SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): April 29, 1999
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-16741 94-1667468
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
5005 LBJ Freeway, Suite 1000, Dallas, Texas
75244 (Address of principal executive
offices)
(972) 701-2000
(Registrant's Telephone No.)
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Item 5.Other Events
On April 29, 1999, Comstock Resources, Inc. (the "Company") closed the sale
of $150 million in aggregate principal amount of 11.25% Senior Notes due in 2007
(the "Senior Notes"). Interest on the Senior Notes is payable semiannually on
May 1 and November 1, commencing on November 1, 1999. The Senior Notes were
priced at a discount to yield 11.35% and proceeds from the sale of the Senior
Notes were used to reduce amounts outstanding under the Company's bank credit
facility. The Senior Notes are unsecured obligations of the Company and
guaranteed by all of the Company's principal operating subsidiaries. The Company
can redeem the Senior Note beginning on May 1, 2004.
Concurrently with the sale of the Senior Notes, the Company also sold
1,948,001 shares of its Series A 1999 Convertible Preferred Stock, $10 par value
and 1,051,999 shares of its Series B 1999 Non-Convertible Preferred Stock, $10
par value (the "Preferred Stock"), in a private placement for $30 million to
certain funds and institutions for which Trust Company of the West serves as
investment manager and to Pacific Life Insurance Company and Aquila Energy
Capital Corporation. The proceeds from the private placement were used to reduce
amounts outstanding under the Company's bank credit facility. The Preferred
Stock accrues dividends at an annual rate of 9% and are payable quarterly in
cash or in shares of the Company's common stock, at the election of the Company.
Shares of the Series A 1999 Convertible Preferred Stock are convertible, at the
option of the holder, into shares of common stock of the Company. Based on the
initial conversion price of $4.00 per share of common stock, each share of
Series A 1999 Convertible Preferred Stock is convertible into 2.5 shares of
common stock. At the Company's upcoming annual meeting of stockholders to be
held on June 23, 1999, the Company is asking its stockholders to approve the
issuance by the Company of 1,051,999 shares of Series A 1999 Convertible
Preferred Stock upon conversion by the Company of the Series B 1999
Non-Convertible Preferred Stock into shares of Series A 1999 Convertible
Preferred Stock.
In connection with the sale of the Senior Notes and the Preferred Stock,
the Company entered into a new $162.5 million revolving credit facility with The
First National Bank of Chicago as administrative agent and a syndicate of banks.
As of April 29, 1999, the Company has $104.0 million outstanding under the new
bank credit facility.
Item 7. Financial Statements, Proforma Financial Information and Exhibits
Exhibits
4.1 Certificate of Voting Powers, Designations, Preferences, and
Relative, Participating, Optional or Other Special Rights of the
Series A 1999 Convertible Preferred Stock and Series B 1999
Non-Convertible Preferred Stock.
4.2 Fifth Amendment to the Rights Agreement between the Company and
American Stock Transfer & Trust Company as Rights Agent dated
April 29, 1999.
10.1 Stock Purchase Agreement dated April 29, 1999 between the Company
and certain purchasers.
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10.2 Credit Agreement dated as of April 29, 1999 between the Company
and its principal operating subsidiaries, the lenders party
thereto from time to time, The First National Bank of Chicago, as
Administrative Agent, Toronto Dominion (Texas), Inc., as
Syndication Agent, and Paribas, as Documentation Agent.
10.3 Placement Agreement dated April 26, 1999 between the Company and
Morgan Stanley & Co. Incorporated, Banc One Capital Markets,
Inc., TD Securities (USA) Inc. and Paribas Corporation.
10.4 Registration Rights Agreement dated April 29, 1999 between the
Company and Morgan Stanley & Co. Incorporated, Banc One Capital
Markets, Inc., TD Securities (USA) Inc. and Paribas Corporation.
10.5 Indenture dated as of April 29, 1999 between the Company and U.S.
Trust Company of Texas, N.A., Trustee for the $150,000,000 11
1/4% Senior Notes due 2007.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: May 4, 1999 By:/s/ROLAND O. BURNS
---------------------
ROLAND O. BURNS Senior Vice President,
Chief Financial Officer, Secretary, and
Treasurer (Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
Exhibit Page
Number Description Number
------ ----------- ------
4.1 Certificate of Voting Powers, Designations, E-2
Preferences, and Relative, Participating, Optional or
Other Special Rights of the Series A 1999 Convertible
Preferred Stock and Series B 1999 Non- Convertible
Preferred Stock.
4.2 Fifth Amendment to the Rights Agreement between the E-27
Company and American Stock Transfer & Trust Company as
Rights Agent dated April 29, 1999.
10.1 Stock Purchase Agreement dated April 29, 1999 between E-30
the Company and certain purchasers.
10.2 Credit Agreement dated as of April 29, 1999 the Company E-58
and its principal operating subsidiaries, the lenders
party thereto from time to time, The First National
Bank of Chicago, as Administrative Agent, Toronto
Dominion (Texas), Inc., as Syndication Agent, and
Paribas, as Documentation Agent.
10.3 Placement Agreement dated April 26, 1999 between the E-111
Company and Morgan Stanley & Co. Incorporated, Banc One
Capital Markets, Inc., TD Securities (USA) Inc. and
Paribas Corporation.
10.4 Registration Rights Agreement dated April 29, 1999 E-129
between the Company and Morgan Stanley & Co.
Incorporated, Banc One Capital Markets, Inc., TD
Securities (USA) Inc. and Paribas Corporation.
10.5 Indenture dated as of April 29, 1999 between the E-144
Company and U.S. Trust Company of Texas, N.A., Trustee
for the $150,000,000 11 1/4% Senior Notes due 2007.
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COMSTOCK RESOURCES, INC.
Certificate of Voting Powers, Designations,
Preferences, and Relative, Participating,
Optional or Other Special Rights of
Series A 1999 Convertible Preferred Stock
and Series B 1999 Non-Convertible Preferred Stock
We, M. Jay Allison, President, and Roland O. Burns, Secretary, of Comstock
Resources, Inc. (the "Company"), a corporation organized and existing under the
General Corporation Law of the State of Nevada, in accordance with the
provisions of Section 78.195 of the Nevada Revised Statutes thereof, DO HEREBY
CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Restated Articles of Incorporation of the Company, said Board of Directors, at a
meeting of the Board of Directors held pursuant to the General Corporation Law
of the State of Nevada, duly adopted a resolution providing for the issuance of
Three Million (3,000,000) shares of a new series of preferred stock designated
as Series A 1999 Convertible Preferred Stock and One Million Fifty One Thousand
Nine Hundred Ninety-Nine (1,051,999) shares of a new series of preferred stock
designated as Series B 1999 Non-Convertible Preferred Stock, which resolution is
as follows:
RESOLVED, that pursuant to the Restated Articles of Incorporation of the
Company, there be and hereby is authorized and created a series of preferred
stock, to consist of Three Million (3,000,000) shares with a par value of Ten
Dollars ($10.00) per share and that the voting powers, designations,
preferences, and relative, participating, optional or other special rights of
the Series A 1999 Convertible Preferred Stock (the "Series A 1999 Preferred
Stock") and a series of preferred stock to consist of One Million Fifty One
Thousand Nine Hundred Ninety-Nine (1,051,999) shares with a par value of Ten
Dollars ($10.00) per share and that the voting powers, designations, preferences
and relative, participating, optional or other special rights of the Series B
1999 Non-Convertible Preferred Stock (the "Series B 1999 Preferred Stock" and
together with the Series A 1999 Preferred Stock, the "Series 1999 Preferred
Stock") and the qualifications, limitations or restrictions thereof be as
follows:
1. Certain Definitions. The following terms shall have the following
meanings:
"5-Day Average Price" per share of Common Stock, for purposes of any
provision herein at the date specified in such provision, shall mean the average
closing price of the Common Stock on the securities exchange or other national
market system on which the Common Stock is then listed over the 5- trading day
period immediately prior to such date.
"30-Day Average Price" per share of Common Stock, for purposes of any
provision herein at the date specified in such provision, shall mean the average
closing price of the Common Stock on the securities exchange or other national
market system on which the Common Stock is then listed over the 30- trading day
period immediately prior to such date.
"1991 Long-Term Incentive Plan" shall mean the Company's 1991
Long-Term Incentive Plan, as in effect on the Closing Date and as such plan may
be amended from time to time with the consent of the holders of the Series 1999
Preferred Stock pursuant to Section 6.5(e) hereof.
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"1999 Long-Term Incentive Plan" shall mean the Company's 1999
Long-Term Incentive Plan, in the form attached hereto as Exhibit A and as such
plan may be amended from time to time with the consent of the holders of the
Series 1999 Preferred Stock pursuant to Section 6.5(e) hereof.
"Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Actual Directors" shall have the meaning set forth in Section 6.2
below.
"Additional Shares of Nonpreferred Stock" shall mean all shares of
Nonpreferred Stock issued by the Company after the Closing Date other than (i)
the shares of Common Stock issued to a holder of the Series 1999 Preferred Stock
upon conversion or redemption of, or dividends on, the Series 1999 Preferred
Stock, (ii) any issuance of Common Stock or rights or warrants to purchase
Common Stock at the then market price pursuant to the Company's 1991 Long-Term
Incentive Plan provided that such plan will not provide for the issuance of
options, rights, warrants or grants in excess of 4,119,130 shares of Common
Stock (and counting as a portion of such shares the 3,890,500 shares reserved
for issuance for outstanding options granted under the 1991 Long-Term Incentive
Plan as of the Closing Date as shown on Attachment 1 hereto) plus, if the
Company's 1999 Long-Term Incentive Plan is not approved by the Company's
shareholders, a number of shares equal to ten percent (10%) of the number of
shares of Common Stock issued after the Closing Date (excluding Common Stock
issued upon conversion or redemption of the Series 1999 Preferred Stock), (iii)
if approved by the Company's shareholders, any issuance of Common Stock or
rights or warrants to purchase Common Stock at the then current market price
pursuant to the 1999 Long- Term Incentive Plan provided that such plan will not
provide for the issuance of options, rights, warrants or grants in excess of
1,255,000 shares of Common Stock plus a number of shares of Common Stock per
year commencing January 1, 2000 equal to the sum of (x) one percent (1%) of the
outstanding number of shares of Common Stock issued and (y) 50,000 shares of
Common Stock issuable to non-employee directors, (iv) any shares of Common Stock
issued at then current market prices in payment of the annual retainers paid to
members of the Board of Directors of the Company if not otherwise included in
the 1999 Long-Term Incentive Plan, provided that such annual retainers do not
exceed a value or amount of Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate per year, (v) up to 5,111,030 shares of Common Stock issued pursuant
to the options and warrants outstanding on the Closing Date (and counting as a
portion of such shares the 3,890,500 shares reserved for issuance for
outstanding options granted under the 1991 Long-Term Incentive Plan as of the
Closing Date) as shown on Attachment 1 hereto, and (vi) the issuance of up to
500,000 shares of Common Stock after the Closing Date at a price per share less
than the Conversion Price.
"Applicable IRR Amount" means, for purposes of any provision herein at
the date specified in such provision, that amount which, when added to the
amount of all dividend payments received by the holders of the Series 1999
Preferred Stock (including dividends the Cash Equivalent Amount of which were
paid in the form of Freely Tradeable Common Stock) through such date, would
result in such holders receiving a thirty five percent (35%) cumulative
cash-on-cash internal rate of return, compounded quarterly, on such holders'
initial investment of Ten Dollars ($10.00) per share of Series 1999 Preferred
Stock.
"Available Director Seats" shall have the meaning set forth in Section
6.2 below.
"Business Day" means any day other than a Saturday, a Sunday, any day
on which the New York Stock Exchange is closed or any other day on which banking
institutions in New York or California are authorized or required by law to be
closed.
"Cash Equivalent Amount" means, with respect to any cash amount which
may be paid to the holders of the Series 1999 Preferred Stock by way of
dividend, redemption or other distribution, the number of shares (or fraction
thereof) of Freely Tradeable Common Stock equal in value to such cash amount.
For purposes of determining the Cash Equivalent Amount, the shares of Freely
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Tradeable Common Stock shall be valued at eighty two and one-half percent
(82.5%) multiplied by the lower of (i) the 30-Day Average Price of the Common
Stock or (ii) the 5-Day Average Price of the Common Stock; provided, that if the
Cash Equivalent Amount cannot be ascertained by such methods, then the Freely
Tradeable Common Stock shall be valued at eighty two and one-half percent
(82.5%) multiplied by the lower of (i) the net book value per share of Common
Stock, determined in accordance with generally accepted accounting principles,
or (ii) the fair value per share of Common Stock determined pursuant to the
Valuation Procedure. The Cash Equivalent Amount shall be determined as of the
date immediately prior to the date of issuance of any such Freely Tradeable
Common Stock.
"Change of Control" shall mean (i) the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Commission under the Securities Exchange Act of
1934, as amended) of more than fifty percent (50%) of the outstanding shares of
voting stock of the Company or (ii) that the Board of Directors of the Company
shall not consist of a majority of Continuing Directors of the Company.
"Closing Date" means the date of the closing of the first sale of the
Series 1999 Preferred Stock.
"Commission" shall mean the Securities and Exchange Commission or any
other similar or successor agency of the federal government administering the
Act.
"Common Stock" shall mean the common stock of the Company, par value
$0.50 per share.
"Continuing Directors" of the Company shall mean the directors of the
Company as of the Closing Date and each other director of the Company if such
other director's nomination for election to the Board of Directors of the
Company is recommended by a majority of the then Continuing Directors of the
Company.
"Conversion Price" shall initially be Four Dollars ($4.00) and shall
be adjusted and readjusted from time to time as provided in Section 8 below.
"Convertible Securities" shall mean evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable for
Additional Shares of Nonpreferred Stock, either immediately or upon the arrival
of a specified date or the happening of a specified event.
"Events of Noncompliance" shall mean each of the events specified in
Sections 6 and 7 below.
"Fair Market Price" per share of Common Stock, for purposes of any
provision herein at the date specified in such provision, shall mean the greater
of (i) the 30-Day Average Price of the Common Stock or (ii) the 5-Day Average
Price of the Common Stock; provided, that if the Fair Market Price per share of
Common Stock cannot be ascertained by such methods, then the Fair Market Price
per share of Common Stock shall be deemed to be the greater of (i) the net book
value per share of Common Stock, determined in accordance with generally
accepted accounting principles, or (ii) the fair value per share of Common Stock
determined pursuant to the Valuation Procedure.
"Freely Tradeable Common Stock" shall mean Common Stock (i) for which
a registration statement with respect to the sale of such Common Stock shall
have become and shall remain continuously effective under the Act and listing
application shall have been made, in each case permitting all of such Common
Stock to be disposed of from time to time in transactions on the principal
exchange or market where such Common Stock is publicly traded or in a registered
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transaction or (ii) which may be distributed immediately to the public pursuant
to Rule 144 (or any successor provision) under the Act without the need to meet
any holding period requirement pursuant to such rule; provided that in each case
the Common Stock is represented by certificates not bearing a legend restricting
transfer and the disposition of which Common Stock does not require registration
or qualification under the Act or any state securities laws then in force.
"Junior Stock" shall have the meaning set forth in Section 2 below.
"Liquidation Amount" means Ten Dollars ($10.00), plus a sum equal to
all accumulated but unpaid dividends and interest thereon, if any, through the
date of any determination thereof, per share of Series 1999 Preferred Stock.
"Nonpreferred Stock" shall mean the Common Stock and shall also
include stock of the Company of any other class which is not preferred as to
dividends or assets over any other class of stock of the Company and which is
not subject to redemption.
"Person" shall include an individual, a corporation, an association, a
partnership, a trust or estate, a joint stock company, an unincorporated
organization, a limited liability company, a joint venture, a government
(foreign or domestic), and any agency or political subdivision thereof, or any
other entity.
"Valuation Procedure" shall have the meaning set forth in Section
8.3(b) below.
2. Ranking of the Series 1999 Preferred Stock. The Series A 1999 Preferred
Stock and the Series B 1999 Preferred Stock shall be pari passu with respect to
the right to receive dividends or assets upon the liquidation, dissolution or
winding up of the Company. So long as any shares of Series 1999 Preferred Stock
shall be outstanding, the Series 1999 Preferred Stock shall rank senior with
respect to the right to receive dividends or assets upon liquidation,
dissolution or winding up of the Company to the Common Stock and to all other
series of preferred stock or classes or series of capital stock hereafter or
heretofore established by the Board of Directors (collectively, the "Junior
Stock").
3. Dividends; Restricted Payments.
3.1. Dividend Payment Dates. The holders of the Series 1999 Preferred
Stock shall be entitled to receive when, as and if declared by the Board of
Directors out of funds legally available for the purpose, cumulative dividend
payments, payable quarterly in accordance with this Section 3, on March 31, June
30, September 30 and December 31 of each year commencing on June 30, 1999, or,
in the event that any such date is not a Business Day, the immediately preceding
Business Day before such date. Dividends on the Series 1999 Preferred Stock
shall be cumulative from the date of original issue of the Series 1999 Preferred
Stock. Accumulations of dividends shall bear interest at a rate of nine percent
(9%) per annum, compounded quarterly, which interest shall be deemed accrued
dividends payable in the same manner and at the same time as dividends and
redemptions shall be paid on the Series 1999 Preferred Stock.
3.2. Form of Payment. Dividends on the Series 1999 Preferred Stock
may, at the option of the Company, be paid:
(a) in cash at a quarterly rate of twenty two and one-half
cents ($0.225) per share;
(b) in shares (whether whole or fractional) of Freely
Tradeable Common Stock valued at the Cash Equivalent Amount for the
purposes of determining the number of shares (or fraction thereof) of
Freely Tradeable Common Stock to be issued; or
(c) by combination of cash and such shares;
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provided, that if any such dividend shall be paid in a combination of cash and
shares of Freely Tradeable Common Stock, all holders of the Series 1999
Preferred Stock shall receive cash and shares of Freely Tradeable Common Stock
in the same ratio, except that the Company, at its option, may pay cash in lieu
of fractional shares of Freely Tradeable Common Stock valued at the Cash
Equivalent Amount.
3.3. Record Date. The Board of Directors shall fix a record date for
the determination of holders of the Series 1999 Preferred Stock entitled to
receive payment of a dividend declared thereon, which record date shall be not
more than sixty (60) days prior to the date fixed for the payment thereof.
3.4. Restricted Payments. Unless full cumulative dividends on the
Series 1999 Preferred Stock have been paid, no dividends shall be declared or
paid or set apart for payment or other distribution upon any Junior Stock nor
shall any Junior Stock be redeemed, purchased or otherwise acquired by the
Company for any consideration (or any payment made to or available for a sinking
fund for the redemption of any shares of such stock) by the Company.
4. Redemption.
4.1. Mandatory Redemption. On May 1st of each of 2005, 2006 and 2007,
or, in the event that any such date is not a Business Day, the immediately
preceding Business Day before such date, the Company shall redeem a number of
shares (or such lesser number of shares if a lesser number of shares shall be
outstanding on such date) of the Series A 1999 Preferred Stock equal to
one-third of (x) the number of Series A 1999 Preferred Stock originally issued
by the Company plus (y) the number of Series A 1999 Preferred Stock issued upon
the conversion of the Series B 1999 Preferred Stock and a number of shares of
the Series B 1999 Preferred Stock equal to one-third of the number of Series B
1999 Preferred Stock originally issued by the Company (or such lesser number of
shares if a lesser number of shares shall be outstanding on such date);
provided, that if the holders of the Series 1999 Preferred Stock are the
beneficial owners of at least five percent (5%) of the issued and outstanding
Common Stock, the Company shall not be permitted to redeem an aggregate of 1,000
shares of the Series A 1999 Preferred Stock on May 1, 2007 or thereafter until
the holders of the Series 1999 Preferred Stock as of any date of determination
do not beneficially own five percent (5%) or more of the issued and outstanding
Common Stock issued by the Company upon the conversion or redemption of the
Series 1999 Preferred Stock or paid by the Company as a dividend on the Series
1999 Preferred Stock, at which time the Company may redeem such shares by paying
the holders of such shares in cash a price per share equal to the Liquidation
Amount. Redemptions pursuant to this Section 4.1 shall be paid, at the option of
the Company, (i) in cash for a price per share of Series 1999 Preferred Stock
equal to the Liquidation Amount, (ii) with shares (whether whole or fractional)
of Freely Tradeable Common Stock having a Cash Equivalent Amount equal to the
Liquidation Amount or (iii) by combination of cash and such shares; provided,
that if such redemption shall be paid in a combination of cash and shares of
Freely Tradeable Common Stock, all holders of the Series 1999 Preferred Stock
shall receive cash and shares of Freely Tradeable Common Stock in the same
ratio, except that the Company, at its option, may pay cash in lieu of
fractional shares of Freely Tradeable Common Stock valued at the Cash Equivalent
Amount. In the event that at any time less than all of the shares of Series 1999
Preferred Stock outstanding are to be redeemed pursuant to this Section 4.1, the
Company shall effect such redemption pro rata according to the number of shares
of Series 1999 Preferred Stock held by each holder thereof.
4.2. Redemptions Upon Change of Control or Merger. (a) Upon the sale,
conveyance or disposition of all or substantially all of the assets of the
Company, a merger, consolidation or other reorganization of the Company in a
transaction or series of related transactions (except for a merger,
consolidation or reorganization as to which Subsection 4.2(b) applies or after
the consummation of which the stockholders of the Company own a majority of the
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voting securities of the surviving corporation or its parent corporation), or a
Change of Control, each holder of the Series 1999 Preferred Stock shall have the
right to require that the Company redeem all or any part of such holder's Series
1999 Preferred Stock on a date that is no earlier than three Business Days
following the date such holder notifies the Company of its election to cause the
Company to redeem its Series 1999 Preferred Stock for cash out of legally
available funds at a price per share equal to the Liquidation Amount.
(b) Upon a merger or consolidation of the Company with or into any
other corporation or other entity where (1) either (A) the Company is not the
surviving corporation or (B) the Company shall issue to any Person as
consideration in respect of such consolidation or merger any capital stock of
the Company representing twenty percent (20%) or more of the Company's
outstanding capital stock prior to such consolidation or merger and (2) the
Company has not received the affirmative vote or consent of the holders of a
majority of the outstanding shares of the Series 1999 Preferred Stock, voting as
a separate class, each holder of the Series 1999 Preferred Stock shall have the
right to require that the Company redeem all or any part of such holder's Series
1999 Preferred Stock on a date that is no earlier than three Business Days
following the date such holder notifies the Company of its election to cause the
Company to redeem its Series 1999 Preferred Stock for cash out of legally
available funds at a price per share equal to the Applicable IRR Amount.
(c) If on the date of such sale, conveyance, disposition, Change of
Control, merger or consolidation funds legally available for such redemption
shall be insufficient to redeem all of the outstanding shares of Series 1999
Preferred Stock held by holders who have elected to have their shares redeemed,
funds to the extent legally available shall be used for such purpose and the
Company shall effect such redemption pro rata according to the number of shares
of Series 1999 Preferred Stock held by each holder thereof. The redemption
requirements provided hereby shall be continuous, so that if on the date of such
sale, conveyance, disposition, Change of Control, merger or consolidation such
requirements can not be fully discharged, without further action by any holder
of the Series 1999 Preferred Stock funds legally available shall be applied
therefor until such requirements are fulfilled.
Prior to the payment in full of the amounts owing under this Section
4.2 to any holder of Series 1999 Preferred Stock who has elected to have its
shares redeemed, the dividends with respect to such shares shall continue to
accrue dividends and such shares shall retain all rights associated with such
Series 1999 Preferred Stock. Upon payment in full of the amounts owing under
this Section 4.2 to any holder of Series 1999 Preferred Stock who has elected to
have its shares redeemed, then notwithstanding that the certificate or
certificates evidencing such shares shall not have been surrendered, the
dividends with respect to such shares shall cease to accrue after the date of
such payment in full and all rights with respect to such shares shall forthwith
terminate.
4.3. Optional Redemption Prior to March 31, 2002. The shares of Series
1999 Preferred Stock may be redeemed, in whole but not in part, at the option of
the Company, at any time prior to March 31, 2002, if the Common Stock has traded
on a recognized securities exchange or national market system more than 75,000
shares per day (as adjusted for stock dividends, split-ups, mergers,
recapitalizations, combinations, exchanges of shares or the like) over the
30-trading day period prior to the date of the Redemption Notice required by
Section 4.5 below at an average closing price on such securities exchange or
national market system equal to or greater than the following amounts (as
adjusted for stock dividends, split-ups, mergers, recapitalizations,
combinations, exchanges of shares or the like):
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On or prior to
March 31: Average Closing Price:
2000 $ 6.25
2001 $ 8.25
2002 $ 10.00
Redemptions pursuant to this Section 4.3 shall be paid, at the option
of the Company, (i) in cash for a price per share of Series 1999 Preferred Stock
equal to the 30-Day Average Price of the Common Stock immediately prior to such
date of redemption multiplied by the number of shares of Common Stock issuable
upon the conversion of one share of Series 1999 Preferred Stock at the then
applicable Conversion Price, (ii) with shares (whether whole or fractional) of
Freely Tradeable Common Stock valued at a Cash Equivalent Amount equal to the
cash amount provided in clause (i) above, or (iii) with a combination of cash
and such shares in amounts determined pursuant to clauses (i) and (ii) above,
respectively; provided, that if such redemption shall be paid in a combination
of cash and shares of Freely Tradeable Common Stock, all holders of the Series
1999 Preferred Stock shall receive cash and shares of Freely Tradeable Common
Stock in the same ratio, except that the Company, at its option, may pay cash in
lieu of fractional shares of Freely Tradeable Common Stock valued at the Cash
Equivalent Amount. Notwithstanding anything set forth in this Section 4.3, there
shall be no trading volume requirement if redemptions pursuant to this Section
4.3 are paid in cash as set forth in clause (i) of the immediately preceding
sentence. For purposes of calculating the redemption payment of the Series B
1999 Preferred Stock to be made pursuant to this Section 4.3, the Series B 1999
Preferred Stock shall be deemed to have the same Conversion Price as the Series
A 1999 Preferred Stock.
4.4. Optional Redemption After March 31, 2002. The shares of Series
1999 Preferred Stock may be redeemed, in whole but not in part, at the option of
the Company, at any time on or after March 31, 2002, if the Common Stock has
traded on a recognized securities exchange or national market system more than
75,000 shares per day (as adjusted for stock dividends, split-ups, mergers,
recapitalizations, combinations, exchanges of shares or the like) over the
30-trading day period prior to the date of the Redemption Notice required by
Section 4.5 below.
Redemptions pursuant to this Section 4.4 shall be made, at the option
of the Company, (i) in cash for a price per share of Series 1999 Preferred Stock
equal to the Applicable IRR Amount, (ii) with shares (whether whole or
fractional) of Freely Tradeable Common Stock valued at a Cash Equivalent Amount
equal to the Applicable IRR Amount or (iii) with a combination of cash and such
shares in amounts determined pursuant to clauses (i) and (ii) above,
respectively; provided, that if such redemption shall be paid in a combination
of cash and shares of Freely Tradeable Common Stock, all holders of the Series
1999 Preferred Stock shall receive cash and shares of Freely Tradeable Common
Stock in the same ratio, except that the Company, at its option, may pay cash in
lieu of fractional shares of Freely Tradeable Common Stock valued at the Cash
Equivalent Amount. Notwithstanding anything set forth in this Section 4.4, there
shall be no trading volume requirement if redemptions pursuant to this Section
4.4 are paid in cash as set forth in clause (i) of the immediately preceding
sentence.
4.5. Redemption Notice. The Company shall give written notice (the
"Redemption Notice") to each holder of the class of Series 1999 Preferred Stock
to be redeemed by the Company at least 20 Business Days prior to the date (the
"Redemption Date") of any redemption required or permitted to be made by the
Company under this Section 4, such notice to be addressed to each holder at the
address as it appears on the stock transfer books of the Company. Such notice
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shall specify (i) the class or classes of Series 1999 Preferred Stock to be
redeemed, (ii) the Redemption Date, (iii) the number of all shares of each class
of the Series 1999 Preferred Stock of each holder to be redeemed and (iv) the
amount and form or forms of payment therefor and the method of calculation
thereof (the "Redemption Amount"). On or after each such Redemption Date, each
holder of the Series 1999 Preferred Stock shall surrender a certificate or
certificates representing the number of shares of each class of the Series 1999
Preferred Stock to be redeemed as stated in the Redemption Notice provided by
the Company. If the Redemption Notice shall have been duly given, and if on the
Redemption Date the Redemption Amount is either paid or made reasonably
available for payment in immediately available funds, Common Stock or a
combination thereof as provided herein to the holders of the Series 1999
Preferred Stock being redeemed, then notwithstanding that the certificates
evidencing any of the Series 1999 Preferred Stock so called for redemption shall
not have been surrendered, the dividends with respect to such shares shall cease
to accrue after the Redemption Date and all rights with respect to such shares
shall forthwith terminate after the Redemption Date, except only the right of
the holders to receive the Redemption Amount without interest upon surrender of
their certificate or certificates. Notwithstanding anything to the contrary
contained herein, with respect to any shares of Series 1999 Preferred Stock
scheduled for redemption pursuant to a Redemption Notice, the holders of such
shares may at any time prior to the Redemption Date, upon written notice to the
Company as provided herein, exercise their right to convert all or any portion
of such shares into Common Stock at the Conversion Price. For purposes of
calculating the redemption payment of the Series B 1999 Preferred Stock to be
made pursuant to this Section 4.5, the Series B 1999 Preferred Stock shall be
deemed to have the same Conversion Price as the Series A 1999 Preferred Stock.
4.6. Series B 1999 Preferred Stock Optional Redemption on or after
December 30, 1999. At any time and from time to time on or after December 30,
1999, each holder the Series B 1999 Preferred Stock shall have the right to
require that the Company redeem all or any part of such holder's Series B 1999
Preferred Stock on a date that is no earlier than three Business Days following
the date such holder notifies the Company of its election to cause the Company
to redeem its Series B 1999 Preferred Stock for a redemption price equal to one
Unit per share of Series B 1999 Preferred Stock. Each "Unit" shall be comprised
of (x) an amount equal to the Liquidation Amount for such share of Series B 1999
Preferred Stock (the "Non-SAR Amount") and (y) two and one-half (2.5) Stock
Appreciation Rights ("SAR's"), in form satisfactory to the holders of the Series
B 1999 Preferred Stock and their legal counsel, constituting the right to be
paid by the Company the difference between Three Dollars and Seventy Five Cents
($3.75) per share (the "SAR Threshold Amount") of Common Stock and the fair
market value of a share of Common Stock on the date the SAR is redeemed by a
holder of such SAR (the "SAR Exercise Amount"). Both the number of shares of
SAR's and the SAR Threshold Amount of the SAR's shall be subject to adjustment
and non-impairment pursuant to anti-dilution provisions providing substantially
equivalent protections as the terms of Section 8 below in the same manner as
Series A 1999 Preferred Stock. At any time and from time to time on or after the
grant of the SAR's, each holder of an SAR shall have the right to require that
the Company redeem all or any part of such holder's SAR's on a date that is no
earlier than three Business Days following the date such holder notifies the
Company of its election to cause the Company to redeem its SAR's for a
redemption price equal to the SAR Exercise Amount for such SAR's.
The Non-SAR Amount shall be paid in (i) cash out of legally available
funds, (ii) with shares of Freely Tradeable Common Stock valued at a Cash
Equivalent Amount equal to the cash amount provided in clause (i) above, (iii)
with shares of Series A Preferred Stock valued, based on the par value of such
shares, at an amount equal to the Liquidation Amount of the Series B 1999
Preferred Stock redeemed, or (iv) with a combination of cash and such shares in
amounts determined pursuant to clause (i), (ii) and (iii) above, respectively;
provided, that if the Non-SAR Amount shall be paid in a combination of cash and
shares of Series A 1999 Preferred Stock and/or Freely Tradeable Common Stock,
all holders of the Series B 1999 Preferred Stock electing to cause the Company
to redeem shares of Series B 1999 Preferred Stock shall receive cash and shares
of Series A 1999 Preferred Stock and/or Freely Tradeable Common Stock in the
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same ratio, except that the Company, at its option, may (a) pay cash in lieu of
fractional shares of Series A 1999 Preferred Stock valued at an amount equal to
the cash value of such fraction shares of Series A 1999 Preferred Stock and (b)
may pay cash in lieu of fractional shares of Freely Tradeable Common Stock
valued at the Cash Equivalent Amount. The Company shall, in its sole discretion,
select from the options set forth in clauses (i) through (iv) of the preceding
sentence the form of consideration that the Company shall pay or issue to effect
such redemption; provided, that if the Company is unable to legally effect such
redemption by one or more of the methods of redemption set forth in clauses (i)
through (iv) of the preceding sentence, the Company must choose a method of
redemption from among the remaining legal methods of redemption.
The SAR Exercise Amount shall be paid in (i) cash out of legally
available funds, (ii) with shares of Freely Tradeable Common Stock, or (iii)
with a combination of cash and such shares in amounts determined pursuant to
clause (i) and (ii) above, respectively; provided, that if the SAR Exercise
Amount shall be paid in a combination of cash and shares of Freely Tradeable
Common Stock, all holders of the SAR's electing to cause the Company to pay
SAR's shall receive cash and shares of Freely Tradeable Common Stock in the same
ratio, except that the Company, at its option, may pay cash in lieu of
fractional shares of Freely Tradeable Common Stock valued at the Cash Equivalent
Amount. The Company shall, in its sole discretion, select from the options set
forth in clauses (i) through (iii) of the preceding sentence the form of
consideration that the Company shall pay or issue to effect such payment;
provided, that if the Company is unable to legally effect such payment by one or
more of the methods of payment set forth in clauses (i) through (iii) of the
preceding sentence, the Company must choose a method of payment from among the
remaining legal methods of payment.
Prior to the payment or issuance in full of the consideration owing
under this Section 4.6 to any holder of Series B 1999 Preferred Stock who has
elected to have its shares redeemed, the dividends with respect to such shares
shall continue to accrue dividends and such shares shall retain all rights
associated with such Series B 1999 Preferred Stock. Upon payment or issuance in
full of the consideration owing under this Section 4.6 to any holder of Series B
1999 Preferred Stock who has elected to have its shares redeemed, then
notwithstanding that the certificate or certificates evidencing such shares
shall not have been surrendered, the dividends with respect to such shares shall
cease to accrue after the date of such payment in full and all rights with
respect to such shares shall forthwith terminate.
5. Liquidation Rights. Upon any liquidation, dissolution or winding up of
the affairs of the Company, no distribution shall be made to the holders of any
Junior Stock unless, prior to the first such distribution, the holders of the
Series 1999 Preferred Stock shall have received the Liquidation Amount. If the
assets distributable in any such event to the holders of the Series 1999
Preferred Stock are insufficient to permit the payment to such holders of the
full preferential amounts to which they may be entitled, such assets shall be
distributed ratably among the holders of the Series 1999 Preferred Stock in
proportion to the full preferential amount each such holder would otherwise be
entitled to receive.
6. Voting Rights of Series 1999 Preferred Stock.
6.1 Voting Rights. The holders of the Series A 1999 Preferred Stock
shall be entitled, on all matters submitted for a vote of the holders of shares
of Common Stock, whether pursuant to law or otherwise, to a number of votes per
share of the Series A 1999 Preferred Stock equal to the number of shares of
Common Stock issuable upon conversion of one share of the Series A 1999
Preferred Stock on the date of such vote, and on all such matters shall vote
together as one class with the holders of Common Stock and the holders of all
other shares of stock entitled to vote with the holders of Common Stock on such
matters.
6.2 Special Voting Rights. In addition, the holders of the Series 1999
Preferred Stock shall have the voting powers provided for by law and shall have
the further voting powers provided for below. If one or more of the Events of
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Noncompliance (defined below) occurs and remains outstanding and has not been
specifically waived in writing by holders of eighty percent (80%) or more of the
shares of the Series 1999 Preferred Stock, then, to the extent permitted by law
as relating to directorships, the holders of such Series 1999 Preferred Stock
shall have the right, voting as single class separately from all other classes
and series, to elect two directors of the Company, the remaining directors to be
elected by the other classes or series of stock entitled to vote therefor,
including the Series 1999 Preferred Stock as set forth in Section 6.1. In
addition, the Series 1999 Preferred Stock shall have the right to elect two
directors each time that the Company mandatorily redeems the Series 1999
Preferred Stock by issuing Freely Tradeable Common Stock to the holders of
Series 1999 Preferred Stock pursuant to the terms of Section 4.1 above. The
maximum number of directors that the holders of Series 1999 Preferred Stock may
elect pursuant to this Section 6.2 shall be four. If and when such right of the
holders of the Series 1999 Preferred Stock becomes operative, the maximum
authorized number of members of the Board of Directors of the Company shall
automatically be increased to the extent necessary to create any vacancy or
vacancies to be filled only by vote of the holders of the Series 1999 Preferred
Stock then outstanding as hereinafter set forth. Whenever such right of the
holders of the Series 1999 Preferred Stock shall become operative, such right
shall be exercised initially either at a special meeting of the holders of the
Series 1999 Preferred Stock called as provided in Section 6.3 below or at any
annual meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings. In electing the directors to be elected by
the holders of the Series 1999 Preferred Stock, each holder of such stock shall
have one vote for each share thereof held. The right of the holders of the
Series 1999 Preferred Stock, voting as a single class separately from all other
classes and series, to elect two members of the Board of Directors of the
Company as a result of the occurrence of an Event of Noncompliance shall
continue until such event is cured or waived as set forth above, at which time
the right of the holders of the Series 1999 Preferred Stock to vote separately
and as a single class as provided in this Section 6.2 shall terminate (subject
to becoming operative again in the event of a subsequent Event of Noncompliance)
and the maximum authorized number of members of the Board of Directors of the
Company shall automatically be reduced if such number was increased at the time
when the terminated voting right of the holders of the Series 1999 Preferred
Stock became operative. Notwithstanding the foregoing, in no event shall the
Company increase the number of members of the Board of Directors above six, plus
those members of the Board of Directors elected by the holders of the Series
1999 Preferred Stock. In the event that (i) the holders of the Series 1999
Preferred Stock elect members of the Board of Directors of the Company pursuant
to this Section 6.2, and (ii) all of the Series 1999 Preferred Stock has been
converted or redeemed, so long as the holders of the Series 1999 Preferred Stock
are the beneficial owners of the percentage of Common Stock listed below, such
holders of the Series 1999 Preferred Stock shall continue to have the right,
voting as a single class separately from all other classes or series, to elect
the number members of the Board of Directors of the Company listed below:
Percentage Ownership No. of Members of
Common Stock Board of Directors
20% or more 4
15 - 19.99% 3
10 - 14.99% 2
5 - 9.99% 1
Less than 5% 0;
provided, that in calculating the percentage of Common Stock owned by the
holders, only Common Stock (x) issued by the Company upon the conversion or
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redemption of the Series 1999 Preferred Stock or (y) paid by the Company as a
dividend on the Series 1999 Preferred Stock shall be included in such
calculation. If the holder(s) of the Series 1999 Preferred Stock elect fewer
directors than allowed by this Section 6.2, the director(s) elected by the
holder(s) of the Series 1999 Preferred Stock shall nonetheless have the number
of votes equal to the number of directors the holders of the Series 1999
Preferred Stock could have elected pursuant to this Section 6.2, so that at any
subsequent meeting of the Board of Directors of the Company, each director
elected by the holder(s) of the Series 1999 Preferred Stock pursuant to this
Section 6.2 shall have the number of votes equal to the number of directors that
the holder(s) of the Series 1999 Preferred Stock could have elected pursuant to
this Section 6.2 (the "Available Director Seats") divided by the actual number
of directors elected by the holder(s) of the Series 1999 Preferred Stock
pursuant to this Section 6.2 and attending such meeting (the "Actual Directors")
and, for purposes of determining whether a quorum is present at such meeting,
each such director that was elected by the holders of the Series 1999 Preferred
Stock and is present at such meeting shall be counted as a number of directors
equal to the number of the Available Director Seats divided by the number of
Actual Directors.
Such "Events of Noncompliance", in addition to those set forth in
Section 7, are:
(a) the failure by the Company to pay, in the aggregate,
four quarterly dividends or the equivalent on the Series 1999
Preferred Stock on the dates on which the same should be payable
according to the terms hereof whether or not consecutive and whether
or not such dividends have been declared and whether or not there are
any monies of the Company properly applicable to the payment of
dividends;
(b) the failure by the Company to redeem the Series 1999
Preferred Stock when such redemption is required hereunder;
(c) the occurrence of any event or condition in respect of
any debts or security of the Company or any of its subsidiaries, or
under any agreement securing or relating to such debt or security, the
effect of which is to cause or to permit any holder of such debts or
other security or trustee to cause (whether or not such holder or
trustee elects to cause) such debts or security, or a portion thereof,
to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment provided that, with respect to any debts
other than the Company's senior bank or other credit facility, such
debts in the aggregate exceed Ten Million Dollars ($10,000,000);
(d) a breach by the Company of any covenant, term or
condition hereof, or in respect of any debts or security of the
Company or any of its subsidiaries, or any under any agreement
securing or relating to such debts or security, which breach is
continuing and uncured for a period of at least 30 days after delivery
of written notice thereof to the Company; provided that, with respect
to any debts other than the Company's senior bank or other credit
facility, such debts in the aggregate exceed Ten Million Dollars
($10,000,000);
(e) Mr. M. Jay Allison shall cease to be the chief executive
officer of the Company, or the occurrence of any material decrease in,
or the termination of, for any reason, the active involvement of Mr.
Allison in the operations and affairs of the Company and its
subsidiaries as Mr. Allison is involved on the Closing Date, unless
Mr. Allison has been replaced in such capacities by a person or
persons approved in writing by the holders of a majority or more of
the Series 1999 Preferred Stock, in their sole discretion;
(f) the commencement of an involuntary case or other
proceeding against the Company or any of its subsidiaries which seeks
liquidation, reorganization or other relief with respect to it or its
debtor, other liabilities under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
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trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or the entry of an order
for relief against the Company or any of its subsidiaries in any such
case under the United States Bankruptcy Code;
(g) the commencement by the Company or any of its
subsidiaries of a voluntary case or other proceeding, seeking
liquidation, reorganization or other relief with respect to itself or
its debts or other liabilities under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or the making by the Company or any
of its subsidiaries of a general assignment for the benefit of
creditors, or failure by the Company or any of its subsidiaries
generally to or written admission of its inability to pay its debts
generally as they become due, or the taking of any corporate action to
authorize or effect any of the foregoing;
(h) a Change in Control shall have occurred with respect to
the Company;
(i) the dissolution of the Company or the discontinuation of
its usual business; or
(j) the failure of the Company or any of its subsidiaries to
pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of Five Million Dollars ($5,000,000) that is not
otherwise being satisfied in accordance with its terms and is not
stayed on appeal or otherwise being appropriately contested in good
faith and if reserves adequate under generally accepted accounting
principles shall not have been established therefor.
6.3. Procedures Relating to Special Voting Rights.
(a) At any time when the special voting rights of the
holders of the Series 1999 Preferred Stock provided in Section 6.2
above shall have become operative and not have been exercised, a
proper officer of the Company shall, upon the written request of the
holders of record of at least twenty percent (20%) of the shares of
Series 1999 Preferred Stock then outstanding addressed to the
Secretary of the Company, call a special meeting of the holders of the
Series 1999 Preferred Stock for the purpose of electing the two
directors to be elected by the Series 1999 Preferred Stock. Such
meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at such place in the
continental United States as may be specified in such written request.
If such meeting shall not be called by the proper officer of the
Company within twenty (20) days after the personal service of such
written request upon the Secretary of the Company, or within twenty
(20) days after mailing the same within the United States by
registered or certified mail enclosed in a postpaid envelope addressed
to the Secretary of the Company at its principal office, then the
holders of record of at least twenty percent (20%) of the shares of
Series A 1999 Preferred Stock then outstanding may designate in
writing one of their number to call such meeting at the expense of the
Company, and such meeting may be called by the person so designated
upon the notice required for annual meetings of stockholders and shall
be held at such place in the continental United States as may be
specified in such notice. Notwithstanding the provisions of this
Section 6.3, no such special meeting shall be called during the period
of sixty (60) days immediately preceding the date fixed for any annual
or special meeting of stockholders if the staff of the Commission
shall have advised the Company that the calling of any such meeting
shall require the Company to amend or supplement its proxy soliciting
materials relating to such annual or special meeting of stockholders;
and no such special meeting shall be called if in connection with such
meeting a proxy solicitation conforming to the rules and regulations
issued under the Securities Exchange Act of 1934, as amended, shall be
required, but in such event the election of directors by the holders
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of the Series 1999 Preferred Stock shall take place at the next annual
meeting of stockholders, unless the right of the holders of the Series
1999 Preferred Stock to elect directors shall in the meantime have
terminated.
(b) Upon any termination of the right of the holders of the
Series 1999 Preferred Stock to elect directors as hereinabove provided
(including as holders of Common Stock), the term of office of any
director then in office elected by the Series 1999 Preferred Stock
shall terminate immediately. If the office of any director elected by
the holders of the Series 1999 Preferred Stock becomes vacant by
reason of death, resignation, retirement, disqualification, removal
from office or otherwise, then the procedure provided for in Section
6.3(a) above shall be used to fill the vacancy.
(c) Subject to the provisions of Section 6.2, the Bylaws of
the Company shall automatically be deemed amended from time to time to
provide for the increase or reduction in the maximum authorized number
of members of the Board of Directors and for the election procedure as
hereinabove in this Section 6.3 provided.
6.4. Rights Relating to Board of Directors. The Company will promptly
execute and deliver to any individual elected to the Board of Directors,
pursuant to Section 6.2, an agreement by the Company to indemnify and hold
harmless such individual for any and all actions taken by such individual in his
capacity as a member of the Board of Directors to the fullest extent permitted
by the laws of the state of incorporation of the Company. Unless waived or
modified by the holders of a majority of the Series 1999 Preferred Stock voting
as a single class, the Company will also use its best efforts to promptly
provide for such individual such amount of director's liability insurance as is
normal and customary for corporations which have common stock that is publicly
traded on the New York Stock Exchange or the NASDAQ National Market System. In
addition to the rights of the holders of the Series 1999 Preferred Stock to
elect directors as provided herein, any holder of more than 15% of the
outstanding Series 1999 Preferred Stock which does not have a representative
acting as a member of the Board of Directors shall have the right to appoint an
observer who may attend and participate in all meetings (including committee
meetings) of the Board of Directors and who shall be entitled to the same
expense reimbursement as Directors of the Company.
6.5. Certain Actions by the Company. So long as any shares of the
Series 1999 Preferred Stock are outstanding, the Company will not, without the
affirmative vote or consent of all of the holders of the outstanding shares of
Series 1999 Preferred Stock, voting as a separate classes, amend or repeal any
provision of, or add any provision to, the Company's Articles of Incorporation
which affect the dividend rate, Liquidation Amount, liquidation preference,
conversion price, put right, dividend and liquidation priority, mandatory
redemption rights and terms of or any material rights or privileges relating to
the Series 1999 Preferred Stock.
Unless the vote or consent of the holders of a greater number of
shares shall then be required by law or as provided in the immediately preceding
paragraph, and so long as any shares of the Series 1999 Preferred Stock are
outstanding, the Company will not, without the affirmative vote or consent of
the holders of at least eighty percent (80%) of the outstanding shares of Series
1999 Preferred Stock, voting as separate classes:
(a) amend or repeal any provision of, or add any provision
to, the Company's Articles of Incorporation which affect the other
rights, powers, preferences or terms of the Series 1999 Preferred
Stock;
(b) merge or consolidate with or into any other Person, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of the properties and assets of the Company and its
subsidiaries on a consolidated basis to any Person or group of
affiliated Persons,
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or permit any of its subsidiaries to enter into any such transaction
or series of related transactions if such transaction or series of
transactions, in the aggregate, would result in the sale, assignment,
conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company and its
subsidiaries on a consolidated basis to any other Person or group of
affiliated Persons, unless (I) at the time and after giving effect
thereto either (A) if the transaction is a merger or consolidation,
the Company shall be the surviving Person of such merger or
consolidation, or (B) the Person (if other than the Company) formed by
such consolidation or into which the Company is merged or to which the
properties and assets of the Company or its subsidiaries, as the case
may be, are sold, assigned, conveyed, transferred, leased or otherwise
disposed of (any such surviving Person or transferee Person being the
"Surviving Entity") shall be a corporation organized and existing
under the laws of the United States of America, any state thereof or
the District of Columbia and shall, in either case, issue preferred
stock of the Surviving Entity into which the Series 1999 Preferred
Stock is converted or for which it is exchanged having preferences,
conversion and other rights, privileges voting powers, restrictions,
limitations as to distributions, qualifications and terms or
conditions or redemption thereof identical to those of the Series 1999
Preferred Stock; (II) immediately before and immediately after giving
effect to such transaction or series of related transactions on a pro
forma basis (and treating any indebtedness not previously an
obligation of the Company or any of its subsidiaries which becomes an
obligation of the Company or any of its subsidiaries in connection
with or as a result of such transactions having been incurred at the
time of such transaction), no default or event of default shall have
occurred and be continuing under any funded indebtedness of the
Company or the Surviving Entity; (III) except in the case of the
consolidation or merger of any subsidiary with or into the Company,
immediately after giving effect to such transaction or transactions on
a pro forma basis, the consolidated net worth (as determined in
accordance with GAAP) of the Company (or the Surviving Entity if the
Company is not the surviving entity) is at least equal to the
consolidated net worth of the Company immediately before such
transaction or transactions; (IV) except in the case of the
consolidation or merger of the Company with or into a subsidiary or
any subsidiary with or into the Company or another subsidiary,
immediately before and immediately after giving effect to such
transaction or transactions on a pro forma basis (assuming that the
transaction or transactions occurred on the first day of the period of
four fiscal quarters ending immediately prior to the consummation of
such transaction or transactions, with the appropriate adjustments
with respect to the transaction or transactions being included in such
pro forma calculation), the Company (or the Surviving Entity if the
Company is not the surviving entity) could incur $1.00 of additional
indebtedness (other than specifically permitted indebtedness) pursuant
to the provisions of the senior debt facilities of the Company; and
(V) the Company (or the Surviving Entity if the Company is not the
surviving entity) shall have delivered to the holders of the Series
1999 Preferred, in form and substance reasonably satisfactory to the
holders of a majority of the outstanding Series 1999 Preferred Stock,
(a) an officers' certificate stating that such consolidation, merger,
transfer, lease or other disposition and any supplemental indenture in
respect thereto comply with the requirements under this Certificate
and (b) an opinion of counsel stating that the requirements of clause
(I) of this paragraph have been satisfied;
(c) sell or convey all or substantially all of the assets of
the Company, or dissolve or liquidate the Company;
(d) reclassify any Common Stock into shares having any
preference or priority as to the payment of dividends or the
distribution of assets superior to or on a parity with any such
preference or priority of the Series 1999 Preferred Stock; or
(e) declare or pay any dividend, or make any distribution,
or purchase, redeem or otherwise acquire for value any capital stock
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or other interest in the Company now or hereafter outstanding, or make
any other distribution of its assets, to the holders of any Junior
Stock, unless (i) no Event of Noncompliance shall have occurred and be
continuing immediately prior to and after such distributions, (ii) all
accumulated dividends with respect to the Series 1999 Preferred Stock
have been paid in full immediately prior to such distribution and
(iii) the aggregate amount of all such distributions in any 12-month
period does not exceed One Hundred Thousand Dollars ($100,000).
7. Covenants of the Company. The failure by the Company to comply with any
of the covenants set forth below, unless specifically waived in writing by
holders of a majority or more of the Series 1999 Preferred Stock, shall be an
Event of Noncompliance. Except as specifically set forth in Section 7.1 below,
the holders of the Series 1999 Preferred Stock shall have no remedies for
violation of the covenants set forth below other than (i) election of directors
as provided in Section 6.2 and (ii) a right to specific performance or other
equitable remedies. 7.1. Board of Directors. So long as the Series 1999
Preferred Stock shall remain outstanding, the Company shall not increase the
number of directors above six, except in connection with the right of the
holders of the Series A 1999 Preferred Stock to elect directors as provided in
Section 6.2 above.
7.2. Dividend Payments. At least once during any 12-month period while
any shares of Series 1999 Preferred Stock shall remain outstanding, the Company
shall pay to the holders of shares of the Series 1999 Preferred Stock all
accumulated dividends, if any, with respect to such shares, whether or not such
dividends have been declared and whether or not there are any monies of the
Company properly applicable to the payment of dividends.
7.3. Financial Statements. Whether or not the Company remains subject
to the reporting requirements of the Securities Exchange Act of 1934, as
amended, the Company will furnish or cause to be furnished to any holder of the
Series 1999 Preferred Stock:
(a) As soon as available and in any event within 105 days
after the close of each fiscal year of the Company, the audited
balance sheet of the Company as of the end of such fiscal year and the
audited statements of operations and cash flow of the Company for such
fiscal year prepared in accordance with generally accepted accounting
principles which fairly present the information included therein
(showing any material change in the consistency of the application of
such principles from the prior period), accompanied by an opinion of a
nationally recognized independent certified public accountant,
together with a certificate by the President or the Chief Financial
Officer of the Company certifying that no Event of Noncompliance has
occurred in such year;
(b) Promptly upon the written request of any holder, a
budget for the consolidated operations of the Company and its
subsidiaries for the subsequent fiscal year, broken down by months,
certified by the Chief Financial Officer of the Company;
(c) Promptly upon the written request of any holder, a
written statement discussing the operations of the Company in such
quarter and explaining any material variations in the results of such
operations from the budget delivered pursuant to subparagraph (ii)
above, certified by the Chief Financial Officer of the Company;
(d) As soon as available and in any event prior to 45 days
after the end of each quarter of each fiscal year of the Company, the
unaudited balance sheet of the Company at the end of such quarter, the
unaudited statements of operations of the Company for such quarter and
for the period from the beginning of the fiscal year to the close of
such quarter, and unaudited statements of cash flow of the Company
from the beginning of the fiscal year to the close of such quarter,
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all prepared in accordance with generally accepted accounting
principles which fairly present the information included therein
(showing any material change in the consistency of the application of
such principles from the prior quarter) and certified by the Chief
Financial Officer of the Company;
(e) Promptly upon written request, any monthly financial
statements prepared by the Company in the ordinary course of business
of the Company;
(f) Promptly upon receipt thereof, one copy of each other
report submitted to the Company by independent accountants in
connection with any annual, interim or special audit made by them of
the books of the Company or any of its subsidiaries;
(g) Promptly upon written request, production, independent
engineering and other reports; and
(h) Promptly upon the occurrence of an Event of
Noncompliance and in no event later than 3 Business Days after the
occurrence of such event, a certificate of the Chief Financial Officer
of the Company stating that an Event of Noncompliance has occurred and
specifying the material facts related to such Event of Noncompliance
and steps being taken or contemplated to be taken to cure such Event
of Noncompliance.
