<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 20, 1995
------------------------------
HARCOR ENERGY, INC.
----------------------------------------------------
(Exact name of registrant as specified in its Charter)
Delaware
--------------------------------------------
(State or other jurisdiction of incorporation)
0-9300 33-0234380
- ------------------------ -----------------------
(Commission File Number) (IRS Employer I.D. No.)
Five Post Oak Park, Suite 2220
4400 Post Oak Parkway
Houston, Texas 77027-3416
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 961-1804
-----------------------------
<PAGE> 2
Item 5. Other Events
Sale of Units. On July 24, 1995, HarCor Energy, Inc. (the "Company")
consummated the sale of 65,000 Units (the "Units") consisting of $65,000,000
aggregate principal amount of its 14 7/8% Senior Notes due 2002 (the "Notes")
and 1,430,000 Warrants (the "Warrants") to purchase an equal number of shares of
Common Stock, $.10 par value, of the Company (the "Common Stock"). Each Unit
consists of a $1,000 principal amount Note and 22 Warrants to purchase an equal
number of shares of Common Stock. The Notes and Warrants became separately
transferrable immediately after July 24, 1995 (the "Issue Date").
Use of Proceeds. The net proceeds to the Company from the offering of
Units are estimated to be approximately $61.6 million after deducting discounts
and estimated offering expenses payable by the Company. The Company has used, or
plans to use, the net proceeds primarily to (i) repay all amounts outstanding
under its Credit Agreement dated June 24, 1994 with Internationale Nederlanden
(U.S.) Capital Corporation ("INCC") and the other lenders named therein (the
"Existing Credit Facility") ($34.4 million) and bridge loan from INCC (the
"Bridge Loan") ($5.0 million); (ii) redeem its outstanding shares of Series D
Preferred Stock ($10.9 million); (iii) acquire interests in certain carried
interest wells ($2.5 million) from the operator of the Company's properties
located in the Lost Hills Field in Kern County, California (the "Bakersfield
Properties"); and (iv) finance a portion of the development of the Bakersfield
Properties ($9.0 million) (figures are approximate). Items (i), (ii) and (iii)
were completed on July 24, 1995. In connection with item (i), the Company
entered into an Amended and Restated Credit Agreement with INCC and the other
lenders identified therein, dated July 19, 1995 (the "New Credit Facility"),
providing for a total credit facility of $15 million, $10 million of which is
initially available. In connection with the Company's redemption of its Series D
Preferred Stock on July 24, 1995, the Company also issued 1,100,000 shares of
Common Stock to the former holders of such Series D Preferred Stock in exchange
for the cancellation of warrants held by such holders for the purchase of
3,424,666 shares of Common Stock.
The Notes. The Notes bear interest at the rate of 14 7/8% per annum.
Interest accrues from the Issue Date and will be payable semi-annually on
January 15 and July 15 of each year, commencing on January 15, 1996. The Notes
are redeemable, in whole or in part, at the option of the Company at any time on
or after July 15, 1999, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the 12-month period
commencing on July 15 of the year set forth below, plus, in each case, accrued
interest thereon to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
--------------------------------------------
<S> <C>
1999 110%
2000 107%
2001 and thereafter 100%
</TABLE>
<PAGE> 3
The Notes are issued pursuant to an Indenture, dated July 24, 1995, between the
Company and Texas Commerce Bank National Association, as Trustee (the
"Indenture"). All of the obligations of the Company under the Notes and the
Indenture are secured by a second priority lien on substantially all of the
assets of the Company and its subsidiaries securing the New Credit Facility.
The Warrants. Each Warrant entitles the holder thereof to purchase one
share of Common Stock at an exercise price of $3.85 per share. The Warrants are
exercisable at any time on or after July 24, 1996 and expire at the close of
business on July 24, 2000. Holders of the Warrants have certain demand and
piggy-back rights to cause the Company to register the shares of Common Stock
issuable thereunder. Such shares of Common Stock collectively represent
approximately 10% of the Common Stock of the Company on a fully diluted basis
(after taking into account the conversion or exercise of all existing options,
warrants and other convertible securities).
Placement of Units. Subject to the terms of the Purchase Agreement
dated July 17, 1995 (the "Purchase Agreement"), the Company sold the Units to BT
Securities Corporation and Internationale Lederlanden (U.S.) Securities
Corporation (the "Initial Purchasers"). As part of the compensation to the
Initial Purchasers in connection with the offering of the Units, the Company
issued to the Initial Purchasers (i) additional warrants to purchase 350,000
shares of Common Stock at an initial exercise price of $3.85 per share, and (ii)
warrants to purchase 150,000 shares of the Company's Series F Preferred Stock at
an initial exercise price of $3.85 per share. Each share of Series F Preferred
Stock is convertible into one share of Common Stock. The additional warrants
issued as such compensation have substantially the same terms as the Warrants.
Capital Expenditures. The Company intends to spend approximately $53.0
(of which approximately $9.0 million will come come from the proceeds of the
sale of the Units, as discussed above) million for capital expenditures to
develop the proved reserves of the Bakersfield Properties, of which $10.9
million will be spent for the remainder of 1995 and $12.4 million in 1996 and
$29.7 million thereafter. An additional $3.0 million will be spent over the next
several years for the development of the Company's other properties. The Company
intends to fund such amounts out of a portion of the net proceeds of the sale of
the Units, operating cash flows and borrowings under the New Credit Facility.
During the last six months of 1994, the Company drilled and completed 14 wells
(10.5 net) on the Bakersfield Properties at a cost of approximately $4 million
(net to the Company). The drilling of these wells resulted in a 45% increase in
the Company's average daily oil production from 546 barrels per day during June
1994, the month immediately prior to the acquisition date, to a rate of
approximately 792 barrels per day during January 1995. Similarly, during the
same time period, the Company's natural gas production increased 22% from 7.2
MMcf per day to approximately 8.8 MMcf per day. The Company expects that an
additional 38 gross (28.5 net) development wells will be drilled on such
properties in 1995, at an estimated cost of $14.6 million ($10.9 million net
to the Company). During the first quarter of 1995, the Company curtailed its
capital expenditures and did not drill or complete any new wells. As a result,
the Company's rate of production declined in accordance with engineering
projections from 3,682 barrels per day in the fourth quarter of 1994 to 3,382
barrels per day in the first quarter of 1995. The curtailment occurred because
the Company was capital constrained and, subsequent to the consummation of this
offering, the Company intends to resume its planned drilling activities for the
balance of 1995.
The Company currently anticipates that total additional drilling
necessary to develop the Bakersfield Properties after 1995 will result in
approximately 123 gross (92.3 net) new wells. The projected total development
costs for the proved reserves assigned to the Bakersfield Properties after 1995
are estimated at approximately $56 million ($42 million net to the Company)
based on current drilling costs. No assurances can be given, however, that any
of such wells will be drilled, or that if such wells are drilled, they will be
either successful or completed in accordance with the Company's development
schedule.
The Company intends to continue participating in development drilling
on its South Texas properties as those opportunities arise and as resources are
available. The Company is also involved in two small waterflood projects on its
Permian Basin properties and plans to participate in a third waterflood project
on such properties. It is anticipated that capital expenditures required for
these developmental activities will be funded from operating cash flows.
The Company expects that the net proceeds from the sale of the Units,
together with its available cash and expected cash flows from operating
activities will be sufficient to meet its financial obligations and fund its
developmental drilling activities for the foreseeable future, provided, that (i)
there are no further significant decreases in oil and gas prices beyond those
experienced at the end of 1994, (ii) there are no significant declines in oil
and gas production from existing properties other than declines in production
currently anticipated based on engineering estimates of the decline curves
associated with such properties, (iii) drilling costs for development wells with
respect to the Bakersfield Properties do not increase significantly from the
drilling costs recently experienced by the operator in such area with respect to
similar wells, and (iv) the operator continues its development program
with respect to the Bakersfield Properties on the schedule currently
contemplated.
<PAGE> 4
PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data are derived from the
historical financial statements of the Company set forth elsewhere herein and
are adjusted to reflect (i) the issuance of the Units and the application of a
portion of the net proceeds to repay all indebtedness outstanding under the
Existing Credit Facility and the Bridge Loan, to redeem the Series D Preferred
Stock and to fund the acquisition of certain oil and gas interests associated
with the Bakersfield Properties (the "Carried Interest Wells"), (ii) the
acquisition of the Bakersfield Properties and the results of operations for the
Bakersfield Properties, (iii) the exchange of certain outstanding warrants for
shares of common stock of the Company and (iv) the write-off of deferred
financing costs as a result of the early extinguishment of debt and the
recording of estimated transaction costs relating to the Units.
The unaudited Pro Forma Condensed Consolidated Balance Sheet reflects such
adjustments as if such transactions had occurred at March 31, 1995 and the
unaudited Pro Forma Statements of Operations reflect such adjustments as if such
transactions had occurred on January 1, 1994 (except that the acquisition of the
Carried Interest Wells is assumed to have occurred during the fourth quarter of
1994, the period when the wells were drilled and completed). The unaudited pro
forma financial data should be read in conjunction with the notes thereto.
The unaudited pro forma financial data do not purport to be indicative of
the financial position or results of operations which would actually have
occurred if the transactions described had occurred as presented in such
statements or which may be obtained in the future. In addition, future results
may vary significantly from the results reflected in such statements due to
normal crude oil and natural gas production declines, reductions in prices paid
for crude oil and natural gas, future acquisitions and other factors.
<PAGE> 5
HARCOR ENERGY, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS
---------- ---------------------------------
HARCOR CARRIED
ENERGY, BAKERSFIELD INTERESTS THE PRO
INC. ACQUISITION(A) WELLS(B) OFFERING FORMA
------- -------------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Revenues:
Oil and gas revenues.................. $10,982 $5,100 $287 $ -- $16,369
Gas plant revenues.................... 1,978 991 -- -- 2,969
Interest income....................... 16 -- -- -- 16
Other................................. 237 -- -- -- 237
------- ------ ---- ------- -------
Total revenues................... 13,213 6,091 287 -- 19,591
------- ------ ---- ------- -------
Costs and expenses:
Production costs...................... 3,610 1,297 7 -- 4,914
Gas plant costs....................... 1,708 1,591 -- -- 3,299
Dry hole, impairment and abandonment
costs.............................. 75 -- -- -- 75
Engineering and geological costs...... 254 75 -- -- 329
Depletion, depreciation and
amortization....................... 3,897 1,010 87 -- 4,994
General and administrative expenses... 2,014 96 -- -- 2,110
Interest expense...................... 2,269 1,058 -- 7,173(C) 10,500
Loss on partnership dissolution....... 203 -- -- -- 203
------- ------ ---- ------- -------
Total costs and expenses......... 14,030 5,127 94 7,173 26,424
------- ------ ---- ------- -------
Loss from continuing operations....... $ (817) $ 964 $193 $(7,173) $(6,833)
======= ====== ==== ======= =======
Loss applicable to common
shareholders....................... $(1,890) $(7,233)
======= =======
Loss from continuing operations per
share applicable to common
shareholders....................... $ (0.29) $ (0.85)(D)
======= =======
Primary shares outstanding............ 6,447 8,534(D)
======= =======
EBITDA(E)............................. $ 5,552 $ 8,864
======= =======
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE> 6
HARCOR ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE PRO
HISTORICAL OFFERING FORMA
--------- -------- -----
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............................... $ 1,653 $ 9,065 (K) $10,718
Accounts receivable..................................... 2,257 -- 2,257
Prepaids and other...................................... 409 -- 409
------- ------- -------
Total current assets............................... 4,319 9,065 13,384
Property and equipment, net............................... 59,813 2,493 (F) 62,306
Other assets.............................................. 3,018 2,053 (G) 5,071
------- ------- -------
Total assets....................................... $67,150 $13,611 $80,761
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term bank debt.................. $ 4,266 $(4,266)(H) $ --
Bridge Loan............................................. 5,000 (5,000)(H) --
Accounts payable and accrued liabilities................ 4,265 -- 4,265
------- ------- -------
Total current liabilities.......................... 13,531 (9,266) 4,265
Long-term debt............................................ 30,134 (30,134)(H) --
Senior Notes.............................................. -- 62,989 (I) 62,989
Other liabilities......................................... 63 -- 63
Series D Preferred Stock.................................. 8,673 (8,673)(J) --
Stockholders' Equity:
Preferred stock......................................... 1 -- 1
Common stock............................................ 725 128 (D) 853
Additional paid-in capital.............................. 29,638 94 (J) 29,732
Accumulated deficit..................................... (15,615) (1,527)(G) (17,142)
------- ------- -------
Total stockholders' equity......................... 14,749 (1,305) 13,444
------- ------- -------
Total liabilities and stockholders' equity......... $67,150 $13,611 $80,761
======= ======= =======
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE> 7
HARCOR ENERGY, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
-----------------
CARRIED
INTERESTS THE PRO
HISTORICAL WELLS(B) OFFERING FORMA
--------- ------- -------- -----
<S> <C> <C> <C> <C>
Revenues:
Oil and gas revenues............................. $3,683 $763 $ -- $ 4,446
Gas plant revenues............................... 1,785 -- -- 1,785
Interest income.................................. 7 -- -- 7
Other............................................ 8 -- -- 8
------ ---- ------- -------
Total revenues........................... 5,483 763 -- 6,246
------ ---- ------- -------
Costs and expenses:
Production costs................................. 1,263 73 -- 1,336
Gas plant costs.................................. 1,410 -- -- 1,410
Engineering and geological costs................. 89 -- -- 89
Depletion, depreciation and amortization......... 1,346 273 -- 1,619
General and administrative expenses.............. 666 -- -- 666
Interest expense................................. 1,130 -- 1,535(C) 2,665
------ ---- ------- -------
Total costs and expenses................. 5,904 346 1,535 7,785
------ ---- ------- -------
Loss from continuing operations.................. $ (421) $417 $(1,535) $(1,539)
====== ==== ======= =======
Loss applicable to common shareholders........... $ (837) $(1,639)
====== =======
Loss from continuing operations per share
applicable to common shareholders................ $(0.12) $ (0.19)(D)
====== =======
Primary shares outstanding......................... 7,226 8,534(D)
====== =======
EBITDA(E).......................................... $2,055 $ 2,745
====== =======
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE> 8
HARCOR ENERGY, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(A) The adjustment represents estimated revenues and expenses that would
have been incurred by the Company if the Bakersfield Properties had been
acquired on January 1, 1994 instead of June 30, 1994.
