EXHIBIT 4.16
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CHESAPEAKE ENERGY CORPORATION
as Issuer,
THE SUBSIDIARY GUARANTORS,
as Guarantors,
AND
THE BANK OF NEW YORK,
as Trustee
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INDENTURE
DATED AS OF NOVEMBER 5, 2001
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8.375% SENIOR NOTES DUE 2008
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CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
310 (a)(1)............................................................... 7.10
(a)(2)............................................................... 7.10
(a)(3)............................................................... N.A.
(a)(4)............................................................... N.A.
(a)(5)............................................................... 7.08
(b).................................................................. 7.08; 7.10
(c).................................................................. N.A.
311 (a).................................................................. 7.11
(b).................................................................. 7.11
(c).................................................................. N.A.
312 (a).................................................................. 2.05
(b).................................................................. 12.03
(c).................................................................. 12.03
313 (a).................................................................. 7.06
(b)(1)............................................................... N.A.
(b)(2)............................................................... 7.06
(c).................................................................. 7.06; 12.02
(d).................................................................. 7.06
314 (a).................................................................. 4.02; 4.03; 12.02
(b).................................................................. N.A.
(c)(1)............................................................... 12.04
(c)(2)............................................................... 12.04
(c)(3)............................................................... N.A.
(d).................................................................. N.A.
(e).................................................................. 12.05
(f).................................................................. N.A.
315 (a).................................................................. 7.01(b)
(b).................................................................. 7.05; 12.02
(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)............................................................ 6.02; 6.04; 9.02
(a)(2)............................................................... N.A.
(b).................................................................. 6.07
(c).................................................................. N.A.
317 (a)(1)............................................................... 6.08
(a)(2)............................................................... 6.09
(b).................................................................. 2.04
318 (a).................................................................. 12.01
318 (c).................................................................. 12.01
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N.A. means Not Applicable
NOTE: This Cross-Reference table shall not, for any purpose, be deemed part of
this
Indenture.
ii
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions..................................................................................1
SECTION 1.02. Other Definitions...........................................................................19
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act...........................................19
SECTION 1.04. Rules of Construction.......................................................................20
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.............................................................................20
SECTION 2.02. Execution and Authentication................................................................20
SECTION 2.03. Registrar and Paying Agent..................................................................21
SECTION 2.04. Paying Agent To Hold Money in Trust.........................................................21
SECTION 2.05. Holder Lists................................................................................22
SECTION 2.06. Transfer and Exchange.......................................................................22
SECTION 2.07. Replacement Securities......................................................................22
SECTION 2.08. Outstanding Securities......................................................................22
SECTION 2.09. Temporary Securities........................................................................23
SECTION 2.10. Cancellation................................................................................23
SECTION 2.11. Defaulted Interest..........................................................................23
SECTION 2.12. CUSIP Numbers...............................................................................23
SECTION 2.13. Issuance of Additional Securities...........................................................23
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notice to Trustee...........................................................................24
SECTION 3.02. Selection of Securities to Be Redeemed......................................................24
SECTION 3.03. Notice of Redemption........................................................................24
SECTION 3.04. Effect of Notice of Redemption..............................................................25
SECTION 3.05 Deposit of Redemption Price.................................................................25
SECTION 3.06. Securities Redeemed in Part.................................................................26
SECTION 3.07. Optional Redemption.........................................................................26
SECTION 3.08. Equity Offering Redemption..................................................................26
SECTION 3.09. Optional Redemption at Make-Whole Price.....................................................26
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.......................................................................27
SECTION 4.02. SEC Reports.................................................................................27
SECTION 4.03. Compliance Certificates.....................................................................27
SECTION 4.04. Maintenance of Office or Agency.............................................................28
SECTION 4.05. Corporate Existence.........................................................................28
SECTION 4.06. Waiver of Stay, Extension or Usury Laws.....................................................29
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SECTION 4.07. Payment of Taxes and Other Claims...........................................................29
SECTION 4.08. Maintenance of Properties and Insurance.....................................................29
SECTION 4.09. Limitation on Incurrence of Additional Indebtedness.........................................30
SECTION 4.10. Limitation on Restricted Payments...........................................................30
SECTION 4.11. Limitation on Sale of Assets................................................................31
SECTION 4.12. Limitation on Liens Securing Indebtedness...................................................33
SECTION 4.13. Limitation on Sale/Leaseback Transactions...................................................34
SECTION 4.14. Limitation on Payment Restrictions Affecting Subsidiaries...................................34
SECTION 4.15. Limitation on Transactions with Affiliates..................................................34
SECTION 4.16. Change of Control...........................................................................35
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc. ...............................................................36
SECTION 5.02. Successor Corporation Substituted...........................................................37
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default...........................................................................37
SECTION 6.02. Acceleration................................................................................39
SECTION 6.03. Other Remedies..............................................................................39
SECTION 6.04. Waiver of Past Defaults.....................................................................40
SECTION 6.05. Control by Majority.........................................................................40
SECTION 6.06. Limitation on Remedies......................................................................40
SECTION 6.07. Rights of Holders to Receive Payment........................................................40
SECTION 6.08. Collection Suit by Trustee..................................................................40
SECTION 6.09. Trustee May File Proofs of Claim............................................................41
SECTION 6.10. Priorities..................................................................................41
SECTION 6.11. Undertaking for Costs.......................................................................41
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee...........................................................................41
SECTION 7.02. Rights of Trustee...........................................................................42
SECTION 7.03. Individual Rights of Trustee................................................................43
SECTION 7.04. Trustee's Disclaimer........................................................................43
SECTION 7.05. Notice of Defaults..........................................................................43
SECTION 7.06. Reports by Trustee to Holders...............................................................43
SECTION 7.07. Compensation and Indemnity..................................................................43
SECTION 7.08. Replacement of Trustee......................................................................44
SECTION 7.09. Successor Trustee by Merger, etc. ..........................................................45
SECTION 7.10. Eligibility; Disqualification...............................................................45
SECTION 7.11. Preferential Collection of Claims Against Company...........................................45
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ARTICLE EIGHT
DISCHARGE OF
INDENTURE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....................................45
SECTION 8.02. Legal Defeasance and Discharge..............................................................46
SECTION 8.03. Covenant Defeasance.........................................................................46
SECTION 8.04. Conditions to Legal or Covenant Defeasance..................................................46
SECTION 8.05. Deposited Money and U.S. Government Securities to be Held in Trust; Other Miscellaneous
Provisions..................................................................................48
SECTION 8.06. Repayment to Company........................................................................48
SECTION 8.07. Reinstatement...............................................................................49
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders..................................................................49
SECTION 9.02. With Consent of Holders.....................................................................49
SECTION 9.03. Compliance with Trust
Indenture Act.........................................................51
SECTION 9.04. Revocation and Effect of Consents...........................................................51
SECTION 9.05. Notation on or Exchange of Senior Notes.....................................................51
SECTION 9.06. Trustee Protected...........................................................................52
ARTICLE TEN
GUARANTEES
SECTION 10.01. Unconditional Guarantee...................................................................52
SECTION 10.02. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.............................53
SECTION 10.03. Addition of Subsidiary Guarantors.........................................................53
SECTION 10.04. Release of a Subsidiary Guarantor.........................................................54
SECTION 10.05. Limitation of Subsidiary Guarantor's Liability............................................54
SECTION 10.06. Contribution..............................................................................54
SECTION 10.07. [Intentionally Omitted.]..................................................................54
SECTION 10.08. Severability..............................................................................54
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust
Indenture Act Controls..............................................................55
SECTION 11.02. Notices...................................................................................55
SECTION 11.03. Communication by Holders with Other Holders...............................................55
SECTION 11.04. Certificate and Opinion as to Conditions Precedent........................................56
SECTION 11.05. Statements Required in Certificate or Opinion.............................................56
SECTION 11.06. Rules by Trustee and Agents...............................................................56
SECTION 11.07. Legal Holidays............................................................................56
SECTION 11.08. Governing Law.............................................................................56
SECTION 11.09. No Adverse Interpretation of Other Agreements.............................................57
SECTION 11.10. No Recourse Against Others................................................................57
SECTION 11.11. Successors................................................................................57
SECTION 11.12. Duplicate Originals.......................................................................57
SECTION 11.13. Severability..............................................................................57
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SIGNATURES.................................................................................................58
RULE 144A/REGULATION S APPENDIX...........................................................................A-1
EXHIBIT 1 TO THE RULE 144A/REGULATION S APPENDIX - FORM OF INITIAL SECURITY...............................B-1
EXHIBIT A-1 - FORM OF REVERSE EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY..............................C-1
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NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of this
Indenture.
vi
INDENTURE, dated as of November 5, 2001, among CHESAPEAKE
ENERGY CORPORATION, an
Oklahoma corporation (the "Company"), the SUBSIDIARY
GUARANTORS listed as signatories hereto, and The Bank of New York, a New York
corporation, as Trustee.
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the holders of the Company's
8.375% Senior Notes due 2008:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Additional Securities" means, subject to the Company's
compliance with Section 4.09(a), 8.375% Senior Notes due 2008 issued from time
to time after the Issue Date under the terms of this
Indenture (other than
pursuant to Section 2.06, 2.07, 2.09 or 3.06 of this Indenture and other than
Exchange Securities or Private Exchange Securities issued pursuant to an
exchange offer for other Securities outstanding under this Indenture).
"Adjusted Consolidated EBITDA" means the Consolidated Net
Income of the Company and its Restricted Subsidiaries for the Reference Period,
(a) increased (to the extent deducted in determining Consolidated Net Income) by
the sum, without duplication, of: (i) all income and state franchise taxes of
the Company and its Restricted Subsidiaries paid or accrued according to GAAP
for such period (other than income taxes attributable to extraordinary, unusual
or non-recurring gains or losses); (ii) all interest expense of the Company and
its Restricted Subsidiaries paid or accrued in accordance with GAAP for such
period (including amortization of original issue discount or premium); (iii)
depreciation and depletion of the Company and its Restricted Subsidiaries; (iv)
amortization of the Company and its Restricted Subsidiaries including, without
limitation, amortization of capitalized debt issuance costs; (v) any loss
realized in accordance with GAAP upon the sale or other disposition of any
property, plant or equipment of the Company or its Restricted Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) which is not sold or
otherwise disposed of in the ordinary course of business and any loss realized
in accordance with GAAP upon the sale or other disposition of any Capital Stock
of any Person; (vi) any loss realized in accordance with GAAP from currency
exchange transactions not in the ordinary course of business consistent with
past practice; (vii) any loss net of income taxes realized in accordance with
GAAP attributable to extraordinary items; (viii) any charges associated solely
with the prepayment of any Indebtedness; and (ix) any other non-cash charges to
the extent deducted from Consolidated Net Income and (b) decreased (to the
extent included in determining Consolidated Net Income) by the sum of (i) the
amount of deferred revenues that are amortized during the Reference Period and
are attributable to reserves that are subject to Volumetric Production Payments
and (ii) amounts recorded in accordance with GAAP as repayments of principal and
interest pursuant to Dollar-Denominated Production Payments.
"Adjusted Consolidated EBITDA Coverage Ratio" means, for any
Reference Period, the ratio on a pro forma basis of (a) Adjusted Consolidated
EBITDA for the Reference Period to (b) Adjusted Consolidated Interest Expense
for such Reference Period; provided, that, in calculating Adjusted Consolidated
EBITDA and Adjusted Consolidated Interest Expense
2
(i) acquisitions which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the date of the transaction giving rise to
the need to calculate the Adjusted Consolidated EBITDA Coverage Ratio (the
"Transaction Date") shall be assumed to have occurred on the first day of the
Reference Period, (ii) the incurrence of any Indebtedness (including the
issuance of the Securities) or issuance of any Disqualified Stock during the
Reference Period or subsequent to the Reference Period and on or prior to the
Transaction Date shall be assumed to have occurred on the first day of such
Reference Period, (iii) any Indebtedness that had been outstanding during the
Reference Period that has been repaid on or prior to the Transaction Date shall
be assumed to have been repaid as of the first day of such Reference Period,
(iv) the Adjusted Consolidated Interest Expense attributable to interest on any
Indebtedness or dividends on any Disqualified Stock bearing a floating interest
(or dividend) rate shall be computed on a pro forma basis as if the rate in
effect on the Transaction Date were the average rate in effect during the entire
Reference Period and (v) in determining the amount of Indebtedness pursuant to
Section 4.09, the incurrence of Indebtedness or issuance of Disqualified Stock
giving rise to the need to calculate the Adjusted Consolidated EBITDA Coverage
Ratio and, to the extent the net proceeds from the incurrence or issuance
thereof are used to retire Indebtedness, the application of the proceeds
therefrom shall be assumed to have occurred on the first day of the Reference
Period.
"Adjusted Consolidated Interest Expense" means, with respect
to the Company and its Restricted Subsidiaries, for the Reference Period, the
aggregate amount (without duplication) of (a) interest expensed in accordance
with GAAP (including, in accordance with the following sentence, interest
attributable to Capitalized Lease Obligations, but excluding interest
attributable to Dollar-Denominated Production Payments and amortization of
deferred debt expense) during such period in respect of all Indebtedness of the
Company and its Restricted Subsidiaries (including (i) amortization of original
issue discount or premium on any Indebtedness (other than with respect to the
Existing Notes and the Securities), (ii) the interest portion of all deferred
payment obligations, calculated in accordance with GAAP, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptance financings and currency and interest rate swap arrangements, in each
case to the extent attributable to such period), and (b) dividend requirements
of the Company and its Restricted Subsidiaries with respect to any Preferred
Stock dividends (whether in cash or otherwise (except dividends paid solely in
shares of Qualified Stock)) paid (other than to the Company or any of its
Restricted Subsidiaries), declared, accrued or accumulated during such period,
divided by one minus the applicable actual combined federal, state, local and
foreign income tax rate of the Company and its Subsidiaries (expressed as a
decimal), on a consolidated basis, for the four quarters immediately preceding
the date of the transaction giving rise to the need to calculate Consolidated
Interest Expense, in each case to the extent attributable to such period and
excluding items eliminated in consolidation. For purposes of this definition,
(a) interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by the Company to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP and (b)
interest expense attributable to any Indebtedness represented by the guarantee
by the Company or a Restricted Subsidiary of the Company of an obligation of
another Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, (a) the sum of
3
(i) discounted future net revenue from proved oil and gas reserves of the
Company and its Restricted Subsidiaries calculated in accordance with SEC
guidelines before any state or federal income taxes, as estimated by independent
petroleum engineers in a reserve report prepared as of the end of the Company's
most recently completed fiscal year, as increased by, as of the date of
determination, the discounted future net revenue of (A) estimated proved oil and
gas reserves of the Company and its Restricted Subsidiaries attributable to any
acquisition consummated since the date of such year-end reserve report, and (B)
estimated proved oil and gas reserves of the Company and its Restricted
Subsidiaries attributable to extensions, discoveries and other additions and
upward revisions of estimates of proved oil and gas reserves due to exploration,
development or exploitation, production or other activities conducted or
otherwise occurring since the date of such year-end reserve report, which, in
the case of sub-clauses (A) and (B), would, in accordance with standard industry
practice, result in such increases as calculated in accordance with SEC
guidelines (utilizing the prices utilized in such year-end reserve report), and
decreased by, as of the date of determination, the discounted future net revenue
of (C) estimated proved oil and gas reserves of the Company and its Restricted
Subsidiaries produced or disposed of since the date of such year-end reserve
report and (D) reductions in the estimated oil and gas reserves of the Company
and its Restricted Subsidiaries since the date of such year-end reserve report
attributable to downward revisions of estimates of proved oil and gas reserves
due to exploration, development or exploitation, production or other activities
conducted or otherwise occurring since the date of such year-end reserve report
which, in the case of sub-clauses (C) and (D), would, in accordance with
standard industry practice, result in such decreases as calculated in accordance
with SEC guidelines (utilizing the prices utilized in such year-end reserve
report); provided that, in the case of each of the determinations made pursuant
to clauses (A) through (D), such increases and decreases shall be as estimated
by the Company's engineers, (ii) the capitalized costs that are attributable to
oil and gas properties of the Company and its Restricted Subsidiaries to which
no proved oil and gas reserves are attributable, based on the Company's books
and records as of a date no earlier than the date of the Company's latest annual
or quarterly financial statements, (iii) the Net Working Capital on a date no
earlier than the date of the Company's latest annual or quarterly financial
statements and (iv) the greater of (I) the net book value on a date no earlier
than the date of the Company's latest annual or quarterly financial statements
and (II) the appraised value, as estimated by independent appraisers, of other
tangible assets (including Investments in unconsolidated Subsidiaries) of the
Company and its Restricted Subsidiaries, as of a date no earlier than the date
of the Company's latest audited financial statements, minus (b) the sum of (i)
minority interests, (ii) any gas balancing liabilities of the Company and its
Restricted Subsidiaries reflected in the Company's latest annual or quarterly
financial statements, (iii) the discounted future net revenue, calculated in
accordance with SEC guidelines (utilizing the prices utilized in the Company's
year-end reserve report), attributable to reserves which are required to be
delivered to third parties to fully satisfy the obligations of the Company and
its Restricted Subsidiaries with respect to Volumetric Production Payments on
the schedules specified with respect thereto, (iv) the discounted future net
revenue, calculated in accordance with SEC guidelines, attributable to reserves
subject to Dollar-Denominated Production Payments which, based on the estimates
of production included in determining the discounted future net revenue
specified in (a) (i) above (utilizing the same prices utilized in the Company's
year-end reserve report), would be necessary to fully satisfy the payment
obligations of the Company and its Restricted Subsidiaries with respect to
Dollar-Denominated Production Payments on the schedules
4
specified with respect thereto and (v) the discounted future net revenue,
calculated in accordance with SEC guidelines (utilizing the same prices utilized
in the Company's year-end reserve report), attributable to reserves subject to
participation interests, overriding royalty interests or other interests of
third parties, pursuant to participation, partnership, vendor financing or other
agreements then in effect, or which otherwise are required to be delivered to
third parties. If the Company changes its method of accounting from the full
cost method to the successful efforts method or a similar method of accounting,
Adjusted Consolidated Net Tangible Assets will continue to be calculated as if
the Company were still using the full cost method of accounting.