7.4. Inspection of Property. In addition to any rights of the holders
of the Series 1999 Preferred Stock under applicable law to inspect the property
of the Company, the Company will permit any representative designated by any
holder of the Series 1999 Preferred Stock, upon reasonable notice and during
normal business hours, to (i) visit and inspect any of the properties of the
Company and its subsidiaries, (ii) examine the corporate and financial records
of the Company and its subsidiaries and make copies thereof or extracts
therefrom and (iii) discuss the affairs, finances and accounts of the Company
and its subsidiaries with the directors, officers, key employees and independent
accountants of the Company and its subsidiaries.
7.5. Conduct of Business. The Company shall carry on and conduct, and
cause each of its subsidiaries to carry on and conduct, its business in
substantially the same manner and in substantially the same fields of enterprise
as it is conducted on the Closing Date; and do, and, unless merged into the
Company, cause each of its subsidiaries to do, all things necessary to remain
duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted.
7.6. Insurance. The Company shall maintain, and cause each of its
subsidiaries to maintain, insurance with financially sound and responsible
insurance carriers of the kinds, against the risks and in the relative
proportions and amounts usually carried by companies engaged in similar
businesses, including, without limitation, director and officer insurance in an
amount and extent of coverage acceptable to all of the directors elected by the
holders of the Series 1999 Preferred Stock pursuant to Section 6 above.
7.7. Maintenance of Property; Development and Maintenance. The Company
shall maintain, and cause each of its subsidiaries to maintain, all of its
tangible property in good condition and repair and make all necessary
replacements thereof and operate the same properly and efficiently and shall
develop and maintain, or cause to be developed and maintained (by the prompt
payment of all royalties, delay rentals and other sums due thereunder or
otherwise), the leases, wells, units and acreage constituting proven property
owned or leased by the Company and its subsidiaries as of the Closing Date in a
prudent manner, and as may be reasonably necessary for the prudent and
economical operation of such leases, wells, units and acreage in compliance with
all proration and conservation laws and all applicable rules, regulations and
orders of any governmental authority.
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7.8. Common Stock Reserved; Legality. The Company shall at all times
reserve and keep available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A 1999 Preferred
Stock; all of such shares of the Common Stock which are issuable to the holders
of the Series 1999 Preferred Stock by way of conversion, redemption or dividend
will, when issued, be duly authorized and validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges.
8. Conversion of Series A 1999 Preferred Stock. The Series A 1999 Preferred
Stock shall be convertible as follows:
8.1. Right to Convert. Each share of the Series A 1999 Preferred Stock
shall be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the Company or any transfer
agent for the Series A 1999 Preferred Stock, into the whole number of fully paid
and nonassessable shares of Common Stock determined by dividing the Liquidation
Amount by the Conversion Price in effect at the time of conversion, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the Conversion Price.
8.2. Mechanics of Conversion. In order for any holder of the Series A
1999 Preferred Stock to convert the same into Common Stock, such holder shall
deliver a written notice to the Company that he elects to convert all or a
specified number of such shares and stating therein his name or the name or
names of his nominees in which he wishes the certificate or certificates for
Common Stock to be issued (the "Conversion Notice"). The holder shall also
surrender to the Company at the office of the Company or of any transfer agent
for the Series A 1999 Preferred Stock, the certificate or certificates
representing the Series A 1999 Preferred Stock to be converted. The Company
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of the Series A 1999 Preferred Stock, or to his nominee or nominees,
a certificate or certificates representing the number of shares of Common Stock
to which he shall be entitled as aforesaid and, if less than the full number of
shares of the Series A 1999 Preferred Stock evidenced by such surrendered
certificate or certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares of the Series A 1999
Preferred Stock evidenced by such surrendered certificate less the number of
such shares being converted. Any conversion made at the election of a holder of
the Series A 1999 Preferred Stock shall be deemed to have been made immediately
prior to the close of business on the date the Conversion Notice has been
received by the Company, and the Person or Persons entitled to receive the
Common Stock issuable upon conversion shall be treated for all purposes as the
record holder or holders of such Common Stock on such date.
8.3. Adjustments to Conversion Price for Diluting Issues:
(a) Stock Dividends, Subdivisions and Combinations. In case
at any time or from time to time the Company shall:
(1) take a record of the holders of its
Nonpreferred Stock for the purpose of entitling them to
receive a dividend payable in, or other distribution of,
Nonpreferred Stock;
(2) subdivide its outstanding shares of
Nonpreferred Stock into a larger number of shares of
Nonpreferred Stock; or
(3) combine its outstanding shares of Nonpreferred
Stock into a smaller number of shares of Nonpreferred Stock;
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then the Conversion Price in effect immediately after the happening of
any such event shall be proportionately decreased, in case of the
happening of events described in subparagraphs (1) or (2) above, or
proportionately increased, in case of the happening of events
described in subparagraph (3) above.
(b) Certain Other Dividends and Distributions. In case at
any time or from time to time the Company shall take a record of the
holders of its Nonpreferred Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(1) cash (other than a cash distribution made as a
dividend and payable out of earnings or earned surplus
legally available for the payment of dividends under the
laws of the jurisdiction of incorporation of the Company, to
the extent, but only to the extent, that the aggregate of
all such dividends paid or declared after the date hereof,
does not exceed the consolidated net income, net of
consolidated net losses, of the Company and its consolidated
subsidiaries earned subsequent to the date hereof determined
in accordance with generally accepted accounting
principles);
(2) any evidence of its indebtedness (other than
Convertible Securities), any shares of its stock (other than
Additional Shares of Nonpreferred Stock) or any other
securities or property of any nature whatsoever (other than
cash and other than Convertible Securities or Additional
Shares of Nonpreferred Stock); or
(3) any warrants or other rights to subscribe for
or purchase any evidences of its indebtedness (other than
Convertible Securities), any shares of its stock (other than
Additional Shares of Nonpreferred Stock) or any other
securities or property of any nature whatsoever (other than
cash and other than Convertible Securities or Additional
Shares of Nonpreferred Stock);
then the Conversion Price in effect shall be adjusted to that number
determined by multiplying the Conversion Price then in effect by a
fraction (x) the numerator of which shall be the Fair Market Price per
share of Common Stock immediately prior to the date of taking such
record minus the portion applicable to one share of Common Stock of
any such cash so distributable and of the fair value of any and all
such evidences of indebtedness, shares of stock, other securities or
property, or warrants or other subscription or purchase rights, so
distributable and (y) the denominator of which shall be the Fair
Market Price per share of Common Stock immediately prior to the date
of taking such record. Such fair value shall be determined pursuant to
the Valuation Procedure. The "Valuation Procedure" is a determination
of fair value of any property made in good faith by the Board of
Directors; provided, that if the holders of a majority of the Series A
1999 Preferred Stock object to such determination within 10 days of
receipt of written notification thereof, then the fair value of such
property shall be determined in good faith by a recognized national
investment bank selected by unanimous vote or consent of the Board of
Directors, which investment bank is not reasonably objected to by the
holders of a majority of the Series A 1999 Preferred Stock. The fees
and expenses of such investment bank shall be paid by the Company. A
reclassification of the Nonpreferred Stock into shares of Nonpreferred
Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Nonpreferred Stock
of such shares of such other class of stock within the meaning of this
Section 8.3(b) and, if the outstanding shares of Nonpreferred Stock
shall be changed into a larger or smaller number of shares of
Nonpreferred Stock as a part of such reclassification, shall be deemed
a subdivision or combination, as the case may be, of the outstanding
shares of Nonpreferred Stock within the meaning of Section 8.3(a).
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(c) Issuance of Additional Shares of Nonpreferred Stock. In
case at any time or from time to time after the Closing Date, the
Company shall (except as hereinafter provided) issue, whether in
connection with the merger of a corporation into the Company or
otherwise, any Additional Shares of Nonpreferred Stock for a
consideration per share less than either the Conversion Price or the
Fair Market Price per share of Common Stock on the Computation Date
(determined as set forth in the last sentence of this Section 8.3(c)),
then the Conversion Price shall be adjusted to the lower of either:
(i) that number determined by multiplying the
Conversion Price in effect immediately prior to such
adjustment by a fraction (x) the numerator of which shall be
the number of shares of Nonpreferred Stock, plus the number
of shares of Nonpreferred Stock which the aggregate
consideration for the total number of such Additional Shares
of Nonpreferred Stock so issued would purchase at the Fair
Market Price per share of Common Stock and (y) the
denominator of which shall be the number of shares of
Nonpreferred Stock plus the number of such Additional Shares
of Nonpreferred Stock so issued; or
(ii) the value of the consideration per share for
which such Additional Shares of Nonpreferred Stock were
issued (or, in the case of adjustments under Sections 8.3(d)
or 8.3(e), are issuable).
No adjustment of the Conversion Price shall be made under this Section
8.3(c) upon the issuance of any Additional Shares of Nonpreferred
Stock which are issued pursuant to the exercise of any warrants or
other subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any Convertible Securities, if
any such adjustment shall previously have been made upon the issuance
of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or other
rights therefor) pursuant to Section 8.3(d) or 8.3(e). For purposes of
this Section 8.3(c), the Computation Date shall be the earlier of (i)
the date on which the Company shall enter into a firm contract for the
issuance of such Additional Shares of Nonpreferred Stock, or (ii) the
date of actual issuance of such Additional Shares of Nonpreferred
Stock.
(d) Issuance of Warrants, Options or Other Rights. In case
at any time or from time to time after the Closing Date, the Company
shall take a record of the holders of its Nonpreferred Stock for the
purpose of entitling them to receive a distribution of, or shall
otherwise issue, any warrants, options or other rights to subscribe
for or purchase any Additional Shares of Nonpreferred Stock or any
Convertible Securities and the consideration per share for which
Additional Shares of Nonpreferred Stock may at any time thereafter be
issuable pursuant to such warrants, options or other rights or
pursuant to the terms of such Convertible Securities shall be less
than either the Conversion Price or the Fair Market Price per share of
Common Stock on the Computation Date (determined as set forth in the
last sentence of this Section 8.3(d)), then the Conversion Price shall
be adjusted as provided in Section 8.3(c). Such adjustment shall be
made on the basis that (i) the maximum number of Additional Shares of
Nonpreferred Stock issuable pursuant to all such warrants, options or
other rights or necessary to effect the conversion or exchange of all
such Convertible Securities shall be deemed to have been issued as of
the Computation Date (determined as set forth in the last sentence of
this Section 8.3(d)), and (ii) the aggregate consideration for such
maximum number of Additional Shares of Nonpreferred Stock shall be
deemed to be the minimum consideration received and receivable by the
Company for the issuance of such Additional Shares of Nonpreferred
Stock pursuant to such warrants, options or other rights or pursuant
to the terms of such Convertible Securities. For purposes of this
Section 8.3(d), the Computation Date shall be the earliest to occur of
(a) the date on which the Company shall take a record of the holders
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of its Nonpreferred Stock for the purpose of entitling them to receive
any such warrants, options or other rights, (b) the date on which the
Company shall enter into a firm contract for the issuance of such
warrants, options or other rights, and (c) the date of actual issuance
of such warrants, options or other rights.
(e) Issuance of Convertible Securities. In case at any time
or from time to time after the Closing Date, the Company shall take a
record of the holders of its Nonpreferred Stock for the purpose of
entitling them to receive a distribution of, or shall otherwise issue,
any Convertible Securities and the consideration per share for which
Additional Shares of Nonpreferred Stock may at any time thereafter be
issuable pursuant to the terms of such Convertible Securities shall be
less than either the Conversion Price or the Fair Market Price per
share of Common Stock on the Computation Date (determined as set forth
in the last sentence of this Section 8.3(e)), then the Conversion
Price shall be adjusted as provided in Section 8.3(c). Such
adjustments shall be made on the basis that (i) the maximum number of
Additional Shares of Nonpreferred Stock necessary to effect the
conversion or exchange of all such Convertible Securities shall be
deemed to have been issued as of the Computation Date (determined as
set forth in the penultimate sentence of this Section 8.3(e)), and
(ii) the aggregate consideration for such maximum number of Additional
Shares of Nonpreferred Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance
of such Additional Shares of Nonpreferred Stock pursuant to the terms
of such Convertible Securities. No adjustment of the Conversion Price
shall be made under this Section 8.3(e) upon the issuance of any
Convertible Securities which are issued pursuant to the exercise of
any warrants or other subscription or purchase rights therefor, if any
such adjustment shall previously have been made upon the issuance of
such warrants or other rights pursuant to Section 8.3(d). For purposes
of this Subsection, the Computation Date shall be the earliest of (a)
the date on which the Company shall take a record of the holders of
its Nonpreferred Stock for the purpose of entitling them to receive
any such Convertible Securities, (b) the date on which the Company
shall enter into a firm contract for the issuance of such Convertible
Securities, and (c) the date of actual issuance of such Convertible
Securities.
(f) Superseding Adjustment of Conversion Price. If, at any
time after any adjustment of the Conversion Price shall have been made
pursuant to the foregoing Section 8.3(d) or 8.3(e) on the basis of the
issuance of warrants or other rights or the issuance of other
Convertible Securities, or after any new adjustment of the Conversion
Price shall have been made pursuant to this Section 8.3(f):
(1) all of such warrants, options or rights or the
right of conversion or exchange in such other Convertible
Securities shall expire, and none of such warrants, options
or rights, or the right of conversion or exchange in respect
of such other Convertible Securities, as the case may be,
shall have been exercised; or
(2) the consideration per share, for which
Additional Shares of Nonpreferred Stock are issuable
pursuant to all of such warrants, options or rights or the
terms of all of such other Convertible Securities, shall be
increased solely by virtue of provisions therein contained
for an automatic increase in such consideration per share
upon the arrival of a specified date or the happening of a
specified event, and none of such warrants, options or
rights, or the right of conversion or exchange in respect of
such other Convertible Securities, as the case may be, shall
have been exercised;
such previous adjustment shall be rescinded and annulled and the
Additional Shares of Nonpreferred Stock which were deemed to have been
issued by virtue of the computation made in connection with the
adjustment so rescinded and annulled shall no longer be deemed to have
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<PAGE>
been issued by virtue of such computation. Thereupon, a recomputation
shall be made of the effect of such warrants, rights or options or
other Convertible Securities on the basis of treating any such
warrants, options or rights or any such other Convertible Securities
which then remain outstanding as having been granted or issued
immediately after the time of such increase of the consideration per
share for such Additional Shares of Nonpreferred Stock are issuable
under such warrants or rights or other Convertible Securities; and, if
and to the extent called for by the foregoing provisions of this
Section 8.3 on the basis aforesaid, a new adjustment of the Conversion
Price shall be made, which new adjustment shall supersede the previous
adjustment so rescinded and annulled.
(g) Other Provisions Applicable to Adjustments Under this
Section. The following provisions shall be applicable to the making of
adjustments of the Conversion Price hereinbefore provided for in this
Section 8.3:
(1) Treasury Stock. The sale or other disposition
of any issued shares of Nonpreferred Stock owned or held by
or for the account of the Company shall be deemed an
issuance thereof for purposes of this Section 8.3.
(2) Computation of Consideration. To the extent
that any Additional Shares of Nonpreferred Stock or any
Convertible Securities or any warrants, options or other
rights to subscribe for or purchase any Additional Shares of
Nonpreferred Stock or any Convertible Securities shall be
issued solely for cash consideration, the consideration
received by the Company therefor shall be deemed to be the
amount of cash received by the Company therefor, or, if such
Additional Shares of Nonpreferred Stock or Convertible
Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of
Nonpreferred Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction
of any compensation, discounts or expenses paid or incurred
by the Company for and in the underwriting of, or otherwise
in connection with, the issue thereof. The consideration for
any Additional Shares of Nonpreferred Stock issuable
pursuant to any warrants, options or other rights to
subscribe for or purchase the same shall be the
consideration received or receivable by the Company for
issuing such warrant, options or other rights, plus the
additional consideration payable to the Company upon the
exercise of such warrants, options or other rights. The
consideration for any Additional Shares of Nonpreferred
Stock issuable pursuant to the terms of any Convertible
Securities shall be the consideration received or receivable
by the Company for issuing any warrants or other rights to
subscribe for or purchase such Convertible Securities, plus
the consideration paid or payable to the Company in respect
of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any,
payable to the Company upon the exercise of the right of
conversion or exchange in such Convertible Securities. To
the extent that any issuance shall be for a consideration
other than solely for cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall
be deemed to be the fair value of such consideration at the
time of such issuance as determined pursuant to the
Valuation Procedure.
(3) When Adjustments to be Made. The adjustments
required by the preceding subsections of this Section 8.3
shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that no
adjustment of the Conversion Price that would otherwise be
required shall be made (except in the case of a subdivision
or combination of shares of the Nonpreferred Stock as
provided for in Section 8.3(a)) unless and until such
adjustment, either by itself or with other adjustments not
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previously made, adds or subtracts at least five cents
($0.05) to the Conversion Price, as determined in good faith
by the Board of Directors of the Company. Any adjustment
representing a change of less than such minimum amount shall
be carried forward and made as soon as such adjustment,
together with other adjustments required by this Section 8.3
and not previously made, would result in a minimum
adjustment. For the purpose of any adjustment, any specified
event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(4) Fractional Interests. In computing adjustments
under this Section 8.3, fractional interests in Nonpreferred
Stock shall be taken into account to the nearest
one-thousandth of a share.
(5) When Adjustment Not Required. If the Company
shall take a record of the holders of its Nonpreferred Stock
for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall,
thereafter and before the distribution thereof to
shareholders, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by
reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and
annulled.
(h) Merger, Consolidation or Disposition of Assets. In case
the Company shall merge or consolidate into another corporation, or
shall sell, transfer or otherwise dispose of all or substantially all
of its property, assets or business to another corporation and
pursuant to the terms of such merger, consolidation or disposition,
shares of common stock of the successor or acquiring corporation are
to be received by or distributed to the holders of Nonpreferred Stock
of the Company, then each holder of a share of the Series A 1999
Preferred Stock shall have the right thereafter to receive, upon
exercise of such share of the Series A 1999 Preferred Stock, shares of
common stock each comprising the number of shares of common stock of
the successor or acquiring corporation receivable upon or as a result
of such merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock into which one share of the
Series A 1999 Preferred Stock could be converted immediately prior to
such event. If, pursuant to the terms of such merger, consolidation or
disposition of assets, any cash, shares of stock or other securities
or property of any nature whatsoever (including warrants or other
subscription or purchase rights) are to be received by or distributed
to the holders of Nonpreferred Stock of the Company in addition to
common stock of the successor or acquiring corporation, then the
Conversion Price in effect shall be adjusted to that number determined
by multiplying the Conversion Price then in effect by a fraction (x)
the numerator of which shall be the Fair Market Price per share of
Common Stock immediately prior to the closing of such merger,
consolidation or disposition minus the portion applicable to one share
of Common Stock of any such cash so distributable and of the fair
value of any such shares of stock or other securities or property so
received or distributed and (y) the denominator of which shall be the
Fair Market Price per share of Common Stock immediately prior to the
closing of such merger, consolidation or disposition. The fair value
of any such shares of stock or other securities or property shall be
determined pursuant to the Valuation Procedure. In case of any such
merger, consolidation or disposition of assets, the successor
acquiring corporation shall expressly assume the due and punctual
observance and performance of each and every covenant and condition
hereof to be performed and observed by the Company and all of the
obligations and liabilities hereunder, subject to such modification as
shall be necessary to provide for adjustments to the Conversion Price
which shall be as nearly equivalent as practicable to the adjustments
provided for in this Section. For the purposes of this Section,
"common stock of the successor or acquiring corporation" shall include
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stock of such corporation of any class, which is not preferred as to
dividends or assets over any other class of stock of such corporation
and which is not subject to redemption, and shall also include any
evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening
of a specified event, and any warrants or other rights to subscribe
for or purchase any such stock. The foregoing provisions of this
Section 8.3(h) shall similarly apply to successive mergers,
consolidations or dispositions of assets.
(i) Other Action Affecting Nonpreferred Stock. In case at
any time or from time to time the Company shall take any action
affecting its Nonpreferred Stock, other than an action described in
any of the foregoing Sections 8.3(a) through (h), inclusive, then,
unless in the opinion of the Board of Directors such action will not
have a materially adverse effect upon the rights of the holders of the
Series A 1999 Preferred Stock, the Conversion Price shall be adjusted
in such manner and at such time as the Board of Directors may in good
faith determine to be equitable in the circumstances.
8.4. No Impairment. Other than in connection with the amendment of its
Articles of Incorporation approved by the requisite number of stockholders, the
Company will not, through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good faith assist in
the carrying out of all the provisions of this Section 8 and in the taking of
all such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series A 1999 Preferred Stock against
impairment. Without limiting the generality of the foregoing, the Company (i)
will not permit the par value of any shares of stock at the time receivable upon
the conversion of the Series A 1999 Preferred Stock to exceed the Conversion
Price then in effect, (ii) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
nonassessable shares of stock on the conversion of the Series A 1999 Preferred
Stock, and (iii) will not issue any Additional Shares of Nonpreferred Stock or
Convertible Securities or take any action which results in any adjustment of the
Conversion Price if the total number of shares of Common Stock issuable after
such issuance or action upon the conversion or redemption of, or payment of all
outstanding dividends on, all of the then outstanding shares of Series A 1999
Preferred Stock will exceed the total number of shares of Common Stock then
authorized by the Company's Articles of Incorporation and available for the
purpose of issue upon such conversion or redemption or payment of such dividend.
8.5. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 8,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
the Series A 1999 Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (i) the consideration received
or to be received by the Company for any Additional Shares of Nonpreferred Stock
issued or sold or deemed to have been issued, (ii) the number of shares of
Nonpreferred Stock outstanding or deemed to be outstanding, and (iii) the
Conversion Price in effect immediately prior to such issue or sale and as
adjusted and readjusted on account thereof, showing how it was calculated. The
Company shall, upon the written request at any time of any holder of the Series
A 1999 Preferred Stock furnish or cause to be furnished to such holder a like
certificate setting forth (i) the Conversion Price at the time in effect,
showing how it was calculated, and (ii) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the conversion of the Series A 1999 Preferred Stock.
8.6. Notices of Record Date. In the event of any taking by the Company
of a record of the holders of any class of securities for the purpose of
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determining the holders thereof who are entitled to receive any dividend or
other distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right, the Company shall mail to each holder of the Series A
1999 Preferred Stock at least ten days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.
8.7 Conversion Option. The Company will have the option, at any time,
to convert the Series A 1999 Preferred Stock, on the same terms and conditions
set forth herein, to convertible subordinated debt of the Company, provided that
all of the following conditions are satisfied: (i) the Company shall have
delivered to the holders thereof all necessary approvals, subordination
agreements and other documentation, in form and substance satisfactory to the
holders of the Series A 1999 Preferred Stock in their sole and absolute
discretion, required in connection with such conversion (which will provide for
an increase in the number of demand registrations, the reasonable costs and
expenses of which shall be payable by the Company, to a number acceptable to the
holders of the Series A 1999 Preferred Stock in their sole and absolute
discretion) and (ii) the holders thereof shall have received an opinion of
counsel to the Company (a) that such conversion neither breaches nor violates
any existing agreement to which the Company is a party or any other obligation
of the Company, (b) such conversion shall not cause an adjustment in the
conversion price, option price or exercise price in any convertible security
issued by the Company, and (c) such other matters as the holders of the Series A
1999 Preferred Stock may request.
9. Conversion of Series B 1999 Preferred Stock. The Series B 1999 Preferred
Stock shall be convertible as follows:
9.1 Mandatory Conversion. The Series B 1999 Preferred Stock shall be
converted, in whole but not in part, into Series A 1999 Preferred Stock upon
resolution of the Board of Directors of the Company on a share-for-share basis,
as such number of shares of Series A 1999 Preferred Stock may be proportionally
increased or decreased upon the occurrence of an event set forth in Section 8.3
above; provided, that all accumulated, unpaid dividends on the Series B 1999
Preferred Stock are paid concurrently with the conversion of the Series B 1999
Preferred Stock into Series A 1999 Preferred Stock.
9.2 Mechanics of Conversion. In order for the Company to convert the
Series B 1999 Preferred Stock into Series A 1999 Preferred Stock, the Company
shall deliver a written notice to all of the holders of Series B Preferred Stock
that its elects to convert all such shares of Series B 1999 Preferred Stock into
Series A 1999 Preferred Stock. The Company shall also issue and deliver to each
holder of the Series B 1999 Preferred Stock, or to his nominee or nominees, a
certificate or certificates representing the number of shares of Series A 1999
Preferred Stock to which he shall be entitled as aforesaid. Each holder of
Series B 1999 Preferred Stock shall, as soon as practicable thereafter,
surrender to the Company at the office of the Company or of any transfer agent
for the Series B 1999 Preferred Stock, the certificate or certificates
representing the Series B 1999 Preferred Stock that have been converted. Any
conversion made at the election of the Company shall be deemed to have been made
immediately prior to the close of business on the date the Company delivers a
certificate or certificate representing the number of shares of Series A 1999
Preferred Stock to which the each holder is entitled, and the Person or Persons
entitled to receive the Series A 1999 Preferred Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such Series
A 1999 Preferred Stock on such date.
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<PAGE>
IN WITNESS WHEREOF, COMSTOCK RESOURCES, INC. has caused its corporate seal
to be hereunto affixed and this certificate to be signed by M. Jay Allison, its
President, and Roland O. Burns, its Secretary, this 26th day of April, 1999.
By /s/ M. JAY ALLISON
---------------------
M. Jay Allison
President
By /s/ ROLAND O. BURNS
----------------------
Roland O. Burns
Secretary
E-26
FIFTH AMENDMENT TO RIGHTS AGREEMENT
This Fifth Amendment is entered into and is effective as of April 29, 1999
by and between Comstock Resources, Inc. (the "Company") and American Stock
Transfer & Trust Company, as successor Rights Agent (the "Rights Agent"), with
respect to that certain Rights Agreement dated as of December 10, 1990, as
amended, a copy of which is attached hereto as Exhibit "A" (the "Rights
Agreement").
RIGHTS
A. The Company intends to issue and sell to certain investors (together
with their successors, the "1999 Preferred Holders") an aggregate of 3,000,000
shares of its Series A 1999 Convertible Preferred Stock and an aggregate of
1,051,999 shares of its Series B 1999 Non-Convertible Preferred Stock (the
Series A 1999 Convertible Preferred Stock and the Series B 1999 Non-Convertible
Preferred Stock are collectively referred to hereafter as the "Series 1999
Preferred Stock") pursuant to the terms of a Stock Purchase Agreement dated as
of April 29, 1999 between the Company, Trust Company of the West and TCW Asset
Management Company in the capacities set forth therein, Pacific Life Insurance
Company and Aquila Energy Capital Corporation (the "Stock Purchase Agreement").
Capitalized terms used herein but not otherwise defined herein shall have
meaning ascribed thereto in the Rights Agreement as in effect on the date
hereof.
B. Pursuant to the Certificate of Designation for the Series 1999 Preferred
Stock, the Company may also issue in connection with a redemption of some of the
Series 1999 Preferred Stock certain Stock Appreciation Rights ("SAR's").
C. As a condition to their purchase of the shares of Series 1999 Preferred
Stock, the 1999 Preferred Holders have required that the Rights Agreement be
amended to exclude, under certain conditions, the Series 1999 Preferred Stock,
the Common Stock issued by way of conversion or redemption of, or payment of any
dividend on the Series 1999 Preferred Stock or in satisfaction of amounts owing
under the SAR's (collectively, the "Conversion Shares"), the 1999 Preferred
Holders and certain other Persons from certain provisions of the Rights
Agreement.
D. The Company has determined that the offer and sale of the shares of
Series 1999 Preferred Stock are in the best interest of the Company and all of
its stockholders, and is therefore willing to so amend the Rights Agreement.
AGREEMENT
NOW, THEREFORE, pursuant to Section 27 of the Rights Agreement, the Company
hereby supplements and amends, and directs the Rights Agent to supplement and
amend, the Rights Agreement as follows:
1. Acquiring Person and Adverse Person
1.1 Notwithstanding any provision of the Rights Agreement which could
be construed to the contrary, all shares of Series 1999 Preferred Stock, all
SAR's and all Conversion Shares held by:
(a) any 1999 Preferred Holder;
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<PAGE>
(b) any Affiliate, fund participant, trust beneficiary, or
limited partner of any 1999 Preferred Holder;
(c) any party to any investment management or other similar
agreement with Trust Company of the West, a California trust company
("Trustco") or TCW Asset Management Company, a California corporation
("Tamco"), listed in the definition of "TCW" in the Stock Purchase
Agreement or any fund, foundation, trust or other Person for whose
benefit any such agreement with Trustco or Tamco relates or any
trustee, custodian or nominee of or for any such Person; and
(d) any Person (including any "group" as defined in the
Exchange Act) who acquires all shares of Series 1999 Preferred Stock
or Conversion Shares then held by any of the Persons described in
clauses (a), (b) or (c) above, directly from such Person (provided
that the transferor of such shares shall have, prior to such transfer,
given the Company the right of first offer described in Section 1.2
below).
shall be excluded from any calculation made for the purpose of determining
whether the holder of such shares is an "Acquiring Person" or an "Adverse
Person" for any purpose under the Rights Agreement.
1.2 No transferee of any shares of Series 1999 Preferred Stock or
Conversion Shares shall be entitled to the exclusions set forth in Section 1.1
unless (i) at least fifteen (15) business days prior to any such transfer the
transferor of such shares shall have delivered a written notice to the Company
offering to sell such shares to the Company or its designee for cash at the same
price and on the same terms as offered to the proposed transferee and (ii) the
Company or its designee shall have failed to accept such offer within seven (7)
business days of the Company's receipt thereof and to close such sale and
purchase on the scheduled closing date set forth in the terms offered.
2. Miscellaneous
2.1 Subject to the terms set forth herein, the Rights Agreement shall
remain in full force and effect.
2.2 This Amendment may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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<PAGE>
This Fifth Amendment to Rights Agreement is hereby executed as of the date
first above written.
Attest: COMSTOCK RESOURCES, INC.,
a Nevada corporation
By: /s/ ROLAND O. BURNS By: /s/ M. JAY ALLISON
- ----------------------- ----------------------
Roland O. Burns M. Jay Allison
Secretary President and Chief Executive Officer
AMERICAN STOCK TRANSFER
& TRUST COMPANY,
as Rights Agent
By: /s/ HERBERT J. LEMMER
-------------------------
Herbert J. Lemmer
Vice President and General Counsel
E-29
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 29, 1999 between Comstock
Resources, Inc., a Nevada corporation (the "Company"), and TCW DEBT AND ROYALTY
FUND VI, L.P., a California limited partnership ("Fund VI"); TCW DEBT AND
ROYALTY FUND VIB, L.P., a California limited partnership ("Fund VIB"); TRUST
COMPANY OF THE WEST, a California trust company ("Trustco"), in its capacity as
Investment Manager pursuant to the Investment Management Agreement dated as of
June 6, 1988 between General Mills, Inc. and Trustco and as Custodian pursuant
to the Custody Agreement dated as of February 6, 1989 among General Mills, Inc.,
Trustco and State Street Bank and Trust Company, as trustee; TCW ASSET
MANAGEMENT COMPANY, a California corporation ("Tamco"), as Investment Manager
pursuant to the Investment Management Agreement dated as of July 7, 1997 between
Morgan Stanley Asset Management Inc. as Fiduciary Advisor on behalf of, inter
alia, Eugenia III Investment Holdings Limited and Tamco as amended by amendment
dated as of October 15, 1998 between Bessemer Trust Company, N.A., in the
capacity discussed therein, and Tamco; Tamco, as Investment Manager pursuant to
the Investment Management and Custody Agreement dated as of May 19, 1997 between
Allmerica Asset Management, Inc. as agent for First Allmerica Financial Life
Insurance Company, Tamco and Trustco; Tamco as Investment Manager pursuant to
the Investment Management and Custody Agreement dated as of October 27, 1997
between University of Chicago, Tamco and Trustco; Tamco, as Investment Manager
pursuant to the Investment Management and Custodian Agreement dated as of
October 27, 1997 between University of Notre Dame du Lac, Tamco and Trustco;
Tamco, as Investment Manager dated as of October 24, 1997 between William N.
Pennington Separate Property Trust dated January 1, 1991, Tamco and Trustco;
Tamco, as Investment Manager pursuant to the Investment Management Agreement
dated as of October 27, 1997 between Delta Air Lines, Inc., Tamco and Trustco;
Pacific Life Insurance Company, a California stock insurer ("Pacific"); and
Aquila Energy Capital Corporation, a Delaware corporation ("Aquila"). (Trustco
and Tamco, in the respective capacities designated above, Fund VI and Fund VIB
are hereinafter collectively referred to as "TCW"; TCW, Pacific and Aquila are
hereinafter collectively referred to as "Purchasers"). In consideration of the
mutual promises, representations, warranties, covenants, conditions and
agreements contained herein, the parties hereto, intending to be legally bound
by the terms hereof, agree as follows:
TCW, on behalf of each of the TCW related parties set forth on
Schedule A hereto (together with their successors and assigns, the "TCW
Holders"), Pacific (together with its successors and assigns, "Pacific
Holders"), and Aquila (together with its successors and assigns, the "Aquila
Holders", collectively with the TCW Holders and the Pacific Holders, the
"Holders") hereby subscribe for an aggregate of 1,948,001 shares of the
Company's Series A 1999 Convertible Preferred Stock and 1,051,999 shares of
Series B 1999 Non-Convertible Preferred Stock (the "Series B Preferred Shares"),
$10.00 par value per share (collectively, the "Preferred Stock"), at a purchase
price of $10.00 per share, with the rights, restrictions, preferences and
privileges as stated in the Certificate of Designation with respect to the
Preferred Stock attached hereto as Exhibit A (the "Certificate of Designation")
and as provided by law. As used herein, "Series A Preferred Shares" shall mean
the shares of the Company's Series A 1999 Convertible Preferred Stock subscribed
to by Purchasers on behalf of the parties set forth on Schedule A attached
hereto and such shares of the Company's Series A 1999 Convertible Preferred, if
any, as shall be issued by the Company in exchange for the Series B Preferred
Shares in the event that the Company converts the Series B Preferred Shares
pursuant to the terms of the Certificate of Designation and Articles of
Incorporation of the Company (the "Series B Conversion Shares") and "Preferred
Shares" shall mean the Series A Preferred Shares and the Series B Preferred
Shares collectively. The Series A Preferred Shares are convertible into, and the
Preferred Shares are redeemable for, and dividends on the Preferred Shares may
be payable in, shares of the Company's common stock, $0.50 par value per share
(the "Common Stock"), as stated in the Certificate of Designation. Accordingly,
the parties hereto agree as follows:
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<PAGE>
SECTION 1. DEFINITIONS
As used herein, the following terms shall have the following meanings.
"Actual Directors" shall have the meaning set forth in Section 5.8.
"Affiliate" shall mean, with respect to a specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person and, with respect to any fund
or trust, any Person which is a participant in or beneficiary of such fund or
trust. For 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, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. Notwithstanding the foregoing provisions of this
definition in no event shall any Holder (or any Affiliate thereof) be deemed to
be an Affiliate of the Company.
"Articles of Incorporation" shall mean the Restated Articles of
Incorporation of the Company, as amended and in effect on the date hereof and as
at any time hereafter amended or otherwise modified.
"Available Director Seats" shall have the meaning set forth in Section
5.8.
"Commission" shall mean the Securities and Exchange Commission or any
other similar or successor agency of the federal government administering the
Securities Act.
"Common Shares" means the Dividend Shares and the Conversion Shares.
"Controlling Person" shall have the meaning defined in Section 4.8.
"Conversion Shares" shall mean the shares of Common Stock into which
the Series A Preferred Shares are convertible or converted at the option of the
Holders.
"Dividend Shares" shall mean the shares of Common Stock for which the
Preferred Shares are redeemed or in which dividends on the Preferred Shares are
paid.
"Indemnitee" and "Indemnitor" shall have the meanings defined in
Section 4.8.
"Permitted Transferee" shall have the meaning set forth in the
introductory paragraph of Section 4 hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, limited liability company,
unincorporated organization or government or agency or political subdivision
thereof.
"Piggy Back Right" shall have the meaning defined in Section 4.3.
"Requisite Holders" shall mean the holders of Preferred Shares and
Conversion Shares representing at least 80% of the Conversion Shares.
"Restricted Certificate" shall mean a certificate for Preferred Shares
or Conversion Shares bearing the restrictive legend set forth in Section 4.1.
E-31
<PAGE>
"Restricted Securities" shall mean Preferred Shares or Conversion
Shares evidenced by a Restricted Certificate and the Dividend Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Shelf Registration Statement" shall have the meaning set forth in
Section 4.5.
"Seller" shall mean a holder of Restricted Securities for which the
Company shall be required to file a registration statement or which shall be
registered under the Securities Act pursuant to any of the provisions of Section
4. Neither the Company nor any Affiliate of the Company shall be deemed a
"Seller" for any purposes of this Agreement.
"Transfer" shall mean any sale, transfer or other disposition of any
Restricted Securities, or of any interest in any thereof, which would constitute
an offer or sale thereof within the meaning of the Securities Act.
SECTION 2. PURCHASE AND SALE OF SECURITIES
2.1. Authorization and Issuance of Preferred Shares and Conversion
Shares. The Company has authorized: (a) the issue of one or more certificates
for issuance to the Holders pursuant to this Agreement, and (b) the issue of
such number of Conversion Shares, Series B Conversion Shares and Dividend Shares
as will permit the compliance by the Company with its obligations to issue
Conversion Shares or at its option to issue Series B Conversion Shares and
Dividend Shares pursuant to the Articles of Incorporation and Certificate of
Designation.
2.2. The Closing. Subject to the conditions set forth in Section
3.1.7, the Company hereby agrees to issue to each Holder, and each Holder hereby
agrees to purchase, the number of shares of Preferred Stock set out opposite
such Holder's name on Schedule A attached hereto, at a purchase price of $10.00
per share. The Company will deliver to each Holder certificates for such number
of Preferred Shares, registered in the name of such Holder, except that, if any
such Holder shall notify the Company in writing prior to such issuance that it
desires certificates for Preferred Shares to be issued in other denominations or
registered in the name or names of any Person or Persons referred to in the
proviso at the end of the first sentence of Section 4 or any nominee or nominees
for its or their benefit, then the certificates for Preferred Shares shall be
issued to such Holder in the denominations and registered in the name or names
specified in such notice.
2.3. Purchase for Holder's Account. Each Holder represents and
warrants to the Company that such Holder is purchasing and will purchase the
Preferred Shares as of the date hereof solely for investment purposes, for its
own account, with no present intention of distributing or reselling the
Preferred Shares, the Conversion Shares or the Dividend Shares or any part
thereof in violation of applicable securities laws, and that such Holder is
prepared to bear the economic risk of retaining the Preferred Shares, the
Conversion Shares and the Dividend Shares for an indefinite period, all without
prejudice, however, to the right of such Holder at any time, in accordance with
this Agreement, lawfully to sell or otherwise dispose of all or any part of the
Preferred Shares, the Conversion Shares or the Dividend Shares held by it. It is
understood that, in making the representations set forth in Section 3.1, 3.2 and
3.3, the Company is relying, to the extent applicable, upon the representations
and warranties of each such Holder. Each Holder represents and warrants that it
is an accredited investor, as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.
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<PAGE>
2.4. Compliance. Further in reliance upon the representations and
warranties of each Holder in Section 2.3, the Company has not registered the
Preferred Shares, the Dividend Shares or the Conversion Shares under the
Securities Act and each Holder agrees that none of the Preferred Shares, the
Dividend Shares or the Conversion Shares will be sold or offered for sale
without registration under said Act or the availability of an exemption
therefrom or if said Act is not applicable, all as more fully provided in
Section 4, nor in violation of any other law of the United States of America or
any state.
2.5. Expenses. Whether or not the Preferred Shares are sold to any
Holder, the Company will pay all costs and expenses incurred by the Holders (a)
relating to the negotiation, execution and delivery of this Agreement and the
issuance of the Preferred Shares (including, without limitation, reasonable
fees, office charges and expenses of Milbank, Tweed, Hadley & McCloy, counsel to
certain of the Holders and $25,000 to TCW for its other out-of-pocket costs),
(b) provided for in Sections 4.7, 4.8, 5.1 and 5.2, (c) relating to printing the
instruments evidencing the Preferred Shares or the Common Shares, (d) expenses
relating to any amendments, waivers or consents under this Agreement and (e)
incident to the enforcement by any Holder of, or the protection or preservation
of any right or remedy of any Holder under, this Agreement, the Articles of
Incorporation or any other agreement furnished pursuant hereto or thereto or in
connection herewith or therewith (including, without limitation, fees and
expenses of counsel). The Company shall pay such costs and expenses, to the
extent then payable, on the date of issuance of the Preferred Shares and
thereafter from time to time upon demand by any Holder against presentation, in
each such case, of a statement thereof.
2.6. Conversion Option. The Company will have the option, at any time,
to convert the Preferred Shares, on the same terms and conditions set forth
herein, to convertible subordinated debt of the Company, provided that all of
the following conditions are satisfied: (i) the Company shall have delivered to
the Holders all necessary approvals, subordination agreements and other
documentation, in form and substance satisfactory to Purchasers in their sole
and absolute discretion, required in connection with such conversion (which will
provide for an increase in the number of demand registrations, the reasonable
costs and expenses of which shall be payable by the Company, to a number
acceptable to Purchasers in their sole and absolute discretion) and (ii) the
Holders shall have received an opinion of counsel to the Company (a) that such
conversion neither breaches nor violates any existing agreement to which the
Company is a party or any other obligation of the Company, (b) such conversion
shall not cause an adjustment in the conversion price, option price or exercise
price in any convertible security issued by the Company, and (c) such other
matters as Purchasers may request.
SECTION 3. WARRANTIES, REPRESENTATIONS AND COVENANTS OF THE COMPANY
The Company hereby represents, warrants and covenants to each Holder
that as of the date of the Company's execution of this Agreement:
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<PAGE>
3.1. Sale is Legal, etc.
3.1.1. Upon the issuance of the Preferred Shares under this Agreement,
the total number of shares of capital stock which the Company has authority to
issue is 55,000,000 shares, consisting of 50,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. The Company has the power and authority and
has taken all actions (corporate or other) necessary to authorize it to enter
into and perform its obligations and undertakings under this Agreement.
Immediately prior to the issuance of the Preferred Shares under this Agreement,
24,350,452 shares of Common Stock will be issued and outstanding. Upon the
issuance of the Preferred Shares under this Agreement, the Company does not have
outstanding any stock or securities convertible into or exchangeable for any
shares of capital stock nor does it have outstanding any rights to subscribe for
or to purchase, or any options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, any capital stock or stock or securities
convertible into or exchangeable for any capital stock other than (i) the
Preferred Shares to be issued pursuant to this Agreement, and (ii) options and
warrants to purchase an aggregate of 5,111,030 shares of Common Stock as set
forth on Schedule 3.1.1 hereto.
3.1.2. The Preferred Shares will, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
3.1.3. The Company will at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
the conversion of the Series A Preferred Shares, such number of Conversion
Shares issuable upon the conversion of all outstanding Series A Preferred
Shares. All Conversion Shares, Series B Conversion Shares and Dividend Shares
will, when issued, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Company will take all such actions
as may be necessary to assure that all Conversion Shares, Series B Conversion
Shares and Dividend Shares may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange or national market upon which the Conversion Shares and Dividend Shares
may be listed.
3.1.4. None of the execution and delivery of this Agreement, or the
issue and sale of the Preferred Shares, the Conversion Shares and the Dividend
Shares, or the consummation of the transactions herein or therein contemplated
or compliance with the terms and provisions hereof and thereof will conflict
with or result in a breach of, or require any consent under, the Articles of
Incorporation of the Company, or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority or agency
(other than filings which will be made by the Company as required by applicable
state securities laws), or any agreement or instrument to which the Company is a
party or by which it is bound or to which it is subject, or constitute a default
under any such agreement or instrument, or result in the creation or imposition
of any lien upon any of the revenues or assets of the Company pursuant to the
terms of any such agreement or instrument.
3.1.5. There is not in effect on the date hereof any agreement by the
Company (other than this Agreement) pursuant to which any holders of securities
of the Company have a right to cause the Company to register such securities
under the Securities Act other than as set forth on Schedule 3.1.5 hereto.
3.1.6. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Nevada and has the
corporate power and authority to execute and deliver this Agreement, the
Preferred Shares, the Conversion Shares and the Dividend Shares and to perform
the terms hereof and thereof. The Company has taken all action necessary to
authorize the execution, delivery and performance of this Agreement, the
issuance of the Preferred Shares, the Conversion Shares and the Dividend Shares.
This Agreement has been duly authorized and executed and constitutes the legal,
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<PAGE>
valid and binding obligations of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors' rights generally.
3.1.7. As a condition to the obligations of the Holders hereunder and
prior to the issuance of the Preferred Shares subscribed for by Purchasers on
behalf of the parties to this Agreement listed on Schedule A, the Company shall
have delivered to the Holders (in form and substance satisfactory to Holders and
their counsel):
(a) a certificate, dated the date hereof, of the Secretary
or an Assistant Secretary of the Company, (A) attaching a true and
complete copy of the resolutions of the Board of Directors of the
Company, and of all documents evidencing other necessary corporate or
shareholder action (in form and substance satisfactory to the Holders
and to their counsel) taken by the Company in connection with the
matters contemplated by this Agreement, (B) attaching a true and
complete copy of the Articles of Incorporation and by-laws of the
Company and each of its subsidiaries and (C) setting forth the
incumbency of the officer or officers of the Company who sign this
Agreement, any document delivered by the Company pursuant hereto and
each certificate for the Preferred Shares, including therein a
signature specimen of such officer or officers;
(b) certificates of good standing (including tax status, if
applicable) of the Company and each of its subsidiaries under the laws
of their respective states of incorporation and as foreign
corporations in every state in which they own property or conduct
business;
(c) an opinion of Locke Liddell & Sapp LLP in the form
attached hereto as Exhibit B;
(d) a copy of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, which report shall contain
audited financial statements of the Company for such fiscal year
prepared in accordance with generally accepted accounting principles
which fairly present the information included therein, accompanied by
an opinion of the Company's certified public accountants;
(e) such other documents and evidence relating to the
matters contemplated by this Agreement as the Holders or their counsel
shall reasonably require, including without limitation, evidence that
(i) the Company has sufficient authorized and reserved shares of
Common Stock on the date hereof to meet the Company's obligations
herein and in the Certificate of Designation and (ii) the Rights
Agreement between the Company and American Stock Transfer and Trust
Company, as successor Rights Agent, dated December 10, 1990, as the
same may be amended from time to time (the "Rights Agreement"), has
been amended to exclude the Preferred Shares, the Conversion Shares,
the Dividend Shares and the Holders thereof, under certain
circumstances, from the definitions of "Acquiring Person" or "Adverse
Person" under such Rights Agreement;
(f) a fully executed copy of the Credit Agreement,
substantially in the form of Exhibit D attached hereto (the "Credit
Agreement"), dated as of April 29, 1999, between, on the one hand, the
Company and certain of its subsidiaries, and, on the other hand, the
banks party thereto, The First National Bank of Chicago, as
administrative agent, and Toronto Dominion (Texas), Inc., as
syndication agent (as amended, the "Credit Agreement") and such other
documents delivered pursuant thereto as requested by the Purchasers;
and
(g) evidence that the Company has consummated the sale of
$150,000,000 of the Company's senior unsecured notes on the terms set
forth in Exhibit E attached hereto (the "Notes").
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<PAGE>
3.2. Governmental Consent. Other than filings required by applicable
state securities laws which shall be made by the Company, neither the nature of
the Company or of any its subsidiaries, or of any of their respective businesses
or properties, nor any relationship between the Company or any subsidiary and
any other Person, nor (except as expressly provided for in this Agreement) any
circumstance in connection with the offer, issue or sale of the Preferred
Shares, the Conversion Shares and the Dividend Shares is such as to require
consent, approval or authorization of, or filing, registration or qualification
with, any governmental authority on the part of the Company as a condition to
the execution and delivery of this Agreement or the execution and filing of the
Certificate of Designation or any amendment of the Articles of Incorporation
required in connection with the authorization, offer, sale and/or issuance of
the Preferred Shares, the Conversion Shares or the Dividend Shares.
3.3. Private Offering. Neither the Company nor any other Person acting
on behalf of the Company has offered any of the Preferred Shares or any similar
securities of the Company for sale to, or solicited offers to buy any thereof
from, or otherwise approached or negotiated with respect thereto with any
prospective purchasers who are not accredited investors, as defined in Rule 501
of Regulation D promulgated under the Securities Act. The Company agrees that
neither the Company nor anyone acting on its behalf has offered or will offer
the Preferred Shares or any part thereof or any similar securities for issue or
sale to, or has solicited or will solicit any offer to acquire any of the same
from, anyone so as to bring the issuance and sale of the Preferred Shares within
the provisions of Section 5 of the Securities Act. Based in part on the
representations of the Holders set forth herein, the offer, sale and issuance of
the Preferred Shares in conformity with the terms of this Agreement are exempt
from the registration requirements of the Securities Act and any applicable
state securities laws.
3.4. Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against the Company that questions the validity
of this Agreement or the Company's right to enter into this Agreement, or to
consummate the transactions contemplated hereby or which, if decided in a manner
adverse to the Company, would have a material adverse effect on the Company or
on any of its subsidiaries or the ability of the Company to consummate the
transactions contemplated hereby.
3.5. No Material Misstatements. No representation, warranty, or
statement by Company in this Agreement or in any written statement or
certificate furnished or to be furnished to the Holders pursuant to this
Agreement contains any untrue statement of a material fact or, when taken
together, omits a material fact necessary to make the statements made herein or
therein not misleading.
3.6. Ownership of Subsidiaries. The Company has good and marketable
title to all the outstanding stock of each of its subsidiaries free and clear of
all liens other than as set forth on Schedule 3.6 hereof. None of the Company's
subsidiaries have outstanding (i) any stock or securities convertible into or
exchangeable for any shares of capital stock or (ii) any rights to subscribe for
or to purchase, or any options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to any capital stock or stock or securities.
3.7. Material Adverse Change. There has been no material adverse
change in the business, prospects or financial standing of the Company since the
filing of the Company's most recent Annual Report on Form 10-K.
SECTION 4. RESTRICTIONS ON TRANSFERABILITY; REGISTRATION RIGHTS
The Restricted Securities shall not be transferable except upon the
conditions specified in this Section 4; provided that, notwithstanding any other
provisions of this Section 4, each Holder (and each other Person mentioned below
in this clause) shall have the right to transfer any Restricted Securities to
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any Affiliate, fund participant, trust beneficiary, or limited partner of such
Holder, any party to any investment management or other similar agreement with
Trustco or Tamco, any fund, foundation, trust or other Person for whose benefit
any such agreement with Trustco or Tamco relates or any trustee, custodian or
nominee of or for any such Person (each a "Permitted Transferee"). Each such
transferee shall be subject to the same transfer restrictions imposed on the
Holders by this Agreement. All rights and obligations of the Holders set forth
in this Section 4 will inure to the benefit of and be binding upon any
transferee of the Restricted Securities.
4.1. Restrictive Legend. Unless and until otherwise permitted by this
Section 4, each certificate for Preferred Shares issued under this Agreement,
each certificate for any Preferred Shares issued to any subsequent transferee of
any such certificate, each certificate for any Conversion Shares issued upon
exercise of any Preferred Shares and each certificate for any Conversion Shares
issued to any subsequent transferee of any such certificate, shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, and may be reoffered and sold only
if registered pursuant to the provisions of said Securities Act or if an
exemption from registration is available."
4.2. Notice of Proposed Transfers. Prior to any transfer or attempted
transfer of any Restricted Securities not subject to an effective registration
statement and not covered by the proviso contained in the introductory paragraph
to Section 4, the holder of such Restricted Certificate shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice (i) shall describe the manner and circumstances of the proposed
transfer in sufficient detail, and shall contain an undertaking by the Person
giving such notice to furnish such other information as may be required, to
enable counsel to render the opinions referred to below, and (ii) shall
designate the counsel for the Person giving such notice. Except as otherwise set
forth herein, such Person shall obtain the services of counsel described below
at its own expense. The Person giving such notice shall submit a copy thereof to
the counsel designated in such notice. If in the opinion of such counsel, which
is reasonably satisfactory to the Company, the proposed transfer of such
Restricted Securities evidenced by such Restricted Certificate may be effected
without registration of such Restricted Securities under the Securities Act, the
Company shall, within ten (10) business days after delivery of such opinion to
the Company, so notify the holder of such Restricted Certificate and such holder
shall thereupon be entitled to transfer such Restricted Securities in accordance
with the terms of the notice delivered by such holder to the Company. Each
certificate evidencing the Restricted Securities thus to be transferred (and
each certificate evidencing any untransferred balance of the Restricted
Securities evidenced by such Restricted Certificate) shall bear the restrictive
legend set forth in Section 4.1.
4.3. Demand Registration.
(a) Subject to the limitations contained in Section 4.7, at
any time and from time to time, the holders of at least 51% of the
outstanding Series A Preferred Shares and Conversion Shares held by
the TCW Holders and the holders of at least 51% of the outstanding
Series A Preferred Shares and Conversion Shares held by the Pacific
Holders and the Aquila Holders may give written notice to the Company
(i) of their intention to convert all or part of the Series A
Preferred Shares held by them and to transfer the Conversion Shares
held or obtained by conversion of the Series A Preferred Shares and
(ii) requesting the registration of said Conversion Shares.
(b) Whenever the Company shall have received a demand to
effect a registration pursuant to Section 4.3(a), the Company shall
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promptly give written notice of such proposed registration to all
other Holders. Any such Holder may request in writing that all of such
Holder's Conversion Shares, or any portion thereof, designated by such
Holder, be included in the registered offering.
(c) The Company shall, as expeditiously as possible
following receipt of a demand pursuant to Section 4.3(a), effect the
registration of such Conversion Shares under the Securities Act. The
Sellers of the Conversion Shares shall have the right to select the
managing underwriter or underwriters for the offering of such
Conversion Shares.
(d) In the case of an underwritten public offering of
Restricted Securities to be so registered, if the managing underwriter
advises in its opinion that (i) the inclusion in such registration of
some or all of such Common Stock requested to be registered (including
without limitation, securities to be included pursuant to incidental
or "piggyback" rights heretofore or hereafter granted by the Company
to other Persons) will cause the proceeds or price per share to the
Sellers to be reduced or (ii) that the number of securities to be
registered at the request of the Sellers pursuant to this Section 4.3
plus the number of securities sought to be registered by such other
Persons is too large a number to be reasonably sold, then the number
of securities to be included in such registration will be reduced as
set forth below:
(i) the number of shares of Common Stock sought to be
registered by any Holders of Common Stock, other than the Conversion
Shares, shall be reduced pro rata to the extent necessary to reduce
the number of securities to be registered to the number recommended by
the managing underwriter (the "Recommended Number");
(ii) if the reduction provided for in clause (i) does not
reduce the number of shares of Common Stock to be registered to the
Recommended Number, then the number of Conversion Shares sought to be
registered by Holders other than the Holders that exercised the demand
to effect such registration pursuant to Section 4.3(a) shall be
reduced pro rata, in proportion to the number of Conversion Shares
sought to be registered by such Holders of Conversion Shares, to the
extent necessary to reduce the number of shares of Common Stock to be
registered to the Recommended Number; and
(iii) if the reduction provided for in clauses (i) and (ii)
above does not reduce the number of shares of Common Stock to be
registered to the Recommended Number, then the number of Conversion
Shares sought to be registered shall be reduced pro rata, in
proportion to the number of Conversion Shares sought to be registered
by the Holders of such Conversion Shares, to the extent necessary to
reduce the number of shares of Common Stock to be registered to the
Recommended Number;
provided, that in no event shall the holders of the Conversion Shares so
included in such registration be required to pay any expenses relating to such
registration, including, without limitation, all the expenses described in the
first paragraph of Section 4.7, which are related to the inclusion of any other
holders' Common Stock in the registration.