(B) The adjustment represents the acquisition of the Carried Interests
Wells during the fourth quarter of 1994, the period when the wells were drilled
and completed.
(C) The adjustment represents the change in interest expense associated
with (i) the inclusion of interest and discount amortization associated with the
Notes of $9,955 and $2,489 for the year ended December 31, 1994
and the three months ended March 31, 1995, respectively, (ii) the elimination of
$3,074 and $985 in the year ended December 31, 1994 and the three months ended
March 31, 1995, respectively, resulting from the repayment of the Existing
Credit Facility and the Bridge Loan, (iii) the elimination of amortization of
deferred financing costs of $220 and $97 for the year ended December 31, 1994
and the three months ended March 31, 1995, respectively, related to the Existing
Credit Facility and the Bridge Loan and (iv) the inclusion of $512 and $128 of
estimated amortization of deferred financing cost for the year ended December
31, 1994 and the three months ended March 31, 1995, respectively, related to
the issuance of the Units.
(D) The pro forma earnings per share data reflect dividends on remaining
preferred stock which increase loss applicable to common shareholders. The write
off of deferred financing costs and the charge to additional paid-in capital
noted below have not been reflected in the earnings per share calculation.
Outstanding stock options, warrants and convertible preferred shares were not
included in the calculation as their effect was antidilutive. Primary shares
outstanding reflects the impact of certain completed and pending transactions
whereby existing holders of warrants to purchase the Company's common shares
exchange those warrants for common shares. The pro forma increase in primary
shares outstanding as a result of these transactions is 1,282,500.
(E) EBITDA represents income before provision for income tax and
extraordinary items and before depletion, depreciation, amortization, interest
expense, minority interests and other. EBITDA is presented because it is a
widely accepted financial indicator of a company's ability to service and/or
incur indebtedness. However, EBITDA should not be considered as an alternative
to net income as a measure of operating results or to cash flows as a measure of
liquidity.
(F) The adjustment represents the acquisition of the Carried Interest
Wells.
(G) The adjustment represents the increase in deferred financing costs
estimated at $3,580 associated with the issuance of the Units and the write-off
of $1,527 of deferred financing costs resulting from the early extinguishment of
the Existing Credit Facility.
(H) The adjustment represents (i) the repayment of the Existing Credit
Facility, including $4,266 classified as current at March 31, 1995, and (ii) the
repayment of the Bridge Loan.
(I) The adjustment represents the issuance of the Notes offered hereby in
the principal face amount of $65 million less an original issue discount of $352
and value ascribed to the Warrants being offered of $1,659.
(J) The adjustment includes the redemption of $10,690 (face value) Series D
Preferred Stock. The difference between the recorded value of $8,673 at March
31, 1995 and the face value represents the value ascribed to warrants issued to
the Series D Holders which was being accreted to additional paid-in capital over
the life of the Series D Preferred Stock. Accordingly, at redemption, this
difference of $2,017 is recorded as a charge to additional paid-in capital. The
adjustment also includes the value ascribed to all of the warrants issued
in connection with the offering in the amount of $2,239 as an increase to
additional paid-in capital.
<PAGE> 9
(K) The pro forma net effect of these transactions on the Company's cash
and cash equivalents are as follows:
<TABLE>
<S> <C>
Issuance of the Units............................................. $ 64,648
Estimated Transaction Costs....................................... (3,000)
Retirement of Existing Credit Facility............................ (34,400)
Retirement of Bridge Loan......................................... (5,000)
Redemption of Series D Preferred Stock............................ (10,690)
Purchase of Carried Interest Wells................................ (2,493)
--------
$ 9,065
========
</TABLE>
The Company intends to use the balance of the cash remaining from this offering
to finance its pro rata share of the development of the Bakersfield Properties
over the next six months. Projected results from this development are not
included in these pro forma financial statements as the success or outcome of
such development activities cannot be determined at this time. Further, no
investment income on cash balances has been assumed.
<PAGE> 10
Item 7. Financial Statements and Exhibits.
(a) None.
(b) None.
(c) Exhibits.
1 Purchase Agreement dated July 17, 1995 between the Company, BT
Securities Corporation and Internationale Nederlanden (U.S.)
Securities Corporation.
4 Indenture dated as of July 24, 1995 between the Company and
Texas Commerce Bank National Association, as Trustee.
10.1 Warrant Agreement dated as of July 24, 1995 between the
Company and BT Securities Corporation, as Warrant Agent.
10.2 Warrant Agreement dated as of July 24, 1995 between the
Company and Texas Commerce Bank National Association, as
Warrant Agent.
10.3 Securityholders' and Registration Rights Agreement dated as of
July 24, 1995 among the Company, BT Securities Corporation and
Internationale Nederlanden (U.S.) Securities Corporation.
10.4 Registration Rights Agreement dated as of July 24, 1995 among
the Company, the Subsidiary Guarantors named therein, BT
Securities Corporation and Internationale Nederlanden (U.S.)
Securities Corporation.
10.5 Amended and Restated Credit Agreement dated as of July 24,
1995 among the Company, Internationale Nederlanden (U.S.)
Capital Corporation, as Agent, and the Lenders named therein.
99.1 Press release dated July 20, 1995 announcing the Company's
pricing of its private placement of an aggregate of $65
million in senior secured notes due 2002 and warrants to
purchase 1,430,000 shares of common stock of the Company.
99.2 Press release dated July 25, 1995 announcing the Company's
completion of its private placement of an aggregate of $65
million in senior secured notes due 2002 and warrants to
purchase 1,430,000 shares of common stock of the Company.
<PAGE> 11
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.
HarCor Energy, Inc.
---------------------------
(Registrant)
Date: July 25, 1995 /s/ Gary S. Peck
---------------------------
Gary S. Peck
Vice President, Finance
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER PAGE
------ ----
<S> <C> <C>
1 Purchase Agreement dated July 17, 1995 between the Company, BT
Securities Corporation and Internationale Nederlanden (U.S.)
Securities Corporation.
4 Indenture dated as of July 24, 1995 between the Company and
Texas Commerce Bank National Association, as Trustee.
10.1 Warrant Agreement dated as of July 24, 1995 between the
Company and BT Securities Corporation, as Warrant Agent.
10.2 Warrant Agreement dated as of July 24, 1995 between the
Company and Texas Commerce Bank National Association, as
Warrant Agent.
10.3 Securityholders' and Registration Rights Agreement dated as of
July 24, 1995 among the Company, BT Securities Corporation and
Internationale Nederlanden (U.S.) Securities Corporation.
10.4 Registration Rights Agreement dated as of July 24, 1995 among
the Company, the Subsidiary Guarantors named therein, BT
Securities Corporation and Internationale Nederlanden (U.S.)
Securities Corporation.
10.5 Amended and Restated Credit Agreement dated as of July 24,
1995 among the Company, Internationale Nederlanden (U.S.)
Capital Corporation, as Agent, and the Lenders named therein.
99.1 Press release dated July 20, 1995 announcing the Company's
pricing of its private placement of an aggregate of $65
million in senior secured notes due 2002 and warrants to
purchase 1,430,000 shares of common stock of the Company.
99.2 Press release dated July 25, 1995 announcing the Company's
completion of its private placement of an aggregate of $65
million in senior secured notes due 2002 and warrants to
purchase 1,430,000 shares of common stock of the Company.
</TABLE>
<PAGE> 1
HarCor Energy, Inc.
65,000 Units
Consisting of
$65,000,000
14 7/8% Senior Secured Notes due 2002
and
1,430,000 Warrants to Purchase
Shares of Common Stock
PURCHASE AGREEMENT
July 17, 1995
BT SECURITIES CORPORATION
INTERNATIONALE NEDERLANDEN
(U.S.) SECURITIES CORPORATION
c/o BT Securities Corporation
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
HarCor Energy, Inc., a Delaware corporation (the "Company"), and the
Subsidiary Guarantors (as defined below) hereby confirm their agreement with you
(the "Initial Purchasers"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
65,000 Units (as defined below) consisting of an aggregate of $65,000,000
aggregate principal amount of its 14 7/8% Senior Secured Notes due 2002, Series
A (the "Senior Notes") and 1,430,000 warrants (the "Warrants") to purchase
initially an equal number of shares of the Company's Common Stock, par value
$0.10 per share (the "Common Stock"). The Senior Notes are to be issued under an
indenture (the "Indenture") to be dated as of July 24, 1995 by and among the
Company, the Subsidiary Guarantors (as defined below) and Texas Commerce Bank
National Association, as Trustee (the "Trustee"). The Senior Notes will be
unconditionally guaranteed, jointly
<PAGE> 2
-2-
and severally, by Warrior, Inc., a Texas corporation and HTAC Investments, Inc.,
a California corporation (collectively, the "Subsidiary Guarantors"), pursuant
to the terms of the Indenture (the "Guarantees"). The Senior Notes will be
secured by a second priority lien on and security interest in the Collateral (as
defined in the Indenture) pursuant to Security Documents (as defined in the
Indenture) entered into by the Company and Warrior, Inc. for the benefit of the
Trustee and the holders of the Senior Notes. The Warrants are to be issued under
a Warrant Agreement to be dated as of July 24, 1995 (the "Warrant Agreement")
between the Company and Texas Commerce Bank National Association, as Warrant
Agent (the "Warrant Agent"). The shares of Common Stock issuable upon exercise
of the Warrants are herein referred to as the "Warrant Shares." The Senior Notes
and the Warrants will initially be represented by 65,000 units ("Units"), each
Unit consisting of $1,000 principal amount of Senior Notes and 22 Warrants, each
to purchase 1 (one) Warrant Share at an initial exercise price of $3.85 per
Warrant Share. The Senior Notes, the Guarantees, the Warrants and the Units are
collectively referred to herein as the "Securities."
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company and the
Subsidiary Guarantors have prepared a preliminary offering memorandum dated July
17, 1995 (the "Preliminary Memorandum"), and a final offering memorandum dated
July 17, 1995 (the "Final Memorandum"; the Preliminary Memorandum and the Final
Memorandum each herein being referred to as a "Memorandum") setting forth or
including a description of the terms of the Securities, the terms of the
offering of the Securities, and a description of the Company and the Subsidiary
Guarantors.
The Initial Purchasers and their direct and indirect transferees of
the Securities will be entitled to the benefits of (i) the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company and the
Subsidiary Guarantors have agreed, among other things, to file a registration
statement (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") registering the Senior Notes or the Exchange Notes
(as defined in the Registration Rights Agreement) under the Act, and (ii) the
<PAGE> 3
-3-
Securityholders' and Registration Rights Agreement, substantially in the form
attached hereto as Exhibit B (the "Securityholders' Agreement" and, together
with the Registration Rights Agreement, the "Rights Agreements").
2. Representations and Warranties. The Company and the Subsidiary
Guarantors, jointly and severally, represent and warrant to and agree with each
of the Initial Purchasers that:
(a) Neither the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up to the
Closing Date (as defined in Section 3 below) contained or contains any untrue
statement of a material fact or omitted or omits 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 Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with information relating to
either of the Initial Purchasers furnished to the Company or the Subsidiary
Guarantors in writing by the Initial Purchasers expressly for use in the Final
Memorandum or any amendment or supplement thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum; all of
the outstanding shares of capital stock of the Company and the Subsidiary
Guarantors have been, and as of the Closing Date will be, duly authorized and
validly issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights; except as set forth in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum), all of the outstanding shares of capital stock of the Subsidiary
Guarantors are, and as of the Closing Date will be, owned, directly or
indirectly, by the Company, free and clear of all liens, encumbrances, equities
and claims or restrictions on transferability (other than those imposed by the
Act and the securities or "Blue Sky" laws of certain jurisdictions) or voting;
except as set forth in the Final Memorandum (or, if the Final Memorandum is not
in existence, the most recent Memorandum), there are no (i) options, warrants or
other rights to purchase from the Company or any Subsidiary Guarantor, (ii)
agreements or other obligations of the Company or any Subsidiary Guarantor to
issue or (iii) other rights to convert any obligation into, or exchange any
securities for, in the case of each clause (i)-(iii) shares of capital stock of
or ownership interests in
<PAGE> 4
-4-
the Company or any Subsidiary Guarantor outstanding. The Company does not have
any Subsidiaries except for the Subsidiary Guarantors; except for the capital
stock of the Subsidiary Guarantors and as otherwise disclosed in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum), the Company does not own, directly or indirectly, any shares of
capital stock or any other equity or long-term debt securities or have any
equity interest in any firm, partnership, joint venture or other entity.
