any change in provisions of this Indenture, the Notes, the Guarantees, the
Intercreditor Agreement or any Security Document protecting the right of each
Holder of a Note to receive payment of principal of and interest on such Note on
or after the due date thereof or to bring suit to enforce such payment or
permitting Holders of a majority in aggregate principal amount of the then
outstanding Notes to waive Defaults or Events of Default; (vi) amend, change or
modify in any material respect the obligation of the Issuer to make and
consummate a Change of Control Offer in the event of a Change of Control or to
Pay Down Debt with respect to any Asset Sale that has been consummated or
57
modify any of the provisions or definitions with respect thereto; (vii) modify
or change any provision of this Indenture, the Notes, the Guarantees, the
Intercreditor Agreement, any Security Document or Section 1.01 affecting the
ranking of the Notes or any Guarantee in a manner which adversely affects the
Holders; or (viii) release any Subsidiary Guarantor from any of its obligations
under its Guarantee or this Indenture otherwise than in accordance with the
terms of this Indenture.
Notwithstanding anything to the contrary in this Section 9.02, the
Issuer and its Subsidiaries may enter into and perform farmouts not complying
with Section 4.31(a) of this Indenture if consent to such farmout is obtained
from the Holders of not less than a majority of the then outstanding principal
amount of the then outstanding Notes.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect; PROVIDED, HOWEVER, that this
Section 9.03 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Issuer received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver. An amendment, supplement
or waiver becomes effective upon receipt by the Trustee of such Officers'
Certificate and evidence of consent by the Holders of the requisite percentage
in principal amount of outstanding Notes.
The Issuer may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which Record Date shall be at least 30 days prior to the
first solicitation of such consent. If a Record Date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such Record Date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date unless consents from Holders of the requisite percentage
in principal amount of outstanding Notes required hereunder for the
effectiveness of such consents shall have also been given and not revoked within
such 90 day period.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Issuer or the Trustee so
determines, the Issuer in exchange for the Note shall issue and the Trustee upon
receipt of a written order in the form of an Officers' Certificate shall
authenticate a new Note that reflects the changed terms.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, Etc.
The Trustee shall execute any amendment, supplement or waiver approved
by the Board of Directors of the Issuer and authorized pursuant to this Article
Nine; PROVIDED, HOWEVER, that the Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. In executing such amendment,
supplement or waiver the Trustee shall be entitled to receive security and
indemnity satisfactory to it, and shall be fully protected in relying upon an
Opinion of Counsel and an Officers' Certificate of the Issuer, each stating that
(a) no Event of Default shall occur as a result of such amendment, supplement or
waiver, (b) such amendment, supplement or waiver has been approved by the Board
of Directors of the Issuer and (c) the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
58
this Indenture, PROVIDED the legal counsel delivering such Opinion of Counsel
may rely as to matters of fact on one or more Officers' Certificates of the
Issuer. Such Opinion of Counsel shall not be an expense of the Trustee.
SECTION 9.07. EVIDENCE OF AMENDMENTS, SUPPLEMENTS, WAIVERS.
This Indenture, the Notes, the Guarantees, the Intercreditor Agreement
and the Security Documents may only be amended, supplemented or waived by a
written instrument duly signed as contemplated in Section 9.01 or 9.02.
SECTION 9.08. AMENDMENT OF INTERCREDITOR AGREEMENT.
The provisions of the Intercreditor Agreement and the provisions of
this Indenture cannot be amended in a manner adverse to the Senior Credit
Facility Representative or the Senior Credit Facility Lenders without the
written consent of the Senior Credit Facility Representative.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control; PROVIDED, HOWEVER, that this Section 10.01
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.
SECTION 10.02. NOTICES.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Issuer or any Subsidiary Guarantor:
c/o
Abraxas Petroleum Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
if to the Trustee:
U.S. Bank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Senior Credit Facility Representative, as specified in
the Intercreditor Agreement.
Each of the Issuer, the Subsidiary Guarantors and the Trustee by
written notice to the others may designate additional or different addresses for
notices to such Person. A different identity and/or address for the Senior
Credit
59
Facility Representative may be designated by the Trustee being given a Senior
Credit Facility Representative Change Notice setting forth such different
identity and/or address. Any notice or communication to the Issuer, the
Subsidiary Guarantors, the Trustee or the Senior Credit Facility Representative
shall be deemed to have been given or made as of the date so delivered if hand
delivered; when receipt is acknowledged, if faxed; and five (5) calendar days
after mailing if sent by registered or certified mail, postage prepaid (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar ten (10) days prior to such mailing and
shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it, except for notices or communications
to the Trustee which shall be effective only upon actual receipt thereof.
SECTION 10.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Issuer, the Subsidiary Guarantors, the Trustee, the Registrar and any other
Person shall have the protection of TIA Section 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuer to the Trustee to take
any action under this Indenture, the Issuer shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent to be performed by the Issuer, if
any, provided for in this Indenture relating to the proposed action
have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Issuer,
if any, provided for in this Indenture relating to the proposed action
have been complied with (which counsel, as to factual matters, may rely
on an Officers' Certificate).
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is reasonably necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
SECTION 10.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
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SECTION 10.07. LEGAL HOLIDAYS.
A "LEGAL HOLIDAY" used with respect to a particular place of payment is
a Saturday, a Sunday or a day on which banking institutions in
New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 10.08. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Each of the
parties hereto agrees to submit to the non-exclusive jurisdiction of the
competent courts of the State of New York sitting in the City of New York in any
action or proceeding arising out of or relating to this Indenture.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Issuer, any Subsidiary Guarantor or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 10.10. NO PERSONAL LIABILITY.
No director, officer, employee or stockholder, as such, of the Issuer
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Issuer or any Subsidiary Guarantor under the Notes, this
Indenture, the Security Documents or the Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
of Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
SECTION 10.11. SUCCESSORS.
All agreements of the Issuer and the Subsidiary Guarantors in this
Indenture, the Intercreditor Agreement, the Notes and the Guarantees shall bind
their successors. Except as permitted under Article Five, neither the Issuer nor
any Subsidiary Guarantor may assign any or all of its rights hereunder. All
agreements of the Trustee in this Indenture and the Intercreditor Agreement
shall bind its successors.
SECTION 10.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 10.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
SECTION 10.14. INDEPENDENCE OF COVENANTS.
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
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SECTION 10.15. CURRENCY INDEMNITY.
This is an international loan transaction in which the specification of
U.S. Legal Tender is of the essence, and the stipulated currency shall in each
instance be the currency of account and payment in all instances. A payment
obligation in U.S. Legal Tender hereunder or under the Notes or Guarantees (the
"ORIGINAL CURRENCY") shall not be discharged by an amount paid in another
currency (the "OTHER CURRENCY"), whether pursuant to any judgment expressed in
or converted into any Other Currency or in another place except to the extent
that such tender or recovery results in the effective receipt by the Holders of
the full amount of the Original Currency payable to it under this Indenture or
the Notes or Guarantees. If for the purpose of obtaining judgment in any court
it is necessary to convert a sum due hereunder in the Original Currency into the
Other Currency, the rate of exchange that shall be applied shall be that at
which in accordance with normal banking procedures the Trustee could purchase
Original Currency at its principal office with the Other Currency on the
Business Day next preceding the day on which such judgment is rendered. The
obligation of the Issuer and the Subsidiary Guarantors in respect of any such
sum due from them to the Trustee or any Holder hereunder or under any other
document (in this Section 10.15 called an "ENTITLED PERSON") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder in the
Other Currency such Entitled Person may in accordance with normal banking
procedures purchase and transfer the Original Currency to New York with the
amount of the judgment currency so adjudged to be due; and the Issuer and the
Subsidiary Guarantors each hereby, as a separate obligation and notwithstanding
any such judgment, agrees jointly and severally to indemnify such Entitled
Person against, and to pay such Entitled Person on demand, in the Original
Currency, the amount (if any) by which the sum originally due to such Entitled
Person in the Original Currency hereunder exceeds the amount of the Original
Currency so purchased and transferred.
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. UNCONDITIONAL GUARANTEE.
Subject to the provisions of this Article Eleven, each Subsidiary
Guarantor, if any, hereby, jointly and severally, unconditionally and
irrevocably guarantees, on a senior basis, except as provided in the
Intercreditor Agreement (such guarantee to be referred to herein as a
"GUARANTEE") to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes, the Security Documents or the
obligations of the Issuer or any Subsidiary Guarantor to the Holders or the
Trustee hereunder or thereunder, that: (a) the principal of, premium, if any,
and interest on the Notes shall be duly and punctually paid in full when due,
whether at the Maturity Date, upon repurchase at the option of Holders pursuant
to any provisions of the Notes relating thereto, by acceleration or otherwise,
and interest on the overdue principal and (to the extent permitted by law)
interest, if any, on the Notes and all other obligations of the Issuer or the
Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee under Section 7.07 hereof) and all other
obligations shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, the same shall
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed, or failing performance of
any other obligation of the Issuer to the Holders under this Indenture or under
the Notes, for whatever reason, each Subsidiary Guarantor shall be obligated
jointly or severally to pay or to perform, or cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall entitle
the Holders of Notes to accelerate the obligations of the Subsidiary Guarantors
hereunder in the same manner and to the same extent as the obligations of the
Issuer.
Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes, the Security Documents or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, any release of
any other Subsidiary Guarantor, the recovery of any judgment against the Issuer,
any action to enforce the same, whether or not a Guarantee is affixed to any
particular Note, or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each of the Subsidiary
Guarantors hereby waives the benefit of diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuer, any right to require a proceeding first against the Issuer,
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protest, notice and all demands whatsoever and covenants that its Guarantee
shall not be discharged except by complete performance of the obligations
contained in the Notes, this Indenture and this Guarantee. This Guarantee is a
guarantee of payment and not of collection. If any Holder or the Trustee is
required by any court or otherwise to return to the Issuer or to any Subsidiary
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Issuer or such Subsidiary Guarantor, any amount paid
by the Issuer or such Subsidiary Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor further agrees that, as between it,
on the one hand, and the Holders of Notes and the Trustee, on the other hand,
(a) subject to this Article Eleven, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six hereof for the purposes of
this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (b) in the event of any acceleration of such obligations as provided in
Article Six hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Guarantee.
No stockholder, officer, director, employee or incorporator, past,
present or future, or any Subsidiary Guarantor, as such, shall have any personal
liability under this Guarantee solely by reason of his, her or its status as
such stockholder, officer, director, employee or incorporator.
Each Subsidiary Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in a prorata amount based on the net assets of such Subsidiary
Guarantor, determined in accordance with GAAP.
SECTION 11.02. LIMITATIONS ON GUARANTEES.
The obligations of each Subsidiary Guarantor in the United States under
its Guarantee will be limited to the maximum amount which, after giving effect
to all other contingent and fixed liabilities of such Subsidiary Guarantor and
after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Guarantee or pursuant to its contribution
obligations under this Indenture, will result in the obligations of such
Subsidiary Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.
SECTION 11.03. EXECUTION AND DELIVERY OF GUARANTEE.
To further evidence the Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Guarantee,
substantially in the form of EXHIBIT E herein, shall be endorsed on each Note
authenticated and delivered by the Trustee. Such Guarantee shall be executed on
behalf of each Subsidiary Guarantor by either manual or facsimile signature of
an Officer of each Subsidiary Guarantor, who, in each case, shall have been duly
authorized to so execute by all requisite corporate action. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is not
affixed to any particular Note.
Each of the Subsidiary Guarantors hereby agrees that its Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.
If an Officer of a Subsidiary Guarantor whose signature is on this
Indenture or a Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee is endorsed or at any time
thereafter, such Subsidiary Guarantor's Guarantee of such Note shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of each Subsidiary Guarantor.
SECTION 11.04. RELEASE OF A SUBSIDIARY GUARANTOR.
(a) If no Default exists or would exist under this Indenture, upon
the sale or disposition of all of the Capital Stock of a Subsidiary Guarantor by
the Issuer or a Subsidiary of the Issuer in a transaction constituting an Asset
Sale, the Net Cash Proceeds of which are applied in accordance with Section
4.16, such Subsidiary Guarantor and each Subsidiary of such Subsidiary Guarantor
that is also a Subsidiary Guarantor shall be deemed released from all
obligations under this Article Eleven without any further action required on the
part of the Trustee or any Holder and all Collateral owned by such Person shall
be released to the extent set forth in Section 12.04; PROVIDED, HOWEVER, that
each such Subsidiary
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Guarantor is sold or disposed of in accordance with this Indenture. Any
Subsidiary Guarantor not so released shall remain or be liable under its
Guarantee as provided in this Article Eleven.
(b) The Trustee shall deliver to the Issuer an appropriate instrument
evidencing the release of a Subsidiary Guarantor under its Guarantee endorsed on
the Notes and under this Article Eleven upon receipt of a written request by the
Issuer or such Subsidiary Guarantor accompanied by an Officers' Certificate and
an Opinion of Counsel certifying as to the compliance with this Section 11.04,
PROVIDED the legal counsel delivering such Opinion of Counsel may rely as to
matters of fact on one or more Officers' Certificates of the Issuer.
Except as set forth in Articles Four and Five and this Section 11.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Issuer or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Issuer or another Subsidiary Guarantor.
SECTION 11.05. WAIVER OF SUBROGATION.
Until this Indenture is discharged and all of the Notes are discharged
and paid in full, each Subsidiary Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Issuer that arise from the existence, payment, performance or
enforcement of the ISSUER'S obligations under the Notes or this Indenture and
such Subsidiary Guarantor's obligations under its Guarantee and this Indenture,
in any such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders against the Issuer, whether or
not such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuer, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Subsidiary Guarantor in violation of the
preceding sentence and any amounts owing to the Trustee or the Holders of Notes
under or in connection with the Notes, this Indenture, or any other document or
instrument delivered under or in connection with such agreements or instruments,
shall not have been paid in full, such amount shall have been deemed to have
been paid to such Subsidiary Guarantor for the benefit of, and held in trust for
the benefit of, the Trustee or the Holders and shall forthwith be paid to the
Trustee for the benefit of itself or such Holders to be credited and applied to
the obligations in favor of the Trustee or the Holders, as the case may be,
whether matured or unmatured, in accordance with the terms of this Indenture.
Each Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 11.05 is knowingly made in contemplation of
such benefits.
SECTION 11.06. IMMEDIATE PAYMENT.
Each Subsidiary Guarantor agrees to make immediate payment to the
Trustee on behalf of the Holders of all Obligations owing or payable to the
respective Holders upon receipt of a demand for payment therefor by the Trustee
to such Subsidiary Guarantor in writing.
SECTION 11.07. NO SET-OFF.
Each payment to be made by a Subsidiary Guarantor hereunder in respect
of the Obligations guaranteed by it shall be payable in the currency or
currencies in which such Obligations are denominated, and shall be made without
set-off, counterclaim, reduction or diminution of any kind or nature.
SECTION 11.08. OBLIGATIONS ABSOLUTE.
The obligations of each Subsidiary Guarantor hereunder are and shall be
absolute and unconditional and any monies or amounts expressed to be owing or
payable by each Subsidiary Guarantor hereunder which may not be recoverable from
such Subsidiary Guarantor on the basis of a Guarantee shall be recoverable from
such Subsidiary Guarantor as a primary obligor and principal debtor in respect
thereof.
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SECTION 11.09. OBLIGATIONS CONTINUING.
The obligations of each Subsidiary Guarantor hereunder shall be
continuing and shall remain in full force and effect until all the Obligations
of the Issuer under this Indenture and the Notes have been paid and satisfied in
full. Each Subsidiary Guarantor agrees with the Trustee that it will from time
to time deliver to the Trustee suitable written acknowledgments of its continued
liability hereunder and under any other instrument or instruments in such form
as counsel to the Trustee may advise and as will prevent any action brought
against it in respect of any default hereunder being barred by any statute of
limitations now or hereafter in force and, in the event of the failure of a
Subsidiary Guarantor so to do, it hereby irrevocably appoints the Trustee the
attorney and agent of such Subsidiary Guarantor to make, execute and deliver
such written acknowledgment or acknowledgments or other instruments as may from
time to time become necessary or advisable, in the judgment of the Trustee, on
the advice of counsel, to fully maintain and keep in force the liability of such
Subsidiary Guarantor hereunder; PROVIDED, HOWEVER, that notwithstanding anything
herein to the contrary, nothing in this Section 11.09 shall be construed to
obligate the Trustee to take any action not otherwise allowed by this Indenture
or the TIA, and under no circumstances shall Trustee be required to take any
actions in compliance with this Section 11.09 which would incur any liability
whatsoever under the terms of this Indenture or otherwise except to the extent
that it is provided with security or indemnity satisfactory to it, nor shall
Trustee's actions hereunder be deemed to be a breach of any other provision of
this Indenture.
SECTION 11.10. OBLIGATIONS NOT REDUCED.
The obligations of each Subsidiary Guarantor hereunder shall not be
satisfied, reduced or discharged solely by the payment of such principal,
premium, if any, interest, fees and other monies or amounts as may at any time
prior to discharge of this Indenture pursuant to Article Eight be or become
owing or payable under or by virtue of or otherwise in connection with the Notes
or this Indenture.
SECTION 11.11. OBLIGATIONS REINSTATED.