"Adjusted Net Assets of a Subsidiary Guarantor" at any date
shall mean the lesser of (i) the amount by which the fair value of the property
of such Subsidiary Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Guarantee of such Subsidiary Guarantor at such
date and (ii) the amount by which the present fair saleable value of the assets
of such Subsidiary Guarantor at such date exceeds the amount that will be
required to pay the probable liability of such Subsidiary Guarantor on its debts
(after giving effect to all other fixed and contingent liabilities incurred or
assumed on such date and after giving effect to any collection from any
Subsidiary of such Subsidiary Guarantor in respect of the obligations of such
Subsidiary under the Guarantee), excluding debt in respect of the Guarantee, as
they become absolute and matured.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means any sale, lease, transfer, exchange or
other disposition (or series of related sales, leases, transfers, exchanges or
dispositions) having a fair market value of $1,000,000 or more of shares of
Capital Stock of a Restricted Subsidiary (other than directors' qualifying
shares), or of property or assets (including the creation of Dollar-Denominated
Production Payments and Volumetric Production Payments, other than
Dollar-Denominated Production Payments and Volumetric Production Payments
created or sold in connection with the financing of, and within 30 days after,
the acquisition of the properties subject thereto) or any interests therein
(each referred to for purposes of this definition as a "disposition") by the
Company or any of its Restricted Subsidiaries, including any disposition by
means of a merger, consolidation or similar transaction (other than (a) by the
Company to a Wholly Owned Restricted Subsidiary or by a Subsidiary to the
Company or a Wholly Owned Restricted Subsidiary, (b) a sale of oil, gas or other
hydrocarbons or other mineral products in the ordinary course of business of the
Company's oil and gas production operations, (c) any abandonment, farm-in,
farm-out, lease and sub-lease of developed and/or undeveloped properties made or
entered into in the ordinary course of business, but excluding (x) any sale of a
net profits or overriding royalty interest, in each case conveyed from or
burdening proved developed or proved undeveloped reserves and (y) any sale of
hydrocarbons or other mineral
5
products as a result of the creation of Dollar-Denominated Production Payments
or Volumetric Production Payments, other than Dollar-Denominated Production
Payments and Volumetric Production Payments created or sold in connection with
the financing of, and within 30 days after, the acquisition of the properties
subject thereto), (d) the disposition of all or substantially all of the assets
of the Company in compliance with Article Five, (e) Sale/Leaseback Transactions
in compliance with Section 4.13, (f) the provision of services and equipment for
the operation and development of the Company's oil and gas ▇▇▇▇▇, in the
ordinary course of the Company's oil and gas service businesses, notwithstanding
that such transactions may be recorded as asset sales in accordance with full
cost accounting guidelines, and (g) the issuance by the Company of shares of its
Capital Stock).
"Attributable Indebtedness" means, with respect to any
particular lease under which any Person is at the time liable and at any date as
of which the amount thereof is to be determined, the present value of the total
net amount of rent required to be paid by such Person under the lease during the
primary term thereof, without giving effect to any renewals at the option of the
lessee, discounted from the respective due dates thereof to such date at the
rate of interest per annum implicit in the terms of the lease. As used in the
preceding sentence, the "net amount of rent" under any lease for any such period
shall mean the sum of rental and other payments required to be paid with respect
to such period by the lessee thereunder excluding any amounts required to be
paid by such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease which is
terminable by the lessee upon payment of a penalty, such net amount of rent
shall also include the amount of such penalty, but no rent shall be considered
as required to be paid under such lease subsequent to the first date upon which
it may be so terminated.
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the product
of (x) the number of years from such date to the date of each successive
scheduled principal payment of such Indebtedness multiplied by (y) the amount of
such principal payment by (ii) the sum of all such principal payments.
"Bank Credit Facility" means any revolving credit, term credit
or letter of credit facility, the proceeds of which are used for working capital
and other general corporate purposes to be entered into by one or more of the
Company and/or its Restricted Subsidiaries and certain financial institutions,
as amended, extended or refinanced from time to time.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person duly authorized to act on behalf of the Board of Directors of such
Person.
"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 or the managing
partner(s) 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 on which the New York Stock
Exchange, Inc. is open for trading and which is not a Legal Holiday.
6
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock or partnership or limited liability company interests and any
and all warrants, options and rights with respect thereto (whether or not
currently exercisable), including each class of common stock and preferred stock
of such Person.
"Capitalized Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under a lease of
property, real or personal, that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the Company's assets to any Person
or group (as such term is used in Section 13(d)(3) of the Exchange Act), other
than to Permitted Holders; (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company; (iii) the acquisition, directly or
indirectly, by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), other than Permitted Holders, of beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act, except that such Person shall be
deemed to have beneficial ownership of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or only after
passage of time) of more than 50% of the aggregate voting power of the Voting
Stock of the Company; provided, however, that the Permitted Holders beneficially
own (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of the Company than such other Person and do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company (for the purposes
of this definition, such other Person shall be deemed to beneficially own any
Voting Stock of a specified corporation held by a parent corporation, if such
other Person is the beneficial owner (as defined above), directly or indirectly,
of more than 35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders beneficially own (as defined in this
proviso), directly or indirectly, in the aggregate a lesser percentage of the
voting power of the Voting Stock of such parent corporation and do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of such parent corporation);
or (iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company was approved by
a vote of 66-2/3% of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Company" means the party named as such above, until a
successor replaces such Person in accordance with the terms of this Indenture,
and thereafter means such successor.
"Consolidated Net Income" of the Company means, for any
period, the aggregate net income (or loss) of the Company and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, however, that there shall
7
not be included in such Consolidated Net Income: (a) any net income of any
Person if such Person is not the Company or a Restricted Subsidiary, except that
(i) subject to the limitations contained in clause (d) below, the Company's
equity in the net income of any such Person for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash or cash
equivalents actually distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution to a Restricted Subsidiary, to
the limitations contained in clause (c) below) and (ii) the Company's equity in
a net loss of any such Person (other than an Unrestricted Subsidiary) for such
period shall be included in determining such Consolidated Net Income; (b) any
net income (or loss) of any Person acquired by the Company or a Subsidiary in a
pooling of interests transaction for any period prior to the date of such
acquisition; (c) the net income of any Restricted Subsidiary to the extent that
the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, is prohibited; (d) any gain
(but not loss) realized upon the sale or other disposition of any property,
plant or equipment of the Company or any Restricted Subsidiary (including
pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise
disposed of in the ordinary course of business and any gain (but not loss)
realized upon the sale or other disposition of any Capital Stock of any Person;
(e) any gain (but not loss) from currency exchange transactions not in the
ordinary course of business consistent with past practice; (f) the cumulative
effect of a change in accounting principles; (g) to the extent deducted in the
calculation of net income, the non-cash charges associated with the repayment of
Indebtedness with the proceeds from the sale of the Securities and the
prepayment of any of the Securities; and (h) any writedowns of non-current
assets; provided, however, that any "ceiling limitation" writedowns under SEC
guidelines shall be treated as capitalized costs, as if such writedowns had not
occurred; and (i) any gain (but not loss) attributable to extraordinary items.
"Consolidated Tangible Net Worth" means, with respect to the
Company and its Restricted Subsidiaries, as at any date of determination, the
sum of Capital Stock (other than Disqualified Stock) and additional paid-in
capital plus retained earnings (or minus accumulated deficit) minus all
intangible assets, including, without limitation, organization costs, patents,
trademarks, copyrights, franchises, research and development costs, and any
amount reflected in treasury stock, of the Company and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Currency Hedge Obligations" means, at any time as to the
Company and its Restricted Subsidiaries, the obligations of such Person at such
time that were incurred in the ordinary course of business pursuant to any
foreign currency exchange agreement, option or futures contract or other similar
agreement or arrangement designed to protect against or manage such Person's or
any of its Subsidiaries' exposure to fluctuations in foreign currency exchange
rates.
"Default" means any event which is, or after notice or passage
of time would be, an Event of Default.
"Disinterested Director" means, with respect to an Affiliate
Transaction or series of related Affiliate Transactions, a member of the Board
of Directors of the Company who has no financial interest, and whose employer
has no financial interest, in such Affiliate Transaction or series of related
Affiliate Transactions.
8
"Disqualified Stock" means any Capital Stock of the Company or
any Restricted Subsidiary of the Company 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 or with the passage of time, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the Maturity Date or which is exchangeable or convertible into debt
securities of the Company or any Restricted Subsidiary of the Company, except to
the extent that such exchange or conversion rights cannot be exercised prior to
the Maturity Date.
"Dollar-Denominated Production Payments" mean production
payment obligations recorded as liabilities in accordance with GAAP, together
with all undertakings and obligations in connection therewith.
"Equity Offering" means any underwritten public offering of
Capital Stock (other than Disqualified Stock) of the Company pursuant to a
registration statement filed pursuant to the Securities Act or any private
placement of Capital Stock (other than Disqualified Stock) of the Company (other
than to any Person who, prior to such private placement, was an Affiliate of the
Company) which offering or placement is consummated after the Issue Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Existing Notes" means the Company's outstanding (i) 7.875%
Senior Notes due 2004, (ii) 8.5% Senior Notes due 2012 and (iii) 8.125% Senior
Notes due 2011.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America as of the Issue Date.
"Guarantee" means, individually and collectively, the
guarantees given by the Subsidiary Guarantors pursuant to Article Ten hereof.
"Holder" means a Person in whose name a Security is registered
on the Registrar's books.
"Indebtedness" means, without duplication, with respect to any
Person, (a) all obligations of such Person (i) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (ii) evidenced by bonds, notes, debentures
or similar instruments, (iii) representing the balance deferred and unpaid of
the purchase price of any property or services (other than accounts payable or
other obligations arising in the ordinary course of business), (iv) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (v) for
the payment of money relating to a Capitalized Lease Obligation, or (vi)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any letter of credit; (b) all net obligations of such Person
under Interest Rate Hedging Agreements, Oil and Gas Hedging Contracts and
Currency Hedge Obligations, except to the extent such net obligations are taken
into account in the determination of future net revenues from proved oil and gas
reserves for purposes of the calculation of Adjusted Consolidated Net Tangible
Assets; (c) all liabilities of others of the kind described in the preceding
clauses (a) or (b) that such Person has guaranteed or that are otherwise its
legal liability (including, with respect to any Production Payment, any
warranties or guaranties of
9
production or payment by such Person with respect to such Production Payment but
excluding other contractual obligations of such Person with respect to such
Production Payment); (d) Indebtedness (as otherwise defined in this definition)
of another Person secured by a Lien on any asset of such Person, whether or not
such Indebtedness is assumed by such Person, the amount of such obligations
being deemed to be the lesser of (1) the full amount of such obligations so
secured, and (2) the fair market value of such asset, as determined in good
faith by the Board of Directors of such Person, which determination shall be
evidenced by a Board Resolution, (e) with respect to such Person, the
liquidation preference or any mandatory redemption payment obligations in
respect of Disqualified Stock; (f) the aggregate preference in respect of
amounts payable on the issued and outstanding shares of Preferred Stock of any
of the Company's Restricted Subsidiaries in the event of any voluntary or
involuntary liquidation, dissolution or winding up (excluding any such
preference attributable to such shares of Preferred Stock that are owned by such
Person or any of its Restricted Subsidiaries; provided, that if such Person is
the Company, such exclusion shall be for such preference attributable to such
shares of Preferred Stock that are owned by the Company or any of its Restricted
Subsidiaries); and (g) any and all deferrals, renewals, extensions, refinancings
and refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b), (c), (d), (e), (f) or this clause (g), whether or not between
or among the same parties. Subject to clause (c) of the preceding sentence,
neither Dollar-Denominated Production Payments nor Volumetric Production
Payments shall be deemed to be Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Initial Purchasers" means, collectively, Bear, ▇▇▇▇▇▇▇ & Co.
Inc. and Credit Suisse First Boston Corporation.
"Interest Rate Hedging Agreements" means, with respect to the
Company and its Restricted Subsidiaries, the obligations of such Persons under
(i) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and (ii) other agreements or arrangements designed to
protect any such Person or any of its Subsidiaries against fluctuations in
interest rates.
"Investment" of any Person means (i) all investments by such
Person in any other Person in the form of loans, advances or capital
contributions, (ii) all guarantees of Indebtedness or other obligations of any
other Person by such Person, (iii) all purchases (or other acquisitions for
consideration) by such Person of assets, Indebtedness, Capital Stock or other
securities of any other Person and (iv) all other items that would be classified
as investments (including, without limitation, purchases of assets outside the
ordinary course of business) or advances on a balance sheet of such Person
prepared in accordance with GAAP.
"Issue Date" means November 5, 2001.
"Lien" means, with respect to any Person, any mortgage,
pledge, lien, encumbrance, easement, restriction, covenant, right-of-way, charge
or adverse claim affecting title or resulting in an encumbrance against real or
personal property of such Person, or a security interest of any kind (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option, right of first refusal or other similar agreement to sell,
in each case securing
10
obligations of such Person and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statute or statutes)
of any jurisdiction).
"Make-Whole Amount" with respect to a Security means an amount
equal to the excess, if any, of (i) the present value of the remaining interest,
premium and principal payments due on such Security (excluding any portion of
such payments of interest accrued as of the redemption date) as if such Security
were redeemed on November 1, 2005, computed using a discount rate equal to the
Treasury Rate plus 50 basis points, over (ii) the outstanding principal amount
of such Security. As used herein, "Treasury Rate" is defined as the yield to
maturity (calculated on a semi-annual bond equivalent basis) at the time of the
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15 (519), which has become publicly available at least two Business Days prior
to the date of the redemption notice or, if such Statistical Release is no
longer published, any publicly available source of similar market data) most
nearly equal to the then remaining maturity of the Securities assuming
redemption of the Securities on November 1, 2005; provided, however, that if the
Make-Whole Average Life of such Security is not equal to the constant maturity
of the United States Treasury security for which a weekly average yield is
given, the Treasury Rate shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the
Make-Whole Average Life of such Securities is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used. As used herein, "Make-Whole Average
Life" means the number of years (calculated to the nearest one-twelfth) between
the date of redemption and November 1, 2005.
"Make-Whole Price" means the greater of (i) the sum of (A) the
outstanding principal amount of the Securities to be redeemed plus (B) the
Make-Whole Amount and (ii) the redemption price (expressed as a percentage of
the principal amount) of the Securities on November 1, 2005 set forth in Section
3.07.
"Maturity Date" means November 1, 2008.
"Net Available Proceeds" means, with respect to any Asset Sale
or Sale/ Leaseback Transaction of any Person, cash proceeds received (including
any cash proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or otherwise, but only as and when received, and
excluding any other consideration until such time as such consideration is
converted into cash) therefrom, in each case net of all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all federal, state or local taxes required to be accrued as a liability as a
consequence of such Asset Sale or Sale/ Leaseback Transaction, and in each case
net of all Indebtedness which is secured by such assets, in accordance with the
terms of any Lien upon or with respect to such assets, or which must, by its
terms or in order to obtain a necessary consent to such Asset Sale or Sale/
Leaseback Transaction or by applicable law, be repaid out of the proceeds from
such Asset Sale or Sale/Leaseback Transaction and which is actually so repaid.
"Net Cash Proceeds" means, in the case of any sale by the
Company of securities pursuant to clauses (B) or (C) of Section 4.10(a)(iii),
the aggregate net cash proceeds received by the Company, after payment of
expenses, commissions, discounts and any other transaction costs incurred in
connection therewith.
11
"Net Working Capital" means (i) all current assets of the
Company and its Restricted Subsidiaries, minus (ii) all current liabilities of
the Company and its Restricted Subsidiaries, except current liabilities included
in Indebtedness.
"Non-Recourse Indebtedness" means Indebtedness or that portion
of Indebtedness of a Non-Recourse Subsidiary as to which (a) neither the Company
nor any other Subsidiary (other than a Non-Recourse Subsidiary) (i) provides
credit support, including any undertaking, agreement or instrument which would
constitute Indebtedness or (ii) is directly or indirectly liable for such
Indebtedness and (b) no default with respect to such Indebtedness (including any
rights which the holders thereof may have to take enforcement action against a
Non-Recourse Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness (other than Non-Recourse Indebtedness) of the
Company or its Subsidiaries (other than a Non-Recourse Subsidiary) to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Non-Recourse Subsidiary" means a Subsidiary or an Affiliate
(i) established for the purpose of acquiring or investing in property securing
Non-Recourse Indebtedness, (ii) substantially all of the assets of which consist
of property securing Non-Recourse Indebtedness, and (iii) which shall have been
designated as a Non-Recourse Subsidiary by a Board Resolution adopted by the
Board of Directors of the Company, as evidenced by an Officers' Certificate
delivered to the Trustee. The Company may redesignate any Non-Recourse
Subsidiary of the Company to be a Subsidiary other than a Non-Recourse
Subsidiary by a Board Resolution adopted by the Board of Directors of the
Company, as evidenced by an Officers' Certificate delivered to the Trustee, if,
after giving effect to such redesignation, the Company could borrow $1.00 of
additional Indebtedness pursuant to Section 4.09(a) (such redesignation being
deemed an incurrence of additional Indebtedness (other than Non-Recourse
Indebtedness)).
"Officer" means, with respect to any Person, the Chairman of
the Board, the President, any Vice President, the Chief Financial Officer or the
Treasurer of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either the Secretary, or
an Assistant Secretary or Assistant Treasurer of such Person. One of the
Officers signing an Officers' Certificate given pursuant to Section 4.03(a)
shall be the principal executive, financial or accounting officer of the Person
delivering such certificate.
"Oil and Gas Business" means the business of the exploration
for, and exploitation, development, production, processing (but not refining),
marketing, storage and transportation of, hydrocarbons, and other related energy
and natural resource businesses (including oil and gas services businesses
related to the foregoing).
"Oil and Gas Hedging Contracts" means any oil and gas purchase
or hedging agreements, and other agreement or arrangement, in each case, that is
designed to provide protection against price fluctuations of oil, gas or other
commodities.
"Oil and Gas Securities" means the Voting Stock of a Person
primarily engaged in the Oil and Gas Business, provided that such Voting Stock
shall constitute a majority of the Voting Stock of such Person in
12
the event that such Voting Stock is not registered under Section 12 of the
Exchange Act.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company (or any Subsidiary Guarantor, if
applicable) or the Trustee.