(c) Each of the Company and the Subsidiary Guarantors has been duly
incorporated, is validly existing and is in good standing as a corporation under
the laws of its jurisdiction of incorporation, with all requisite corporate
power and authority to own its properties and conduct its business as now
conducted, and as described in the Preliminary Memorandum and the Final
Memorandum; each of the Company and the Subsidiary Guarantors is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a material adverse
effect on the general affairs, management, business, condition (financial or
otherwise), prospects or results of operations of the Company and the Subsidiary
Guarantors, taken as a whole (any such event, a "Material Adverse Effect").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Senior Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Senior Notes, the Exchange Notes and the Private Exchange
Notes have each been duly and validly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Senior Notes, when delivered
to and paid for by the Initial Purchasers in accordance with the terms of this
Agreement, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of
<PAGE> 5
-5-
equity and the discretion of the court before which any proceeding therefor may
be brought.
(e) Each of the Subsidiary Guarantors has all requisite corporate
power and authority to execute, deliver and perform each of its obligations
under the Guarantees. The Guarantees endorsed on the Senior Notes, the Exchange
Notes and the Private Exchange Notes have each been duly and validly authorized
by each of the Subsidiary Guarantors and, when the Senior Notes, the Exchange
Notes and the Private Exchange Notes are executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture
and, in the case of the Senior Notes, delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will constitute valid
and legally binding obligations of each of the Subsidiary Guarantors, entitled
to the benefits of the Indenture and enforceable against the Subsidiary
Guarantors in accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(f) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under the Indenture and each Security Document to which it is
a party. The Indenture meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "TIA"). The Indenture and each Security
Document to which it is a party have been duly and validly authorized by the
Company and each of the Subsidiary Guarantors and, when executed and delivered
by the Company and each of the Subsidiary Guarantors a party thereto (assuming
the due authorization, execution and delivery by the Trustee if the Trustee is
required to execute any such document), each will constitute a valid and legally
binding agreement of the Company and each of the Subsidiary Guarantors a party
thereto, enforceable against the Company and each of the Subsidiary Guarantors
in accordance with its terms, except that the enforcement thereof may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
<PAGE> 6
-6-
(g) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under the Rights Agreements to which they are a party. Each of
the Rights Agreements has been duly and validly authorized by the Company and
each of the Subsidiary Guarantors to the extent it is a party thereto and, when
executed and delivered by the Company and each of the Subsidiary Guarantors a
party thereto (assuming the due authorization, execution and delivery by the
Initial Purchasers), will constitute a valid and legally binding agreement of
the Company and each such Subsidiary Guarantor enforceable against the Company
and each such Subsidiary Guarantor in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought and (B) any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy considerations.
(h) The Company and each of the Subsidiary Guarantors a party
thereto have all requisite corporate power and authority to execute, deliver and
perform each of their obligations under the credit facility to be entered into
among the Company, the Subsidiary Guarantors a party thereto, Internationale
Nederlanden (U.S.) Capital Corporation ("ING Capital"), as Agent and the lenders
named therein (the "Credit Facility"). The Credit Facility has been duly and
validly authorized by the Company and each of the Subsidiary Guarantors a party
thereto and, when executed and delivered by the Company and each of the
Subsidiary Guarantors a party thereto (assuming the due authorization, execution
and delivery by ING Capital and the other lenders party thereto), will
constitute a valid and legally binding agreement of the Company and each such
Subsidiary Guarantor enforceable against the Company and each such Subsidiary
Guarantor in accordance with its terms, except that the enforcement thereof may
be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity and the discretion of any court before
which any proceeding therefor may be brought.
(i) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Warrant Agreement
and the Preferred Stock
<PAGE> 7
-7-
Warrant Agreement (as defined in Section 3 hereof). Each of the Warrant
Agreement and the Preferred Stock Warrant Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Warrant Agent and
the Preferred Stock Warrant Agent (as defined in Section 3 hereof), as the case
may be), will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(j) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Warrants and the
Additional Warrants (as defined in Section 3 below). The Warrants and the
Additional Warrants have been duly and validly authorized by the Company and,
when executed by the Company and countersigned by the Warrant Agent in
accordance with the provisions of the Warrant Agreement (and, in the case of the
Preferred Stock Warrants (as defined in Section 3), countersigned by the
Preferred Stock Warrant Agent in accordance with the provisions of the Preferred
Stock Warrant Agreement) and when delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Warrant Agreement or
the Preferred Stock Warrant Agreement, as the case may be, and enforceable
against the Company in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(k) The Warrant Shares and the Additional Warrant Shares (as defined
in Section 3 below) have been duly and validly authorized for issuance by the
Company and when issued in accordance with the terms and conditions contained in
the Warrant Agreement (or the Preferred Stock Warrant Agreement, as the case may
be) upon exercise of the Warrants and upon exercise of the Additional Warrants,
the Warrant Shares and the Additional Warrant Shares, as the case may be, will
be duly
<PAGE> 8
-8-
authorized, validly issued, fully paid and non-assessable and will not be
subject to any preemptive or similar rights. The Warrant Shares and the
Additional Warrant Shares, as the case may be, have been duly reserved for
issuance in accordance with the terms of the Warrants, the Warrant Agreement,
the Additional Warrants, and the Preferred Stock Warrant Agreement, as the case
may be.
(l) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Company and each of the Subsidiary Guarantors. No
consent, approval, authorization or order of any court or governmental agency or
body, or third party is required for the performance of this Agreement by the
Company or the Subsidiary Guarantors or the consummation by the Company or the
Subsidiary Guarantors of the transactions contemplated hereby, except such as
have been obtained and other than such as may be required under state securities
or "Blue Sky" laws in connection with the purchase and resale of the Securities
by the Initial Purchasers. None of the Company or the Subsidiary Guarantors is
(i) in violation of its certificate of incorporation or bylaws (or similar
organizational document), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to any of them or any of their
respective properties or assets, except for any such breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which any of them is a
party or to which any of them or their respective properties or assets is
subject, except for any such breach, default, violation or event which would
not, individually or in the aggregate, have a Material Adverse Effect.
(m) The execution, delivery and performance by the Company and each
of the Subsidiary Guarantors of this Agreement and the consummation by the
Company and each of the Subsidiary Guarantors of the transactions contemplated
hereby, and the fulfillment of the terms hereof, will not conflict with or
constitute or result in a breach of or a default under (or an
<PAGE> 9
-9-
event which with notice or passage of time or both would constitute a a default
under) or violation of any of (i) the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate, contract or other agreement or instrument to
which the Company or any of the Subsidiary Guarantors is a party or to which any
of them or their respective properties or assets is subject, except for any such
conflict, breach, violation, default or event which would not, individually or
in the aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the Company or
any of the Subsidiary Guarantors, or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchasers in Section 8 hereof)
any statute, judgment, decree, order, rule or regulation applicable to the
Company or any of the Subsidiary Guarantors or any of their respective
properties or assets, except for any such conflict, breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect.
(n) The audited consolidated financial statements of the Company and
its subsidiaries included in the Final Memorandum (or, if the Final Memorandum
is not in existence, the most recent Memorandum) present fairly in all material
respects the financial position, results of operations and cash flows of the
Company and its subsidiaries at the dates and for the periods to which they
relate and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise stated therein.
The summary and selected financial and statistical data in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent Memorandum)
present fairly in all material respects the financial information shown therein
and have been prepared and compiled on a basis consistent with the audited
financial statements included therein, except as otherwise stated therein.
Arthur Andersen LLP (the "Independent Accountants") is an independent public
accounting firm within the meaning of the Act and the rules and regulations
promulgated thereunder.
(o) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent Memorandum)
(i) comply as to form in all material respects with the applicable requirements
of Regulation S-X promulgated under the
<PAGE> 10
-10-
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) have been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements, and (iii) have been properly computed on the
bases described therein; the assumptions used in the preparation of the pro
forma financial data and other pro forma financial information included in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum) are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(p) Except as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Memorandum), there is not
pending or, to the best knowledge of the Company or any Subsidiary Guarantor,
threatened, any action, suit, proceeding, inquiry or investigation to which the
Company or any of the Subsidiary Guarantors is a party, or to which the property
or assets of the Company or any of the Subsidiary Guarantors are subject, before
or brought by any court or governmental agency or body which, if determined
adversely to the Company or the Subsidiary Guarantors, would result,
individually or in the aggregate, in any material adverse change in the general
affairs, management, business, condition (financial or otherwise), prospects or
results of operations of the Company and the Subsidiary Guarantors, taken as a
whole (any such event, a "Material Adverse Change"), or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance or sale
of the Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum (or, if the Final Memorandum is
not in existence, the most recent Memorandum).
(q) Each of the Company and the Subsidiary Guarantors owns or
possesses adequate licenses or other rights to use all trademarks, service
marks, trade names and know-how necessary to conduct the businesses now or
proposed to be operated by it as described in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Memorandum), and none of
the Company or the Subsidiary Guarantors has received any notice of conflict
with (or knows of any such conflict with) asserted rights of others with respect
to any trademarks, service marks, trade names or know-how which, if such
assertion of conflict were sustained, would, individually or in the aggregate,
have a Material Adverse Effect.
<PAGE> 11
-11-
(r) Each of the Company and the Subsidiary Guarantors possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, presently required or
necessary to own or lease, as the case may be, and to operate its respective
properties and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Final Memorandum (or, if the Final Memorandum is
not in existence, the most recent Memorandum), except where the failure to
obtain such licenses, permits, certificates, consents, orders, approvals and
other authorizations, or to make all declarations and filings, would not,
individually or in the aggregate, have a Material Adverse Effect, and none of
the Company or the Subsidiary Guarantors has received any notice of any
proceeding relating to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except as
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Memorandum) and except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(s) Since the respective dates as of which information is given in
the Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum), except as described therein, (i) none of the Company or any
of the Subsidiary Guarantors has incurred any liabilities or obligations, direct
or contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business and (ii) none
of the Company or any of the Subsidiary Guarantors has 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 with respect to any
such Subsidiary Guarantor, the purchase of, or dividend or distribution on,
capital stock owned by the Company).
(t) Each of the Company and the Subsidiary Guarantors has filed all
necessary federal, state and foreign income and franchise tax returns, except
where the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company or any Subsidiary
Guarantor is contesting in good faith and for which the Company or such
Subsidiary Guarantor has provided
<PAGE> 12
-12-
adequate reserves, there is no tax deficiency that has been asserted against the
Company or any of the Subsidiary Guarantors that would have, individually or in
the aggregate, a Material Adverse Effect.
(u) The statistical and market-related data included in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum) are based on or derived from sources which the Company and the
Subsidiary Guarantors believe to be reliable and accurate.
(v) None of the Company, the Subsidiary Guarantors or any agent
acting on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Securities to violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System, in each case as in effect,
or as the same may hereafter be in effect, on the Closing Date.
(w) Each of the Company and the Subsidiary Guarantors has good and
defensible title to all real property and good title to all personal property
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Memorandum) as being owned by it and good and
defensible title to a leasehold estate in the real and personal property
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Memorandum) as being leased by it free and clear of
all liens, charges, encumbrances or restrictions, except as described in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum) or to the extent the failure to have such title or the
existence of such liens, charges, encumbrances or restrictions would not,
individually or in the aggregate, have a Material Adverse Effect.
(x) There are no legal or governmental proceedings involving or
affecting the Company or any Subsidiary Guarantor or any of their respective
properties or assets which would be required to be described in a prospectus
pursuant to the Act that are not described in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Memorandum), nor are there
any material contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not described in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum).
<PAGE> 13
-13-
(y) Except as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Memorandum), each of the Company
and the Subsidiary Guarantors is in compliance in all respects with all laws,
rules or regulations relating to pollution or protection of public or employee
health or the environment ("Environmental Law") and with the terms and
conditions of any permit, license or approval required thereunder in connection
with the ownership, operation or use of its business, property and assets except
where the failure to be in such compliance would not, individually or in the
aggregate, have a Material Adverse Effect; except as disclosed in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum), none of the Company or the Subsidiary Guarantors is subject to any
known liability, absolute or contingent, under any Environmental Law except for
any such liability which would not, individually or in the aggregate, have a
Material Adverse Effect; except as disclosed in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Memorandum), there is no
civil, criminal or administrative action, suit, demand, hearing, notice of
violation or deficiency, investigation, proceeding or notice of potential
responsibility or demand letter or request for information pending or, to their
knowledge, threatened against the Company or any of the Subsidiary Guarantors
under any Environmental Law which, if determined adversely to the Company
or any such Subsidiary Guarantors would, individually or in the aggregate,
result in a Material Adverse Effect.
(z) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or any of the Subsidiary Guarantors which is
pending or, to the best knowledge of the Company or any Subsidiary Guarantor,
threatened.
(aa) Each of the Company and the Subsidiary Guarantors carries
insurance (including self insurance) in such amounts and covering such risks as
in its reasonable determination is adequate for the conduct of its business and
the value of its properties.