The obligations of each Subsidiary Guarantor hereunder shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced the obligations of any Subsidiary
Guarantor hereunder (whether such payment shall have been made by or on behalf
of the Issuer or by or on behalf of a Subsidiary Guarantor) is rescinded or
reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation
or reorganization of the Issuer or any Subsidiary Guarantor or otherwise, all as
though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Issuer is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of the Issuer, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Subsidiary Guarantor as provided herein.
SECTION 11.12. OBLIGATIONS NOT AFFECTED.
The obligations of each Subsidiary Guarantor hereunder shall not be
affected, impaired or diminished in any way by any act, omission, matter or
thing whatsoever, occurring before, upon or after any demand for payment
hereunder (and whether or not known or consented to by any Subsidiary Guarantor
or any of the Holders) which, but for this provision, might constitute a whole
or partial defense to a claim against any Subsidiary Guarantor hereunder or
might operate to release or otherwise exonerate any Subsidiary Guarantor from
any of its obligations hereunder or otherwise affect such obligations, whether
occasioned by default of any of the Holders or otherwise, including, without
limitation:
(a) any limitation of status or power, disability, incapacity
or other circumstance relating to the Issuer or any other Person,
including any insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, winding-up or other proceeding
involving or affecting the Issuer or any other Person;
(b) any irregularity, defect, unenforceability or invalidity
in respect of any indebtedness or other obligation of the Issuer or any
other Person under this Indenture, the Notes or any other document or
instrument;
(c) any failure of the Issuer, whether or not without fault on
its part, to perform or comply with any of the provisions of this
Indenture, any Security Document or the Notes, or to give notice
thereof to a Subsidiary Guarantor;
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(d) the taking or enforcing or exercising or the refusal or
neglect to take or enforce or exercise any right or remedy from or
against the Issuer or any other Person or their respective assets or
the release or discharge of any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Issuer or any other Person;
(f) any change in the time, manner or place of payment of, or
in any other term of, any of the Notes, or any other amendment,
variation, supplement, replacement or waiver of, or any consent to
departure from, any of the Notes, the Intercreditor Agreement, any
Security Document or this Indenture, including, without limitation, any
increase or decrease in the principal amount of or premium, if any, or
interest on any of the Notes;
(g) any change in the ownership, control, name, objects,
businesses, assets, capital structure or constitution of the Issuer or
a Subsidiary Guarantor;
(h) any merger or consolidation of the Issuer or a Subsidiary
Guarantor with any Person or Persons, except as provided in Section
11.04;
(i) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction by any present or future
action of any governmental authority or court amending, varying,
reducing or otherwise affecting, or purporting to amend, vary, reduce
or otherwise affect, any of the Obligations of the Issuer under this
Indenture or the Notes or the obligations of a Subsidiary Guarantor
under its Guarantee; and
(j) any other circumstance, other than the release of the
Subsidiary Guarantor pursuant to Section 11.04 or irrevocable payment
of such Obligations, that might otherwise constitute a legal or
equitable discharge or defense of the Issuer under this Indenture or
the Notes or of a Subsidiary Guarantor in respect of its Guarantee
hereunder.
SECTION 11.13. WAIVER.
Without in any way limiting the provisions of Section 11.01 hereof,
each Subsidiary Guarantor hereby waives notice of acceptance hereof, notice of
any liability of any Subsidiary Guarantor hereunder, notice or proof of reliance
by the Holders upon the obligations of any Subsidiary Guarantor hereunder, and
diligence, presentment, demand for payment on the Issuer, protest, notice of
dishonor or non-payment of any of the Obligations of the Issuer under this
Indenture or the Notes, or other notice or formalities to the Issuer or any
Subsidiary Guarantor of any kind whatsoever.
SECTION 11.14. NO OBLIGATION TO TAKE ACTION AGAINST THE ISSUER.
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations of the ISSUER under this Indenture or the Notes or
against the ISSUER or any other Person or any Property of the ISSUER or any
other Person before the Trustee is entitled to demand payment and performance by
any or all Subsidiary Guarantors of their liabilities and obligations under
their Guarantees or under this Indenture.
SECTION 11.15. DEALING WITH THE ISSUER AND OTHERS.
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Subsidiary
Guarantor hereunder and without the consent of or notice to any Subsidiary
Guarantor, may
(a) grant time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
ISSUER or any other Person;
(b) take or abstain from taking security or collateral from
the ISSUER or any other Person or from perfecting security or
collateral of the ISSUER or any other Person;
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(c) release, discharge, compromise, realize, enforce or
otherwise deal with or do any act or thing in respect of (with or
without consideration) any and all collateral, mortgages or other
security given by the ISSUER or any third party with respect to the
obligations or matters contemplated by this Indenture or the Notes;
(d) accept compromises or arrangements from the ISSUER;
(e) apply all monies at any time received from the ISSUER or
from any security upon such part of the Obligations of the ISSUER under
this Indenture and the Notes as the Holders may see fit or change any
such application in whole or in part from time to time as the Holders
may see fit; and
(f) otherwise deal with, or waive or modify their right to
deal with, the ISSUER and all other Persons and any security as the
Holders or the Trustee may see fit.
SECTION 11.16. DEFAULT AND ENFORCEMENT.
Subject to the terms of the Intercreditor Agreement, if any Subsidiary
Guarantor fails to pay in accordance with Section 11.06 hereof, the Trustee may
proceed in its name as trustee hereunder in the enforcement of the Guarantee of
any such Subsidiary Guarantor and such Subsidiary Guarantor's obligations
thereunder and hereunder by any remedy provided by law, whether by legal
proceedings or otherwise, and to recover from such Subsidiary Guarantor the
obligations.
SECTION 11.17. ACKNOWLEDGMENT.
Each Subsidiary Guarantor hereby acknowledges communication of the
terms of this Indenture, the Intercreditor Agreement and the Notes and consents
to and approves of the same.
SECTION 11.18. COSTS AND EXPENSES.
Each Subsidiary Guarantor shall pay on demand by the Trustee any and
all costs, fees and expenses (including, without limitation, legal fees on a
solicitor and client basis) incurred by the Trustee, its agents, advisors and
counsel or any of the Holders in enforcing any of their rights under any
Guarantee.
SECTION 11.19. NO MERGER OR WAIVER; CUMULATIVE REMEDIES.
No Guarantee shall operate by way of merger of any of the obligations
of a Subsidiary Guarantor under any other agreement, including, without
limitation, this Indenture. No failure to exercise and no delay in exercising,
on the part of the Trustee or the Holders, any right, remedy, power or privilege
hereunder or under this Indenture or the Notes, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or under this Indenture or the Notes preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Guarantee and
under this Indenture, the Notes and any other document or instrument between a
Subsidiary Guarantor and/or the Issuer and the Trustee are cumulative and not
exclusive of any rights, remedies, powers and privilege provided by law.
SECTION 11.20. GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.
The obligations of each Subsidiary Guarantor under its Guarantee and
this Indenture are in addition to and not in substitution for any other
obligations to the Trustee or to any of the Holders in relation to this
Indenture or the Notes and any guarantees or security at any time held by or for
the benefit of any of them.
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ARTICLE TWELVE
SECURITY
SECTION 12.01. GRANT OF SECURITY INTEREST; REMEDIES.
(a) In order to secure the obligations of the Issuer hereunder and
the Guarantees, the Issuer hereby covenants to, and to cause each Subsidiary
Guarantor to, execute and deliver on or before the Issue Date, and from time to
time thereafter as appropriate, one or more Mortgages and other Security
Documents, as reasonably determined by the Trustee to obtain a Lien, but subject
to certain Permitted Liens, on all of the current and future Oil and Gas Assets
of the Issuer and its Subsidiaries, and substantially all other current and
future assets of the Issuer and the Subsidiary Guarantors. Subject to the
Intercreditor Agreement, each such Security Document, when executed and
delivered, shall be deemed hereby incorporated by reference herein to the same
extent and as fully as if set forth in their entirety at this place, and
reference is made hereby to each such Security Document for a more complete
description of the terms and provisions thereof. Each Holder, by accepting a
Note, agrees to all of the terms and provisions of each Security Document and
the Trustee agrees to all of the terms and provisions of each Security Document.
(b) If (i) the Notes become due and payable prior to the Maturity
Date or are not paid in full at the Maturity Date or (ii) an Event of Default
has occurred and is continuing, the Trustee may take all actions it deems
necessary or appropriate, including, but not limited to, foreclosing upon the
Collateral in accordance with the Security Documents and applicable law,
subject, however, to the terms of the Intercreditor Agreement. Subject to the
terms of the Intercreditor Agreement, the proceeds received from the sale of any
Collateral that is the subject of a foreclosure or collection suit shall be
applied in accordance with the priorities set forth in Section 6.10. Subject to
the terms of the Intercreditor Agreement, the Trustee has the power to institute
and maintain such suits and proceedings as it may deem expedient to prevent
impairment of, or to preserve or protect its and the Holders' interest in, the
Collateral in the manner set forth in this Indenture.