"Permitted Business Investments" means (i) Investments in
assets used in the Oil and Gas Business; (ii) the acquisition of Oil and Gas
Securities; (iii) the entry into operating agreements, joint ventures,
processing agreements, farm-out agreements, development agreements, area of
mutual interest agreements, contracts for the sale, transportation or exchange
of oil and natural gas, unitization agreements, pooling arrangements, joint
bidding agreements, service contracts, partnership agreements (whether general
or limited) 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, excluding, however, Investments in
corporations; (iv) the acquisition of working interests, royalty interests or
mineral leases relating to oil and gas properties; (v) Investments by the
Company or any Wholly Owned Restricted Subsidiary in any Person which,
immediately prior to the making of such Investment, is a Wholly Owned Restricted
Subsidiary; (vi) Investments in the Company by any Wholly Owned Restricted
Subsidiary; (vii) Investments permitted under Section 4.11 or Section 4.13;
(viii) Investments in any Person the consideration for which consists of
Qualified Stock and (ix) any other Investments in an amount not to exceed 10% of
Adjusted Consolidated Net Tangible Assets determined as of the date of the
making or incurrence of such Investment.
"Permitted Company Refinancing Indebtedness" means
Indebtedness of the Company, the net proceeds of which are used to renew,
extend, refinance, refund or repurchase outstanding Indebtedness of the Company,
provided that (i) if the Indebtedness (including the Securities) being renewed,
extended, refinanced, refunded or repurchased is pari passu with or subordinated
in right of payment to the Securities, then such Indebtedness is pari passu or
subordinated in right of payment to, as the case may be, the Securities at least
to the same extent as the Indebtedness being renewed, extended, refinanced,
refunded or repurchased, (ii) such Indebtedness is scheduled to mature no
earlier than the Indebtedness being renewed, extended, refinanced, refunded or
repurchased, and (iii) such Indebtedness has an Average Life at the time such
Indebtedness is incurred that is equal to or greater than the Average Life of
the Indebtedness being renewed, extended, refinanced, refunded or repurchased;
provided, further, that such Indebtedness (to the extent that such Indebtedness
constitutes Permitted Company Refinancing Indebtedness) is in an aggregate
principal amount (or, if such Indebtedness is issued at a price less than the
principal amount thereof, the aggregate amount of gross proceeds therefrom is)
not in excess of the aggregate principal amount then outstanding of the
Indebtedness being renewed, extended, refinanced, refunded or repurchased (or if
the Indebtedness being renewed, extended, refinanced, refunded or repurchased
was issued at a price less than the principal amount thereof, then not in excess
of the amount of liability in respect thereof determined in accordance with
GAAP).
"Permitted Financial Investments" means the following kinds of
instruments if, in the case of instruments referred to in clauses (i)-(iv)
below, on the date of purchase or other acquisition of any such instrument by
the Company or any Subsidiary, the remaining term to maturity is not more than
one year; (i) readily marketable obligations issued or
13
unconditionally guaranteed as to principal of and interest thereon by the United
States of America or by any agency or authority controlled or supervised by and
acting as an instrumentality of the United States of America; (ii) repurchase
obligations for instruments of the type described in clause (i) for which
delivery of the instrument is made against payment; (iii) obligations
(including, but not limited to, demand or time deposits, bankers' acceptances
and certificates of deposit) issued by a depositary institution or trust company
incorporated or doing business under the laws of the United States of America,
any state thereof or the District of Columbia or a branch or subsidiary of any
such depositary institution or trust company operating outside the United
States, provided, that such depositary institution or trust company has, at the
time of the Company's or such Subsidiary's investment therein or contractual
commitment providing for such investment, capital surplus or undivided profits
(as of the date of such institution's most recently published financial
statements) in excess of $500,000,000; (iv) commercial paper issued by any
corporation, if such commercial paper has, at the time of the Company's or any
Subsidiary's investment therein or contractual commitment providing for such
investment, credit ratings of A-1 (or higher) by Standard & Poor's Ratings
Services and P-1 (or higher) by ▇▇▇▇▇'▇ Investors Service, Inc.; and (v) money
market mutual or similar funds having assets in excess of $500,000,000.
"Permitted Holders" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇
and their respective Affiliates.
"Permitted Indebtedness" means (i) Indebtedness of the Company
and its Restricted Subsidiaries under a Bank Credit Facility as the same may be
amended, refinanced, or replaced, in a principal amount outstanding at any time
not to exceed the greater of (a) $300 million and (b) $100 million plus 20% of
Adjusted Consolidated Net Tangible Assets, less any Net Available Proceeds
applied in accordance with Section 4.11(b) hereof to repay or prepay such
Indebtedness which repayment or prepayment results in a permanent reduction in
any revolving credit or other commitment relating thereto or the maximum amount
that may be borrowed thereunder; (ii) Indebtedness of the Company and its
Restricted Subsidiaries outstanding on the Issue Date; (iii) other Indebtedness
of the Company and its Restricted Subsidiaries in a principal amount not to
exceed $25 million at any one time outstanding; (iv) Non-Recourse Indebtedness;
(v) Indebtedness of the Company to any Wholly Owned Restricted Subsidiary of the
Company and Indebtedness of any Restricted Subsidiary of the Company to the
Company or another Wholly Owned Restricted Subsidiary of the Company; (vi)
Permitted Company Refinancing Indebtedness; (vii) Permitted Subsidiary
Refinancing Indebtedness; (viii) obligations of the Company and its Restricted
Subsidiaries under Currency Hedge Obligations, Oil and Gas Hedging Contracts or
Interest Rate Hedging Agreements; (ix) Indebtedness under the Securities
(excluding any Additional Securities); and (x) Indebtedness of a Subsidiary
pursuant to a Guarantee of the Securities in accordance with Article Ten of this
Indenture.
"Permitted Investments" means Permitted Business Investments
and Permitted Financial Investments.
"Permitted Liens" means (i) Liens existing on the Issue Date;
(ii) Liens under a Bank Credit Facility; provided, however, such Liens are
limited to Proved Developed Properties of the Company and its Subsidiaries and
such Liens secure Indebtedness in an amount not in excess of that permitted to
be incurred in accordance with clause (i) of the definition of "Permitted
Indebtedness"; (iii) Liens now or hereafter securing any Interest Rate Hedging
Agreements so long as the related Indebtedness
14
(a) constitutes the Existing Notes or the Securities (or any Permitted Company
Refinancing Indebtedness in respect thereof) or (b) is, or is permitted to be
under this Indenture, secured by a Lien on the same property securing such
interest rate hedging obligations; (iv) Liens securing Permitted Company
Refinancing Indebtedness or Permitted Subsidiary Refinancing Indebtedness;
provided, that such Liens extend to or cover only the property or assets
currently securing the Indebtedness being refinanced; (v) Liens for taxes,
assessments and governmental charges not yet delinquent or being contested in
good faith and for which adequate reserves have been established to the extent
required by GAAP; (vi) mechanics', worker's, materialmen's, operators' or
similar Liens arising in the ordinary course of business; (vii) Liens in
connection with worker's compensation, unemployment insurance or other social
security, old age pension or public liability obligations; (viii) Liens,
deposits or pledges to secure the performance of bids, tenders, contracts (other
than contracts for the payment of money), leases, public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of business;
(ix) survey exceptions, encumbrances, easements or reservations of, or rights of
others for, rights of way, zoning or other restrictions as to the use of real
properties, and minor defects in title which, in the case of any of the
foregoing, were not incurred or created to secure the payment of borrowed money
or the deferred purchase price of property or services, and in the aggregate do
not materially adversely affect the value of such properties or materially
impair use for the purposes of which such properties are held by the Company or
any Restricted Subsidiaries; (x) Liens on, or related to, properties to secure
all or part of the costs incurred in the ordinary course of business of
exploration, drilling, development or operation thereof; (xi) Liens on pipeline
or pipeline facilities which arise out of operation of law; (xii) judgment and
attachment Liens not giving rise to an Event of Default or Liens created by or
existing from any litigation or legal proceeding that are currently being
contested in good faith by appropriate proceedings and for which adequate
reserves have been made; (xiii) (a) Liens upon any property of any Person
existing at the time of acquisition thereof by the Company or a Restricted
Subsidiary, (b) Liens upon any property of a Person existing at the time such
Person is merged or consolidated with the Company or any Restricted Subsidiary
or existing at the time of the sale or transfer of any such property of such
Person to the Company or any Restricted Subsidiary, or (c) Liens upon any
property of a Person existing at the time such Person becomes a Restricted
Subsidiary; provided, that in each case such Lien has not been created in
contemplation of such sale, merger, consolidation, transfer or acquisition, and
provided, further, that in each such case no such Lien shall extend to or cover
any property of the Company or any Restricted Subsidiary other than the property
being acquired and improvements thereon; (xiv) Liens on deposits to secure
public or statutory obligations or in lieu of surety or appeal bonds entered
into in the ordinary course of business; (xv) 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 Company or any Subsidiary on deposit with
or in possession of such bank; (xvi) purchase money security interests granted
in connection with the acquisition of assets in the ordinary course of business
and consistent with past practices, provided, that (A) such Liens attach only to
the property so acquired with the purchase money indebtedness secured thereby
and (B) such Liens secure only Indebtedness that is not in excess of 100% of the
purchase price of such assets; (xvii) Liens reserved in oil and gas mineral
leases for bonus or rental payments and for compliance with the terms of such
leases; (xviii) Liens arising under partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale, purchase,
exchange,
15
transportation or processing (but not refining) of oil, gas or other
hydrocarbons, unitization and pooling declarations and agreements, development
agreements, operating agreements, area of mutual interest agreements, and other
similar agreements which are customary in the Oil and Gas Business; (xix) Liens
securing obligations of the Company or any of its Restricted Subsidiaries under
Currency Hedge Obligations or Oil and Gas Hedging Contracts; and (xx) Liens to
secure Dollar-Denominated Production Payments and Volumetric Production
Payments.
"Permitted Subsidiary Refinancing Indebtedness" means
Indebtedness of any Restricted Subsidiary, the net proceeds of which are used to
renew, extend, refinance, refund or repurchase outstanding Indebtedness of such
Restricted Subsidiary, provided that (i) if the Indebtedness (including the
Guarantees) being renewed, extended, refinanced, refunded or repurchased is pari
passu with or subordinated in right of payment to the Guarantees, then such
Indebtedness is pari passu with or subordinated in right of payment to, as the
case may be, the Guarantees at least to the same extent as the Indebtedness
being renewed, extended, refinanced, refunded or repurchased, (ii) such
Indebtedness is scheduled to mature no earlier than the Indebtedness being
renewed, extended, refinanced, refunded or repurchased, and (iii) such
Indebtedness has an Average Life at the time such Indebtedness is incurred that
is equal to or greater than the Average Life of the Indebtedness being renewed,
extended, refinanced, refunded or repurchased; provided, further, that such
Indebtedness (to the extent that such Indebtedness constitutes Permitted
Subsidiary Refinancing Indebtedness) is in an aggregate principal amount (or, if
such Indebtedness is issued at a price less than the principal amount thereof,
the aggregate amount of gross proceeds therefrom is) not in excess of the
aggregate principal amount then outstanding of the Indebtedness being renewed,
extended, refinanced, refunded or repurchased (or if the Indebtedness being
renewed, extended, refinanced, refunded or repurchased was issued at a price
less than the principal amount thereof, then not in excess of the amount of
liability in respect thereof determined in accordance with GAAP); provided,
however, that a Restricted Subsidiary shall not incur refinancing Indebtedness
to renew, extend, refinance, refund or repurchase outstanding Indebtedness of
the Company or another Subsidiary.
"Person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization or government or any agency
or political subdivision thereof.
"Preferred Shares" means the 624,037 shares of 7% Cumulative
Convertible Preferred Stock of the Company having a par value of $0.01 per share
and a liquidation preference of $50 per share issued by the Company pursuant to
the Preferred Stock Offering, all of which shares were redeemed as of May 1,
2001.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated),
which is preferred as to the payment of dividends, or upon any voluntary or
involuntary liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.
"Preferred Stock Offering" means the private placement of
Preferred Shares that closed on or about April 22, 1998.
"Production Payments" means, collectively, Dollar-Denominated
Production Payments and Volumetric Production Payments.
16
"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 Eleven of Regulation S-X under the Securities Act.
"Proved Developed Properties" means working interests, royalty
interests, and other interests in oil, gas or mineral leases or other interests
in oil, gas or mineral properties to which reserves are attributed which may
properly be categorized as proved developed reserves under Regulation S-X under
the Securities Act; together with all contracts, agreements and contract rights
which cover, affect or otherwise relate to such interests; all hydrocarbons and
all payments of any type in lieu of production; all improvements, fixtures,
equipment, information, data and other property used in connection therewith or
in connection with the treating, handling, storing, processing, transporting or
marketing of such hydrocarbons; all insurance policies relating thereto or to
the operation thereof; all personal property related thereto; and all proceeds
thereof.
"Qualified Stock" means any Capital Stock that is not
Disqualified Stock.
"Reference Date" means March 31, 1998.
"Reference Period" means, with respect to any Person, the
period of four consecutive fiscal quarters ending with the last full fiscal
quarter for which financial information is available immediately preceding any
date upon which any determination is to be made pursuant to the terms of the
Securities or this Indenture.
"Restricted Payment" means, with respect to any Person, any of
the following: (i) any dividend or other distribution in respect of such
Person's Capital Stock (other than (a) dividends or distributions payable solely
in Capital Stock (other than Disqualified Stock) (b) in the case of Restricted
Subsidiaries of the Company, dividends or distributions payable to the Company
or to a Restricted Subsidiary of the Company and (c) in the case of the Company,
cash dividends payable on the Preferred Shares); (ii) the purchase, redemption
or other acquisition or retirement for value of any Capital Stock, or any
option, warrant, or other right to acquire shares of Capital Stock, of the
Company or any of its Restricted Subsidiaries; (iii) the making of any principal
payment on, or the purchase, defeasance, repurchase, redemption or other
acquisition or retirement for value, prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment, of any Indebtedness which is
subordinated in right of payment to the Securities; and (iv) the making by such
Person of any Investment other than a Permitted Investment.
"Restricted Security" has the meaning provided in Rule
144(a)(3) under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that,
immediately after giving effect to such designation of any Unrestricted
Subsidiary, the Company could incur at least $1.00 in additional Indebtedness
pursuant to Section 4.09(a). As of the Issue Date, all of the Company's
Subsidiaries other than ▇▇▇▇▇▇ Acquisition Corp. and Chesapeake Energy
Marketing, Inc. (which shall constitute Unrestricted Subsidiaries as of the
Issue Date) shall be Restricted Subsidiaries.
17
"Sale/Leaseback Transaction" means with respect to the Company
or any of its Restricted Subsidiaries, any arrangement with any Person providing
for the leasing by the Company or any of its Restricted Subsidiaries of any
principal property, acquired or placed into service more than 180 days prior to
such arrangement, whereby such property has been or is to be sold or transferred
by the Company or any of its Restricted Subsidiaries to such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Indebtedness" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter incurred), unless such
Indebtedness is contractually subordinate or junior in right of payment of
principal, premium and interest to the Securities.
"Senior Indebtedness of a Subsidiary Guarantor" means any
Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date
or thereafter incurred), unless such Indebtedness is contractually subordinate
or junior in right of payment of principal, premium and interest to the
Guarantees.
"Subordinated Indebtedness of a Subsidiary Guarantor" means
any Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue
Date or thereafter incurred) which is contractually subordinate or junior in
right of payment of principal, premium and interest to the Guarantees.
"Subordinated Indebtedness of the Company" means any
Indebtedness of the Company (whether outstanding on the Issue Date or thereafter
incurred) which is contractually subordinate or junior in right of payment of
principal, premium and interest to the Securities.
"Subsidiary" means any subsidiary of the Company. A
"subsidiary" of any Person means (i) a corporation a majority of whose Voting
Stock is at the time, directly or indirectly, owned by such Person, by one or
more subsidiaries of such Person or by such Person and one or more subsidiaries
of such Person, (ii) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general or limited partner of such
partnership, but only if such Person or its subsidiary is entitled to receive
more than 50 percent of the assets of such partnership upon its dissolution, or
(iii) any other Person (other than a corporation or partnership) in which such
Person, directly or indirectly, at the date of determination thereof, has (x) at
least a majority ownership interest or (y) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"Subsidiary Guarantor" means (i) each of the Subsidiaries that
becomes a guarantor of the Securities in compliance with the provisions of
Article Ten of this Indenture and (ii) each of the Subsidiaries executing a
supplemental indenture in which such Subsidiary agrees to be bound by the terms
of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as
provided in Section 9.03.
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"Trust Officer" means any officer or assistant officer within
the corporate trust department of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor.
"Unrestricted Subsidiary" means (a) ▇▇▇▇▇▇ Acquisition Corp.
and Chesapeake Energy Marketing, Inc. until such time as any such Subsidiary
shall be designated as a Restricted Subsidiary, (b) any Subsidiary of an
Unrestricted Subsidiary and (c) any Subsidiary of the Company or of a Restricted
Subsidiary that is designated as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors in accordance with the requirements of the
following sentence. The Company may designate any Subsidiary of the Company or
of a Restricted Subsidiary (including a newly acquired or newly formed
Subsidiary or any Restricted Subsidiary of the Company), to be an Unrestricted
Subsidiary by a resolution of the Board of Directors of the Company, as
evidenced by written notice thereof delivered to the Trustee, if immediately
after giving effect to such designation, (i) the Company could incur $1.00 of
additional Indebtedness pursuant to Section 4.09(a), (ii) the Company could make
an additional Restricted Payment of $1.00 pursuant to Section 4.10(a), (iii)
such Subsidiary does not own or hold any Capital Stock of, or any lien on any
property of, the Company or any Restricted Subsidiary and (iv) such Subsidiary
is not liable, directly or indirectly, with respect to any Indebtedness other
than Unrestricted Subsidiary Indebtedness.
"Unrestricted Subsidiary Indebtedness" of any Person means
Indebtedness of such Person (a) as to which neither the Company nor any
Restricted Subsidiary is directly or indirectly liable (by virtue of the
Company's or such Restricted Subsidiary's being the primary obligor, or
guarantor of, or otherwise liable in any respect on, such Indebtedness), (b)
which, with respect to Indebtedness incurred after the Issue Date by the Company
or any Restricted Subsidiary, upon the occurrence of a default with respect
thereto, does not result in, or permit any holder of any Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such Indebtedness
of the Company or any Restricted Subsidiary and (c) which is not secured by any
assets of the Company or of any Restricted Subsidiary.
"U.S. Government Securities" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof.
"U.S. Legal Tender" means such coin or currency of the United
States as at the time of payment shall be legal tender for the payment of public
and private debts.
"Volumetric Production Payments" mean production payment
obligations recorded as deferred revenue in accordance with GAAP, together with
all undertakings and obligations in connection therewith.
"Voting Stock" means, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling the
19
holders thereof (whether at all times or only so long as no senior class of
stock has voting power by reason of contingency) to vote in the election of
members of the Board of Directors or other governing body of such Person.