(bb) None of the Company or the Subsidiary Guarantors has any
liability for any prohibited transaction or funding deficiency or any complete
or partial withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any Subsidiary Guarantor
makes or ever has made a contribution and in
<PAGE> 14
-14-
which any employee of the Company or any Subsidiary Guarantor is or has ever
been a participant. With respect to such plans, the Company and each Subsidiary
Guarantor is in compliance in all material respects with all applicable
provisions of ERISA.
(cc) None of the Company or the Subsidiary Guarantors will be an
"investment company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(dd) The Senior Notes, the Exchange Notes, the Warrants, the Warrant
Shares, the Common Stock, the Units, the Indenture, the Security Documents, the
Warrant Agreement, the Additional Warrants, the Rights Agreements and the Credit
Facility will, and this Agreement does, conform in all material respects to the
descriptions thereof in the Final Memorandum (or, if the Final Memorandum is not
in existence, the most recent Memorandum).
(ee) Except as disclosed in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Memorandum), no holder of
securities of the Company or any Subsidiary Guarantor will be entitled to have
such securities registered under the registration statements required to be
filed by the Company pursuant to the Rights Agreements or other than as
expressly permitted thereby.
(ff) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of each of the Company and the Subsidiary Guarantors (each on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; none of the Company or the Subsidiary Guarantors (each
on a consolidated basis) is, nor will any of the Company or the Subsidiary
Guarantors (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, (a) left with unreasonably small capital
with which to carry on its business as it is proposed to be conducted, (b)
unable to pay its debts (contingent or otherwise) as they mature or (c)
otherwise insolvent.
(gg) None of the Company or any of its Affiliates (as defined in
Rule 501(b) of Regulation D under the Act) has directly, or through any agent,
(i) sold, offered for sale,
<PAGE> 15
-15-
solicited offers to buy or otherwise negotiated in respect of, any "security"
(as defined in the Act) which is or will be integrated with the sale of the
Securities in a manner that would require the registration under the 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 Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(hh) Assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial Purchasers in
the manner contemplated by this Agreement to register any of the Securities
under the Act or to qualify the Indenture under the TIA.
(ii) No securities of the Company or any Subsidiary Guarantor are of
the same class (within the meaning of Rule 144A under the Act) as the Securities
and listed on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
(jj) None of the Company or the Subsidiary Guarantors has taken, nor
will any of them take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Securities.
(kk) Upon execution and delivery by the Company and the Subsidiary
Guarantors on the Closing Date and assuming due recording, each Mortgage (as
defined in the Indenture) will create and constitute (A) a valid and enforceable
mortgage lien on the real property and fixtures described therein (the "Real
Property") and (B) a valid and enforceable security interest in such of the
Property (as defined in each Mortgage), other than the Real Property, in which a
security interest can be created under Article 9 (the "UCC Property") of the
Uniform Commercial Code (the "UCC") as in effect in the state in which such
Property is located. Each Mortgage will be in proper form, under the laws of the
state in which the Property encumbered thereby is located, to be accepted for
recording in the county where such Property is located.
<PAGE> 16
-16-
(ll) Upon the filing of the financing statements (the "Financing
Statements") relating to each Mortgage with the Office of the Secretary of State
in the state in which the Property encumbered by each Mortgage is located, and
with the recorder in the county where real property on which fixtures are
present is located, the security interest, lien or pledge created by each
Mortgage in UCC Property will be a perfected security interest with respect to
that portion of the UCC Property in which a security interest can be perfected
by filing a financing statement, prior to all other security interests therein
which may be perfected by filing a Financing Statement or by possession, except
for prior liens and encumbrances permitted by the Mortgages.
(mm) The representations and warranties of the Company and Warrior,
Inc. contained in Section 2.1(h) of each of the Mortgages are true and correct
and are hereby incorporated herein mutatis mutandis as representations and
warranties of the Company and Warrior, Inc., respectively.
Any certificate signed by any officer of the Company or any
Subsidiary Guarantor and delivered to any Initial Purchaser or to counsel for
the Initial Purchasers shall be deemed a joint and several representation and
warranty by the Company and each of the Subsidiary Guarantors to each Initial
Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company and the
Subsidiary Guarantors agree to issue and sell to the Initial Purchasers, and the
Initial Purchasers, acting severally and not jointly, agree to purchase in the
respective amounts set forth on Schedule 1 hereto from the Company and the
Subsidiary Guarantors 65,000 Units at a purchase price of $959.58 per Unit. One
or more certificates in definitive form for the Securities that the Initial
Purchasers have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Company at least 24 hours prior to the Closing Date,
shall be delivered by or on behalf of the Company and the Subsidiary Guarantors
to the Initial Purchasers, against payment by or on behalf of the Initial
Purchasers of the purchase price therefor by wire transfer (same day funds), net
of the overnight cost of such funds, to such account or accounts as the Company
shall specify prior to the Closing Date, or by such means as the
<PAGE> 17
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parties hereto shall agree prior to the Closing Date. Such delivery of and
payment for the Securities shall be made at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York at 10:00 A.M., New York time, on
July 24, 1995, or at such other place, time or date as the Initial Purchasers,
on the one hand, and the Company, on the other hand, may agree upon, such time
and date of delivery against payment being herein referred to as the "Closing
Date." The Company has requested that the Closing Date be scheduled to occur
five business days after the date of this Agreement in order to provide
sufficient time to satisfy the conditions for closing set forth in Section 7
below. The Company and the Subsidiary Guarantors will make such certificate or
certificates for the Securities available for checking and packaging by the
Initial Purchasers at the offices of BT Securities Corporation in New York, New
York, or at such other place as BT Securities Corporation may designate, at
least 24 hours prior to the Closing Date. As additional compensation to the
Initial Purchasers, the Company agrees to issue to the Initial Purchasers (in
such denomination or denominations and registered in such name or names as each
of the Initial Purchasers requests upon notice to the Company at least 24 hours
prior to the Closing Date) at the Closing Date, for no additional consideration,
(i) warrants to purchase initially 350,000 shares of Common Stock at an initial
exercise price of $3.85 per share of Common Stock (of which warrants to purchase
125,000 shares of Common Stock will be issued to Internationale Nederlanden
(U.S.) Securities Corporation and warrants to purchase 225,000 shares of Common
Stock will be issued to BT Securities Corporation) (the "Additional Common Stock
Warrants") and (ii) warrants to purchase initially 150,000 shares of the
Company's Series F Preferred Stock at an initial exercise price of $3.85 per
share of Series F Preferred Stock (which warrant will be issued to BT Securities
Corporation) (the "Additional Preferred Stock Warrants" and, together with the
Additional Common Stock Warrants, the "Additional Warrants"). The shares of
Common Stock and shares of Series F Preferred Stock issuable upon exercise of
the Additional Warrants are herein referred to together as the "Additional
Warrant Shares". The Additional Common Stock Warrants will be issued under the
Warrant Agreement. The Additional Preferred Stock Warrants will be issued under
a warrant agreement, to be dated as of July 24, 1995 (the "Preferred Stock
Warrant Agreement") between the Company and BT Securities Corporation (or its
designee) as Warrant Agent (the "Preferred Stock Warrant Agent").
<PAGE> 18
-18-
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company and the Subsidiary Guarantors. Each of
the Company and the Subsidiary Guarantors jointly and severally covenants and
agrees with each of the Initial Purchasers that:
(a) The Company and the Subsidiary Guarantors will not amend or
supplement the Final Memorandum or any amendment or supplement thereto of which
the Initial Purchasers shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not have given their
consent. The Company and the Subsidiary Guarantors will promptly, upon the
reasonable request of the Initial Purchasers or counsel for the Initial
Purchasers, make any amendments or supplements to the Preliminary Memorandum or
the Final Memorandum that may be necessary or advisable in connection with the
resale of the Securities by the Initial Purchasers.
(b) The Company and the Subsidiary Guarantors will cooperate with
the Initial Purchasers in arranging for the qualification of the Securities for
offering and sale under the securities or "Blue Sky" laws of such jurisdictions
as the Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the Securities;
provided, however, that in connection therewith, neither of the Company nor any
Subsidiary Guarantor shall be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(c) If, at any time prior to the completion of the initial resale by
the Initial Purchasers of the Securities to persons other than affiliates of the
Initial Purchasers (as determined by the Initial Purchasers), any event occurs
as a result of which the Final Memorandum as then amended or supplemented would
include 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, or if for any other reason it
<PAGE> 19
-19-
is necessary at any time to amend or supplement the Final Memorandum to comply
with applicable law, the Company and the Subsidiary Guarantors will promptly
notify the Initial Purchasers thereof and will prepare, at the expense of the
Company and the Subsidiary Guarantors, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or supplement
thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For and during the period ending on the date no Securities are
outstanding, the Company will furnish to the Initial Purchasers copies of all
reports and other communications (financial or otherwise) furnished by the
Company or the Subsidiary Guarantors to the Trustee, Warrant Agent or the
holders of the Securities and, as soon as available, copies of any reports or
financial statements furnished to or filed by the Company or the Subsidiary
Guarantors with the Commission or any national securities exchange on which any
class of securities of the Company or the Subsidiary Guarantors may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared, if at all, a copy of any
unaudited interim financial statements of the Company for any period subsequent
to the period covered by the most recent financial statements appearing in the
Final Memorandum.
(h) None of the Company or any of its Affiliates will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the Act of
the Securities.
(i) The Company and the Subsidiary Guarantors will not solicit any
offer to buy or offer to sell the Securities by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or
<PAGE> 20
-20-
in any manner involving a public offering within the meaning of Section 4(2) of
the Act.
(j) For so long as any of the Securities remain outstanding, the
Company and the Subsidiary Guarantors will make available, upon request, to any
seller of such Securities the information specified in Rule 144A(d)(4) under the
Act, unless the Company and the Subsidiary Guarantors are then subject to
Section 13 or 15(d) of the Exchange Act.
(k) Each of the Company and the Subsidiary Guarantors will use its
best efforts to (i) permit the Securities to be designated PORTAL securities in
accordance with the rules and regulations adopted by the NASD relating to
trading in the Private Offerings, Resales and Trading through Automated Linkages
market (the "PORTAL Market") and (ii) permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
6. Expenses. The Company and the Subsidiary Guarantors agree,
jointly and severally, to pay all costs and expenses incident to the performance
of their obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the
printing, word processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, and any "Blue Sky" memoranda, (ii) all arrangements relating to the
delivery to the Initial Purchasers of copies of the foregoing documents, (iii)
the fees and disbursements of the counsel, the accountants and any other experts
or advisors retained by the Company, (iv) preparation (including printing),
issuance and delivery to the Initial Purchasers of the Securities, (v) the
qualification of the Securities under state securities and "Blue Sky" laws,
including filing fees and fees and disbursements of counsel for the Initial
Purchasers relating thereto, (vi) the fees and disbursements of counsel to the
Initial Purchasers in connection with the transactions contemplated hereby,
(vii) expenses in connection with any meetings with prospective investors in the
Securities, (viii) fees and expenses of the Trustee, the Warrant Agent and the
transfer agent for the Common Stock including fees and expenses of their
respective counsel, (ix) all expenses and listing fees incurred in connection
with the application for quotation of the Securities on the PORTAL Market and
(x) any fees charged by
<PAGE> 21
-21-
investment rating agencies for the rating of the Securities. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Initial Purchasers set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated or because of any failure,
refusal or inability on the part of the Company or any Subsidiary Guarantor to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder (other than solely by reason of a default by the Initial
Purchasers of their obligations hereunder after all conditions hereunder have
been satisfied in accordance herewith), the Company and the Subsidiary
Guarantors jointly and severally agree to promptly reimburse the Initial
Purchasers upon demand for all out-of-pocket expenses (including reasonable
fees, disbursements and charges of Cahill Gordon & Reindel, counsel for the
Initial Purchasers) that shall have been incurred by the Initial Purchasers in
connection with the proposed purchase and sale of the Securities. The Company
and the Subsidiary Guarantors shall not be liable to the Initial Purchasers for
loss of contemplated profits from the transactions covered by this Agreement.
7. Conditions of the Initial Purchasers' Obligations. The obligation
of the Initial Purchasers to purchase and pay for the Securities shall, in their
sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Vinson & Elkins L.L.P., counsel for the Company and the
Subsidiary Guarantors, in form and substance satisfactory to counsel for the
Initial Purchasers, to the effect that:
(i) Each of the Company and the Subsidiary Guarantors is duly
incorporated, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Final Memorandum. Each of the
Company and the Subsidiary Guarantors is duly qualified as a foreign
corporation and in good standing in each jurisdiction where the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified
<PAGE> 22
-22-
would not, individually or in the aggregate, have a Material Adverse
Effect.
(ii) As of the date hereof, the Company has the authorized, issued
and outstanding capitalization set forth in the Final Memorandum; except
as set forth in the Final Memorandum, all of the outstanding shares of
capital stock of the Subsidiary Guarantors are owned, directly or
indirectly, by the Company, and, to the best knowledge of such counsel,
free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability or voting.