(c) Unless an Event of Default shall have occurred and be continuing,
the Issuer and the Subsidiary Guarantors will have the right to remain in
possession and retain exclusive control of the Collateral securing the Notes
(other than any cash, securities, obligations and Cash Equivalents constituting
part of the Collateral and deposited with the Trustee in the Collateral Account
or with the Senior Credit Facility Representative and other than as set forth in
the Security Documents), to freely operate the Collateral and to collect, invest
and dispose of any income thereon or therefrom.
SECTION 12.02. RECORDING AND OPINIONS.
(a) The Issuer shall take or cause to be taken all action required to
perfect, maintain, preserve and protect the Lien in the Collateral granted by
the Security Documents, including, without limitation, the filing of financing
statements, continuation statements and any instruments of further assurance, in
such manner and in such places as may be required by law fully to preserve and
protect the rights of the Holders and the Trustee under this Indenture and the
Security Documents to all property comprising the Collateral. The Issuer shall
from time to time promptly pay all financing and continuation statement
recording and/or filing fees, charges and taxes relating to this Indenture, the
Security Documents, any amendments thereto and any other instruments of further
assurance required pursuant to the Security Documents.
(b) The Issuer shall, to the extent required by the TIA, furnish to
the Trustee, at closing and at such other time as required by Section 314(b) of
the TIA, Opinion(s) of Counsel either (i) substantially to the effect that, in
the opinion of such counsel, this Indenture and the grant of a Lien in the
Collateral intended to be made by the Security Documents and all other
instruments of further assurance, including, without limitation, financing
statements, have been properly recorded and filed to the extent necessary to
perfect the Lien in the Collateral created by the Security Documents (other than
as stated in such opinion) and reciting the details of such action, and stating
that as to the Lien created pursuant to the Security Documents, such recordings
and filings are the only recordings and filings necessary to give notice thereof
and that no re-recordings or refilings are necessary to maintain such notice
(other than as stated in such opinion), or (ii) to the effect that, in the
opinion of such counsel, no such action is necessary to perfect such Lien. In
rendering such opinions, legal counsel may rely on certificates of officers of
the Issuer and/or the Subsidiaries with respect to factual matters.
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(c) The Issuer shall furnish to the Trustee on March 15th in each
year, beginning with March 15, 2003, an Opinion of Counsel, dated as of such
date, either (i)(A) stating that, in the opinion of such counsel, all required
action has been taken with respect to the recording, filing, re-recording and
refiling of all supplemental indentures, financing statements, continuation
statements and other documents as is necessary to maintain the Lien of this
Indenture and the Security Documents (other than as stated in such opinion) and
reciting with respect to the Lien in the Collateral the details of such action
or referring to prior Opinions of Counsel in which such details are given, and
(B) stating that, based on relevant laws as in effect on the date of such
Opinion of Counsel, all financing statements, continuation statements and other
documents have been executed and filed that are necessary as of such date and
during the succeeding 24 months fully to maintain the Lien of the Holders and
the Trustee hereunder and under the Security Documents with respect to the
Collateral (other than as stated in such opinion), or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Lien. In
rendering such opinions, legal counsel may rely on certificates of officers of
the ISSUER and/or the Subsidiaries with respect to factual matters.
SECTION 12.03. RELEASE OF COLLATERAL.
(a) The Trustee, in its capacity as secured party under the Security
Documents, shall not at any time release Collateral from the Lien created by
this Indenture and the Security Documents unless such release is in accordance
with the provisions of this Indenture and the Security Documents or required by
the terms of the Intercreditor Agreement.
(b) Except as provided in the Intercreditor Agreement, at any time
when an Event of Default shall have occurred and be continuing, the Trustee
shall not release any Liens granted for the benefit of the Holders and no
release of Collateral given at such time pursuant to the provisions of this
Indenture and the Security Documents shall be effective as against the Holders
of the Notes.
(c) The release of any Collateral from the terms of the Security
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Security Documents. To the extent
applicable, the Issuer shall cause TIA Section 314(d) relating to the release of
property from the Lien of the Security Documents and relating to the
substitution therefor of any property to be subjected to the Lien of the
Security Documents to be complied with. Any certificate or opinion required by
TIA Section 314(d) may be made by an Officer of the Issuer, except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee. A Person is "independent" if
such Person (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in Issuer, any of its
Subsidiaries or in any Affiliate of the Issuer and (c) is not an officer,
employee, promoter, underwriter, trustee, partner or director or Person
performing similar functions to any of the foregoing for the Issuer or any of
its Subsidiaries. The Trustee shall be entitled to receive and rely upon a
certificate provided by any such Person confirming that such Person is
independent within the foregoing definition.
SECTION 12.04. SPECIFIED RELEASES OF COLLATERAL.
(a) The Issuer and the Subsidiary Guarantors shall be entitled to
obtain a full release of all of the Collateral from the Lien of this Indenture
and of the Security Documents or an assignment of such Lien to a Person
designated by the Issuer upon compliance with the conditions precedent set forth
in Section 8.01 for satisfaction and discharge of this Indenture or for Legal
Defeasance or Covenant Defeasance pursuant to Section 8.01. Upon delivery by the
Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel,
each to the effect that such conditions precedent have been complied with (and
which may be the same Officers' Certificate and Opinion of Counsel required by
Article Eight), the Trustee shall forthwith take all necessary action (at the
request of and the expense of the Issuer) to release and reconvey to the
relevant Person all of the Collateral, and shall deliver such Collateral in its
possession to the Issuer, including, without limitation, the execution and
delivery of releases and satisfactions wherever required.
(b) Upon compliance by the Issuer with the conditions set forth below
in respect of any sale, transfer or other disposition, the Trustee shall release
the Released Interests from the Lien of this Indenture and the Security
Documents and reconvey the Released Interests to the Issuer or the grantor of
the Lien on such property. The ISSUER will have the right to obtain a release of
items of Collateral (the "RELEASED INTERESTS") subject to any sale, transfer or
other disposition, or owned by a Subsidiary the Capital Stock of which is sold
in compliance with the terms of this
69
Indenture such that it ceases to be a Subsidiary, or that is the subject of a
farmout allowed by the terms of Section 4.31, upon compliance with the condition
that the Issuer deliver to the Trustee the following:
(i) a written notice in the form of an Officers' Certificate
requesting the release of Released Interests:
(A) describing the proposed Released Interests,
(B) specifying the value of such Released Interests or such
Capital Stock, as the case may be, on a date within 60 days of the Issuer notice
(the "VALUATION DATE"),
(C) stating that the consideration to be received is at least
equal to the fair market value of the Released Interests, provided that this
clause (C) is not applicable with respect to a release to be given in connection
with a farmout permitted pursuant to Section 4.31,
(D) stating that the release of such Released Interests will
not interfere with the Trustee's ability to realize the value of the remaining
Collateral and will not impair the maintenance and operation of the remaining
Collateral,
(E) confirming the sale or exchange of, or an agreement to
sell or exchange, such Released Interests or such Capital Stock, as the case may
be, is a bona fide sale to or exchange with a Person that is not an Affiliate of
the ISSUER or, in the event that such sale or exchange is to or with a Person
that is an Affiliate, confirming that such sale or exchange is made in
compliance with the provisions set forth in Section 4.11, provided that this
clause (E) is not applicable with respect to a release to be given in connection
with a farmout permitted pursuant to Section 4.31,
(F) in the event there is to be a contemporaneous substitution
of property for the Collateral subject to the sale, transfer or other
disposition, specifying the property intended to be substituted for the
Collateral to be disposed of, and
(G) with respect to a release to be given in connection with a
farmout permitted pursuant to Section 4.31, stating that the farmout to which
the Released Interests are (or are to be) subject complies with Section 4.31 of
this Indenture,
(ii) an Officers' Certificate stating that:
(A) such sale, transfer or other disposition complies with the
terms and conditions of this Indenture, including the provisions set forth in
Sections 4.10, 4.11, 4.14, 4.16 and 4.31, to the extent any of the foregoing are
applicable,
(B) all Net Cash Proceeds from the sale, transfer or other
disposition of any of the Released Interests or such Capital Stock, as the case
may be, will be applied pursuant to the provisions of this Indenture in respect
of the deposit of proceeds into the Collateral Account as contemplated by this
Indenture and in respect of Asset Sales, to the extent applicable, provided that
this clause (B) is not applicable with respect to a release to be given in
connection with a farmout permitted pursuant to Section 4.31,
(C) there is no Default or Event of Default in effect or
continuing on the date thereof or the date of such sale, transfer or other
disposition,
(D) the release of the Collateral will not result in a Default
or Event of Default under this Indenture,
(E) upon the delivery of such Officers' Certificate, all
conditions precedent in this Indenture relating to the release in question will
have been complied with,
(F) such sale, transfer or other disposition is not between
the Issuer and any of its Subsidiaries or between Subsidiaries, provided that
this clause (F) is not applicable with respect to a release to be given in
connection with a farmout permitted pursuant to Section 4.31, and
70
(G) such sale, transfer or other disposition is not a sale,
transfer or other disposition that is excluded from the definition of "Asset
Sale" because it was a sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of the Issuer in a transaction which was
made in compliance with the provisions of Section 5.01, provided that this
clause (G) is not applicable with respect to a release to be given in connection
with a farmout permitted pursuant to Section 4.31, and
(iii) all documentation required by the TIA, if any, prior to the
release of Collateral by the Trustee and, in the event there is
to be a contemporaneous substitution of property for the
Collateral subject to such sale, transfer or other disposition,
all documentation necessary to effect the substitution of such
new Collateral.