"Wholly Owned Restricted Subsidiary" means a Restricted
Subsidiary all the Capital Stock (other than directors' qualifying shares, if
applicable) of which is owned by the Company or another Wholly Owned Restricted
Subsidiary.
SECTION 1.02. Other Definitions.
Other terms used in this Indenture are defined in the Appendix
or in the Section indicated below:
Term Defined in Section
---- ------------------
"Affiliate Transaction"............................................................. 4.15
"Appendix".......................................................................... 2.01
"Bankruptcy Law".................................................................... 6.01
"Change of Control Offer"........................................................... 4.16
"Change of Control Notice".......................................................... 4.16
"Change of Control Payment Date".................................................... 4.16
"Covenant Defeasance"............................................................... 8.03
"Custodian" ....................................................................... 6.01
"Event of Default".................................................................. 6.01
"Excess Proceeds"................................................................... 4.11
"Funding Guarantor"................................................................. 10.06
"incur" .......................................................................... 4.09
"Legal Defeasance" ................................................................. 8.02
"Legal Holiday" ................................................................... 11.07
"Net Proceeds Offer" ............................................................... 4.11
"Net Proceeds Offer Amount"......................................................... 4.11
"Net Proceeds Payment Date"......................................................... 4.11
"Paying Agent"...................................................................... 2.03
"Payment Default"................................................................... 6.01
"Payment Restriction"............................................................... 4.14
"Registrar"......................................................................... 2.03
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms, if used in this Indenture, have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and the
Guarantees.
"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 Company, the
Subsidiary Guarantors and any other obligor on the Securities or the Guarantees.
20
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them therein.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) any gender used in this Indenture shall be deemed to
include the neuter, masculine or feminine genders;
(6) provisions apply to successive events and transactions;
and
(7) "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.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating. Provisions relating to the Initial
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix")
which is hereby incorporated in and expressly made part of this Indenture. The
Initial Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 to the Appendix which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities, the Private Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company and
to the Trustee). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibit A are part of
the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the
21
Security. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver
$250 million of Initial Securities and, at any time and from time to time
thereafter, the Trustee shall authenticate and deliver Securities for original
issue in an aggregate principal amount specified in such order, in each case
upon a written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and, in
the case of an issuance of Additional Securities pursuant to Section 2.13 after
the Issue Date, shall certify that such issuance is in compliance with Section
4.09.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights with respect to the Company as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent and shall furnish the
Trustee with an executed counterpart of any such agency agreement. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.07. The Company or any Wholly Owned Subsidiary incorporated or
organized within The United States of America may act as Paying Agent,
Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to 11:00
a.m., New York time, each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the
22
Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
SECTION 2.05. 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 Holders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee, in writing at least five Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of this Indenture and Section
8-401(1) of the Uniform Commercial Code are met. When Securities are presented
to the Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
23
SECTION 2.09. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancelation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a payment
of interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the persons who are Holders on a
subsequent special record date. The Company shall fix or cause to be fixed any
such special record date and payment date to the reasonable satisfaction of the
Trustee and shall promptly mail to each Holder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 2.13. Issuance of Additional Securities. The Company shall be
entitled, subject to its compliance with Section 4.09(a), to issue Additional
Securities under this Indenture which shall have identical terms as the Initial
Securities issued on the Issue Date, other than with respect to the date of
issuance and issue price. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor shall be treated as a single class for all purposes
under this Indenture.
With respect to any Additional Securities, the Company shall
set forth in a resolution of the Board of Directors and an Officers'
Certificate, a copy of each which shall be delivered to the Trustee, the
following information:
(1) the aggregate principal amount of such Additional
Securities to be authenticated and delivered pursuant to this
Indenture;
(2) the issue price, the issue date and the CUSIP number of
such Additional Securities; provided, however, that no Additional
24
Securities may be issued at a price that would cause such Additional
Securities to have "original issue discount" within the meaning of
Section 1273 of the Code; and
(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Initial Securities as
set forth in the Appendix to this Indenture or shall be issued in the
form of Exchange Securities as set forth in Exhibit A.
Additional Securities may be issued with the same CUSIP number as the
Securities issued on the Issue Date if, and only if, the Company shall have
provided the Trustee with an opinion of nationally recognized counsel,
reasonably satisfactory to the Trustee, to the effect that such Additional
Securities will be fungible with the Securities issued on the Issue Date for all
United States federal income tax purposes.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notice to Trustee. If the Company elects to redeem
Securities pursuant to the optional redemption provisions of Paragraphs 5, 6 or
7 of the Securities, it shall furnish to the Trustee and the Registrar, at least
45 days but not more than 60 days before the redemption date (unless the Trustee
consents to a shorter period in writing), an Officers' Certificate setting forth
the redemption date, the principal amount of Securities to be redeemed and the
redemption price, including the detail of the calculation of the Make-Whole
Price, if applicable.
SECTION 3.02. Selection of Securities to Be Redeemed. If less than all
of the Securities are to be redeemed at any time, the Trustee shall select the
Securities to be redeemed pro rata, by lot or, if the Securities are listed on
any securities exchange, by any other method that the Trustee considers fair and
appropriate and that complies with the requirements of such exchange; provided,
however, that no Securities with a principal amount of $1,000 or less will be
redeemed in part. The Trustee shall make the selection from outstanding
Securities not previously called for redemption not less than 30 nor more than
60 days prior to the redemption date. Securities and portions of them it selects
shall be in amounts of $1,000 or whole multiples of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities selected for redemption.
SECTION 3.03. Notice of Redemption. (a) At least 30 days but not more
than 60 days before a redemption date, the Company shall mail a notice of
redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder's registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the aggregate principal amount of Securities
being redeemed;
25
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in
such notice to collect the redemption price;
(6) that, unless the Company defaults in the payment
of the redemption price or accrued interest, interest on
Securities called for redemption ceases to accrue on and after
the redemption date and the only remaining right of the
Holders is to receive payment of the redemption prices in
respect of the Securities upon surrender to the Paying Agent
of the Securities;
(7) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be
redeemed and that, after the redemption date, upon surrender
of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion will be issued in the
name of the Holder thereof upon cancelation of the Security or
Securities being redeemed;
(8) the paragraph of the Securities pursuant to which
the Securities called for redemption are being redeemed; and
(9) the CUSIP number of the Securities.
(b) At the Company's request, the Trustee shall give the
notice of redemption required in Section 3.03(a) in the Company's name and at
the Company's expense; provided, however, that the Company shall deliver to the
Trustee, at least 45 days prior to the redemption date (unless the Trustee
consents to a shorter notice period in writing), an Officers' Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in Section 3.03(a).
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.03, Securities called for
redemption become due and payable on the redemption date at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price, plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05.Deposit of Redemption Price. Prior to 11:00 a.m., New York
time, the redemption date, the Company shall deposit with the Paying Agent (or
if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in
trust) funds available on the redemption date sufficient to pay the redemption
price of, and accrued and unpaid interest on, the Securities to be redeemed on
that date. The Paying Agent shall promptly return to the Company any money so
deposited which is not required for that purpose upon the written request of the
Company, except with respect to monies owed as obligations to the Trustee
pursuant to Article Seven.
If any Security called for redemption shall not be so paid
upon redemption because of the failure of the Company to comply with the
preceding paragraph, interest will continue to be payable on the unpaid
principal and premium, if any, including from the redemption date until
26
such principal and premium, if any, is paid, and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the rate provided in
the Securities and in Section 4.01 hereof.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is to be redeemed in part, the Company shall issue and the Trustee shall
authenticate for the Holder, at the expense of the Company, a new Security equal
in aggregate amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. Optional Redemption. Except as set forth in Sections 3.08
and 3.09 hereof, the Company shall not have the option to redeem the Securities
prior to November 1, 2005. The Securities may be redeemed at the option of the
Company, in whole or from time to time in part, at any time on or after November
1, 2005, at the redemption prices set forth below (expressed as a percentage of
the principal amount of the Securities to be redeemed), together with accrued
and unpaid interest on the Securities so redeemed to the redemption date, if
redeemed during the 12-month period commencing on November 1 of the years
indicated below:
Redemption
Year Price
---- ----------
2005............................................................... 104.188%
2006 .............................................................. 102.094%
2007 and thereafter ............................................... 100.000%
Any redemption pursuant to this Section 3.07 shall be made, to
the extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
SECTION 3.08. Equity Offering Redemption. In the event the Company
consummates one or more Equity Offerings on or prior to November 1, 2004, the
Company may redeem, in its sole discretion, up to 35% of the aggregate principal
amount of the Securities (which includes Additional Securities, if any) with all
or a portion of the aggregate net proceeds received by the Company from any such
Equity Offering or Equity Offerings at a redemption price of 108.375% of the
aggregate principal amount of the Securities so redeemed, plus accrued and
unpaid interest on the Securities so redeemed to the redemption date; provided,
however, that (i) the date of any such redemption occurs within the 90-day
period after the Equity Offering in respect of which such redemption is made and
(ii) following each such redemption, at least 65% of the aggregate principal
amount of the Securities (which includes Additional Securities, if any) remains
outstanding.
Any redemption pursuant to this Section 3.08 shall be made, to
the extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
SECTION 3.09. Optional Redemption at Make-Whole Price. At any time
prior to November 1, 2005, the Company may, at its option, redeem all or any
portion of the Securities at the Make-Whole Price plus accrued and unpaid
interest on the Securities so redeemed to the date of redemption.
Any redemption pursuant to this Section 3.09 shall be made, to
the extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
27
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall pay the
principal of, premium, if any, and interest on, the Securities on the dates and
in the manner provided in the Securities and this Indenture. Principal, premium
and interest shall be considered paid on the date due if the Trustee or Paying
Agent holds on that date money deposited by the Company designated for and
sufficient to pay all principal, premium and interest then due. All references
to interest in this Indenture shall for all purposes be deemed to include any
additional interest payable as liquidated damages pursuant to the Registration
Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal, and
premium, if any, at the rate borne by the Securities to the extent lawful; and
it shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. (a) The Company, within 15 days after it
files the same with the SEC, shall deliver to Holders, copies of the annual
reports and the information, documents and other reports (or copies of any such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be
required to remain subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall file with the SEC and provide Holders
with such annual reports and such information, documents and other reports
specified in Sections 13 and 15(d) of the Exchange Act. The Company and each
Subsidiary Guarantor shall also comply with the provisions of TIA Section
314(a).
(b) The Company may request the Trustee on behalf of the
Company at the Company's expense to mail the foregoing to Holders. In such case,
the Company shall provide the Trustee with a sufficient number of copies of all
reports and other documents and information that the Trustee may be required to
deliver to Holders under this Section.
SECTION 4.03. Compliance Certificates. (a) The Company shall deliver to
the Trustee, within 90 days after the end of each fiscal year of the Company, an
Officers' Certificate substantially in the form of Exhibit J hereto, stating
that a review of the activities of the Company and the Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that, to the best of
such Officer's knowledge, the Company and each Subsidiary Guarantor has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
such Officer may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of such Officer's
knowledge, after reasonable inquiry, no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium,
if any, or interest, if any, on the Securities are prohibited or, if such event
has occurred, a description of the event and
28
what action the Company and the Subsidiary Guarantors are taking or propose to
take with respect thereto. Such Officers' Certificate shall comply with TIA
Section 314(a)(4). The Company hereby represents that, as of the Issue Date, its
fiscal year ends December 31, and hereby covenants that it shall notify the
Trustee at least 30 days in advance of any change in its fiscal year.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 shall be
accompanied by a written statement of the Company's independent public
accountants (which shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Sections 4.07, 4.09, 4.10, 4.11 or 4.15
of this Indenture (to the extent such provisions relate to accounting matters)
or, if any such violation has occurred, specifying the nature and period of
existence thereof. Where such financial statements are not accompanied by such a
written statement, the Company shall furnish the Trustee with an Officers'
Certificate stating that any such written statement would be contrary to the
then current recommendations of the American Institute of Certified Public
Accountants.
(c) The Company and the Subsidiary Guarantors will, so long as
any of the Securities are outstanding, deliver to the Trustee forthwith upon any
Officer becoming aware of any Default or Event of Default or default in the
performance of any covenant, agreement or condition contained in this Indenture,
an Officers' Certificate specifying such Default or Event of Default and what
action the Company or any Subsidiary Guarantor proposes to take with respect
thereto.
SECTION 4.04. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
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 11.02. If at any time the Company shall fail to maintain any
required office or agency or shall fail to furnish the Trustee with the address
thereof, such surrenders, presentations, notices and demands may be made or
served at the corporate trust office of the Trustee.
Subject to Section 2.03, the Company may also from time to
time designate one or more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the Borough of Manhattan, The City of New York, for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
SECTION 4.05. Corporate Existence. The Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence
29
of each Subsidiary and all rights (charter and statutory) and franchises of the
Company and the Subsidiaries; provided, that the Company shall not be required
to preserve the corporate existence of any Subsidiary, or any such right or
franchise, if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.06. Waiver of Stay, Extension or Usury Laws. The Company and
each Subsidiary Guarantor covenants (to the extent that each may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension, or usury law or
other law, which would prohibit or forgive the Company or any Subsidiary
Guarantor from paying all or any portion of the principal of, premium, if any,
or interest on the Securities as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
each of the Company and the Subsidiary Guarantors hereby expressly waives all
benefit or advantage of any such law, and covenants that it 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 4.07. Payment of Taxes and Other Claims. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary and (b) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon the
property of the Company or any Subsidiary; provided, however, that the Company
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 proceedings.
SECTION 4.08. Maintenance of Properties and Insurance. (a) The Company
shall cause all properties used or held for use in the conduct of its business
or the business of any Subsidiary to be maintained and kept in good condition,
repair and working order (ordinary wear and tear excepted) and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any such property, or disposing of
it, if such discontinuance or disposal is, in the judgment of the Company,
desirable in the conduct of its business and not disadvantageous in any material
respect to the Holders.
(b) The Company shall provide or cause to be provided, for
itself and each of its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Company, are adequate and appropriate for the conduct
of the business of the Company and such Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the reasonable, good faith opinion of the
Company, for corporations similarly situated in the industry.
30
SECTION 4.09. Limitation on Incurrence of Additional Indebtedness.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries, directly or indirectly, to issue, incur, assume,
guarantee, become liable, contingently or otherwise, with respect to or
otherwise become responsible for the payment of (collectively, "incur") any
Indebtedness; provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness, the Company or its Restricted Subsidiaries may
incur Indebtedness if, on a pro forma basis, after giving effect to such
incurrence and the application of the proceeds therefrom, either of the
following tests shall have been satisfied: (i) the Adjusted Consolidated EBITDA
Coverage Ratio would have been at least 2.25 to 1.0; or (ii) Adjusted
Consolidated Net Tangible Assets would have been greater than 200% of
Indebtedness of the Company and its Restricted Subsidiaries.
(b) Notwithstanding the foregoing, if no Default or Event of
Default shall have occurred and be continuing at the time or as a consequence of
the incurrence of such Indebtedness, the Company and its Restricted Subsidiaries
may incur Permitted Indebtedness.
(c) Any Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be incurred by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary.
SECTION 4.10. Limitation on Restricted Payments. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment, unless:
(i) no Default or Event of Default shall have
occurred and be continuing at the time of or immediately after
giving effect to such Restricted Payment;
(ii) at the time of and immediately after giving
effect to such Restricted Payment, the Company would be able
to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 4.09(a); and
(iii) immediately after giving effect to such
Restricted Payment, the aggregate of all Restricted Payments
declared or made after the Reference Date does not exceed the
sum of (A) 50% of the Consolidated Net Income of the Company
and its Restricted Subsidiaries (or in the event such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit) during the period (treated as one accounting period)
subsequent to the Reference Date and ending on the last day of
the fiscal quarter immediately preceding the date of such
Restricted Payment; (B) the aggregate Net Cash Proceeds, and
the fair market value of property other than cash (as
determined in good faith by the Company's Board of Directors,
including a majority of the Company's Disinterested Directors,
and evidenced by a resolution of such Board), received by the
Company during such period from any Person other than a
Subsidiary of the Company as a result of the issuance or sale
of Capital Stock of the Company (other than any Disqualified
Stock and other than Preferred Shares issued in the Preferred
Stock Offering), other than in connection with the conversion
of Indebtedness or Disqualified Stock; (C) the aggregate Net
Cash Proceeds, and the fair market value of property other
31
than cash (as determined in good faith by the Company's Board
of Directors, including a majority of the Company's
Disinterested Directors, and evidenced by a resolution of such
Board), received by the Company during such period from any
Person other than a Subsidiary of the Company as a result of
the issuance or sale of any Indebtedness or Disqualified Stock
to the extent that at the time the determination is made such
Indebtedness or Disqualified Stock, as the case may be, has
been converted into or exchanged for Capital Stock of the
Company (other than Disqualified Stock); (D)(i) in case any
Unrestricted Subsidiary has been redesignated a Restricted
Subsidiary, an amount equal to the lesser of (x) the book
value (determined in accordance with GAAP) at the date of such
redesignation of the aggregate Investments made by the Company
and its Restricted Subsidiaries in such Unrestricted
Subsidiary and (y) the fair market value of such Investments
in such Unrestricted Subsidiary at the time of such
redesignation, as determined in good faith by the Company's
Board of Directors, including a majority of the Company's
Disinterested Directors, whose determination shall be
conclusive and evidenced by a resolution of such Board; or
(ii) in case any Restricted Subsidiary has been redesignated
an Unrestricted Subsidiary, minus the greater of (x) the book
value (determined in accordance with GAAP) at the date of
redesignation of the aggregate Investments made by the Company
and its Restricted Subsidiaries in such Restricted Subsidiary
and (y) the fair market value of such Investments in such
Restricted Subsidiary at the time of such redesignation, as
determined in good faith by the Company's Board of Directors,
including a majority of the Company's Disinterested Directors,
whose determination shall be conclusive and evidenced by a
resolution of such Board; and (E) $25,000,000.
(b) Notwithstanding the foregoing, the above limitations will
not prevent (i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment complied with
the provisions hereof; (ii) the purchase, redemption, acquisition or retirement
of any shares of Capital Stock of the Company in exchange for, or out of the net
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of, other shares of Capital Stock (other than
Disqualified Stock) of the Company; and (iii) any dividend or other distribution
payable from a Restricted Subsidiary to the Company or any other Restricted
Subsidiary.