(e) The Company will not grant to any Person at any time on
or after the date hereof the right (a "Piggyback Right") to request
the Company to register any securities of the Company under the
Securities Act by reason of the exercise by any Holder of its rights
under this Section 4.3 unless such Piggyback Right provides that such
securities shall not be registered and sold at the same time if the
managing underwriter for the respective Sellers believes that sale of
such securities would adversely affect the amount of, or price at
which, the respective Conversion Shares being registered under this
Section 4.3 can be sold.
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(f) The Company agrees (1) not to effect any public or
private sale or distribution of its equity securities, including a
sale pursuant to Regulation D under the Securities Act, during the
10-day period prior to, and during the 120-day period beginning on,
the closing date of an underwritten offering made pursuant to a
registration statement filed pursuant to this Section 4.3 and (2) to
cause each holder of its privately placed equity securities purchased
from the Company at any time on or after the date of this Agreement to
agree not to effect any public sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144
under the Securities Act (except as part of such underwritten
registration, if permitted).
Except pursuant to a registration statement filed pursuant
to this Section 4.3, each Holder agrees not to effect any public sale
or distribution, including a sale pursuant to Rule 144 or 144A under
the Securities Act, of any Restricted Securities during the 10-day
period prior to, and during the 120-day period beginning on, the
closing date of an underwritten offering made pursuant to a
registration statement filed pursuant to this Section 4.3.
(g) The Company recognizes that money damages may be
inadequate to compensate Holders for a breach by the Company of its
obligations under this Section 4.3, and the Company agrees that in the
event of such a breach the Holders may apply for an injunction of
specific performance or the granting of such other equitable remedies
as may be awarded by a court of competent jurisdiction in order to
afford Holders the benefits of this Section 4.3 and that the Company
shall not object to such application, entry of such injunction or
granting of such other equitable remedies on the grounds that money
damages will be sufficient to compensate the Holders.
4.4. Piggy-Back Registration.
(a) Subject to the limitations contained in Section 4.7, if
the Company at any time proposes to register any of its securities
under the Securities Act (other than a registration effected solely to
implement an employee benefit plan, a registration of the Notes or any
other registration on Form S-4), whether of its own accord or at the
request of any holder or holders of such securities, it will each such
time give written notice to all holders of outstanding Preferred
Shares and Conversion Shares of its intention so to do.
(b) Upon the written request of a holder or holders of any
such Preferred Shares and Conversion Shares given within 30 days after
receipt of any such notice (stating the intended method of disposition
of such securities by the prospective Seller or Sellers), the Company
will use its best efforts to cause all Conversion Shares, the holders
of which shall have so requested registration thereof, to be
registered under the Securities Act, all to the extent requisite to
permit the sale or other disposition (in accordance with the intended
methods thereof as aforesaid) by the prospective Seller or Sellers of
the Conversion Shares so registered; provided, however, the Company
may elect not to file a registration statement pursuant to this
Section 4.4 or may withdraw any registration statement filed pursuant
to this Section 4.4 at any time prior to the effective date thereof.
In the case of an underwritten public equity offering by the Company,
each Seller shall, if requested by the managing underwriter, agree not
to sell publicly any equity securities of the Company held by such
Seller (other than the Conversion Shares so registered) for a period
of up to 120 days following the effective date of the registration
statement relating to such offering.
(c) If the managing underwriter for the respective offering
advises that the inclusion in such registration of some or all of the
Conversion Shares sought to be registered by the Seller in its opinion
will cause the proceeds or price per unit the Company or the
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requesting or demanding holder of securities will derive from such
registration to be reduced or that the number of securities to be
registered at the instance of the Company or such requesting or
demanding holder plus the number of securities sought to be registered
by the Sellers is too large a number to be reasonably sold, then the
number of securities to be included in such registration will be
reduced as set forth below:
(i) the number of shares of Common Stock sought to be
registered by any holders of Common Stock, other than the Conversion
Shares, shall be reduced pro rata to the extent necessary to reduce
the number of securities to be registered to the Recommended Number;
(ii) if the reduction provided for in clause (i) above does
not reduce the number of securities to be registered to the
Recommended Number, then the number of shares of the Common Stock
sought to be issued and registered on account of the Company shall be
reduced to the extent necessary to reduce the number of shares of
Common Stock to be registered to the Recommended Number; provided,
however, that this clause (ii) shall be of no effect with respect to
the registration and sale of such Common Stock by the Company which is
necessary to repay any debt or obligation of the Company or its
subsidiaries then becoming due and payable or which is necessary to
finance the acquisition of assets or a majority of the outstanding
stock of another corporation by the Company or its subsidiaries which
acquisition will be consummated within 6 months of the effective date
of such registration; and (iii) if the reduction provided for in
clauses (i) and (ii) above does not reduce the number of shares of
Common Stock to be registered to the Recommended Number, then the
number of Conversion Shares sought to be registered shall be reduced
pro rata, in proportion to the number of Conversion Shares sought to
be registered by the holders thereof, to the extent necessary to
reduce the number of shares of Common Stock to be registered to the
Recommended Number.
(d) The Company will not grant to any Person at any time on
or after the date hereof the right to request the Company to register
any securities of the Company under the Securities Act unless such
right provides that such securities shall not be registered and sold
at the same time if the managing underwriter for the respective
sellers believes that sale of such securities would adversely affect
the amount of, or price at which, the respective Conversion Shares
being registered under this Section 4.4 can be sold.
4.5. Registration of Dividend Shares. The Company shall cause a
registration statement to be filed pursuant to Rule 415 under the Securities Act
(the "Shelf Registration Statement") and to be declared effective prior to the
issuance of Dividend Shares to any Holder, which Shelf Registration Statement
shall provide for resales of all Dividend Shares that are issued by the Company
to the Holders and which Shelf Registration Statement shall remain effective
until the earlier of (a) the date all such Dividend Shares have been sold under
such Shelf Registration Statement or (b) the date such Dividend Shares can be
sold pursuant to Rule 144(k) promulgated under the Securities Act.
4.6. Registration Procedures. (a) If and whenever the Company is
required by the provisions of this Section 4 to use its best efforts to effect
the registration of any of the Conversion Shares or to effect the registration
of the Dividend Shares under the Securities Act, the Company will (except as
otherwise provided in this Agreement), as expeditiously as possible:
(i) cooperate with any underwriters for, and the Sellers of,
such Common Shares, and will enter into a usual and customary
underwriting agreement with respect thereto and take all such other
reasonable actions as are necessary or advisable to permit, expedite
and facilitate the disposition of such Common Shares in the manner
contemplated by the related registration statement in each case to the
same extent as if all the securities then being offered were for the
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account of the Company and the Company will provide to any Seller of
Common Shares, any underwriter participating in any distribution
thereof pursuant to a registration statement, and any attorney,
accountant or other agent retained by any Seller or underwriter,
reasonable access to appropriate Company officers and employees to
answer questions and to supply information reasonably requested by any
such Seller, underwriter, attorney, accountant or agent in connection
with such registration statement;
(ii) furnish or cause to be furnished to each Seller of
Common Shares covered by such registration statement and the
underwriters, if any, addressed to such Sellers and the underwriters,
if any, such opinion of counsel for the Company, and a "comfort"
letter signed by the independent public accountants who have certified
the Company's financial statements included in the registration
statement in each case covering matters customarily covered in
opinions and "comfort" letters requested in underwritten offerings and
such other matters as may be reasonably requested by the Sellers and
underwriters, if any;
(iii) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain continuously
effective and provide all requisite financial statements for the
period specified in paragraph (b) of this Section 4.6; and prepare and
file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith
(including without limitation such amendments and supplements as the
Sellers may deem necessary in their reasonable discretion) as may be
necessary to keep such registration statement continuously effective
and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities covered by such
registration statement whenever the Seller or Sellers of such
securities shall desire to sell or otherwise dispose of the same;
provided that no such registration statement will be filed by the
Company until counsel for the Sellers of securities included therein
shall have had a reasonable opportunity to review the same and to
exercise their rights under clause (i) above with respect thereto and
no amendment to any such registration statement naming such Sellers as
selling shareholders shall be filed with the Commission until such
Sellers shall have had at least seven days to review such registration
statement as originally filed and theretofore amended, to exercise
their rights under clause (i) above and to approve or disapprove any
portion of such registration statement describing or referring to such
Sellers;
(iv) furnish to each Seller such numbers of copies of a
summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act,
and such other documents, as such Seller may reasonably request in
order to facilitate the public sale or other disposition of the
securities owned by such Seller;
(v) use its best efforts to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each Seller shall
request, and do any and all other acts and things which may be
necessary or advisable to enable such Seller to consummate the public
sale or other disposition in such jurisdictions of the securities
owned by such Seller, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein
any general consent to service;
(vi) in the event of the issuance of any stop order
suspending the effectiveness of any registration statement or of any
order suspending or preventing the use of any prospectus or suspending
the qualification of any Common Shares for sale in any jurisdiction,
use its best efforts promptly to obtain its withdrawal;
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(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months,
beginning with the first fiscal quarter beginning after the effective
date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act; and
(viii) list such securities on any securities exchange on
which any stock of the Company is then listed, if the listing of such
securities is then permitted under the rules of such exchange;
(b) Notwithstanding any other provision of this Section 4,
the Company shall not be required to maintain the effectiveness of (i)
any registration statement filed by the Company pursuant to Section
4.3 or Section 4.4 hereof for a period in excess of two years (plus
any period during which the effectiveness of such registration has
been suspended) or (ii) any registration statement filed by the
Company pursuant to Section 4.5 for a period in excess of two years
(plus any period during which the effectiveness of such registration
has been suspended) following the later of (a) the date on which the
Company issues shares of Common Stock in payment of a dividend on the
Preferred Shares for the last dividend payment made in Common Stock by
the Company with respect to the Preferred Shares and (b) the date on
which the Company issues shares of Common Stock to redeem all of the
then issued and outstanding Preferred Shares. From time to time after
a transfer of Shares pursuant to a registration statement the Company
will file all reports required to be filed by it under the Securities
Act and the Securities Exchange Act of 1934, as amended, and the rules
and regulations adopted by the Commission thereunder, and will take
such further action as any holder or holders of Common Shares may
reasonably request, all to the extent required to enable such holders
to sell Common Shares pursuant to Rule 144 and Rule 144A promulgated
under the Securities Act (or any successor thereto). Upon written
request, the Company will deliver to such holders a written statement
as to whether it has complied with such requirements.
4.7. Expenses; Limitations on Registration. The Company shall pay all
expenses incident to the Company's performance of its obligations in connection
with any registration of the Sellers' Common Shares under this Agreement
including, without limitation, (i) printing expenses, (ii) fees and
disbursements of counsel for the Company, (iii) fees of the National Association
of Securities Dealers, Inc. in connection with its review of any offering
contemplated in any registration statement, (iv) expenses of any special audits
to which the Company shall agree or which shall be necessary to comply with
governmental requirements in connection with any such registration, (v) all
registration and filing fees for the Sellers' Common Shares under Federal and
State securities laws, (vi) expenses of complying with the securities or blue
sky laws of any jurisdictions pursuant to Section 4.6(a)(v), and (vii) fees and
expenses of not more than one special counsel for the Seller or Sellers whose
Common Shares are included in such registration, such special counsel to be
selected by the Holder(s) of a majority of such Common Shares included in such
registration.
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Section 4 in respect of the Conversion Shares
which are to be registered at the request of any prospective Seller that (i)
subject to the immediately preceding paragraph, the Company shall have received
an undertaking satisfactory to it from such prospective Seller to pay, or have
deducted from the proceeds from the sale of Conversion Shares pursuant to a
registration, all expenses to be incurred by or for the account of and required
to be paid by such Seller, and (ii) such prospective Seller shall furnish to the
Company such information regarding the securities held by such Seller and the
intended method of disposition thereof as the Company shall reasonably request
and as shall be required in connection with the action to be taken by the
Company.
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The TCW Holders of Preferred Shares and Conversion Shares shall be
entitled to an aggregate of two effective registrations pursuant to requests
made under Section 4.3; provided that in the case any TCW Holder shall acquire
any Conversion Shares by conversion of such Preferred Stock following a Notice
of Redemption (as defined in the Certificate of Designation) the holders of
Preferred Shares and Conversion Shares shall be entitled to an aggregate of
three effective registrations pursuant to requests made under Section 4.3;
provided, further, that any registration request made by the requisite number of
Holders, as set forth in the first paragraph of Section 4.3, which request shall
be withdrawn (other than by reason of the Company's failure to perform its
obligations hereunder or a material adverse change in its financial position or
business) by the holders of at least 75% of the shares evidenced or covered by
the Conversion Shares sought to be registered, after the respective registration
statement shall have become effective, shall be treated as an "effective"
registration for purposes hereof.
The Pacific Holders and the Aquila Holders of Preferred Shares and
Conversion Shares shall be entitled to an aggregate of one effective
registration pursuant to a request made under Section 4.3; provided that in the
case any Pacific Holder or Aquila Holder shall acquire any Conversion Shares by
conversion of such Preferred Stock following a Notice of Redemption (as defined
in the Certificate of Designation) the holders of Preferred Shares and
Conversion Shares shall be entitled to an aggregate of two effective
registrations pursuant to requests made under Section 4.3; provided, further,
that any registration request made by the requisite number of Holders, as set
forth in the first paragraph of Section 4.3, which request shall be withdrawn
(other than by reason of the Company's failure to perform its obligations
hereunder or a material adverse change in its financial position or business) by
the holders of at least 75% of the shares evidenced or covered by the Conversion
Shares sought to be registered, after the respective registration statement
shall have become effective, shall be treated as an "effective" registration for
purposes hereof.
The Company agrees that it will not file a registration statement
under the Securities Act, either for securities held by any of the Company's
securityholders other than holders of Preferred Shares and Common Shares or for
securities newly issued by the Company, until 30 days after the effective date
of any registration statement filed pursuant to the request of a Seller or
Sellers made under Section 4.3.
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4.8. Indemnification.
4.8.1. In the event of any registration of any of its securities under
the Securities Act pursuant to this Section 4, the Company shall indemnify and
hold harmless the Seller of such Common Shares, such Seller's directors,
officers, employees, agents, and each other person, if any, who controls such
Seller within the meaning of the Securities Act (a "Controlling Person"),
against any losses, claims, damages or liabilities, joint or several, to which
such Seller or any such director or officer or Controlling Person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such securities were registered under the Securities Act, or in any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse such Seller or such director, officer or
Controlling Person for any legal or any other expenses reasonably incurred by
such Seller or such director, officer or Controlling Person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any alleged untrue statement or alleged omission made in such registration
statement, preliminary prospectus, prospectus, or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Seller specifically for use
therein. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Seller or such director, officer or
Controlling Person, and shall survive the transfer of such securities by such
Seller.
4.8.2. Each holder of any Common Shares shall, by acceptance thereof,
indemnify and hold harmless the Company, its directors and officers and each
other person, if any, who controls the Company against any losses, claims,
damages or liabilities, joint or several, to which the Company or any such
director or officer or any such person may become subject under the Securities
Act or any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or omission of any material fact contained, on the
effective date thereof, in any registration statement under which securities
were registered under the Securities Act, or in any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto, or
(ii) any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent that such untrue statement or omission was
contained in written information furnished to the Company through an instrument
duly executed by such holder specifically for use therein, and shall reimburse
the Company or such director, officer or other person for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage, liability or action.
4.8.3. Indemnification similar to that specified in Subsections 4.8.1
and 4.8.2 shall be given by the Company and each holder of any Common Shares
(with such modifications as shall be appropriate) to any underwriter with
respect to any required registration or other qualification of any Common Shares
under any Federal or state law or regulation of governmental authority. The
indemnity and expense reimbursements obligations of the Company and the Holders
under Subsections 4.8.1 and 4.8.2 shall be in addition to any liability the
Company and the Holders may otherwise have.
4.8.4. Each Person (an "Indemnitor") who under the preceding
provisions of this Section 4.8 agrees to indemnify another Person (an
"Indemnitee") shall have the right, subject to the provisions hereto, to
designate counsel (acceptable to the Indemnitee) to defend any case or
proceeding against the Indemnitee arising in respect of any claim of liability
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for which such indemnification may be claimed, to the end that duplication of
legal expense may be minimized; provided that, if the Indemnitee notifies the
Indemnitor that the former has been advised by its counsel that any single
counsel in such case or proceeding would have a conflict of interest in
representing both the Indemnitor and the Indemnitee, the Indemnitee may
designate its own counsel in such case or proceeding and, to the extent so
provided above in this Section 4.8, shall be entitled to be reimbursed for its
legal expenses reasonably incurred in connection with defending itself in such
case or proceeding.
4.9. Termination of Restrictions. Notwithstanding the foregoing
provisions of this Section 4, the restrictions imposed by this Section 4 upon
the transferability of the Restricted Securities shall cease and terminate as to
any particular Restricted Security when such Restricted Security shall have been
effectively registered under the Securities Act and sold by the holder thereof
in accordance with such registration or sold under Rule 144 or 144A promulgated
by the Commission. Whenever the restrictions imposed by this Section 4 shall
terminate as to any Restricted Certificate, as hereinabove provided, the holder
thereof shall be entitled to receive from the Company, without expense, a new
certificate not bearing the restrictive legend otherwise required to be borne
thereby.
4.10. Rule 144. At all times, in order to permit the holders of
Preferred Shares and Common Shares to sell the same, if they so desire, pursuant
to Rule 144 or 144A promulgated by the Commission (or any successor to such
rule), the Company will comply with all rules and regulations of the Commission
applicable in connection with use of Rule 144 and 144A (or any successor rules
thereto), including the provision of information concerning the Company and the
timely filing of all reports with the Commission in order to enable such
holders, if they so elect, to utilize Rule 144 or 144A, and the Company will
cause any restrictive legends to be removed and any transfer restrictions to be
rescinded with respect to any sale of Preferred Shares or Common Shares which is
exempt from registration under the Securities Act pursuant to Rule 144 or 144A.
SECTION 5. COVENANTS OF THE COMPANY
5.1. Delivery Expenses. If any Holder surrenders any certificate for
Preferred Shares, Conversion Shares or Dividend Shares to the Company or a
transfer agent of the Company for exchange for instruments of other
denominations or registered in another name or names, the Company will, subject
to the provisions of Section 4, cause such new instruments to be issued and will
pay the cost of delivering to or from the office of the Holder from or to the
Company or its transfer agent, duly insured, the surrendered instrument and any
new instruments issued in substitution or replacement for the surrendered
instrument.
5.2. Taxes. The Company will pay all taxes (other than Federal, State
or local income taxes) which may be payable in connection with the execution and
delivery of this Agreement or the issuance and sale of the Preferred Shares, the
Conversion Shares and the Dividend Shares hereunder or in connection with any
modification of the Preferred Shares, Conversion Shares or Dividend Shares and
will save the Holders harmless without limitation as to time against any and all
liabilities with respect to or resulting from any delay in paying, or omission
to pay such taxes. The obligations of the Company under this Section 5.2 shall
survive any redemption, repurchase or acquisition of Preferred Shares,
Conversion Shares or Dividend Shares by the Company and the termination of this
Agreement. 5.3. Replacement of Instruments. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Preferred Shares, Conversion Shares or Dividend Shares, and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that, if the owner of the same
is a commercial bank or an institutional lender or investor, its own
agreement of indemnity shall be deemed to be satisfactory), or
E-45
<PAGE>
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company, at its expense, will execute, register and deliver, in lieu
thereof, a new certificate or instrument for (or covering the purchase of) an
equal number of shares of Preferred Shares, Conversion Shares or Dividend Shares
.
5.4. Restrictions on Certain Actions. Prior to the day next following
the issuance of Preferred Shares hereunder the Company will not:
(a) pay or declare any dividend payable in shares of its
common stock or take any other action which, if taken after the date
of such issuance, would result under the terms of the Preferred Stock
in a change in the number of Conversion Shares into which the
Preferred Shares may be converted; or
(b) make any amendment to the Articles of Incorporation of
the Company, or file any resolution of the board of directors with the
Nevada Secretary of State containing any provisions, which would
materially and adversely affect or otherwise impair the rights of the
holders of the Preferred Shares.
5.5. Use of Proceeds. The Company shall use the proceeds of the sale
of the Preferred Shares to repay amounts outstanding under the Credit Agreement.
5.6. Rights Agreement. The Company will not, without the affirmative
vote or consent of the Requisite Holders, supplement, amend or repeal any
provision of the Rights Agreement, or adopt any other agreement or plan similar
to the Rights Agreement, which could materially adversely affect the Holders of
the Preferred Stock, the Conversion Shares or Dividend Shares, in their sole
discretion.
5.7. Maintenance of NYSE Listing. For as long as any Purchaser holds
any Preferred Shares, Conversion Shares or Dividend Shares, the Company shall
cause the Common Stock to be continuously listed on the New York Stock Exchange
or, if the Common Stock is delisted from the New York Stock Exchange, the NASDAQ
National Market System or the American Stock Exchange; provided, that the
Company shall not be liable for a failure to maintain such listing if the Common
Stock of the Company fails to meet the eligibility requirements of the
particular exchange if and only if the failure to meet such eligibility
requirements shall not have been caused by any action of the Company.
5.8. Election of Directors; Maintenance of Directors and Officers
Insurance.
(a) The Company and its Board of Directors shall cause the
Board of Directors of the Company following the redemption of the
Series A Preferred Shares pursuant to the terms of the Articles of
Incorporation and Certificate of Designation to at all times include
as members of the Board of Directors a number of individuals
designated as directors by Purchasers on behalf of the initial
purchasers of the Preferred Shares pursuant to this Agreement and
their Permitted Transferees equal to the number of directors that the
Holders of Preferred Shares were entitled to elect prior to such
redemption pursuant to the terms of the Articles of Incorporation and
the Certificate of Designation. The obligations of the Company and the
Board of Directors to cause the Board of Directors of the Company to
be so constituted shall continue for so long as the initial purchasers
of the Preferred Shares pursuant to this Agreement and their Permitted
Transferees hold at least 20% of the issued and outstanding shares of
Common Stock of the Company; provided, that in calculating the
percentage of Common Stock held by such initial purchasers and their
Permitted Transferees, only Common Stock (x) issued by the Company
upon the conversion or redemption of the Preferred Shares or (y) paid
by the Company as a dividend on the Preferred Shares shall be included
E-46
<PAGE>
in such calculation. In the event that such Holders at anytime hold less than
20% of the issued and outstanding shares of Common Stock of the Company, the
Company and its Board of Directors shall cause the Board of Directors to include
as members of the Board of Directors one director designated by Purchasers on
behalf of such Holders for each 5% of the issued and outstanding shares of
Common Stock of the Company held by such Holders; provided, that in calculating
the percentage of Common Stock held by such initial purchasers and their
Permitted Transferees, only Common Stock (x) issued by the Company upon the
conversion or redemption of the Preferred Shares or (y) paid by the Company as a
dividend on the Preferred Shares shall be included in such calculation. The
Company and the Board of Directors of the Company agree that at all times that
the Holders have the right to designate directors pursuant to this Section
5.8(a), the number of directors constituting the whole Board of Directors shall
be no greater than six directors plus the number of Directors that the Holders
are entitled to elect pursuant to the terms of this Section 5.8(a). If such
Holders designate fewer directors than allowed by this Section 5.8(a), the
directors designated by such Holders shall nonetheless have the number of votes
equal to the number of directors that such Holders could have designated
pursuant this Section 5.8(a) so that at any meeting of the Board of Directors of
the Company each director designated by such Holders pursuant to this Section
5.8(a) shall have the number of votes equal to the number of directors that such
Holders could have designated pursuant to this Section 5.8(a) (the "Available
Director Seats") divided by the actual number of directors designated by such
Holders pursuant to this Section 5.8(a) and attending such meeting (the "Actual
Directors") and, for purposes of determining whether a quorum is present at such
meeting, each such director that was designated by such Holders and is present
at such meeting shall be counted as a number of directors equal to the number of
Available Director Seats divided by the number of Actual Directors.
(b) So long as the Holders are entitled to elect one or more
directors pursuant to the terms of this Section 5.8 and for a period
of three years after such time as the Holders are no longer entitled
to elect any directors, the Company shall maintain director's and
officer's insurance providing for such amount of coverage and such
terms as shall be satisfactory to Purchasers. In the event that the
Company (i) consolidates with or merges with or into any other person
and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person then, in each case,
proper provision shall be made such that the successors and assigns
shall assume the obligations set forth in this Section 5.8(b).
5.9. Shareholder Approval. The Company shall call a meeting of its
shareholders to be held no later than July 31, 1999 for the purpose of voting
upon the approval of the issuance of the Series B Conversion Shares, the
Conversion Shares and the Dividend Shares. The Company will through its Board of
Directors recommend to its shareholders the approval of such matters and shall
not withdraw, modify or change its recommendation in any manner that would
adversely effect the ability of the Company to issue the Series B Conversion
Shares, Conversion Shares or the Dividend Shares. The Purchasers agree to vote
all of their Series A Preferred Shares in favor of such recommendation of the
Board of Directors authorizing the issuance of the Series B Conversion Shares,
the Conversion Shares and the Dividend Shares.
5.10 Issuance of Additional Series A Preferred Shares. The Company
shall not issue any additional shares of Series A Preferred Shares other than
the Series B Conversion Shares.
SECTION 6. MISCELLANEOUS
6.1. Notices.
6.1.1. All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid:
(a) if to any party hereto at its address for notices
specified beneath its name on the signature page hereof, or at such
other address as it may have furnished in writing to each other party
E-47
<PAGE>
hereto and all other holders of Preferred Shares, Conversion Shares
and Dividend Shares at the time outstanding, or
(b) if to any other Person who is the registered holder of
any Preferred Shares, Conversion Shares or Dividend Shares, to the
address for the purpose of such holder as it appears in the stock
ledger of the Company.
6.1.2. Any notice shall be deemed to have been duly given when
delivered by hand, if personally delivered, and if sent by mail, two business
days after being deposited in the mail, postage prepaid.
6.2. Survival. All warranties, representations and covenants made by
the Company herein or in any certificate or other instrument delivered by it or
on its behalf under this Agreement shall be considered to have been relied upon
by the Holders and shall survive the issuance of the Preferred Shares regardless
of any investigation made by or on behalf of the Holders. All statements in any
such certificate or other instrument so delivered shall constitute
representations and warranties by the Company hereunder.
All representations, warranties and covenants made by the Holders
herein shall be considered to have been relied upon by the Company and shall
survive the issuance to the Holders of the Preferred Shares regardless of any
investigation made by the Company or on its behalf.
The provisions of Section 4 and Section 5.8 hereof shall survive the
issuance to the Holders of the Preferred Shares, the Conversion Shares and
Dividend Shares .
6.3. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties whether so expressed or not.
6.4. Amendment and Waiver, etc. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Requisite Holders. No failure or delay on the part of the
Holders in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Holders at law or in equity or otherwise. No waiver of or consent to any
departure by the Company from any provision of this Agreement shall be effective
unless signed in writing by the Holders.
6.5. Duplicate Originals. Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.
6.6. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
6.7. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of California.
6.8. Specific Performance. The Company acknowledges that the Holders
have no adequate remedy at law for breaches by the Company of its obligations
E-48
<PAGE>
hereunder or under the Articles of Incorporation, and accordingly the Company
irrevocably agrees that the Holders shall be entitled to the remedy of specific
performance and waives any right the Company may have to object to such remedy.
6.9. Applicable IRR Calculation. Attached hereto as Exhibit C are
schedules provided by way of example in calculating the Applicable IRR Amount
(as defined in the Certificate of Designation) for purposes of Section 4.4 of
the Certificate of Designation.
6.10 Consents, Approvals and Other Actions by Purchasers or Holders.
Except where specifically provided or the context would provide otherwise, any
consent, approval or other action to be given or taken by Purchasers or Holders
under this Agreement or any other document relating to the Preferred Shares or
Conversion Shares shall be deemed to have been given or taken if given or taken
by Purchasers or Holders , as the case may be, purchasing or holding a majority
of the Preferred Shares or Conversion Shares, as applicable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Stock Purchase Agreement as of the date first above written.
Address for Notices: COMSTOCK RESOURCES, INC.,
a Nevada corporation
LBJ Freeway, Suite 1000
Dallas, TX 75244
By /s/ M. JAY ALLSION
---------------------
M. Jay Allison
President and
Chief Executive Officer
E-49
<PAGE>
Address for Notices: TCW DEBT AND ROYALTY FUND VI, L.P., a
California limited partnership
865 S. Figueroa Street, Suite 1800
Los Angeles, CA 90017 By: TCW Asset Management Company, a
Attn: Arthur R. Carlson California corporation, as General Partner
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
Address for Notices: TCW DEBT AND ROYALTY FUND VIB, L.P., a
California limited partnership
865 S. Figueroa Street, Suite 1800
Los Angels, CA 90017 By: TCW Asset Management Company, a
Attn: Arthur R. Carlson California corporation, as General Partner
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
E-50
<PAGE>
Address for Notices: TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager under
865 S. Figueroa Street, Suite 1800 the Investment Management Agreement dated as
Los Angeles, CA 90017 of July 7, 1997 between Morgan Stanley Asset
Attn: Arthur R. Carlson Management Inc. as Fiduciary Advisor on
behalf of, inter alia, Eugenia III
Investment Holdings Limited and
TCW Asset Management Company as amended by
amendment dated as of October 15, 1998
between Bessemer Trust Company, N.A.,
in the capacity discussed therein, and TCW
Asset Management Company
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
Address for Notices TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant
865 S. Figueroa Street, Suite 1800 to the Investment Management and Custody
Los Angeles, CA 90017 Agreement dated as of May 19, 1997 between
Attn: Arthur R. Carlson Allmerica Asset Management, Inc. as agent
for First Allmerica Financial Life
Insurance Company, TCW Asset Management
Company and Trust Company of the West
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
E-51
<PAGE>
Address for Notices: TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant
865 S. Figueroa Street, Suite 1800 to the Investment Management and Custody
Los Angeles, CA 90017 Agreement dated as of October 27, 1997
Attn: Arthur R. Carlson between University of Chicago,
TCW Asset Management Company and Trust
Company of the West
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
Address for Notices: TCW ASSET MANAGEMENT COMPANY, a Cslifornia
corporation, as Investment Manager pursuat
865 S. Figueroa Street, Suite 1800 to the Investment Management and Custody
Los Angles, CA 90017 Agreement dated as of October 27, 1997
Attn: Arthur R. Carlson between University of Notre Dame du Lac,
TCW Asset Management Company
and Trust Company of the West
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
E-52
<PAGE>
Address for Notices: TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant
865 S. Figueroa Street, Suite 1800 to the Investment Management and Custody
Los Angeles, CA 90017 Agreement dated as of October 24, 1997
Attn: Arthur R. Carlson between William N. Pennington Separate
Property Trust dated January 1, 1991,
TCW Asset Management Company and Trust
Company of the West
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
Address for Notices: TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant
865 S. Figueroa Street, Suite 1800 to the Investment Management Agreement
Los Angeles, CA 90017 dated as of October 27, 1997 between
Attn: Arthur R. Carlson Delta Air Lines, Inc., TCW Asset Management
Company and Trust Company of the West
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
E-53
<PAGE>
Address for Notices TRUST COMPANY OF THE WEST, a California
trust company, in its capacities as
865 S. Figueroa Street, Suite 1800 Investment Manager pursuant to the
Los Angeles, CA 90017 Investment Management Agreement dated as of
Attn: Arthur R. Carlson June 6, 1988 between General Mills, Inc. and
the Trust Company of the West and as
Custodian pursuant to the Custody Agreement
dated as of February 6, 1989 among
General Mills, Inc., the Trust Company
of the West and State Street Bank and
Trust Company, as trustee
By: /s/ THOMAS F. MEHLBERG
--------------------------
Thomas F. Mehlberg
Managing Director
By:/s/ ALVIN R. ALBE, JR.
-------------------------
Alvin R. Albe, Jr.
Executive Vice President,
Finance & Administration
E-54
<PAGE>
Address for Notices PACIFIC LIFE INSURANCE COMPANY,
a California stock insurer
700 Newport Center Drive
Newport Beach, CA 92660
Attn: W.R. Schmidt
Assistant Vice President
By: /s/ WILLIAM R. SCHMIDT
--------------------------
Assistant Vice President
By: /s/ DIANE W. DALLES
-----------------------
Assistant Secretary
Address for Notices AQUILA ENERGY CAPITAL CORPORATION,
a Delaware corporation
2 Houston Center
909 Fannin, Suite 1850
Houston, Texas 77010-1007
Attn: Kenneth F. Wyatt,
Vice President
By: /s/ KENNETH F. WYATT
------------------------
Kenneth F. Wyatt
Vice President
E-55
<PAGE>
SCHEDULE A
Number of Shares
Series A Series B
Holder 1999 Preferred 1999 Preferred
------- ---------------- --------------
TCW DEBT AND ROYALTY FUND VI, L.P., a
California limited partnership (95-4623776) 334,375 180,576
TCW DEBT AND ROYALTY FUND VIB, L.P., a 101,733 54,940
California limited partnership (95-4657858)
TRUST COMPANY OF THE WEST, a California trust 157,587 85,103
company, as Custodian for Eugenia III
Investment Holdings Limited
TRUST COMPANY OF THE WEST, a California trust 100,716 54,391
company, as Custodian for Allmerica Asset
Management, Inc. as agent for First Allmerica
Financial Life Insurance Company (04-1867050)
TRUST COMPANY OF THE WEST, a California trust 40,286 21,756
company, as Custodian pursuant to the Investment
Management and Custody Agreement dated as of
October 27, 1997 between University of Chicago,
TCW Asset Management Company and Trust Company
of the West (36-2177139)
TRUST COMPANY OF THE WEST, a California trust 33,086 17,868
company, as Custodian pursuant to the Investment
Management and Custody Agreement dated as of
October 27, 1997 between University of Notre Dame
du Lac, TCW Asset Management Company and Trust
Company of the West (35-0868188)
TRUST COMPANY OF THE WEST, a California trust 151,073 81,586
company, as Custodian pursuant to the Investment
Management and Custody Agreement dated as of
October 24, 1997 between William N. Pennington
Separate Property Trust dated January 1, 1991,
TCW Asset Management Company and Trust Company
of the West (###-##-####)
E-56
<PAGE>
Number of Shares
Series A Series B
Holder 1999 Preferred 1999 Preferred
------- ---------------- --------------
TRUST COMPANY OF THE WEST, a California trust 55,144 29,780
company, as Sub-Custodian for the Delta Master
Trust dated May 27, 1982, as amended, under the
sub-custody agreement and power of attorney
dated October 30, 1997 among Trust Company
of the West, Citibank F.S.B., as Trustee
and TCW Asset Management Company (36-6751614)
TRUST COMPANY OF THE WEST, a California trust 324,667 175,333
company, in its capacities as Investment Manager
pursuant to the Investment Management Agreement
dated as of June 6, 1988 with General Mills, Inc.
and as Custodian pursuant to the Custody Agreement
dated as of February 6, 1989 with General
Mills, Inc. and State Street Bank and
Trust Company, as trustee (41-0274440)
PACIFIC LIFE INSURANCE COMPANY 324,667 175,333
AQUILA ENERGY CAPITAL CORPORATION 324,667 175,333
------- -------
Total: 1,948,001 1,051,999
========= =========
E-57
CREDIT AGREEMENT
dated as of April 29, 1999
between
COMSTOCK RESOURCES, INC.,
COMSTOCK OIL & GAS, INC.,
COMSTOCK OIL & GAS - LOUISIANA, INC.,
COMSTOCK OFFSHORE, LLC,
and
THE BANKS PARTY HERETO,
THE FIRST NATIONAL BANK OF CHICAGO, AS ADMINISTRATIVE AGENT,
TORONTO DOMINION (TEXAS), INC., AS SYNDICATION AGENT
AND
PARIBAS, AS DOCUMENTATION AGENT
BANC ONE CAPITAL MARKETS, LEAD ARRANGER
E-58
<PAGE>
CREDIT AGREEMENT
THIS AGREEMENT, dated as of April 29, 1999, is among COMSTOCK RESOURCES,
INC. a Nevada corporation ("CRI"), COMSTOCK OIL & GAS, INC., a Nevada
corporation ("COG"), COMSTOCK OIL & GAS - LOUISIANA, INC., a Nevada corporation
("COGL"), COMSTOCK OFFSHORE, LLC, a Nevada limited liability company
("Offshore") (CRI, COG, COGL and Offshore may hereinafter collectively be
referred to as the "Borrowers"), the lenders party hereto from time to time
(collectively, the "Banks" and individually, a "Bank"), PARIBAS, as
documentation agent for the Banks (in such capacity, the "Documentation Agent"),
TORONTO DOMINION (TEXAS), INC., as syndication agent for the Banks (in such
capacity, the "Syndication Agent") and THE FIRST NATIONAL BANK OF CHICAGO, as
administrative agent for the Banks (in such capacity, the "Agent").
RECITALS
A. The Borrowers, the banks party thereto, Toronto Dominion (Texas), Inc.,
as syndication agent for such banks, and The First National Bank of Chicago, as
agent for such banks, executed a Credit Agreement dated as of December 23, 1998
(the "Existing Credit Agreement"), which amended and restated a Credit Agreement
September 24, 1998, which in turn amended and restated a Credit Agreement dated
December 9, 1997, which in turn amended and restated a Credit Agreement dated as
of August 13, 1996, which in turn amended and restated a Credit Agreement dated
as of May 1, 1996, which in turn amended and restated a Credit Agreement dated
as of July 31, 1995, which in turn amended and restated a Credit Agreement dated
as of September 30, 1994, as amended, and which in turn amended and restated a
Credit Agreement dated as of November 15, 1993, as amended.
B. The Borrowers have requested that the Banks amend and restate the
Existing Credit Agreement as herein provided, replacing and refinancing the
indebtedness thereunder with a secured revolving credit facility terminating
December 9, 2002 providing for revolving credit loans in the aggregate principal
amount of up to $162,500,000 (subject to limitations imposed by a Borrowing
Base), including a $5,000,000 letter of credit subfacility participated in by
all the Banks, and the Banks are willing to establish such a credit facility in
favor of the Borrowers and amend and restate the Existing Credit Agreement on
the terms and conditions herein set forth.
AGREEMENT
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree that the Existing Credit Agreement shall be
amended and restated as follows:
SECTION 1. Definitions
1.1 Certain Definitions. As used herein, the following terms shall have the
following respective meanings:
"Advances" shall mean any Loan or any Letter of Credit Advance.
"Advance Date" shall mean each date for the making, continuation or
conversion of an Advance as specified in the notice delivered by the Borrowers,
or any of them, permitted by this Agreement.
E-59
<PAGE>
"Affiliate", when used with respect to any Person shall mean any other
Person which, directly or indirectly, controls or is controlled by or is under
common control with such Person or any other Person which is owned 5% or more by
such Person or any Subsidiary or other Affiliate of such Person. For purposes of
this definition "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), with respect to any Person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"Applicable Margin" shall mean (a) 2.25% with respect to any Eurodollar
Loan or Letter of Credit Advance, (b) 1.25% with respect to any Floating Rate
Loan and (c) 0.50% with respect to commitment fees payable under Section 4.3(a).
"Bank Obligations" shall mean all indebtedness, obligations and
liabilities, whether now or hereafter arising, of the Borrowers to the Agent or
any Bank pursuant to any of the Loan Documents.
"Borrowing Base" shall mean an amount determined in accordance with the
procedures described in Section 9.14, and based upon the Agent's and the Banks'
customary and standard practices in lending to oil and gas companies generally,
including without limitation their standard engineering criteria and oil and gas
lending criteria (and it is acknowledged and agreed that such customary and
standard practices, including without limitation such engineering criteria and
oil and gas lending criteria, shall be determined by the Agent and each Bank, as
the case may be, in their sole discretion, and such determination shall be
conclusive and binding).
"Borrowing Base Deficiency" is defined in Section 4.1(c).
"Business Day" shall mean (i) with respect to any borrowing, payment or
rate selection of Eurodollar Loans, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capital Expenditures" shall mean, without duplication, any expenditures
for any purchase or other acquisition of any asset which would be classified as
a fixed or capital asset on a consolidated balance sheet of CRI and its
Subsidiaries prepared in accordance with GAAP.
"Capital Stock" shall mean (i) in the case of any corporation, all capital
stock and any securities exchangeable for or convertible into capital stock,
including without limitation the Preferred Stock, (ii) in the case of an
association or business entity, any and all shares, interests, participations,
rights or other equivalents of corporate stock (however designated) in or to
such association or entity, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distribution of
assets of, the issuing Person, and including, in all of the foregoing cases
described in clauses (i), (ii), (iii) or (iv), any warrants, rights or other
options to purchase or otherwise acquire any of the interests described in any
of the foregoing cases.
"Change in Control" shall mean (a) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
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<PAGE>
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of more than 50% of the outstanding shares of voting stock
of CRI, (b) COG, COGL, Offshore or any other present or future Borrower (other
than CRI) or Subsidiary shall cease to be a wholly-owned Subsidiary, directly or
indirectly, of CRI or (c) the Board of Directors of CRI shall not consist of a
majority of the Continuing Directors of CRI.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations thereunder.
"Collateral" shall have the meaning ascribed thereto in Section 5.1(a)
hereof.
"Commitments" shall mean, with respect to each Bank, the commitment of such
Bank to make Loans and assume a risk participation in Letter of Credit Advances
pursuant to Sections 2.1(a) and (b), in amounts not exceeding in aggregate
principal amount outstanding at any time the lesser of (i) the respective stated
Commitment amount for such Bank set forth next to the name of such Bank on the
signature pages hereof or established pursuant to Section 10.6, as the case may
be, as such amount may be reduced from time to time or (ii) the Pro Rata Share
of such Bank of the Elected Borrowing Limit in effect from time to time.
"Consent and Amendment of Security Documents" shall mean the consent and
amendment of security documents entered into by the Borrowers and the Agent
pursuant to this Agreement in substantially the form of Exhibit A, as amended or
modified from time to time.
"Consolidated" or "consolidated" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more Persons of
the amount signified by such term for all such Persons determined on a
consolidated basis and in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, total interest
and related expense (including, without limitation, that portion of any
capitalized lease obligation attributable to interest expense in conformity with
GAAP, amortization of debt discount, all capitalized interest, the interest
portion of any deferred payment obligations, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers
acceptance financing, the net costs and net payments under any interest rate
hedging, cap or similar agreement or arrangement, prepayment charges, agency
fees, administrative fees, commitment fees and capitalized transaction costs
allocated to interest expense) and all dividends, payments or other
distributions in respect to any class of Capital Stock or any dividend, payment
or distribution in connection with the redemption, repurchase, defeasance,
conversion, retirement or other acquisition, directly or indirectly, of any
shares of Capital Stock (excluding any of the foregoing paid solely in shares of
common stock of CRI) paid, payable or accrued during such period, without
duplication for any period, with respect to all outstanding Indebtedness of CRI
and its Subsidiaries and all Capital Stock of CRI, all as determined for CRI and
its Subsidiaries on a consolidated basis for such period in accordance with
GAAP.
"Consolidated Net Income" shall mean, for any period, the net income of CRI
and its Subsidiaries for such period, determined in accordance with GAAP.
"Contingent Liabilities" of any Person shall mean, as of any date, all
obligations of such Person or of others for which such Person is contingently
liable, as obligor, guarantor, surety or in any other capacity, or in respect of
which obligations such Person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business and
indemnifications typical and customary in the ordinary course of such Person's
oil and gas business in connection with operating agreements and other
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agreements executed in the ordinary course of such Person's oil and gas
business), including without limitation all reimbursement obligations of such
Person in respect of any letters of credit, surety bonds or similar obligations
and all obligations of such Person to advance funds to, or to purchase assets,
property or services from, any other Person in order to maintain the financial
condition of such other Person.
"Continuing Directors" of any Person shall mean the directors of such
Person on the Effective Date and each other director of such Person if such
other director's nomination for election to the Board of Directors of such
Person is recommended by a majority of the then Continuing Directors of such
Board of Directors or the holders of the Preferred Stock or of shares issued in
conversion or redemption of the Preferred Stock.
"Current Assets" and "Current Liabilities" shall mean all assets or
liabilities of CRI and its Subsidiaries, on a consolidated basis respectively,
which should be classified as current assets and current liabilities in
accordance with GAAP; provided that the calculation of Current Assets shall not
include receivables of the Borrowers owing by any Affiliate in excess of 120
days or subject to any dispute or offset or otherwise unacceptable, advances by
the Borrowers to any Affiliate or any asset classified as a Current Asset solely
because it is held for sale, and Current Liabilities shall not include the
current maturities of any Indebtedness of any Borrower for borrowed money which
by its terms has a final maturity more than one year from the date of any
calculation of Current Liabilities.
"Default" shall mean any Event of Default or any event or condition which
might become an Event of Default with notice or lapse of time or both.
"Disqualified Stock" shall mean any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"EBITDA" shall mean, for any period, the Consolidated Net Income for such
period taken as a single accounting period, plus, to the extent deducted in
determining such Consolidated Net Income, all depreciation, amortization and
depletion expense, and other non cash charges, Consolidated Interest Expense and
income taxes, provided that in determining Consolidated Net Income as used in
this definition the following shall be excluded, without duplication: (a) the
income of any Person accrued prior to the date such Person is merged into or
consolidated with a Borrower or such Person's assets are acquired by a Borrower,
(b) the proceeds of any insurance policy, (c) gains or losses from the sale,
exchange, transfer or other disposition of property or assets of any Borrower or
any of their Subsidiaries and related tax effects in accordance with GAAP and
(d) any extraordinary or non-recurring gains of any Borrower or any of their
Subsidiaries, and related tax effects in accordance with GAAP.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Environmental Laws" at any date shall mean all provisions of law, statute,
ordinances, rules, regulations, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by the government of the United States of
America or any foreign government or by any state, province, municipality or
other political subdivision thereof or therein or by any court, agency,
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instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of, or regulating the discharge of substances into,
the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with any successor statute thereto and the
regulations thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which (i) together with the Borrowers or any Subsidiary, would be
treated as a single employer under Section 414(b) or (c) of the Code or (ii) for
purposes of liability under Section 412(C)(11) of the Code, the lien created
under Section 412(n) of the Code or for a tax imposed for failure to meet
minimum funding standards under Section 4971 of the Code, a member of the same
affiliated service group (within the meaning of Section 401(m) of the Code) as
the Borrowers or any Subsidiary, or any other trade or business described in
clause (i) above.
"Elected Borrowing Limit" shall have the meaning ascribed thereto in
Section 9.14(d).
"Eurodollar Base Rate" shall mean, with respect to a Eurodollar Loan for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which First Chicago offers to place deposits in Dollars with
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, in the approximate amount of First Chicago's relevant
Eurodollar Loan and having a maturity approximately equal to such Eurodollar
Interest Period.
"Eurodollar Interest Period" or "Interest Period" shall mean, with respect
to a Eurodollar Loan, a period of one, two, three or six months commencing on a
Business Day selected by the Borrowers pursuant to this Agreement. Such
Eurodollar Interest Period shall end on the day which corresponds numerically to
such date one, two, three or six months thereafter, provided, however, that if
there is no such numerically corresponding day in such next, second, third or
sixth succeeding month, such Eurodollar Interest Period shall end on the last
Business Day of such next, second, third or sixth succeeding month. If a
Eurodollar Interest Period would otherwise end on a day which is not a Business
Day, such Eurodollar Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Eurodollar Interest Period shall end on the immediately
preceding Business Day.
"Eurodollar Loan" shall mean a Loan which bears interest at a Eurodollar
Rate.
"Eurodollar Rate" shall mean, with respect to a Eurodollar Loan for the
relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Applicable Margin.
"Event of Default" shall mean any of the events or conditions described in
Section 8.1.
"Federal Funds Rate" shall mean, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
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Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"First Chicago" shall mean The First National Bank of Chicago, a national
banking association, as a Bank under this Agreement.
"Floating Rate" shall mean the per annum rate equal to the sum of (a) with
respect to Loans and any other amounts owing hereunder, the Applicable Margin,
plus (b) the greater of (i) the per annum rate announced by the Agent from time
to time as its "corporate base rate", and (ii) the sum of one-half percent
(1/2%) per annum plus the Federal Funds Rate, such Floating Rate to change
simultaneously with any change in such "corporate base rate" or Federal Funds
Rate, as the case may be; all as conclusively determined in good faith by the
Agent, such sum to be rounded up, if necessary, to the nearest whole multiple of
1/16 of 1%.
"Floating Rate Loan" shall mean any Loan bearing interest at the Floating
Rate.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with that reflected in the financial statements referred to in
Section 6.7 hereof.
"Hydrocarbons" shall mean oil, gas casinghead, gas, drip gasoline, natural
gas and condensates and all other liquid or gaseous hydrocarbons.
"Indebtedness" of any Person shall mean, as of any date, (a) all
obligations of such Person for borrowed money, (b) all obligations which are
secured by any lien or encumbrance existing on property owned by such Person
whether or not the obligation secured thereby shall have been assumed by such
Person, other than those obligations which are incurred in the ordinary course
of business and are not required to be shown as a liability on a balance sheet
in accordance with GAAP, (c) all obligations as lessee under any lease which, in
accordance with GAAP, is or should be capitalized on the books of the lessee,
(d) the deferred purchase price for goods, property or services acquired by such
Person, and all obligations of such Person to purchase such goods, property or
services where payment therefor is required regardless of whether or not
delivery of such goods or property or the performance of such services is ever
made or tendered, other than unsecured trade payables incurred in the ordinary
course of business, (e) all obligations of such Person to advance funds to, or
to purchase property or services from, any other Person in order to maintain the
financial condition of such Person, (f) all obligations of such Person in
respect of any interest rate or currency swap, rate cap or other similar
transaction (valued in an amount equal to the highest termination payment, if
any, that would be payable by such Person upon termination for any reason on the
date of termination), and (g) all obligations of such Person or of others for
which such Person is contingently liable, as guarantor, surety or in any other
similar capacity, or in respect of which obligations such Person assures a
creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including without limitation all reimbursement
obligations of such Person in respect of any letters of credit, surety bonds or
similar obligations and all obligations of such Person to advance funds to, or
to purchase assets, property or services from, any other Person in order to
maintain the condition, financial or otherwise, of such other Person.
"Indenture" shall mean the Indenture among CRI, any guarantors and trustee
party thereto, dated as of the date hereof, as amended or modified from time to
time, and relating to the Indenture Notes.
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"Indenture Debt" shall mean all present and future Indebtedness and other
liabilities owing pursuant to the Indenture Notes or any other Indenture Debt
Document.
"Indenture Debt Documents" shall mean the Indenture, the Indenture Notes,
all guarantees and all other agreements and documents executed in connection
therewith at any time.
"Indenture Notes" shall mean the senior unsecured notes issued by CRI in
the aggregate principal amount of at least $150,000,000 due 2007 and issued
pursuant to the Indenture.
"Interest Payment Date" shall mean (a) with respect to each Eurodollar
Loan, the last day of each Eurodollar Interest Period with respect to such
Eurodollar Loan and, in the case of any Eurodollar Interest Period exceeding
three months, those days that occurred during such Eurodollar Interest Period at
intervals of three months after the first day of such Eurodollar Interest
Period, (b) in all other cases, the last Business Day of each month, commencing
with the first such day after the Effective Date, and (c) the Termination Date
with respect to Loans.
"Lending Installation" shall mean, with respect to a Bank or the Agent, any
office, branch, subsidiary or affiliate of such Bank or the Agent.
"Letter of Credit" shall mean a standby letter of credit having a stated
expiry date not later than twelve months after the date of issuance and not
later than the fifth Business Day before the Termination Date, issued by the
Agent on behalf of the Banks for the account of any Borrower under an
application and related documentation acceptable to the Agent requiring, among
other things, immediate reimbursement by the Borrowers to the Agent in respect
of all drafts or other demand for payment honored thereunder and all expenses
paid or incurred by the Agent relative thereto. Standby letters of credit which
are automatically renewed annually unless revoked shall be considered standby
letters of credit which have a stated expiry date not later than twelve months
after their date of issuance for purposes of this definition.
"Letter of Credit Advance" shall mean any issuance of a Letter of Credit
under Section 3.1 made pursuant to Section 2.1 in which each Bank acquires a
risk participation equal to its Pro Rata Share.
"Letter of Credit Documents" shall have the meaning ascribed thereto in
Section 3.3(b)(i).
"Lien" shall mean any pledge, assignment, hypothecation, mortgage, security
interest, deposit arrangement, option, conditional sale or title retaining
contract, sale and leaseback transaction, financing statement filing, lessor's
or lessee's interest under any lease, subordination of any claim or right, or
any other type of lien, charge, encumbrance, preferential arrangement or other
claim or right.
"Loan" means any loan under Section 3.1 evidenced by the Notes and made
pursuant to Section 2.1(a).
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, the environmental certificate and any other agreement, instrument or
document executed at any time pursuant to, in connection with, or otherwise
relating to this Agreement.
"Material Adverse Effect" shall mean a material adverse effect on or change
in (a) the business, property (including without limitation the Collateral),
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operations or condition, financial or otherwise, of the Borrowers on a
consolidated basis, (b) the ability of any Borrower to perform its obligations
under any Loan Document or (c) the validity or enforceability or the rights and
remedies of the Agent or any Bank under any Loan Document.
"Monthly Borrowing Base Reductions" is defined in Section 9.14.
"Mortgages" shall have the meaning ascribed thereto in Section 5.1.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"Note" shall mean any promissory note of the Borrowers evidencing the
Loans, in substantially the form annexed hereto as Exhibit B, as amended or
modified from time to time and together with any promissory note or notes issued
in exchange or replacement therefor.
"Oil and Gas Interests" shall mean all leasehold interests, mineral fee
interests, overriding royalty and royalty interests, net revenue and net working
interests and all other rights and interests relating to Hydrocarbons, including
without limitation any reserves thereof.
"Overdue Rate" shall mean (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of three percent (3%) per annum
plus the Floating Rate, (b) in respect of principal of Eurodollar Loans, a rate
per annum that is equal to the sum of three percent (3%) per annum plus the per
annum rate in effect thereon until the end of the then current Eurodollar
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Floating Rate, and (c) in
respect of other amounts payable by the Borrowers hereunder (other than
interest), a per annum rate that is equal to the sum of three percent (3%) per
annum plus the Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean the Liens permitted by Section 7.2(e) hereof.