(c) Notwithstanding the provisions of Section 12.04(b), so long as no
Event of Default shall have occurred and be continuing, the ISSUER may, without
satisfaction of the conditions set forth in Section 12.04(b) above, all to the
extent consistent with Sections 4.03, 4.05, and 4.07: (i) sell or otherwise
dispose of any equipment or inventory subject to the Lien of this Indenture and
the Security Documents, which may have become worn out or obsolete, (ii)
abandon, terminate, cancel, release or make alterations in or substitutions of
any leases or contracts subject to the Lien of this Indenture or any of the
Security Documents, (iii) surrender or modify any franchise, license or permit
subject to the Lien of this Indenture or any of the Security Documents which it
may own or under which it may be operating, (iv) alter, repair, replace, change
the location or position of and add to its structures, machinery, systems,
equipment, fixtures and appurtenances, (v) demolish, dismantle, tear down or
scrap any obsolete Collateral or abandon any portion thereof, (vi) grant leases
or sub-leases in respect of real property to the extent the foregoing does not
constitute an Asset Sale, and (vii) dispose of Hydrocarbons or other mineral
products for value in the ordinary course of business all in accordance with the
terms of the TIA.
SECTION 12.05. RIGHTS OF PURCHASERS; FORM AND SUFFICIENCY OF RELEASE.
No purchaser or grantee of any property or rights purporting to be
released herefrom shall be bound to ascertain the authority of the Trustee to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Issuer or any Subsidiary be under any obligation to
ascertain or inquire into the authority of the Issuer or such Subsidiary to make
such sale or other disposition. In the event that any Person has sold,
exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise
dispose of any portion of the Collateral that may be sold, exchanged or
otherwise disposed of, and the Issuer or any Subsidiary makes written request to
the Trustee to furnish a written disclaimer, release or quit-claim of any
interest in such property or rights under this Indenture and the Security
Documents, the Trustee, in its capacity as secured party under the Security
Documents, shall execute, acknowledge and deliver to the Issuer or such
Subsidiary (in proper form) such an instrument promptly after satisfaction of
the conditions set forth herein for delivery of any such release.
Notwithstanding the preceding sentence, all purchasers and grantees of any
property or rights purporting to be released herefrom shall be entitled to rely
upon any release executed by the Trustee hereunder as sufficient for the purpose
of this Indenture and the Security Documents and as constituting a good and
valid release of the property therein described from the Lien of this Indenture
or of the Security Documents.
SECTION 12.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE SECURITY DOCUMENTS.
Subject to the provisions of the applicable Security Document and to
the terms of the Intercreditor Agreement, (a) the Trustee may, in its sole
discretion and without the consent of the Holders, take all actions it deems
necessary or appropriate in order to (i) enforce any of the terms of the
Security Documents and (ii) collect and receive any and all amounts payable in
respect of the Obligations of the Issuer hereunder and (b) the Trustee shall
have power to institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any act that may
be unlawful or in violation of the Security Documents or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Collateral
(including the power to institute and maintain suits or proceedings to restrain
the enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest thereunder or be prejudicial to the interests of
the Holders or of the Trustee).
71
SECTION 12.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
THE SECURITY DOCUMENTS.
The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders in accordance with the provisions of
Section 6.10 and the other provisions of this Indenture.
SECTION 12.08. USE OF TRUST MONEYS.
The Net Cash Proceeds associated with any Asset Sale and any Net Cash
Proceeds associated with any sale, transfer or other disposition of Collateral,
to the extent such sale, transfer or other disposition is not an "Asset Sale" by
virtue of clause (vi) of the definition thereof, insurance proceeds and
condemnation (or similar) proceeds with respect to any Collateral shall be
deposited (A) so long as any Indebtedness under the Senior Credit Agreement or
Qualified Senior Affiliate Indebtedness remains outstanding, with the Senior
Credit Facility Representative in accordance with the terms of the Intercreditor
Agreement, and (B) otherwise into a securities account maintained by the Trustee
at its Corporate Trust Office or at any securities intermediary selected by the
Trustee having a combined capital and surplus of at least $250,000,000 and
having a long-term debt rating of at least "A3" by ▇▇▇▇▇'▇ and at least "A-" by
S&P styled the "Abraxas Collateral Account" (such account being the "COLLATERAL
ACCOUNT") which shall be under the control (as such term is defined in Article 9
of the Uniform Commercial Code in effect in the State of New York) of the Senior
Credit Facility Representative so long as any Indebtedness under the Senior
Credit Agreement or Qualified Senior Affiliate Indebtedness remains outstanding,
and thereafter, under the exclusive dominion and control of the Trustee. All
amounts on deposit in the Collateral Account shall be treated as financial
assets and cash funds on deposit in the Collateral Account may be invested by
the Trustee, at the written direction of the Issuer, in Cash Equivalents;
PROVIDED, HOWEVER, in no event shall the Issuer have the right to withdraw funds
or assets from the Collateral Account except in compliance with the terms of
this Indenture, and all assets credited to the Collateral Account shall be
subject to a Lien in favor of the Trustee and the Holders.
Any such funds deposited with the Trustee may be released to the Issuer by
Issuer delivering to the Trustee an Officers' Certificate stating:
(1) no Event of Default has occurred and is continuing as of the date
of the proposed release; and
(2) (A) if such Trust Moneys represent Collateral Proceeds in respect
of an Asset Sale, that such funds are otherwise being applied in accordance
with Section 4.16, or (B) if such Trust Moneys represent proceeds in
respect of a casualty, expropriation or taking, that such funds will be
applied to repair or replace property subject of a casualty or condemnation
or reimburse the Issuer for amounts spent to repair or replace such
property and that attached thereto are invoices or other evidence
reflecting the amounts spent or to be spent, or (C) if such Trust Moneys
represent proceeds derived from any other manner, that such amounts are
being utilized in connection with business of the Issuer and its
Subsidiaries in compliance with the terms of this Indenture; and
(3) all conditions precedent in this Indenture relating to the release
in question have been complied with; and
(4) all documentation required by the TIA, if any, prior to the release
of such Trust Moneys by the Trustee has been delivered to the Trustee.
Notwithstanding the foregoing, (A) if the maturity of the Notes has been
accelerated, which acceleration has not been rescinded as permitted by this
Indenture, the Trustee shall apply the Trust Moneys credited to the Collateral
Account in the manner specified in Section 6.10 to the extent of such Trust
Moneys, (B) if the Issuer so elects, by giving written notice to the Trustee,
the Trustee shall apply Trust Moneys credited to the Collateral Account to the
payment of interest due on any interest payment date, and (C) if the Issuer so
elects, by giving written notice to the Trustee, the Trustee shall apply Trust
Moneys credited to Pay Down Debt.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
72
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
ABRAXAS PETROLEUM CORPORATION, as Issuer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Executive Vice President
SANDIA OIL & GAS CORPORATION, as a
Subsidiary Guarantor
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Vice President
WAMSUTTER HOLDINGS, INC., as a Subsidiary
Guarantor
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Vice President
SANDIA OPERATING CORP., as a Subsidiary
Guarantor
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Vice President
WESTERN ASSOCIATED ENERGY CORPORATION, as
a Subsidiary Guarantor
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Vice President
EASTSIDE COAL COMPANY, INC., as a
Subsidiary Guarantor
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Vice President
GREY WOLF EXPLORATION INC., as a
Subsidiary Guarantor
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
------------------------
Vice President
73
U.S. BANK, N.A., as Trustee
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇, III
-----------------
Vice President
74
EXHIBIT A-1
CUSIP No.: [ ]
ABRAXAS PETROLEUM CORPORATION
11-1/2% SECURED NOTE DUE 2007, SERIES A
No. [ ] $[ ]
ABRAXAS PETROLEUM CORPORATION, a Nevada corporation (the "ISSUER",
which term includes any successor entities), for value received, promises to pay
to [ ] or registered assigns the principal sum of [ ] Dollars on May 1,
2007.