SECTION 4.11. Limitation on Sale of Assets. (a) The Company will not,
and will not permit any Restricted Subsidiary to, make any Asset Sale unless:
(i) the Company (or its Restricted Subsidiaries, as
the case may be) receives consideration at the time of such
sale or other disposition at least equal to the fair market
value thereof (as determined in good faith by the Company's
Board of Directors and evidenced by a resolution of such
Board, including a majority of the Company's Disinterested
Directors, in the case of any Asset Sales or series of related
Asset Sales having a fair market value of $20,000,000 or
greater);
(ii) at least 75% of the proceeds from such Asset
Sale consist of cash, cash equivalents or property, equipment,
leasehold interests or other assets used in the Oil and Gas
Business; and
32
(iii) the Net Available Proceeds received by the
Company (or its Restricted Subsidiaries, as the case may be)
from such Asset Sale are applied in accordance with paragraphs
(b) or (c) hereof.
(b) The Company may apply such Net Available Proceeds within
365 days after receipt of Net Available Proceeds from any Asset Sale, to: (i)
the repayment of Indebtedness of the Company under a Bank Credit Facility or
other Senior Indebtedness, including any mandatory redemption or repurchase or
optional redemption of the Existing Notes or the Securities; (ii) make an
Investment in assets used in the Oil and Gas Business; or (iii) develop by
drilling the Company's oil and gas reserves.
(c) If, upon completion of the 365-day period referred to
above, any portion of the Net Available Proceeds of any Asset Sale shall not
have been applied by the Company as described in clauses (i), (ii) or (iii) of
the immediately preceding paragraph and such remaining Net Available Proceeds,
together with any remaining net cash proceeds from any prior Asset Sale (such
aggregate constituting "Excess Proceeds"), exceed $15,000,000, then the Company
will be obligated to make an offer (the "Net Proceeds Offer") to purchase the
Securities and any other Senior Indebtedness in respect of which such an offer
to purchase is required to be made concurrently with the Net Proceeds Offer
having an aggregate principal amount equal to the Excess Proceeds (such purchase
to be made on a pro rata basis if the amount available for such repurchase is
less than the principal amount of the Securities and other Senior Indebtedness
tendered in such Net Proceeds Offer) at a purchase price of 100% of the
principal amount thereof plus accrued and unpaid interest on the Securities and
other Senior Indebtedness so repurchased to the date of repurchase. Upon the
completion of the Net Proceeds Offer, the amount of Excess Proceeds will be
reset to zero.
(d) The Company shall commence a Net Proceeds Offer by
preparing and mailing a notice to the Trustee, the Paying Agent and each Holder
as of such record date as the Company shall establish (upon written notice to
the Trustee). Notice of a Net Proceeds Offer to purchase the Securities will be
made on behalf of the Company not less than 25 Business Days nor more than 60
Business Days before the payment date of the Net Proceeds Offer (the "Net
Proceeds Payment Date"), and shall set forth the Net Proceeds Offer Amount and
the Net Proceeds Payment Date and refer to and summarize the material points
contained in Sections 4.11(d) and (e) hereof. Securities tendered to the Company
pursuant to a Net Proceeds Offer will cease to accrue interest after the Net
Proceeds Payment Date. For purposes of this covenant, the term "Net Proceeds
Offer Amount" means the principal of outstanding Securities in an aggregate
principal amount equal to any remaining Net Available Proceeds (rounded to the
next lowest $1,000). If the Net Proceeds Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest payable on such interest payment date will be paid to the
Person in whose name a Security is registered at the close of business on such
record date, and no additional interest will be payable to Holders who tender
Securities pursuant to the Net Proceeds Offer.
(e) On the Net Proceeds Payment Date, the Company will (i)
accept for payment Securities and any other Senior Indebtedness in respect of
which such an offer to purchase is required to be made concurrently with the Net
Proceeds Offer or portions thereof pursuant to the Net Proceeds Offer in an
aggregate principal amount equal to the Net Proceeds Offer Amount or such lesser
amount as has been tendered, (ii) deposit with the Paying Agent (or if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to
33
pay the purchase price of all Securities and such other Senior Indebtedness or
portions thereof so tendered in an aggregate principal amount equal to the Net
Proceeds Offer Amount or such lesser amount, including any accrued and unpaid
interest thereon, and (iii) deliver or cause to be delivered to the Trustee,
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof tendered to the Company. If the aggregate
principal amount of Securities and such other Senior Indebtedness tendered
exceeds the Net Proceeds Offer Amount, the Trustee will select the Securities
and other Senior Indebtedness to be purchased (in integral multiples of $1,000)
on a pro rata basis based on the principal amount of Securities and other Senior
Indebtedness so tendered and notify the Company, the Registrar and the Paying
Agent. The Paying Agent, upon instruction of the Company, will promptly mail or
deliver to Holders of Securities so accepted payment in an amount equal to the
purchase price (representing those funds received pursuant to clause (ii) of
this Section 4.11(e)), and the Company will execute and the Trustee will
promptly authenticate and mail or make available for delivery to Holders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted will be promptly mailed or delivered
to the Holder thereof by the Company, or, if the Company so directs the Trustee,
by the Trustee on behalf of the Company at the Company's expense. The Company
will publicly announce the results of the Net Proceeds Offer on or as soon as
practicable after the Net Proceeds Payment Date. For purposes of this Section
4.11, the Trustee will act as the Paying Agent.
(f) The Company will comply with Section 14 of the Exchange
Act and the provisions of Regulation 14E and any other tender offer rules under
the Exchange Act and any other federal and state securities laws, rules and
regulations which may then be applicable to any Net Proceeds Offer.
(g) During the period between any Asset Sale and the
application of the Net Available Proceeds therefrom in accordance with this
covenant, all Net Available Proceeds shall be maintained in a segregated account
and shall be invested in Permitted Financial Investments.
(h) Notwithstanding the foregoing, the Company will not and
will not permit any Restricted Subsidiary to, directly or indirectly, make any
Asset Sale of any of the Capital Stock of a Restricted Subsidiary except
pursuant to an Asset Sale of all of the Capital Stock of such Restricted
Subsidiary.
SECTION 4.12. Limitation on Liens Securing Indebtedness. The Company
will not, and will not permit any of its Restricted Subsidiaries to, create,
incur, assume or suffer to exist any Liens (other than Permitted Liens) upon any
of their respective properties securing (i) any Indebtedness of the Company,
unless the Securities are equally and ratably secured or (ii) any Indebtedness
of any Restricted Subsidiary, unless the Guarantees are equally and ratably
secured; provided, that if such Indebtedness is expressly subordinated to the
Securities or the Guarantees, the Lien securing such Indebtedness will be
subordinated and junior to any Lien securing the Securities or the Guarantees,
with the same relative priority as such Subordinated Indebtedness of the Company
or Subordinated Indebtedness of a Restricted Subsidiary will have with respect
to the Securities or the Guarantees, as the case may be.
34
SECTION 4.13. Limitation on Sale/Leaseback Transactions. The Company
will not, and will not permit any of its Restricted Subsidiaries to, enter into
any Sale/Leaseback Transaction with any Person (other than the Company or any
Wholly Owned Restricted Subsidiary) unless (i) the Company or such Restricted
Subsidiary, as the case may be, would be able to incur Indebtedness in a
principal amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction in accordance with Section 4.09 or (ii) the Company
or such Restricted Subsidiary receives proceeds from such Sale/Leaseback
Transaction at least equal to the fair market value thereof (as determined in
good faith by the Company's Board of Directors, whose determination in good
faith, evidenced by a resolution of such Board shall be conclusive) and such
proceeds are applied in the same manner and to the same extent as Net Available
Proceeds and Excess Proceeds from an Asset Sale.
SECTION 4.14. Limitation on Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or consensual restriction
on the ability of any Restricted Subsidiary of the Company to (i) pay dividends
or make any other distributions on its Capital Stock to the Company or a
Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or a
Restricted Subsidiary of the Company; (iii) make loans or advances to the
Company or a Restricted Subsidiary of the Company; or (iv) transfer any of its
properties or assets to the Company or a Restricted Subsidiary of the Company
(each, a "Payment Restriction"), except for (a) encumbrances or restrictions
under a Bank Credit Facility; provided, that any Payment Restrictions thereunder
(other than, with respect to (iv) above, customary restrictions in security
agreements or other loan documents thereunder securing or governing Indebtedness
of a Restricted Subsidiary) may be imposed only upon the acceleration of the
maturity of the Indebtedness thereunder; (b) consensual encumbrances or
consensual restrictions binding upon any Person at the time such Person becomes
a Restricted Subsidiary of the Company (unless the agreement creating such
consensual encumbrances or consensual restrictions was entered into in
connection with, or in contemplation of, such entity becoming a Restricted
Subsidiary); (c) consensual encumbrances or consensual restrictions under any
agreement that refinances or replaces any agreement described in clauses (a) and
(b) above, provided that the terms and conditions of any such restrictions are
in the aggregate no less favorable to the holders of the Securities than those
under the agreement so refinanced or replaced; and (d) customary non-assignment
provisions in leases, purchase money financings and any encumbrance or
restriction due to applicable law.
SECTION 4.15. Limitation on Transactions with Affiliates. The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into any transaction or series of transactions (including,
without limitation, the sale, purchase or lease of any assets or properties or
the rendering of any services) with any Affiliate or beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of 10% or more of the
Company's common stock (other than with a Wholly Owned Restricted Subsidiary of
the Company) (an "Affiliate Transaction"), on terms that are less favorable to
the Company or such Restricted Subsidiary, as the case may be, than would be
available in a comparable transaction with an unrelated Person. In addition, the
Company will not, and will not permit any Restricted Subsidiary of the Company
to, enter into an Affiliate Transaction, or any series of related Affiliate
Transactions having a value of (a) more than $5,000,000 unless a majority of the
Board of Directors of the Company (including a majority of the Company's
Disinterested Directors) determines in good faith, as evidenced
35
by a resolution of such Board, that such Affiliate Transaction or series of
related Affiliate Transactions is fair to the Company; or (b) more than
$25,000,000, unless the Company receives a written opinion from a nationally
recognized investment banking firm with total assets in excess of $1,000,000,000
that such transaction or series of transactions is fair to the Company from a
financial point of view.
SECTION 4.16. Change of Control. (a) Following the occurrence of any
Change of Control, the Company shall offer (a "Change of Control Offer") to
purchase all outstanding Securities at a purchase price equal to 101% of the
aggregate outstanding principal amount of the Securities, plus accrued and
unpaid interest on the Securities so purchased to the date of purchase. The
Change of Control Offer shall be deemed to have commenced upon mailing of the
notice described in the next succeeding paragraph and shall terminate 20
Business Days after its commencement, unless a longer offering period is
required by law. Promptly after the termination of the Change of Control Offer
(the "Change of Control Payment Date"), the Company shall purchase and mail or
deliver payment for all Securities tendered in response to the Change of Control
Offer. If the Change of Control Payment Date is on or after an interest payment
record date and on or before the related interest payment date, any accrued
interest payable on such interest payment date will be paid to the Person in
whose name a Security is registered at the close of business on such record
date, and no additional interest will be payable to Holders who tender
Securities pursuant to the Change of Control Offer.
(b) Within 15 days after any Change of Control, the Company
(with notice to the Trustee and the Paying Agent), or the Trustee at the
Company's request and expense, will mail or cause to be mailed to all Holders on
the date of the Change of Control a notice prepared by the Company (the "Change
of Control Notice") of the occurrence of such Change of Control and of the
Holders' rights arising as a result thereof. The Change of Control Notice will
contain all instructions and materials necessary to enable Holders to tender
their Securities to the Company. The Change of Control Notice, which shall
govern the terms of the Change of Control Offer, shall state: (1) that the
Change of Control Offer is being made pursuant to this Section 4.16; (2) the
purchase price and the Change of Control Payment Date; (3) that any Security not
tendered will continue to accrue interest at the stated rate; (4) that any
Security accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest on the Change of Control Payment Date; (5) that Holders
electing to have a Security purchased pursuant to any Change of Control Offer
will be required to surrender the Security, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Security completed, to the
Company, a depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice prior to termination of the Change of Control
Offer; (6) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not later
than the expiration of the Change of Control Offer, or such longer period as may
be required by law, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security the Holder
delivered for purchase and a statement that such Holder is withdrawing its
election to have the Security purchased; and (7) that Holders whose Securities
are purchased only in part will be issued Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(c) On the Change of Control Payment Date, the Company shall,
to the extent permitted by applicable law, (i) accept for payment Securities or
portions thereof tendered pursuant to the Change of Control Notice, (ii) if the
Company appoints a depositary or Paying Agent, deposit
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with such depositary or Paying Agent money sufficient to pay the purchase price
of all Securities or portions thereof so tendered and (iii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate stating
the Securities or portions thereof tendered to the Company. The depositary, the
Company or the Paying Agent, as the case may be, shall promptly mail to the
Holders of Securities so accepted payment in an amount equal to the purchase
price (representing those funds received pursuant to clause (ii) of this Section
4.16(c)), and the Trustee shall promptly authenticate and mail to each such
Holder a new Security equal in principal amount to any unpurchased portion of
the Security surrendered; provided that each such new Security will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date. For purposes of this
Section 4.16, the Trustee shall act as the Paying Agent.
(d) The Company will comply with Section 14 of the Exchange
Act and the provisions of Regulation 14E and any other tender offer rules under
the Exchange Act and any other federal and state securities laws, rules and
regulations which may then be applicable to any offer by the Company to purchase
the Securities at the option of the Holders upon a Change of Control.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc. The Company shall not
consolidate with or merge with or into any Person or sell, convey, lease,
transfer or otherwise dispose of all or substantially all of its assets to any
Person, unless:
(1) the Company survives such merger or the Person
formed by such consolidation or into which the Company is
merged or that acquires by sale, conveyance, transfer or other
disposition, or which leases, all or substantially all of the
assets of the Company is a corporation organized and existing
under the laws of the United States of America, any state
thereof or the District of Columbia, or Canada or any province
thereof, and expressly assumes, by supplemental indenture, the
due and punctual payment of the principal of, premium, if any,
and interest on, all the Securities and the performance of
every other covenant and obligation of the Company under this
Indenture;
(2) immediately before and after giving effect to
such transaction no Default or Event of Default exists;
(3) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Tangible
Net Worth of the Company (or the surviving or transferee
entity) is equal to or greater than the Consolidated Tangible
Net Worth of the Company immediately before such transaction;
and
(4) immediately after giving effect to such
transaction on a pro forma basis, the Company (or the
surviving or transferee entity) would be able to incur $1.00
of additional Indebtedness under the test described in Section
4.09(a) (other than Permitted Indebtedness).
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In connection with any consolidation, merger, sale,
conveyance, lease, transfer or other disposition contemplated by this Section
5.01, the Company shall deliver to the Trustee prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
SECTION 5.02. Successor Corporation Substituted. Upon any
consolidation, merger, lease, conveyance or transfer in accordance with Section
5.01, the Trustee shall be notified by the Company and the successor Person, and
the successor Person formed by such consolidation or into which the Company is
merged or to which such lease, conveyance or transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor had been named as
the Company herein 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 Securities.
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" occurs upon:
(1) default by the Company or any Subsidiary
Guarantor in the payment of principal of, or premium, if any,
on the Securities when due and payable at maturity, upon
repurchase pursuant to Section 4.11 or 4.16, upon acceleration
or otherwise;
(2) default by the Company or any Subsidiary
Guarantor in the payment of any installment of interest on the
Securities when due and payable and continuance of such
default for 30 days;
(3) default by the Company or any Subsidiary
Guarantor in the deposit of any optional redemption payment,
when and as due and payable pursuant to Article Three;
(4) default on any other Indebtedness (other than
Non-Recourse Indebtedness and Unrestricted Subsidiary
Indebtedness) of the Company, any Subsidiary Guarantor or any
other Subsidiary (other than a Non-Recourse Subsidiary or an
Unrestricted Subsidiary) if either (A) such default results in
the acceleration of the maturity of any such Indebtedness
having a principal amount of $10,000,000 or more individually
or, taken together with the principal amount of any other such
Indebtedness the maturity of which has been so accelerated, in
the aggregate, or (B) such default results from the failure to
pay when due principal of, premium, if any, or interest on,
any such Indebtedness, after giving effect to any applicable
grace period (a "Payment Default"), having a principal amount
of $10,000,000 or more individually or, taken together with
the principal amount of any other Indebtedness under which
there has been a Payment Default, in the aggregate;
(5) default in the performance, or breach of, the
covenants set forth in Section 4.10 and Article Five, or in
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the performance, or breach of, any other covenant or agreement
of the Company or any Subsidiary Guarantor in this Indenture
and failure to remedy such default within a period of 45 days
after written notice thereof from the Trustee or Holders of
25% of the principal amount of the outstanding Securities;
(6) the entry by a court of one or more judgments or
orders for the payment of money against the Company, any
Subsidiary Guarantor or any other Subsidiary (other than a
Non-Recourse Subsidiary or an Unrestricted Subsidiary,
provided that neither the Company nor any Restricted
Subsidiary is liable, directly or indirectly, for such
judgment or order) in an aggregate amount in excess of
$10,000,000 (net of applicable insurance coverage by a third
party insurer which is acknowledged in writing by such
insurer) that has not been vacated, discharged, satisfied or
stayed pending appeal within 60 days from the entry thereof;
(7) a Guarantee by a Subsidiary Guarantor shall cease
to be in full force and effect (other than a release of a
Guarantee in accordance with Section 10.04) or any Subsidiary
Guarantor shall deny or disaffirm its obligations with respect
thereto;
(8) the Company or any Subsidiary (other than a
Non-Recourse Subsidiary or an Unrestricted Subsidiary)
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or
proceeding,
(B) consents to the entry of an order for
relief against it in an involuntary case or
proceeding,
(C) consents to the appointment of a
Custodian of it or for all or substantially all of
its property,
(D) makes a general assignment for the
benefit of its creditors, or
(E) admits in writing that it generally is
unable to pay its debts as the same become due; or
(9) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(A) is for relief (with respect to the
petition commencing such case) against the Company or
any Subsidiary (other than a Non-Recourse Subsidiary
or an Unrestricted Subsidiary) in an involuntary case
or proceeding,
(B) appoints a Custodian of the Company or
any Subsidiary (other than a Non-Recourse Subsidiary
or an Unrestricted Subsidiary) or for all or
substantially all of its property, or
(C) orders the liquidation of the Company or
any Subsidiary (other than a Non-Recourse Subsidiary
or an Unrestricted Subsidiary), and the order or
decree remains unstayed and in effect for 60 days.