"Person" shall include an individual, a corporation, an association, a
partnership, a trust or estate, a joint stock company, an unincorporated
organization, a joint venture, a government (foreign or domestic), and any
agency or political subdivision thereof, or any other entity.
"Plan" shall mean, with respect to any Person, any employee benefit or
other plan (other than a Multiemployer Plan) maintained by such Person for its
employees and covered by Title IV of ERISA or to which Section 412 of the Code
applies.
"Preferred Stock" shall mean the 1,948,001 shares of Series A 1999
Convertible Preferred Stock, Par Value $10.00 (the "Series A Preferred"), and
1,051,999 shares of Series B 1999 Non-Convertible Preferred Stock, Par Value
$10.00 (the "Series B Preferred"), and including any Series B Preferred
converted into Series A Preferred and any stock appreciation rights issued in
connection with the Preferred Stock Documents.
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"Preferred Stock Documents" shall mean the Preferred Stock and the stock
purchase agreement and all other agreements and documents executed in connection
therewith at any time.
"Pro Rata Share" shall mean, as to obligations of the Banks, the loan
percentage set forth opposite its name on the signature pages hereof or
otherwise established pursuant to Section 10.6, and as to obligations owing to
the Banks, shall mean: (a) in the case of payments of principal and interest on
the Loans, an amount with respect to each Bank equal to the product of such
amount received multiplied by the ratio which the outstanding principal balance
of its Note bears to the outstanding principal balance of all Notes, and (b) in
the case of all other amounts payable hereunder (other than as otherwise noted
with respect to fees) and other amounts, an amount with respect to each Bank
equal to the product of such amount received multiplied by the ratio which the
Commitment of such Bank bears to the Commitments of all Banks.
"Proved Developed Reserves" shall mean all Oil and Gas Interests which, to
the satisfaction of the Agent, are estimated, with reasonable certainty, and as
demonstrated by geological and engineering data acceptable to the Agent, to be
economically recoverable from existing wells requiring no more than minor
workover operations from existing completion intervals open for production and
which are producing, and have proven reserves of, Hydrocarbons.
"Reportable Event" shall mean a reportable event as described in Section
4043(b) of ERISA including those events as to which the thirty (30) day notice
period is waived under Part 2615 of the regulations promulgated by the PBGC
under ERISA.
"Required Banks" shall mean Banks holding not less than 66-2/3% of the
aggregate principal amount of the Advances then outstanding (or 66-2/3% of the
Commitments if no Advances are then outstanding).
"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Security Agreements" shall have the meaning ascribed thereto in Section
5.1.
"Security Documents" shall have the meaning ascribed thereto in Section
5.1.
"Subsidiary" of any Person shall mean any other Person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such Person or by one or more of the other Subsidiaries of such
Person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" shall mean a Subsidiary of CRI.
"Swap Agreement" shall mean any interest rate or oil and gas commodity swap
agreement, interest cap or collar agreement or other financial agreement or
arrangement designed to protect the Borrowers against fluctuations in interest
rates or oil and gas prices.
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"Tangible Net Worth" of any Person shall mean, as of any date, (a) the
amount of any capital stock or similar ownership liability plus (or minus in the
case of a deficit) the capital surplus and retained earnings of such Person and
the amount of any foreign currency translation adjustment account shown as a
capital account of such Person, less (b) the net book value of all items of the
following character which are included in the assets of such Person: (i)
goodwill, including without limitation, the excess of cost over book value of
any asset, (ii) organization or experimental expenses, (iii) unamortized debt
discount and expense, (iv) stock discount and expense, (v) patents, trademarks,
trade names and copyrights, (vi) treasury stock, (vii) deferred taxes and
deferred charges, (viii) franchises, licenses and permits, and (ix) all other
assets which are deemed intangible assets under GAAP; provided, that such
calculation of Tangible Net Worth under this definition shall not include
receivables of such Person which are owing by any Affiliate or advances by such
Person to any Affiliate.
"Termination Date" shall mean the earlier to occur of (a) December 9, 2002
and (b) the date on which the Commitments shall be terminated pursuant to
Section 2.1(c) or 8.2.
"Total Liabilities" of any Person shall mean, as of any date, all
obligations which, in accordance with GAAP, are or should be classified as
liabilities on a balance sheet of such Person.
"Type" shall mean, with respect to any Advance, its nature as a Floating
Rate Loan, Eurodollar Loan or Letter of Credit Advance.
"Year 2000 Issues" shall mean anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data including dates on and after January 1, 2000, as such inability
affects the business, operations, and financial condition of the Borrowers.
1.2 Other Definitions; Rules of Construction. As used herein, the terms
"Agent", "Banks", "CRI", "COG", "COGL", "Borrowers" and "this Agreement" shall
have the respective meanings ascribed thereto in the introductory paragraph of
this Agreement. Such terms, together with the other terms defined in Section
1.1, shall include both the singular and the plural forms thereof and shall be
construed accordingly. All computations required hereunder and all financial
terms used herein shall be made or construed in accordance with GAAP unless such
principles are inconsistent with the express requirements of this Agreement.
SECTION 2. The Commitments.
2.1 Advances. (a) Each Bank agrees, for itself only, to lend and to relend,
and to participate in Letter of Credit Advances pursuant to Section 3.1, in each
case subject to the terms and conditions of this Agreement, to the Borrowers at
any time and from time to time from the Effective Date until the Termination
Date amounts equal to such Bank's Pro Rata Share of such aggregate Advances as
any Borrower may from time to time request, provided that no Advances may be
made if the aggregate outstanding amount of all Advances to all Borrowers would
exceed the lesser of the Commitments or the Borrowing Base; provided, however,
that the aggregate principal amount of Letters of Credit outstanding at any time
shall not exceed $5,000,000. Each Loan made hereunder shall be evidenced by the
Notes, which shall mature and bear interest as set forth in Section 4 hereof and
in such Notes. On the Effective Date, the Borrowers shall issue and deliver to
each Bank a Note in the principal amount of such Bank's Commitment for the
period beginning on the Effective Date. Each Loan which is a Floating Rate Loan
shall be in a minimum amount of $500,000 and in integral multiples of $100,000
and each Loan which is a Eurodollar Loan shall be in a minimum amount of
$1,000,000 and in integral multiples of $1,000,000. No more than ten Eurodollar
Interest Periods shall be permitted to exist at any one time. Subject to the
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terms and onditions of this Agreement, the Borrowers may borrow, prepay pursuant
to Section 4.1(b) and reborrow under this Section 2.1(a).
(b) For purposes of this Agreement, a Letter of Credit Advance (i)
shall be deemed outstanding in an amount equal to the sum of the maximum amount
available to be drawn under the related Letter of Credit on or after the date of
determination and on or before the stated expiry date thereof plus the amount of
any draws under such Letter of Credit that have not been reimbursed as provided
in Section 3.3 and (ii) shall be deemed outstanding at all times on and before
such stated expiry date or such earlier date on which all amounts available to
be drawn under such Letter of Credit have been fully drawn, and thereafter until
all related reimbursement obligations have been paid pursuant to Section 3.3. As
provided in Section 3.3, upon each payment made by the Agent in respect of any
draft or other demand for payment under any Letter of Credit, the amount of any
Letter of Credit Advance outstanding immediately prior to such payment shall be
automatically reduced by the amount of each Loan deemed advanced in respect of
the related reimbursement obligation of the Borrowers.
(c) The Borrowers shall have the right to terminate or reduce the
Commitments at any time and from time to time, provided that (i) the Borrowers
shall give notice of such termination or reduction to the Agent specifying the
amount and effective date thereof, (ii) each partial reduction of the
Commitments shall be in a minimum amount of $1,000,000 and in integral multiples
of $1,000,000 and shall reduce the Commitments of all of the Banks
proportionally in accordance with the respective Commitment amounts of each such
Bank, (iii) no such termination or reduction, either in whole or part and
including without limitation any termination, shall be permitted with respect to
any portion of the Commitments as to which a request for Advances is then
pending, and (iv) the Commitments may not be terminated if any Advances are then
outstanding and may not be reduced below the principal amount of Advances then
outstanding. The Commitments or any portion thereof so terminated or reduced may
not be reinstated. Any Borrower may request Advances without the consent of any
other Borrower, and each Borrower consents to and approves any Advances
requested by any other Borrower. The Advances hereunder replace the revolving
credit loans and letters of credit outstanding pursuant to Section 2.1(a) of the
Existing Credit Agreement and provide additional credit as described above.
(d) This Agreement amends and restates the Existing Credit Agreement,
and all Advances and Letters of Credit outstanding under the Existing Credit
Agreement shall constitute Advances and Letters of Credit under this Agreement
and all fees and other obligations accrued under the Existing Credit Agreement
will continue to accrue and be paid under this Agreement. As stated in the Notes
and the Consent and Amendment to Security Documents, the Advances and other
obligations pursuant hereto are issued in exchange and replacement for the
Advances and other obligations under an Existing Credit Agreement, shall not be
a novation or satisfaction thereof and shall be entitled to the same collateral
with the same priority.
SECTION 3. The Advances.
3.1 Disbursement of Advances. (a) Borrowers shall give notice to the Agent
of each requested Advance in substantially the form of Exhibit C hereto, which
notice given shall be received by the Agent not later than 10:00 a.m. (Chicago
time), (i) three Business Days prior to the date such Advance is requested to be
made if such Advance is to be made as a Eurodollar Loan, (ii) one Business Day
prior to the date such Advance is requested to be made if such Advance is to be
made as a Floating Rate Loan and (iii) three Business Days prior to the date
such Advance is to be made if such Advance is to be made as a Letter of Credit
Advance. Each such notice given shall be irrevocable and binding on the
Borrowers, any such notice must specify the Advance Date, which shall be a
Business Day, the aggregate amount of such Advance, the Type of Advance
selected, in the case of any Eurodollar Loan, the Eurodollar Interest Period
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applicable thereto, and in the case of any Letter of Credit Advance such other
information and documents with respect thereto as may be required by the Agent.
The Agent shall provide notice of such requested Advance to each Bank on the
same Business Day such notice is received from the Borrowers. Subject to the
terms and conditions of this Agreement, the Agent shall, on the date any Letter
of Credit Advance is requested to be made, issue the related Letter of Credit on
behalf of the Banks for the account of the designated Borrower. Notwithstanding
anything herein to the contrary, the Agent may decline to issue any requested
Letter of Credit on the basis that the beneficiary, the purpose of issuance or
the terms or the conditions of drawing are illegal or contrary to a policy of
the Agent.
(b) Floating Rate Loans shall continue as Floating Rate Loans unless
and until such Floating Rate Loans are converted into Eurodollar Loans. Each
Eurodollar Loan of any Type shall continue as a Eurodollar Loan of such Type
until the end of the then applicable Interest Period therefor, at which time
such Eurodollar Loan shall be automatically converted into a Floating Rate Loan
unless the Borrower shall have given the Agent a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such Eurodollar Loan either
continue as a Eurodollar Loan for the same or another Interest Period or be
converted into a Loan of another Type. Subject to the terms of Section 2.1, the
Borrower may elect from time to time to convert all or any part of a Loan of any
Type into any other Type or Types of a Loan; provided that any conversion of any
Eurodollar Loan shall be made on, and only on, the last day of the Interest
Period applicable thereto. The Borrowers shall give the Agent irrevocable notice
(a "Conversion/Continuation Notice") of each conversion of a Loan or
continuation of a Eurodollar Loan not later than 10:00 a.m. (Chicago time) at
least one Business Day, in the case of a conversion into a Floating Rate Loan,
or three Business Days, in the case of a conversion into or continuation of a
Eurodollar Loan, prior to the date of the requested conversion or continuation,
specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Loan which is to be
converted or continued, and
(iii) the amount and Type(s) of Loan(s) into which such Loan is
to be converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Loan, the duration of the Interest Period
applicable thereto.
(c) Subject to the terms and conditions of this Agreement, the
proceeds of such requested Loan shall be made available to the Borrowers by
depositing the proceeds thereof, in immediately available funds, on the Advance
Date for such Loan in an account maintained and designated by the Borrowers at
the principal office of the Agent. Each Bank, on the Advance Date of each such
Loan shall make its Pro Rata Share of such Loan available in immediately
available funds at the principal office of the Agent for disbursement to the
Borrowers. Unless the Agent shall have received notice from any Bank prior to
the date of any requested Loan under this Section 3.1 that such Bank will not
make available to the Agent such Bank's Pro Rata Share, the Agent may assume
that such Bank has made such share available to the Agent on the Advance Date of
such Loan in accordance with this Section 3.1(b). If and to the extent such Bank
shall not have so made such Pro Rata Share available to the Agent, the Agent may
(but shall not be obligated to) make such amount available to the Borrowers on
the relevant Advance Date, and such Bank agrees to pay to the Agent forthwith on
demand such amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers by the Agent until the date such
amount is paid to the Agent, at the Federal Funds Rate. If such Bank shall pay
to the Agent such amount, such amount so paid shall constitute a Loan by such
Bank as a part of such borrowing for purposes of this Agreement. The failure of
any Bank to make its Pro Rata Share of any such Loan available to the Agent
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shall not relieve any other Bank of its obligations to make available its Pro
Rata Share of such Loan on the Advance Date of such Loan, but no Bank shall be
responsible for failure of any other Bank to make such Pro Rata Share available
to the Agent on the Advance Date of any such Loan.
(d) Each Bank may book its Loans at any Lending Installation selected
by such Bank and may change its Lending Installation from time to time. All
terms of this Agreement shall apply to any such Lending Installation and the
Notes shall be deemed held by each Bank for the benefit of such Lending
Installation. Each Bank may, by written or telex notice to the Agent and the
Borrowers, designate a Lending Installation through which Loans will be made by
it and for whose account Loan payments are to be made.
(e) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized that the
Agent has the sole obligation under this Agreement to issue Letters of Credit on
behalf of the Banks, and the Commitment of each Lender with respect to Letter of
Credit Advances is expressly conditioned upon the Agent's performance of such
obligations. Upon such issuance by the Agent, each Bank shall automatically and
unconditionally acquire a risk participation interest to the extent of its Pro
Rata Share in such Letter of Credit Advance based on its respective Commitment.
If the Agent shall honor a draft or other demand for payment presented or made
under any Letter of Credit, the Agent shall provide notice thereof to each Bank
on the date such draft or demand is honored unless the Borrowers shall have
satisfied their reimbursement obligation under Section 3.3 by payment to the
Agent on such date. Each Bank, not later than the Business Day after the Agent
shall have given the notice specified in the previous sentence, shall make its
Pro Rata Share of the amount paid by the Agent available in immediately
available funds at the principal office of the Agent for the account of the
Agent. If and to the extent such Bank shall not have made any required Pro Rata
Share amount available to the Agent or made its portion of Loan available
pursuant to Section 3.3(a)(i), such Bank and the Borrowers severally agree to
pay to the Agent forthwith on demand such amount together with interest thereon,
for each day from the date such amount was paid by the Agent until such amount
is so made available to the Agent at (i) the interest rate then applicable to
Floating Rate Loans for such day in the case of the Borrowers and (ii) the rate
per annum equal to the Federal Funds Rate for the first five days, and
thereafter at the interest rate applicable to Floating Rate Loans, in the case
of any Bank. If such Bank shall pay such amount to the Agent together with such
interest, such amount so paid shall constitute a Loan by such Bank as part of
the Loans disbursed in respect of the reimbursement obligation of the Borrowers
under Section 3.3 for purposes of this Agreement. The failure of any Bank to
make its Pro Rata Share of any such amount paid by the Agent available to the
Agent shall not relieve any other Bank of its obligation to make available its
Pro Rata Share of such amount, but no Bank shall be responsible for failure of
any other Bank to make such Pro Rata Share available to the Agent.
3.2 Conditions of Advances. The Banks and the Agent shall not be obligated
to make any Advance hereunder at any time unless:
(a) On the Effective Date, which may not be after May 14, 1999, there
shall have been delivered to each Bank the following documents, in form and
substance satisfactory to the Agent and the following additional conditions
shall have been satisfied:
(i) The favorable opinion of such counsel for the Borrowers as
shall be approved by the Required Banks, with respect to the matters as
requested by the Banks, all in form and substance satisfactory to the Required
Banks;
(ii) certified copies of such corporate documents of each
Borrower, including each Borrower's articles of incorporation, by-laws and a
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good standing certificate, and such documents evidencing necessary corporate
action with respect to this Agreement, the Loans, the Notes and the Security
Documents, and certifying to the incumbency of, and attesting to the genuineness
of the signatures of, those officers authorized to act on behalf of each
Borrower, as the Banks shall request;
(iii) the Security Documents required as of the Effective Date
under Section 5.1 duly executed on behalf of the Borrowers, together with
evidence of the recordation, filing and other action in such jurisdictions as
the Banks may deem necessary or appropriate with respect to the Security
Documents and evidence of the first-priority of the Banks' liens and security
interests under the Security Documents, subject only to Permitted Liens,
including without limitation such additional mortgages, security agreements,
pledge agreements, other documents and opinions of counsel required by the Banks
and original stock certificates and assignments separate from certificate of
each Person whose stock is required to be pledged;
(iv) the Notes duly executed on behalf of the Borrowers, and it
is acknowledged and agreed that the Notes: (A) are issued in exchange and
replacement for the promissory notes issued pursuant to the Existing Credit
Agreement, (B) shall not be deemed a novation or to have satisfied such
promissory notes and (C) evidence the same indebtedness evidenced by such
promissory notes plus additional indebtedness;
(v) the Consent and Amendment of Security Documents duly executed
by the Borrowers;
(vi) Payment of such fees agreed to among the Borrowers and the
Agent;
(vii) the execution by the Borrowers of the Agent's standard
environmental certificate;
(viii) the Banks shall have determined that the Loans to be made
are equal to or less than the Borrowing Base;
(ix) copies of all agreements relating to any material
Indebtedness for borrowed money, any outstanding preferred stock, any joint
ventures or partnerships or any other material documents requested by the Banks;
(x) the originals of all promissory notes payable to any
Borrower, other than promissory notes in an aggregate amount less than
$1,000,000;
(xi) (A) The Borrowers shall deliver evidence satisfactory to the
Agent that the Borrowers have issued the Indenture Notes in a face amount of not
less than $150,000,000 in accordance with the Indenture Debt Documents and the
Preferred Stock in an amount of not less than $30,000,000 in accordance with the
Preferred Stock Documents and that all net proceeds (net of customary fees and
expenses in connection therewith) of each of the foregoing shall have been used
to prepay the advances and other liabilities under the Existing Credit
Agreement, (B) all Indenture Debt Documents and the Preferred Stock Documents
shall have been delivered to the Agent and the Banks and shall be in form and
substance satisfactory to the Agent and (C) all transactions contemplated
pursuant to the Indenture Debt Documents and the Preferred Stock Documents shall
have been completed; and
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(xii) such other agreements, documents, conditions and
certificates as reasonably requested by the Banks, including without limitation,
releases and terminations of all other Liens which are not permitted hereunder
and amendments of existing Security Documents, all in form and substance
satisfactory to the Banks.
(b) The aggregate outstanding principal amount of all Advances after
giving effect to the proposed Advance, does not exceed the lesser of the
Commitments or the Borrowing Base.
(c) On and as of the date of each such Advance, the representations
and warranties contained in Section 6 hereof shall be true and correct in all
material respects as if made on such date; provided, however, that for purposes
of this Section 3.2(c) the representations and warranties contained in Section
6.7 hereof shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 7.1(d)(ii) and (iii).
(d) No Default or event or condition which could cause a Material
Adverse Effect has occurred and is continuing or will exist upon the
disbursement of such Advance.
Acceptance of the proceeds of any Advance hereunder by the Borrowers shall be
deemed to be a certification by the Borrowers at such time with respect to the
matters set forth in subparagraphs (b), (c) and (d) of this Section 3.2.
3.3 Letter of Credit Reimbursement Payments. (a)(i) The Borrowers agree to
pay to the Agent, on the day on which the Agent shall honor a draft or other
demand for payment presented or made under any Letter of Credit, an amount equal
to the amount paid by the Agent in respect of such draft or other demand under
such Letter of Credit and all expenses paid or incurred by the Agent relative
thereto. Unless the Borrowers shall have made such payment to the Agent on such
day, upon each such payment by the Agent, the Agent shall be deemed to have
disbursed to the Borrowers, and the Borrowers shall be deemed to have elected to
satisfy the reimbursement obligation by borrowing, a Loan bearing interest at
the Floating Rate for the account of the Banks in an amount equal to the amount
so paid by the Agent in respect of such draft or other demand under such Letter
of Credit. Such Loan shall be disbursed, and each Bank shall advance its Pro
Rata Share thereof, notwithstanding any failure to satisfy any conditions for
disbursement of any Loan set forth in Article III or any other condition and, to
the extent of the Loan so disbursed, the reimbursement obligation of the
Borrowers under this Section 3.3 shall be deemed satisfied; provided, however,
that such disbursement shall not be deemed to be a waiver of any Event of
Default or Default, if any.
(ii) If for any reason (including without limitation as a result
of the occurrence of an Event of Default pursuant to Section 6.1(h)), Floating
Rate Loans may not be made by the Banks as described in Section 3.3(a)(i), then
(A) the Borrowers agree that each reimbursement amount not paid pursuant to the
first sentence of Section 3.3(a)(i) shall bear interest, payable on demand by
the Agent, at the interest rate then applicable to Floating Rate Loans, and (B)
effective on the date each such Floating Rate Loan would otherwise have been
made, each Bank severally agrees that it shall unconditionally and irrevocably,
without regard to the occurrence of any Default or Event of Default, in lieu of
a deemed disbursement of Loans, to the extent of such Bank's Pro Rata Share,
purchase a participating interest in each reimbursement amount. Each Bank will
immediately transfer to the Agent, in same day funds, the amount of its
participation. Each Bank shall share in accordance with its Pro Rata Share
(calculated by reference to the Commitments) in any interest which accrues
thereon and in all repayments thereof. If and to the extent that any Bank shall
not have so made the amount of such participating interest available to the
Agent, such Bank and the Borrowers agree to pay to the Agent forthwith on demand
such amount together with interest thereon, for each day from the date of demand
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by the Agent until the date such amount is paid to the Agent, at (x) in the case
of the Borrowers, the interest rate then applicable to Floating Rate Loans and
(y) in the case of such Bank, the Federal Funds Rate for the first five days,
and thereafter the interest rate applicable to Floating Rate Loans.
(b) The reimbursement obligations of the Borrowers under this Section
3.3 shall be absolute, unconditional and irrevocable and shall remain in full
force and effect until all obligations of the Borrowers to the Agent and the
Banks hereunder shall have been satisfied, and such obligations of the Borrowers
shall not be affected, modified or impaired upon the happening of any event,
including without limitation, any of the following, whether or not with notice
to, or the consent of, the Borrowers:
(i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");
(ii) Any amendment, modification, waiver or consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents.
(iii) The existence of any claim, setoff, defense or other right
which the Borrowers may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom any such
beneficiary or any such transferee may be acting), the Agent or any Bank or any
other person or entity, whether in connection with any of the Letter of Credit
Documents, the transactions contemplated herein or therein or any unrelated
transactions;
(iv) Any draft or other statement or document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(v) Payment by the Agent to the beneficiary under any Letter of
Credit against presentation of documents which do not comply with the terms of
the Letter of Credit, including failure of any documents to bear any reference
or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on the part of the
Agent or any Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred upon the Agent,
any Bank or any such party under this Agreement or any of the Letter of Credit
Documents, or any other acts or omissions on the part of the Agent, any Bank or
any such party; or
(vii) Any other event or circumstance that would, in the absence
of this clause, result in the release or discharge by operation of law or
otherwise the Borrowers from the performance or observance of any obligation,
covenant or agreement contained in this Section 3.3. No setoff, counterclaim,
reduction or diminution of any obligation or any defense of any kind or nature
which the Borrowers have or may have against the beneficiary of any Letter of
Credit shall be available hereunder to the Borrowers against the Agent or any
Bank. Nothing in this Section 3.3 shall limit the liability, if any, of the
Borrowers to the Banks pursuant to Section 10.5(b).
3.4. Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Bank, each Bank that is not incorporated under the laws of the United States
of America, or a state thereof, agrees that it will deliver to each of the
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Borrowers and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Bank is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to each of
the Borrowers and the Agent two additional copies of such form (or a successor
form) on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrowers or the Agent,
in each case certifying that such Bank is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises the Borrowers
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.
SECTION 4. Payment and Prepayment; Fees; Change in Circumstances.
4.1 Principal Payments.
(a) Unless earlier payment is required under this Agreement, the
Borrowers shall pay the entire outstanding principal amount of the Advances on
the Termination Date.
(b) The Borrowers may from time to time prepay all or a portion of the
Advances without premium or penalty, provided, however, that (i) the Borrowers
shall have given not less than one Business Day's prior written notice thereof
to the Agent, (ii) other than mandatory payments, each such prepayment, in the
case of prepayment of Floating Rate Loans, shall be in the minimum amount of
$500,000 and in integral multiples of $100,000 and, in the case of prepayment of
Eurodollar Loans, shall be in the minimum amount of $1,000,000 and in integral
multiples thereof, (iii) any prepayment of any Eurodollar Loan shall be
accompanied by any amount required pursuant to Section 4.10.
(c) If it should be determined by the Agent at any time and from time
to time that the principal amount of the Advances exceed the lesser of the then
Borrowing Base or the Commitments (such condition defined herein as a "Borrowing
Base Deficiency"), the Borrowers shall within thirty (30) days of written notice
to the Borrowers of such Borrowing Base Deficiency, in addition to all other
payments of principal and interest required to be paid on the Advances, prepay
upon demand and without premium or penalty the Advances in an amount by which,
in the determination of the Agent, such aggregate principal amount outstanding
exceeds the lesser of the then Borrowing Base or the Commitments, provided that
such prepayment shall be made first on the Loans and if the Loans are paid in
full and such excess still exists, the Borrowers shall provide cash collateral
for any outstanding Letters of Credit to the extent of such remaining excess.
(d) In addition to all other payments required hereunder, upon any
sale or other disposition of any assets when a Default exists, or if such sale
or other disposition would cause a Default or would cause a required prepayment
of, or offer to purchase, the Indenture Notes, the Borrowers shall prepay the
Advances by an amount equal to 100% of the net proceeds (net only of reasonable
and customary costs of such sale or other disposition) of such sale or
disposition, which prepayment is due upon receipt of such net proceeds.
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(e) In addition to all other payments required hereunder, upon any
sale or other disposition of any assets when a Borrowing Base Deficiency exists,
or if such sale or other disposition would cause a Borrowing Base Deficiency,
the Borrower shall prepay the Advances by the amount of the Borrowing Base
Deficiency from the net proceeds (net only of any reasonable and customary costs
of such sale or other disposition) of such sale or disposition, which prepayment
is due upon receipt of such net proceeds.
Unless specified as a determination to be made by all Banks, all
determinations made pursuant to this Section 4.1 shall be made by the Agent or
the Required Banks, as the case may be, and shall be conclusively binding on the
parties absent manifest error.
4.2 Interest Payment. (a) The Borrowers shall pay interest to the Banks on
the unpaid principal amount of each Loan for the period commencing on the date
such Loan is made until such Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum: (i) during such periods
that such Loan is a Floating Rate Loan, the Floating Rate, and (ii) during such
periods that such Loan is a Eurodollar Loan, the Eurodollar Rate applicable to
such Loan for each related Eurodollar Interest Period.
(b) Notwithstanding the foregoing paragraph (a), the Borrowers hereby
agree, if requested by the Required Banks, to pay interest on demand at the
Overdue Rate on the outstanding principal amount of any Loan and any other
amount payable by the Borrowers hereunder (other than interest) upon and during
the continuance of any Default.
4.3 Fees. (a) The Borrowers agree to pay to the Agent, for the pro rata
account of the Banks in accordance with their Pro Rata Shares, a commitment fee
computed at the per annum rate equal to the Applicable Margin on the amount by
which the Borrowing Base exceeds the aggregate outstanding principal amount of
the Advances for the period from the Effective Date until the Termination Date.
Such fee shall be paid quarterly in arrears on the last Business Day of each
March, June, September and December and on the Termination Date.
(b) The Borrowers agree (i) to pay to the Agent, for the benefit of
the Banks, a fee computed at the Applicable Margin on the maximum amount
available to be drawn under each Letter of Credit at the time such fee is to be
paid for the period from and including the date of issuance of such Letter of
Credit to and including the stated expiry date of such Letter of Credit, and
(ii) to pay an additional fee to the Agent for its own account computed at the
rate of 0.25% per annum on such maximum amount for such period. Such fees shall
be payable each month in advance, payable on the date of the issuance of any
Letter of Credit and each month thereafter. Such fees are nonrefundable and the
Borrowers shall not be entitled to any rebate of any portion thereof if such
Letter of Credit does not remain outstanding through the date for which such
fees have been paid. The Borrowers further agree to pay to the Agent, on demand,
such other customary administrative fees, charges and expenses of the Agent in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of each Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(c) The Borrowers agree to pay to the Agent, for the pro rata benefit
of the Banks, an upfront fee equal to 0.50% of the amount of the Commitment of
each Bank, payable on the Effective Date.
(d) The Borrowers agree to pay to the Agent agency and servicing fees
for its services under this Agreement in such amounts as it may from time to
time be agreed upon between the Borrowers and the Agent, which fee shall be
retained solely by the Agent.
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4.4 Payment Method. All payments to be made by the Borrowers hereunder will
be made in Dollars and in immediately available funds to the Agent at its
address set forth in Section 10.2 not later than 11:00 a.m. Chicago time on the
date on which such payment shall become due. Payments received after 11:00 a.m.
Chicago time shall be deemed to be payments made prior to 11:00 a.m. Chicago
time on the next succeeding Business Day. At the time of making each such
payment, the Borrowers shall specify to the Agent that obligation of the
Borrowers hereunder to which such payment is to be applied, or, in the event
that the Borrowers fail to so specify or if an Event of Default shall have
occurred and be continuing, the Agent may apply such payments as it may
determine in its sole discretion. On the day such payments are received, the
Agent shall remit to the Banks their respective Pro Rata Shares of such
payments, in immediately available funds.
4.5 No Setoff or Deduction. All payments of principal of and interest on
the Advances and other amounts payable by the Borrowers hereunder shall be made
by the Borrowers without setoff or counterclaim, and free and clear of, and
without deduction or withholding for, or on account of, any present or future
taxes, levies, imposts, duties, fees, assessments, or other charges of whatever
nature, imposed by any governmental authority, or by any department, agency or
other political subdivision or taxing authority.
4.6 Payment on Non-Business Day; Payment Computations. Except as otherwise
provided in this Agreement to the contrary, whenever any installment of
principal of, or interest on, any Advances outstanding hereunder or any other
amount due hereunder, becomes due and payable on a day which is not a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
and, in the case of any installment of principal, interest shall be payable
thereon at the rate per annum determined in accordance with this Agreement
during such extension. Computations of interest and other amounts due under this
Agreement shall be made on the basis of a year of 360 days for the actual number
of days elapsed, including the first day but excluding the last day of the
relevant period.
4.7. Yield Protection. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof, or the compliance of any Bank
therewith,
(i) subjects any Bank or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the Borrowers
(excluding federal taxation of the overall net income of any Bank or applicable
Lending Installation), or changes the basis of taxation of payments to any Bank
in respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any Bank
or any applicable Lending Installation (other than reserves and assessments
taken into account in determining the interest rate applicable to Eurodollar
Loans), or
(iii) imposes any other condition the result of which is to
increase the cost to any Bank or any applicable Lending Installation of making,
funding or maintaining loans or reduces any amount receivable by any Bank or any
applicable Lending Installation in connection with loans, or requires any Bank
or any applicable Lending Installation to make any payment calculated by
reference to the amount of loans held or interest received by it, by an amount
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deemed material by such Bank, then, within 30 days of demand by such Bank, the
Borrowers shall pay such Bank that portion of such increased expense incurred or
reduction in an amount received which such Bank determines is attributable to
making, funding and maintaining its Loans and its Commitment.
4.8. Changes in Capital Adequacy Regulations. If a Bank determines the
amount of capital required or expected to be maintained by such Bank, any
Lending Installation of such Bank or any corporation controlling such Bank is
increased as a result of a Change, then, within 15 days of demand by such Bank,
the Borrowers shall pay such Bank the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital which
such Bank determines is attributable to this Agreement, its Advances or its
Commitment (after taking into account such Bank's policies as to capital
adequacy). "Change" means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Bank or any Lending Installation or any corporation
controlling any Bank. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
4.9. Availability of Types of Advances. If any Bank determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Banks determine that (i) deposits of
a type and maturity appropriate to match fund Eurodollar Loans are not available
or (ii) the interest rate applicable to a Type of Advance does not accurately
reflect the cost of making or maintaining such Advance, then the Agent shall
suspend the availability of the affected Type of Advance and require any
Eurodollar Loans of the affected Type to be repaid.
4.10. Funding Indemnification. If any payment of a Eurodollar Loan occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Loan is not
made on the date specified by the Borrowers for any reason other than default by
the Banks, the Borrowers will indemnify each Bank for any loss or cost incurred
by it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Eurodollar
Loan.
4.11. Bank Statements; Survival of Indemnity. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrowers to such
Bank under Sections 4.7 and 4.8 or to avoid the unavailability of a Type of
Advance under Section 4.9, so long as such designation is not disadvantageous to
such Bank. Each Bank shall deliver a written statement of such Bank to the
Borrowers (with a copy to the Agent) as to the amount due, if any, under
Sections 4.7, 4.8 or 4.10. Such written statement shall set forth in reasonable
detail the calculations upon which such Bank determined such amount and shall be
final, conclusive and binding on the Borrowers in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Loan shall be calculated as though each Bank funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Bank shall be
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payable on demand after receipt by the Borrowers of such written statement. The
obligations of the Borrowers under Sections 4.7, 4.8 and 4.10 shall survive
payment of the Bank Obligations and termination of this Agreement.
SECTION 5. Security
5.1 Security Documents. To secure all indebtedness, obligations and
liabilities under this Agreement, the Notes, the Security Documents, the
Advances, any Swap Agreements among any Borrower and any Lender and to secure
all other Indebtedness and obligations of the Borrowers to the Agent and the
Banks pursuant thereto, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, the Borrowers shall:
(a) Execute and deliver to the Agent, promptly upon the request of the
Agent or the Required Banks, such indentures of mortgage, deeds of trust,
security agreements, financing statements and assignment of production and other
agreements, including without limitation any amendments to any such documents
previously executed and delivered in favor of the Agent or any Bank (as amended
or modified from time to time, the "Mortgages" and together with the Security
Agreements, and all agreements and documents described in this Section 5.1(a) or
in 5.1(b) or 5.2 and all other agreements and documents securing any of the Bank
Obligations at any time or otherwise executed by any Borrower with or in favor
of the Agent and the Banks, and including without limitation the Letter of
Credit Documents, as amended or modified from time to time, the "Security
Documents"), in form and substance satisfactory to the Required Banks, granting
the Agent, for the benefit of the Banks, a first-priority, perfected and
enforceable lien and security interest, subject only to the Permitted Liens, in
the following (collectively, with all other assets described in Section 5.1(b),
the "Collateral"): all oil, gas and mineral properties and all other assets of
the Borrowers as requested at any time by the Required Banks, including without
limitation all leasehold and royalty interests and all other rights in
connection therewith, and all interests in machinery, equipment, materials,
improvements, hereditaments, appurtenances and other property, real, Personal
and/or mixed, now or hereafter a part of or obtained in or used in connection
with such properties and all interests in and to any and all oil, gas and other
minerals now in storage or now or hereafter located in, under, on or produced
from, such properties and an assignment of production from such properties to
the Agent;
(b) Execute and deliver to the Agent, on or before the Effective Date,
such security agreements, pledge agreements, financing statements and other
agreements, including without limitation the Consent and Amendment of Security
Documents confirming the continuing effectiveness of Security Documents
previously executed and delivered to the Agent or any Bank (as amended or
modified from time to time, the "Security Agreements"), in form and substance
satisfactory to the Required Banks, granting to the Agent, for the benefit of
the Banks, a first-priority, perfected and enforceable lien and security
interest, subject only to the Permitted Liens, in all other assets, whether
real, personal or mixed, and whether now owned or hereafter existing and
wherever located, of the Borrowers.
5.2 Additional Security Documents. If at any time requested by the Agent or
the Required Banks, the Borrowers shall execute and deliver such additional
documents, and shall take such other action, as the Agent or the Required Banks
may reasonably consider necessary or proper to evidence or perfect the liens and
security interests described in Section 5.1 hereof.
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SECTION 6. Representations and Warranties.
Each of the Borrowers represents and warrants that:
6.1 Corporate Existence and Power. It is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified to do business and in good standing in each
additional jurisdiction where failure to so qualify would have a Material
Adverse Effect. It has all requisite corporate power to own its properties and
to carry on its business as now being conducted and as proposed to be conducted,
and to execute and deliver this Agreement, the Notes and the Security Documents
and to engage in the transactions contemplated by this Agreement, the Notes and
the Security Documents.
6.2 Corporate Authority. The execution, delivery and performance by it of
this Agreement, the Notes and the Security Documents are within its corporate
powers, have been duly authorized by all necessary corporate action and are not
in contravention of any law, rule or regulation, or any judgment, decree, writ,
injunction, order or award of any arbitrator, court or governmental authority,
or of the terms of its charter or by-laws, or of any contract or undertaking to
which it is a party or by which it or its property may be bound or affected.
6.3 Binding Effect. This Agreement is, and the Notes and the Security
Documents to which it is a party when delivered hereunder will be, legal, valid
and binding obligations of each Borrower, enforceable against each in accordance
with their respective terms.
6.4 Subsidiaries. All Subsidiaries of CRI are duly organized, validly
existing and in good standing under the laws of their jurisdictions of
organization and are duly qualified to do business in each jurisdiction where
failure to so qualify would have a Material Adverse Effect. All outstanding
shares of Capital Stock of each class of each Subsidiary of CRI have been and
will be validly issued and are and will be fully paid and nonassessable and are
and will be owned, beneficially and of record, by CRI, free and clear of any
Liens. Schedule 6.4 is a complete list of all Subsidiaries of CRI. COG is and
will remain a wholly owned subsidiary of CRI and COGL is and will remain a
wholly owned subsidiary of COG, and Offshore is and will remain a wholly owned
subsidiary of COGL.
6.5 Liens. The properties of each Borrower and each Subsidiary of any
Borrower (including without limitation the Collateral) are not subject to any
Lien except Permitted Liens.
6.6 Litigation. There is no action, suit or proceeding pending or, to the
best of its knowledge, threatened against or affecting it before or by any
court, governmental authority, or arbitrator which would be reasonably likely to
result in, either individually or collectively, a Material Adverse Effect and,
to the best of the Borrowers' knowledge, there is no basis for any such action,
suit or proceeding.
6.7 Financial Condition. The consolidated balance sheet of CRI and its
Subsidiaries and the consolidated statements of income and cash flow of CRI and
its Subsidiaries for the fiscal year ended December 31, 1998 and reported on by
Arthur Andersen, LLP, copies of which have been furnished to the Banks, fairly
present, and the financial statements of CRI and its Subsidiaries to be
delivered pursuant to Section 7.1(d) will fairly present, the consolidated
financial position of CRI and its Subsidiaries as of the respective dates
thereof, and the consolidated results of operations of CRI and its Subsidiaries
for the respective periods indicated, all in accordance with generally accepted
accounting principles consistently applied. There has been no event or
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development which has had or would be reasonably likely to have a Material
Adverse Effect since December 31, 1998. There is no material Contingent
Liability of CRI or any of its Subsidiaries that is not reflected in such
financial statements or in the notes thereto.
6.8 Use of Advances. The Advances will be used for working capital and
general corporate purposes. No Borrower extends or maintains, in the ordinary
course of business, credit for the purpose, whether immediate, incidental, or
ultimate, of buying or carrying margin stock (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of each Advance will be used for the purpose, whether immediate,
incidental, or ultimate, of buying or carrying any such margin stock or
maintaining or extending credit to others for such purpose. After applying the
proceeds of the Advances, such margin stock will not constitute more than 25% of
the value of the assets that are subject to any provisions of this Agreement or
any Security Document that may cause the Advances to be secured, directly or
indirectly by margin stock.
6.9 Security Documents. The Security Documents create a valid and
enforceable first-priority lien on and perfected security interest in all right,
title and interest of each Borrower in and to the Collateral described therein,
securing all amounts intended to be secured thereby (including without
limitation all principal of and interest on the Notes) subject only to the
Permitted Liens. The respective net revenue interests of each Borrower in and to
the Oil and Gas Interests as set forth in the Security Documents are true and
correct and accurately reflect the interests to which each Borrower is legally
entitled, subject only to the Permitted Liens.
6.10 Consents, Etc. No consent, approval or authorization of or
declaration, registration or filing with any governmental authority or any
nongovernmental Person or entity, including without limitation any creditor or
stockholder of it, is required on the part of it in connection with the
execution, delivery and performance of this Agreement, the Notes, the Security
Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of this Agreement, the Notes or any of the
Security Documents.
6.11 Taxes. It has filed all tax returns (federal, state and local)
required to be filed and has paid all taxes shown thereon to be due, including
interest and penalties, or has established adequate financial reserves on its
books and records for payment thereof, except where the failure to do so would
not have a Material Adverse Effect.
6.12 Title to Properties. It has good and defensible title to, and a valid
indefeasible ownership interest in, all of its properties and assets (including,
without limitation, the Collateral subject to the Security Documents) free and
clear of any Lien except the Permitted Liens, and it is the owner of all the
Collateral described in the Security Documents to which it is a party. All wells
on any of the mortgaged premises have been drilled, operated, shut-in, abandoned
or suspended in accordance with good oil and gas field practices and in
compliance with all applicable laws, permits, statutes, orders, licenses, rules
and regulations. All leases with respect to any Oil and Gas Interests owned by
any Borrower are in good standing and are in full force and effect, all
royalties, rents, taxes, assessments and other payments thereunder or with
respect thereto have been properly and timely paid and all conditions necessary
to keep such leases in full force have been fully performed, including without
limitation any condition to maintain continuous production or other activity
with respect thereto. The Borrowers have delivered to the Agent title opinions
satisfactory to the Agent and the Agent's counsel with respect to at least 80%
of the value of the assets included in the Borrowing Base.
6.13 ERISA. CRI and its Subsidiaries and their Plans are in compliance in
all material respects with those provisions of ERISA and of the Code which are
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applicable with respect to any Plan. No prohibited transaction (as defined in
Section 406 of ERISA and Section 9975 of the Code) and no reportable event (as
defined in ERISA) has occurred with respect to any Plan. Neither CRI, any of its
Subsidiaries nor any of its ERISA Affiliates is an employer with respect to any
multiemployer plan (as defined in Section 4001(a)(3) of ERISA). CRI, its
Subsidiaries and the ERISA Affiliates have met the minimum funding requirements
under ERISA and the Code with respect to each of the respective Plans, if any,
and have not incurred any liability to the PBGC or any Plan. There is no
unfunded benefit liability with respect to any Plan.
6.14 Environmental and Safety Matters. It is in compliance in all material
respects with all federal, state and local laws, ordinances and regulations
relating to safety and industrial hygiene or to the environmental condition,
including without limitation all Environmental Laws in jurisdictions in which it
owns any interest in or operates, a well, a facility or site, or arranges for
disposal or treatment of hazardous substances, solid waste, or other wastes,
accepts for transporting any hazardous substances, solid waste, or other wastes,
or holds any interest in real property or otherwise, except where any such
noncompliance would not have a Material Adverse Effect. No demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by any governmental authority, private Person or entity
or otherwise, arising under, relating to or in connection with any Environmental
Laws is pending or, to the best of any Borrower's knowledge, threatened against
it, any real property in which it holds or has held an interest or any past or
present operation of it. It (a) does not know of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic substances, radioactive materials, hazardous wastes or
related materials into the environment, (b) has not received any notice of any
toxic substances, radioactive materials, hazardous waste or related materials
in, or upon any of its properties in violation of any Environmental Laws, and
(c) does not know of any basis for any such investigation, notice or violation.
No material release, threatened release or disposal of hazardous waste, solid
waste or other wastes is occurring or has occurred on, under or to any real
property in which it holds any interest or performs any of its operations, in
violation of any Environmental Law which would have a Material Adverse Effect.
6.15 Direct Benefit. The initial Advances hereunder and all additional
Advances are for the direct benefit of each of the Borrowers, and the initial
Advances hereunder are used to refinance and replace indebtedness owing,
directly or indirectly, by the Borrowers to the Banks under the Existing Credit
Agreement. The Borrowers are engaged as an integrated group in the business of
oil and gas exploration and related fields, and any benefits to any Borrower is
a benefit to all of them, both directly or indirectly, inasmuch as the
successful operation and condition of the Borrowers is dependent upon the
continued successful performance of the functions of the integrated group as a
whole.
6.16 Solvency. Each of the following is true for each Borrower and the
Borrowers on a consolidated basis: (a) the fair saleable value of its property
is (i) greater than the total amount of its liabilities (including contingent
liabilities), and (ii) greater than the amount that would be required to pay its
probable aggregate liability on its then existing debts as they become absolute
and matured; (b) its property is not unreasonable in relation to its business or
any contemplated or undertaken transaction; and (c) it does not intend to incur,
or believe that it will incur, debts beyond its ability to pay such debts as
they become due.
6.17 Disclosure. This Agreement and all other documents, certificates,
reports or statements or other information furnished to any Bank or the Agent in
writing by or on behalf of any Borrower in connection with the negotiation or
administration of this Agreement or any transactions contemplated hereby when
read together do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact known to any Borrower which has
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caused, or which likely would in the future in the reasonable judgment of the
Borrowers cause, a Material Adverse Effect (except for any economic conditions
which affect generally the industry in which the Borrowers and their
Subsidiaries conduct business), which has not been set forth in this Agreement
or in the other documents, certificates, statements, reports and other
information furnished in writing to the Banks by or on behalf of any Borrower in
connection with the transactions contemplated hereby.
6.18 Indenture Debt Documents and Preferred Stock Documents. All
representations and warranties of the Borrowers contained in any Indenture Debt
Document or Preferred Stock Document are true and correct in all material
respects. CRI has issued the Indenture Notes in the face amount of at least
$150,000,000 on or prior to the Effective Date and all Indenture Debt Documents
have been delivered to the Agent and the Banks prior to the Effective Date. CRI
has issued the Preferred Stock in the amount of $30,000,000 on or prior to the
Effective Date and all Preferred Stock Documents have been delivered to the
Agent and the Banks prior to the Effective Date. There is no event of default or
event or condition which could become an event of default with notice or lapse
of time or both, under the Indenture Debt Documents or Preferred Stock Documents
and each of the Indenture Debt Documents and the Preferred Stock Documents is in
full force and effect.
6.19 Year 2000. The Borrowers have made a full and complete assessment of
the Year 2000 Issues. Based on such assessment, the Borrowers do not reasonably
anticipate that Year 2000 Issues will have a Material Adverse Effect.
SECTION 7. Covenants.
7.1 Affirmative Covenants. Each Borrower covenants and agrees that, until
the payment in full of the principal of and accrued interest on the Notes, the
expiration of this Agreement and all Letters of Credit and the payment and
performance of all other obligations of the Borrowers under this Agreement, the
Notes and the Security Documents, unless the Required Banks shall otherwise
consent in writing, each of the Borrowers shall:
(a) Preservation of Corporate Existence, Etc. Preserve and maintain
its corporate existence, rights and privileges and its material licenses,
franchises and permits, and qualify and remain qualified as a validly existing
corporation in good standing in each jurisdiction in which such qualification is
necessary under applicable law.
(b) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental
authority, whether federal, state, local or foreign (including without
limitation ERISA, the Code and Environmental Laws), in effect from time to time;
and pay and discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income, revenues or property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
give rise to Liens upon such properties or any portion thereof, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on its books and records.
(c) Maintenance of Properties; Insurance. Maintain, preserve and
protect all property that is material to the conduct of its business and keep
such property in good repair, working order and condition and from time to time
make, or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
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carried on in connection therewith may be properly conducted at all times in
accordance with customary and prudent business practices for similar businesses;
comply with all applicable permits, statutes, laws, orders, licenses, rules and
regulations relating to the Oil and Gas Interests owned by it, unless any non
compliance would not cause a Material Adverse Effect, and ensure that all wells
and other properties operated by it, either in its own name or as a partner, are
operated in accordance with prudent oil and gas field practices; comply with all
of its duties and obligations under, and take all actions to maintain,
consistent with prudent oil and gas practices, all leases and other rights in
full force and effect; and, in addition to that insurance required under the
Security Documents, maintain in full force and effect insurance with responsible
and reputable insurance companies or associations in such amounts, on such terms
and covering such risks, including fire and other risks insured against by
extended coverage, as is usually carried by companies engaged in similar
businesses and owning similar properties similarly situated and maintain in full
force and effect public liability insurance, insurance against claims for
personal injury or death or property damage occurring in connection with any of
its activities or any of any properties owned, occupied or controlled by it, in
such amount as it shall reasonably deem necessary, and maintain such other
insurance as may be required by law or as may be reasonably requested by the
Banks for purposes of assuring compliance with this Section 7.1(c).
(d) Reporting Requirements. Furnish to each Bank, in form and
substance satisfactory to the Required Banks, the following:
(i) Promptly and in any event within three calendar days after
becoming aware of the occurrence of (A) any Default, (B) the commencement of any
material litigation against, by or affecting the Borrowers and, upon request by
any Bank, any material developments therein, or (C) any development in the
business or affairs of the Borrowers which has resulted in, or which is likely
in the reasonable judgment of the Borrowers to result in (including without
limitation the entering into of any material contract and/or undertaking by the
Borrowers) a Material Adverse Effect or (D) any "reportable event" (as defined
in ERISA) under, or the institution of steps by the Borrowers or any Subsidiary
to withdraw from, or the institution of any steps to terminate, any Plan, a
statement of the chief financial officer of the Borrowers setting forth details
of such Default or such event or condition or such litigation and the action
which CRI or any Subsidiary has taken and proposes to take with respect thereto;
(ii) As soon as available and in any event within 45 days after
the end of each fiscal quarter of CRI, the consolidated balance sheets of CRI
and its Subsidiaries as of the end of such quarter, and the related consolidated
statements of income and cash flow for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by an appropriate officer of
the Borrowers as having been prepared in accordance with generally accepted
accounting principles, together with a certificate of an appropriate officer of
the Borrowers with a computation in reasonable detail calculating the covenants
contained in Sections 7.2(a), (b), (c), (i) and (j);
(iii) As soon as available and in any event within 120 days after
the end of each fiscal year, a copy of the consolidated balance sheet of CRI and
its Subsidiaries for such fiscal year and related statements of income and cash
flow with a customary audit report thereon by Arthur Andersen LLP or other
independent certified public accountants selected by CRI and acceptable to the
Banks, without qualifications unacceptable to the Banks, together with a
certificate of such accountants stating that they have reviewed this Agreement
and stating further that in making their review in accordance with generally
accepted accounting principles nothing came to their attention that made them
believe that any Default exists, or if their examination has disclosed the
existence of any Default, specifying the nature, period of existence and status
thereof, together with a certificate of an appropriate officer of the Borrowers
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with a computation in reasonable detail calculating the covenants contained in
Sections 7.2(a), (b), (c), (i) and (j) hereof;
(iv) Upon the request of the Required Banks or the Agent, a
schedule of all oil, gas, and other mineral production attributable to all
material Oil and Gas Interests of the Borrowers, and in any event all such Oil
and Gas Interests included in the Borrowing Base;
(v) Promptly, all title or other information received after the
Effective Date by any Borrower which discloses any material defect in the title
to any material asset included in the Borrowing Base;
(vi) As soon as practicable and in any event within 30 days after
the sending or filing thereof, copies of all such financial statements and
reports as it shall send to its security holders and of all final prospectuses
under the Securities Act of 1933 (other than Form S-8), reports on Forms 10-Q,
10- K and 8-K and all similar regular and periodic reports filed by it (i) with
any federal department, bureau, commission or agency from time to time having
jurisdiction with respect to the sale of securities or (ii) with any securities
exchange;
(vii) (A) As soon as available and in any event within 90 days
after each January 1, commencing with January 1, 1999, an annual reserve report
as of each such January 1 with respect to all Hydrocarbon reserves of the
Borrowers prepared by an independent engineering firm of recognized standing
acceptable to the Required Banks in accordance with accepted industry practices
and otherwise acceptable and in form and substance satisfactory to the Required
Banks, and including without limitation all assets included in the Borrowing
Base, and (B) within 90 days after each July 1 thereafter, a reserve report as
of such July 1, with respect to all Hydrocarbon reserves of the Borrowers
prepared by the Borrowers in accordance with accepted industry practices and
otherwise acceptable and in form and substance satisfactory to the Required
Banks, and including without limitation all assets included in the Borrowing
Base;
(viii) On or within 30 days after the request of the Agent or the
Required Banks, in connection with a redetermination of the Borrowing Base
permitted under Section 9.14 an updated reserve report with respect to all
Hydrocarbon reserves of the Borrowers prepared by an independent engineering
firm of recognized standing acceptable to the Required Banks in accordance with
accepted industry practices and otherwise acceptable and in form and substance
satisfactory to the Required Banks, and including without limitation all assets
included in the Borrowing Base;
(ix) Promptly, any management letter from the auditors for any
Borrower and all other information respecting the business, properties or the
condition or operations, financial or otherwise, including, without limitation,
geological and engineering data of any Borrower and any title work with respect
to any Oil and Gas Interests of any Borrower as any Bank may from time to time
reasonably request;
(x) At all times after the date ninety (90) days after the
Effective Date, if requested by the Required Banks, title opinions and other
opinions of counsel, in each case in form and substance acceptable to the
Required Banks, with respect to at least eighty (80%) percent of the value of
the assets included in the Borrowing Base; and
(xi) As soon as available and in any event within 45 days after
the end of each month, the consolidated balance sheet of CRI and its
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Subsidiaries as of the end of such month, and the related consolidated
statements of income and cash flow for the period commencing at the end of the
previous fiscal year and ending with the end of such month, all in reasonable
detail and duly certified (subject to year-end audit adjustments) by an
appropriate officer of the Borrowers as having been prepared in accordance with
generally accepted accounting principles, and
(xii) The Borrowers will advise the Agent of any reasonably
anticipated Material Adverse Effect as a result of Year 2000 Issues and will
take all actions reasonably necessary to assure that the Year 2000 Issues will
not have a Material Adverse Effect.
(e) Access to Records, Books, Etc. At any reasonable time and from
time to time, permit any Bank or any agents or representatives thereof, at the
Borrowers' own expense, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrowers, and
to discuss the affairs, finances and accounts of the Borrowers with their
respective officers and employees. Without limiting the foregoing, the Borrowers
agree that at any reasonable time and from time to time, the Borrowers will
permit any Bank or any agents or representatives thereof to inspect, at the
office of the Borrowers listed on its signature page hereto, all opinions with
respect to title and other material work received by the Borrowers with respect
to any asset included in the Borrowing Base.