(iii) Except as set forth in the Final Memorandum, to the knowledge of
such counsel (A) no options, warrants or other rights to purchase from the
Company or any Subsidiary Guarantor shares of capital stock or ownership
interests in the Company or any Subsidiary Guarantor are outstanding, (B)
no agreements or other obligations of the Company or any Subsidiary
Guarantor to issue, or other rights to cause the Company or any Subsidiary
Guarantor to convert, any obligation into, or exchange any securities for,
shares of capital stock or ownership interests in the Company or any
Subsidiary Guarantor are outstanding and (C) no holder of securities of
the Company or any Subsidiary Guarantor is entitled to have such
securities registered under a registration statement filed by the Company
or any Subsidiary Guarantor under the Act with respect to the Securities
or the Warrant Shares.
(iv) The Senior Notes are in the form contemplated by the Indenture.
The Senior Notes have each been duly and validly authorized by the Company
and when executed (and assuming the due authorization, execution and
delivery of the Indenture by the Trustee and the execution, delivery and
authentication of the Senior Notes by the Trustee in accordance with the
Indenture) and delivered by the Company and, in the case of the Senior
Notes, paid for by the Initial Purchasers in accordance with the terms of
this Agreement, will constitute the valid and legally binding obligations
of the Company enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the
<PAGE> 23
-23-
discretion of the court before which any proceeding therefor may be
brought.
(v) The Guarantees are in the form contemplated by the Indenture.
Each of the Subsidiary Guarantors has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Guarantees. The Guarantees endorsed on the Senior Notes have each been
duly and validly authorized by each of the Subsidiary Guarantors and, when
the Senior Notes are executed by the Company and each of the Subsidiary
Guarantors and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Senior Notes,
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will constitute the valid and legally binding
obligations of each of the Subsidiary Guarantors, enforceable against each
of the Subsidiary Guarantors in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(vi) Each of the Company and each of the Subsidiary Guarantors has
all requisite corporate power and authority to execute, deliver and
perform its respective obligations under the Indenture, the Senior Notes
and each Security Document to which it is a party; the Indenture is in
sufficient form for qualification under the TIA; the Indenture and each
Security Document to which it is a party have been duly and validly
authorized by each of the Company and each of the Subsidiary Guarantors
and, when duly executed and delivered by the Company and each of the
Subsidiary Guarantors a party thereto (assuming the due authorization,
execution and delivery thereof by the Trustee if the Trustee is required
to execute any such document), each will constitute the valid and legally
binding agreement of each of the Company and each of the Subsidiary
Guarantors a party thereto, enforceable against each of the Company and
each of the Subsidiary Guarantors in accordance with its terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights
<PAGE> 24
-24-
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(vii) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under the Rights Agreements to which it is a party; each
of the Rights Agreements has been duly and validly authorized by the
Company and each of the Subsidiary Guarantors a party thereto and when
duly executed and delivered by the Company and each such Subsidiary
Guarantor (assuming the due authorization, execution and delivery thereof
by the Initial Purchasers), will constitute the valid and legally binding
agreement of the Company and each such Subsidiary Guarantor, enforceable
against the Company and each such Subsidiary Guarantor in accordance with
its terms, except that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(viii) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under the Credit Facility; the Credit Facility has been
duly and validly authorized by the Company and each of the Subsidiary
Guarantors a party thereto and, when duly executed and delivered by the
Company and each such Subsidiary Guarantor (assuming the due
authorization, execution and delivery thereof by ING Capital and the other
lenders party thereto), will constitute the valid and legally binding
agreement of the Company and each such Subsidiary Guarantor, enforceable
against the Company and each such Subsidiary Guarantor in accordance with
its terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the discretion
of the court before which any proceeding therefor may be brought.
<PAGE> 25
-25-
(ix) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Warrant Agreement
and the Preferred Stock Warrant Agreement. Each of the Warrant Agreement
and the Preferred Stock Warrant Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company (assuming the due authorization, execution and delivery by the
Warrant Agent and the Preferred Stock Warrant Agent, as the case may be),
will constitute the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding
therefor may be brought.
(x) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Warrants and the
Additional Warrants. The Warrants and the Additional Warrants have been
duly and validly authorized by the Company and, when executed by the
Company and countersigned by the Warrant Agent in accordance with the
provisions of the Warrant Agreement (and, in the case of the Preferred
Stock Warrants, countersigned by the Preferred Stock Warrant Agent in
accordance with the provisions of the Preferred Stock Warrant Agreement)
and when delivered to and paid for by the Initial Purchasers in accordance
with the terms of this Agreement, will have been duly executed, issued and
delivered and will constitute the valid and legally binding obligations of
the Company, entitled to the benefits of the Warrant Agreement or the
Preferred Stock Warrant Agreement, as the case may be, and enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(xi) When issued in accordance with the terms and conditions
contained in the Warrant Agreement (or the Preferred Stock Warrant
Agreement, as the case may be) upon
<PAGE> 26
-26-
exercise of the Warrants and upon exercise of the Additional Warrants, the
Warrant Shares and the Additional Warrant Shares, as the case may be, will
be duly authorized, validly issued, fully paid and non-assessable and will
not be subject to any preemptive or similar rights. The Warrant Shares and
the Additional Warrant Shares, as the case may be, have been duly reserved
for issuance in accordance with the terms of the Warrants, the Warrant
Agreement, the Additional Warrants and the Preferred Stock Warrant
Agreement, as the case may be.
(xii) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby; the execution, delivery and performance of this
Agreement by the Company and the Subsidiary Guarantors and the
consummation by the Company and the Subsidiary Guarantors of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company and each of the
Subsidiary Guarantors. This Agreement has been duly executed and delivered
by the Company and each of the Subsidiary Guarantors.
(xiii) The Indenture, the Senior Notes, the Guarantees, the Security
Documents, the Warrants, the Additional Warrants, the Warrant Shares, the
Common Stock, the Rights Agreements, the Warrant Agreement and the Credit
Facility conform in all material respects to the descriptions thereof
contained in the Final Memorandum.
(xiv) To the knowledge of such counsel, no legal or governmental
proceedings are pending or threatened to which any of the Company or the
Subsidiary Guarantors is a party or to which the property or assets of the
Company or any Subsidiary Guarantor is subject which, if determined
adversely to the Company or the Subsidiary Guarantors, would result,
individually or in the aggregate, in a Material Adverse Effect, or which
seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Securities to be sold hereunder or
the consummation of the other transactions described in the Final
Memorandum under the caption "Use of Proceeds".
(xv) The execution and delivery of the Exchange Notes and the Private
Exchange Notes by the Company has been
<PAGE> 27
-27-
duly authorized by all necessary corporate action of the Company, and when
the Exchange Notes and the Private Exchange Notes have been duly executed
and delivered by the Company in accordance with the terms of the
Registration Rights Agreement and the Indenture, and assuming due
authentication by the Trustee, the Exchange Notes and the Private Exchange
Notes will constitute the legal, valid, binding and enforceable
obligations of the Company, entitled to the benefits of the Indenture,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(xvi) The Guarantees endorsed on the Exchange Notes and the Private
Exchange Notes by the Subsidiary Guarantors have been duly authorized by
all necessary corporate action of the Subsidiary Guarantors, and when the
Exchange Notes and the Private Exchange Notes have been duly executed and
delivered by the Company and the Subsidiary Guarantors in accordance with
the terms of the Registration Rights Agreement and the Indenture, and
assuming due authentication by the Trustee, will constitute the legal,
valid, binding and enforceable obligations of the Subsidiary Guarantors,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(xvii) The execution and delivery of this Agreement, the Indenture, the
Security Documents, the Warrant Agreement, the Preferred Stock Warrant
Agreement, the Rights Agreements, the Credit Facility and the consummation
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Securities to the Initial
Purchasers) will not conflict with or constitute or result in a breach or
violation of or a default under (or an event which with notice or passage
of time or both would constitute a a default under) or violation of any of
(i) the terms or provisions of any indenture, mortgage, deed of trust,
loan agreement, note, lease, license, franchise agreement, permit,
certificate,
<PAGE> 28
-28-
contract or other agreement or instrument known to such counsel (including
in any event any of the foregoing which have been filed by the Company
with the Commission) to which the Company or any of the Subsidiary
Guarantors is a party or to which any of them or their respective
properties or assets is subject, except for any such conflict, breach,
violation, default or event which would not, individually or in the
aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the
Company or any of the Subsidiary Guarantors, or (iii) (assuming compliance
with all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial Purchasers
in Section 8 hereof) any statute, judgment, decree, order, rule or
regulation known to such counsel to be applicable to the Company or any of
the Subsidiary Guarantors or any of their respective properties or assets,
except for any such conflict, breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect.
(xviii) To the knowledge of such counsel, no consent, approval,
authorization or order of any governmental authority is required for the
issuance and sale by the Company and the Subsidiary Guarantors of the
Securities to the Initial Purchasers or the other transactions
contemplated hereby, except such as may be required under Blue Sky laws,
as to which such counsel need express no opinion, and those which have
previously been obtained.
(xix) None of the Company or the Subsidiary Guarantors is, or
immediately after the sale of the Securities to be sold hereunder and the
application of the proceeds from such sale (as described in the Final
Memorandum under the caption "Use of Proceeds") will be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(xx) No registration under the Act of the Securities is required in
connection with the sale of the Securities to the Initial Purchasers as
contemplated by this Agreement and the Final Memorandum or in connection
with the initial resale of the Securities by the Initial Purchasers in
accordance with Section 8 of this Agreement, and prior to the commencement
of the Exchange Offer (as defined in the Registration Rights Agreement) or
the effectiveness of the Shelf Registration Statement (as defined in the
<PAGE> 29
-29-
Registration Rights Agreement), the Indenture is not required to be
qualified under the TIA, in each case assuming (i) that the purchasers who
buy such Securities in the initial resale thereof are qualified
institutional buyers as defined in Rule 144A promulgated under the Act
("QIBs" or "Qualified Institutional Buyers"), accredited investors as
defined in Rule 501(a) (1), (2), (3) or (7) promulgated under the Act
("Accredited Investors"), (ii) the accuracy of the Initial Purchasers'
representations in Section 8 and those of the Company and the Subsidiary
Guarantors contained in this Agreement regarding the absence of a general
solicitation in connection with the sale of such Securities to the Initial
Purchasers and the initial resale thereof and (iii) the due performance by
the Initial Purchasers of the agreements set forth in Section 8 hereof.
(xxi) Neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the
Securities will violate Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System.
At the time the foregoing opinion is delivered, Vinson & Elkins
L.L.P. shall additionally state that it has participated in conferences with
officers and other representatives of the Company and the Subsidiary Guarantors,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences the contents of the Final Memorandum and
related matters were discussed, and, although it has not independently verified
and is not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final Memorandum
(except to the extent specified in subsection 7(a)(xiii)), no facts have come to
its attention which lead it to believe that the Final Memorandum, on the date
thereof or at the Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading (it being understood that such firm need
express no opinion with respect to the financial statements and related notes
thereto and the other financial, statistical, numerical and accounting data
included in the Final Memorandum). The opinion of Vinson & Elkins L.L.P.
described in this Section shall be rendered to the Initial Purchasers at the
request of
<PAGE> 30
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the Company and the Subsidiary Guarantors and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance satisfactory to the Initial Purchasers, dated
as of the Closing Date and addressed to the Initial Purchasers, of Cahill Gordon
& Reindel, counsel for the Initial Purchasers, with respect to certain legal
matters relating to this Agreement and such other related matters as the Initial
Purchasers may require. In rendering such opinion, Cahill Gordon & Reindel shall
have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(c) The Initial Purchasers shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance satisfactory to counsel for the Initial Purchasers.
(d) The representations and warranties of each of the Company and
the Subsidiary Guarantors contained in this Agreement shall be true and correct
in all material respects on and as of the date hereof and on and as of the
Closing Date as if made on and as of the Closing Date; the statements of the
Company's and the Subsidiary Guarantors' officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be true and
correct in all material respects on and as of the date made and on and as of the
Closing Date; the Company and the Subsidiary Guarantors shall have complied in
all material respects with all agreements and satisfied all conditions on their
part to be performed or satisfied hereunder at or prior to the Closing Date;
and, except as described in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), subsequent to the date of the most
recent financial statements in such Final Memorandum, there shall have been no
Material Adverse Change or any development that, singly or in the aggregate, is
reasonably likely to cause a Material Adverse Change.
(e) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
<PAGE> 31
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(f) Subsequent to the date of the most recent financial statements
in the Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), other than as described in such Final Memorandum, none of the
Company or the Subsidiary Guarantors shall have incurred any liabilities or
obligations, direct or contingent (other than in the ordinary course of
business), that are material to the Company or the Subsidiary Guarantors, taken
as a whole, or entered into any transactions not in the ordinary course of
business that are material to the business, condition (financial or other) or
results of operations or prospects of the Company or the Subsidiary Guarantors,
taken as a whole, and there shall not have been any adverse change in the
capital stock or long-term indebtedness of the Company or the Subsidiary
Guarantors that is material to the business, condition (financial or other) or
results of operations or prospects of the Company and the Subsidiary Guarantors,
taken as a whole.
(g) Subsequent to the date of the most recent financial statements
in the Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), the conduct of the business and operations of the Company or
the Subsidiary Guarantors shall not have been interfered with by strike, fire,
flood, hurricane, accident or other calamity (whether or not insured) or by any
court or governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company or the Subsidiary Guarantors shall not
have sustained any loss or damage (whether or not insured) as a result of any
such occurrence, except any such interference, loss or damage which would not,
individually or in the aggregate, have a Material Adverse Effect.