39
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event
of Default specified in clauses (8) or (9)) under Section 6.01 occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% of the principal amount of the outstanding Securities may declare the
unpaid principal of and premium, if any, or the Change of Control purchase price
if the Event of Default includes failure to pay the Change of Control purchase
price, and accrued and unpaid interest on, all the Securities then outstanding
to be due and payable, by a notice in writing to the Company (and to the
Trustee, if given by Holders), and upon any such declaration such principal,
premium, if any, and accrued and unpaid interest shall become immediately due
and payable, notwithstanding anything contained in this Indenture or the
Securities to the contrary. If an Event of Default specified in clauses 8 or 9
above occurs, all unpaid principal of, and premium, if any, and accrued and
unpaid interest on, the Securities then outstanding will become due and payable,
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority of the principal amount of the
outstanding Securities, by written notice to the Company, the Subsidiary
Guarantors and the Trustee, may rescind and annul a declaration of acceleration
and its consequences if (1) the Company or any Subsidiary Guarantor has paid or
deposited with such Trustee a sum sufficient to pay (A) all overdue installments
of interest on all the Securities, (B) the principal of, and premium, if any, on
any Securities that have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor in
the Securities, (C) to the extent that payment of such interest is lawful,
interest on the defaulted interest at the rate or rates prescribed therefor in
the Securities, and (D) all money paid or advanced by the Trustee thereunder and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; (2) all Events of Default, other than the
non-payment of the principal of any Securities that have become due solely by
such declaration of acceleration, have been cured or waived as provided in this
Indenture; and (3) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction. No such rescission will affect any
subsequent Event of Default or impair any right consequent thereon.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may, but is not obligated to, pursue, in its own name
and as trustee of an express trust, any available remedy by proceeding at law or
in equity to collect the payment of principal or interest on the Securities or
to enforce the performance of any provision of the Securities or this Indenture.
If an Event of Default specified under clauses (8) or (9) of Section 6.01 occurs
with respect to the Company at a time when the Company is the Paying Agent, the
Trustee shall automatically assume the duties of Paying Agent.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any 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.
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SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.07 and
9.02, the Holders of at least a majority of the principal amount of the
outstanding Securities by notice to the Trustee may waive an existing Default or
Event of Default and its consequences, except a Default or Event of Default in
payment of principal or interest on the Securities, including any optional
redemption payments or Change of Control or Net Proceeds Offer payments.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the Securities will 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 such Trustee, provided
that (1) such direction is not in conflict with any rule of law or with this
Indenture and (2) the Trustee may take any other action deemed proper by such
Trustee that is not inconsistent with such direction.
SECTION 6.06. Limitation on Remedies. No Holder of any of the
Securities will have any right to institute any proceeding, judicial or
otherwise, or for the appointment of a receiver or trustee or pursue any remedy
under this Indenture, unless:
(1) such Holder has previously given notice to the
Trustee of a continuing Event of Default,
(2) the Holders of not less than 25% of the principal
amount of the outstanding Securities have made written request
to such Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee under this
Indenture,
(3) such Holder or Holders have offered to such
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request,
(4) such Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any proceeding, and
(5) no direction inconsistent with such written
request has been given to such Trustee during such 60-day
period by the Holders of a majority of the principal amount of
the outstanding Securities.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over other Holders.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the Holder of any Securities will have the
right, which is absolute and unconditional, to receive payment of the principal
of and interest on such Securities on the stated maturity therefor and to
institute suit for the enforcement of any such payment, and such right may not
be impaired without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium, if any, or interest specified in Section 6.01(1),
(2) or (3) occurs and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company or any Subsidiary
Guarantor for the whole amount of principal, premium, if any, and interest
remaining unpaid with respect to the
41
Securities, and interest on overdue principal and premium, if any, and, to the
extent lawful, interest on overdue interest, and such further amounts as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation and expenses of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. (a) The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, the Subsidiary Guarantors,
their creditors or their property and may collect and receive any money or
securities or other property payable or deliverable on any such claims and to
distribute the same.
(b) 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
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section
7.07;
Second: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest,
respectively; and
Third: to the Company.
The Trustee 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 in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of
more than 10% in principal amount of the then outstanding Securities.
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 rights and powers
vested in it by this Indenture and use the same degree of care and skill in such
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
42
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that
are specifically set forth (or incorporated by reference) in
this Indenture and no others.
(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, the Trustee shall examine such certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph (c) does not limit the effect of
paragraph (b) of this Section.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by an officer of the Trustee,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to
action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05, and
the Trustee shall be entitled from time to time to request
such a direction.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall be under no obligation and may refuse to
perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense. No provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01:
(a) The Trustee may rely on and shall be 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 shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, 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
43
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 Company, personally or by agent or attorney, to the extent reasonably
required by such inquiry or investigation.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Subsidiaries or 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 or the Securities, it shall not
be accountable for the Company's use of the proceeds from the Securities or any
prospectus, offering or solicitation documents, and it shall not be responsible
for any statement in the Securities other than its certificate of
authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each Holder
pursuant to Section 11.02 a notice of the Default within 90 days after it
occurs. Except in the case of a Default in any payment on any Security, the
Trustee may withhold the notice if and so long as the board of directors,
executive committee or a trust committee of officers in good faith determines
that withholding the notice is in the interests of Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each
April 1, beginning with the April 1 following the date of this Indenture, the
Trustee shall mail to each Holder a brief report dated as of such April 1 that
complies with TIA Section 313(a), but only if such report is required in any
year under TIA Section 313(a). The Trustee also shall comply with TIA Sections
313(b) and 313(c). A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee in writing when the Securities
become listed on any national securities exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company and the
Subsidiary Guarantors jointly and severally agree to pay the Trustee from time
to time reasonable compensation for its services (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust). The Company and the Subsidiary Guarantors jointly and
severally agree to reimburse the Trustee upon request for all reasonable
out-of-pocket expenses, disbursements and advances incurred by it. Such expenses
shall include when applicable the reasonable compensation and expenses of the
Trustee's agents and counsel.
44
The Trustee shall not be under any obligation to institute any
suit, or take any remedial action under this Indenture, or to enter any
appearance or in any way defend any suit in which it may be a defendant, or to
take any steps in the execution of the trusts created hereby or thereby or in
the enforcement of any rights and powers under this Indenture, until it shall be
indemnified to its satisfaction against any and all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provisions of this Indenture, including compensation for services, costs,
expenses, outlays, counsel fees and other disbursements, and against all
liability not due to its negligence or willful misconduct. The Company and the
Subsidiary Guarantors jointly and severally agree to indemnify the Trustee
against any loss, liability or expenses incurred by it arising out of or in
connection with the acceptance and administration of the trust and its duties
hereunder as Trustee, Registrar and/or Paying Agent, including the costs and
expenses of enforcing this Indenture against the Company (including with respect
to this Section 7.07) and of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company and the Subsidiary Guarantors of
any claim for which it may seek indemnity; however, unless the position of the
Company is prejudiced by such failure, the failure of the Trustee to promptly
notify the Company shall not limit its right to indemnification. The Company
shall defend each such claim and the Trustee shall cooperate in the defense. The
Trustee may retain separate counsel and the Company shall reimburse the Trustee
for the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent.
Neither the Company nor the Subsidiary Guarantors shall be
obligated to reimburse any expense or indemnify against any loss or liability
incurred by the Trustee through the Trustee's negligence or willful misconduct.
To secure the payment obligations of the Company and the Subsidiary Guarantors
in this Section, the Trustee shall have a claim prior to that of the Holders of
the Securities on all money or property held or collected by the Trustee, except
that held in trust to pay principal of and interest on particular Securities.
The Trustee's right to receive payment of any amounts due under this Section
7.07 shall not be subordinate to any other liability or Indebtedness of the
Company.
When the Trustee incurs expenses or renders services after the
occurrence of any Event of Default specified in Sections 6.01(8) or (9), the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company and the Subsidiary Guarantors. The Holders of a majority
in principal amount of the Securities may remove the Trustee by so notifying the
Trustee, in writing. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or other public officer takes charge
of the Trustee or its property; or
(4) the Trustee becomes incapable of acting as
Trustee hereunder.
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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 Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company and the Subsidiary
Guarantors. Immediately after that, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee shall
mail notice of its succession 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
Company or the Holders of a majority in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee. Any successor Trustee shall comply
with TIA Section 310(a)(5).
SECTION 7.09. Successor Trustee by Merger, etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust assets to, another corporation, the successor corporation
without any further act shall be the successor Trustee; provided such
corporation or association shall be otherwise eligible and qualified under this
Article and shall notify the Company of its successor hereunder.
SECTION 7.10. Eligibility; Disqualification. This Indenture shall
always have a Trustee which satisfies the requirements of TIA Section 310(a)(1).
The Trustee shall always have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall also comply with TIA Section 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
with respect to the Securities, elect to exercise its rights pursuant to either
Section 8.02 or 8.03 with respect to all outstanding
46
Securities upon compliance with the conditions set forth below in this Article
Eight.
SECTION 8.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.01 of the option applicable to this Section 8.02, the
Company shall be deemed to have been discharged from its obligations with
respect to all outstanding Securities on the date all conditions set forth below
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
and the other Sections of this Indenture referred to in (a) and (b) below, and
to have satisfied all its other obligations under such Securities and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Securities to receive solely
from the trust fund described in Section 8.04, and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any, and
interest on such Securities when such payments are due, (b) the Company's
obligations with respect to such Securities under Sections 2.03, 2.04, 2.06,
2.07, 2.09 and 4.04, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Company's obligations in connection therewith
(including, but not limited to, Section 7.07) and (d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 with respect to the Securities.
SECTION 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 of the option applicable to this Section 8.03, the Company shall be
released from its obligations under the covenants contained in the second
sentence of Section 4.02, Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, and 4.16 and Article Five with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Securities shall
not be deemed outstanding for accounting purposes). For this purpose, such
Covenant Defeasance means that, with respect to the outstanding Securities, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01(5), but, except as specified
above, the remainder of this Indenture and such Securities shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 of the
option applicable to this Section 8.03, Sections 6.01(4) through 6.01(9) shall
not constitute Events of Default.
SECTION 8.04. Conditions to Legal or Covenant Defeasance. The following
shall be the conditions to application of either Section 8.02 or Section 8.03 to
the outstanding Securities:
47
(a) The Company shall irrevocably have deposited or cause to
be deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article Eight
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) cash in U.S. Legal Tender
in an amount, or (b) U.S. Government Securities which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
cash in U.S. Legal Tender in an amount, or (c) a combination thereof, in such
amounts, as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge the principal of,
premium, if any, and interest on the outstanding Securities on the Maturity Date
or on the applicable redemption date, as the case may be, of such principal or
installment of principal, premium, if any, or interest and in accordance with
the terms of this Indenture and of such Securities; provided that the Trustee
shall have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Securities to said payments with respect to the Securities.
(b) In the case of an election under Section 8.02, the Company
shall have delivered to the Trustee an Opinion of Counsel confirming that (i)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the date hereof, there has been a change
in the applicable federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.03, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the outstanding Securities 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 with respect to the
Securities shall have occurred and be continuing on the date of such deposit or,
insofar as Subsection 6.01(8) or 6.01(9) is concerned, at any time in the period
ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period);
(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 material agreement or instrument to which the Company is
a party or by which the Company is bound;
(f) In the case of any election under Section 8.02 or 8.03,
the Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.02
or 8.03 was not made by the Company with the intent of preferring the Holders
over other creditors of the Company or with the
48
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(g) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal Defeasance under
Section 8.02 or the Covenant Defeasance under Section 8.03 (as the case may be)
have been complied with as contemplated by this Section 8.04.
SECTION 8.05. Deposited Money and U.S. Government Securities to be Held
in Trust; Other Miscellaneous Provisions. Subject to Section 8.06, all money and
U.S. Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 in respect of the outstanding
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company or a Subsidiary
Guarantor, if any, acting as Paying Agent) as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or U.S.
Government Securities deposited pursuant to Section 8.04 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 the outstanding
Securities.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the Company's request any money or U.S. Government Securities held by
it as provided in Section 8.04 which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a)), are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. Repayment to Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest on any Security which
is not subject to the last paragraph of Section 8.05 and has remained unclaimed
for two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its request (unless an abandoned
property law designates another Person) or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Securities shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
49
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable
to apply any U.S. Legal Tender or U.S. Government Securities in accordance with
Section 8.02 or 8.03, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining, or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 or 8.03, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest on any
Security following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, the Subsidiary Guarantors and the Trustee may
amend or supplement this Indenture or the Securities without notice to or
consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01;
(3) to reflect the addition or release of any
Subsidiary Guarantor, as provided for by this Indenture;
(4) to comply with any requirements of the SEC in
order to effect or maintain the qualification of this
Indenture under the TIA; or
(5) 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 in any material
respect.
Upon the request of the Company and the Subsidiary Guarantors,
accompanied by a Board Resolution of the Company and of each Subsidiary
Guarantor authorizing the execution of any such supplemental indenture, and upon
receipt by the Trustee of the documents described in Section 9.06, the Trustee
shall join with the Company and the Subsidiary Guarantors in the execution of
any supplemental indenture authorized or permitted by the terms of this
Indenture and make any further appropriate agreements and stipulations that may
be therein contained. After an amendment or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Security affected
thereby a notice briefly describing the amendment or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 9.02. With Consent of Holders. Except as provided below in this
Section 9.02, the Company, the Subsidiary Guarantors and the Trustee may amend
this Indenture or the Securities with the written consent (including consents
obtained in connection with a tender offer or exchange offer for Securities or a
solicitation of consents in respect of
50
Securities, provided that in each case such offer or solicitation is made to all
Holders of then outstanding Securities on equal terms) of the Holders of at
least a majority of the principal amount of the outstanding Securities.
Upon the request of the Company and the Subsidiary Guarantors,
accompanied by a Board Resolution of the Company and each Subsidiary Guarantor
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders as aforesaid,
and upon receipt by the Trustee of the Opinion of Counsel described in Section
9.06, the Trustee shall join with the Company and the Subsidiary Guarantors in
the execution of such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
The Holders of a majority of the principal amount of the
outstanding Securities may waive compliance in a particular instance by the
Company or the Subsidiary Guarantors with any provision of this Indenture or the
Securities (including waivers obtained in connection with a tender offer or
exchange offer for Securities or a solicitation of consents in respect of
Securities, provided that in each case such offer or solicitation is made to all
Holders of the then outstanding Securities on equal terms). However, without the
consent of each Holder affected, an amendment or waiver under this Section may
not:
(1) reduce the percentage of principal amount of
Securities whose Holders must consent to an amendment,
supplement or waiver of any provision of this Indenture or the
Securities;
(2) reduce the rate or change the time for payment of
interest, including default interest, on the Securities;
(3) reduce the principal amount of any Security or
change the Maturity Date of the Securities;
(4) reduce the redemption price, including premium,
if any, payable upon the redemption of any Security or change
the time at which any Security may be redeemed;
(5) reduce the repurchase price, including premium,
if any, payable upon the repurchase of any Security pursuant
to Sections 4.11 or 4.16, or change the time at which any
Security may or shall be repurchased thereunder;
(6) waive a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on
the Securities;
(7) make any Security payable in money other than
that stated in the Security;
(8) impair the right to institute suit for the
enforcement of principal of, premium, if any, or principal on
any Security pursuant to Sections 6.07 or 6.08, except as
limited by Section 6.06; or
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(9) make any change in Section 6.04 or Section 6.07
or in this sentence of this Section 9.02.
The right of any Holder to participate in any consent required
or sought pursuant to any provision of this Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which such consent is required or sought as of
a date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of this Indenture.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
or supplement of this Indenture or the Securities shall comply with the TIA as
then in effect.
SECTION 9.04. Revocation and Effect of Consents. A consent to an
amendment, supplement or waiver by a Holder of a Security shall bind the Holder
and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent is not made on any Security. However, until an amendment, supplement
or waiver becomes effective, any such Holder or subsequent Holder may revoke the
consent as to its Security or portion of a Security. For such revocation to be
effective, the Trustee must receive the notice of revocation before the date the
amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment or waiver. If the Company elects to fix a record date for such
purpose, the record date shall be fixed at (i) the later of 30 days prior to the
first solicitation of such consent or the date of the most recent list of
Holders furnished to the Trustee prior to such solicitation pursuant to Section
2.05, or (ii) such other date as the Company shall designate. If a record date
is fixed, then notwithstanding the provisions 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 consent to
such amendment or waiver or to revoke any consent previously given, whether or
not such Persons continue to be Holders after such record date. No consent shall
be valid or effective for more than 90 days after such record date unless
consent from the Holders of the principal amount of Securities required
hereunder for such amendment or waiver to be effective also shall have been
given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it makes a change described in any of clauses (1)
through (9) of Section 9.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 9.05. Notation on or Exchange of Senior Notes. If an amendment,
supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms.
52
SECTION 9.06. Trustee Protected. The Trustee shall sign any amendment
or supplement or waiver authorized pursuant to this Article if the amendment or
supplement or waiver does not adversely affect the rights of the Trustee. If it
does adversely affect the rights of the Trustee, the Trustee may but need not
sign it. In signing such amendment or supplement or waiver the Trustee shall be
entitled to receive, and (subject to Article Seven) shall be fully protected in
relying upon, an Opinion of Counsel stating that such amendment or supplement or
waiver is authorized or permitted by and complies with this Indenture. The
Company may not sign an amendment or supplement until the Boards of Directors of
the Company and the Subsidiary Guarantors approve it.
ARTICLE TEN
GUARANTEES
SECTION 10.01. Unconditional Guarantee. Each Subsidiary Guarantor
hereby, jointly and severally, fully and unconditionally guarantees, as
principal obligor and not only as surety (such guarantee to be referred to
herein as the "Guarantee"), to each Holder and to the Trustee the due and
punctual payment of the principal of, premium, if any, and interest on the
Securities and all other amounts due and payable under this Indenture and the
Securities by the Company whether at maturity, by acceleration, redemption,
repurchase or otherwise, including, without limitation, interest on the overdue
principal of, premium, if any, and interest on the Securities, to the extent
lawful, all in accordance with the terms hereof and thereof; subject, however,
to the limitations set forth in Section 10.05.
Failing payment when due of any amount so guaranteed for
whatever reason, the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately. Each Subsidiary Guarantor hereby agrees
that its obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Securities or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Securities with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Subsidiary Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that this Guarantee will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and in this Guarantee.