Interest Payment Dates: May 1 and November 1, commencing May 1, 2003
Record Dates: April 15 and October 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
ABRAXAS PETROLEUM CORPORATION
ATTEST:
By:
----------------------------- ---------------------------------------
Secretary Name:
----------------------------------
Title:
---------------------------------
Certificate of Authentication
This is one of the 11-1/2% Secured Notes due 2007, Series A, referred
to in the within-mentioned Indenture.
U.S. BANK, N.A.,
as Trustee
By:
---------------------------------------
Authorized Signatory
Date of Authentication:
(REVERSE OF SECURITY)
11-1/2% Secured Note due 2007, Series A
1. INTEREST.
ABRAXAS PETROLEUM CORPORATION, a Nevada corporation
(the "ISSUER") promises to pay interest on the principal amount of this Note at
the rate per annum shown above, except to the extent a different rate of
interest is applicable as provided below. Interest on the Indebtedness evidenced
by the Notes will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Issue Date of the Note. The
Issuer will pay interest semi-annually in arrears on each Interest Payment Date,
commencing May 1, 2003. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
Upon and during the continuation of an Event of Default, interest on
the Notes will accrue at the rate of 16.5% per annum, unless the terms of the
Registration Rights Agreement referred to below apply and provide for a higher
rate of interest.
A1-1
The Issuer shall pay interest on overdue principal and to the extent
lawful on overdue installments of interest from time to time on demand at the
rate of 16.5% per annum, unless the Registration Rights Agreement provides for a
higher rate of interest.
2. METHOD OF PAYMENT. The Issuer shall pay interest on the Notes
(except defaulted interest pursuant to which Section 2.12 of the Indenture shall
apply) to the Persons who are the registered Holders at the close of business on
the Record Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration of exchange
(including pursuant to a Series B Exchange Offer (as defined in the Registration
Rights Agreement)) after such Record Date. Holders must surrender Notes to a
Paying Agent to collect principal payments. The Issuer shall pay principal and,
to the extent not prohibited by the terms of the Senior Credit Agreement or the
Intercreditor Agreement, interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. LEGAL
TENDER"). However, and subject to the same limitation, the Issuer may pay
principal and interest by check payable in such U.S. Legal Tender. The Issuer
may deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address. If the payment of interest in the form of cash is
prohibited by the terms of the Senior Credit Agreement or the Intercreditor
Agreement, that interest will be paid in the form of PIK Notes in a principal
amount equal to the amount of accrued and unpaid interest on the Notes plus an
additional 1% per annum accrued interest for the applicable period.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank, N. A. (the
"TRUSTEE") will act as Paying Agent and Registrar. The Issuer may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders.
4. INDENTURE AND INTERCREDITOR AGREEMENT. The Issuer issued the
Notes under an Indenture, dated as of January 23, 2003 (the "INDENTURE"), among
the Issuer, the Subsidiary Guarantors and the Trustee. This Note is one of a
duly authorized issue of Notes of the Issuer designated as its 11-1/2% Secured
Notes due 2007, Series A (the "INITIAL NOTES"). The Notes are limited in
aggregate principal amount to $118,250,000.00, plus such additional principal
amounts as may be necessary with respect to the issuance of PIK Notes for the
payment of interest. The Notes include the Initial Notes, the PIK Notes and the
11-1/2% Secured Notes due 2007, Series B (the "EXCHANGE NOTES"), issued in
exchange for the Initial Notes and any PIK Notes issued in lieu of payment of
interest on the Initial Notes pursuant to the Registration Rights Agreement. The
Initial Notes, the PIK Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and said Act for
a statement of them. The Notes are general obligations of the Issuer secured by
a second lien on the Collateral, subject, however, to the Permitted Liens.
Payment of the Notes and the Liens securing the Notes are subordinate to the
Indebtedness under the Senior Credit Agreement and the Liens securing such
Indebtedness pursuant to the terms of the Intercreditor Agreement.
5. HOLDERS BOUND TO TERMS OF THE INDENTURE. Each Holder, by
accepting a Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time in accordance with its
terms.
6. REDEMPTION. The Notes will be redeemable, at the Issuer's option,
in whole at any time or in part from time to time, upon not less than 30 nor
more than 60 days' notice, at the Redemption Prices (expressed as percentages of
the principal amount thereof) set forth below. If the Issuer redeems all or any
Notes, the Issuer must also pay all interest accrued and unpaid to the
applicable Redemption Date. The Redemption Prices for the Notes during the
indicated time periods are as follows:
PERIOD PERCENTAGE
------ ----------
On the Issue Date.................................................................100.0000%
On the next Business Day after the Issue Date......................................78.6266%
From the next Business Day after the Issue Date to 6 months after the Issue Date...80.0429%
From 6 months after the Issue Date to 12 months after the Issue Date...............91.4592%
From 12 months after the Issue Date to 18 months after the Issue Date..............97.1674%
A1-2
From 18 months after the Issue Date to 24 months after the Issue Date..............98.5837%
Thereafter .....................................................................100.0000%
Notwithstanding the foregoing, the Redemption Price for Notes to be
redeemed will in no event be less than the then current Adjusted Issue Price.
The Issuer can call Notes for redemption on the Issue Date without giving any
notice of redemption to the Holders, and Notes called for redemption on the
Issue Date will be deemed not to have accrued interest.
7. NOTICE OF REDEMPTION. With the exception of Notes being redeemed
on the Issue Date, as provided above, notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Issuer defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. OFFER TO PURCHASE. Section 4.15 of the Indenture provides that,
upon the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Issuer will make an offer
to purchase the Notes in accordance with the procedures set forth in the
Indenture.
9. REGISTRATION RIGHTS. Pursuant to the Registration Rights
Agreement, the Issuer and the Subsidiary Guarantors will be obligated to
initiate and consummate an exchange offer pursuant to which the Holders of the
Initial Notes issued on the Issue Date and any PIK Notes issued in payment on
interest thereon shall have the right to exchange such Notes for the Exchange
Notes, which have been registered under the Securities Act, in like principal
amount and having terms identical in all material respects as such Notes. The
Holders of such Notes shall be entitled to receive certain additional interest
payments in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
10. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, and in denominations of $1.00 and integral multiples of
$1.00. A Holder shall register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer or
exchange of any Notes or portions thereof selected for redemption.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
12. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Issuer. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
13. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Issuer at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Issuer will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but including, under certain
circumstances, its obligation to pay the principal of and interest on the Notes
but without affecting the rights of the Holders to receive such amounts from
such deposits).
14. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the
A1-3
Security Documents or the Notes may be amended or supplemented with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, and any past Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the
Security Documents or the Notes to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated Notes in addition to or in
place of certificated Notes, comply with any requirements of the Commission in
order to effect or maintain the qualification of the Indenture under the TIA or
comply with Article Five of the Indenture or make any other change that does not
adversely affect the rights of any Holder of a Note.
15. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of each of the Issuer and the Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, create or incur Liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, issue Preferred Stock of its Subsidiaries,
and on the ability of the Issuer and its Subsidiaries to merge or consolidate
with any other Person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the Issuer's and its Subsidiaries'
assets. Such limitations are subject to a number of important qualifications and
exceptions. Pursuant to Section 4.06 of the Indenture, the Issuer must annually
report to the Trustee on compliance with such limitations.
16. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
17. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received security and indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest when due, for any
reason, a Default in payment with respect to a Change in Control Offer, a
Default in any requirement under the Indenture to Pay Down Debt, or a Default in
compliance with Article Five of the Indenture) if it determines that withholding
notice is in the interest of the Holders. Foreclosure under the Security
Documents is subject to the terms of the Intercreditor Agreement.
18. TRUSTEE DEALINGS WITH ISSUER. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuer, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.
19. NO RECOURSE AGAINST OTHERS. No partner, director, officer,
employee or stockholder, as such, of the Issuer or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Issuer or any
Subsidiary Guarantor under the Notes, the Indenture, the Security Documents or
the Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or its creation. Each Holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
20. GUARANTEES AND COLLATERAL. This Note will be entitled to the
benefits of certain Guarantees, if any, made for the benefit of the Holders and
of Security Documents given to secure Obligations under the Notes and the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Subsidiary Guarantors, the Trustee and the Holders.
21. AUTHENTICATION. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of
authentication on this Note.
A1-4
22. GOVERNING LAW. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York. Each of the
parties to the Indenture agrees to submit to the non-exclusive jurisdiction of
the competent courts of the State of New York sitting in the City of New York in
any action or proceeding arising out of or relating to this Note.
23. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Issuer will furnish to any Holder of a Note upon written request
and without charge a copy of each of the Indenture, which has the text of this
Note, the Intercreditor Agreement, and the Registration Rights Agreement.
Requests may be made to:
Abraxas Petroleum Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
A1-5
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________, agent to transfer this Note on the books
of the Issuer. The agent may substitute another to act for him.
Dated: Signed:
----------- -------------------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
------------------------------------------------------------
A1-6
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Issuer pursuant
to Section 4.15 of the Indenture, check the appropriate box:
Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Issuer pursuant to Section 4.15 of the Indenture, state the amount you elect to
have purchased:
$___________
Dated:
---------------- --------------------------------------------------------
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed.
Signature Guarantee:
------------------------------------------------------------
▇▇-▇
▇▇▇▇▇▇▇ ▇-▇
CUSIP No.: [ ]
ABRAXAS PETROLEUM CORPORATION
11-1/2% SECURED NOTE DUE 2007, SERIES B
No. [ ] $[ ]
ABRAXAS PETROLEUM CORPORATION, a Nevada corporation (the "ISSUER",
which term includes any successor entities), for value received, promises to pay
to [ ] or registered assigns the principal sum of [ ] Dollars on May 1,
2007.
Interest Payment Dates: May 1 and November 1, commencing May 1, 2003
Record Dates: April 15 and October 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
ABRAXAS PETROLEUM CORPORATION
ATTEST:
By:
----------------------------- ---------------------------------------
Secretary Name:
----------------------------------
Title:
---------------------------------
Certificate of Authentication
This is one of the 11-1/2% Secured Notes due 2007, Series B, referred
to in the within-mentioned Indenture.
U.S. BANK, N.A.,
as Trustee
By:
---------------------------------------
Authorized Signatory
Date of Authentication:
(REVERSE OF SECURITY)
11-1/2% Secured Note due 2007, Series B
1. INTEREST. ABRAXAS PETROLEUM CORPORATION, a Nevada corporation
(the "ISSUER") promises to pay interest on the principal amount of this Note at
the rate per annum shown above, except to the extent a different rate of
interest is applicable as provided below. Interest on the Indebtedness evidenced
by the Notes will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Issue Date of the Note. The
Issuer will pay interest semi-annually in arrears on each Interest Payment Date,
commencing May 1, 2003. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
Upon and during the continuation of an Event of Default, interest on
the Notes will accrue at the rate of 16.5% per annum.
A2-1
The Issuer shall pay interest on overdue principal and to the extent
lawful on overdue installments of interest from time to time on demand at the
rate of 16.5% per annum.
2. METHOD OF PAYMENT. The Issuer shall pay interest on the Notes
(except defaulted interest pursuant to which Section 2.12 of the Indenture shall
apply) to the Persons who are the registered Holders at the close of business on
the Record Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Issuer shall pay principal and, to the extent
not prohibited by the terms of the Senior Credit Agreement or the Intercreditor
Agreement, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts ("U.S. LEGAL TENDER").
However, and subject to the same limitation, the Issuer may pay principal and
interest by check payable in such U.S. Legal Tender. The Issuer may deliver any
such interest payment to the Paying Agent or to a Holder at the Holder's
registered address. If the payment of interest in the form of cash is prohibited
by the terms of the Senior Credit Agreement or the Intercreditor Agreement, that
interest will be paid in the form of PIK Notes in a principal amount equal to
the amount of accrued and unpaid interest on the Notes plus an additional 1% per
annum accrued interest for the applicable period.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank, N. A. (the
"TRUSTEE") will act as Paying Agent and Registrar. The Issuer may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders.
4. INDENTURE AND INTERCREDITOR AGREEMENT. The Issuer issued the
Notes under an Indenture, dated as of January 23, 2003 (the "INDENTURE"), among
the Issuer, the Subsidiary Guarantors and the Trustee. This Note is one of a
duly authorized issue of Exchange Notes of the Issuer designated as its 11-1/2%
Secured Notes due 2007, Series B (the "EXCHANGE NOTES"). The Notes are limited
in aggregate principal amount to $118,250,000.00, plus such additional principal
amounts as may be necessary with respect to the issuance of PIK Notes for the
payment of interest. The Notes include the 11-1/2% Notes due 2007, Series A (the
"INITIAL Notes"), the PIK Notes and the Exchange Notes, issued in exchange for
the Initial Notes and any PIK Notes issued in lieu of payment of interest on the
Initial Notes pursuant to the Registration Rights Agreement. The Initial Notes,
the PIK Notes and the Exchange Notes are treated as a single class of securities
under the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and said Act for a statement of them. The Notes are
general obligations of the Issuer secured by a second lien on the Collateral,
subject, however, to the Permitted Liens. Payment of the Notes and the Liens
securing the Notes are subordinate to the Indebtedness under the Senior Credit
Agreement and the Liens securing such Indebtedness pursuant to the terms of the
Intercreditor Agreement.
5. HOLDERS BOUND TO TERMS OF THE INDENTURE. Each Holder, by
accepting a Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time in accordance with its
terms.
6. REDEMPTION. The Notes will be redeemable, at the Issuer's option,
in whole at any time or in part from time to time, upon not less than 30 nor
more than 60 days' notice, at the Redemption Prices (expressed as percentages of
the principal amount thereof) set forth below. If the Issuer redeems all or any
Notes, the Issuer must also pay all interest accrued and unpaid to the
applicable Redemption Date. The Redemption Prices for the Notes during the
indicated time periods are as follows:
PERIOD PERCENTAGE
------ ----------
On the Issue Date.................................................................100.0000%
On the next Business Day after the Issue Date......................................78.6266%
From the next Business Day after the Issue Date to 6 months after the Issue Date...80.0429%
From 6 months after the Issue Date to 12 months after the Issue Date...............91.4592%
From 12 months after the Issue Date to 18 months after the Issue Date..............97.1674%
From 18 months after the Issue Date to 24 months after the Issue Date..............98.5837%
Thereafter .....................................................................100.0000%
A2-2
Notwithstanding the foregoing, the Redemption Price for Notes to be
redeemed will in no event be less than the then current Adjusted Issue Price.
The Issuer can call Notes for redemption on the Issue Date without giving any
notice of redemption to the Holders, and Notes called for redemption on the
Issue Date will be deemed not to have accrued interest.
7. NOTICE OF REDEMPTION. With the exception of Notes being redeemed
on the Issue Date, as provided above, notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Issuer defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. OFFER TO PURCHASE. Section 4.15 of the Indenture provides that,
upon the occurrence of a Change of Control (as defined in the Indenture), and
subject to further limitations contained therein, the Issuer will make an offer
to purchase the Notes in accordance with the procedures set forth in the
Indenture.
9. REGISTRATION RIGHTS. Holders of Exchange Notes shall be entitled
to receive certain additional interest payments upon certain conditions pursuant
to and in accordance with the terms of the Registration Rights Agreement.
10. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, and in denominations of $1.00 and integral multiples of
$1.00. A Holder shall register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer or
exchange of any Notes or portions thereof selected for redemption.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
12. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Issuer. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
13. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Issuer at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Issuer will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but including, under certain
circumstances, its obligation to pay the principal of and interest on the Notes
but without affecting the rights of the Holders to receive such amounts from
such deposits).
14. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the
Security Documents or the Notes may be amended or supplemented with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, and any past Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of not less than a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture, the Guarantees, the Intercreditor
Agreement (with the joinder of the Senior Credit Facility Representative), the
Security Documents or the Notes to, among other things, cure any ambiguity,
defect or inconsistency, provide for uncertificated Notes in addition to or in
place of certificated Notes, comply with any
A2-3
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA or comply with Article Five of the Indenture or
make any other change that does not adversely affect the rights of any Holder of
a Note.
15. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of each of the Issuer and the Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, create or incur Liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, issue Preferred Stock of its Subsidiaries,
and on the ability of the Issuer and its Subsidiaries to merge or consolidate
with any other Person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of the Issuer's and its Subsidiaries'
assets. Such limitations are subject to a number of important qualifications and
exceptions. Pursuant to Section 4.06 of the Indenture, the Issuer must annually
report to the Trustee on compliance with such limitations.
16. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
17. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received security and indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest when due, for any
reason, a Default in payment with respect to a Change in Control Offer, a
Default in any requirement under the Indenture to Pay Down Debt, or a Default in
compliance with Article Five of the Indenture) if it determines that withholding
notice is in the interest of the Holders. Foreclosure under the Security
Documents is subject to the terms of the Intercreditor Agreement.
18. TRUSTEE DEALINGS WITH ISSUER. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuer, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.