(h) The Initial Purchasers shall have received certificates of the
Company and each of the Subsidiary Guarantors, dated the Closing Date, signed on
behalf of the Company and each of the Subsidiary Guarantors by their respective
Chairman of the Board, President or any Senior Vice President and the Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Company and each of
the Subsidiary Guarantors contained in this Agreement are true and correct
in all material respects as of the date hereof and as of the Closing Date,
and the Company and each of the Subsidiary Guarantors have performed all
covenants and agreements and satisfied hereunder all conditions on their
part to be performed or satisfied hereunder at or prior to the Closing
Date;
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(ii) At the Closing Date, since the date hereof or since the date of
the most recent financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), no event or
events have occurred, no information has become known nor does any
condition exist that, individually or in the aggregate, would have a
Material Adverse Effect;
(iii) Since the date hereof or since the date of the most recent
financial statements in the Final Memorandum (exclusive of any amendment
or supplement thereto after the date hereof), none of the Company or any
of the Subsidiary Guarantors has incurred any liabilities or obligations,
direct or contingent (other than in the ordinary course of business), that
are material to the Company or the Subsidiary Guarantors, or entered into
any transactions not in the ordinary course of business that are material
to the business, condition (financial or other) or results of operations
or prospects of the Company or the Subsidiary Guarantors, taken as a
whole, and there has not been any change in the capital stock or long-term
indebtedness of the Company or the Subsidiary Guarantors that is material
to the business, condition (financial or other) or results of operations
or prospects of the Company or the Subsidiary Guarantors, taken as a
whole, except as described in such Final Memorandum; and
(iv) The sale of the Securities hereunder has not been enjoined
(temporarily or permanently).
(i) On the Closing Date, the Initial Purchasers shall have received
the Rights Agreements executed by the Company and the Subsidiary Guarantors a
party thereto, and BT Securities Corporation shall have received the Preferred
Stock Warrant Agreement and the Additional Warrants executed by the Company, and
such agreements shall be in full force and effect at all times from and after
the Closing Date.
(j) All of the conditions contained in the Credit Facility to be
fulfilled or complied with prior to any borrowing under such agreement shall
have been complied with (other than the sale of the Securities as set forth
herein and the application of the proceeds therefrom) and the Credit Facility
shall be in full force and effect.
(k) The Initial Purchasers shall have received from Ryder Scott
Company letters dated the date hereof and the
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Closing Date, in form and substance satisfactory to the Initial Purchasers and
their counsel, with respect to an estimate of the reserves, future production
and income attributable to certain leasehold and royalty interests of the
Company and the Subsidiary Guarantors and such other matters as the Initial
Purchasers shall reasonably request.
(l) The holders of the Series D Preferred Stock of the Company shall
have exchanged their warrants to purchase an aggregate of 3,424,666 shares of
Common Stock for 1,100,000 shares of Common Stock, all on terms and conditions
and pursuant to documentation satisfactory to the Initial Purchasers.
(m) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company an executed Deed of
Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement,
Fixture Filing and Financing Statement relating to certain real property in Kern
County, California, in form and substance satisfactory to the Initial Purchasers
and their counsel.
(n) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company an executed Deed of
Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement and
Financing Statement relating to certain real property in New Mexico and
Texas, in form and substance satisfactory to the Initial Purchasers and their
counsel.
(o) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company an executed Deed of
Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement and
Financing Statement relating to certain real property in Louisiana, in form and
substance satisfactory to the Initial Purchasers and their counsel.
(p) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from Warrior, Inc. an executed Mortgage,
Line of Credit Mortgage, Assignment, Security Agreement and Financing Statement
relating to certain real property in New Mexico, in form and substance
satisfactory to the Initial Purchasers and their counsel.
(q) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company financing statements to
be filed in California,
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Louisiana, New Mexico and Texas, in form and substance satisfactory to the
Initial Purchasers and their counsel.
(r) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from Warrior, Inc. financing statements
to be filed in New Mexico and Texas, in form and substance satisfactory to the
Initial Purchasers and their counsel.
(s) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from Chicago Title Insurance Company a
policy (or commitment to issue a policy) of title insurance insuring (or
committing to insure) the lien of the document referred to in Section 7(m)
above, in form and substance and with such endorsements satisfactory to the
Initial Purchasers and their counsel.
(t) The Initial Purchasers shall have received from local counsel to
the Company in each of California, Louisiana, New Mexico and Texas an opinion,
in form and substance satisfactory to the Initial Purchasers and their counsel,
dated as of the Closing Date and addressed to the Initial Purchasers, with
respect to certain legal matters relating to the document referred to in Section
7(m) above and such other related matters as the Initial Purchasers may require.
(u) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received UCC, judgment and tax lien search reports
from (i) the states of California, Louisiana, New Mexico and Texas and each
county therein in which the Company owns Collateral (as defined in the
Indenture) in such states and (ii) the state of New Mexico and each county
therein in which Warrior, Inc. owns Collateral, which reports and the results
thereof shall in all respects be satisfactory to the Initial Purchasers and
their counsel.
(v) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company and Warrior, Inc.
policies or certificates of insurance naming the Trustee as additional insured
or loss payee in respect of insurance coverages maintained in respect of
Collateral.
(w) The Initial Purchasers shall have received an executed
Intercreditor Agreement between Internationale Nederlanden (U.S.) Capital
Corporation, as agent, and the Trustee, and acknowledged by the Company and
Warrior, Inc., in form
<PAGE> 35
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and substance satisfactory to the Initial Purchasers and their counsel.
(x) The Initial Purchasers shall have received all other documents,
agreements, certificates, instruments and opinions as the Initial Purchasers and
their counsel may in their sole discretion require or deem necessary to perfect
the liens created, or purported or intended to be created, by the Security
Documents.
(y) A certificate of designation covering the Series F Preferred
Stock in form and substance satisfactory to BT Securities Corporation and its
counsel shall have been filed and accepted for filing with the Secretary of
State of the State of Delaware.
On or before the Closing Date, the Initial Purchasers and counsel
for the Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Subsidiary
Guarantors as they shall have heretofore reasonably requested from the Company
and the Subsidiary Guarantors.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Company and the
Subsidiary Guarantors shall furnish to the Initial Purchasers such conformed
copies of such documents, opinions, certificates, letters, schedules and
instruments in such quantities as the Initial Purchasers shall reasonably
request.
8. Offering of Securities; Restrictions on Transfer. Each of the
Initial Purchasers represents and warrants (as to itself only) that it is a
qualified institutional buyer as defined in Rule 144A promulgated under the Act
(a "QIB"). Each of the Initial Purchasers agrees with the Company and the
Subsidiary Guarantors (as to itself only) that (a) it has not and will not
solicit offers for, or offer or sell, the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act; and (b) it has and will solicit offers for the
Securities only from, and will offer the Securities only to (A) in the case of
offers inside the United States,
<PAGE> 36
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(i) persons whom the Initial Purchasers reasonably believe to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchasers that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A under
the Act ("Rule 144A"), and, in each case, in transactions under Rule 144A or
(ii) a limited number of other institutional investors reasonably believed by
the Initial Purchasers to be Accredited Investors that, prior to their purchase
of the Securities, deliver to the Initial Purchasers a letter containing the
representations and agreements set forth in Exhibit A to the Final Memorandum
(or, if the Final Memorandum is not in existence, in the most recent Memorandum)
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)); provided,
however, that, in the case of this clause (b), in purchasing such Securities
such persons are deemed to have represented and agreed as provided under the
caption "Transfer Restrictions" contained in the Final Memorandum (or, if the
Final Memorandum is not in existence, in the most recent Memorandum).
9. Indemnification and Contribution. (a) The Company and the
Subsidiary Guarantors, jointly and severally, agree to indemnify and hold
harmless the Initial Purchasers, and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities to which
any Initial Purchaser or such controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or
any application or other document, or any amendment or supplement thereto,
executed by the Company or any Subsidiary Guarantor or based upon written
information furnished by or on behalf of the Company or any Subsidiary
Guarantor filed in any jurisdiction in order to qualify the Securities
under the securities or "Blue Sky" laws thereof or filed with any
<PAGE> 37
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securities association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein
not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action in respect thereof; provided,
however, the Company and the Subsidiary Guarantors will 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 untrue statement or alleged untrue statement or
omission or alleged omission made in any Memorandum or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information concerning the Initial Purchasers furnished to the Company
or the Subsidiary Guarantors by the Initial Purchasers specifically for use
therein. This indemnity agreement will be in addition to any liability that the
Company or the Subsidiary Guarantors may otherwise have to the indemnified
parties. Neither the Company nor the Subsidiary Guarantors shall be liable under
this Section 9 for any settlement of any claim or action effected without their
prior written consent, which shall not be unreasonably withheld.
(b) The Initial Purchasers agree to indemnify and hold harmless each
of the Company, the Subsidiary Guarantors, their directors, their officers and
each person, if any, who controls the Company or any such Subsidiary Guarantor
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Company or the
Subsidiary Guarantors or any such director, officer or controlling person may
become subject under the Act, the Exchange Act or otherwise, 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 alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement thereto
or any Application, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated in any
<PAGE> 38
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Memorandum or any amendment or supplement thereto or any Application, 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 alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Initial Purchaser, furnished
to the Company by the Initial Purchasers specifically for use therein; and
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses incurred by the Company or
any Subsidiary Guarantor or any such director, officer or controlling person in
connection with investigating or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that the Initial Purchasers may otherwise have to the indemnified parties. The
Initial Purchasers shall not be liable under this Section 9 for any settlement
of any claim or action effected without their consent, which shall not be
unreasonably withheld. Neither the Company nor any Subsidiary Guarantor shall,
without the prior written consent of the Initial Purchasers, effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Initial Purchaser is or could have been a party, or indemnity could
have been sought hereunder by any Initial Purchaser, unless such settlement (A)
includes an unconditional written release of the Initial Purchasers, in form and
substance reasonably satisfactory to the Initial Purchasers, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case
<PAGE> 39
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any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 9 or the Company or the Subsidiary Guarantors
in the case of paragraph (b) of this Section 9, representing the indemnified
parties under such paragraph (a) or paragraph (b), as the case may be, who are
parties to such action or actions) or (ii) the indemnifying party has authorized
in writing the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such
<PAGE> 40
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notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior written consent of
the indemnifying party (which consent shall not be unreasonably withheld),
unless such indemnified party waived in writing its rights under this Section 9,
in which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 9 is unavailable to, or insufficient
to hold harmless, an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof). The relative benefits received by the Company and the Subsidiary
Guarantors on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company and the Subsidiary
Guarantors bear to the total discounts and commissions received by such Initial
Purchaser. The relative fault of the parties 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 or the Subsidiary Guarantors on
the one hand, or such Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The Company, the Subsidiary Guarantors and the Initial
Purchasers agree that it would not be equitable if the
<PAGE> 41
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amount of such contribution were determined by pro rata or per capita allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the first sentence of the immediately
preceding paragraph (d). Notwithstanding any other provision of the immediately
preceding paragraph (d), no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of the immediately
preceding paragraph (d), each person, if any, who controls an Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Initial Purchasers, and each
director of the Company and the Subsidiary Guarantors, each officer of the
Company and the Subsidiary Guarantors and each person, if any, who controls the
Company or the Subsidiary Guarantors within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company and the Subsidiary Guarantors.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company and the
Subsidiary Guarantors, their respective officers and the Initial Purchasers set
forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company and the Subsidiary Guarantors,
any of their respective officers or directors, the Initial Purchasers or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 16 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that the Company or any of the Subsidiary Guarantors
<PAGE> 42
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shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on their respective part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiary Guarantors shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding, which
loss or interference, in the sole judgment of the Initial Purchasers, has
had or has a Material Adverse Effect, or there shall have been, in the
sole judgment of the Initial Purchasers, any Material Adverse Change, or
any event or development involving or reasonably likely to cause or result
in a Material Adverse Change (including without limitation a change in
management or control of the Company or the Subsidiary Guarantors), except
in each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) trading in securities of the Company or in securities generally
on the New York Stock Exchange, American Stock Exchange or the NASDAQ
National Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by
New York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial markets
of the United States which, in the case of (A), (B) or (C) above and in
the sole judgment of the Initial Purchasers, makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
<PAGE> 43
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(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The statements
set forth in the last paragraph on the front cover page and in the second and
third sentences of the third paragraph under the heading "Private Placement" in
the Final Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
if sent to the Initial Purchasers, shall be mailed or delivered or telecopied
and confirmed in writing to (i) BT Securities Corporation, 130 Liberty Street,
New York, New York 10006, Attention: Corporate Finance Department, Telecopy No.:
(212) 250-7200; if sent to the Company or any Subsidiary Guarantor, shall be
mailed or delivered or telecopied and confirmed in writing to the Company at
Five Post Oak Park, 4400 Post Oak Parkway, Suite 2200, Houston, Texas 77027,
Attention: Chief Financial Officer, Telecopy No.: (713) 961-9773; with a copy to
Vinson & Elkins L.L.P., 1001 Fannin, Suite 2300, Houston, Texas 77002,
Attention: John S. Watson, Esq., Telecopy No. (713) 758-2346.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Company and the Subsidiary Guarantors
and their respective successors and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Company and the Subsidiary Guarantors contained
in Section 9 of this Agreement shall also be for the benefit of any person or
persons who
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control the Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 9 of this Agreement shall also be for the
benefit of the directors of the Company and the Subsidiary Guarantors, their
respective officers and any person or persons who control the Company or the
Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Securities from the Initial Purchasers will
be deemed a successor because of such purchase.