If any Holder or the Trustee is required by any court or otherwise to return to
the Company, any Subsidiary Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or any Subsidiary
Guarantor, any amount paid by the Company or any 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 agrees
it shall not be entitled to any right of subrogation in relation to the Holders
in respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as
between each Subsidiary Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of
53
the obligations guaranteed hereby, and (y) in the event of any acceleration of
such obligations as provided in Article Six, such obligations (whether or not
due and payable) shall forthwith become due and payable by each Subsidiary
Guarantor for the purpose of this Guarantee.
SECTION 10.02. Subsidiary Guarantors May Consolidate, etc., on Certain
Terms. (a) Subject to paragraph (b) of this Section 10.02, no Subsidiary
Guarantor may consolidate or merge with or into (whether or not such Subsidiary
Guarantor is the surviving Person) another Person unless (i) the Person formed
by or surviving any such consolidation or merger (if other than such Subsidiary
Guarantor) assumes all the obligations of such Subsidiary Guarantor under this
Indenture and the Securities pursuant to a supplemental indenture, in a form
reasonably satisfactory to the Trustee, (ii) immediately after such transaction,
no Default or Event of Default exists, (iii) such Subsidiary Guarantor or Person
formed by or surviving any such consolidation or merger will have Consolidated
Tangible Net Worth (immediately after the transaction) equal to or greater than
the Consolidated Tangible Net Worth of such Subsidiary Guarantor immediately
preceding the transaction and (iv) the Company will, at the time of such
transaction after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable Reference Period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to Section 4.09(a). In
connection with any consolidation or merger contemplated by this Section 10.02,
the Company shall deliver to the Trustee prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture. This Section 10.02(a) will not prohibit a
merger between Subsidiary Guarantors or a merger between the Company and a
Subsidiary Guarantor.
(b) In the event of a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor or a sale or other
disposition of all of the Capital Stock of such Subsidiary Guarantor, in any
case by way of merger, consolidation or otherwise, then such Subsidiary
Guarantor (in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the Capital Stock of such Subsidiary
Guarantor) or the Person acquiring the assets (in the event of a sale or other
disposition of all or substantially all of the assets of such Subsidiary
Guarantor) will be released and relieved of any obligations under its
Guarantees; provided that in the event such sale or disposition constitutes an
Asset Sale, the Net Available Proceeds of such sale or other disposition are
applied in accordance with the provisions of this Indenture described under
Section 4.11.
SECTION 10.03. Addition of Subsidiary Guarantors. (a) The Company
agrees to cause each Subsidiary that shall become a Restricted Subsidiary after
the Issue Date to execute and deliver a supplemental indenture pursuant to which
such Restricted Subsidiary shall guarantee the payment of the Securities
pursuant to the terms hereof.
(b) Any Person that was not a Subsidiary Guarantor on the
Issue Date may become a Subsidiary Guarantor by executing and delivering to the
Trustee (i) a supplemental indenture in form and substance satisfactory to the
Trustee, which subjects such Person to the provisions (including the
representations and warranties) of this Indenture as a Subsidiary Guarantor and
(ii) an Opinion of Counsel and Officers' Certificate to the effect that such
supplemental indenture has been duly authorized and executed by such Person and
constitutes the legal, valid and binding obligation of such Person (subject to
such customary
54
exceptions concerning creditors' rights and equitable principles as may be
acceptable to the Trustee in its discretion and provided that no opinion need be
rendered concerning the enforceability of the Guarantee).
SECTION 10.04. Release of a Subsidiary Guarantor. Upon (i) the sale or
disposition of a Subsidiary Guarantor (or all or substantially all of its
assets) or (ii) the designation of a Subsidiary Guarantor as an Unrestricted
Subsidiary, in each case which is otherwise in compliance with the terms of this
Indenture, including but not limited to the provisions of Section 10.02, such
Subsidiary Guarantor shall be deemed released from all of its Guarantee and
related obligations in this Indenture. The Trustee shall deliver an appropriate
instrument evidencing such release upon receipt of a request by the Company
accompanied by an Officers' Certificate and an Opinion of Counsel certifying
that such sale or other disposition was made by the Company in accordance with
the provisions of this Indenture. Any Subsidiary Guarantor not so released
remains liable for the full amount of principal of and interest on the
Securities as provided in this Article Ten.
SECTION 10.05. Limitation of Subsidiary Guarantor's Liability. Each
Subsidiary Guarantor, and by its acceptance hereof each Holder, hereby confirms
that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any federal, state or foreign law. To
effectuate the foregoing intention, the Holders and each Subsidiary Guarantor
hereby irrevocably agree that the obligations of each Subsidiary Guarantor under
the Guarantee shall be limited to the maximum amount as will, 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 Section
10.06, result in the obligations of such Subsidiary Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal, state or foreign law. This Section 10.05 is for the benefit of the
creditors of each Subsidiary Guarantor, and, for purposes of applicable
fraudulent transfer and fraudulent conveyance law, any Indebtedness of a
Subsidiary Guarantor pursuant to a Bank Credit Facility shall be deemed to have
been incurred prior to the incurrence by such Subsidiary Guarantor of its
liability under the Guarantee.
SECTION 10.06. Contribution. In order to provide for just and equitable
contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree,
inter se, that in the event any payment or distribution is made by any
Subsidiary Guarantor (a "Funding Guarantor") under the Guarantee, such Funding
Guarantor shall be entitled to a contribution from each other Subsidiary
Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor (including the Funding Guarantor) for all payments, damages
and expenses incurred by the Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to the Guarantee.
SECTION 10.07. [Intentionally Omitted.]
SECTION 10.08. Severability. In case any provision of this Guarantee
shall be invalid, illegal or unenforceable, that portion of such provision that
is not invalid, illegal or unenforceable shall remain in effect, and the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
55
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls. Whether prior to or
following the qualification of this Indenture under the TIA, if any provision of
this Indenture limits, qualifies, or conflicts with the duties imposed by
operation of TIA Section 318(c) upon an indenture qualified under the TIA, the
imposed duties shall control under this Indenture.
SECTION 11.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by certified
or registered mail (return receipt requested), facsimile, telecopier or
overnight air courier guaranteeing next day delivery, addressed as follows:
If to the Company or any Subsidiary Guarantor:
Chesapeake Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
If to the Trustee:
The Bank of New York
▇/▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
The Company or any Subsidiary Guarantor or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.
All notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if faxed or telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication mailed to a Holder shall be mailed
by first-class mail to the address for such Holder appearing on the registration
books of the Registrar and shall be sufficiently given to such Holder 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. If the
Company or any Subsidiary Guarantor mails notice or communications to Holders,
it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. Communication 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 Securities. The
56
Company, the Subsidiary Guarantors, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company or any Subsidiary Guarantor to the
Trustee to take any action under this Indenture, the Company or such Subsidiary
Guarantor, as the case may be, shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05) stating that, in the
opinion of the signers, the conditions precedent, 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, such conditions precedent have been
complied with.
SECTION 11.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that each 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 each such
person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether or not, in the opinion
of each such person, such covenant or condition has been
complied with.
SECTION 11.06. Rules by Trustee and Agents. The Trustee may make
reasonable rules for actions taken by, or meetings or consents of, Holders. The
Registrar or Paying Agent may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday, or a day on which banks and trust companies in the City of New York are
not required by law or executive order to be open. If a payment date is a Legal
Holiday at a place of payment, payment may be made at the place on the next
succeeding day that is not a Legal Holiday, without additional interest.
SECTION 11.08. Governing Law. THIS INDENTURE AND THE SECURITIES AND THE
GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD
BE REQUIRED THEREBY, EXCEPT TO THE EXTENT THAT THE LAWS OF THE STATE OF NEW YORK
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION REGARDING THE
VALIDITY OF THE SECURITIES.
57
SECTION 11.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company, any Subsidiary Guarantor or any other Subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others. All liability described in
Paragraph 22 of the Securities of any director, officer, employee or
stockholder, as such, of the Company, the Subsidiary Guarantors or the Trustee
is waived and released.
SECTION 11.11. Successors. All agreements of the Company and the
Subsidiary Guarantors in this Indenture, the Securities and the Guarantees shall
bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 11.12. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same instrument.
SECTION 11.13. Severability. In case any provision in this Indenture or
in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, and a Holder shall have no claim therefor against
any party hereto.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
CHESAPEAKE ENERGY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
SUBSIDIARY GUARANTORS:
THE ▇▇▇▇ COMPANY, INC.
ARKOMA PITTSBURG HOLDING CORPORATION
CHESAPEAKE ACQUISITION CORPORATION
CHESAPEAKE ROYALTY COMPANY
NOMAC DRILLING CORPORATION
CHESAPEAKE ENERGY LOUISIANA
CORPORATION
CHESAPEAKE OPERATING, INC.
CHESAPEAKE MOUNTAIN FRONT CORP.
GOTHIC ENERGY CORPORATION
GOTHIC PRODUCTION CORPORATION
SAP ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
CHESAPEAKE EXPLORATION LIMITED
PARTNERSHIP
CHESAPEAKE LOUISIANA, L.P.
CHESAPEAKE PANHANDLE LIMITED PARTNERSHIP
CHESAPEAKE-STAGHORN ACQUISITION L.P.
By Chesapeake Operating, Inc., as
general partner of each
respective entity
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
THE BANK OF NEW YORK, as Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signatory
RULE 144A/REGULATION S APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Exchange Securities" means (1) the 8.375% Senior Notes due
2008 issued pursuant to the Indenture in connection with the Registered Exchange
Offer pursuant to a Registration Rights Agreement and (2) Additional Securities,
if any, issued pursuant to a registration statement filed with the SEC under the
Securities Act.
"Initial Purchasers" means (1) with respect to the Initial
Securities issued on the Issue Date, Bear, ▇▇▇▇▇▇▇ & Co. Inc. and Credit Suisse
First Boston Corporation and (2) with respect to each issuance of Additional
Securities, the Persons purchasing such Additional Securities under the related
Purchase Agreement.
"Initial Securities" means (1) $250 million aggregate
principal amount of 8.375% Senior Notes due 2008 issued on the Issue Date and
(2) Additional Securities, if any, issued in one or more transactions exempt
from the registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to
a Registration Rights Agreement, to the Initial Purchasers to issue and deliver
to each Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 8.375% Senior Notes
due 2008 issued in connection with a Private Exchange.
"Purchase Agreement" means (1) with respect to the Initial
Securities issued on the Issue Date, the Purchase Agreement dated October 25,
2001, among the Company, the Subsidiary Guarantors and the Initial Purchasers,
and (2) with respect to each issuance of Additional Securities, the purchase
agreement or underwriting agreement among the Company, the Subsidiary Guarantors
and the Persons purchasing such Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to a Registration Rights Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the Initial
Securities, a like aggregate principal amount of Exchange Securities registered
under the Securities Act.
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"Registration Rights Agreement" means (1) with respect to the
Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated October 25, 2001, among the Company, the Subsidiary Guarantors and the
Initial Purchasers, and (2) with respect to each issuance of Additional
Securities issued in a transaction exempt from the registration requirements of
the Securities Act, the registration rights agreement, if any, among the
Company, the Subsidiary Guarantors and the Persons purchasing such Additional
Securities under the related Purchase Agreement.
"Securities" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor Person
thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the registration
statement issued by the Company in connection with the offer and sale of Initial
Securities or Private Exchange Securities pursuant to a Registration Rights
Agreement.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.3(b) hereto.
1.2 Other Definitions
Defined in
Term Section:
---- ----------
"Agent Members" ..............................................................................2.1(b)
"Global Security" ............................................................................2.1(a)
"Regulation S" ...............................................................................2.1(a)
"Restricted Global Security" .................................................................2.1(a)
"Rule 144A" ..................................................................................2.1(a)
2. The Securities.
2.1 (a) Form and Dating. Initial Securities offered and sold to a QIB
in reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance
on Regulation S under the Securities Act ("Regulation S"), in each case as
provided in a Purchase Agreement, and Private Exchange Securities, as provided
in a Registration Rights Agreement, shall be issued initially in the form of one
or more permanent global Securities in definitive, fully registered form without
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit 1 hereto (each, a "Restricted Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Trustee, at its principal corporate trust office,
as Securities Custodian, and registered in the name of the Depository or a
nominee of the Depository, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depository or its nominee as hereinafter
provided. Exchange Securities shall be issued in global form (with the global
securities legend set forth in Exhibit 1 hereto) or in certificated form at the
option of the Holders thereof from time to time. Exchange Securities issued in
global form and Restricted Global Securities are sometimes referred to in this
Appendix as "Global Securities."
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(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as Securities Custodian.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as Securities
Custodian or under such Global Security, and the Company, the Trustee and any
agent of the Company or the Trustee shall be entitled to treat the Depository as
the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this
Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Restricted
Global Securities shall not be entitled to receive physical delivery of
certificated Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) on
the Issue Date, an aggregate principal amount of $250 million 8.375% Senior
Notes due 2008, (2) from time to time after the Issue Date, any Additional
Securities for an original issue in an aggregate principal amount specified in
the written order of the Company pursuant to Section 2.02 of the Indenture and
(3) Exchange Securities or Private Exchange Securities for issue only in a
Registered Exchange Offer or a Private Exchange, respectively, pursuant to a
Registration Rights Agreement, for a like principal amount of Initial
Securities, in each case upon a written order of the Company signed by two
Officers or by an Officer and either the Secretary, an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and, in the case of any issuance of Additional
Securities pursuant to Section 2.13 of the Indenture, shall certify that such
issuance is in compliance with Section 4.09(a) of the Indenture.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository therefor. A transferor of a beneficial interest in a Global
Security shall deliver to the Registrar a written order given in accordance with
the Depository's procedures containing information regarding the participant
account of the Depository to be credited with a beneficial interest in the
Global Security. The Registrar shall, in accordance with such instructions
instruct the Depository to credit to the account of the Person specified in such
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instructions a beneficial interest in the Global Security and to debit the
account of the Person making the transfer the beneficial interest in the Global
Security being transferred.
(ii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4), a Global Security may not
be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(iii) In the event that a Restricted Global Security is
exchanged for Securities in certificated registered form pursuant to Section 2.4
of this Appendix, prior to the consummation of a Registered Exchange Offer or
the effectiveness of a Shelf Registration Statement with respect to such
Securities, such Securities may be exchanged only in accordance with such
procedures as are substantially consistent with the provisions of this Section
2.3 (including the certification requirements set forth on the reverse of the
Initial Securities intended to ensure that such transfers comply with Rule 144A
or Regulation S, as the case may be) and such other procedures as may from time
to time be adopted by the Company.
(b) Legend.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), until the expiration of the applicable holding period
with respect to the Securities set forth in Rule 144(k) of the
Securities Act, each Security certificate evidencing the Restricted
Global Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the
following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (I) THE COMPANY, (II) IN THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (IV) PURSUANT TO EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
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(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Restricted Global Security) pursuant to Rule 144 under the Securities
Act, the Registrar shall permit the transferee thereof to exchange such
Transfer Restricted Security for a certificated Security that does not
bear the legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security, if the transferor
thereof certifies in writing to the Registrar that such sale or
transfer was made in reliance on Rule 144 (such certification to be in
the form set forth on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities pursuant to and during the period of the
effectiveness of a Shelf Registration Statement with respect to such
Initial Securities or Private Exchange Securities, as the case may be,
all requirements pertaining to legends on such Initial Security or such
Private Exchange Security will cease to apply, the requirements
requiring any such Initial Security or such Private Exchange Security
issued to certain Holders be issued in global form will cease to apply,
and a certificated Initial Security or Private Exchange Security or an
Initial Security or Private Exchange Security in global form, in each
case without restrictive transfer legends, will be available to the
transferee of the Holder of such Initial Securities or Private Exchange
Securities upon exchange of such transferring Holder's certificated
Initial Security or Private Exchange Security or directions to transfer
such Holder's interest in the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders be
issued in global form will still apply with respect to Holders of such
Initial Securities that do not exchange their Initial Securities, and
Exchange Securities in certificated or global form will be available to
Holders that exchange such Initial Securities in such Registered
Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect
to the Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will still apply with respect to Holders of such Initial
Securities that do not exchange their Initial Securities, and Private
Exchange Securities in global form with the global securities legend
and the Restricted Securities Legend set forth in Exhibit 1 hereto will
be available to Holders that exchange such Initial Securities in such
Private Exchange.
(c) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for certificated Securities, redeemed, purchased or canceled, such Global
Security shall be returned to the Depository for cancelation or retained and
canceled by the Trustee. At any time prior to such cancelation, if any
beneficial interest in a Global Security is exchanged for certificated
Securities, redeemed, purchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
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(d) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate certificated
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.06 and 4.16 of the
Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redeem Securities or 15 Business Days before an
interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, Agent Member or other Person
with respect to the accuracy of the records of the Depository or its
nominee or of any Agent Member, with respect to any ownership interest
in the Securities or with respect to the delivery to any Agent Member,
beneficial owner or other Person (other than the Depository) of any
notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Depository or
its nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to
its Agent Member and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with
A-7
respect to any transfer of any interest in any Security (including any
transfers between or among Agent Members or beneficial owners in any
Global Security) other than to require delivery of such certificates
and other documentation or evidence as are expressly required by, and
to do so if and when expressly required by, the terms of this
Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
2.4 Certificated Securities.
(a) A Restricted Global Security deposited with the Depository
or with the Trustee as Securities Custodian pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for such Restricted
Global Security or if at any time such Depository ceases to be a "clearing
agency" registered under the Exchange Act and a successor depositary is not
appointed by the Company within 90 days of such notice or (ii) an event of
default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of certificated Securities under this Indenture.
(b) Any Restricted Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered by the
Depository to the Trustee located at its principal corporate trust office in the
Borough of Manhattan, The City of New York, to be so transferred, in whole or
from time to time in part, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Restricted Global
Security, an equal aggregate principal amount of certificated Initial Securities
of authorized denominations. Any portion of a Restricted Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 principal amount and any integral
multiple thereof and registered in such names as the Depository shall direct.
Any certificated Initial Security or Private Exchange Security delivered in
exchange for an interest in the Restricted Global Security shall, except as
otherwise provided by Section 2.3(b), bear the restricted securities legend set
forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security shall be entitled to grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of any of the events
specified in Section 2.4(a), the Company shall promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
B-1
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY TO (I) THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
B-2
No. CUSIP NO.
$ ISIN NO.