7.2 Negative Covenants. Until payment in full of the principal of and
accrued interest on the Notes, the expiration of this Agreement and all Letters
of Credit and the payment and performance of all other obligations of the
Borrowers and each Guarantor under this Agreement, the Notes and the Security
Documents, each Borrower agrees that, unless the Required Banks shall otherwise
consent in writing, none of them shall:
(a) Current Ratio. Permit or suffer the ratio of (i) the sum of
Current Assets plus the unused availability under the revolving credit facility
established by Section 2.1(a) to (ii) Current Liabilities to be less than 1.0 to
1.0 at any time.
(b) Tangible Net Worth. Permit or suffer Consolidated Tangible Net
Worth of CRI and its Subsidiaries, at any time, to be less than the sum of (i)
$105,000,000, plus (ii) 50% of Consolidated Net Income for each fiscal year,
commencing with the fiscal year ending December 31, 1998, and to be added as of
the last day of such fiscal quarter and each such fiscal year, provided that if
such Consolidated Net Income is negative in such fiscal quarter or in any fiscal
year, the amount added pursuant to this clause (ii) shall be zero and shall not
reduce the amount added pursuant to this clause (ii) for any other fiscal year,
plus (iii) 75% of the net cash proceeds of any equity offering or other sale of
Capital Stock of CRI or any of its Subsidiaries, other than net cash proceeds in
an aggregate amount per fiscal year not to exceed $2,500,000 received by CRI in
connection with the exercising of stock options.
(c) Interest Coverage Ratio. Permit or suffer, as of the last day of
any fiscal quarter of CRI, the ratio of (i) EBITDA, as calculated for the four
fiscal quarters then ending, to (ii) Consolidated Interest Expense, as
calculated for the four fiscal quarters then ending, to be less than 2.5 to 1.0.
(d) Indebtedness. Create, incur, assume, guaranty or in any manner
become liable in respect of, or suffer to exist, any Indebtedness other than:
(i) The Advances;
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(ii) Other Indebtedness in aggregate outstanding amount not to
exceed $5,000,000;
(iii) Unsecured insurance premium financing incurred in the
ordinary course of business;
(iv) Indebtedness pursuant to any Swap Agreement with any Bank,
any Person with an investment grade debt rating acceptable to the Agent and any
other Person acceptable to the Agent;
(v) Indenture Debt, including the related guarantees thereunder,
pursuant to the Indenture Debt Documents, provided that the aggregate principal
amount of such Indenture Debt shall not exceed the amount of the Indenture Debt
outstanding as of its original issuance; and
(vi) Indebtedness permitted pursuant to Section 7.2(i).
(e) Liens. Create, incur or suffer to exist, any Lien to exist on any
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, other than:
(i) Liens for taxes not delinquent or for taxes being contested
in good faith by appropriate proceedings and as to which adequate financial
reserves have been established on its books and records;
(ii) Liens (other than any Lien imposed by ERISA) created and
maintained in the ordinary course of business which are not material in the
aggregate, and which would not have a Material Adverse Effect and which
constitute (A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which any Borrower is a
party for a purpose other than borrowing money or obtaining credit, including
rent security deposits, (C) liens imposed by law, such as those of carriers,
warehousemen, operators and mechanics, if payment of the obligation secured
thereby is not yet due, (D) Liens securing taxes, assessments or other
governmental charges or levies not yet subject to penalties for nonpayment, and
(E) pledges or deposits to secure public or statutory obligations of any
Borrower, or surety, customs or appeal bonds to which such Borrower is a party;
(iii) Liens created pursuant to the Security Documents and Liens
expressly permitted by the Security Documents, including without limitation
liens securing any reimbursement and other obligations pursuant to any Letters
of Credit issued by any Bank for the account of any Borrower, and it is
acknowledged and agreed that, without limiting the indebtedness secured by the
Security Documents, each Security Document secures all reimbursement and other
obligations incurred at any time by any Borrower pursuant to any Letter of
Credit issued by any Bank for the account of any Borrower;
(iv) Liens securing Indebtedness permitted pursuant to Section
7.2(d)(iii) created to secure payment of a portion of the purchase price of, or
existing at the time of acquisition of, any tangible fixed asset acquired by any
Borrower if the outstanding principal amount of the Indebtedness secured by such
Lien does not at any time exceed the purchase price paid by such Borrower for
such assets, provided that such Lien does not encumber any other asset at any
time owned by such Borrower.
(f) Merger; Acquisitions; Etc. Purchase or otherwise acquire, whether
in one or a series of transactions, unless the Required Banks shall otherwise
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consent in writing, all or any substantial portion of the business assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
of any Person, or all or any substantial portion of the Capital Stock of or
other ownership interest in any other Person, nor merge or consolidate or
amalgamate with any other Person or take any other action having a similar
effect, unless in each of the foregoing cases, each of the following conditions
is satisfied: (i) no Default or Event of Default exists either before or after
such acquisition, merger, consolidation, amalgamation or other action having a
similar effect, (ii) if such transaction is a merger, consolidation,
amalgamation or other action having a similar effect, a Borrower is the
surviving entity and (iii) in the case of any take-over bid or offer to acquire
all or substantially all of the outstanding voting or equity securities of a
corporation or an acquisition of all or substantially all of the assets of any
Person, the board of directors of the target corporation or management of the
target Person(if the target is not a corporation) has recommended acceptance of
such bid or offer.
(g) Disposition of Assets; Etc. Without the prior written consent of
the Required Banks, sell, lease, license, transfer, assign or otherwise dispose
of any Collateral or any of its other business, assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether in one or a
series of transactions, other than (i) inventory sold in the ordinary course of
business upon customary credit terms, and (ii) if no Default has occurred and is
continuing or would be caused thereby, other sales of assets in aggregate amount
not to exceed $15,000,000 in any twelve-month period, provided that in
connection with any such sales in excess of $500,000 in aggregate amount since
the date of the most recent redetermination of the Borrowing Base all the net
proceeds (net only of reasonable and customary fees actually incurred in
connection with such sales and of taxes paid or reasonably estimated to be
payable as a result thereof), will simultaneously reduce the Borrowing Base by a
like amount.
(h) Nature of Business. Make any substantial change in the nature of
its business from that engaged in on the date of this Agreement or engage in any
other businesses other than those in which it is engaged on the date of this
Agreement.
(i) Investments and Advances. Purchase or otherwise acquire any
Capital Stock of or other ownership interest in, or debt securities of or other
evidences of Indebtedness of, any other Person; nor make any loan or advance of
any of its funds or property or make any other extension of credit to, or make
any investment or acquire any interest whatsoever in, any other Person, except
(i) loans and advances to officers of the Borrowers, provided that the aggregate
amount of all such loans and advances does not exceed $25,000, (ii) loans and
advances among the Borrowers or any Subsidiary of any Borrower guaranteeing all
indebtedness, obligations and liabilities of the Borrowers to the Banks and the
Agent pursuant to a guaranty and other agreements satisfactory to the Agent, and
(iii) other loans and advances, provided that the aggregate amount of all such
loans and advances, together with Indebtedness allowed under Section
7.2(d)(iii), shall not exceed $5,000,000.
(j) Dividends. With respect to CRI only, make, pay, declare or
authorize any dividend, payment or other distribution in respect of any class of
its Capital Stock or any dividend, payment or distribution in connection with
the redemption, repurchase, defeasance, conversion, retirement or other
acquisition, directly or indirectly, of any shares of its Capital Stock (all of
the foregoing defined herein as "Restricted Payments"), except (i) Restricted
Payments payable solely in shares of common stock of CRI and (ii) payments in
cash of the accrued fixed dividends on the Preferred Stock at a rate not to
exceed 9.0% per annum, provided that both before and after giving effect to such
payment (on a pro forma basis acceptable to the Agent) no Default or Event of
Default shall have occurred and be continuing and all representations and
warranties contained in Section 6 hereof shall be true and correct in all
material respects as if made at the time of such payment. Additionally, other
than the Preferred Stock, CRI will not issue any Disqualified Stock.
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(k) Transactions with Affiliates. Enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Borrowers' business and upon fair and
reasonable terms no less favorable to such Borrower than would be obtained in a
comparable arms-length transaction with a Person other than an Affiliate and
except the loans and advances described in Section 7.2(i).
(l) Additional Covenants. If at any time any Borrower shall enter into
or be a party to any instrument or agreement, including all such instruments or
agreements in existence as of the date hereof and all such instruments or
agreements entered into after the date hereof, relating to or amending any terms
or conditions applicable to any of its Indebtedness which includes covenants,
terms, conditions or defaults not substantially provided for in this Agreement
or more favorable to the lender or lenders thereunder than those provided for in
this Agreement, then the Borrowers shall promptly so advise the Agent and the
Banks. Thereupon, if the Agent shall request, upon notice to the Borrowers, the
Agent and the Banks shall enter into an amendment to this Agreement or an
additional agreement (as the Agent may request), providing for substantially the
same covenants, terms, conditions and defaults as those provided for in such
instrument or agreement to the extent required and as may be selected by the
Agent. In addition to the foregoing, any covenants, terms, conditions or
defaults in any existing agreements or other documents evidencing or relating to
any Indebtedness of any Borrower (including without limitation the Indenture
Debt Documents) not substantially provided for in this Agreement or more
favorable to the holders of such Indebtedness, are hereby incorporated by
reference into this Agreement to the same extent as if set forth fully herein,
and no subsequent amendment, waiver or modification thereof shall affect any
such covenants, terms, conditions or defaults as incorporated herein.
(m) Financial Contracts. Enter into any Swap Agreement (or any other
agreement, device or arrangement providing for payments relating to fluctuations
of interest rates, exchange rates or commodity prices) for purposes of financial
speculation or otherwise not in the ordinary course of business of the
Borrowers, and any Swap Agreement with respect to fluctuations in interest rates
shall be entered into by the Borrowers only with respect to Indebtedness for
borrowed money of the Borrowers.
(n) Payments and Modification of Indenture Debt. Make, or permit any
Subsidiary to make, any optional payment, defeasance (whether a covenant
defeasance, legal defeasance or other defeasance), prepayment or redemption of
any of its or any of its Subsidiaries' Indenture Debt or amend or modify, or
consent or agree to any amendment or modification of, any Indenture Debt
Document, or enter into any agreement or arrangement providing for any
defeasance of any kind of any of its Indenture Debt.
SECTION 8. Default
8.1 Events of Default. The occurrence of any one of the following events or
conditions shall be deemed an "Event of Default" hereunder unless waived by the
Required Banks pursuant to Section 10.1:
(a) Any Borrower shall fail to pay within 2 Business Days of when due
any principal of or interest on the Notes (whether pursuant to Section 4.1 or
otherwise), any fees or any other amount payable hereunder or under any Security
Document; or
(b) Any representation or warranty made by any Borrower in Section 6
hereof, in any Security Document or in any other document or certificate
furnished by or on behalf of any Borrower in connection with this Agreement,
shall prove to have been incorrect in any material respect when made; or
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(c) (i) Any Borrower shall fail to perform or observe any term,
covenant or agreement contained in Sections 7.1(b), 7.1(c) (other than the
agreement to maintain continuous insurance coverage) or 7.1(d) hereof or in any
Security Document, any other Loan Document or any other agreement among the
Borrowers, the Banks and the Agent, or any of them, and such failure shall
remain unremedied for 30 calendar days after the earlier of the date notice
thereof shall have been given to Borrowers by the Agent or any Bank or any
Borrower knows of such failure, or (ii) any Borrower shall fail to perform or
observe any other term, covenant, or agreement contained in this Agreement; or
(d) Any Borrower shall fail to pay any part of the principal of, the
premium, if any, or the interest on, or any other payment of money due under any
of its Indebtedness (other than Indebtedness hereunder), beyond any period of
grace provided with respect thereto, which individually or together with other
such Indebtedness as to which any such failure exists has an aggregate
outstanding principal amount in excess of $10,000,000; or if any Borrower fails
to perform or observe any other term, covenant or agreement contained in any
agreement, document or instrument evidencing or securing any such Indebtedness,
or under which any such Indebtedness was issued or created, beyond any period of
grace, if any, provided with respect thereto if the effect of such failure is
either (i) to cause, or permit the holders of such Indebtedness (or a trustee on
behalf of such holders) to cause, any payment in respect of such Indebtedness to
become due prior to its due date or (ii) to permit the holders of such
Indebtedness (or a trustee on behalf of such holder) to elect a majority of the
board of directors of any Borrower; or
(e) A judgment or order for the payment of money, which together with
other such judgments or orders exceeds the aggregate amount of $10,000,000,
shall be rendered against any Borrower and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order and such
judgment or order shall have remained unsatisfied and such proceedings shall
have remained unstayed for a period of 30 consecutive days, or (ii) for a period
of 30 consecutive days, such judgment or order shall have remained unsatisfied
and a stay of enforcement thereof, by reason of pending appeal or otherwise,
shall not have been in effect; or
(f) The occurrence or existence with respect to any Borrower or any
Guarantor or any of their ERISA Affiliates of any of the following: (i) any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any Reportable Event shall occur with respect
to any Plan, (iii) the filing under ERISA of a notice of intent to terminate any
Plan or the termination of any Plan, (iv) any event or circumstance exists which
might constitute grounds entitling the PBGC to institute proceedings under ERISA
for the termination of, or the appointment of a trustee to administer, any Plan,
or the institution of the PBGC of any such proceedings, or (v) complete or
partial withdrawal under ERISA from any Multiemployer Plan or the
reorganization, insolvency, or termination of any Multiemployer Plan, and in
each of the foregoing cases, such event or condition, together with all other
events or conditions, if any, could in the opinion of the Banks subject any
Borrower to any tax, penalty, or other liability to a Plan, the PBGC, or
otherwise (or any combination thereof); or
(g) Any Borrower shall generally not pay its debts as they become due,
or shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors, or shall institute, or
there shall be instituted against any Borrower, any proceeding or case seeking
to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency or reorganization
or relief or protection of debtors or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property, and, if such proceeding is
instituted against any Borrower and is being contested by such Borrower in good
faith by appropriate proceedings, such proceedings shall remain undismissed or
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unstayed for a period of 30 days; or any Borrower shall take any action
(corporate or other) to authorize or further any of the actions described above
in this subsection; or
(h) Any event of default described in any Security Document shall have
occurred and be continuing, or any material provision of any Security Document
shall at any time for any reason cease to be valid and binding and enforceable
against any obligor thereunder, or the validity, binding effect or
enforceability thereof shall be contested or repudiated by any Person, or any
obligor, shall deny that it has any or further liability or obligation
thereunder, or any Security Document shall be terminated, invalidated or set
aside, or be declared ineffective or inoperative or in any way cease to give or
provide to the Agent and the Banks the benefits purported to be created thereby;
(i) Any Change in Control shall occur; or
(j) or the occurrence of any "Change of Control", "Change in Control"
or similar term as defined in the Indenture or the Preferred Stock Documents.
8.2 Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Agent may, and upon being directed to do so by the Required Banks,
shall, by notice to the Borrowers terminate the Commitments or declare the
outstanding principal of, and accrued interest on, the Notes and all other
amounts due under this Agreement and all other Loan Documents, to be immediately
due and payable, or demand immediate delivery of cash collateral, and the
Borrowers agree to deliver such cash collateral upon such demand, in an amount
equal to the maximum amount that may be available to be drawn at any time prior
to the stated expiry of all outstanding Letters of Credit, or all of the above,
whereupon the Commitments shall terminate forthwith and all such amounts shall
become immediately due and payable, or both, as the case may be, provided that
in the case of any event or condition described in Section 8.1(g), the
Commitments shall automatically terminate forthwith and all such amounts shall
automatically become immediately due and payable without notice; in each case
without demand, presentment, protest, diligence, notice of dishonor or other
formality, all of which are hereby expressly waived.
(b) Upon the occurrence and during the continuance of such Event of
Default, the Agent may, and upon being directed to do so by the Required Banks,
shall, in addition to the remedies provided in Section 8.2(a), enforce its
rights either by suit in equity, or by action at law, or by other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Agreement or in any then
outstanding Note or any Security Document or in aid of the exercise of any power
granted in this Agreement, any then outstanding Notes or any Security Document,
and may enforce the payment of any then outstanding Notes and any of the other
rights of the Agent and the Banks in any other agreement or available at law or
in equity.
(c) Upon the occurrence and during the continuance of any Event of
Default hereunder, each Bank may at any time and from time to time, without
notice to the Borrowers (any requirement for such notice being expressly waived
by the Borrowers) set off and apply against any and all of the obligations of
any Borrower now or hereafter existing under this Agreement, any of the Notes or
the Security Documents, any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank to or for the credit or the account of any Borrower and
any property of any Borrower from time to time in possession of such Bank,
irrespective of whether or not any Bank shall have made any demand hereunder and
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although such obligations may be contingent and unmatured. The rights of the
Banks under this Section 8.2(c) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Banks may
have.
8.3 Distribution of Proceeds. All proceeds of any realization on the
Collateral received by the Agent pursuant to the Security Documents or any
payments on any of the liabilities secured by the Security Documents received by
the Agent or any Bank upon and during the continuance of any Event of Default
shall be allocated and distributed as follows:
(a) First, to the payment of all costs and expenses, including without
limitation all attorneys' fees, of the Agent in connection with the enforcement
of the Security Documents and otherwise administering this Agreement;
(b) Second, to the payment of all costs, expenses and fees, including
without limitation, commitment fees and attorneys' fees, owing to the Banks
pursuant to the Bank Obligations on a pro rata basis in accordance with the Bank
Obligations consisting of fees, costs and expenses owing to the Banks under the
Bank Obligations for application to payment of such liabilities;
(c) Third, to the Banks on a pro rata basis in accordance with the
Bank Obligations consisting of interest and principal owing to the Banks under
the Bank Obligations, with any obligations owing to any Bank pursuant to any
Swap Agreement to which it is a party (whether pursuant to a termination thereof
or otherwise) and with any reimbursement obligations or other liabilities owing
to any Bank pursuant to any Letter of Credit, for application to payment of such
liabilities;
(c) Fourth, to the payment of any and all other amounts owing to the
Banks on a pro rata basis in accordance with the total amount of such
Indebtedness owing to each of the Banks, for application to payment of such
liabilities; and
(d) Fifth, to the Borrowers or such other Person as may be legally
entitled thereto.
8.4 Letter of Credit Liabilities. For the purposes of payments and
distributions under Section 8.3, the full amount of Bank Obligations on account
of any Letter of Credit then outstanding but not drawn upon shall be deemed to
be then due and owing. Amounts distributable to any of the Banks on account of
such Bank Obligations under such Letter of Credit shall be deposited in a
separate interest bearing collateral account in the name of and under the
control of the Agent and held by the Agent first as security for such Letter of
Credit Bank Obligations and then as security for all other Bank Obligations and
the amount so deposited shall be applied to the Letter of Credit Bank
Obligations at such times and to the extent that such Letter of Credit Bank
Obligations become absolute liabilities. If and to the extent that the Letter of
Credit Bank Obligations fail to become absolute Bank Obligations because of the
expiration or termination of the underlying Letters of Credit without being
drawn upon, then such amounts shall be applied to the remaining Bank Obligations
in the order provided in Section 8.3. Each Borrower hereby grants to the Agent,
for the benefit of the Banks, a lien and security interest in all such funds
deposited in such separate interest bearing collateral account, as security for
all the Bank Obligations as set forth above. The Borrowers acknowledge and agree
that all reimbursement and other obligations and liabilities pursuant to any
Letters of Credit issued by the Agent for the account of any Borrower are
secured by all Collateral and the Security Documents.
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SECTION 9. The Administrative Agent, the Syndication Agent and the Banks.
9.1 Appointment; Nature of Relationship. The First National Bank of Chicago
is hereby appointed by the Banks as the administrative agent hereunder and under
each other Loan Document, and each of the Banks irrevocably authorizes the Agent
to act as the contractual representative of such Bank with the rights and duties
expressly set forth herein and in the other Loan Documents. The Agent agrees to
act as such contractual representative upon the express conditions contained in
this Section 9. Notwithstanding the use of the defined term "Agent," it is
expressly understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Bank by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the representative of the Banks
with only those duties as are expressly set forth in this Agreement and the
other Loan Documents. In its capacity as the Banks' contractual representative,
the Agent (i) does not hereby assume any fiduciary duties to any of the Banks,
(ii) is a "representative" of the Banks within the meaning of Section 9-105 of
the Uniform Commercial Code and (iii) is acting as an independent contractor,
the rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Banks hereby agrees to
assert no claim against the Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each Bank hereby
waives.
9.2 Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Banks, or any obligation to the Banks
to take any action thereunder except any action specifically provided by the
Loan Documents to be taken by the Agent.
9.3 General Immunity. Neither the Agent nor any of its directors, officers,
agents or employees shall be liable to the Borrowers, any Borrower, the Banks or
any Bank for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith except for
its or their own gross negligence or willful misconduct.
9.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Bank; (iii) the satisfaction of any condition specified in Section 3.2 or
otherwise hereunder; (iv) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security. The
Agent shall have no duty to disclose to the Banks information that is not
required to be furnished by the Borrowers to the Agent at such time, but is
voluntarily furnished by the Borrowers to the Agent (either in its capacity as
Agent or in its individual capacity).
9.5 Action on Instructions of Banks. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Loan Document in accordance with written instructions signed by the Required
Banks, and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks and on all holders of Notes. The
Banks hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Banks. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
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Document unless it shall first be indemnified to its satisfaction by the Banks
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
9.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Banks, except as to money or securities received by it or its authorized agents,
for the default or misconduct of any such agents or attorneys-in-fact selected
by it with reasonable care. The Agent shall be entitled to advice of counsel
concerning all matters pertaining to the agency hereby created and its duties
hereunder and under any other Loan Document.
9.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper Person or Persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
9.8 Agent's Reimbursement and Indemnification. The Banks agree to reimburse
and indemnify the Agent ratably in proportion to their respective Commitments
(or, if the Commitments have been terminated, in proportion to their Commitments
immediately prior to such termination) (i) for any amounts not reimbursed by the
Borrowers for which the Agent is entitled to reimbursement by the Borrowers
under the Loan Documents, (ii) for any other expenses incurred by the Agent on
behalf of the Banks, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, provided that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. The obligations of the Banks
under this Section 9.8 shall survive payment of the Bank Obligations and
termination of this Agreement.
9.9 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Agent has received written notice from a Bank or a Borrower referring to this
Agreement describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Banks.
9.10 Rights as a Bank. In the event the Agent is a Bank, the Agent shall
have the same rights and powers hereunder and under any other Loan Document as
any Bank and may exercise the same as though it were not the Agent, and the term
"Bank" or "Banks" shall, at any time when the Agent is a Bank, unless the
context otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of trust, debt, equity or other transaction, in addition to those contemplated
by this Agreement or any other Loan Document, with any Borrower or any of their
respective Subsidiaries in which any Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person. The Agent, in its
individual capacity, is not obligated to remain a Bank.
9.11 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements prepared by the Borrowers and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Bank
also acknowledges that it will, independently and without reliance upon the
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Agent or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
9.12 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Banks and the Borrowers, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Banks shall have
the right to appoint, on behalf of the Borrowers and the Banks, a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks
within thirty days after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the Borrowers, and
the Banks, a successor Agent. If the Agent has resigned and no successor Agent
has been appointed, the Banks may perform all the duties of the Agent hereunder
and the Borrowers shall make all payments in respect of the Bank Obligations to
the applicable Bank and for all other purposes shall deal directly with the
Banks. No successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent shall be
a commercial bank having capital and retained earnings of at least $50,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Section 9 shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
9.13 Pro Rata Sharing by Banks. Each Bank agrees with every other Bank
that, in the event that it shall receive and retain any payment on account of
the Borrower's obligations under this Agreement, the Notes or the Security
Documents in a greater proportion than that received by any other Bank, whether
such payment be voluntary, involuntary or by operation of law, by application of
set-off of any indebtedness or otherwise, then such Bank shall promptly purchase
a participation interest from the other Banks, without recourse, for cash and at
face value, ratably in accordance with its Pro Rata Share, in such an amount
that each Bank shall have received payment in respect of such obligations in
accordance with its Pro Rata Share; provided, that if any such purchase be made
by any Bank and if any such excess payment relating thereto or any part thereof
is thereafter recovered from such Bank, appropriate adjustment in the related
purchase from the other Banks shall be made by rescission and restoration of the
purchase price as to the portion of such excess payment so recovered. It is
further agreed that, to the extent there is then owing by the Borrowers to any
Bank indebtedness other than that evidenced by this Agreement, the Notes and the
Security Documents to which such Bank may apply any involuntary payments of
indebtedness by the Borrowers, including those resulting from exercise of rights
of set-off or similar rights, such Bank shall apply all such involuntary
payments first to obligations of the Borrowers to the Banks hereunder and under
the Notes and the Security Documents and then to such other indebtedness owed to
it by the Borrowers. In addition, it is further agreed that any and all proceeds
resulting from a sale or other disposition of any collateral which may be
hereafter granted for the benefit of the Banks to secure the obligations of the
Borrowers hereunder, shall be applied first to obligations of the Borrowers to
the Banks hereunder and under the Notes and the Security Documents, and then
ratably to any other indebtedness owed by the Borrowers to the Banks which is
secured by such collateral.
9.14 Determination of Borrowing Base, Etc. (a) As of the Effective Date,
the Borrowing Base shall be equal to $162,500,000 and scheduled monthly
reductions to the Borrowing Base shall be $0 (any monthly reductions in the
Borrowing Base redetermined at any time under this Section 9.14 are defined as
the "Monthly Borrowing Base Reductions").
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(b) Any redetermination of the Borrowing Base and the Monthly
Borrowing Base Reductions shall be made by the Agent and submitted to the Banks.
Such redetermined Borrowing Base and Monthly Borrowing Base Reductions shall
then be effective when approved by Banks holding not less than 75% of the
aggregate principal amount of the Advances then outstanding (or 75% of the
Commitments if no Advances are then outstanding). If any of such redetermined
Borrowing Base and Monthly Borrowing Base Reductions are not approved by Banks
holding not less than 75% of the aggregate principal amount of the Advances then
outstanding (or 75% of the Commitments if no Advances are then outstanding)
within ten (10) days after they are submitted to the Banks, each Bank shall
submit to the Agent, on or within ten (10) days after the Agent notifies the
Banks that such Banks have not approved any such redetermined Borrowing Base or
Monthly Borrowing Base Reductions, its determination of each of the foregoing
which was not so approved, and the redetermined amount of each of the foregoing
which was not so approved will be based on the weighted average of the
redetermined amount thereof of each Bank which properly submits such
redetermination to the Agent, weighted according to each Bank's Commitment.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, WITHOUT THE PRIOR WRITTEN
APPROVAL OF ALL THE BANKS, SUCH APPROVAL TO BE IN EACH BANK'S SOLE DISCRETION,
(1) THE BORROWING BASE MAY NOT BE GREATER THAN $162,500,000 AT ANY TIME, (2) THE
REDETERMINATION OF THE BORROWING BASE AND THE MONTHLY BORROWING BASE REDUCTIONS
SCHEDULED TO OCCUR ON OR ABOUT OCTOBER, 1999 SHALL BE EFFECTIVE WHEN APPROVED BY
ALL OF THE BANKS AND (3) THE MONTHLY BORROWING BASE REDUCTIONS DETERMINED AT ANY
TIME AND IN ACCORDANCE WITH THE ABOVE PROCEDURE MAY NOT BE MODIFIED.
(c) The Borrowing Base and the Monthly Borrowing Base Reductions may
be redetermined from time to time as requested by the Required Banks (provided
that the Required Banks may not request any such optional redetermination until
after the mandatory redetermination scheduled to occur on or about October, 1999
unless any representation or warranty contained in Section 6 hereof shall not be
true and correct in all material respects at any time as if made at any such
time), and will be redetermined upon the request of the Borrowers (provided that
the Borrowers cannot request a redetermination of the Borrowing Base, or the
Monthly Borrowing Base Reductions more than once between the mandatory
redeterminations hereinafter provided for), and, in addition, at least twice
each year (provided that the first such redetermination shall not be made until
October, 1999) as follows: upon receipt of the reserve reports referred to in
Section 7.1(d)(vii) hereof (and in connection with such twice per year
redeterminations of the Borrowing Base and the Monthly Borrowing Base Reductions
the Agent shall submit the redetermined Borrowing Base and the Monthly Borrowing
Base Reductions as required under this Section 9.14 on or prior to 30 days after
the receipt of each (i) reserve report referred to in Section 7.1(d)(vii) (A)
hereof and (ii) reserve report referred to in Section 7.1(d)(vii)(B)). Each
redetermination of the Monthly Borrowing Base Reductions shall determine such
reductions for each of the six months following such determination. Except for
the scheduled redeterminations of the Borrowing Base and the Monthly Borrowing
Base Reductions, each Bank requesting a redetermination of the Borrowing Base
and the Monthly Borrowing Base Reductions agrees to give notice to the Agent and
the Borrowers of such request.
(d) Within five days after notification to Borrower of a Borrowing
Base redetermination pursuant to the provisions of this Section 9.14, the
Borrowers may notify Agent as to what portion of the Borrowing Base they desire
access (the "Elected Borrowing Limit"). Thereafter, the Borrowers may obtain
Advances which do not exceed in the aggregate the lesser of (i) the Commitments
or (ii) the Elected Borrowing Limit until the next Borrowing Base
redetermination, subject to the provisions of Section 9.14(b) and (c) above. If
no such notification is received by the Agent the Elected Borrowing Limit shall
be the Borrowing Base as so determined. Notwithstanding anything herein to the
contrary, the Elected Borrowing Limit may not exceed the lesser of (A) the
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Borrowing Base or (B) the aggregate stated Commitment amounts for the Banks set
forth next to the names of the Banks on the signature pages hereof or
established pursuant to Section 10.6, as the case may be, as such amount may be
reduced from time to time. As of the Effective Date, the Elected Borrowing Limit
shall be equal to $162,500,000.
9.15 Syndication and Documentation Agent. Toronto Dominion (Texas), Inc.,
as Syndication Agent hereunder, and Paribas, as Documentation Agent hereunder,
shall have no duties or liabilities hereunder in such capacities.
SECTION 10. Miscellaneous.
10.1 Amendments; Etc. (a) This Agreement and any term or provision hereof
may be amended, waived or terminated by an instrument in writing executed by the
Borrowers and the Required Banks, and to the extent any rights or duties of the
Agent may be affected thereby, the Agent, provided, that, notwithstanding
anything in this Agreement to the contrary, except by an instrument in writing
executed by the Borrowers and all of the Banks, no such amendment, waiver or
termination shall authorize or permit the extension of the time or times of
payment of the principal of, or interest on, the Notes or the reduction in
principal amount thereof or the rate of interest thereon, or any fees payable
hereunder, or increase or extend the aggregate Commitments or the respective
Commitments of any Bank, or change the percentage of Banks required for
approvals of the Borrowing Base as specified in Section 9.14, or release any
Borrower from any of its obligations hereunder or under any other Loan Document,
or release any material amount of the Collateral from the Liens granted pursuant
hereto or the Security Documents, or amend this Section 10.1.
(b) Any such amendment, waiver or termination shall be effective only
in the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, any Bank that has
failed to fund any Advance or other amount required to be funded by such Bank
hereunder shall not be entitled to vote (whether to consent or to withhold its
consent) with respect to any amendment, modification, termination or waiver of
any provision of any Loan Document or a departure therefrom or any direction
from the Banks to the Agent and, for purposes of determining the Required Banks,
the Commitments and Advances of such Bank shall be disregarded.
10.2 Notices. (a) Except as otherwise provided in Section 10.2(c) hereof,
all notices, requests, consents and other communications hereunder shall be in
writing and shall be delivered or sent to the Borrowers, the Banks and the Agent
at the respective addresses for notices set forth on the signature pages hereof,
or to such other address as may be designated by the Borrowers, the Agent or any
Bank by notice to the other parties hereto. All notices shall be deemed to have
been given at the time of actual delivery thereof to such address, or if sent by
the Agent or any Bank to the Borrowers by certified or registered mail, postage
prepaid, to such address, on the fifth day after the date of mailing.
(b) Notices by the Borrowers to the Agent with respect to requests for
Advances pursuant to Section 3.1 and notices of prepayment pursuant to Section
4.1(c) shall be irrevocable and binding on the Borrowers.
(c) Any notice to be given by the Borrowers to the Agent pursuant to
Section 4.1(c) or Section 3.1 and any notice to be given by the Agent or any
Bank hereunder, may be given by telephone, by telex or by facsimile transmission
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and must be immediately confirmed in writing in the manner provided in Section
10.2(a). Any such notice given by telephone, telex or facsimile transmission
shall be deemed effective upon receipt thereof by the party to whom such notice
is given.
10.3 Conduct No Waiver; Remedies Cumulative. No course of dealing on the
part of the Agent or the Banks, nor any delay or failure on the part of the
Agent or any Bank in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege or otherwise prejudice the
Agent's or the Banks' rights and remedies hereunder; nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other right, power or privilege. No right or remedy conferred upon or
reserved to the Agent or the Banks under this Agreement is intended to be
exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy given hereunder or now
or hereafter existing under any applicable law. Every right and remedy given by
this Agreement or by applicable law to the Agent or the Banks may be exercised
from time to time and as often as may be deemed expedient by them.
10.4 Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of the Borrowers made herein or in
any certificate or other document delivered pursuant hereto shall be deemed to
be material and to have been relied upon by the Banks, notwithstanding any
investigation heretofore or hereafter made by any Bank or on any Bank's behalf,
and those covenants and agreements of the Borrowers set forth in Section 10.5
hereof shall survive the repayment in full of the Advances and other obligations
of the Borrowers hereunder and under Security Documents and the termination of
the Commitments.
10.5 Expenses; Indemnification. (a) The Borrowers agree to pay and save the
Agent harmless from liability for the payment of the reasonable fees and
expenses of any counsel the Agent shall employ, in connection with the
preparation, execution and delivery of this Agreement, the Notes and the
Security Documents and the consummation of the transactions contemplated hereby
and in connection with any amendments, waivers or consents and other matters in
connection therewith, and all reasonable costs and expenses of the Agent and the
Banks (including reasonable fees and expenses of counsel) in connection with any
enforcement of this Agreement, the Notes or the Security Documents.
(b) Each of the Borrowers hereby indemnifies and agrees to
hold harmless the Banks and the Agent, and their respective officers, directors,
employees and agents, from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever which the Banks
or the Agent or any such Person may incur or which may be claimed against any of
them by reason of or in connection with any Letter of Credit, and neither any
Bank nor the Agent or any of their respective officers, directors, employees or
agents shall be liable or responsible for: (i) the use which may be made of any
Letter of Credit or for any acts or omissions of any beneficiary in connection
therewith; (ii) the validity, sufficiency or genuineness of documents or of any
endorsement thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (iii) payment by the
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; (iv) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Borrowers shall not be required to indemnify the
Agent and such other Persons, and the Agent shall be liable to the Borrowers to
the extent, but only to the extent, of any direct, as opposed to consequential
or incidental, damages suffered by any Borrower which were caused by (A) the
Agent's wrongful dishonor of any Letter of Credit after the presentation to it
by the beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter of
Credit, or (B) the payment by the Agent to the beneficiary under any Letter of
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Credit against presentation of documents which do not comply with the terms of
the Letter of Credit to the extent, but only to the extent, that such payment
constitutes gross negligence or wilful misconduct of the Agent. It is understood
that in making any payment under a Letter of Credit the Agent will rely on
documents presented to it under such Letter of Credit as to any and all matters
set forth therein without further investigation and regardless of any notice or
information to the contrary, and such reliance and payment against documents
presented under a Letter of Credit substantially complying with the terms
thereof shall not be deemed gross negligence or wilful misconduct of the Agent
in connection with such payment. It is further acknowledged and agreed that a
Borrower may have rights against the beneficiary or others in connection with
any Letter of Credit with respect to which the Agent is alleged to be liable and
it shall be a precondition of the assertion of any liability of the Agent under
this Section that such Borrower shall first have taken reasonable steps to
enforce remedies in respect of the alleged loss against such beneficiary and any
other parties obligated or liable in connection with such Letter of Credit and
any related transactions.
(c) In consideration of the execution and delivery of this Agreement
by each Bank and the extension of the Commitments, the Borrowers hereby
indemnify, exonerate and hold the Agent, each Bank and each of their respective
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to:
(i) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Advance;
(ii) the entering into and performance of this Agreement and any
other agreement or instrument executed in connection herewith by any of the
Indemnified Parties (including any action brought by or on behalf of the
Borrowers as the result of any determination by the Required Banks not to fund
any Advance in compliance with this Agreement);
(iii) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrowers or any of their
Subsidiaries of any portion of the stock or assets of any Person, whether or not
the Agent or such Bank is party thereto;
(iv) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to any release
by the Borrowers or any of their Subsidiaries of any hazardous material or any
violations of Environmental Laws; or
(v) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real property
owned or operated by the Borrowers or any Subsidiary thereof of any Hazardous
Material (including any losses, liabilities, damages, injuries, costs, expenses
or claims asserted or arising under any Environmental Law), regardless of
whether caused by, or within the control of, the Borrowers or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the activities of the Indemnified
Party on the property of the Borrowers conducted subsequent to a foreclosure on
such property by the Banks or by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct or breach of this Agreement, and if and to
the extent that the foregoing undertaking may be unenforceable for any reason,
the Borrowers hereby agree to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
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applicable law. The Borrowers shall be obligated to indemnify the Indemnified
Parties for all Indemnified Liabilities subject to and pursuant to the foregoing
provisions, regardless of whether the Borrowers or any of their Subsidiaries had
knowledge of the facts and circumstances giving rise to such Indemnified
Liability.
10.6 Successors and Assigns. (a) This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided that the Borrowers may not, without the prior consent of
the Banks, assign their rights or obligations hereunder or under the Notes and
the Banks shall not be obligated to make any Advance hereunder to any entity
other than the Borrowers.
(b) Any Bank may sell a participation interest to any financial
institution or institutions, and such financial institution or institutions may
further sell, a participation interest (undivided or divided) in, the Advances
and such Bank's rights and benefits under this Agreement, the Notes and the
Security Documents and to the extent of that participation, such participant or
participants shall have the same rights and benefits against the Borrowers under
Section 6.2(c) as it or they would have had if participation of such participant
or participants were the Bank making the Advances to the Borrowers hereunder,
provided, however, that (i) such Bank's obligations under this Agreement shall
remain unmodified and fully effective and enforceable against such Bank, (ii)
such Bank shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Bank shall remain the holder of its
Note for all purposes of this Agreement, (iv) the Borrowers, the Agent and the
other Banks shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement, and (v)
such Bank shall not grant to its participant any rights to consent or withhold
consent to any action taken by such Bank or the Agent under this Agreement other
than action requiring the consent of all of the Banks hereunder. The Agent from
time to time in its sole discretion may appoint agents for the purpose of
servicing and administering this Agreement and the transactions contemplated
hereby and enforcing or exercising any rights or remedies of the Agent provided
under this Agreement, the Notes, or otherwise. In furtherance of such agency,
the Agent may from time to time direct that the Borrowers provide notices,
reports and other documents contemplated by this Agreement (or duplicates
thereof) to such agent. The Borrowers hereby consent to the appointment of such
agent and agree to provide all such notices, reports and other documents and to
otherwise deal with such agent acting on behalf of the Agent in the same manner
as would be required if dealing with the Agent itself.
(c) Each Bank may, with the prior consent of the Borrowers (which
consent shall not be unreasonably withheld and shall not be required upon the
occurrence and during the continuance of any Event of Default which is not cured
or waived within 30 days (or 0 days in the case of an Event of Default under
Section 8.1(g)) after the occurrence of such Event of Default or if such
assignment by such Bank is to an Affiliate of such Bank or to another Bank) and
the Agent, assign to one or more banks or other entities all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment, the Advances owing to it and the Note or Notes
and the Security Documents held by it); provided, however, that (i) each such
assignment shall be of a uniform, and not a varying, percentage of all rights
and obligations, (ii) except in the case of an assignment of all of a Bank's
rights and obligations under this Agreement, (A) the amount of the Commitment of
the assigning Bank being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000, and in integral multiples of
$1,000,000 thereafter, or such lesser amount as the Borrowers and the Agent may
consent to and (B) after giving effect to each such assignment, the amount of
the Commitment of the assigning Bank shall in no event be less than $5,000,000,
and (iii) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance in the form of Exhibit D hereto (an "Assignment and Acceptance"),
together with any Note or Notes subject to such assignment and a processing and
recordation fee of $3,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
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to such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and (y) the Bank assignor thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all of
the remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrowers or
the performance or observance by the Borrowers of any of their obligations under
this Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 6.7 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance on the Agent, such
assigning Bank or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Bank.
(e) The Agent shall maintain at its address designated on the
signature pages hereof a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Commitment of, and principal amount of the Advances owing to,
each Bank from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee, together with any Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrowers. Within five Business Days after its receipt of such
notice, the Borrowers, at their own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained a
Commitment hereunder, a new Note to the order of the assigning Bank in an amount
equal to the Commitment retained by it hereunder. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit B hereto.
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(g) The Banks may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.6, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrowers, provided that such proposed assignee or
participant has agreed to hold such information confidential under the terms
described in Section 10.20.
(h) Notwithstanding any other provisions set forth in this Agreement,
any Bank may at any time create a security interest in, or assign, all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System; provided that such creation of a security interest or
assignment shall not release such Bank from its obligations under this
Agreement.
10.7 Subsidiaries as Borrowers. In the event that CRI, COG, COGL or
Offshore shall create or acquire a Subsidiary, such Subsidiary shall execute a
joinder agreement in form and substance satisfactory to the Agent, together with
such Security Documents, other documents and opinions as the Agent may
reasonably require, and shall become a Borrower hereunder.
10.8 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
10.9 Table of Contents and Headings. The table of contents and the headings
of the various subdivisions hereof are for the convenience of reference only and
shall in no way modify any of the terms or provisions hereof.
10.10 Construction of Certain Provisions. All computations required
hereunder and all financial terms used herein shall be made or construed in
accordance with GAAP unless such principles are inconsistent with the express
requirements of this Agreement. If any provision of this Agreement refers to any
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person, whether or not expressly specified in such
provision.
10.11 Integration and Severability. This Agreement embodies the entire
agreement and understanding between the Borrowers and the Banks, and supersedes
all prior agreements and understandings, relating to the subject matter hereof.
In case any one or more of the obligations of the Borrowers under this
Agreement, the Notes or any Security Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of the Borrowers shall not in any way be affected or
impaired thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of the Borrowers under this Agreement, the Notes or any Security
Documents in any other jurisdiction.
10.12 Interest Rate Limitation. Notwithstanding any provisions of this
Agreement, the Notes or any Security Documents, in no event shall the amount of
interest paid or agreed to be paid by the Borrowers exceed an amount computed at
the highest rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement, the
Notes or any Security Documents at the time performance of such provision shall
be due, shall involve exceeding the interest rate limitation validly prescribed
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by law which a court of competent jurisdiction may deem applicable hereto, then,
ipso facto, the obligations to be fulfilled shall be reduced to an amount
computed at the highest rate of interest permissible under applicable law, and
if for any reason whatsoever the Banks shall ever receive as interest an amount
which would be deemed unlawful under such applicable law such interest shall be
automatically applied to the payment of principal of the Advances outstanding
and other obligations of the Borrowers hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the
Borrowers if such principal has been paid in full. Anything herein to the
contrary notwithstanding, the obligations of the Borrowers under this Agreement
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt of any such payment by the Banks would be
contrary to provisions of law applicable to the Banks which limits the maximum
rate of interest which may be charged or collected by the Banks.
10.13 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
10.14 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of an Event of Default or any event or condition which with
notice or lapse of time, or both, could become such an Event of Default if such
action is taken or such condition exists.
10.15 Consent to Jurisdiction. Notwithstanding the place where any
liability originates or arises, or is to be repaid, any suit, action or
proceeding arising out of or relating to this Agreement, any Security Documents,
or the Notes may be instituted in any court of competent jurisdiction in the
State of Illinois, each Borrower hereby irrevocably waives any objection which
it may have or hereafter has to the laying of such venue of any such suit,
action or proceeding and any claim that any such suit, action or proceeding has
been brought in an inconvenient forum, and each Borrower hereby irrevocably
submits its Person and property to the jurisdiction of any such court in any
such suit, action or proceedings. Nothing in this Section 10.15 shall affect the
right of the Bank to bring proceedings against the Borrowers or any of their
property in the courts of any other court of competent jurisdiction.
10.16 JURY TRIAL WAIVER. THE AGENT, THE BANKS AND EACH BORROWER, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES,
THE SECURITY DOCUMENTS, OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE NOTES OR THE SECURITY DOCUMENTS
OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY OF THEM. NEITHER THE AGENT, THE BANKS NOR ANY BORROWER SHALL SEEK
TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED
IN ANY RESPECT OR RELINQUISHED BY EITHER THE AGENT AND THE BANKS OR THE
BORROWERS EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
10.17 Joint and Several Obligations; Contribution Rights; Savings Clause.
(a) Notwithstanding anything to the contrary set forth herein or in any Note or
in any other Loan Document, the obligations of the Borrowers hereunder and under
the Notes and the other Loan Documents are joint and several.
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(b) If any Borrower makes a payment in respect of the Bank
Obligations, it shall have the rights of contribution set forth below against
the other Borrowers; provided that such Borrower shall not exercise its right of
contribution until all the Bank Obligations shall have been finally paid in full
in cash. If any Borrower makes a payment in respect of the Bank Obligations that
is smaller in proportion to its Payment Share (as hereinafter defined) than such
payments made by the other Borrowers are in proportion to the amounts of their
respective Payment Shares, the Borrower making such proportionately smaller
payment shall, when permitted by the preceding sentence, pay to the other
Borrowers an amount such that the net payments made by the Borrower in respect
of the Bank Obligations shall be shared among the Borrowers pro rata in
proportion to their respective Payment Shares. If any Borrower receives any
payment that is greater in proportion to the amount of its Payment Shares than
the payments received by the other Borrowers are in proportion to the amounts of
their respective Payment Shares, the Borrower receiving such proportionately
greater payment shall, when permitted by the second preceding sentence, pay to
the other Borrowers an amount such that the payments received by the Borrowers
shall be shared among the Borrowers pro rata in proportion to their respective
Payment Shares. Notwithstanding anything to the contrary contained in this
paragraph or in this Agreement, no liability or obligation of any Borrower that
shall accrue pursuant to this paragraph shall be paid nor shall it be deemed
owed pursuant to this paragraph until all of the Bank Obligations shall be
finally paid in full in cash.
For purposes hereof, the "Payment Share" of each Borrower shall be the sum
of (a) the aggregate proceeds of the Bank Obligations received by such Borrower
plus (b) the product of (i) the aggregate Bank Obligations remaining unpaid on
the date such Bank Obligations become due and payable in full, whether by stated
maturity, acceleration, or otherwise (the "Determination Date") reduced by the
amount of such Bank Obligations attributed to all or such Borrowers pursuant to
clause (a) above, times (ii) a fraction, the numerator of which is such
Borrower's net worth on the effective date of this Agreement (determined as of
the end of the immediately preceding fiscal reporting period of such Borrower),
and the denominator of which is the aggregate net worth of all Borrowers on such
effective date.
(c) It is the intent of each Borrower, the Agent and the Banks that
each Borrower's maximum Bank Obligations shall be in, but not in excess of:
(i) in a case or proceeding commenced by or against such Borrower
under the Bankruptcy Code on or within one year from the date on which any of
the Bank Obligations are incurred, the maximum amount that would not otherwise
cause the Bank Obligations (or any other obligations of such Borrower to the
Agent and the Banks) to be avoidable or unenforceable against such Borrower
under (A) Section 548 of the Bankruptcy Code or (B) any state fraudulent
transfer or fraudulent conveyance act or statute applied in such case or
proceeding by virtue of Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code subsequent to one year from the date on which
any of the Bank Obligations are incurred, the maximum amount that would not
otherwise cause the Bank Obligations (or any other obligations of such Borrower
to the Agent and the Banks) to be avoidable or unenforceable against such
Borrower under any state fraudulent transfer or fraudulent conveyance act or
statute applied in any such case or proceeding by virtue of Section 544 of the
Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against such
Borrower under any law, statute or regulation other than the Bankruptcy Code
(including, without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution, liquidation or
similar debtor relief laws), the maximum amount that would not otherwise cause
the Bank Obligations (or any other obligations of such Borrower to the Agent and
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the Banks) to be avoidable or unenforceable against such Borrower under such
law, statute or regulation including, without limitation, any state fraudulent
transfer or fraudulent conveyance act or statute applied in any such case or
proceeding.
(d) The Borrowers acknowledge and agree that they have requested that
the Banks make credit available to the Borrowers with each Borrower expecting to
derive benefit, directly and indirectly, from the Advances and other credit
extended by the Banks to the Borrowers.
10.18 Consents to Renewals, Modifications and Other Actions and Events.
This Agreement and all of the obligations of the Borrowers hereunder shall
remain in full force and effect without regard to and shall not be released,
affected or impaired by: (a) any amendment, assignment, transfer, modification
of or addition or supplement to the Bank Obligations, this Agreement, any Note
or any other Loan Document; (b) any extension, indulgence, increase in the Bank
Obligations or other action or inaction in respect of any of the Loan Documents
or otherwise with respect to the Bank Obligations, or any acceptance of security
for, or guaranties of, any of the Bank Obligations or Loan Documents, or any
surrender, release, exchange, impairment or alteration of any such security or
guaranties including without limitation the failing to perfect a security
interest in any such security or abstaining from taking advantage or of
realizing upon any guaranties or upon any security interest in any such
security; (c) any default by any Borrower under, or any lack of due execution,
invalidity or unenforceability of, or any irregularity or other defect in, any
of the Loan Documents; (d) any waiver by the Banks or any other Person of any
required performance or otherwise of any condition precedent or waiver of any
requirement imposed by any of the Loan Documents, any guaranties or otherwise
with respect to the Bank Obligations; (e) any exercise or non-exercise of any
right, remedy, power or privilege in respect of this Agreement or any of the
other Loan Documents; (f) any sale, lease, transfer or other disposition of the
assets of any Borrower or any consolidation or merger of any Borrower with or
into any other Person, corporation, or entity, or any transfer or other
disposition by any Borrower or any other holder of any shares of Capital Stock
of any Borrower; (g) any bankruptcy, insolvency, reorganization or similar
proceedings involving or affecting any Borrower; (h) the release or discharge of
any Borrower from the performance or observance of any agreement, covenant, term
or condition under any of the Bank Obligations or contained in any of the Loan
Documents by operation of law; or (i) any other cause whether similar or
dissimilar to the foregoing which, in the absence of this provision, would
release, affect or impair the obligations, covenants, agreements and duties of
any Borrower hereunder, including without limitation any act or omission by the
Agent, or the Bank or any other any Person which increases the scope of such
Borrower's risk; and in each case described in this paragraph whether or not any
Borrower shall have notice or knowledge of any of the foregoing, each of which
is specifically waived by each Borrower. Each Borrower warrants to the Agent and
the Banks that it has adequate means to obtain from each other Borrower on a
continuing basis information concerning the financial condition and other
matters with respect to the Borrowers and that it is not relying on the Agent or
the Banks to provide such information either now or in the future.
10.19 Waivers, Etc. Each Borrower unconditionally waives: (a) notice of any
of the matters referred to in Section 10.18 above; (b) all notices which may be
required by statute, rule or law or otherwise to preserve any rights of the
Agent or the Banks including, without limitation, presentment to and demand of
payment or performance from the other Borrowers and protect for non-payment or
dishonor; (c) any right to the exercise by the Agent or the Banks of any right,
remedy, power or privilege in connection with any of the Loan Documents; (d) any
requirement that the Agent or the Banks in the event of any default by any
Borrower, first make demand upon or seek to enforce remedies against, such
Borrower or any other Borrower before demanding payment under or seeking to
enforce this Agreement against any other Borrower; (f) any right to notice of
the disposition of any security which the Agent or the Banks may hold from any
Borrower or otherwise and any right to object to the commercial reasonableness
of the disposition of any such security; and (g) all errors and omissions in
connection with the Agent's or any Bank's administration of any of the Bank
Obligations, any of the Loan Documents, or any other act or omission of the
Agent or any Bank which changes the scope of the Borrower's risk, except as a
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<PAGE>
result of the gross negligence or willful misconduct of the Agent or any Bank.
The obligations of each Borrower hereunder shall be complete and binding
forthwith upon the execution of this Agreement and subject to no condition
whatsoever, precedent or otherwise, and notice of acceptance hereof or action in
reliance hereon shall not be required.
10.20 Confidentiality. The Banks and the Agent shall hold all confidential
information obtained pursuant to the requirements of this Agreement which has
been identified as such by any Borrower in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with this Agreement or as reasonably
required by any bona fide transferee or participant in connection with the
contemplated transfer of any Note or participation therein or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process. Without limiting the foregoing, it is expressly understood that
such confidential information shall not include information which, at the time
of disclosure is in the public domain or, which after disclosure, becomes part
of the public domain or information which any Bank or the Agent had obtained
prior to the time of disclosure and identification by any Borrower under this
Section 10.20, or information received by any Bank or the Agent from a third
party. Nothing in this Section 10.20 or otherwise shall prohibit any Bank or the
Agent from disclosing any confidential information to the other Banks or the
Agent or render any of them liable in connection with any such disclosure.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written, which
shall be the Effective Date of this Agreement.
Address for Notices:
COMSTOCK RESOURCES, INC.
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
-------------------
Dallas, Texas 75244 M. Jay Allison, its chairman, president
Attention: M. Jay Allison and chief executive officer
Telephone: (972) 701-2000
Telecopy: (972) 701-2111
Address for Notices
COMSTOCK OIL & GAS, INC.
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
-------------------
Dallas, Texas 75244 M. Jay Allison, its chairman, president
Attention: M. Jay Allison and chief executive officer
Telephone: (972) 701-2000
Telecopy: (972) 701-2111
COMSTOCK OIL & GAS, LOUISIANA, INC.
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
-------------------
Dallas, Texas 75244 M. Jay Allison, its chairman, president
Attention: M. Jay Allison and chief executive officer
Telephone: (972) 701-2000
Telecopy: (972) 701-2111
COMSTOCK OFFSHORE, LLC
5005 LBJ Freeway, Suite 1000 By: /s/ M. JAY ALLISON
-------------------
Dallas, Texas 75244 M. Jay Allison, its chairman, president
Attention: M. Jay Allison and chief executive officer
Telephone: (972) 701-2000
Telecopy: (972) 701-2111
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<PAGE>
One First National Plaza THE FIRST NATIONAL BANK OF CHICAGO,
Suite 0362 as a Bank and as Agent
Chicago, Illinois 60670
Attention: Carl Skoog By: /s/ CARL SKOOG
---------------
Telephone No: (312) 732-8011 Its: Authorized Agent
Facsimile No: (312) 732-3055
Commitment Amount: $36,794,642.85
Pro Rata Share: 22.6428571%
909 Fannin Street, Ste. 1700 TORONTO DOMINION (TEXAS), INC.
Houston, Texas 77010 as a Bank and as Syndication Agent
Attention: Manager,
Credit Administration
Telephone No: (713) 653-8200
Facsimile No: (713) 652-2647 By: /s/ DAVID P. PARKER
Commitment Amount: $29,017,857.15 --------------------
Pro Rata Share: 17.8571428% Its: Vice President
1200 Smith Street, Ste. 3100 PARIBAS
Houston, Texas 77002
Attention: Mike Fiuzat By: /s/ BART SCHOUEST
Telephone No: (713) 659-4811 ------------------
Facsimile No: (713) 659-6915 Its: Managing Director
Commitment Amount: $23,214,285.72
Pro Rata Share: 14.2857142% By: /s/ MICHAEL FIUZAT
------------------
Its: Vice President
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<PAGE>
Commitment Amount: $21,821,428.57 MEESPIERSON CAPITAL CORP.