15. Miscellaneous. If, on the Closing Date, either of the Initial
Purchasers shall fail or refuse to purchase Securities that it has agreed to
purchase hereunder on such date, and the aggregate amount of Securities which
such defaulting Initial Purchaser agreed but failed or refused to purchase is
not more than one-tenth of the aggregate amount of Securities to be purchased on
such date, the other Initial Purchaser shall be obligated to purchase the
Securities which such defaulting Initial Purchaser agreed but failed or refused
to purchase on such date. If, on the Closing Date any Initial Purchaser shall
fail or refuse to purchase Securities which it agreed to purchase hereunder on
such date and the aggregate amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate amount of Securities to
be purchased on such date and arrangements satisfactory to the nondefaulting
Initial Purchaser 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 nondefaulting Purchaser or of the Company, except
as provided in Section 10. In any such case either the nondefaulting Initial
Purchaser 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
Initial Purchaser from liability in respect of any default of such Initial
Purchaser under this Agreement.
16. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
<PAGE> 45
-45-
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE> 46
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company,
the Subsidiary Guarantors and the Initial Purchasers.
Very truly yours,
HARCOR ENERGY, INC.
By:
---------------------------
Name:
Title:
WARRIOR, INC.
By:
---------------------------
Name:
Title:
HTAC INVESTMENTS, INC.
By:
---------------------------
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT SECURITIES CORPORATION
By:
--------------------------
Name:
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) SECURITIES CORPORATION
By:
--------------------------
Name:
Title:
<PAGE> 47
SCHEDULE 1
<TABLE>
<CAPTION>
Number
Initial Purchaser of Units
- ----------------- --------
<S> <C>
BT Securities Corporation................. 48,750
Internationale Nederlanden (U.S.)
Securities Corporation.................. 16,250
------
Total............................... 65,000
======
</TABLE>
<PAGE> 1
- --------------------------------------------------------------------------------
HARCOR ENERGY, INC.
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
-----------------
INDENTURE
Dated as of July 24, 1995
----------------
$65,000,000
14-7/8% Series A Senior Secured Notes
due July 15, 2002
14-7/8% Series B Senior Secured Notes
due July 15, 2002
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1).......................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.08; 7.10
(b)............................................. 7.08; 7.10;
13.02
(c)............................................. N.A.
311(a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a)............................................. 2.05
(b)............................................. 13.03
(c)............................................. 13.03
313(a)............................................. 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.06
(c)............................................. 7.06; 13.02
(d)............................................. 7.06
314(a)............................................. 4.08; 4.10;
13.02
(b)............................................. 10.02
(c)(1).......................................... 7.02; 13.04
(c)(2).......................................... 7.02; 13.04
(c)(3).......................................... N.A.
(d)............................................. 10.03
(e)............................................. 13.05
(f)............................................. N.A.
315(a)............................................. 7.01(b)
(b)............................................. 7.05; 13.02
(c)............................................. 7.01(a)
(d)............................................. 6.05; 7.01(c)
(e)............................................. 6.11
316(a)(last sentence).............................. 2.09
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... 6.04
(a)(2).......................................... N.A.
(b)............................................. 6.07
317(a)(1).......................................... 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.04
318(a)............................................. 13.01
(c)............................................. 13.01
</TABLE>
- ----------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE ONE
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions...................................... 1
Section 1.02 Incorporation by Reference of TIA................ 30
Section 1.03 Rules of Construction............................ 31
ARTICLE TWO
THE SECURITIES
Section 2.01 Form and Dating.................................. 31
Section 2.02 Execution and Authentication..................... 32
Section 2.03 Registrar and Paying Agent....................... 33
Section 2.04 Paying Agent To Hold Assets in
Trust......................................... 34
Section 2.05 Securityholder Lists............................. 34
Section 2.06 Transfer and Exchange............................ 34
Section 2.07 Replacement Securities........................... 35
Section 2.08 Outstanding Securities........................... 36
Section 2.09 Treasury Securities.............................. 36
Section 2.10 Temporary Securities............................. 37
Section 2.11 Cancellation..................................... 37
Section 2.12 Defaulted Interest............................... 37
Section 2.13 CUSIP Number..................................... 38
Section 2.14 Deposit of Moneys................................ 38
Section 2.15 Book-Entry Provisions for Global
Securities.................................... 38
Section 2.16 Registration of Transfers and
Exchanges..................................... 39
Section 2.17 Designation...................................... 44
ARTICLE THREE
REDEMPTION
Section 3.01 Notices to Trustee............................... 45
Section 3.02 Selection of Securities To Be
Redeemed...................................... 45
Section 3.03 Notice of Redemption............................. 45
</TABLE>
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<TABLE>
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Section 3.04 Effect of Notice of Redemption................... 46
Section 3.05 Deposit of Redemption Price...................... 47
Section 3.06 Securities Redeemed in Part...................... 47
Section 3.07 Procedures for Purchase Offers................... 47
ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Securities............................ 49
Section 4.02 Maintenance of Office or Agency.................. 50
Section 4.03 Limitation on Restricted Payments................ 50
Section 4.04 Limitation on Indebtedness....................... 52
Section 4.05 Corporate Existence.............................. 53
Section 4.06 Payment of Taxes and Other Claims................ 53
Section 4.07 Maintenance of Properties and
Insurance..................................... 54
Section 4.08 Compliance Certificate; Notice of
Default; Tax Information...................... 55
Section 4.09 Compliance with Laws............................. 56
Section 4.10 SEC Reports...................................... 56
Section 4.11 Waiver of Stay, Extension or Usury
Laws.......................................... 57
Section 4.12 Limitation on Transactions with
Affiliates.................................... 57
Section 4.13 Limitation on Conduct of Business................ 58
Section 4.14 Limitation on Dividend and Other
Payment Restrictions Affecting
Subsidiaries.................................. 58
Section 4.15 Limitation on Liens.............................. 59
Section 4.16 Change of Control................................ 60
Section 4.17 Limitation on Sale of Assets..................... 62
Section 4.18 Limitation on Preferred Stock of
Subsidiaries.................................. 64
Section 4.19 Impairment of Security Interest.................. 64
Section 4.20 Excess Cash Flow Offer........................... 65
Section 4.21 Equity Proceeds Offer............................ 65
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Mergers, Consolidations and Sale
of Assets..................................... 66
Section 5.02 Successor Corporation Substituted................ 68
</TABLE>
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<PAGE> 5
<TABLE>
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ARTICLE SIX
DEFAULT AND REMEDIES
Section 6.01 Events of Default................................ 69
Section 6.02 Acceleration..................................... 71
Section 6.03 Other Remedies................................... 72
Section 6.04 Waiver of Past Defaults.......................... 72
Section 6.05 Control by Majority.............................. 73
Section 6.06 Limitation on Suits.............................. 73
Section 6.07 Rights of Holders To Receive
Payment....................................... 74
Section 6.08 Collection Suit by Trustee....................... 74
Section 6.09 Trustee May File Proofs of Claim................. 74
Section 6.10 Priorities....................................... 75
Section 6.11 Undertaking for Costs............................ 75
ARTICLE SEVEN
TRUSTEE
Section 7.01 Duties of Trustee................................ 76
Section 7.02 Rights of Trustee................................ 78
Section 7.03 Individual Rights of Trustee..................... 79
Section 7.04 Trustee's Disclaimer............................. 79
Section 7.05 Notice of Default................................ 80
Section 7.06 Reports by Trustee to Holders.................... 80
Section 7.07 Compensation and Indemnity....................... 81
Section 7.08 Replacement of Trustee........................... 82
Section 7.09 Successor Trustee by Merger, Etc................. 83
Section 7.10 Eligibility; Disqualification.................... 83
Section 7.11 Preferential Collection of Claims
Against Company............................... 84
Section 7.12 Appointment of Co-Trustee........................ 84
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
Section 8.01 Legal Defeasance and Covenant
Defeasance.................................... 85
Section 8.02 Satisfaction and Discharge....................... 89
Section 8.03 Survival of Certain Obligations.................. 89
Section 8.04 Acknowledgment of Discharge by
Trustee....................................... 89
Section 8.05 Application of Trust Assets...................... 90
</TABLE>
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<TABLE>
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Section 8.06 Repayment to the Company or
Subsidiary Guarantors; Unclaimed
Money.......................................... 90
Section 8.07 Reinstatement.................................... 91
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01 Without Consent of Holders....................... 91
Section 9.02 With Consent of Holders.......................... 92
Section 9.03 Compliance with TIA.............................. 93
Section 9.04 Revocation and Effect of Consents................ 94
Section 9.05 Notation on or Exchange of
Securities.................................... 95
Section 9.06 Trustee To Sign Amendments, Etc.................. 95
ARTICLE TEN
COLLATERAL AND SECURITY
Section 10.01 Collateral and Security Documents;
Additional Collateral......................... 95
Section 10.02 Recording and Opinions........................... 96
Section 10.03 Release of Collateral............................ 97
Section 10.04 Possession and Use of Collateral................. 98
Section 10.05 Specified Releases of Collateral................. 98
Section 10.06 Disposition of Collateral Without
Release....................................... 101
Section 10.07 Form and Sufficiency of Release.................. 101
Section 10.08 Purchaser Protected.............................. 102
Section 10.09 Authorization of Actions To Be
Taken by the Trustee Under the
Security Documents............................ 102
Section 10.10 Authorization of Receipt of Funds
by the Trustee Under the
Security Documents............................ 103
ARTICLE ELEVEN
APPLICATION OF TRUST MONEYS
Section 11.01 "Trust Moneys" Defined........................... 103
Section 11.02 Withdrawal of Net Cash Proceeds
Following an Asset Sale Offer................. 104
</TABLE>
-iv-
<PAGE> 7
<TABLE>
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<S> <C> <C>
Section 11.03 Withdrawal of Trust Moneys for Oil
and Gas Related Assets........................ 105
Section 11.04 Withdrawal of Trust Moneys on
Basis of Retirement of
Securities.................................... 106
Section 11.05 Investment of Trust Moneys....................... 106
ARTICLE TWELVE
GUARANTEE
Section 12.01 Unconditional Guarantee.......................... 107
Section 12.02 Severability..................................... 108
Section 12.03 Limitation of Subsidiary
Guarantor's Liability......................... 108
Section 12.04 Subsidiary Guarantors May
Consolidate, etc., on Certain
Terms......................................... 109
Section 12.05 Contribution..................................... 110
Section 12.06 Waiver of Subrogation............................ 111
Section 12.07 Execution of Guarantee........................... 112
Section 12.08 Waiver of Stay, Extension or Usury
Laws.......................................... 112
ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.01 TIA Controls..................................... 113
Section 13.02 Notices.......................................... 113
Section 13.03 Communications by Holders with
Other Holders................................. 114
Section 13.04 Certificate and Opinion as to
Conditions Precedent.......................... 115
Section 13.05 Statements Required in Certificate
or Opinion.................................... 115
Section 13.06 Rules by Trustee, Paying Agent,
Registrar..................................... 116
Section 13.07 Legal Holidays................................... 116
Section 13.08 Governing Law.................................... 116
Section 13.09 No Adverse Interpretation of Other
Agreements.................................... 116
Section 13.10 No Recourse Against Others....................... 116
Section 13.11 Successors....................................... 116
Section 13.12 Duplicate Originals.............................. 117
Section 13.13 Severability..................................... 117
</TABLE>
-v-
<PAGE> 8
<TABLE>
<CAPTION>
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<S> <C>
Signatures......................................................... 118
Exhibit A-1 - Form of Series A Security
Exhibit A-2 - Form of Series B Security
Exhibit B - Form of Legend for Global
Securities
Exhibit C - Transferee Certificate for Non-QIB
Accredited Investors
Exhibit D - Transferee Certificate for
Transfers Pursuant to Regulation S
Exhibit E - Form of Intercreditor Agreement
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to
be part of the Indenture.