8.375% Senior Notes due November 1, 2008
Chesapeake Energy Corporation, an
Oklahoma corporation,
promises to pay to CEDE & CO., or registered assigns, the principal sum of
_______________________________________________ Dollars on November 1, 2008.
Interest Payment Dates: May 1 and November 1 (commencing May
1, 2002(1))
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
CHESAPEAKE ENERGY CORPORATION,
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
----------
(1) such later date as is appropriate in the case of Additional Securities.
B-3
[REVERSE SIDE OF INITIAL SECURITY]
8.375% Senior Note due 2008
1. Interest
Chesapeake Energy Corporation, an
Oklahoma corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Security at a rate of
0.50% per annum (increasing by an additional 0.50% per annum after each
consecutive 90-day period that occurs after the date on which such Registration
Default occurs up to a maximum additional interest rate of 2.00%) from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured. The
Company will pay interest semiannually on May 1 and November 1 of each year,
commencing May 1, 2002. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from November 5, 2001. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the April 15 or October 15 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and interest)
by mailing a check to the registered address of each Holder thereof; provided,
however, that payments on a certificated Security will be made by wire transfer
to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying Agent to such effect designating such account no
later than 30 days immediately preceding the relevant due date for payment (or
such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
B-4
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 5, 2001 ("Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Holders are referred to the Indenture and the Act
for a statement of those terms.
The Company shall be entitled, subject to its compliance with
Section 4.09(a) of the Indenture, to issue Additional Securities pursuant to
Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date,
any Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor will be treated as a single class for all
purposes under the Indenture.
5. Optional Redemption
The Securities may be redeemed at the option of the Company,
in whole or from time to time in part, at any time on or after November 1, 2005,
at the redemption prices set forth below (expressed as a percentage of the
principal amount of the Securities to be redeemed), together with accrued and
unpaid interest on the Securities so redeemed to the redemption date, if
redeemed during the 12-month period commencing on November 1 of the years
indicated below:
Redemption
Year Price
---- ----------
2005............................................................... 104.188%
2006 .............................................................. 102.094%
2007 and thereafter ............................................... 100.000%
Any redemption pursuant to this paragraph 5 shall be made, to
the extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
of the Indenture.
6. Equity Offering Redemption
In the event the Company consummates one or more Equity
Offerings on or prior to November 1, 2004, the Company may redeem, in its sole
discretion, up to 35% of the aggregate principal amount of the Securities (which
includes Additional Securities, if any) with all or a portion of the aggregate
net proceeds received by the Company from any such Equity Offering or Equity
Offerings at a redemption price of 108.375% of the aggregate principal amount of
the Securities so redeemed, plus accrued and unpaid interest on the Securities
so redeemed to the redemption date; provided, however, that (i) the date of any
such redemption occurs within the 90-day period after the Equity Offering in
respect of which such redemption is made and (ii) following each such
redemption, at least 65% of the aggregate principal amount of the Securities
(which includes Additional Securities, if any) remains outstanding. Any
redemption pursuant to this paragraph 6 shall be made, to the extent applicable,
pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.
B-5
7. Make-Whole Price Redemption
At any time prior to November 1, 2005, the Company may, at its
option, redeem all or any portion of the Securities at the "Make-Whole Price"
(as defined in the Indenture) plus accrued and unpaid interest on the Securities
so redeemed to the date of redemption. Any redemption pursuant to this paragraph
7 shall be made, to the extent applicable, pursuant to the provisions of
Sections 3.01 through 3.06 of the Indenture.
8. Notice of Redemption
Notice of redemption will be mailed to the Holder's registered
address at least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed. If less than all Securities are to be
redeemed, the Trustee shall select pro rata, by lot or, if the Securities are
listed on any securities exchange, by any other method that the Trustee
considers fair and appropriate and that complies with the requirements of such
exchange, the Securities to be redeemed in multiples of $1,000; provided,
however, that no Securities with a principal amount of $1,000 or less will be
redeemed in part. Securities in denominations larger than $1,000 may be redeemed
in part. On and after the redemption date, interest ceases to accrue on
Securities or portions of them called for redemption (unless the Company shall
default in the payment of the redemption price or accrued interest).
9. Change of Control Offer
In the event of a Change of Control of the Company, the
Company shall be required to make an offer to purchase all or any portion of
each Holder's Securities, at 101% of the principal amount thereof, plus accrued
and unpaid interest to the date of purchase.
10. Net Proceeds Offer
In the event of certain Asset Sales (and Sale/Leaseback
Transactions), the Company may be required to make a Net Proceeds Offer to
purchase all or any portion of each Holder's Securities, at 100% of the
principal amount thereof, plus accrued and unpaid interest to the Net Proceeds
Payment Date.
11. Restrictive Covenants
The Indenture imposes certain limitations on, among other
things, the ability of the Company to merge or consolidate with any other Person
or sell, lease or otherwise transfer all or substantially all of its properties
or assets, the ability of the Company or the Restricted Subsidiaries to dispose
of assets, to pay dividends and make certain other distributions and payments,
to make certain investments or redeem, retire, repurchase or acquire for value
shares of Capital Stock, to incur additional Indebtedness or incur encumbrances
against certain property and to enter into certain transactions with Affiliates,
all subject to certain limitations described in the Indenture.
12. Ranking and Guarantees
The Securities are general senior unsecured obligations of the
Company. The Company's obligation to pay principal, premium, if any, and
interest with respect to the Securities is unconditionally guaranteed on a
senior basis, jointly and severally, by the Subsidiary Guarantors pursuant
B-6
to Article Ten of the Indenture. Certain limitations to the obligations of the
Subsidiary Guarantors are set forth in further detail in the Indenture.
13. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 Business Days before the mailing of a
notice of an offer to repurchase or redeem Securities or 15 Business Days before
an interest payment date.
14. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
15. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
16. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Securities for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
17. Amendment, Supplement, Waiver
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority of the outstanding principal amount of the Securities, and any past
default or noncompliance with any provision may be waived with the consent of
the Holders of a majority in principal amount of the Securities. Without the
consent of any Holder, the Company may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency
or to make any change that does not adversely affect the rights of any Holder in
any material respect.
19. Successor Corporation
When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.
B-7
20. Defaults and Remedies
An Event of Default generally is: default by the Company or
any Subsidiary Guarantor for 30 days in payment of interest on the Securities;
default by the Company or any Subsidiary Guarantor in payment of principal of,
or premium, if any, on the Securities; default by the Company or any Subsidiary
Guarantor in the deposit of any optional redemption or repurchase payment when
due and payable; defaults resulting in acceleration prior to maturity of certain
other Indebtedness or resulting from payment defaults under certain other
Indebtedness; failure by the Company or any Subsidiary Guarantor for 45 days
after notice to comply with any of its other agreements in the Indenture;
certain final judgments against the Company or Subsidiaries; a failure of any
Guarantee of a Subsidiary Guarantor to be in full force and effect or denial by
any Subsidiary Guarantor of its obligations with respect thereto; and certain
events of bankruptcy or insolvency. Subject to certain limitations in the
Indenture, if an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Securities
may declare all the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of bankruptcy,
insolvency or reorganization, all outstanding Securities shall become due and
payable immediately without further action or notice. Holders may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Company must furnish an annual compliance certificate to the Trustee.
21. Trustee Dealings with Company and Subsidiary Guarantors
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, the Subsidiary Guarantors or their respective Subsidiaries or
Affiliates with the same rights it would have if it were not Trustee.
22. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, any Subsidiary Guarantor or the Trustee shall not have any liability
for any obligations of the Company, any Subsidiary Guarantor or the Trustee
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Security.
23. Authentication
This Security shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Security.
24. Abbreviations
Customary abbreviations may be used in the name of a Holder 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).
B-8
25. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP numbers
to be printed on the Securities as a convenience to Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
26. Holders' Compliance with Registration Rights Agreement
Each Holder of this Security, by acceptance hereof,
acknowledges and agrees to the provisions of the Registration Rights Agreement,
including the obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.
27. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY, EXCEPT TO THE EXTENT
THAT THE LAWS OF THE STATE OF NEW YORK WOULD REQUIRE THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION REGARDING THE VALIDITY OF THE SECURITIES.
B-9
THE COMPANY WILL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE AND A COPY OF
THE REGISTRATION RIGHTS AGREEMENT. REQUESTS MAY BE MADE TO:
CHESAPEAKE ENERGY CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: CHIEF FINANCIAL OFFICER
B-10
----------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
--------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to act for him.
------------------------------------------------------------
Date: Your Signature:
---------------- ---------------------
-------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933) that purchases for its
own account or for the account of a qualified
institutional buyer to whom notice is given that such
transfer is being made in reliance on Rule 144A, in
each case pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
(4) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the
Securities Act in compliance with Rule 904 under the
Securities Act of 1933; or
B-11
(5) [ ] pursuant to the exemption from registration provided
by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however,
that if box (4) or (5) is checked, the Trustee shall be entitled to
require, prior to registering any such transfer of the Securities, such
legal opinions, certifications and other information as the Company has
reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
-----------------------------
Signature
Signature Guarantee:
---------------------------- -----------------------------
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
----------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
---------------- -----------------------------------
NOTICE: To be executed by
an executive officer
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:
Principal amount of Signature of
Amount of decrease Amount of increase this Global Security authorized officer
Date of in Principal amount in Principal amount following such of Trustee or
Exchange of this Global Security of this Global Security decrease or increase) Securities Custodian
-------- ----------------------- ----------------------- --------------------- --------------------
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.11 or 4.16 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.11 or 4.16 of the Indenture,
state the amount in principal amount: $
Date: Your Signature:
--------------- ------------------------------------
(Sign exactly as your name appears
on the other side of this Security.)
Signature Guarantee:
---------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
EXHIBIT A-1
[FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
*/**/
----------
*/If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY".
**/If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to Appendix A and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.
C-2
No. CUSIP NO.
$ ISIN NO.
8.375% Senior Notes due November 1, 2008
Chesapeake Energy Corporation, an
Oklahoma corporation,
promises to pay to CEDE & CO., or registered assigns, the principal sum of
_____________________________________________________________________ Dollars
on November 1, 2008.
Interest Payment Dates: May 1 and November 1 (commencing May
1, 2002)
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
CHESAPEAKE ENERGY CORPORATION,
by
------------------------
Name:
Title:
by
------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
C-3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
8.375% Senior Note due 2008
1. Interest
Chesapeake Energy Corporation, an
Oklahoma corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Security at a rate of
0.50% per annum (increasing by an additional 0.50% per annum after each
consecutive 90-day period that occurs after the date on which such Registration
Default occurs up to a maximum additional interest rate of 2.00%) from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured.** The
Company will pay interest semiannually on May 1 and November 1 of each year,
commencing May 1, 2002. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from November 5, 2001. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the April 15 or October 15 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and interest)
by mailing a check to the registered address of each Holder thereof; provided,
however, that payments on a certificated Security will be made by wire transfer
to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying Agent to such effect designating such account no
later than 30 days immediately preceding the relevant due date for payment (or
such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
----------
**Insert if at the date of issuance of the Exchange Security
or Private Exchange Security (as the case may be) any Registration
Default has occurred with respect to the related Initial Securities
during the interest period in which such date of issuance occurs.
C-4
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 5, 2001 ("Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. ▇▇.▇▇. 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Holders are referred to the Indenture and the Act
for a statement of those terms.
The Company shall be entitled, subject to its compliance with
Section 4.09(a) of the Indenture, to issue Additional Securities pursuant to
Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date,
any Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor will be treated as a single class for all
purposes under the Indenture.
5. Optional Redemption
The Securities may be redeemed at the option of the Company,
in whole or from time to time in part, at any time on or after November 1, 2005,
at the redemption prices set forth below (expressed as a percentage of the
principal amount of the Securities to be redeemed), together with accrued and
unpaid interest on the Securities so redeemed to the redemption date, if
redeemed during the 12-month period commencing on November 1 of the years
indicated below:
Redemption
Year Price
---- ----------
2005............................................................... 104.188%
2006 .............................................................. 102.094%
2007 and thereafter ............................................... 100.000%
Any redemption pursuant to this paragraph 5 shall be made, to
the extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
of the Indenture.
6. Equity Offering Redemption
In the event the Company consummates one or more Equity
Offerings on or prior to November 1, 2004, the Company may redeem, in its sole
discretion, up to 35% of the aggregate principal amount of the Securities (which
includes Additional Securities, if any) with all or a portion of the aggregate
net proceeds received by the Company from any such Equity Offering or Equity
Offerings at a redemption price of 108.375% of the aggregate principal amount of
the Securities so redeemed, plus accrued and unpaid interest on the Securities
so redeemed to the redemption date; provided, however, that (i) the date of any
such redemption occurs within the 90-day period after the Equity Offering in
respect of which such redemption is made and (ii) following each such
redemption, at least 65% of the aggregate principal amount of the Securities
(which includes Additional Securities, if any) remains outstanding. Any
redemption pursuant to this paragraph 6 shall be made, to the extent applicable,
pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.
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7. Make-Whole Price Redemption
At any time prior to November 1, 2005, the Company may, at its
option, redeem all or any portion of the Securities at the "Make-Whole Price"
(as defined in the Indenture) plus accrued and unpaid interest on the Securities
so redeemed to the date of redemption. Any redemption pursuant to this paragraph
7 shall be made, to the extent applicable, pursuant to the provisions of
Sections 3.01 through 3.06 of the Indenture.
8. Notice of Redemption
Notice of redemption will be mailed to the Holder's registered
address at least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed. If less than all Securities are to be
redeemed, the Trustee shall select pro rata, by lot or, if the Securities are
listed on any securities exchange, by any other method that the Trustee
considers fair and appropriate and that complies with the requirements of such
exchange, the Securities to be redeemed in multiples of $1,000; provided,
however, that no Securities with a principal amount of $1,000 or less will be
redeemed in part. Securities in denominations larger than $1,000 may be redeemed
in part. On and after the redemption date, interest ceases to accrue on
Securities or portions of them called for redemption (unless the Company shall
default in the payment of the redemption price or accrued interest).
9. Change of Control Offer
In the event of a Change of Control of the Company, the
Company shall be required to make an offer to purchase all or any portion of
each Holder's Securities, at 101% of the principal amount thereof, plus accrued
and unpaid interest to the date of purchase.
10. Net Proceeds Offer
In the event of certain Asset Sales (and Sale/Leaseback
Transactions), the Company may be required to make a Net Proceeds Offer to
purchase all or any portion of each Holder's Securities, at 100% of the
principal amount thereof, plus accrued and unpaid interest to the Net Proceeds
Payment Date.
11. Restrictive Covenants
The Indenture imposes certain limitations on, among other
things, the ability of the Company to merge or consolidate with any other Person
or sell, lease or otherwise transfer all or substantially all of its properties
or assets, the ability of the Company or the Restricted Subsidiaries to dispose
of assets, to pay dividends and make certain other distributions and payments,
to make certain investments or redeem, retire, repurchase or acquire for value
shares of Capital Stock, to incur additional Indebtedness or incur encumbrances
against certain property and to enter into certain transactions with Affiliates,
all subject to certain limitations described in the Indenture.
12. Ranking and Guarantees
The Securities are general senior unsecured obligations of the
Company. The Company's obligation to pay principal, premium, if any, and
interest with respect to the Securities is unconditionally guaranteed on a
senior basis, jointly and severally, by the Subsidiary Guarantors pursuant to
Article Ten of the Indenture. Certain limitations to the obligations of the
Subsidiary Guarantors are set forth in further detail in the Indenture.
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13. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 Business Days before the mailing of a
notice of an offer to repurchase or redeem Securities or 15 Business Days before
an interest payment date.
14. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
15. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
16. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture if the Company deposits with the Trustee money or U.S. Government
Securities for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
17. Amendment, Supplement, Waiver
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority of the outstanding principal amount of the Securities, and any past
default or noncompliance with any provision may be waived with the consent of
the Holders of a majority in principal amount of the Securities. Without the
consent of any Holder, the Company may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency
or to make any change that does not adversely affect the rights of any Holder in
any material respect.
19. Successor Corporation
When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.
20. Defaults and Remedies
An Event of Default generally is: default by the Company or
any Subsidiary Guarantor for 30 days in payment of interest on the Securities;
default by the Company or any Subsidiary Guarantor in payment of principal of,
or premium, if any, on the Securities; default by the Company or any Subsidiary
C-7
Guarantor in the deposit of any optional redemption or repurchase payment when
due and payable; defaults resulting in acceleration prior to maturity of certain
other Indebtedness or resulting from payment defaults under certain other
Indebtedness; failure by the Company or any Subsidiary Guarantor for 45 days
after notice to comply with any of its other agreements in the Indenture;
certain final judgments against the Company or Subsidiaries; a failure of any
Guarantee of a Subsidiary Guarantor to be in full force and effect or denial by
any Subsidiary Guarantor of its obligations with respect thereto; and certain
events of bankruptcy or insolvency. Subject to certain limitations in the
Indenture, if an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Securities
may declare all the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of bankruptcy,
insolvency or reorganization, all outstanding Securities shall become due and
payable immediately without further action or notice. Holders may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Company must furnish an annual compliance certificate to the Trustee.
21. Trustee Dealings with Company and Subsidiary Guarantors
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, the Subsidiary Guarantors or their respective Subsidiaries or
Affiliates with the same rights it would have if it were not Trustee.
22. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, any Subsidiary Guarantor or the Trustee shall not have any liability
for any obligations of the Company, any Subsidiary Guarantor or the Trustee
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Security.
23. Authentication
This Security shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Security.
24. Abbreviations
Customary abbreviations may be used in the name of a Holder 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).
25. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP numbers
to be printed on the Securities as a convenience to Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
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26. Holders' Compliance with Registration Rights Agreement
Each Holder of this Security, by acceptance hereof,
acknowledges and agrees to the provisions of the Registration Rights Agreement,
including the obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.
27. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY, EXCEPT TO THE EXTENT
THAT THE LAWS OF THE STATE OF NEW YORK WOULD REQUIRE THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION REGARDING THE VALIDITY OF THE SECURITIES.
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THE COMPANY WILL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE AND A COPY OF
THE REGISTRATION RIGHTS AGREEMENT. REQUESTS MAY BE MADE TO:
CHESAPEAKE ENERGY CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: CHIEF FINANCIAL OFFICER
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
-------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
-------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to act for him.
------------------------------------------------------------
Date: Your Signature:
---------------- ---------------------
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Sign exactly as your name appears on the other side of this Security.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.11 or 4.16 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.11 or 4.16 of the Indenture,
state the amount in principal amount: $
Date: Your Signature:
--------------- -------------------------------------
(Sign exactly as your name appears on
the other side of this Security.)
Signature Guarantee:
---------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.