Pro Rata Share: 13.4285714%
By: /s/ KAREL LOUMAN
-----------------
Its: Managing Director
By:/s/ DARRELL W. HOLLEY
---------------------
Its: Senior Vice President
Address for Operational Notices:
MeesPierson Capital Corp.
300 Crescent Court, Suite 1750
Dallas, Texas 75201
Yolanda Dittmar
Telephone: (214) 754-0009
Telefax: (214) 754-5981
ADDRESSES FOR OTHER NOTICES:
MeesPierson Capital Corp.
300 Crescent Court, Suite 1750
Dallas, Texas 75201
Attn: Karel Louman
Telephone: (214) 754-0009
Telefax: (214) 754-5981
11 West 42nd Street, 7th Floor CHRISTIANIA BANK OG KREDITKASSE, ASA
New York, New York 10036
Attention: Steve Phillips By: /s/ PETER M. DODGE
Telephone No: (212) 827-4836 -------------------
Facsimile No: (212) 827-4888 Its: Sr. Vice President
Commitment Amount: $14,508,928.57
Pro Rata Share: 8.8925714% By: /s/ CARL SVENDEN
----------------
Its: Vice President
1000 Louisiana Street, Suite 5360 CREDIT LYONNAIS NEW YORK BRANCH
Houston, Texas 77002
Attention: Christine Smith Byerley
Telephone No. (713) 751-0500
Facsimile No: (713) 751-0307 By: /s/ PHILIPPE SOUSTRA
Commitment Amount: $14,508,928.57 ---------------------
Pro Rata Share: 8.9285714% Its: Senior Vice President
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<PAGE>
565 Fifth Avenue BANK OF SCOTLAND
New York, NY 10017
Attention: Annie Chin Tat
Telephone No. (212) 450-0871
Facsimile No: (212) 557-9460 By: /s/ ANNIE CHIN TAT
Commitment Amount: $13,928,571.43 -------------------
Pro Rata Share: 8.5714285% Its Senior Vice President
2121 San Jacinto, Ste. 1850 NATIONAL BANK OF CANADA
Dallas, Texas 75201
Attention: Doug Clark By: /s/ LARRY L. SEARS
Telephone No: (214) 871-1265 -------------------
Facsimile No: (214) 871-2015 Its: Vice President
Commitment Amount: $8,705,357.14
Pro Rata Share: 5.3571428% By: /s/ DOUG CLARK
----------------
Its: Vice President
Lending Office for Floating Rate Loans
125 West 55th Street, 23rd Floor
New York, New York 10019
Lending Office for Eurodollar Loans
125 West 55th Street, 23rd Floor
New York, New York 10019
E-110
$150,000,000
COMSTOCK RESOURCES, INC.
11 1/4% SENIOR NOTES DUE 2007
PLACEMENT AGREEMENT
April 26, 1999
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<PAGE>
April 26, 1999
Morgan Stanley & Co. Incorporated
Banc One Capital Markets, Inc.
TD Securities (USA) Inc.
Paribas Corporation
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Comstock Resources, Inc., a Nevada corporation (the "Company"), proposes to
issue and sell to the several purchasers named in Schedule I hereto (the
"Placement Agents") $150,000,000 principal amount of its 11 1/4% Senior Notes
due 2007 (the "Securities") to be issued pursuant to the provisions of an
Indenture to be dated as of April 29, 1999 (the "Indenture") among the Company,
the Guarantors (as defined below) and U.S. Trust Company of Texas, N.A., as
Trustee (the "Trustee"). The Securities will be guaranteed (the "Subsidiary
Guarantees") by each of the entities listed on Schedule II hereto (each, a
"Guarantor" and collectively the "Guarantors").
The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act and in offshore transactions in reliance
on Regulation S under the Securities Act ("Regulation S").
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement to be dated as of
April 29, 1999 between the Company, the Guarantors and the Placement Agents (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum (the "Preliminary Memorandum") and will prepare
a final offering memorandum (the "Final Memorandum" and, with the Preliminary
Memorandum, each a "Memorandum") including or incorporating by reference a
description of the terms of the Securities, the terms of the offering and a
description of the Company. As used herein, the term "Memorandum" shall include
in each case the documents incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein with respect to a
Memorandum shall include all documents deemed to be incorporated by reference in
the Preliminary Memorandum or Final Memorandum that are filed subsequent to the
date of such Memorandum with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Concurrently with the issue and sale of the Securities to the Placement
Agents, the Company is selling to certain purchasers 1,948,001 shares of its
Series A 1999 Convertible Preferred Stock , par value $10.00 per share (the
"Series A Preferred Stock"), and 1,051,999 shares of its Series B 1999
NonConvertible Preferred Stock, par value $10.00 per share (the "Series B
Preferred Stock").
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1. Representations and Warranties. The Company and the Guarantors jointly
and severally represent and warrant to, and agree with, you that:
(a) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in either Memorandum complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder and
(ii) the Preliminary Memorandum does not contain and the Final Memorandum,
in the form used by the Placement Agents to confirm sales and on the
Closing Date (as defined in Section 4), will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in either Memorandum based upon information relating to any
Placement Agent furnished to the Company in writing by such Placement Agent
through you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in each Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly organized, is validly
existing as a corporation or limited liability company in good standing
under the laws of the jurisdiction of its organization, has the corporate
power and authority to own its property and to conduct its business as
described in each Memorandum and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; all of the issued shares of capital
stock or other ownership interest of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly, or indirectly through one of the
other subsidiaries, by the Company, free and clear of all liens,
encumbrances, equities or claims, except for pledges of such shares or
ownership interest pursuant to the Company's bank credit facility described
in the Memorandum.
(d) This Agreement has been duly authorized, executed and delivered by
the Company and each of the Guarantors.
(e) All of the shares of common stock, par value $.50 per share
("Common Stock"), of the Company that are outstanding have been duly
authorized and are validly issued, fully paid and non-assessable.
(f) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Placement Agents in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity, and will be entitled to the
benefits of the Indenture and the Registration Rights Agreement pursuant to
which such Securities are to be issued.
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(g) Each Subsidiary Guarantee to be endorsed on the Securities by each
Guarantor has been duly authorized by such Guarantor and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Placement Agents in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Guarantors, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity, and will be entitled to
the benefits of the Indenture and the Registration Rights Agreement
pursuant to which such Subsidiary Guarantees are to be issued.
(h) Each of the Indenture and the Registration Rights Agreement has
been duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company and each of the Guarantors, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles
of equity and except as rights to indemnification and contribution under
the Registration Rights Agreement may be limited under applicable law.
(i) The Securities, the Subsidiary Guarantees, the Indenture and the
Registration Rights Agreement will conform in all material respects to the
respective statements relating thereto contained in the Final Memorandum
and will be in substantially the respective forms previously delivered to
the Placement Agents.
(j) The execution and delivery by the Company and the Guarantors, as
the case may be, of, and the performance by the Company and the Guarantors,
as the case may be, of their obligations under, this Agreement, the
Indenture, the Registration Rights Agreement, the Securities and the
Subsidiary Guarantees will not contravene any provision of applicable law
or the certificate or articles of incorporation or by-laws or other
organizational documents of the Company or any of the Guarantors or any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
or any of the Guarantors of its obligations under this Agreement, the
Indenture, the Registration Rights Agreement, the Securities or the
Subsidiary Guarantors, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Securities and by Federal and state securities laws with respect to
the Company's obligations under the Registration Rights Agreement.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Final Memorandum.
(l) Subsequent to the respective dates as of which information is
given in the Final Memorandum, (1) the Company and its subsidiaries have
not incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course of
business; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock other than ordinary and customary dividends;
and (3) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its subsidiaries,
except in each case as described in the Final Memorandum.
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(m) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than proceedings accurately
described in all material respects in each Memorandum and proceedings that
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company
and the Guarantors to perform their obligations under this Agreement, the
Indenture, the Registration Rights Agreement, the Securities or the
Subsidiary Guarantees or to consummate the transactions contemplated by the
Final Memorandum.
(n) Neither the Company nor any of its subsidiaries is in violation of
its certificate or articles of incorporation or by-laws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of its
subsidiaries or of any judgement, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any of its
subsidiaries, or in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their respective
properties may be bound.
(o) The accountants, Arthur Andersen LLP, who have certified or shall
certify the financial statements included in each Memorandum, are
independent public accountants as required by the Securities Act.
(p) Lee Keeling and Associates, Inc. are independent petroleum
consultants with respect to the Company and its subsidiaries.
(q) The consolidated historical financial statements, together with
related schedules and notes, included in each Memorandum comply as to form
in all material respects with the requirements applicable to registration
statements on Form S-1 under the Securities Act. Such historical financial
statements present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and its
subsidiaries on the basis stated in each Memorandum at the respective dates
or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein. The other financial and statistical
information and data included in each Memorandum are accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company and its subsidiaries.
(r) The Company and each of its subsidiaries has (1) generally
satisfactory title to all its interests in its oil and gas properties,
title investigations having been carried out by the Company and each of its
subsidiaries in accordance with the general practice in the oil and gas
industry, (2) good and marketable title in fee simple to all other real
property owned by it and (3) good and marketable title to all personal
property owned by it, in each case free and clear of all liens,
encumbrances, claims, security interests, subleases and defects except such
as are described in the Final Memorandum or such as do not materially
affect the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings of the Company and its subsidiaries.
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(s) None of the Company or its subsidiaries has violated any
environmental safety or similar law or regulation applicable to its
business relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permits, licenses or other
approvals required of them under applicable Environmental Laws to own,
lease and operate their respective properties and to conduct their business
in the manner described in the Final Memorandum, is violating any terms and
conditions of any such permit, license or approval or has permitted to
occur any event that allows, or after notice or lapse of time would allow,
revocation or termination of any such permit, license or approval or result
in any other impairment of their rights thereunder, which in each case
would have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(t) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(u) The Company and each of its subsidiaries have filed all material
tax returns required to be filed, which returns are complete and correct in
all material respects, and neither the Company nor any of its subsidiaries
is in default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto.
(v) The Company and its subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Final Memorandum as being owned by them or any
of them or necessary for the conduct of their respective businesses, and
the Company is not aware of any claim to the contrary or any challenge by
any other person to the rights of the Company and its subsidiaries with
respect to the foregoing.
(w) The Company and its subsidiaries are insured by the insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for; and neither the
Company nor any of its subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Final Memorandum.
(x) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations of
the Company or any of its subsidiaries will be affected by the Year 2000
Problem (that is, any significant risk that computer hardware or software
applications used by the Company and its subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000); as a result of such review, (1) the Company has
no reason to believe, and does not believe, that (A) there are any issues
related to the Company's preparedness to address the Year 2000 Problem that
are of a character required to be described or referred to in the Final
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Memorandum which have not been accurately described in the Final Memorandum
and (B) the Year 2000 Problem will have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, or result
in any material loss or interference with the business or operations of the
Company and its subsidiaries, taken as a whole; and (2) the Company
reasonably believes, after due inquiry, that the suppliers, vendors,
customers or other material third parties used or served by the Company and
such subsidiaries are addressing or will address the Year 2000 Problem in a
timely manner, except to the extent that a failure to address the Year 2000
Problem by any supplier, vendor, customer or material third party would not
have a material adverse effect on the condition, financial or otherwise, or
on the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
(y) All indebtedness of the Company and the Guarantors that will be
repaid with the proceeds of the issuance and sale of the Securities was
incurred, and the indebtedness represented by the Securities is being
incurred, for proper purposes and in good faith and each of the Company and
the Guarantors was, at the time of the incurrence of such indebtedness that
will be repaid with the proceeds of the issuance and sale of the
Securities, and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Securities) solvent,
and had at the time of the incurrence of such indebtedness that will be
repaid with the proceeds of the issuance and sale of the Securities and
will have on the Closing Date (after giving effect to the application of
the proceeds from the issuance of the Securities) sufficient capital for
carrying on their respective business and were, at the time of the
incurrence of such indebtedness that will be repaid with the proceeds of
the issuance and sale of the Securities and will be on the Closing Date
(after giving effect to the application of the proceeds from the issuance
of the Securities), able to pay their respective debts as they mature.
(z) The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Final Memorandum, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended.
(aa) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "Affiliate") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) which is or will be integrated with the sale
of the Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of the
Securities, (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(bb) None of the Company, its Affiliates or any person acting on its
or their behalf has engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Securities and the
Company and its Affiliates and any person acting on its or their behalf
have complied and will comply with the offering restrictions requirement of
Regulation S, except no representation, warranty or agreement is made by
the Company in this paragraph with respect to the Placement Agents.
(cc) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Placement Agents in the manner
contemplated by this Agreement to register the Securities and the
Subsidiary Guarantees under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended.
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(dd) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(ee) The Series A Preferred Stock and the Series B Preferred Stock
will conform in all material respects to the respective statements relating
thereto contained in the Final Memorandum and will be in substantially the
respective forms previously delivered to the Placement Agents. The issuance
and sale of the Series A Preferred Stock and the Series B Preferred Stock
by the Company does not require registration under the Securities Act nor
does it require any consent, approval, authorization or order of, or
qualification with, any governmental body or agency. The issuance and sale
of the Series A Preferred Stock and the Series B Preferred Stock by the
Company does not require the consent, or approval or authorization of the
New York Stock Exchange or the shareholders of the Company.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Placement Agents, and each Placement Agent, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Securities set forth in Schedule I
hereto opposite its name at a purchase price of 96.7453% of the principal amount
thereof (the "Purchase Price") plus accrued interest, if any, to the Closing
Date.
The Company hereby agrees that, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Placement Agents, it will not,
during the period beginning on the date hereof and continuing to and including
the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt
of the Company or warrants to purchase debt of the Company substantially similar
to the Securities (other than the sale of the Securities under this Agreement).
3. Terms of Offering. You have advised the Company that the Placement
Agents will make an offering of the Securities purchased by the Placement Agents
hereunder on the terms to be set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Securities shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Securities for the respective accounts of the several Placement
Agents at 10:00 a.m., New York City time, on April 29, 1999, or at such other
time on the same or such other date, not later than May 6, 1999, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Closing Date."
Certificates for the Securities shall be in definitive form or global form,
as specified by you, and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date. The certificates evidencing the Securities shall be delivered to
you on the Closing Date for the respective accounts of the several Placement
Agents, with any transfer taxes payable in connection with the transfer of the
Securities to the Placement Agents duly paid, against payment of the Purchase
Price therefor plus accrued interest, if any, to the date of payment and
delivery.
5. Conditions to the Placement Agents' Obligations. The several obligations
of the Placement Agents to purchase and pay for the Securities on the Closing
Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
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(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities or in the rating outlook for the Company by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Final Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company and each of the Guarantors, to the effect set forth in Section
5(a)(i) and to the effect that the representations and warranties of the
Company and the Guarantors contained in this Agreement are true and correct
as of the Closing Date and that the Company and the Guarantors have
complied with all of the agreements and satisfied all of the conditions on
their part to be performed or satisfied hereunder on or before the Closing
Date.
The officers signing and delivering such certificates may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the Closing Date an
opinion of Locke Liddell & Sapp LLP, outside counsel for the Company and
the Guarantors, dated the Closing Date, to the effect set forth in Exhibit
A. Such opinion shall be rendered to the Placement Agents at the request of
the Company and the Guarantors and shall so state therein.
(d) The Placement Agents shall have received on the Closing Date an
opinion of Baker & Botts, L.L.P., counsel for the Placement Agents, dated
the Closing Date, to the effect set forth in Exhibit B.
(e) The Placement Agents shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Placement Agents, from Arthur Andersen LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Final Memorandum; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.
(f) The Placement Agents shall have received a counterpart, conformed
as executed, of the Indenture which shall have been entered into by the
Company, the Guarantors and the Trustee.
(g) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Placement Agents shall have received
an original copy thereof, duly executed by the Company and the Guarantors.
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(h) The sale by the Company of 1,948,001 shares of its Series A
preferred Stock and 1,051,999 shares of its Series B preferred Stock for an
aggregate purchase price of $30,000,000 shall have been consummated prior
to or concurrently with the sale by the Company of the Securities pursuant
to this Agreement.
6. Covenants of the Company. In further consideration of the agreements of
the Placement Agents contained in this Agreement, the Company and the Guarantors
covenant with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c), as many
copies of the Final Memorandum, any documents incorporated by reference
therein and any supplements and amendments thereto as you may reasonably
request.
(b) Before amending or supplementing either Memorandum, to furnish to
you a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the date
on which all of the Securities shall have been sold by the Placement
Agents, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Final Memorandum in order to make the
statements therein, in the light of the circumstances when the Final
Memorandum is delivered to a purchaser, not misleading, or if, in the
opinion of the Placement Agents, it is necessary to amend or supplement the
Final Memorandum to comply with applicable law, forthwith to prepare and
furnish, at its own expense, to the Placement Agents, either amendments or
supplements to the Final Memorandum so that the statements in the Final
Memorandum as so amended or supplemented will not, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented,
will comply with applicable law.
(d) To endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(e) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of their obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's and the Guarantors' counsel and the Company's and the Guarantors'
accountants in connection with the issuance and sale of the Securities and
all other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies thereof
to the Placement Agents, in the quantities herein above specified, (ii) all
costs and expenses related to the transfer and delivery of the Securities
to the Placement Agents, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection with
the qualification of the Securities for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Placement
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Agents in connection with such qualification and in connection with the
Blue Sky or legal investment memorandum, (iv) any fees charged by rating
agencies for the rating of the Securities, (v) all document production
charges and expenses of counsel to the Placement Agents (but not including
their fees for professional services) in connection with the preparation of
this Agreement, (vi) the fees and expenses, if any, incurred in connection
with the admission of the Securities for trading in PORTAL or any
appropriate market system, (vii) the costs and charges of the Trustee and
any transfer agent, registrar or depositary, (viii) the cost of the
preparation, issuance and delivery of the Securities, (ix) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(x) all other cost and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which provision
is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 8, and the last paragraph of
Section 10, the Placement Agents will pay all of their costs and expenses,
including fees and disbursements of their counsel, travel and lodging
expenses of representatives of the Placement Agents, transfer taxes payable
on resale of any of the Securities by them and any advertising expenses
connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the
Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(h) While any of the Securities remain "restricted securities" within
the meaning of the Securities Act, to make available, upon request, to any
seller of such Securities the information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company is then subject to Section 13
or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(j) None of the Company, its Affiliates or any person acting on its or
their behalf (other than the Placement Agents) will engage in any directed
selling efforts (as that term is defined in Regulation S) with respect to
the Securities, and the Company and its Affiliates and each person acting
on its or their behalf (other than the Placement Agents) will comply with
the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them.
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7. Offering of Securities; Restrictions on Transfer. (a) Each Placement
Agent, severally and not jointly, represents and warrants that such Placement
Agent is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Securities by any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for such Securities only from,
and will offer such Securities only to, persons that it reasonably believes to
be (A) in the case of offers inside the United States, QIBs and (B) in the case
of offers outside the United States, to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)) in reliance upon Regulation S
under the Securities Act that, in each case, in purchasing such Securities are
deemed to have represented and agreed as provided in the Final Memorandum under
the caption "Transfer Restrictions".
(b) Each Placement Agent, severally and not jointly, represents, warrants,
and agrees with respect to offers and sales outside the United States that:
(i) such Placement Agent understands that no action has been or will
be taken in any jurisdiction by the Company that would permit a public
offering of the Securities, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) such Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Securities or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Rule 144A or
Regulation S under the Securities Act or pursuant to another exemption from
the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Securities and will offer
and sell the Securities (A) as part of their distribution at any time and
(B) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates nor any persons acting on its
or their behalf have engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Securities, and
any such Placement Agent, its Affiliates and any such persons have complied
and will comply with the offering restrictions requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and will not
offer or sell any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995 or the Financial Services Act 1986; (B) complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and (C) only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Securities to a person who is of a kind
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described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom
such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Securities have not
been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees not to
offer or sell, directly or indirectly, any Securities in Japan or for the
account of any resident thereof except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to confirmation of
sales of the Securities, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering and the
closing date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnity and Contribution. (a) The Company and the Guarantors, jointly
and severally, agree to indemnify and hold harmless each Placement Agent and
each person, if any, who controls any Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
either Memorandum (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Placement Agent furnished to
the Company in writing by such Placement Agent through you expressly for use
therein.
(b) Each Placement Agent agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Guarantors, their directors, its officers and
each person, if any, who controls the Company or any Guarantor within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company and the
Guarantors to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use in either Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
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indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Placement Agents on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause 8(d)(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors on the one hand
and of the Placement Agents on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Placement
Agents on the other hand in connection with the offering of the Securities shall
be deemed to be in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the Company
and the Guarantors and the total discounts and commissions received by the
Placement Agents, in each case as set forth in the Final Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the Company
and the Guarantors on the one hand and of the Placement Agents on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and the
Guarantors or by the Placement Agents and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
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statement or omission. The Placement Agents' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amount of Securities they have purchased hereunder, and not
joint.
(e) The Company, the Guarantors and the Placement Agents agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Placement Agents were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities resold by
it in the initial placement of such Securities were offered to investors exceeds
the amount of any damages that such Placement Agent has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Placement Agent or any person controlling any Placement
Agent or by or on behalf of the Company, or any Guarantor, their officers or
directors or any person controlling the Company or any Guarantor and (iii)
acceptance of and payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner contemplated in the Final
Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Placement Agents shall fail
or refuse to purchase Securities that it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Placement Agent or Placement Agents agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, the other Placement Agents shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Securities set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
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that in no event shall the principal amount of Securities that any Placement
Agent has agreed to purchase pursuant to this Agreement be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Placement Agent. If, on the
Closing Date any Placement Agent or Placement Agents shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to you
and the Company for the purchase of such Securities are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Placement Agent or of the Company and the Guarantors. In
any such case either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Final Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Placement Agent from liability in respect of any default
of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement Agents, or any of
them, because of any failure or refusal on the part of the Company or any
Guarantor to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or any Guarantor shall be unable to
perform its obligations under this Agreement, the Company and the Guarantors
will reimburse the Placement Agents or such Placement Agents as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Placement Agents in connection with this Agreement
or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
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<PAGE>
Very truly yours,
COMSTOCK RESOURCES, INC.
By: /s/ M. JAY ALLISON
----------------------
Name: M. Jay Allison
Title: Chairman of the Board, President
and Chief Executive Officer
COMSTOCK OIL & GAS, INC.
By: /s/ M. JAY ALLISON
Name: M. Jay Allison
Title: Chairman of the Board, President
and Chief Executive Officer
COMSTOCK OIL & GAS - LOUISIANA, INC.
By: /s/ M. JAY ALLISON
----------------------
Name: M. Jay Allison
Title: Chairman of the Board, President
and Chief Executive Officer
COMSTOCK OFFSHORE LLC
By: /s/ M. JAY ALLISON
----------------------
Name: M. Jay Allison
Title: Chairman of the Board, President
and Chief Executive Officer
Accepted as of the date hereof.
Morgan Stanley & Co. Incorporated
Banc One Capital Markets, Inc.
TD Securities (USA) Inc.
Paribas Corporation
Acting severally on behalf of themselves
and the several Placement Agents named
in Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ DANIEL H. KLAUSNER
- ----------------------------
Name: Daniel H. Klausner
Title: Vice President
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SCHEDULE I
Principal Amount of
Placement Agent Securities to be Purchased
- --------------- --------------------------
Morgan Stanley & Co. Incorporated........ $112,500,000
Banc One Capital Markets, Inc............ 25,005,000
TD Securities (USA) Inc.................. 7,500,000
Paribas Corporation...................... 4,995,000
------------
Total......................... $150,000,000
============
E-128
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into April 29, 1999, among COMSTOCK RESOURCES, INC., a Nevada
corporation (the "Company"), COMSTOCK OIL & GAS, INC., a Nevada corporation,
COMSTOCK OIL & GAS - LOUISIANA, INC., a Nevada corporation, and COMSTOCK
OFFSHORE LLC, a Nevada limited liability company (each, a "Guarantor," and
collectively, the "Guarantors"), and MORGAN STANLEY & CO. INCORPORATED, BANC ONE
CAPITAL MARKETS, INC., TD SECURITIES (USA) INC. and PARIBAS CORPORATION (each, a
"Placement Agent," and collectively, the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated April
26, 1999, among the Company, the Guarantors and the Placement Agents (the
"Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $150,000,000 principal amount of the
Company's 11 1/4% Senior Notes due 2007 (the "Securities"). In order to induce
the Placement Agents to enter into the Placement Agreement, the Company and the
Guarantors here agreed to provide to the Placement Agents and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Placement
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
5. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble
and shall also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the
Company and the Guarantors of Exchange Securities for Registrable
Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration
under the 1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if applicable,
on another appropriate form) and all amendments and supplements to
such registration statement, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Exchange Securities" shall mean securities issued by the
Company (and guaranteed by the Guarantors) under the Indenture
containing terms identical to the Securities (except that (i) interest
thereon shall accrue from the last date on which interest was paid on
the Securities or, if no such interest has been paid, from the Closing
Date and (ii) the Exchange Securities will not contain restrictions on
transfer) and to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.
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"Holder" shall mean the Placement Agents, for so long as
they own any Registrable Securities, and each of their successors,
assigns and direct and indirect transferees who become registered
owners of Registrable Securities under the Indenture; provided that
for purposes of Sections 4 and 5 of this Agreement, the term "Holder"
shall include Participating Broker-Dealers (as defined in Section
4(a)).
"Indenture" shall mean the Indenture relating to the
Securities dated as of April 29, 1999 among the Company, the
Guarantors and U.S. Trust Company of Texas, N.A., as trustee, and as
the same may be amended from time to time in accordance with the terms
thereof.
"Majority Holders" shall mean the Holders of a majority of
the aggregate principal amount of outstanding Registrable Securities;
provided that whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or any of its affiliates
(as such term is defined in Rule 405 under the 1933 Act) (other than
the Placement Agents or subsequent Holders of Registrable Securities
if such subsequent holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Securities) shall not be
counted in determining whether such consent or approval was given by
the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization,
or a government or agency or political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble.
"Placement Agreement" shall have the meaning set forth in
the preamble.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities
covered by a Shelf Registration Statement, and by all other amendments
and supplements to such prospectus, and in each case including all
material incorporated by reference therein.
"Registrable Securities" shall mean the Securities;
provided, however, that the Securities shall cease to be Registrable
Securities (i) when a Registration Statement with respect to such
Securities shall have been declared effective under the 1933 Act and
such Securities shall have been disposed of pursuant to such
Registration Statement, (ii) when such Securities have been sold to
the public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the 1933 Act or (iii) when such
Securities shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company and the
Guarantors with this Agreement, including without limitation: (i) all
SEC, stock exchange or National Association of Securities Dealers,
Inc. registration and filing fees, (ii) all fees and expenses incurred
in connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of
any of the Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating
to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) all fees and disbursements relating to the
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<PAGE>
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for the Company and the Guarantors
and, in the case of a Shelf Registration Statement, the fees and
disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel
for the Placement Agent) and (viii) the fees and disbursements of the
independent public accountants of the Company and the Guarantors,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but
excluding fees and expenses of counsel to the underwriters (other than
fees and expenses set forth in clause (ii) above) or the Holders and
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a
Holder.
"Registration Statement" shall mean any registration
statement of the Company and the Guarantors that covers any of the
Exchange Securities or Registrable Securities pursuant to the
provisions of this Agreement and all amendments and supplements to any
such Registration Statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company and the Guarantors pursuant to
the provisions of Section 2(b) of this Agreement which covers all of
the Registrable Securities (but no other securities unless approved by
the Holders whose Registrable Securities are covered by such Shelf
Registration Statement) on an appropriate form under Rule 415 under
the 1933 Act, or any similar rule that may be adopted by the SEC, and
all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
"Underwriter" shall have the meaning set forth in Section 3
hereof.
"Underwritten Registration" or "Underwritten Offering" shall
mean a registration in which Registrable Securities are sold to an
Underwriter for reoffering to the public.
6. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company and the Guarantors shall use
their best efforts to cause to be filed an Exchange Offer Registration Statement
covering the offer by the Company to the Holders to exchange all of the
Registrable Securities for Exchange Securities and to have such Registration
Statement remain effective until the closing of the Exchange Offer. The Company
and the Guarantors shall commence the Exchange Offer promptly after the Exchange
Offer Registration Statement has been declared effective by the SEC and use
their best efforts to have the Exchange Offer consummated not later than 60 days
after such effective date. The Company and the Guarantors shall commence the
Exchange Offer by mailing the related exchange offer Prospectus and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:
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<PAGE>
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their
election, not later than the close of business on the last Exchange
Date, by sending to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice a
telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a statement that such Holder is withdrawing
his election to have such Registrable Securities exchanged.
As soon as practicable after the last Exchange Date, the
Company shall:
(i) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so
accepted for exchange by the Company and issue, and cause the Trustee
to promptly authenticate and mail to each Holder, an Exchange Security
equal in principal amount to the principal amount of the Registrable
Securities surrendered by such Holder.
The Company and the Guarantors shall use their best efforts to complete the
Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
The Company shall inform the Placement Agents of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Placement Agents shall have
the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company and the Guarantors determine
that the Exchange Offer Registration provided for in Section 2(a) above is not
available or may not be consummated as soon as practicable after the last
Exchange Date because it would violate applicable law or the applicable
interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any
other reason consummated by October 29, 1999 or (iii) the Exchange Offer has
been completed and in the opinion of counsel for the Placement Agents a
Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable
Securities, the Company and the Guarantors shall use their best efforts to cause
to be filed as soon as practicable after such determination, date or notice of
such opinion of counsel is given to the Company, as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
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<PAGE>
Registrable Securities and to have such Shelf Registration Statement declared
effective by the SEC. In the event the Company and the Guarantors are required
to file a Shelf Registration Statement solely as a result of the matters
referred to in clause (iii) of the preceding sentence, the Company and the
Guarantors shall use their best efforts to file and have declared effective by
the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a)
with respect to all Registrable Securities and a Shelf Registration Statement
(which may be a combined Registration Statement with the Exchange Offer
Registration Statement) with respect to offers and sales of Registrable
Securities held by the Placement Agents after completion of the Exchange Offer.
The Company and the Guarantors agree to use their best efforts to keep the Shelf
Registration Statement continuously effective until the expiration of the period
referred to in Rule 144(k) with respect to the Registrable Securities or such
shorter period that will terminate when all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement. The Company and the Guarantors further agree to
supplement or amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used by the
Company and the Guarantors for such Shelf Registration Statement or by the 1933
Act or by any other rules and regulations thereunder for shelf registration or
if reasonably requested by a Holder with respect to information relating to such
Holder, and to use its best efforts to cause any such amendment to become
effective and such Shelf Registration Statement to become usable as soon as
thereafter practicable. The Company and the Guarantors agree to furnish to the
Holders of Registrable Securities copies of any such supplement or amendment
promptly after it is used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2(a) and Section 2(b). Each Holder shall
pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. In the event the Exchange Offer is
not consummated and the Shelf Registration Statement is not declared effective
on or prior to October 29, 1999, the interest rate on the Securities will be
increased by 0.5% per annum until the Exchange Offer is consummated or the Shelf
Registration Statement is declared effective by the SEC.
(e) Without limiting the remedies available to the Placement Agents
and the Holders, the Company and the Guarantors acknowledge that any failure by
the Company or any Guarantor to comply with their respective obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable injury
to the Placement Agents or the Holders for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Placement Agents or any Holder
may obtain such relief as may be required to specifically enforce the Company's
and the Guarantors' obligations under Section 2(a) and Section 2(b) hereof.
7. Registration Procedures.
In connection with the obligations of the Company and the Guarantors
with respect to the Registration Statements pursuant to Section 2(a) and Section
2(b) hereof, the Company and the Guarantors shall as expeditiously as possible:
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(a) prepare and file with the SEC a Registration Statement
on the appropriate form under the 1933 Act, which form (x) shall be
selected by the Company and (y) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities
by the selling Holders thereof and (z) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period and cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the 1933 Act; to keep each Prospectus
current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or
dealers with respect to the Registrable Securities or Exchange
Securities;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, to counsel for the Placement Agents,
to counsel for the Holders and to each Underwriter of an Underwritten
Offering of Registrable Securities, if any, without charge, as many
copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such
Holder or Underwriter may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Securities;
and the Company and the Guarantors consent to the use of such
Prospectus and any amendment or supplement thereto in accordance with
applicable law by each of the selling Holders of Registrable
Securities and any such Underwriters in connection with the offering
and sale of the Registrable Securities covered by and in the manner
described in such Prospectus or any amendment or supplement thereto in
accordance with applicable law;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable
Securities covered by a Registration Statement shall reasonably
request in writing by the time the applicable Registration Statement
is declared effective by the SEC, to cooperate with such Holders in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. and do any and all other acts
and things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however,
that neither the Company or any Guarantor shall be required to (i)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but
for this Section 3(d), (ii) file any general consent to service of
process or (iii) subject itself to taxation in any such jurisdiction
if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder
of Registrable Securities, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or
counsel, confirm such advice in writing (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities
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covered thereby, the representations and warranties of the Company and
the Guarantors contained in any underwriting agreement, securities
sales agreement or other similar agreement, if any, relating to the
offering cease to be true and correct in all material respects or if
the Company or any Guarantor receives any notification with respect to
the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation of any proceeding for such
purpose, (v) of the happening of any event during the period a Shelf
Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements
therein not misleading and (vi) of any determination by the Company or
any Guarantor that a post-effective amendment to a Registration
Statement would be appropriate;
(f)make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment and provide immediate notice to each
Holder of the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, without charge, at least one
conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends and
enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in
such names as the selling Holders may reasonably request at least one
business day prior to the closing of any sale of Registrable
Securities;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use its best
efforts to prepare and file with the SEC a supplement or
post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
Company and the Guarantors agree to notify the Holders to suspend use
of the Prospectus as promptly as practicable after the occurrence of
such an event, and the Holders hereby agree to suspend use of the
Prospectus until the Company and the Guarantors have amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a
Registration Statement or amendment or supplement to a Prospectus or
any document which is to be incorporated by reference into a
Registration Statement or a Prospectus after initial filing of a
Registration Statement, provide copies of such document to the
Placement Agents and their counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) and make such
of the representatives of the Company and the Guarantors as shall be
reasonably requested by the Placement Agents or their counsel (and, in
the case of a Shelf Registration Statement, the Holders or their
counsel) available for discussion of such document, and shall not at
any time file or make any amendment to the Registration Statement, any
Prospectus or any amendment of or supplement to a Registration
Statement or a Prospectus or any document which is to be incorporated
by reference into a Registration Statement or a Prospectus, of which
the Placement Agents and their counsel (and, in the case of a Shelf
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Registration Statement, the Holders and their counsel) shall not have
previously been advised and furnished a copy or to which the Placement
Agents or their counsel (and, in the case of a Shelf Registration
Statement, the Holders or their counsel) shall object;
(k) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Securities or Registrable Securities, as
the case may be, cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for the Indenture to
be so qualified in accordance with the terms of the TIA and execute,
and use its best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes and all other
forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Securities, any Underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable
manner, all financial and other records, pertinent documents and
properties of the Company and the Guarantors, and cause the respective
officers, directors and employees of the Company to supply all
information reasonably requested by any such representative,
Underwriter, attorney or accountant in connection with a Shelf
Registration Statement;
(n) in the case of a Shelf Registration, use its best
efforts to cause all Registrable Securities to be listed on any
securities exchange or any automated quotation system on which similar
securities issued by the Company and the Guarantors are then listed if
requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;
(o) use its best efforts to cause the Exchange Securities or
Registrable Securities, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term
is defined in Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Securities covered by a Registration Statement, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment
such information with respect to such Holder as such Holder reasonably
requests to be included therein and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
the Company has received notification of the matters to be
incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection
therewith (including those requested by the Holders of a majority of
the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities including,
but not limited to, an Underwritten Offering and in such connection,
(i) to the extent possible, make such representations and warranties
to the Holders and any Underwriters of such Registrable Securities
with respect to the business of the Company and its subsidiaries,
including the Guarantors, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings
and confirm the same if and when requested, (ii) obtain opinions of
counsel to the Company and the Guarantors (which counsel and opinions,
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in form, scope and substance, shall be reasonably satisfactory to the
Holders and such Underwriters and their respective counsel) addressed
to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) obtain "cold comfort" letters from the
independent certified public accountants of the Company and the
Guarantors (and, if necessary, any other certified public accountant
of any subsidiary of the Company, or of any business acquired by the
Company or any Guarantor for which financial statements and financial
data are or are required to be included in the Registration Statement)
addressed to each selling Holder and Underwriter of Registrable
Securities, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings, and (iv) deliver such
documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable
Securities being sold or the Underwriters, and which are customarily
delivered in underwritten offerings, to evidence the continued
validity of the representations and warranties of the Company and the
Guarantors made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in an underwriting
agreement.
In the case of a Shelf Registration Statement, the Company and the
Guarantors may require each Holder of Registrable Securities to furnish to the
Company and the Guarantors such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company or any Guarantor of the
happening of any event of the kind described in Section 3(e)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company or any Guarantor, such Holder will deliver to the
Company (at its expense) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. If the
Company or any Guarantor shall give any such notice to suspend the disposition
of Registrable Securities pursuant to a Registration Statement, the Company and
the Guarantors shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions. The
Company and the Guarantors may give any such notice only twice during any 365
day period and any such suspensions may not exceed 30 days for each suspension
and there may not be more than two suspensions in effect during any 365 day
period.
The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
8. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any broker-dealer
that receives Exchange Securities for its own account in the Exchange Offer in
exchange for Securities that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker- Dealer"),
may be deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities.
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The Company and the Guarantors understand that it is the Staff's
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the 1933 Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets the
requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company and the Guarantors agree that the provisions of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may be, reasonably requested by the Placement Agents or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
(i) the Company and the Guarantors shall not be required to
amend or supplement the Prospectus contained in the Exchange Offer
Registration Statement, as would otherwise be contemplated by Section
3(i), for a period exceeding 180 days after the last Exchange Date (as
such period may be extended pursuant to the penultimate paragraph of
Section 3 of this Agreement) and Participating Broker-Dealers shall
not be authorized by the Company and the Guarantors to deliver and
shall not deliver such Prospectus after such period in connection with
the resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures
set forth in Section 3 of this Agreement to an Exchange Offer
Registration, to the extent not required by the positions of the Staff
of the SEC or the 1933 Act and the rules and regulations thereunder,
will be in conformity with the reasonable request to the Company by
the Placement Agents or with the reasonable request in writing to the
Company by one or more broker-dealers who certify to the Placement
Agents and the Company in writing that they anticipate that they will
be Participating Broker-Dealers; and provided further that, in
connection with such application of the Shelf Registration procedures
set forth in Section 3 to an Exchange Offer Registration, the Company
and the Guarantors shall be obligated (x) to deal only with one entity
representing the Participating Broker-Dealers, which shall be Morgan
Stanley & Co. Incorporated unless it elects not to act as such
representative, (y) to pay the fees and expenses of only one counsel
representing the Participating Broker-Dealers, which shall be counsel
to the Placement Agents unless such counsel elects not to so act and
(z) to cause to be delivered only one, if any, "cold comfort" letter
with respect to the Prospectus in the form existing on the last
Exchange Date and with respect to each subsequent amendment or
supplement, if any, effected during the period specified in clause (i)
above.
(c) The Placement Agents shall have no liability to the Company, any
Guarantor or any Holder with respect to any request that it may make pursuant to
Section 4(b) above.
9. Indemnification and Contribution.
(a) The Company and the Guarantors agree, severally and jointly, to
indemnify and hold harmless the Placement Agents, each Holder and each Person,
if any, who controls any Placement Agent or any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under
common control with, or is controlled by, any Placement Agent or any Holder,
from and against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
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Agent, any Holder or any such controlling or affiliated Person in connection
with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company or any
Guarantor shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Placement
Agents or any Holder furnished to the Company or any Guarantor in writing by or
through Morgan Stanley & Co. Incorporated or any selling Holder expressly for
use therein. In connection with any Underwritten Offering permitted by Section
3, the Company and the Guarantors, severally and jointly, will also indemnify
the Underwriters, if any, selling brokers, dealers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of the
1933 Act and the 1934 Act) to the same extent as provided above with respect to
the indemnification of the Holders, if requested in connection with any
Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Guarantors, the Placement Agents and the other
selling Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company, any
Guarantor, any Placement Agent and any other selling Holder within the meaning
of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same
extent as the foregoing indemnity from the Company and the Guarantors to the
Placement Agents and the Holders, but only with reference to information
relating to such Holder furnished to the Company or any Guarantor in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
Persons, if any, who control any Placement Agent within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company and the Guarantors, their respective directors, their respective
officers who sign the Registration Statement and each Person, if any, who
controls the Company or any Guarantor within the meaning of either such Section
and (c) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Holders and all Persons, if any, who control any Holders
within the meaning of either such Section, and that all such fees and expenses
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shall be reimbursed as they are incurred. In such case involving the Placement
Agents and Persons who control the Placement Agents, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated. In such case
involving the Holders and such Persons who control Holders, such firm shall be
designated in writing by the Majority Holders. In all other cases, such firm
shall be designated by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but,
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company, the Guarantors and the
Holders shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantors or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective
principal amount of Registrable Securities of such Holder that were registered
pursuant to a Registration Statement.
(e) The Company, each Guarantor and each Holder agree that it would
not be just or equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
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The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Placement Agents, any Holder or any Person controlling any Placement Agent
or any Holder, or by or on behalf of the Company or any Guarantor, or their
respective officers or directors, or any Person controlling the Company or any
Guarantor, (iii) acceptance of any of the Exchange Securities and (iv) any sale
of Registrable Securities pursuant to a Shelf Registration Statement.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Guarantors have
not entered into, and on or after the date of this Agreement will not enter
into, any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's or any Guarantor's other issued and outstanding securities under
any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; provided, however, that no amendment, modification,
supplement, waiver or consent to any departure from the provisions of Section 5
hereof shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company or
any Guarantor, initially at the Company's or the Guarantor's respective address
set forth in the Placement Agreement and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section 6(c).
All such 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
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Placement Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be conclusively deemed to have agreed to be bound
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by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof. The Placement Agents
(in their capacity as Placement Agents) shall have no liability or obligation to
the Company and the Guarantors with respect to any failure by a Holder to comply
with, or any breach by any Holder of, any of the obligations of such Holder
under this Agreement.
(e) Purchases and Sales of Securities. The Company and the Guarantors
shall not, and shall use their best efforts to cause their affiliates (as
defined in Rule 405 under the 1933 Act) not to, purchase and then resell or
otherwise transfer any Securities.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Placement Agents, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by the laws of the
State of New York.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMSTOCK RESOURCES, INC.
By /s/ M. JAY ALLISON
Name: M. Jay Allison
--------------------
Title: Chairman of the Board
COMSTOCK OIL & GAS, INC.
By /s/ M. JAY ALLISON
Name: M. Jay Allison
--------------------
Title: Chairman of the Board, President and
Chief Executive Officer
COMSTOCK OIL & GAS - LOUISIANA, INC.
By /s/ M. JAY ALLISON
---------------------
Name: M. Jay Allison
Title: Chairman of the Board, President and
Chief Executive Officer
COMSTOCK OFFSHORE LLC
By /s/ M. JAY ALLISON
---------------------
Name: M. Jay Allison
Title: Chairman of the Board, President and
Chief Executive Officer
Confirmed and accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
TD SECURITIES (USA) INC.
PARIBAS CORPORATION
By: MORGAN STANLEY & CO. INCORPORATED
By /s/ DANIEL H. KLAUSNER
- -------------------------
Name: Daniel H. Klausner
Title: Vice President
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COMSTOCK RESOURCES, INC.,
SUBSIDIARY GUARANTORS
NAMED HEREIN
and
U.S. TRUST COMPANY OF TEXAS, N.A.
Trustee
INDENTURE
Dated as of April 29, 1999
$150,000,000
11 1/4% Senior Notes due 2007
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THIS INDENTURE, dated as of April 29, 1999, is between COMSTOCK RESOURCES,
INC., a Nevada corporation (hereinafter called the "Company"), the SUBSIDIARY
GUARANTORS (as defined hereinafter) and U.S. TRUST COMPANY OF TEXAS, N.A., as
Trustee (hereinafter called the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's 11 1/4% Senior Notes
due 2007, to be issued, from time to time, in one or more series as in this
Indenture provided (the "Initial Securities") and, if and when issued pursuant
to a registered or private exchange for the Initial Securities, the Company's 11
1/4% Senior Notes due 2007 (the "Exchange Securities" and, together with the
Initial Securities, the "Securities"):
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person becomes a Restricted Subsidiary or (b) assumed in connection
with acquisitions of Properties from such Person (other than any Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary or such acquisition). Acquired Indebtedness shall be
deemed to be incurred on the date the acquired Person becomes a Restricted
Subsidiary or the date of the related acquisition of Properties from such
Person.
"Act," when used with respect to any Holder, has the meaning specified in
Section 13.3.
"Additional Assets" means (i) any Property (other than cash, Cash
Equivalents or securities) used in the Oil and Gas Business or any business
ancillary thereto, (ii) Investments in any other Person engaged in the Oil and
Gas Business or any business ancillary thereto (including the acquisition from
third parties of Capital Stock of such Person) as a result of which such other
Person becomes a Restricted Subsidiary, (iii) the acquisition from third parties
of Capital Stock of a Restricted Subsidiary or (iv) Investments pursuant to
clause (v) of the definition of "Permitted Investments."
"Adjusted Consolidated Net Tangible Assets" means (without duplication), as
of the date of determination, the remainder of:
(i) the sum of (A) discounted future net revenues from proved oil and gas
reserves of the Company and its Restricted Subsidiaries calculated in accordance
with Commission guidelines before any state, federal or foreign income taxes, as
estimated by the Company and confirmed by a nationally recognized firm of
independent petroleum engineers in a reserve report prepared as of the end of
the Company's most recently completed fiscal year for which audited financial
statements are available, as increased by, as of the date of determination, the
estimated discounted future net revenues from (1) estimated proved oil and gas
reserves acquired since such year-end, which reserves were not reflected in such
year-end reserve report, and (2) estimated oil and gas reserves attributable to
upward revisions of estimates of proved oil and gas reserves since such year-end
due to exploration, development or exploitation activities, in each case
calculated in accordance with Commission guidelines (utilizing the prices
utilized in such year-end reserve report), and decreased by, as of the date of
determination, the estimated discounted future net revenues from (3) estimated
proved oil and gas reserves produced or disposed of since such year-end and (4)
estimated oil and gas reserves attributable to downward revisions of estimates
of proved oil and gas reserves since such year-end due to changes in geological
conditions or other factors which would, in accordance with standard industry
practice, cause such revisions, in each case calculated in accordance with
Commission guidelines (utilizing the prices utilized in such year-end reserve
report); provided that, in the case of each of the determinations made pursuant
to clauses (1) through (4), such increases and decreases shall be as estimated
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by the Company's petroleum engineers, unless there is a Material Change as a
result of such acquisitions, dispositions or revisions, in which event the
discounted future net revenues utilized for purposes of this clause (i)(A) shall
be confirmed in writing by a nationally recognized firm of independent petroleum
engineers, (B) 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, (C) the Net Working Capital on a date no earlier than the
date of the Company's latest annual or quarterly financial statements and (D)
the greater of (1) the net book value on a date no earlier than the date of the
Company's latest annual or quarterly financial statements and (2) the appraised
value, as estimated by independent appraisers, of other tangible assets
(including, without duplication, Investments in unconsolidated Restricted
Subsidiaries) of the Company and its Restricted Subsidiaries, as of the date no
earlier than the date of the Company's latest audited financial statements,
minus
(ii) the sum of (A) minority interests, (B) any net gas balancing
liabilities of the Company and its Restricted Subsidiaries reflected in the
Company's latest audited financial statements, (C) to the extent included in
(i)(A) above, the discounted future net revenues, calculated in accordance with
Commission 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 (determined, if
applicable, using the schedules specified with respect thereto) and (D) the
discounted future net revenues, calculated in accordance with Commission
guidelines, attributable to reserves subject to Dollar-Denominated Production
Payments which, based on the estimates of production and price assumptions
included in determining the discounted future net revenues specified in (i)(A)
above, would be necessary to fully satisfy the payment obligations of the
Company and its Restricted Subsidiaries with respect to Dollar-Denominated
Production Payments (determined, if applicable, using the schedules specified
with respect thereto).
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
amount by which the fair value of the Properties 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
its Subsidiary Guarantee, of such Subsidiary Guarantor at such date.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of this definition, beneficial ownership of 10% or more of the voting
common equity (on a fully diluted basis) or options or warrants to purchase such
equity (but only if exercisable at the date of determination or within 60 days
thereof) of a Person shall be deemed to constitute control of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by way of merger or consolidation)
(collectively, for purposes of this definition, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary held by the Company or any Restricted Subsidiary,
(b) all or substantially all of the Properties of any division or line of
business of the Company or any of its Restricted Subsidiaries or (c) any other
Properties of the Company or any of its Restricted Subsidiaries other than (i) a
transfer of cash, Cash Equivalents, hydrocarbons or other mineral products in
the ordinary course of business or (ii) any lease, abandonment, disposition,
relinquishment or farm-out of any oil and gas Property in the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" also shall
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not include (i) any transfer of Properties (including Capital Stock) which is
governed by, and made in accordance with, the provisions of Article VII hereof;
(ii) any transfer of Properties to an Unrestricted Subsidiary, if permitted
under Section 9.9 hereof; or (iii) any transfer of Properties (including Capital
Stock) having a Fair Market Value of less than $2,500,000.
"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, with respect to any Indebtedness, as at any date of
determination, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years (and any portion thereof) from the date of determination
to the date or dates of each successive scheduled principal payment (including,
without limitation, any sinking fund or mandatory redemption payment
requirements) of such Indebtedness multiplied by (ii) the amount of each such
principal payment by (b) the sum of all such principal payments.
"Bank Credit Facility" means that certain Credit Agreement dated as of
April 29, 1999 among Comstock Resources, Inc., Comstock Oil & Gas, Inc.,
Comstock Oil & Gas - Louisiana, Inc., Comstock Offshore, LLC, as Borrowers, the
lenders party thereto from time to time, The First National Bank of Chicago, as
Administrative Agent, Toronto Dominion (Texas), Inc., as Syndication Agent and
Paribas, as Documentation Agent, together with all related documents executed or
delivered pursuant thereto at any time (including, without limitation, all
mortgages, deeds of trust, guarantees, security agreements and all other
collateral and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder provided that such
increase in borrowings is within the definition of "Permitted Indebtedness" or
is otherwise permitted under Section 9.11) or adding Subsidiaries as additional
borrowers or guarantors thereunder and all or any portion of the Indebtedness
and other Obligations under such agreement or agreements or any successor or
replacement agreement or agreements, and whether by the same or any other agent,
lender or group of lenders.
"Board of Directors" means, with respect to the Company, either the board
of directors of the Company or any duly authorized committee of such board of
directors, and, with respect to any Subsidiary, either the board of directors of
such Subsidiary or any duly authorized committee of that board or, in the case
of a Subsidiary not having a board of directors, the manager or other person
performing a function comparable to a board of directors of a corporation.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by its Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee, and with respect to a Subsidiary, a
copy of a resolution certified by the Secretary or an Assistant Secretary of
such Subsidiary to have been duly adopted by its Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
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"Borrowing Base" means, as of any date, the aggregate amount of borrowing
availability as of such date under the Bank Credit Facility that determines
availability on the basis of a borrowing base or other asset-based calculation.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the cities of New York, New
York or Dallas, Texas are authorized or obligated by law or executive order to
close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights or other equivalents in the equity interests
(however designated) in such Person, and any rights (other than debt securities
convertible into an equity interest), warrants or options exercisable for,
exchangeable for or convertible into such an equity interest in such Person.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
Property that is required to be classified and accounted for as a capital lease
obligation under GAAP, and, for the purpose of this Indenture, the amount of
such obligation at any date shall be the capitalized amount thereof at such
date, determined in accordance with GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) demand and time deposits and certificates of deposit or
acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500,000,000; (iii) commercial
paper with a maturity of 180 days or less issued by a corporation that is not an
Affiliate of the Company and is organized under the laws of any state of the
United States or the District of Columbia and rated at least A-l by S&P or at
least P-l by Moody's; (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any commercial bank meeting the specifications of clause (ii)
above; (v) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in clause (ii) above; (vi) deposits
available for withdrawal on demand with any commercial bank not meeting the
qualifications specified in clause (ii) above but which is a lending bank under
the Bank Credit Facility, provided all such deposits do not exceed $5,000,000 in
the aggregate at any one time; (vii) demand and time deposits and certificates
of deposit with any commercial bank organized in the United States not meeting
the qualifications specified in clause (ii) above, provided that such deposits
and certificates support bond, letter of credit and other similar types of
obligations incurred in the ordinary course of business; and (viii) investments
in money market or other mutual funds substantially all of whose assets comprise
securities of the types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of any event or series of events
by which (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50%
of the total Voting Stock of the Company; (b) the Company consolidates with or
merges into another Person or any Person consolidates with, or merges into, the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities or
other Property, other than any such transaction where (i) the outstanding Voting
Stock of the Company is changed into or exchanged for Voting Stock of the
surviving or resulting Person that is Qualified Capital Stock and (ii) the
holders of the Voting Stock of the Company immediately prior to such transaction
own, directly or indirectly, not less than a majority of the Voting Stock of the
surviving or resulting Person immediately after such transaction; (c) the
Company, either individually or in conjunction with one or more Restricted
Subsidiaries, sells, assigns, conveys, transfers, leases or otherwise disposes
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of, or the Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of, all or substantially all of the Properties of the Company
and the Restricted Subsidiaries, taken as a whole (either in one transaction or
a series of related transactions), including Capital Stock of the Restricted
Subsidiaries, to any Person (other than the Company or a Wholly Owned Restricted
Subsidiary); (d) during any consecutive two-year period, 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 stockholders of the Company was approved by
a vote of a two-thirds of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (e) the
liquidation or dissolution of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations thereunder issued by the
Internal Revenue Service.