19. NO RECOURSE AGAINST OTHERS. No partner, director, officer,
employee or stockholder, as such, of the Issuer or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Issuer or any
Subsidiary Guarantor under the Notes, the Indenture, the Security Documents or
the Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or its creation. Each Holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
20. GUARANTEES AND COLLATERAL. This Note will be entitled to the
benefits of certain Guarantees, if any, made for the benefit of the Holders and
of Security Documents given to secure Obligations under the Notes and the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Subsidiary Guarantors, the Trustee and the Holders.
21. AUTHENTICATION. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
22. GOVERNING LAW. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York. Each of the
parties to the Indenture agrees to submit to the non-exclusive jurisdiction of
the competent courts of the State of New York sitting in the City of New York in
any action or proceeding arising out of or relating to this Note.
23. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
A2-4
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Issuer will furnish to any Holder of a Note upon written request
and without charge a copy of each of the Indenture, which has the text of this
Note and the Intercreditor Agreement. Requests may be made to: Abraxas Petroleum
Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
A2-5
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________, agent to transfer this Note on the books
of the Issuer. The agent may substitute another to act for him.
Dated: Signed:
----------- -------------------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
------------------------------------------------------------
A2-6
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Issuer pursuant
to Section 4.15 of the Indenture, check the appropriate box:
Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Issuer pursuant to Section 4.15 of the Indenture, state the amount you elect to
have purchased:
$___________
Dated:
---------------- --------------------------------------------------------
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed.
Signature Guarantee:
------------------------------------------------------------
A2-7
EXHIBIT B
Form of Additional Provisions In Assignment Form
For Restricted Securities
So long as this Note is a Restricted Security, in connection with any
transfer the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer:
[CHECK ONE]
(1) / / to an Issuer or a Subsidiary thereof; or
(2) / / pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
(3) / / to an "accredited investor" (as defined in Rule 501 under the
Securities Act of 1933, as amended) that has furnished to the
Trustee a signed letter containing certain representations and
agreements (the form of which letter can be obtained from the
Trustee); or
(4) / / outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of 1933,
as amended; or
(5) / / pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933, as amended; or
(6) / / pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) / / pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Issuer as defined in Rule 144
under the Securities Act of 1933, as amended (an "AFFILIATE"):
/ / The transferee is an Affiliate of the Issuer.
Unless one of the items is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than the
registered Holder thereof; PROVIDED, HOWEVER, that if item (3), (4), (5) or (7)
is checked, the Issuer or the Trustee may require, prior to registering any such
transfer of the Notes, in its sole discretion, such written legal opinions,
certifications (including an investment letter in the case of box (3)) and other
information as the Trustee or the Issuer has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, as amended.
B-1
If none of the foregoing items are checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: Signed:
----------- -------------------------------------------------------
(Sign exactly as name
appears on the other side
of this Note)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
ISSUER as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
----------- ----------------------------------------------
NOTICE: To be executed by
an executive officer
B-2
EXHIBIT C
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[ ], [ ]
[ ]
[ ]
[ ]
Ladies and Gentlemen:
In connection with our proposed purchase of 11-1/2% Secured Notes due
2007 (the "NOTES") of Abraxas Petroleum Corporation (the "ISSUER"), we confirm
that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture relating to the Notes (the "INDENTURE") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer
the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
all applicable State securities laws.
2. We understand that the offer and sale of the Notes to us
or our predecessors have not been registered under the Securities Act,
and that the Notes may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. Persons except as
permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Notes, we will do so only (i) to the Issuer,
or any subsidiary thereof, (ii) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined in Rule 144A promulgated under the Securities Act)
that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to the Trustee (as defined in the Indenture) a
signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes (the form of
which letter can be obtained from the Trustee), (iii) outside the
United States in accordance with Rule 904 of Regulation S promulgated
under the Securities Act (provided that any such sale or transfer in
Canada or to or for the benefit of a Canadian resident must be effected
pursuant to an exemption from the prospectus and registration
requirements under applicable Canadian securities laws), (iv) pursuant
to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (v) pursuant to an effective
registration statement under the Securities Act, and we further agree
to provide to any Person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as
stated herein.
3. We understand that, on any proposed resale of any Notes,
we will be required to furnish to the Trustee and the Issuer such
certification, legal opinions and other information as the Trustee or
the Issuer may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an "accredited investor" (as defined in Rule 501 of
Regulation D under the Securities Act) and have such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we
and any accounts for
C-1
which we are acting are each able to bear the economic risk of our or
its investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an "accredited investor")
as to each of which we exercise sole investment discretion.
You, the Issuer, the Trustee and others are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
[ ], [ ]
[ ]
[ ]
[ ]
[ ]
Re: Abraxas Petroleum Corporation (the "ISSUER")
11-1/2% Secured Notes due 2007 (the "NOTES")
----------
Ladies and Gentlemen:
In connection with our proposed sale of $[ ] aggregate principal amount
of the Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the U.S. Securities Act of 1933, as amended
(the "SECURITIES ACT"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any Person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any Person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Issuer and counsel for the Issuer are entitled to rely
upon this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
---------------------------------------
Authorized Signatory
D-1
EXHIBIT E
GUARANTEE
For value received, the undersigned hereby unconditionally guarantees,
as principal obligor and not only as a surety, to the Holder of this Note the
cash payments in United States dollars of principal of, premium, if any, and
interest on this Note in the amounts and at the times when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Issuer
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Eleven of the Indenture and this Guarantee. This Guarantee will become
effective in accordance with Article Eleven of the Indenture and its terms shall
be evidenced therein. The validity and enforceability of any Guarantee shall not
be affected by the fact that it is not affixed to any particular Note.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Indenture dated as of January 23, 2003, among Abraxas Petroleum
Corporation, a Nevada corporation, as issuer (the "ISSUER"), the Subsidiary
Guarantors party thereto, and U.S. Bank, N. A., as trustee (the "TRUSTEE"), as
amended or supplemented (the "INDENTURE").
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. Each Subsidiary Guarantor hereby agrees to
submit to the non-exclusive jurisdiction of the competent courts of the State of
New York sitting in the City of New York in any action or proceeding arising out
of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
E-1
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused its Guarantee
to be duly executed.
Date:
-----------------
SANDIA OIL & GAS CORPORATION, as Guarantor
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
WAMSUTTER HOLDINGS, INC., as Guarantor
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SANDIA OPERATING CORP., as Guarantor
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
WESTERN ASSOCIATED ENERGY CORPORATION, as
Guarantor
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EASTSIDE COAL COMPANY, INC., as Guarantor
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GREY WOLF EXPLORATION INC., as Guarantor
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
E-2
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE") is dated as of,
among [SUBSIDIARY GUARANTOR] (the "NEW SUBSIDIARY GUARANTOR"), a subsidiary of
Abraxas Petroleum Corporation, a Nevada corporation (the "ISSUER"), the Issuer
and U.S. Bank, N.A., as trustee under the Indenture referred to below (the
"TRUSTEE").
RECITALS:
WHEREAS the Issuer, Sandia Oil & Gas Corporation, a Texas corporation
("SANDIA"), Wamsutter Holdings, Inc., a Wyoming corporation ("WAMSUTTER"),
Sandia Operating Corp., a Texas corporation ("SANDIA OPERATING"), Western
Associated Energy Corporation, a Texas corporation ("WESTERN ASSOCIATED"),
Eastside Coal Company, Inc., a Colorado corporation ("EASTSIDE COAL") and Grey
Wolf Exploration Inc., an Alberta corporation ("NEWCO CANADA" and together with
Sandia, Wamsutter, Sandia Operating, Western Associated and Eastside Coal, the
"SUBSIDIARY GUARANTORS") have heretofore executed and delivered to the Trustee
an Indenture (the "INDENTURE") dated as of January 23, 2003, providing for the
issuance of the Issuer's 11-1/2% Secured Notes due 2007 (the "NOTES"); and
WHEREAS Section 4.20 of the Indenture provides that under certain
circumstances the Issuer is required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally guarantee all the ISSUER'S
obligations under the Notes and the Indenture pursuant to a Guarantee on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Issuer and the Trustee mutually covenant and agree for
the equal and ratable benefit of the Holders as follows:
1. AGREEMENT TO GUARANTEE. The New Subsidiary Guarantor hereby agrees
to unconditionally guarantee the ISSUER'S obligations under the Notes and the
Indenture on the terms and subject to the conditions set forth in Article XI of
the Indenture and to be bound by all other applicable provisions of the
Indenture.
2. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURE PART OF INDENTURE.
The Indenture, as supplemented hereby, is in all respects ratified and confirmed
and all the terms, conditions and provisions thereof shall remain in full force
and effect. This Supplemental Indenture shall form a part of the Indenture for
all purposes, and every holder of Notes heretofore or hereafter authenticated
and delivered shall be bound hereby.
3. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not effect the construction thereof.
F-1
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR]
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ABRAXAS PETROLEUM CORPORATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
U.S. BANK, N. A.,
as Trustee
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
F-2