"Commission" or "SEC" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding-up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated Exploration Expenses" means, for any period, exploration
expenses of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
on a pro forma basis of (a) the sum of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-cash
Charges each to the extent deducted in computing Consolidated Net Income, in
each case, for such period, of the Company and its Restricted Subsidiaries on a
consolidated basis, all determined in accordance with GAAP, decreased (to the
extent included in determining Consolidated Net Income) by the sum of (x) the
amount of deferred revenues that are amortized during such period and are
attributable to reserves that are subject to Volumetric Production Payments and
(y) amounts recorded in accordance with GAAP as repayments of principal and
interest pursuant to Dollar-Denominated Production Payments, to (b) the sum of
such Consolidated Interest Expense for such period; provided, however, that (i)
the Consolidated Fixed Charge Coverage Ratio shall be calculated on a pro forma
basis on the assumptions that (A) the Indebtedness to be incurred (and all other
Indebtedness incurred after the first day of such period of four full fiscal
quarters referred to in Section 9.11(a) hereof through and including the date of
determination), and (if applicable) the application of the net proceeds
therefrom (and from any other such Indebtedness), including to refinance other
Indebtedness, had been incurred on the first day of such four-quarter period
and, in the case of Acquired Indebtedness, on the assumption that the related
transaction (whether by means of purchase, merger or otherwise) also had
occurred on such date with the appropriate adjustments with respect to such
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acquisition being included in such pro forma calculation and (B) any acquisition
or disposition by the Company or any Restricted Subsidiary of any Properties
outside the ordinary course of business, or any repayment of any principal
amount of any Indebtedness of the Company or any Restricted Subsidiary prior to
the Stated Maturity thereof, in either case since the first day of such period
of four full fiscal quarters through and including the date of determination,
had been consummated on such first day of such four-quarter period, (ii) in
making such computation, the Consolidated Interest Expense attributable to
interest on any Indebtedness required to be computed on a pro forma basis in
accordance with Section 9.11(a) hereof and (A) bearing a floating interest rate
shall be computed as if the rate in effect on the date of computation had been
the applicable rate for the entire period and (B) which was not outstanding
during the period for which the computation is being made but which bears, at
the option of the Company, a fixed or floating rate of interest, shall be
computed by applying, at the option of the Company, either the fixed or floating
rate, (iii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
required to be computed on a pro forma basis in accordance with Section 9.11(a)
hereof shall be computed based upon the average daily balance of such
Indebtedness during the applicable period, provided that such average daily
balance shall be reduced by the amount of any repayment of Indebtedness under a
revolving credit facility during the applicable period, which repayment
permanently reduced the commitments or amounts available to be reborrowed under
such facility, (iv) notwithstanding clauses (ii) and (iii) of this proviso,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations, shall be deemed to have accrued at the rate per annum resulting
after giving effect to the operation of such agreements, (v) in making such
calculation, Consolidated Interest Expense shall exclude interest attributable
to Dollar-Denominated Production Payments, and (vi) if after the first day of
the period referred to in clause (a) of this definition the Company has
permanently retired any Indebtedness out of the Net Cash Proceeds of the
issuance and sale of shares of Qualified Capital Stock of the Company within 30
days of such issuance and sale, Consolidated Interest Expense shall be
calculated on a pro forma basis as if such Indebtedness had been retired on the
first day of such period.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes (including state franchise taxes
accounted for as income taxes in accordance with GAAP) of the Company and its
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of (i) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (a) any amortization of debt discount,
(b) the net cost under Interest Rate Protection Obligations (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation constituting Indebtedness, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and (e) all accrued interest, in each case to the extent attributable
to such period, (ii) to the extent any Indebtedness of any Person (other than
the Company or a Restricted Subsidiary) is guaranteed by the Company or any
Restricted Subsidiary, the aggregate amount of interest paid (to the extent not
accrued in a prior period) or accrued by such other Person during such period
attributable to any such Indebtedness, in each case to the extent attributable
to that period, (iii) the aggregate amount of the interest component of
Capitalized Lease Obligations paid (to the extent not accrued in a prior
period), accrued or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP and (iv) the aggregate amount of dividends paid (to the
extent such dividends are not accrued in a prior period and excluding dividends
paid in Qualified Capital Stock) or accrued on Disqualified Capital Stock of the
Company and its Restricted Subsidiaries, to the extent such Disqualified Capital
Stock is owned by Persons other than the Company or its Restricted Subsidiaries,
less, to the extent included in any of clauses (i) through (iv), amortization of
capitalized debt issuance costs of the Company and its Restricted Subsidiaries
during such period.
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"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto), (b)
net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to Asset Sales, (c) the net income (or net loss) of any Person
(other than the Company or any of its Restricted Subsidiaries), in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions actually paid to
the Company or any of its Restricted Subsidiaries in cash by such other Person
during such period (regardless of whether such cash dividends or distributions
is attributable to net income (or net loss) of such Person during such period or
during any prior period), (d) net income (or net loss) of any Person combined
with the Company or any of its Restricted Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of combination,
(e) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary is not at the date of determination permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, (f) dividends paid
on Qualifying TECONS, (g) dividends paid in Qualified Capital Stock, (h) income
resulting from transfers of assets received by the Company or any Restricted
Subsidiary from an Unrestricted Subsidiary, (i) Consolidated Exploration
Expenses and any write-downs or impairments of non-current assets and (j) the
cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means, at any date, the consolidated stockholders'
equity of the Company and its Restricted Subsidiaries less the amount of such
stockholders' equity attributable to Disqualified Capital Stock or treasury
stock of the Company and its Restricted Subsidiaries, as determined in
accordance with GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization and exploration expense and other non-cash
expenses of the Company and its Restricted Subsidiaries reducing Consolidated
Net Income for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such non-cash charge for which an accrual of or reserve
for cash charges for any future period is required).
"Corporate Trust Office" means the office of the Trustee at which at any
particular time the trust created by this Indenture is administered, which
office at the date of execution of this Indenture is located at 2001 Ross
Avenue, 27th Floor, Dallas, Texas 75201.
"Default" means any event, act or condition that is, or after notice or
passage of time or both would become, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a Board Resolution hereunder, a member of the Board of
Directors of the Company who does not have any material direct or indirect
financial interest (other than an interest arising solely from the beneficial
ownership of Capital Stock of the Company) in or with respect to such
transaction or series of transactions.
"Disqualified Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or by contract or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed or repurchased prior to the final Stated
Maturity of the Securities or is redeemable at the option of the holder thereof
at any time prior to such final Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final Stated
Maturity. For purposes of Section 9.11(a) hereof, Disqualified Capital Stock
shall be valued at the greater of its voluntary or involuntary maximum fixed
redemption or repurchase price plus accrued and unpaid dividends. For such
purposes, the "maximum fixed redemption or repurchase price" of any Disqualified
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Capital Stock which does not have a fixed redemption or repurchase price shall
be calculated in accordance with the terms of such Disqualified Capital Stock as
if such Disqualified Capital Stock were redeemed or repurchased on the date of
determination, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined in good faith by the board of directors of the issuer of such
Disqualified Capital Stock; provided, however, that if such Disqualified Capital
Stock is not at the date of determination permitted or required to be redeemed
or repurchased, the "maximum fixed redemption or repurchase price" shall be the
book value of such Disqualified Capital Stock.
"Dollar-Denominated Production Payments" means production payment
obligations of the Company or any Restricted Subsidiary recorded as liabilities
in accordance with GAAP, together with all undertakings and obligations in
connection therewith.
"Event of Default" has the meaning specified in Section 4.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor act thereto.
"Exchanged Properties" means properties or assets used or useful in the Oil
and Gas Business received by the Company or a Restricted Subsidiary in trade or
as a portion of the total consideration for other such properties or assets.
"Fair Market Value" means the fair market value of a Property (including
shares of Capital Stock) as determined in good faith by the Board of Directors
of the Company and evidenced by a Board Resolution, which determination shall be
conclusive for purposes of this Indenture; provided, however, that unless
otherwise specified herein, the Board of Directors shall be under no obligation
to obtain any valuation or assessment from any investment banker, appraiser or
other third party.
"Federal Bankruptcy Code" means the United States Bankruptcy Code of Title
11 of the United States Code, as amended from time to time.
"Finance Person" means a Subsidiary of the Company, the Common Stock of
which is owned by the Company, that does not engage in any activity other than
(i) the holding of Subordinated Indebtedness with respect to which payments of
interest on such Subordinated Indebtedness can, at the election of the issuer
thereof, be deferred for one or more payment periods, (ii) the issuance of
Qualifying TECONS and Common Stock and/or debt securities and (iii) any activity
necessary, incidental or related to the foregoing.
"Foreign Subsidiary" means a Restricted Subsidiary that is formed in a
jurisdiction other than the United States or a State thereof or the District of
Columbia, that engages in the Oil and Gas Business exclusively outside the
United States of America and that is treated as a corporation or an association
taxable as a corporation for U.S. federal income tax purposes.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States of America, which are
applicable as of the date of this Indenture.
The term "guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments or documents for collection
in the ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
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the payment or performance (or payment of damages in the event of
non-performance) of all or any part of such obligation, including, without
limiting the foregoing, the payment of amounts drawn down under letters of
credit. When used as a verb, "guarantee" has a corresponding meaning.
"Holder" means a Person in whose name a Security is registered in a
Security Register.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person, contingent or otherwise, for borrowed money or
for the deferred purchase price of Property or services (excluding any trade
accounts payable and other accrued current liabilities incurred and reserves
established in the ordinary course of business) and all liabilities of such
Person incurred in connection with any agreement to purchase, redeem, exchange,
convert or otherwise acquire for value any Capital Stock of such Person, or any
warrants, rights or options to acquire such Capital Stock outstanding on the
date of this Indenture or thereafter, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (b) all obligations of such Person evidenced
by bonds, notes, debentures or other similar instruments, if, and to the extent,
any of the foregoing would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, (c) all obligations of such Person with
respect to letters of credit, (d) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such Property), but excluding trade accounts payable and
reserves established arising in the ordinary course of business, (e) all
Capitalized Lease Obligations of such Person, (f) the Attributable Indebtedness
(in excess of any related Capitalized Lease Obligations) related to any
Sale/Leaseback Transaction of such Person, (g) all Indebtedness referred to in
the preceding clauses of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon
Property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such Property or the amount of the obligation so
secured), (h) all guarantees by such Person of Indebtedness referred to in this
definition (including, with respect to any Production Payment, any warranties or
guaranties of 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), and (i) all obligations of such Person
under or in respect of currency exchange contracts, oil and natural gas price
hedging arrangements and Interest Rate Protection Obligations; provided,
however, that Indebtedness shall not include Qualifying TECONS and Indebtedness
(including guarantees thereof) relating to Qualifying TECONS and held by a
Finance Person. Subject to clause (h) of the first sentence of this definition,
neither Dollar-Denominated Production Payments nor Volumetric Production
Payments shall be deemed to be Indebtedness. In addition, Disqualified Capital
Stock shall not be deemed to be Indebtedness.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
(a) an insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or similar case or proceeding in connection
therewith, relative to such Person or its creditors, as such, or its assets or
(b) any liquidation, dissolution or other winding-up proceeding of such Person,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy or (c) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of such Person.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
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"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's and any of its Subsidiaries' exposure to
fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other Property to others or
any payment for Property or services for the account or use of others), or any
purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities (including derivatives) or evidences of
Indebtedness issued by, any other Person. In addition, the Fair Market Value of
the net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary shall be deemed to be an
"Investment" made by the Company in such Unrestricted Subsidiary at such time.
"Investments" shall exclude (a) extensions of trade credit or other advances to
customers on commercially reasonable terms in accordance with normal trade
practices or otherwise in the ordinary course of business, (b) Interest Rate
Protection Obligations entered into in the ordinary course of business or as
required by any Permitted Indebtedness or any Indebtedness incurred in
compliance with Section 9.11 hereof, but only to the extent that the stated
aggregate notional amounts of such Interest Rate Protection Obligations do not
exceed 105% of the aggregate principal amount of such Indebtedness to which such
Interest Rate Protection Obligations relate and (c) endorsements of negotiable
instruments and documents in the ordinary course of business.
"Issue Date" means the date on which the Original Securities were first
issued under this Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim or similar type
of encumbrance (including, without limitation, any agreement to give or grant
any lease, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing) upon or with
respect to any Property of any kind. A Person shall be deemed to own subject to
a Lien any Property which such Person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Liquid Securities" means securities (i) of an issuer that is not an
Affiliate of the Company, (ii) that are publicly traded on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market and (iii) as
to which the Company is not subject to any restrictions on sale or transfer
(including any volume restrictions under Rule 144 under the Securities Act or
any other restrictions imposed by the Securities Act) or as to which a
registration statement under the Securities Act covering the resale thereof is
in effect for as long as the securities are held; provided that securities
meeting the requirements of clauses (i), (ii) and (iii) above shall be treated
as Liquid Securities from the date of receipt thereof until and only until the
earlier of (a) the date on which such securities are sold or exchanged for cash
or Cash Equivalents and (y) 150 days following the date of receipt of such
securities. If such securities are not sold or exchanged for cash or Cash
Equivalents within 120 days of receipt thereof, for purposes of determining
whether the transaction pursuant to which the Company or a Restricted Subsidiary
received the securities was in compliance with Section 9.16 hereof, such
securities shall be deemed not to have been Liquid Securities at any time.
"Material Change" means an increase or decrease (except to the extent
resulting from changes in prices) of more than 30% during a fiscal quarter in
the estimated discounted future net revenues from proved oil and gas reserves of
the Company and its Restricted Subsidiaries, calculated in accordance with
clause (i)(A) of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following shall be excluded from the calculation of
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Material Change: (i) any acquisitions during the quarter of oil and gas reserves
with respect to which the Company's estimate of the discounted future net
revenues from proved oil and gas reserves has been confirmed by independent
petroleum engineers and (ii) any dispositions of Properties during such quarter
that were disposed of in compliance with Section 9.16.
"Maturity" means, with respect to any Security, the date on which any
principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Sale or Sale/Leaseback Transaction means
cash proceeds received therefrom (including (i) 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 (ii) the Fair Market
Value of Liquid Securities and Cash Equivalents, and excluding (a) any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to the Property that is the subject
of such Asset Sale or Sale/Leaseback Transaction and (b) except to the extent
subsequently converted to cash, Cash Equivalents or Liquid Securities within 240
days after such Asset Sale or Sale/Leaseback Transaction, consideration
constituting Exchanged Properties or consideration other than as identified in
the immediately preceding clauses (i) and (ii)), in each case net of (a) all
legal, title and recording expenses, commissions and other fees and expenses
incurred, and all federal, state, foreign and local taxes required to be paid or
accrued as a liability under GAAP as a consequence of such Asset Sale or
Sale/Leaseback Transaction, (b) all payments made on any Indebtedness (but
specifically excluding Indebtedness of the Company and its Restricted
Subsidiaries assumed in connection with or in anticipation of such Asset Sale or
Sale/Leaseback Transaction) which is secured by any assets subject to such Asset
Sale or Sale/Leaseback Transaction, in accordance with the terms of any Lien
upon 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, provided that such payments are made in a manner that results in
the permanent reduction in the balance of such Indebtedness and, if applicable,
a permanent reduction in any outstanding commitment for future incurrences of
Indebtedness thereunder, (c) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Sale or Sale/Leaseback Transaction and (d) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Sale or Sale/Leaseback Transaction and retained by the Company or any
Restricted Subsidiary after such Asset Sale or Sale/Leaseback Transaction;
provided, however, that if any consideration for an Asset Sale or Sale/Leaseback
Transaction (which would otherwise constitute Net Available Cash) is required to
be held in escrow pending determination of whether a purchase price adjustment
shall be made, such consideration (or any portion thereof) shall become Net
Available Cash only at such time as it is released to such Person or its
Restricted Subsidiaries from escrow.
"Net Cash Proceeds," with respect to any issuance or sale of Qualified
Capital Stock or other securities, means the cash proceeds of such issuance or
sale net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
and expenses actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"Net Working Capital" means (i) all current assets of the Company and its
Restricted Subsidiaries, less (ii) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in consolidated financial statements of
the Company prepared in accordance with GAAP.
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"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or any Restricted Subsidiary incurred in connection
with the acquisition by the Company or such Restricted Subsidiary of any
Property and as to which (a) the holders of such Indebtedness agree that they
will look solely to the Property so acquired and securing such Indebtedness for
payment on or in respect of such Indebtedness, and neither the Company nor any
Subsidiary (other than an Unrestricted 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 would permit (after notice or
passage of time or both), according to the terms thereof, any holder of any
Indebtedness of the Company or a Restricted Subsidiary to declare a default on
such Indebtedness or cause the payment thereof to be accelerated or payable
prior to its Stated Maturity.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, payments with respect to any letters of
credit, reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Officers" means, with respect to any Person, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer and the Treasurer
of such Person.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Oil and Gas Business" means (i) the acquisition, exploration, development,
operation and disposition of interests in oil, gas and other hydrocarbon
Properties, (ii) the gathering, marketing, treating, processing, storage,
refining, selling and transporting of any production from such interests or
Properties, (iii) any business relating to or arising from exploration for or
development, production, treatment, processing, storage, refining,
transportation or marketing of oil, gas and other minerals and products produced
in association therewith and (iv) any activity necessary, appropriate or
incidental to the activities described in the foregoing clauses (i) through
(iii) of this definition.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company (or any Subsidiary Guarantor), including an employee of the
Company (or any Subsidiary Guarantor), and who shall be reasonably acceptable to
the Trustee.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities, provided that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Securities, except to the extent provided in Sections 11.2 and
11.3 hereof, with respect to which the Company has effected legal
defeasance or covenant defeasance as provided in Article XI hereof; and
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(iv) Securities which have been paid pursuant to Section 2.7 hereof or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such securities are held by a bona
fide purchaser in whose hands the Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities owned
by the Company, any Subsidiary Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, any Subsidiary Guarantor or such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, consent, notice or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company, any Subsidiary Guarantor or
any other obligor upon the Securities or any Affiliate of the Company, any
Subsidiary Guarantor or such other obligor.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness under the Bank Credit Facility in an
aggregate principal amount at any one time outstanding not to exceed
the Borrowing Base, plus all interest and fees and other Obligations
under such facility and any guarantee of any such Indebtedness;
(ii) Indebtedness under the Original Securities;
(iii) Indebtedness outstanding or in effect on the date of this
Indenture (and not repaid or defeased with the proceeds of the
offering of the Securities);
(iv) obligations pursuant to Interest Rate Protection
Obligations, but only to the extent such obligations do not exceed
105% of the aggregate principal amount of the Indebtedness covered by
such Interest Rate Protection Obligations; obligations under currency
exchange contracts entered into in the ordinary course of business;
hedging arrangements entered into in the ordinary course of business
for the purpose of protecting production, purchases and resales
against fluctuations in oil or natural gas prices; and any guarantee
of any of the foregoing;
(v) the Subsidiary Guarantees of the Securities (and any
assumption of the obligations guarantees thereby);
(vi) Indebtedness of the Company owing to and held by a Wholly
Owned Restricted Subsidiary, and Indebtedness of any Restricted
Subsidiary owing to and held by the Company or a Wholly Owned
Restricted Subsidiary;
(vii) Permitted Refinancing Indebtedness and any guarantee
thereof;
(viii) Non-Recourse Indebtedness;
(ix) in-kind obligations relating to net gas balancing positions
arising in the ordinary course of business;
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(x) Indebtedness in respect of bid, performance or surety bonds
issued for the account of the Company or any Restricted Subsidiary in
the ordinary course of business, including guaranties and letters of
credit supporting such bid, performance or surety obligations (in each
case other than for an obligation for money borrowed); and
(xi) any additional Indebtedness in an aggregate principal
amount not in excess of $25,000,000 at any one time outstanding and any
guarantee thereof.
"Permitted Investments" means any of the following: (i) Investments in Cash
Equivalents; (ii) Investments in property, plant and equipment used in the
ordinary course of business; (iii) Investments in the Company or any of its
Restricted Subsidiaries; (iv) Investments by the Company or any of its
Restricted Subsidiaries in another Person, if as a result of such Investment (A)
such other Person becomes a Restricted Subsidiary or (B) such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all of its Properties to, the Company or a Restricted Subsidiary;
(v) entry into operating agreements, joint ventures, partnership agreements,
working interests, royalty interests, mineral leases, processing agreements,
farm-out agreements, contracts for the sale, transportation or exchange of oil
and natural gas, unitization agreements, pooling arrangements, area of mutual
interest agreements 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; (vi) entry into any hedging arrangements in the ordinary course
of business for the purpose of protecting the Company's or any Restricted
Subsidiary's production, purchases and resales against fluctuations in oil or
natural gas prices; (vii) entry into any currency exchange contract in the
ordinary course of business; or (viii) Investments in stock, obligations or
securities received in settlement of debts owing to the Company or any
Restricted Subsidiary as a result of bankruptcy or insolvency proceedings or
upon the foreclosure, perfection or enforcement of any Lien in favor of the
Company or a Restricted Subsidiary, in each case as to debt owing to the Company
or a Restricted Subsidiary that arose in the ordinary course of business of the
Company or any such Restricted Subsidiary.
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the date of this Indenture;
(b) Liens securing the Securities or the Subsidiary Guarantees;
(c) Liens in favor of the Company or any Restricted Subsidiary;
(d) Liens securing Indebtedness of the Company under the Bank Credit
Facility that constitutes Permitted Indebtedness pursuant to clause (i) of
the definition of "Permitted Indebtedness";
(e) Liens for taxes, assessments and governmental charges or claims
either
(f) (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(g) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
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(h) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety and appeal bonds,
bids, government contracts and leases, performance and return of money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money but including lessee or operator obligations
under statutes, governmental regulations or instruments related to the
ownership, exploration and production of oil, gas and minerals on state,
federal or foreign lands or waters);
(i) judgment and attachment Liens not giving rise to an Event of
Default so long as any appropriate legal proceedings which may have been
duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated
shall not have expired;
(j) easements, rights-of-way, restrictions and other similar charges
or encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Restricted
Subsidiaries;
(k) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(l) purchase money Liens; provided, however, that (i) the related
purchase money Indebtedness shall not be secured by any Property of the
Company or any Restricted Subsidiary other than the Property so acquired
(including, without limitation, those acquired indirectly through the
acquisition of stock or other ownership interests) and the proceeds thereof
and (ii) the Lien securing such Indebtedness shall be created within 90
days of such acquisition;
(m) Liens securing obligations under hedging agreements that the
Company or any Restricted Subsidiary enters into in the ordinary course of
business for the purpose of protecting its production, purchases and
resales against fluctuations in oil or natural gas prices;
(n) Liens upon specific items of inventory or other goods of any
Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(o) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other Property
relating to such letters of credit and products and proceeds thereof;
(p) Liens encumbering Property under construction arising from
progress or partial payments by a customer of the Company or its Restricted
Subsidiaries relating to such Property;
(q) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
(r) Liens securing Interest Rate Protection Obligations which Interest
Rate Protection Obligations relate to Indebtedness that is secured by Liens
otherwise permitted under this Indenture;
(s) Liens on, or related to, Properties to secure all or part of the
costs incurred in the ordinary course of business for the exploration,
drilling, development or operation thereof;
(t) Liens on pipeline or pipeline facilities which arise by operation
of law;
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(u) Liens arising under operating agreements, joint venture
agreements, partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or
exchange of oil and natural gas, unitization and pooling declarations and
agreements, area of mutual interest agreements and other agreements which
are customary in the Oil and Gas Business;
(v) Liens reserved in oil and gas mineral leases for bonus or rental
payments or for compliance with the terms of such leases;
(w) Liens constituting survey exceptions, encumbrances, easements or
reservations of, or rights to others for, rights-of-way, zoning or other
restrictions as to the use of real properties, and minor defects of 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 the Properties of the Company and the Restricted
Subsidiaries, taken as a whole, or materially impair the use of such
Properties for the purposes of which such Properties are held by the
Company or any Restricted Subsidiaries;
(x) Liens securing Non-Recourse Indebtedness; provided, however, that
the related Non-Recourse Indebtedness shall not be secured by any Property
of the Company or any Restricted Subsidiary other than the Property
acquired (including, without limitation, those acquired indirectly through
the acquisition of stock or other ownership interests) by the Company or
any Restricted Subsidiary with the proceeds of such Non-Recourse
Indebtedness;
(y) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company and Liens on Property of a
Subsidiary existing at the time it became a Subsidiary, provided that such
Liens were in existence prior to the contemplation of the acquisition and
do not extend to any Property other than the Acquired Property; and
(z) Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of defeasing Indebtedness of the
Company or any of its Restricted Subsidiaries.
Notwithstanding anything in clauses (a) through (y) of this definition, the term
"Permitted Liens" shall not include any Liens resulting from the creation,
incurrence, issuance, assumption or guarantee of any Production Payments other
than Production Payments that are created, incurred, issued, assumed or
guaranteed in connection with the financing of, and within 30 days after, the
acquisition of the Properties that are subject thereto.
"Permitted Refinancing Indebtedness" means Indebtedness of the Company or a
Restricted Subsidiary, the net proceeds of which are used to renew, extend,
refinance, refund or repurchase (including, without limitation, pursuant to a
Change of Control Offer or Prepayment Offer) outstanding Indebtedness of the
Company or any Restricted Subsidiary, provided that (a) if the Indebtedness
(including the Securities) being renewed, extended, refinanced, refunded or
repurchased is pari passu with or subordinated in right of payment to either the
Securities or the Subsidiary Guarantees, then such Indebtedness is pari passu
with or subordinated in right of payment to the Securities or the Subsidiary
Guarantees, as the case may be, at least to the same extent as the Indebtedness
being renewed, extended, refinanced, refunded or repurchased, (b) such
Indebtedness has a Stated Maturity for its final scheduled principal payment
that is no earlier than the Stated Maturity for the final scheduled principal
payment of the Indebtedness being renewed, extended, refinanced, refunded or
repurchased and (c) 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 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
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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) plus the
amount of any premium required to be paid in connection with such renewal,
extension, refinancing, refunding or repurchase pursuant to the terms of the
Indebtedness being renewed, extended, refinanced, refunded or repurchased or the
amount of any premium reasonably determined by the Company as necessary to
accomplish such renewal, extension, refinancing, refunding or repurchase, plus
the amount of reasonable fees and expenses incurred by the Company or such
Restricted Subsidiary in connection therewith.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of this Indenture, including, without limitation, all classes and
series of preferred or preference stock of such Person.
"Production Payments" means, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other Person.
"Public Equity Offering" means an offer and sale of Common Stock of the
Company for cash pursuant to a registration statement that has been declared
effective by the Commission pursuant to the Securities Act (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of the Company).
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Disqualified Capital Stock and, with respect to the
Company, Qualified Capital Stock includes, without limitation, any Qualifying
TECONS.
"Qualifying TECONS" means preferred trust securities or similar securities
issued by a Finance Person after the date of this Indenture.
"Redemption Date," when used with respect to any Security to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Responsible Officer," when used with respect to the Trustee, means any
officer in the Corporate Trust Office, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
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"Restricted Investment" means (without duplication) (i) the designation of
a Subsidiary as an Unrestricted Subsidiary in the manner described in the
definition of "Unrestricted Subsidiary" and (ii) any Investment other than a
Permitted Investment.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of this Indenture, unless such Subsidiary of the
Company is an Unrestricted Subsidiary or is designated as an Unrestricted
Subsidiary pursuant to the terms of this Indenture.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"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.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor act thereto.
"Senior Indebtedness" means any Indebtedness of the Company (whether
outstanding on the date hereof or hereinafter incurred), unless such
Indebtedness is Subordinated Indebtedness.
"Series A Preferred Stock" means the Company's Series A 1999 Convertible
Preferred Stock, par value $10.00 per share.
"Series B Preferred Stock" means the Company's Series B 1999
Non-Convertible Preferred Stock, par value $10.00 per share.
"Stated Maturity" means, when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in the instrument
evidencing or governing such Indebtedness as the fixed date an which the
principal of such Indebtedness or such installment of interest is due and
payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Subsidiary Guarantor which is expressly subordinated in right of payment to the
Securities or the Subsidiary Guarantees, as the case may be. "Subsidiary" means,
with respect to any Person, (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
thereof or (ii) any other Person (other than a corporation), including, without
limitation, a joint venture, in which such Person, one or more Subsidiaries
thereof or such Person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, have at least majority
ownership interest entitled to vote in the election of directors, managers or
trustees thereof (or other Persons performing similar functions).
"Subsidiary Guarantee" has the meaning specified in Section 12.1 hereof.
"Subsidiary Guarantor" means (i) Comstock Oil & Gas, Inc., a Nevada
corporation, (ii) Comstock Oil & Gas - Louisiana, Inc., a Nevada corporation,
(iii) Comstock Offshore, LLC, a Nevada limited liability company, (iv) each of
the Company's other Restricted Subsidiaries, if any, executing a supplemental
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indenture in compliance with the provisions of Section 9.12(a) hereof and (v)
any Person that becomes a successor guarantor of the Securities in compliance
with the provisions of Section 12.2 hereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended and in force at the date as of which this Indenture was executed, except
as provided in Section 8.5 hereof.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company as an Unrestricted Subsidiary so long as (a)
neither the Company nor any Restricted Subsidiary is directly or indirectly
liable pursuant to the terms of any Indebtedness of such Subsidiary; (b) no
default with respect to any Indebtedness of such Subsidiary would permit (upon
notice, lapse of time or otherwise) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity; (c) such designation as an Unrestricted Subsidiary would be
permitted under Section 9.9 hereof; and (d) such designation shall not result in
the creation or imposition of any Lien on any of the Properties of the Company
or any Restricted Subsidiary (other than any Permitted Lien or any Lien the
creation or imposition of which shall have been in compliance with Section 9.14
hereof); provided, however, that with respect to clause (a), the Company or a
Restricted Subsidiary may be liable for Indebtedness of an Unrestricted
Subsidiary if (1) such liability constituted a Permitted Investment or a
Restricted Payment permitted by Section 9.9 hereof, in each case at the time of
incurrence, or (2) the liability would be a Permitted Investment at the time of
designation of such Subsidiary as an Unrestricted Subsidiary. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing a Board Resolution with the Trustee giving effect to such
designation. The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after giving
effect to such designation, on a pro forma basis (i) no Default or Event of
Default shall have occurred and be continuing, (ii) the Company could incur
$1.00 of additional Indebtedness (not including the incurrence of Permitted
Indebtedness) under Section 9.11(a) hereof and (iii) if any of the Properties of
the Company or any of its Restricted Subsidiaries would upon such designation
become subject to any Lien (other than a Permitted Lien), the creation or
imposition of such Lien shall have been in compliance with Section 9.14 hereof.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Volumetric Production Payments" means production payment obligations of
the Company or a Restricted Subsidiary recorded as deferred revenue in
accordance with GAAP, together with all undertakings and obligations in
connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the
Company to the extent (i) all of the Capital Stock or other ownership interests
in such Restricted Subsidiary, other than any directors' qualifying shares
mandated by applicable law, is owned directly or indirectly by the Company or
(ii) such Restricted Subsidiary does substantially all of its business in one or
more foreign jurisdictions and is required by the applicable laws and
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regulations of any such foreign jurisdiction to be partially owned by the
government of such foreign jurisdiction or individual or corporate citizens of
such foreign jurisdiction in order for such Restricted Subsidiary to transact
business in such foreign jurisdiction, provided that the Company, directly or
indirectly, owns the remaining Capital Stock or ownership interest in such
Restricted Subsidiary and, by contract or otherwise, controls the management and
business of such Restricted Subsidiary and derives the economic benefits of
ownership of such Restricted Subsidiary to substantially the same extent as if
such Restricted Subsidiary were a wholly owned subsidiary.
Section 1.2 Other Definitions.
Defined
Term in Section
"Change of Control Notice"...............................9.15(c)
"Change of Control Offer"................................9.15(a)
"Change of Control Purchase Date"........................9.15(c)
"Change of Control Purchase Price".......................9.15(a)
"Excess Proceeds"........................................9.16(b)
"Funding Guarantor".........................................12.5
"Global Security".....................................Appendix A
"Offer Amount"...........................................9.16(c)
"Offer Period"...........................................9.16(c)
"OID"........................................................2.1
"Original Securities"........................................2.1
"Paying Agent"...............................................2.4
"Payment Restriction".......................................9.18
"Permitted Consideration.................................9.16(a)
"Prepayment Offer".......................................9.16(b)
"Prepayment Offer Notice.................................9.16(c)
"Purchase Date"..........................................9.16(c)
"Registrar"..................................................2.4
"Representative"............................................13.2
"Restricted Payment"......................................9.9(a)
"Security Register"..........................................2.4
"Surviving Entity"........................................7.1(a)
"U.S. Government Obligations"............................11.4(a)
Section 1.3 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 used in this Indenture have the following meanings:
"indenture securities" means the Securities,
"indenture security holder" means a Holder,
"indenture to be qualified" means this Indenture,
"indenture trustee" or "institutional trustee" means the Trustee, and
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
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All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
Section 1.4 Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP and all accounting calculations will be
determined in accordance with GAAP;
(c) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(d) the masculine gender includes the feminine and the neuter;
(e) a "day" means a calendar day;
(f) the term "merger" includes a statutory share exchange and the term
"merged" has a correlative meaning;
(g) provisions apply to successive events and transactions; and
(h) references to agreements and other instruments include subsequent
amendments and waivers but only to the extent not prohibited by this Indenture.
ARTICLE II.
THE SECURITIES
Section 2.1 Amount of Securities; Issuable in Series.
The aggregate principal amount of Securities Outstanding at any one time
may not exceed $225,000,000 except as provided in Section 2.7 hereof. All
Securities shall be identical in all respects other than issue price and
issuance dates. The Securities may be issued in one or more series; provided,
however, that any Securities issued with original issue discount ("OID") for
Federal income tax purposes shall not be issued as part of the same series as
any Securities that are issued with a different amount of OID or are not issued
with OID.
Subject to Section 2.3, the Trustee shall authenticate Securities for
original issue on the Issue Date in the aggregate principal amount of
$150,000,000 (the "Original Securities"). With respect to any Securities issued
after the Issue Date (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
pursuant to Section 2.7, 2.8, 2.9, 9.15, 9.16 or 10.6 or Appendix A), there
shall be established in or pursuant to a resolution of the Board of Directors
and, subject to Section 2.3, set forth or determined in the manner provided in
an Officer's Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of such Securities:
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(1) whether such Securities shall be issued as part of a new or existing
series of Securities and the title of such Securities (which shall distinguish
the Securities of the series from Securities of any other series);
(2) the aggregate principal amount of such Securities which may be
authenticated and delivered under this Indenture, which shall be in an aggregate
principal amount not to exceed $75,000,000 (except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Securities of the same series pursuant to Section 2.7, 2.8, 2.9, 9.15,
9.16 or 10.6 or Appendix A and except for Securities which, pursuant to Section
2.3, are deemed never to have been authenticated and delivered hereunder);
(3) the issue price and issuance date of such Securities, including the
date from which interest on such Securities shall accrue;
(4) if applicable, that such Securities shall be issuable in whole or in
part in the form of one or more Global Securities and, in such case, the
respective depositories for such Global Securities, the form of any legend or
legends which shall be borne by any such Global Security in addition to or in
lieu of that set forth in Exhibit 1 to Appendix A and any circumstances in
addition to or in lieu of those set forth in Section 2.3 of Appendix A in which
any such Global Security may be exchanged in whole or in part for Securities
registered, and any transfer of such Global Security in whole or in part may be
registered, in the name or names of Persons other than the depository for such
Global Security or a nominee thereof; and
(5) if applicable, that such Securities shall not be issued in the form of
Initial Securities subject to Appendix A, but shall be issued in the form of
Exchange Securities as set forth in Exhibit A.
If any of the terms of any series are established by action taken pursuant
to a resolution of the Board of Directors, a copy of an appropriate record of
such action shall be certified by the Secretary or any Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate or the trust indenture supplementary thereto setting forth
the terms of the series.
Notwithstanding anything to the contrary in this Section or otherwise in
this Indenture, any additional issuance of Securities after the Issue Date,
whether such Securities are of the same or a different series than the Original
Securities, shall be in a principal amount greater than or equal to $25,000,000.
Section 2.2 Form and Dating.
Provisions relating to the Initial Securities of each series and the
Exchange Securities are set forth in Appendix A, which is hereby incorporated in
and expressly made a part of this Indenture. The Initial Securities of each
series and the Trustee's certificate of authentication shall be substantially in
the form of Exhibit 1 to Appendix A which is hereby incorporated in and
expressly made a part of this Indenture. The 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 of each series 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 reasonably acceptable to the Company. Each Security
shall be dated the date of its authentication. The terms of the Securities of
each series set forth in Exhibit 1 to Appendix A and Exhibit A are part of the
terms of this Indenture.
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Section 2.3 Execution and Authentication.
Two Officers of the Company shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal may be impressed, affixed,
imprinted or reproduced on the Securities and may be in facsimile form.
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.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a written order of the
Company signed by two Officers of the Company for the authentication and
delivery of such Securities, and the Trustee in accordance with such written
order of the Company shall authenticate and deliver such Securities.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
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 as any Registrar, Paying Agent or agent for service of notices and
demands.
Section 2.4 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 (the "Security 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. 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 5.6. The
Company 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 2.5 Paying Agent To Hold Money in Trust.
Not later than 10:00 a.m., Eastern standard time, on 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 Securityholders 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
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 Trustee and to account for any
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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 2.6 Securityholder 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
Securityholders. 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 Securityholders.
Section 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Registrar or if the Holder of
a Security claims that such 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 2.8 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 cancellation
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 2.7, 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, and the Paying
Agent is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
Section 2.9 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.
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Section 2.10 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. 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 cancellation and shall, upon
written request, deliver a certificate of such destruction to the Company. The
Company may not issue new Securities to replace Securities it has redeemed, paid
or delivered to the Trustee for cancellation.
Section 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the persons who are
Securityholders on a subsequent special record date, in each case at the rate
provided in the Securities and in Section 9.1 hereof. 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
Securityholder 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.
ARTICLE III.
SATISFACTION AND DISCHARGE
Section 3.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of
Securities, as expressly provided for in this Indenture) as to all Outstanding
Securities, and the Trustee, at the expense of the Company, shall, upon payment
of all amounts due the Trustee under Section 5.6 hereof, execute proper
instruments acknowledging satisfaction and discharge of this Indenture when
(a) either
(1) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been replaced as provided in Section 2.7 hereof
and (ii) Securities for whose payment money or United States governmental
obligations of the type described in clause (i) of the definition of Cash
Equivalents have theretofore been deposited in trust with the Trustee or
any Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as provided
in Section 9.3 hereof) have been delivered to the Trustee for cancellation,
or
(2) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
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(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of clause (2)(i), (2)(ii) or (2)(iii) above,
has irrevocably deposited or caused to be deposited with the Trustee funds
in an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest to the date of such
deposit (in the case of Securities which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be, together with
instructions from the Company irrevocably directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case
may be;
(b) the Company has paid or caused to be paid all other sums then due
and payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, which, taken together, state that all conditions
precedent herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.6 hereof and, if money
shall have been deposited with the Trustee pursuant to this Section, the
obligations of the Trustee under Section 3.2 hereof and the last paragraph of
Section 9.3 hereof shall survive.
Section 3.2 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 9.3 hereof, all
money deposited with the Trustee pursuant to Section 3.1 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
ARTICLE IV.
DEFAULTS AND REMEDIES
Section 4.1 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of the principal of or premium, if any, on any
of the Securities when the same becomes due and payable, whether such payment is
due at Stated Maturity, upon redemption, upon repurchase pursuant to a Change of
Control Offer or a Prepayment Offer, upon acceleration or otherwise; or
(b) default in the payment of any installment of interest on any of the
Securities, when it becomes due and payable, and the continuance of such default
for a period of 30 days; or
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(c) default in the performance or breach of the provisions of Article VII
hereof, the failure to make or consummate a Change of Control Offer in
accordance with the provisions of Section 9.15 or the failure to make or
consummate a Prepayment Offer in accordance with the provisions of Section 9.16;
or
(d) the Company or any Subsidiary Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in the Securities, any
Subsidiary Guarantee or this Indenture (other than a default specified in
subparagraph (a), (b) or (c) above) for a period of 60 days after written notice
of such failure stating that it is a "notice of default" hereunder and requiring
the Company or such Subsidiary Guarantor, as the case may be, to remedy the same
shall have been given (x) to the Company by the Trustee or (y) to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities then Outstanding; or
(e) the occurrence and continuation beyond any applicable grace period of
any default in the payment of the principal of (or premium, if any, on) or
interest on any Indebtedness of the Company (other than the Securities) or any
Subsidiary Guarantor or any other Restricted Subsidiary for money borrowed when
due, or any other default resulting in acceleration of any Indebtedness of the
Company or any Subsidiary Guarantor or any other Restricted Subsidiary for money
borrowed, provided that the aggregate principal amount of such Indebtedness
shall exceed $10,000,000; or
(f) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to be,
in full force and effect (except pursuant to the release of any such Subsidiary
Guarantee in accordance with this Indenture); or
(g) final judgments or orders rendered against the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary that are unsatisfied and
that require the payment in money, either individually or in an aggregate
amount, that is more than $10,000,000 over the coverage under applicable
insurance policies and either (A) commencement by any creditor of an enforcement
proceeding upon such judgment (other than a judgment that is stayed by reason of
pending appeal or otherwise) or (B) the occurrence of a 60-day period during
which a stay of such judgment or order, by reason of pending appeal or
otherwise, was not in effect; or
(h) the entry of a decree or order by a court having jurisdiction in the
premises (A) for relief in respect of the Company or any Subsidiary Guarantor or
any other Restricted Subsidiary in an involuntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or (B) adjudging the Company or
any Subsidiary Guarantor or any other Restricted Subsidiary bankrupt or
insolvent, or approving a petition seeking reorganization, arrangement,
adjustment or composition of the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary under the Federal Bankruptcy Code or any applicable
federal or state law, or appointing under any such law a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or any Subsidiary Guarantor or any other Restricted Subsidiary or of a
substantial part of its consolidated assets, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
60 consecutive days; or
(i) the commencement by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary of a voluntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or any other case or proceeding to be
adjudicated bankrupt or insolvent, or the consent by the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary to the entry of a decree
or order for relief in respect thereof in an involuntary case or proceeding
under the Federal Bankruptcy Code or any other applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by the Company or any Subsidiary Guarantor or any other Restricted
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Subsidiary of a petition or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it under any such law to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or other
similar official) of the Company or any Subsidiary Guarantor or any other
Restricted Subsidiary or of any substantial part of its consolidated assets, or
the making by it of an assignment for the benefit of creditors under any such
law, or the admission by it in writing of its inability to pay its debts
generally as they become due or taking of corporate action by the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary in furtherance of any
such action.
Section 4.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
4.1(h) or (i) hereof) occurs and is continuing, the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Securities then
Outstanding, by written notice to the Company (and to the Trustee if such notice
is given by the Holders), may, and the Trustee upon the request of the Holders
of not less than 25% in aggregate principal amount of the Outstanding Securities
shall, by a notice in writing to the Company, declare all unpaid principal of,
premium, if any, and accrued and unpaid interest on all the Securities to be due
and payable immediately, upon which declaration all amounts payable in respect
of the Securities shall be immediately due and payable. If an Event of Default
specified in Section 4.1(h) or (i) hereof occurs and is continuing, the amounts
described above shall become and be immediately due and payable without any
declaration, notice or other act on the part of the Trustee or any Holder.
Promptly after the occurrence of a declaration of acceleration, the Company
shall notify each holder of Senior Indebtedness thereof, but failure to give any
such notice shall not affect such declaration or its consequences.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article provided, the Holders of a majority in aggregate
principal amount of the Securities Outstanding, by written notice to the
Company, the Subsidiary Guarantors and the Trustee, may rescind and annul such
declaration and its consequences if
(a) the Company or any Subsidiary Guarantor has paid or deposited with the
Trustee a sum sufficient to pay,
(1) all overdue interest on all Outstanding Securities,
(2) all unpaid principal of (and premium, if any, on) any Outstanding
Securities which have become due otherwise than by such declaration of
acceleration, including any Securities required to have been purchased on a
Change of Control Date or a Purchase Date pursuant to a Change of Control
Offer or a Prepayment Offer, as applicable, and interest on such unpaid
principal at the rate borne by the Securities,
(3) to the extent that payment of such interest is lawful, interest on
overdue interest and overdue principal at the rate borne by the Securities
(without duplication of any amount paid or deposited pursuant to clauses
(1) and (2) above), and
(4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
(b) the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction as certified to the Trustee by the Company; and
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(c) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Securities which have
become due solely by such declaration of acceleration, have been cured or waived
as provided in Section 4.13 hereof.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the foregoing, if an Event of Default specified in Section
4.1(e) hereof shall have occurred and be continuing, such Event of Default and
any consequential acceleration shall be automatically rescinded if the
Indebtedness that is the subject of such Event of Default has been repaid, or if
the default relating to such Indebtedness is waived or cured and if such
Indebtedness has been accelerated, then the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness (provided, in each
case, that such repayment, waiver, cure or rescission is effected within a
period of 10 days from the continuation of such default beyond the applicable
grace period or the occurrence of such acceleration), and written notice of such
repayment, or cure or waiver and rescission, as the case may be, shall have been
given to the Trustee by the Company and countersigned by the holders of such
Indebtedness or a trustee, fiduciary or agent for such holders or other evidence
satisfactory to the Trustee of such events is provided to the Trustee, within 30
days after any such acceleration in respect of the Securities, and so long as
such rescission of any such acceleration of the Securities does not conflict
with any judgment or decree as certified to the Trustee by the Company.
Section 4.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if any,
on) any Security at the Maturity thereof or with respect to any Security
required to have been purchased by the Company on the Change of Control Purchase
Date or the Purchase Date pursuant to a Change of Control Offer or Prepayment
Offer, as applicable, then the Company will, upon demand of the Trustee, pay to
the Trustee for the benefit of the Holders of such Securities, the whole amount
then due and payable on such Securities for principal (and premium, if any) and
interest, and interest on any overdue principal (and premium, if any) and, to
the extent that payment of such interest shall be legally enforceable, upon any
overdue installment of interest, at the rate borne by the Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
money adjudged or decreed to be payable in the manner provided by law out of the
Property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
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Section 4.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, any Subsidiary Guarantor or any
other obligor upon the Securities, their creditors or the Property of the
Company, any Subsidiary Guarantor or of such other obligor, the Trustee
(irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company, the Subsidiary
Guarantors or such other obligor for the payment of overdue principal, premium,
if any, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents and take any other actions including
participation as a full member of any creditor or other committee as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any money or other Property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 5.6 hereof.
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 Subsidiary Guarantees 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 4.5 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities or
the Subsidiary Guarantees may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name and as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.
Section 4.6 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in the case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under Section 5.6
hereof;
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SECOND: to the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if
any) and interest, respectively; and
THIRD: the balance, if any, to the Company, or to whomsoever may be
lawfully entitled to receive the same, or as a court of competent
jurisdiction may direct.
Section 4.7 Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority or more in
aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 4.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article XI hereof) and in
such Security of the principal of (and premium if any, on) and (subject to
Section 2.11 hereof) interest on, such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
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Section 4.9 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Subsidiary Guarantors, the Trustee and the
Holders shall be restored severally and respectively to their former positions
hereunder and thereunder and all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
Section 4.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
2.7 hereof, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 4.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 4.12 Control by Holders.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or with
this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in personal
liability or expense for which the Trustee has not received a satisfactory
indemnity therefor or be unduly prejudicial to the Holders not joining therein.
Section 4.13 Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities may on behalf of the Holders of all the Securities
waive any existing Default or Event of Default hereunder and its consequences,
except a Default or Event of Default
(a) in respect of the payment of the principal of (or premium, if any, on)
or interest on any Security, or
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(b) in respect of a covenant or provision hereof which under Article VIII
hereof cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected thereby.
Upon any such waiver, such Default or Event of Default shall cease to exist
for every purpose under this Indenture, but no such waiver shall extend to any
subsequent or other fault or Event of Default or impair any right consequent
thereon.
Section 4.14 Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Subsidiary Guarantors 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 wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any
Subsidiary Guarantor from paying all or any portion of the principal of
(premium, if any, on) or interest on the Securities as contemplated herein, 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
covenant that they will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE V.
THE TRUSTEE
Section 5.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, and shall be fully protected in so relying, 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; provided, however, that,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture, but the Trustee has
no obligation to determine the accuracy or completeness (other than as to
conformity with the requirements of this Indenture) of the statements made
therein.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except
that:
(i) this paragraph shall not limit the effect of Section 5.1(b);
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(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 4.12.
Section 5.2 Certain Rights of Trustee.
Subject to the provisions of Section 5.1 hereof:
(a) the Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper (whether in its original or
facsimile form), or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) 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,
note, other evidence of indebtedness 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 reasonably see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it in good faith to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;
and
(i) the Trustee shall not be deemed to have notice or knowledge of any
matter unless a Responsible Officer has actual knowledge thereof or unless
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written notice thereof is received by the Trustee at its Corporate Trust Office
and such notice references the Securities generally, the Company or this
Indenture.
The Trustee shall not be required to advance, expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 5.3 Trustee Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company or the Subsidiary Guarantors, as the case may be, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture, the
Subsidiary Guarantees or the Securities. The Trustee shall not be accountable
for the use or application by the Company of any Securities or the proceeds
thereof.
Section 5.4 May Hold Securities.
The Trustee, any Paying Agent, any Registrar or any other agent of the
Company, the Subsidiary Guarantors or of the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
TIA Sections 310(b) and 311 in the case of the Trustee, may otherwise deal with
the Company and the Subsidiary Guarantors with the same rights it would have if
it were not the Trustee, Paying Agent, Registrar or such other agent.
Section 5.5 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company or any Subsidiary Guarantor.
Section 5.6 Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time such compensation as the
Company and the Trustee may agree in writing for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to the Trustee's wilful misconduct, negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability, claim damage or expense incurred without wilful misconduct or
negligence on its part, (i) arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder or (ii) in connection with
enforcing this indemnification provision.
The obligations of the Company under this Section 5.6 to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
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advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture or any other termination under any Insolvency or
Liquidation Proceeding. As security for the performance of such obligations of
the Company, the Trustee shall have a claim and lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for payment of principal of (and premium, if any, on) or
interest on particular Securities. Such lien shall survive the satisfaction and
discharge of this Indenture or any other termination under any Insolvency or
Liquidation Proceeding.
When the Trustee incurs expenses or renders services after the occurrence
of an Event of Default specified in paragraph (h) or (i) of Section 4.1 of this
Indenture, such expenses and the compensation for such services are intended to
constitute expenses of administration under any Insolvency or Liquidation
Proceeding.
Section 5.7 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50,000,000. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 5.7, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 5.8 Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b) of the Trust
Indenture Act; provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
Section 5.9 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 5.10 hereof.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 5.10 hereof shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of not
less than a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
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(2) the Trustee shall cease to be eligible under Section 5.7 hereof
and shall fail to resign after written request therefor by the Company or
by any Holder who has been a bona fide Holder of a Security for at least
six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in aggregate principal amount of the Outstanding Securities delivered
to the Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Holders and
accepted appointment in the manner hereinafter provided, the retiring Trustee or
any Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee. The
evidence of such successorship may, but need not be, evidenced by a supplemental
indenture.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders of
Securities in the manner provided for in Section 13.5 hereof. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
(g) Notwithstanding the replacement of the Trustee pursuant to this Section
5.9, the Company's obligations under Section 5.6 shall continue for the benefit
of the retiring Trustee.
Section 5.10 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of all amounts due it under
Section 5.6 hereof, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all money and
other Property held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
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Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation or banking association into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation or banking
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or banking association succeeding
to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation or
banking association shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided; provided, however,
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities in the name of any predecessor Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 5.12 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 5.13 Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder, the Trustee
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice of such Default hereunder known to the Trustee, unless such Default shall
have been cured or waived; provided, however, that, except in the case of a
Default in the payment of the principal of (or premium, if any, on) or interest
on any Security, the Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interest of the
Holders. The Trustee shall not be deemed to have notice of any Default, other
than a Default under 4.1(a) or (b), unless the Trustee shall have been advised
in writing that a Default has occurred. No duty imposed upon the Trustee in this
Indenture shall be applicable with respect to any Default of which the Trustee
is not deemed to have notice.
ARTICLE VI.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 6.1 Holders' Lists; Holder Communications; Disclosures Respecting
Holders.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. Neither the Company, any Subsidiary Guarantor nor the Trustee shall
be under any responsibility with regard to the accuracy of such list. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee
semi-annually before each Regular Record Date, and at such other times as the
Trustee may reasonably request in writing, a list, in such form as the Trustee
may reasonably request, as of such date of the names and addresses of the
Holders then known to the Company. The Company and the Trustee shall also
satisfy any other requirements imposed upon each of them by TIA Section 312(a).
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Holders may communicate pursuant to Section 312(b) of the TIA with other
Holders with respect to their rights under this Indenture or the Securities.
Every Holder of Securities, by receiving and holding the same, agrees with the
Company, the Subsidiary Guarantors, the Registrar and the Trustee that none of
the Company, the Subsidiary Guarantors, the Registrar or the Trustee, or any
agent of any of them, shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders in accordance with
TIA Section 312, regardless of the source from which such information was
derived, that each of such Persons shall have the protection of TIA Section
312(c) and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under TIA Section 312(b).
Section 6.2 Reports By Trustee.
Within 60 days after May 15 of each year commencing with May 15, 2000, the
Trustee shall transmit by mail to the Holders, as their names and addresses
appear in the Security Register, a brief report dated as of such May 15 in
accordance with and to the extent required under TIA Section 313(a). The Trustee
shall also comply with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Securities
become listed on any stock exchange or automatic quotation system.
A copy of each Trustee's report, at the time of its mailing to Holders of
Securities, shall be mailed to the Company and filed with the Commission and
each stock exchange, if any, on which the Securities are listed.
Section 6.3 Reports by Company.
The Company shall:
(a) file with the Trustee, within 30 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to either of
said Sections, then the Company shall file with the Trustee such information,
documents or reports as required pursuant to Section 9.8 hereof;
(b) file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(c) transmit by mail to all Holders, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information, documents and
reports (without exhibits except to the extent required by TIA Section 313(c))
required to be filed by the Company pursuant to paragraph (a) or (b) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
ARTICLE VII.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 7.1 Company May Consolidate, etc., Only on Certain Terms.
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The Company shall not, in any single transaction or a series of related
transactions, merge or consolidate with or into any other Person, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
the Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any Person or group of Affiliated Persons, and the Company shall not
permit any of its Restricted Subsidiaries to enter into any such transaction or
series of related transactions if such transaction or series of transactions, in
the aggregate, would result in a sale, assignment, conveyance, transfer, lease
or other disposition of all or substantially all of the Properties of the
Company and its Restricted Subsidiaries on a consolidated basis to any other
Person or group of Affiliated Persons, unless at the time and after giving
affect thereto:
(a) either (i) if the transaction is a merger or consolidation, the Company
shall be the surviving Person of such merger or consolidation, or (ii) the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or to which the Properties of the Company or its
Restricted Subsidiaries, as the case may be, are sold, assigned, conveyed,
transferred, leased or otherwise disposed of (any such surviving Person or
transferee Person being called the "Surviving Entity") shall be a corporation
organized and existing under the laws of the United States of America, any state
thereof or the District of Columbia and shall, in either case, expressly assume
by a supplemental indenture to this Indenture executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture, and, in each case, this Indenture shall
remain in full force and effect;
(b) immediately before and immediately after giving effect to such
transaction or series of related transactions on a pro forma basis (and treating
any Indebtedness not previously an obligation of the Company or any of its
Restricted Subsidiaries which becomes the obligation of the Company or any of
its Restricted Subsidiaries in connection with or as a result of such
transaction or transactions as having been incurred at the time of such
transaction or transactions), no Default or Event of Default shall have occurred
and be continuing;
(c) except in the case of the consolidation or merger of any Restricted
Subsidiary with or into the Company, immediately after giving effect to such
transaction or transactions on a pro forma basis, the Consolidated Net Worth of
the Company (or the Surviving Entity if the Company is not the continuing
obligor under this Indenture) is at least equal to the Consolidated Net Worth of
the Company immediately before such transaction or transactions;
(d) except in the case of the consolidation or merger of the Company with
or into a Restricted Subsidiary or any Restricted Subsidiary with or into the
Company or another Restricted Subsidiary, immediately before and immediately
after giving effect to such transaction or transactions on a pro forma basis
(assuming that the transaction or transactions occurred on the first day of the
period of four full fiscal quarters ending immediately prior to the consummation
of such transaction or transactions, with the appropriate adjustments with
respect to the transaction or transactions being included in such pro forma
calculation), the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) could incur $1.00 of additional
Indebtedness (excluding Permitted Indebtedness) under Section 9.11(a) hereof;
(e) if the Company is not the continuing obligor under this Indenture, then
each Subsidiary Guarantor, unless it is the Surviving Entity, shall have by
supplemental indenture confirmed that its Subsidiary Guarantee of the Securities
shall apply to the Surviving Entity's obligations under this Indenture and the
Securities:
(f) if any of the Properties of the Company or any of its Restricted
Subsidiaries would upon such transaction or series of related transactions
become subject to any Lien (other than a Permitted Lien), the creation or
imposition of such Lien shall have been in compliance with Section 9.14 hereof;
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(g) the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) shall have delivered to the Trustee, in
form and substance reasonably satisfactory to the Trustee, (i) an Officers'
Certificate stating that such consolidation, merger, conveyance, transfer, lease
or other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture, comply with this Indenture
and (ii) an Opinion of Counsel stating that the requirements of Section 7.1(a)
have been satisfied.
Section 7.2 Successor Substituted.
Upon any consolidation of the Company with or merger of the Company into
any other corporation or any sale, assignment, lease, conveyance, transfer or
other disposition of all or substantially all of the Properties of the Company
and its Restricted Subsidiaries on a consolidated basis in accordance with
Section 7.1 hereof, the Surviving Entity 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 Surviving Entity had been named as the Company
herein, and in the event of any such sale, assignment, lease, conveyance,
transfer or other disposition, the Company (which term shall for this purpose
mean the Person named as the "Company" in the first paragraph of this Indenture
or any successor Person which shall theretofore become such in the manner
described in Section 7.1 hereof), except in the case of a lease, shall be
discharged of all obligations and covenants under this Indenture and the
Securities, and the Company may be dissolved and liquidated and such dissolution
and liquidation shall not cause a Change of Control under clause (e) of the
definition thereof to occur unless the sale, assignment, lease, conveyance,
transfer or other disposition of all or substantially all of the Properties of
the Company and its Restricted Subsidiaries on a consolidated basis to any
Person otherwise results in a Change of Control.
ARTICLE VIII.
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, each of the Subsidiary Guarantors, when authorized by a Board
Resolution, and the Trustee upon Company Request, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company contained
herein and in the Securities; or
(b) to add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power herein conferred upon the Company; or
(c) to comply with any requirement of the SEC in connection with qualifying
this Indenture under the TIA or maintaining such qualification thereafter; or
(d) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee pursuant to the requirements of Sections 5.9 and 5.10
hereof; or
(e) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action shall not adversely affect the
interests of the Holders in any material respect; or
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(f) to secure the Securities or the Subsidiary Guarantees pursuant to the
requirements of Section 9.14 hereof or otherwise; or
(g) to add any Restricted Subsidiary as an additional Subsidiary Guarantor
as provided in Section 9.12(a) hereof or to evidence the succession of another
Person to any Subsidiary Guarantor pursuant to Section 12.2(b) hereof and the
assumption by any such successor of the covenants and agreements of such
Subsidiary Guarantor contained herein, in the Securities and in the Subsidiary
Guarantee of such Subsidiary Guarantor; or
(h) to release a Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 12.3 hereof; or
(i) to provide for uncertificated Securities in addition to or in place of
certificated Securities.
Section 8.2 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, each of the Subsidiary Guarantors, when authorized by a Board
Resolution, and the Trustee upon Company Request may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment of
interest on, any Security, or reduce the principal amount thereof or the rate of
interest thereon or any premium thereon, or change the coin or currency in which
principal of any Security or any premium or the interest on any Security is
payable, or impair the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date); or
(b) reduce the percentage of aggregate principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
hereunder or the consequences of a default provided for in this Indenture; or
(c) modify any of the provisions of this Section or Sections 4.13 and 9.20
hereof, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby; or
(d) amend, change or modify the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control, or to
make and consummate a Prepayment Offer with respect to any Asset Sale, or modify
any of the provisions or definitions with respect thereto.
It shall not be necessary for any Act of the Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
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the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 8.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 8.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 8.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company, and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
Section 8.7 Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2 hereof, the
Company shall give notice thereof to the Holders of each Outstanding Security
affected, in the manner provided for in Section 13.5 hereof, setting forth in
general terms the substance of such supplemental indenture.
ARTICLE IX.
COVENANTS
Section 9.1 Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually pay the principal of (and premium, if any, on) and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
Section 9.2 Maintenance of Office or Agency.
The Company shall maintain an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities, the Subsidiary Guarantees and this
Indenture may be served. The New York office of the Trustee shall be such office
or agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
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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 aforementioned office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
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 any such designation. Further,
if at any time there shall be no such office or agency in The City of New York
where the Securities may be presented or surrendered for payment, the Company
shall forthwith designate and maintain such an office or agency in The City of
New York, in order that the Securities shall at all times be payable in The City
of New York. The Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of any such other
office or agency.
Section 9.3 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it shall, on
or before 10:00 a.m., Eastern time, on each due date of the principal of (and
premium, if any, on) or interest on any of the Securities, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due until such sum
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will on or before 10:00 a.m., Eastern time, on each due date of
the principal of (and premium, if any, on), or interest on, any Securities,
deposit with a Paying Agent immediately available funds in a sum sufficient to
pay the principal (and premium, if any) or interest so becoming due, such funds
to be held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of such action or any failure so to act.
The Company shall cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums. The Trustee and each Paying Agent shall promptly pay to the Company, upon
Company Request, any money held by them (other than pursuant to Article XI) at
any time in excess of amounts required to pay principal, premium, if any, or
interest on the Securities.
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Subject to applicable escheat and abandoned property laws, 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 (and premium, if any, on) or interest
on any Security and remaining 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 Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security 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.
Section 9.4 Corporate Existence.
Except as expressly permitted by Article VII hereof, Section 9.16 hereof or
other provisions of this Indenture, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and each
Restricted Subsidiary; provided, however, that the Company shall not be required
to preserve any such existence of its Restricted Subsidiaries, rights or
franchises, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 9.5 Payment of Taxes; Maintenance of Properties; Insurance.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or Property of the Company or any
Restricted 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 Restricted 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 and for which
appropriate provision has been made in accordance with GAAP.
The Company shall cause all material Properties owned by the Company or any
Restricted Subsidiary and used or held for use in the conduct of its business or
the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted), all as in
the judgment of the Company or such Restricted Subsidiary may be necessary so
that its business may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company or any
Restricted Subsidiary from discontinuing the maintenance of any of such
Properties if such discontinuance is, in the judgment of the Company or such
Restricted Subsidiary, as the case may be, desirable in the conduct of the
business of the Company or such Restricted Subsidiary and not disadvantageous in
any material respect to the Holders. Notwithstanding the foregoing, nothing
contained in this Section 9.5 shall limit or impair in any way the right of the
Company and its Restricted Subsidiaries to sell, divest and otherwise to engage
in transactions that are otherwise permitted by this Indenture.
The Company shall at all times keep all of its, and cause its Restricted
Subsidiaries to keep their, Properties which are of an insurable nature insured
with insurers, believed by the Company to be responsible, against loss or damage
to the extent that property of similar character and in a similar location is
usually so insured by corporations similarly situated and owning like
Properties.
The Company or any Restricted Subsidiary may adopt such other plan or
method of protection, in lieu of or supplemental to insurance with insurers,
whether by the establishment of an insurance fund or reserve to be held and
applied to make good losses from casualties, or otherwise, conforming to the
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systems of self-insurance maintained by corporations similarly situated and in a
similar location and owning like Properties, as may be determined by the Board
of Directors of the Company or such Restricted Subsidiary.
Section 9.6 Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the Oil and
Gas Business.
Section 9.7 Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 100 days after the end
of each fiscal year of the Company and within 45 days of the end of each of the
first, second and third quarters of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its Restricted Subsidiaries during the preceding fiscal quarter or fiscal year,
as applicable, 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 has kept, observed, performed and fulfilled each and every
condition and covenant contained in this Indenture and no Default or Event of
Default has occurred and is continuing (or, if a Default or Event of Default
shall have occurred to either such Officer's knowledge, 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). Such
Officers' Certificate shall comply with TIA Section 314(a)(4). For purposes of
this Section 9.7(a), such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
(b) The Company shall, so long as any of the Securities is outstanding,
deliver to the Trustee, upon any of its Officers becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company proposes to take with respect thereto,
within 10 days of its occurrence.
Section 9.8 Provision of Financial Information.
The Company (and the Subsidiary Guarantors, if applicable) shall file on a
timely basis with the SEC, to the extent such filings are accepted by the
Commission and whether or not the Company has a class of securities registered
under the Exchange Act, the annual reports, quarterly reports and other
documents that the Company would be required to file if it were subject to
Section 13 or 15 of the Exchange Act. The Company (and the Subsidiary
Guarantors, if applicable) shall also file with the Trustee (with exhibits), and
provide to each Holder of Securities (without exhibits), without cost to such
Holder, copies of such reports and documents within 15 days after the date on
which the Company (and the Subsidiary Guarantors, if applicable) file such
reports and documents with the Commission or the date on which the Company (and
the Subsidiary Guarantors, if applicable) would be required to file such reports
and documents if the Company were so required and, if filing such reports and
documents with the Commission is not accepted by the Commission or is prohibited
under the Exchange Act, the Company shall supply at its cost copies of such
reports and documents (including any exhibits thereto) to any Holder of
Securities promptly upon written request given in accordance with Section 13.4
hereof. The Company is obligated to make available, upon request, to any Holder
of Securities the information required by Rule 144A(d)(4) under the Securities
Act, during any period in which the Company is not subject to Section 13 or
15(d) of the Exchange Act.
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Section 9.9 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, take the following actions:
(i) declare or pay any dividend on, or make any distribution to
holders of, any shares of Capital Stock of the Company (other than
dividends or distributions payable solely in shares of Qualified Capital
Stock of the Company or in options, warrants or other rights to purchase
Qualified Capital Stock of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Affiliate thereof (other than any
Wholly Owned Restricted Subsidiary of the Company) or any options, warrants
or other rights to acquire such Capital Stock (other than the purchase,
redemption, acquisition or retirement of any Disqualified Capital Stock of
the Company solely in shares of Qualified Capital Stock of the Company);
(iii) make any principal payment on or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or maturity, any Subordinated
Indebtedness, except in any case out of the proceeds of Permitted
Refinancing Indebtedness, or
(iv) make any Restricted Investment;
(such payments or other actions described in clauses (i) through (iv) being
collectively referred to as "Restricted Payments"), unless at the time of and
after giving effect to the proposed Restricted Payment (the amount of any such
Restricted Payment, if other than cash, shall be the amount determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), (A) no Default or Event of Default shall have
occurred and be continuing, (B) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in accordance with Section
9.11(a) hereof and (C) the aggregate amount of all Restricted Payments declared
or made after the date of this Indenture shall not exceed the sum (without
duplication) of the following:
(1) 50% of the Consolidated Net Income of the Company accrued
on a cumulative basis during the period beginning on April 1, 1999 and
ending on the last day of the Company's last fiscal quarter ending
prior to the date of such proposed Restricted Payment (or, if such
Consolidated Net Income shall be a loss, minus 100% of such loss), plus
(2) the aggregate Net Cash Proceeds, or the Fair Market Value
of Property other than cash, received after the date of this Indenture
by the Company from the issuance or sale (other than to any of its
Restricted Subsidiaries) of shares of Qualified Capital Stock of the
Company or any options, warrants or rights to purchase such shares of
Qualified Capital Stock of the Company, plus
(3) the aggregate Net Cash Proceeds, or the Fair Market Value
of Property other than cash, received after the date of this Indenture
by the Company (other than from any of its Restricted Subsidiaries)
upon the exercise of any options, warrants or rights to purchase shares
of Qualified Capital Stock of the Company, plus
(4) the aggregate Net Cash Proceeds received after the date of
this Indenture by the Company from the issuance or sale (other than to
any of its Restricted Subsidiaries) of Indebtedness or shares of
Disqualified Capital Stock that have been converted into or exchanged
for Qualified Capital Stock of the Company, together with the aggregate
cash received by the Company at the time of such conversion or
exchange, plus
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(5) to the extent not otherwise included in Consolidated Net
Income, the net reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or a Restricted
Subsidiary after the date of this Indenture from any Unrestricted
Subsidiary or from the redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary (valued in each case as provided in the
definition of "Investment"), not to exceed in the case of any
Unrestricted Subsidiary the total amount of Investments (other than
Permitted Investments) in such Unrestricted Subsidiary made by the
Company and its Restricted Subsidiaries in such Unrestricted Subsidiary
after the date of this Indenture.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take the following actions so long as (in the case of clauses
(ii), (iii) and (iv) below) no Default or Event of Default shall have occurred
and be continuing:
(i) the payment of any dividend on any Capital Stock of the
Company within 60 days after the date of declaration thereof, if at
such declaration date such declaration complied with the provisions of
paragraph (a) above (and such payment shall be deemed to have been paid
on such date of declaration for purposes of any calculation required by
the provisions of paragraph (a) above);
(ii) the payment of dividends through June 30, 2004 on any
shares of the Company's Series A Preferred Stock or Series B Preferred
Stock outstanding on the date of the Indenture (and including shares of
Series A Preferred Stock into which shares of Series B Preferred Stock
outstanding on the date of this Indenture are converted in accordance
with their terms) in an aggregate annual amount not in excess of 9.0%
of the par value of such shares that are outstanding, provided that (A)
such dividends are paid within 60 days of the date of declaration
thereof and (B) on the date of declaration and having given pro forma
effect to the making of such payment the Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately preceding
such event, taken as one period, would have been equal to or greater
than 2.25 to 1.0;
(iii) the repurchase, redemption or other acquisition or
retirement of any shares of any class of Capital Stock of the Company
or any Restricted Subsidiary, in exchange for, or out of the aggregate
Net Cash Proceeds of, a substantially concurrent issue and sale (other
than to a Restricted Subsidiary) of shares of Qualified Capital Stock
of the Company;
(iv) the repurchase, redemption, repayment, defeasance or
other acquisition or retirement for value of any Subordinated
Indebtedness in exchange for, or out of the aggregate Net Cash Proceeds
from, a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of shares of Qualified Capital Stock of the
Company;
(v) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of Subordinated Indebtedness (other
than Disqualified Capital Stock) in exchange for, or out of the
aggregate net cash proceeds of, a substantially concurrent incurrence
(other than to a Restricted Subsidiary) of Subordinated Indebtedness of
the Company so long as (A) the principal amount of such new
Indebtedness does not exceed the principal amount (or, if such
Subordinated Indebtedness being refinanced provides for an amount less
than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of the date
of determination) of the Subordinated Indebtedness being so purchased,
redeemed, repaid, defeased, acquired or retired, plus the amount of any
premium required to be paid in connection with such refinancing
pursuant to the terms of the Indebtedness refinanced or the amount of
any premium reasonably determined by the Company as necessary to
accomplish such refinancing, plus the amount of expenses of the Company
incurred in connection with such refinancing, (B) such new Indebtedness
is subordinated to the Securities at least to the same extent as such
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Subordinated Indebtedness so purchased, redeemed, repaid, defeased,
acquired or retired, and (C) such new Indebtedness has an Average Life
to Stated Maturity that is longer than the Average Life to Stated
Maturity of the Securities and such new Indebtedness has a Stated
Maturity for its final scheduled principal payment that is at least 91
days later than the Stated Maturity for the final scheduled principal
payment of the Securities; and
(vi) loans made to officers, directors or employees of the
Company or any Restricted Subsidiary approved by the Board of Directors
of the Company in an aggregate amount not to exceed $1,000,000
outstanding at any one time, the proceeds of which are used solely (A)
to purchase common stock of the Company in connection with a restricted
stock or employee stock purchase plan, or to exercise stock options
received pursuant to an employee or director stock option plan or other
incentive plan, in a principal amount not to exceed the exercise price
of such stock options or (B) to refinance loans, together with accrued
interest thereon, made pursuant to item (A) of this clause (v).
The actions described in clauses (i), (ii), (iii), (iv) and (vi) of
this paragraph (b) shall be Restricted Payments that shall be permitted to be
made in accordance with this paragraph (b) but shall reduce the amount that
would otherwise be available for Restricted Payments under clause (3) of
paragraph (a) (provided that any dividend paid pursuant to clause (i) of this
paragraph (b) shall reduce the amount that would otherwise be available under
clause (3) of paragraph (a) when declared, but not also when subsequently paid
pursuant to such clause (i)), and the actions described in clause (iv) of this
paragraph (b) shall be permitted to be taken in accordance with this paragraph
and shall not reduce the amount that would otherwise be available for Restricted
Payments under clause (3) of paragraph (a).
(c) In computing Consolidated Net Income under paragraph (a) above, (1) the
Company shall use audited financial statements for the portions of the relevant
period for which audited financial statements are available on the date of
determination and unaudited financial statements and other current financial
data based on the books and records of the Company for the remaining portion of
such period and (2) the Company shall be permitted to rely in good faith on the
financial statements and other financial data derived from the books and records
of the Company that are available on the date of determination. If the Company
makes a Restricted Payment which, at the time of the making of such Restricted
Payment would in the good faith determination of the Company be permitted under
the requirements of this Indenture, such Restricted Payment shall be deemed to
have been made in compliance with this Indenture notwithstanding any subsequent
adjustments made in good faith to the Company's financial statements affecting
Consolidated Net Income of the Company for any period.
Section 9.10 Limitation on Guarantees by Subsidiary Guarantors.
The Company shall not permit any Subsidiary Guarantor to guarantee the
payment of any Subordinated Indebtedness of the Company unless such guarantee
shall be subordinated to such Subsidiary Guarantor's Subsidiary Guarantee at
least to the same extent as such Subordinated Indebtedness is subordinated to
the Securities; provided, however, that this Section 9.10 shall not be
applicable to any guarantee of any Subsidiary Guarantor that (i) existed at the
time such Person became a Subsidiary of the Company and (ii) was not incurred in
connection with, or in contemplation of, such Person's becoming a Subsidiary of
the Company.
Section 9.11 Limitation on Indebtedness and Disqualified Capital Stock.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume, guarantee or in any manner become
directly or indirectly liable for the payment of (collectively, "incur") any
Indebtedness (including any Acquired Indebtedness), except for Permitted
Indebtedness, and the Company shall not, and shall not permit any of its
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Restricted Subsidiaries to, issue any Disqualified Capital Stock (except for the
issuance by the Company of (A) 1,948,001 shares of Series A Preferred Stock and
1,051,999 shares of Series B Preferred Stock on the date of this Indenture (and
including the shares of Series A Preferred Stock issued upon the conversion of
such shares of Series B Preferred Stock into shares of Series A Preferred Stock
in accordance with their terms) and (B) Disqualified Capital Stock (1) which is
redeemable at the Company's option in cash or Qualified Capital Stock and (2)
the dividends on which are payable at the Company's option in cash or Qualified
Capital Stock); provided however, that the Company and its Restricted
Subsidiaries that are Subsidiary Guarantors may incur Indebtedness or issue
shares of Disqualified Capital Stock if (i) at the time of such event and after
giving effect thereto on a pro forma basis the Consolidated Fixed Charge
Coverage Ratio for the four full quarters immediately preceding such event,
taken as one period, would have been equal to or greater than 2.5 to 1.0 and
(ii) no Default or Event of Default shall have occurred and be continuing at the
time such additional Indebtedness is incurred or such Disqualified Capital Stock
is issued or would occur as a consequence of the incurrence of the additional
Indebtedness or the issuance of the Disqualified Capital Stock. For purposes of
determining compliance with this Section 9.11(a), in the event that an item of
Indebtedness meets the criteria of one or more of the categories of Permitted
Indebtedness described in clauses (i) through (xi) of such definition or is
entitled to be incurred (whether incurred under the Bank Credit Facility or
otherwise) pursuant to the proviso of the foregoing sentence, the Company may,
in its sole discretion, classify such item of Indebtedness in any manner that
complies with this covenant and such item of Indebtedness will be treated as
having been incurred pursuant too only one of such clauses of the definition of
Permitted Indebtedness or the proviso of the foregoing sentence and an item of
Indebtedness may be divided and classified in more than one of the types of
Indebtedness permitted hereunder.
(b) The amount of any guarantee by the Company or any Restricted Subsidiary
of any Indebtedness of the Company or one or more Restricted Subsidiaries shall
not be deemed to be outstanding or incurred for purposes of this Section 9.11
hereof in addition to the amount of Indebtedness which it guarantees.
(c) For purposes of this Section 9.11, Indebtedness of any Person that
becomes a Restricted Subsidiary by merger, consolidation or other acquisition
shall be deemed to have been incurred by the Company and the Restricted
Subsidiary at the time such Person becomes a Restricted Subsidiary.
Section 9.12 Additional Subsidiary Guarantors.
(a) The Company shall cause each Restricted Subsidiary that becomes, or
comes into existence as, a Restricted Subsidiary after the date of this
Indenture and has assets, businesses, divisions, real property or equipment with
a Fair Market Value in excess of $5,000,000 to execute and deliver a
supplemental indenture to this Indenture agreeing to be bound by its terms
applicable to a Subsidiary Guarantor and providing for a Subsidiary Guarantee of
the Securities by such Restricted Subsidiary.
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant
to this Section 9.12 shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon the terms and conditions set
forth in Section 12.3 hereof.
Section 9.13 Limitation on Issuances and Sales of Capital Stock by
Restricted Subsidiaries.
The Company (a) shall not permit any Restricted Subsidiary to issue or sell
any Capital Stock to any Person other than to the Company or one of its Wholly
Owned Restricted Subsidiaries or (b) permit any Person other than the Company or
one of its Wholly Owned Restricted Subsidiaries to own any Capital Stock of any
other Restricted Subsidiary except, in each case, for (i) directors' qualifying
shares, (ii) the Capital Stock of a Restricted Subsidiary owned by a Person at
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the time such Restricted Subsidiary became a Restricted Subsidiary or acquired
by such Person in connection with the formation of the Restricted Subsidiary, or
transfers thereof or (iii) a sale of all of the Capital Stock of a Restricted
Subsidiary owned by the Company or its Subsidiaries effected in accordance with
Section 9.16 hereof, (d) Qualifying TECONS or (e) any sale or issuance of
Capital Stock of a Foreign Subsidiary that is required to be issued to or owned
by the government of a foreign jurisdiction or individual or corporate citizens
of such foreign jurisdiction in order for such Foreign Subsidiary to transact
business in such foreign jurisdiction, provided, that any such sale or issuance
shall be deemed to be an Asset Sale to the extent the percentage of the total
outstanding Voting Stock of such Foreign Subsidiary owned directly and
indirectly by the Company is reduced as a result of such sale or issuance and
any such sale or issuance must be made in compliance with the provisions of
Section 9.16 hereof.
Section 9.14 Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume, affirm or suffer to exist or
become effective any Lien of any kind, except for Permitted Liens, upon any of
their respective Properties, whether now owned or acquired after the date of
this Indenture, or any income or profits therefrom, or assign or convey any
right to receive income thereon, unless (a) in the case of any Lien securing
Subordinated Indebtedness, the Securities are secured by a lien on such Property
or proceeds that is senior in priority to such Lien and (b) in the case of any
other Lien, the Securities are directly secured equally and ratably with the
obligation or liability secured by such Lien.
Section 9.15 Purchase of Securities Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase (a "Change of Control Offer") all of the
then Outstanding Securities, in whole or in part, from the Holders of such
Securities in integral multiples of $1,000, at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the aggregate principal amount of such
Securities, plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date (as defined below), in accordance with the procedures set forth in
paragraphs (b), (c) and (d) of this Section. The Company shall, subject to the
provisions described below, be required to purchase all Securities properly
tendered into the Change of Control Offer and not withdrawn. The Company will
not be required to make a Change of Control Offer upon a Change of Control if
another Person makes the Change of Control Offer at the same purchase price, at
the same times and otherwise in substantial compliance with the requirements
applicable to a Change of Control Offer to be made by the Company and purchases
all Securities validly tendered and not withdrawn under such Change of Control
Offer.
(b) The Change of Control Offer is required to remain open for at least 20
Business Days and until the close of business on the fifth Business Day prior to
the Change of Control Purchase Date (as defined below).
(c) Not later than the 30th day following any Change of Control, the
Company shall give to the Trustee in the manner provided in Section 13.4 and
each Holder of the Securities in the manner provided in Section 13.5, a notice
(the "Change of Control Notice") governing the terms of the Change of Control
Offer and stating:
(1) that a Change in Control has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Securities, or
portion thereof, at the Change of Control Purchase Price;
(2) any information regarding such Change of Control required to be
furnished pursuant to Rule 13e-1 under the Exchange Act and any other
securities laws and regulations thereunder;
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(3) a purchase date (the "Change of Control Purchase Date") which
shall be on a Business Day and no earlier than 30 days nor later than 60
days from the date the Change of Control occurred;
(4) that any Security, or portion thereof, not tendered or accepted
for payment will continue to accrue interest:
(5) that unless the Company defaults in depositing money with the
Paying Agent in accordance with the last paragraph of clause (d) of this
Section 9.15, or payment is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Purchase Date; and
(6) the instructions a Holder must follow in order to have his
Securities repurchased in accordance with paragraph (d) of this Section.
If any of the Securities subject to the Change of Control Offer is in the form
of a Global Security, then the Company shall modify the Change of Control Notice
to the extent necessary to accord with the procedures of the depository
applicable thereto.
(d) Holders electing to have Securities purchased will be required to
surrender such Securities to the Paying Agent at the address specified in the
Change of Control Notice at least five Business Days prior to the Change of
Control Purchase Date. Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than three Business Days prior to the
Change of Control Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder and principal amount of the
Securities delivered for purchase by the Holder as to which his election is to
be withdrawn and a statement that such Holder is withdrawing his election to
have such Securities purchased. Holders whose Securities are purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
On the Change of Control Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof validly tendered pursuant to a Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so tendered, and (iii)
deliver or cause to be delivered to the Trustee the Securities so accepted. The
Paying Agent shall promptly mail or deliver to Holders of the Securities so
tendered payment in an amount equal to the purchase price for the Securities,
and the Company shall execute and the Trustee shall authenticate and mail or
make available for delivery to such Holders a new Security equal in principal
amount to any unpurchased portion of the Security which any such Holder did not
surrender for purchase. The Company shall announce the results of a Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date. For purposes of this Section 9.15, the Trustee will act as the Paying
Agent.
(e) The Company shall comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that a Change of Control occurs and the
Company is required to purchase Securities as described in this Section 9.15.
Section 9.16 Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate any Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the Property subject
to such Asset Sale and (ii) all of the consideration paid to the Company or such
Restricted Subsidiary in connection with such Asset Sale is in the form of cash,
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Cash Equivalents, Liquid Securities, Exchanged Properties or the assumption by
the purchaser of liabilities of the Company (other than liabilities of the
Company that are by their terms subordinated to the Securities) or liabilities
of any Subsidiary Guarantor that made such Asset Sale (other than liabilities of
a Subsidiary Guarantor that are by their terms subordinated to such Subsidiary
Guarantor's Subsidiary Guarantee), in each case as a result of which the Company
and its remaining Restricted Subsidiaries are no longer liable for such
liabilities ("Permitted Consideration"); provided, however, that the Company and
its Restricted Subsidiaries shall be permitted to receive Property other than
Permitted Consideration, so long as the aggregate Fair Market Value of all such
Property other than Permitted Consideration received from Asset Sales and held
by the Company or any Restricted Subsidiary at any one time shall not exceed
7.5% of Adjusted Consolidated Net Tangible Assets. The Net Available Cash from
Asset Sales by the Company or a Restricted Subsidiary may be applied by the
Company or such Restricted Subsidiary, to the extent the Company or such
Restricted Subsidiary elects (or is required by the terms of any Senior
Indebtedness of the Company or a Subsidiary Guarantor), to (i) repay
Indebtedness of the Company under the Bank Credit Facility, (ii) reinvest in
Additional Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Company or another
Restricted Subsidiary) or (iii) purchase Securities or purchase both Securities
and one or more series or issues of other Senior Indebtedness on a pro rata
basis (excluding Securities and Senior Indebtedness owned by the Company or an
Affiliate of the Company). Pending any reinvestment pursuant to clause (ii) in
the preceding sentence, the Company may temporarily prepay, repay or purchase
Senior Indebtedness of the Company or a Subsidiary Guarantor.
(b) Any Net Available Cash from an Asset Sale not applied in accordance
with the preceding paragraph within 365 days from the date of such Asset Sale
shall constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $10,000,000, the Company shall be required to make an offer to purchase
Securities having an aggregate principal amount equal to the aggregate amount of
Excess Proceeds (the "Prepayment Offer") at a purchase price equal to 100% of
the principal amount of such Securities plus accrued and unpaid interest, if
any, to the Purchase Date (as defined) in accordance with the procedures
(including prorating in the event of oversubscription) set forth herein. If the
aggregate principal amount of Securities tendered by Holders thereof exceeds the
amount of available Excess Proceeds, then such Excess Proceeds shall be
allocated pro rata according to the principal amount of the Securities tendered
and the Trustee shall select the Securities to be purchased in accordance
herewith. To the extent that any portion of the amount of Excess Proceeds
remains after compliance with the second sentence of this paragraph and provided
that all Holders of Securities have been given the opportunity to tender their
Securities for purchase as described in the following paragraph in accordance
with this Indenture, the Company and its Restricted Subsidiaries may use such
remaining amount for purposes permitted by this Indenture and the amount of
Excess Proceeds shall be reset to zero.
(c) (1) Within 30 days after the 365th day following the date of an Asset
Sale, the Company shall, if it is obligated to make an offer to purchase the
Securities pursuant to the preceding paragraph, send a written Prepayment Offer
notice, by first-class mail, to the Trustee and the Holders of the Securities
(the "Prepayment Offer Notice"), accompanied by such information regarding the
Company and its Subsidiaries as the Company believes shall enable such Holders
of the Securities to make an informed decision with respect to the Prepayment
Offer (which at a minimum shall include (i) the most recently filed Annual
Report on Form 10-K (including audited consolidated financial statements) of the
Company, the most recent subsequently filed Quarterly Report on Form 10-Q of the
Company and any Current Report on Form 8-K of the Company filed subsequent to
such Quarterly Report, other than Current Reports describing Asset Sales
otherwise described in the offering materials, or corresponding successor
reports (or, during any time that the Company is not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, corresponding reports
prepared pursuant to Section 9.8), (ii) a description of material developments
in the Company's business subsequent to the date of the latest of such reports
and (iii) if material, appropriate pro forma financial information). The
Prepayment Offer Notice shall state, among other things, (i) that the Company is
offering to purchase Securities pursuant to the provisions of this Indenture,
(ii) that any Security (or any portion thereof) accepted for payment (and duly
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paid on the Purchase Date) pursuant to the Prepayment Offer shall cease to
accrue interest on the Purchase Date, (iii) that any Securities (or portions
thereof) not properly tendered shall continue to accrue interest, (iv) the
purchase price and purchase date, which shall be, subject to any contrary
requirements of applicable law, no less than 30 days nor more than 60 days after
the date the Prepayment Offer Notice is mailed (the "Purchase Date"), (v) the
aggregate principal amount of Securities to be purchased, (vi) a description of
the procedure which Holders of Securities must follow in order to tender their
Securities and the procedures that Holders of Securities must follow in order to
withdraw an election to tender their Securities for payment and (vii) all other
instructions and materials necessary to enable Holders to tender Securities
pursuant to the Prepayment Offer.
(2) Not later than the date upon which written notice of a Prepayment
Offer is delivered to the Trustee as provided above, the Company shall
deliver to the Trustee an Officers' Certificate as to (i) the amount of the
Prepayment Offer (the "Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Sales pursuant to which such Prepayment Offer
is being made and (iii) the compliance of such allocation with the
provisions of Section 9.16(a). On such date, the Company shall also
irrevocably deposit with the Trustee or with the Paying Agent (or, if the
Company is the Paying Agent, shall segregate and hold in trust) in cash an
amount equal to the Offer Amount to be held for payment in accordance with
the provisions of this Section. Upon the expiration of the period for which
the Prepayment Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee for cancellation the Securities or portions thereof
which have been properly tendered to and are to be accepted by the Company.
The Trustee or the Paying Agent shall, on the Purchase Date, mail or
deliver payment to each tendering Holder in the amount of the purchase
price. In the event that the aggregate purchase price of the Securities
delivered by the Company to the Trustee is less than the Offer Amount, the
Trustee or the Paying Agent shall deliver the excess to the Company
immediately after the expiration of the Offer Period for application in
accordance with this Section.
(3) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the
Company or its agent at the address specified in the notice at least three
Business Days prior to the Purchase Date. Holders shall be entitled to
withdraw their election if the Trustee or the Company receives not later
than one Business Day prior to the Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security which was delivered for purchase by the
Holder and a statement that such Holder is withdrawing his election to have
such Security purchased. If at the expiration of the Offer Period the
aggregate principal amount of Securities surrendered by Holders exceeds the
Offer Amount, the Company shall select the Securities to be purchased on a
pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $1,000, or integral
multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part shall be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by
the Company pursuant to and in accordance with the terms of this Section
9.16. A Security shall be deemed to have been accepted for purchase at the
time the Trustee or the Paying Agent mails or delivers payment therefor to
the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
or regulations thereunder to the extent such laws and regulations are applicable
in connection with the purchase of Securities as described above. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions relating to the Prepayment Offer, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations described above by virtue thereof.
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Section 9.17 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of Property or the rendering of any
services) with, or for the benefit of, any Affiliate of the Company (other than
the Company or a Wholly Owned Restricted Subsidiary), unless (a) such
transaction or series of related transactions is on terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
would be available in a comparable transaction in arm's-length dealings with an
unrelated third party, (b) with respect to a transaction or series of related
transactions involving aggregate payments in excess of $2,500,000, the Company
delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (a) above and
that such transaction or series of related transactions has been approved by a
majority of the Disinterested Directors of the Company, and (c) with respect to
any one transaction or series of related transactions involving aggregate
payments in excess of $10,000,000, the Officers' Certificate referred to in
clause (b) above also certifies that the Company has obtained a written opinion
from an independent nationally recognized investment banking firm or appraisal
firm specializing or having a speciality in the type and subject matter of the
transaction or series of related transactions at issue, which opinion shall be
to the effect set forth in clause (a) above or shall state that such transaction
or series of related transactions is fair from a financial point of view to the
Company or such Restricted Subsidiary; provided, however, that the foregoing
restriction shall not apply to (i) loans or advances to officers, directors and
employees of the Company or any Restricted Subsidiary made in the ordinary
course of business in an aggregate amount not to exceed $1,000,000 outstanding
at any one time, (ii) indemnities of officers, directors, employees and other
agents of the Company or any Restricted Subsidiary permitted by corporate
charter or other organizational document, bylaw or statutory provisions, (iii)
the payment of reasonable and customary fees to directors of the Company or any
of its Restricted Subsidiaries who are not employees of the Company or any
Affiliate, (iv) the Company's employee compensation and other benefit
arrangements, (v) transactions exclusively between or among the Company and any
of the Restricted Subsidiaries or exclusively between or among such Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by the
Indenture, and (vi) any Restricted Payment permitted to be paid pursuant Section
9.9.
Section 9.18 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or suffer to exist or allow to become effective
any consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any
other distributions on or in respect of its Capital Stock, or make payments on
any Indebtedness owed, to the Company or any other Restricted Subsidiary, (b) to
make loans or advances to the Company or any other Restricted Subsidiary or (c)
to transfer any of its Property to the Company or any other Restricted
Subsidiary (any such restrictions being collectively referred to herein as a
"Payment Restriction"), except for such encumbrances or restrictions existing
under or by reason of (i) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Company or any
Restricted Subsidiary, or customary restrictions in licenses relating to the
Property covered thereby and entered into in the ordinary course of business,
(ii) any instrument governing Indebtedness of a Person acquired by the Company
or any Restricted Subsidiary at the time of such acquisition, which encumbrance
or restriction is not applicable to any other Person, other than the Person, or
the Property of the Person, so acquired, provided that such Indebtedness was not
incurred in anticipation of such acquisition or (iii) the Bank Credit Facility
as in effect on the date of this Indenture or any agreement that amends,
modifies, supplements, restates, extends, renews, refinances or replaces the
Bank Credit Facility, provided that the terms and conditions of any Payment
Restriction thereunder are not materially less favorable to the Holders of the
Securities than those under the Bank Credit Facility as in effect on the date of
this Indenture.
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Section 9.19 Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale/Leaseback Transaction unless (i) the
Company or such Restricted Subsidiary, as the case may be, would be able to
incur Indebtedness in an amount equal to the Attributable Indebtedness with
respect to such Sale/Leaseback Transaction 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 Cash and Excess Proceeds
from an Asset Sale.
Section 9.20 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 9.5 through 9.11, Sections 9.13 and
9.14 and Sections 9.17 through 9.19 hereof if, before or after the time for such
compliance, the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities and the Subsidiary Guarantors, by Act of such Holders
and written agreement of the Subsidiary Guarantors, waive such compliance in
such instance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.
ARTICLE X.
REDEMPTION OF SECURITIES
Section 10.1 Notice to Trustee.
If the Company elects to redeem Securities pursuant to paragraph 5 of the
Securities, it shall notify the Trustee in writing of the redemption date, the
principal amount of Securities to be redeemed and that such redemption is being
made pursuant to paragraph 5 of the Securities.
The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the Redemption Date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. Any election to redeem
Securities shall be revocable until the Company gives a notice of redemption
pursuant to Section 10.2 to the Holders of Securities to be redeemed.
Section 10.2 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not less than 30 days nor more than
60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, pro rata, by lot or by any
other method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions of the principal of
Securities; provided, however, that any such partial redemption shall be in
integral multiples of $1,000.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
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For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
Section 10.3 Notice of Redemption.
Notice of redemption shall be given in the manner provided for in Section
13.5 hereof not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Securities to be redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of a partial redemption, the principal amounts)
of the particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price (together with accrued
interest, if any, to the Redemption Date payable as provided in Section 10.5
hereof) will become due and payable upon each such Security, or the portion
thereof, to be redeemed, and that, unless the Company shall default in the
payment of the Redemption Price and any applicable accrued interest, interest
thereon will cease to accrue on and after said date; and
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. Failure to give such
notice by mailing to any Holder of Securities or any defect therein shall not
affect the validity of any proceedings for the redemption of other Securities.
Section 10.4 Deposit of Redemption Price.
On or before 10:00 a.m., Eastern time, on any Redemption Date, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 9.3 hereof) an amount of money sufficient to pay the Redemption Price
of, and accrued and unpaid interest on, all the Securities which are to be
redeemed on such Redemption Date.
Section 10.5 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued and unpaid interest,
if any, to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest) such Securities shall cease to bear interest. Upon surrender of
any such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued and
unpaid interest, if any, to the Redemption Date.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Securities.
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Section 10.6 Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
the office or agency of the Company maintained for such purpose pursuant to
Section 9.2 hereof (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal amount of the Security so
surrendered.
ARTICLE XI.
DEFEASANCE AND COVENANT DEFEASANCE
Section 11.1 Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 11.2 or Section 11.3
hereof be applied to all Outstanding Securities upon compliance with the
conditions set forth below in this Article XI.
Section 11.2 Defeasance and Discharge.
Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.2, the Company and the Subsidiary Guarantors shall
be deemed to have been discharged from their respective obligations with respect
to all Outstanding Securities on the date the conditions set forth in Section
11.4 hereof are satisfied (hereinafter, "legal defeasance"). For this purpose,
such legal defeasance means that the Company and the Subsidiary Guarantors shall
be deemed (i) to have paid and discharged their respective obligations under the
Outstanding Securities; provided, however, that the Securities shall continue to
be deemed to be "Outstanding" for purposes of Section 11.5 hereof and the other
Sections of this Indenture referred to in clauses (A) and (B) below, and (ii) to
have satisfied all their other obligations with respect to such Securities and
this Indenture (and the Trustee, at the expense and direction 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 11.4 hereof and as more fully
set forth in such Section, payments in respect of the principal of (and premium
if any, on) and interest on such Securities when such payments are due (or at
such time as the Securities would be subject to redemption at the option of the
Company in accordance with this Indenture), (B) the respective obligations of
the Company and the Subsidiary Guarantors under Sections 2.3, 2.4, 2.5, 2.6,
2.7, 2.8, 2.9, 4.8, 4.14, 5.6, 5.9, 5.10, 9.2, 9.3, 12.1 (to the extent it
relates to the foregoing Sections and this Article XI), 12.4 and 12.5 hereof,
(C) the rights, powers, trusts, duties and immunities of the Trustee hereunder,
and (D) the obligations of the Company and the Subsidiary Guarantors under this
Article XI. Subject to compliance with this Article XI, the Company may exercise
its option under this Section 11.2 notwithstanding the prior exercise of its
option under Section 11.3 hereof with respect to the Securities.
Section 11.3 Covenant Defeasance.
Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.3, the Company and each Subsidiary Guarantor shall
be released from their respective obligations under any covenant contained in
Article VII, in Sections 9.5 through 9.19 and in Section 12.2 hereof 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 to be "Outstanding" for the purposes
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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. For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Securities, the Company and each Subsidiary Guarantor 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 4.1(c) or 4.1(d) hereof, but, except as specified above, the
remainder of this Indenture and such Securities shall be unaffected thereby.
Section 11.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 11.2
or Section 11.3 hereof to the Outstanding Securities:
(a) The Company or any Subsidiary Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 5.7 hereof who shall agree to comply with
the provisions of this Article XI 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 United States dollars in an amount, or (B) U.S. Government Obligations
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, money in an amount, or (C) a combination thereof,
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 (and premium,
if any, on) and interest on the Outstanding Securities on the Stated Maturity
thereof (or Redemption Date, if applicable), provided that the Trustee shall
have been irrevocably instructed in writing by the Company to apply such money
or the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities. Before such a deposit, the Company may give to the
Trustee, in accordance with Section 10.1 hereof, a notice of its election to
redeem all of the Outstanding Securities at a future date in accordance with
Article X hereof, which notice shall be irrevocable. Such irrevocable redemption
notice, if given, shall be given effect in applying the foregoing. For this
purpose, "U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
(b) 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
Sections 4.1(h) and 4.1(i) are concerned, at any time during the period ending
on the 91st day after the date of such deposit.
(c) Such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest under this Indenture or the Trust
Indenture Act with respect to any securities of the Company or any Subsidiary
Guarantor.
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(d) Such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any other material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound, as evidenced to the Trustee in an Officers'
Certificate delivered to the Trustee concurrently with such deposit.
(e) In the case of an election under Section 11.2 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (ii) since the date of this Indenture there has been a change in
the applicable federal income tax laws, in either case providing 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
(it being understood that (x) such Opinion of Counsel shall also state that such
ruling or applicable law is consistent with the conclusions reached in such
Opinion of Counsel and (y) the Trustee shall be under no obligation to
investigate the basis or correctness of such ruling).
(f) In the case of an election under Section 11.3 hereof, 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.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that all
conditions precedent provided for relating to either the legal defeasance under
Section 11.2 hereof or the covenant defeasance under Section 11.3 (as the case
may be) have been complied with.
Section 11.5 Deposited Money and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 9.3 hereof, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee--collectively for purposes of this
Section 11.5, the "Trustee") pursuant to Section 11.4 hereof 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
acting as its own 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 (and 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 all taxes, fees or
other charges imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 11.4 hereof 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 XI to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 11.4
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent legal defeasance or covenant defeasance, as
applicable, in accordance with this Article.
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Section 11.6 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 11.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and the Subsidiary Guarantors' obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 11.2 or 11.3 hereof, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 11.5 hereof; provided, however,
that if the Company or any Subsidiary Guarantor makes any payment of principal
of (or premium, if any, on) or interest on any Security following the
reinstatement of its obligations, the Company or such Subsidiary Guarantor 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 XII.
SUBSIDIARY GUARANTEES
Section 12.1 Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally, jointly and severally,
guarantees (each such guarantee being referred to herein as this "Subsidiary
Guarantee," with all such guarantees being referred to herein as the "Subsidiary
Guarantees") to each Holder of Securities authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, the full and prompt
performance of the Company's obligations under this Indenture and the Securities
and that:
(a) the principal of (and premium, if any, on) and interest on the
Securities will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the Securities, if any, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise; subject,
however, in the case of clauses (a) and (b) above, to the limitations set forth
in Section 12.4 hereof.
Failing payment when due of any amount so guaranteed or any performance 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, to the extent permitted by
law, 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, to the extent permitted by
law, 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 its Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture and in this Subsidiary 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
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each Subsidiary Guarantor agrees it shall not be
entitled to enforce any right of subrogation in relation to the Holders in
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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 IV hereof for the purposes of
this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article IV hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by each Subsidiary Guarantor for
the purpose of this Subsidiary Guarantee.
Section 12.2 Subsidiary Guarantors May Consolidate, etc., on Certain Terms.
(a) Except as set forth in Article VII hereof, nothing contained in this
Indenture or in any of the Securities shall prevent any consolidation or merger
of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor or shall prevent any sale, conveyance or other disposition of all or
substantially all the Properties of a Subsidiary Guarantor to the Company or
another Subsidiary Guarantor.
(b) Except as set forth in Article VII hereof, nothing contained in this
Indenture or in any of the Securities shall prevent any consolidation or merger
of a Subsidiary Guarantor with or into a Person other than the Company or
another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary
Guarantor), or successive consolidations or mergers in which a Subsidiary
Guarantor or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance or other disposition of all or substantially all
the Properties of a Subsidiary Guarantor to a Person other than the Company or
another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary
Guarantor) authorized to acquire and operate the same; provided, however, that
(i) immediately after such transaction, and giving effect thereto, no Default or
Event of Default shall have occurred as a result of such transaction and be
continuing, (ii) such transaction shall not violate any of the covenants of
Sections 9.1 through 9.19 hereof, and (iii) each Subsidiary Guarantor hereby
covenants and agrees that, upon any such consolidation, merger, sale, conveyance
or other disposition, such Subsidiary Guarantor's Subsidiary Guarantee set forth
in this Article XII, and the due and punctual performance and observance of all
of the covenants and conditions of this Indenture to be performed by such
Subsidiary Guarantor, shall be expressly assumed (in the event that the
Subsidiary Guarantor is not the surviving corporation in a merger), by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by such Person formed by such consolidation, or into
which the Subsidiary Guarantor shall have merged, or by the Person that shall
have acquired such Property (except to the extent the following Section 12.3
would result in the release of such Subsidiary Guarantee, in which case such
surviving Person or transferee of such Property shall not have to execute any
such supplemental indenture and shall not have to assume such Subsidiary
Guarantor's Subsidiary Guarantee). In the case of any such consolidation,
merger, sale, conveyance or other disposition and upon the assumption by the
successor Person, by supplemental indenture executed and delivered to the
Trustee and satisfactory in form to the Trustee of the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as the initial Subsidiary Guarantor.
Section 12.3 Release of Subsidiary Guarantors.
Upon the sale or disposition (by merger or otherwise) of a Subsidiary
Guarantor (or all or substantially all of its Properties) to a Person other than
the Company or another Subsidiary Guarantor and pursuant to a transaction that
is otherwise in compliance with the terms of this Indenture, including but not
limited to the provisions of Section 12.2 hereof or pursuant to Article VII
hereof, such Subsidiary Guarantor shall be deemed released from its Subsidiary
Guarantee and all related obligations under this Indenture; provided, however,
that any such release shall occur only to the extent that all obligations of
such Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, other Indebtedness
of the Company or any other Restricted Subsidiary shall also be released upon
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such sale or other disposition. The Trustee shall deliver an appropriate
instrument evidencing such release upon receipt of a Company Request 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. Each Subsidiary Guarantor that is designated as an
Unrestricted Subsidiary in accordance with the provisions of this Indenture
shall be released from its Subsidiary Guarantee and all related obligations
under this Indenture for so long as it remains an Unrestricted Subsidiary. The
Trustee shall deliver an appropriate instrument evidencing such release upon its
receipt of the Board Resolution designating such Unrestricted Subsidiary. Any
Subsidiary Guarantor not released in accordance with this Section 12.3 shall
remain liable for the full amount of principal of (and premium, if any, on) and
interest on the Securities as provided in this Article XII.
Section 12.4 Limitation of Subsidiary Guarantors' Liability.
Each Subsidiary Guarantor, and by its acceptance hereof each Holder, hereby
confirm that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Federal Bankruptcy Code,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law. To effectuate the foregoing intention, the
Holders and each Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under its Subsidiary 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 Subsidiary Guarantee or pursuant to Section 12.5 hereof,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee not constituting such a fraudulent conveyance or fraudulent transfer.
This Section 12.4 is for the benefit of the creditors of each Subsidiary
Guarantor.
Section 12.5 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 its Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (if
any) 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 that Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to its Subsidiary Guarantee.
Section 12.6 Severability.
In case any provision of this Subsidiary 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.
ARTICLE XIII.
MISCELLANEOUS
Section 13.1 Compliance Certificates and Opinions.
Upon any application or request by the Company or any Subsidiary Guarantor
to the Trustee to take any action under any provision of this Indenture, the
Company or such Subsidiary Guarantor, as the case may be, shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
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Indenture Act or this Indenture. Each such certificate and each such legal
opinion shall be in the form of an Officers' Certificate or an Opinion of
Counsel, as applicable, and shall comply with the requirements of this
Indenture.
Every 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 signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(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, such Person
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, in the opinion of each such Person,
such condition or covenant has been complied with.
The certificates and opinions provided pursuant to this Section 13.1 and
the statements required by this Section 13.1 shall be satisfactory to the
Trustee and comply in all respects with TIA Sections 314(c) and (e).
Section 13.2 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such Opinion of Counsel may be based, insofar as it relates to factual matters,
upon an officers' certificate, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate with respect to such matters
is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 13.3 Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
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appointing any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of authority.
The fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of Securities held
by any Person, and the date of holding the same, shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders of Securities any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date, provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than eleven
months after the record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
Section 13.4 Notices, etc. to Trustee, Company and Subsidiary Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to or filed with,
(1) the Trustee by any Holder, the Company, any Subsidiary Guarantor
or any holder of Senior Indebtedness shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing (in the English
language) and delivered in person or mailed by certified or registered mail
(return receipt requested) to the Trustee at its Corporate Trust Office; or
(2) the Company or any Subsidiary Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing (in the English language) and
delivered in person or mailed by certified or registered mail (return
receipt requested) to the Company or such Subsidiary Guarantor, as
applicable, addressed to it at the Company's offices located at 5005 LBJ
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Freeway, Suite 1000, Dallas, Texas 75244, Attention: Chief Financial
Officer, or at any other address otherwise furnished in writing to the
Trustee by the Company.
Section 13.5 Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing (in the English language) and
mailed, first-class postage prepaid, to each Holder affected by such event, at
his address as it appears in the Security Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
Section 13.6 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 13.7 Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Subsidiary Guarantors shall bind their respective successors and assigns,
whether so expressed or not. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 13.8 Severability.
In case any provision in this Indenture or in the Securities or the
Subsidiary Guarantees 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.
Section 13.9 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person (other than the parties hereto, any Paying Agent, any
Registrar and their successors hereunder, the Holders and, to the extent set
forth in Section 12.4 hereof, creditors of Subsidiary Guarantors and the holders
of Senior Indebtedness) any benefit or any legal or equitable right, remedy or
claim under this Indenture.
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Section 13.10 Governing Law; Trust Indenture Act Controls.
(a) THIS INDENTURE, THE SUBSIDIARY GUARANTEES AND THE SECURITIES SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED 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. THE COMPANY AND EACH SUBSIDIARY
GUARANTOR IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, THE
CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE, THE SECURITIES OR THE SUBSIDIARY GUARANTEES, AND THE COMPANY AND EACH
SUBSIDIARY GUARANTOR IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED BY ANY SUCH COURT.
(b) This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be part of this Indenture and shall, to the extent
applicable, be governed by such provisions. If and to the extent that any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by operation of Section 318(c) of the Trust Indenture Act, or conflicts
with any provision (an "incorporated provision") required by or deemed to be
included in this Indenture by operation of such Trust Indenture Act section,
such imposed duties or incorporated provision shall control.
Section 13.11 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, or Stated
Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities or
the Subsidiary Guarantee) payment of interest or principal (and premium, if any)
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date,
Redemption Date or at the Stated Maturity or Maturity; provided, however, that
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date, Stated Maturity or Maturity, as the case may be.
Section 13.12 No Recourse Against Others.
A director, officer, employee, stockholder, incorporator or Affiliate, as
such, past, present or future, of the Company or any Subsidiary Guarantor shall
not have any personal liability under the Securities or this Indenture by reason
of his or its status as a director, officer, employee, stockholder, incorporator
or Affiliate or any liability for any obligations of the Company or any
Subsidiary Guarantor under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder, by accepting any of the Securities, waives and releases all such
liability to the extent permitted by applicable law.
Section 13.13 Duplicate Originals.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 13.14 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
ISSUER:
COMSTOCK RESOURCES, INC.
By: /s/ M. JAY ALLISON
----------------------
Name: M. Jay Allison
Title: Chairman of the Board, President
and Cheif Executive Officer
SUBSIDIARY GUARANTORS:
COMSTOCK OIL & GAS, INC.
By: /s/ M. JAY ALLISON
----------------------
Name: M. Jay Allison
Title: Chairman of the Board, President
and Cheif Executive Officer
COMSTOCK OIL & GAS-LOUISIANA, INC.
By: /s/ M. JAY ALLISON
----------------------
Name: M. Jay Allison
Title: Chairman of the Board, President
and Cheif Executive Officer
COMSTOCK OFFSHORE, LLC
By: /s/ M. JAY ALLISON
----------------------
Name: M. Jay Allison
Title: Chairman of the Board, President
and Cheif Executive Officer
TRUSTEE:
U.S. TRUST COMPANY OF TEXAS, N.A.
By: /s/ MELISSA SCOTT
---------------------
Name: Melissa Scott
Title: Vice President
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