-vi-
<PAGE> 9
INDENTURE dated as of July 24, 1995, among HARCOR ENERGY, INC., a
Delaware corporation (the "Company"), WARRIOR, INC., a Texas corporation, HTAC
INVESTMENTS, INC., a California corporation, and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, as Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
14-7/8% Senior Secured Notes due 2002:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" of any Person means Indebtedness of another
Person and any of its Subsidiaries existing at the time such other Person
becomes a Subsidiary of such Person or at the time it merges or consolidates
with such Person or any of such Person's Subsidiaries or is assumed by such
Person or any Subsidiary of such Person in connection with the acquisition of
assets from such other Person and in each case not Incurred by such Person or
any Subsidiary of such Person or such other Person in connection with, or in
anticipation or contemplation of, such other Person becoming a Subsidiary of
such Person or such acquisition, merger or consolidation, and which Indebtedness
is without recourse to the Company or any of its Subsidiaries or to any of their
respective properties or assets other than the Person or the assets to which
such Indebtedness related prior to the time such Person becomes a Subsidiary of
the Company or the time of such acquisition, merger or consolidation.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination (a) the sum of (i) discounted
future net revenues from proved oil and gas reserves of the Company and its
subsidiaries calculated in accordance with SEC guidelines before any state or
federal income taxes, as estimated 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, as increased by, as of the
date of determination, the estimated discounted future net revenues from (A)
estimated
<PAGE> 10
-2-
proved oil and gas reserves acquired since the date of such year-end reserve
report, and (B) estimated oil and gas reserves attributable to upward revisions
of estimates of proved oil and gas reserves since the date of such year-end
reserve report due to exploration, development or exploitation activities, in
each case calculated in accordance with SEC guidelines (utilizing the prices
utilized in such year-end reserve report), and decreased by, as of the date of
determination, the estimated discounted future net revenues from (C) estimated
proved oil and gas reserves produced or disposed of since the date of such
year-end reserve report and (D) estimated oil and gas reserves attributable to
downward revisions of estimates of proved oil and gas reserves since the date of
such year-end reserve report due to changes in geological conditions or other
factors which would, in accordance with standard industry practice, cause such
revisions, in each case calculated in accordance with SEC guidelines (utilizing
the prices utilized in such year-end reserve report); provided that, in the case
of each of the determinations made pursuant to clauses (A) through (D), such
increases and decreases shall be as estimated by the Company's petroleum
engineers, unless in the event that there is a Material Change as a result of
such acquisitions, dispositions or revisions, then the discounted future net
revenues utilized for purposes of this clause (a)(i) shall be confirmed in
writing by a nationally recognized firm of independent petroleum engineers, (ii)
the capitalized costs that are attributable to oil and gas properties of the
Company and its Subsidiaries to which no proved oil and gas reserves are
attributable, based on the Company's books and records as of a date no earlier
than the date of the Company's latest annual or quarterly financial statements,
(iii) the Net Working Capital on a date no earlier than the date of the
Company's latest annual or quarterly financial statements and (iv) the greater
of (I) the net book value on a date no earlier than the date of the Company's
latest annual or quarterly financial statements or (II) the appraised value, as
estimated by independent appraisers, of other tangible assets of the Company and
its Subsidiaries, as of the date no earlier than the date of the Company's
latest audited financial statements, minus (b) the sum of (i) minority
interests, (ii) any gas balancing liabilities of the Company and its
Subsidiaries reflected in the Company's latest audited financial statements,
(iii) to the extent included in (a)(i) above, the discounted future net
revenues, calculated in accordance with SEC guidelines (utilizing the prices
used 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 Subsidiaries
<PAGE> 11
-3-
with respect to Volumetric Production Payments on the schedules specified with
respect thereto and (iv) the discounted future net revenues, calculated in
accordance with SEC guidelines, attributable to DollarDenominated Production
Payments which, based on the estimates of (a)(i) above, would be necessary to
fully satisfy the payment obligations of the Company and its Subsidiaries with
respect to Dollar-Denominated Production Payments on the schedules specified
with respect thereto.
"Adjusted Net Assets" shall have the meaning provided in Section
12.06.
"Affiliate" means, when used with reference to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct or cause the direction of management or 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 of the foregoing.
"Affiliate Transaction" shall have the meaning provided in Section
4.12.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Acquisition" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be merged with or into the
Company or any Subsidiary of the Company or (ii) the acquisition by the Company
or any Subsidiary of the Company of assets of any Person comprising a division
or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease, assignment or other transfer for value by the
Company or by any of its Subsidiaries to any Person other than to the Company or
to a direct or indirect wholly owned Subsidiary of the Company of (i) any
Capital Stock of any Subsidiary of the Company or (ii) any other property or
assets of the Company or of any Subsidiary of the Company, other than with
respect to this clause (ii) any disposition of hydrocarbons or other mineral
products for value in the ordinary course of business.
<PAGE> 12
-4-
"Asset Sale Available Proceeds Amount" has the meaning set forth in
Section 4.17.
"Asset Sale Offer" has the meaning set forth in Section 4.17.
"Asset Sale Purchase Date" means the date of purchase pursuant to
the Asset Sale Offer.
"Available Proceeds Amount" means the Asset Sale Available Proceeds
Amount with respect to an Asset Sale Offer; the Excess Cash Flow Available
Proceeds Amount with respect to an Excess Cash Flow Offer or the Equity Offer
Available Proceeds Amount with respect to an Equity Proceeds Offer.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person duly authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions in the City of New York or Houston,
Texas are required or authorized by law or other governmental action to be
closed.
"Capital Expenditures" means, with respect to any Person, for any
period, on a consolidated basis for such Person and its Subsidiaries, the
aggregate of all expenditures during such period which, as determined in
accordance with generally accepted accounting principles, are required to be
included in property, plant or equipment or a similar fixed asset account.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or
<PAGE> 13
-5-
not voting) of corporate stock, including each class of Common Stock and
Preferred Stock of such Person and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease that are
required to be classified and accounted for as capital lease obligations under
GAAP and, for purposes of this definition, the amount of such obligations at any
date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP. The stated maturity of such obligations
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Cash Equivalents" means (i) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000; (v)
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 bank
meeting the qualifications specified in clause (iv) above; and (vi) for purposes
of Article Eleven only (in addition to items (i) through (v) above), investments
in money market funds which funds (A) are not subject to any sales, load or
other similar charge; and (B) are rated at least AAAm or AAAm-G by S&P or Aaa by
Moody's.
<PAGE> 14
-6-
"Change of Control" means the occurrence of one or more of the
following events (whether or not approved by the Board of Directors of the
Company): (i) the Company consolidates with or merges with or into another
Person or any Person consolidates with, or merges with or into, the Company (in
each case, whether or not in compliance with the terms of this Indenture), in
any such event pursuant to a transaction in which immediately after the
consummation thereof Persons owning the Voting Stock of the Company immediately
prior to such consummation shall cease to own a majority of the Voting Stock of
the Company or the surviving entity if other than the Company; or (ii) the
Company or any of its Subsidiaries, directly or indirectly, sells, assigns,
conveys, transfers, leases or otherwise disposes of, in one transaction or a
series of related transactions, all or substantially all of the property or
assets of the Company and its Subsidiaries (determined on a consolidated basis)
to any Person or group of related Persons for purposes of Section 13(d) of the
Exchange Act (a "Group of Persons"); or (iii) the adoption of any plan of
liquidation or dissolution of the Company; or (iv) any Group or Person is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 40% of the Voting Stock of the Company; or (v)
the first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors.
"Change of Control Date" shall have the meaning provided in Section
4.16.
"Change of Control Offer" shall have the meaning provided in
Section 4.16.
"Change of Control Payment Date" shall have the meaning provided in
Section 4.16.
"Collateral" means, collectively, all of the property and assets
(including, without limitation, Trust Moneys) that are from time to time subject
to, or purported to be subject to, the Lien of this Indenture or any of the
Security Documents.
"Collateral Account" means the collateral account established by the
Trustee pursuant to Section 11.01.
"Collateral Proceeds" has the meaning set forth in Section 4.17.
<PAGE> 15
-7-
"Commodity Agreement" of any Person means any option or futures
contract or similar agreement or arrangement.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Company Order" means a written order or request signed in the name
of the Company or any applicable Subsidiary Guarantor by its President or Vice
President, and by its Treasurer, Assistant Treasurer, Secretary or any other
officer so authorized and delivered to the Trustee.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income plus (ii)
to the extent that any of the following shall have been taken into account in
determining Consolidated Net Income, (A) all income taxes of such Person and its
Subsidiaries paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions of assets outside the
ordinary course of business), Consolidated Interest Expense, amortization
expense and depreciation expense, and (B) other non-cash items (other than
non-cash interest) reducing Consolidated Net Income, other than any non-cash
item which requires the accrual of or a reserve for cash charges for any future
period and other than any non-cash charge constituting an extraordinary item of
loss, less other non-cash items increasing Consolidated Net Income, all as
determined on a consolidated basis for such Person and its Subsidiaries in
conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
any Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction or event giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed
Charges of such Person for the Four Quarter
<PAGE> 16
-8-
Period. In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the Incurrence or repayment of any Indebtedness of such
Person or any of its Subsidiaries (and the application of the proceeds thereof)
giving rise to the need to make such calculation and any Incurrence or repayment
of other Indebtedness (and the application of the proceeds thereof), other than
the Incurrence or repayment of Indebtedness in the ordinary course of business
for working capital purposes pursuant to working capital facilities, at any time
subsequent to the first day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period, and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries (including any
Person who becomes a Subsidiary as a result of any such Asset Acquisition)
Incurring, assuming or otherwise being liable for Acquired Indebtedness at any
time subsequent to the first day of the Four Quarter Period and on or prior to
the Transaction Date, as if such Asset Sale or Asset Acquisition (including the
Incurrence, assumption or liability for any such Indebtedness or Acquired
Indebtedness) and also including any Consolidated EBITDA associated with such
Asset Acquisition) occurred on the first day of the Four Quarter Period;
provided, that the Consolidated EBITDA of any Person acquired shall be included
only to the extent includable pursuant to the definition of "Consolidated Net
Income." If such Person or any of its Subsidiaries directly or indirectly
guarantees Indebtedness of a third person, the preceding sentence shall give
effect to the Incurrence of such guaranteed Indebtedness as if such Person or
any Subsidiary of such Person had directly Incurred or otherwise assumed such
guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio," (1) interest on Indebtedness
determined on a fluctuating basis as of the Transaction Date (including
Indebtedness actually Incurred on the Transaction Date) and which will continue
to be so determined thereafter shall be deemed to have accrued at a fixed rate
per annum equal to the rate of interest on such Indebtedness in effect on the
Transaction Date; and (2) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements
<PAGE> 17
-9-
relating to Interest Swap Obligations, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for
any period, the sum, without duplication, of (i) Consolidated Interest Expense
(including amortization or write-off of deferred financing costs of such Person
and its consolidated Subsidiaries during such period and any premium or penalty
paid in connection with redeeming or retiring Indebtedness of such Person and
its consolidated Subsidiaries prior to the stated maturity thereof pursuant to
the agreements governing such Indebtedness) and (ii) the product of (x) the
amount of all dividend payments on any series of Preferred Stock of such Person
(other than dividends paid in Common Stock) paid, accrued or scheduled to be
paid or accrued during such period times (y) a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated Federal, state and local tax rate of such Person, expressed as a
decimal.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the aggregate of the interest expense (without deduction of
interest income) of such Person and its Subsidiaries for such period, on a
consolidated basis, as determined in accordance with GAAP, and including (a) all
amortization of original issue discount; (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Subsidiaries during such period; (c) net cash
costs under all Interest Swap Obligations (including amortization of fees); (d)
all capitalized interest; and (e) the interest portion of any deferred payment
obligations for such period.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided, that there shall be excluded therefrom (a) after-tax gains from Asset
Sales or abandonments or reserves relating thereto, (b) after-tax items
classified as extraordinary or nonrecurring gains, (c) the net income of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Subsidiary of the referent Person or is merged or consolidated
with the referent Person or any Subsidiary of the referent Person, (d) the net
income (but not loss) of any Subsidiary of the referent Person to the extent
that the declaration of
<PAGE> 18
-10-
dividends or similar distributions by that Subsidiary of that income is
restricted by a contract, operation of law or otherwise, (e) the net income of
any Person, other than a Subsidiary of the referent Person, except to the extent
of cash dividends or distributions paid to the referent Person or to a wholly
owned Subsidiary of the referent Person by such Person, (f) any restoration to
income of any contingency reserve, except to the extent that provision for such
reserve was made out of Consolidated Net Income accrued at any time following
the Issue Date, (g) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during such period
whether or not such operations were classified as discontinued), and (h) in the
case of a successor to the referent Person by consolidation or merger or as a
transferee of the referent Person's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person
for any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Subsidiaries for such period, on a consolidated
basis, as determined in accordance with generally accepted accounting
principles.
"Continuing Director" means, as of the date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date hereof or (ii) was nominated for election or
elected to such Board of Directors with the affirmative vote of a majority of
the Continuing Directors who were members of such Board at the time of such
election or nomination.
"Corporate Trust Office" means Texas Commerce Bank National
Association, 600 Travis, 8th Floor, Houston, Texas 77002.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
<PAGE> 19
-11-
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means, with respect to the Securities issued in the
form of one or more Global Securities, The Depository Trust Company or another
Person designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof, in whole or in part, on
or prior to the final maturity date of the Securities.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Equity Offer Available Proceeds Amount" shall have the meaning
provided in Section 4.21.
"Equity Offer Purchase Date" shall have the meaning provided in
Section 4.21.
"Equity Offering" means the first offering of Qualified Capital
Stock of the Company for cash having proceeds in excess of $5 million following
the Issue Date.
"Equity Proceeds Offer" shall have the meaning provided in
Section 4.21.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Events of Default" shall have the meaning set forth in
Section 6.01.
"Excess Cash Flow" means, with respect to any Person for any period,
the amount by which (A)(1) the sum of (i) Consolidated Net Income and (ii) other
Consolidated Non-cash Charges reducing Consolidated Net Income, minus (2)
<PAGE> 20
-12-
consolidated non-cash items increasing Consolidated Net Income, exceeds (B) the
sum of (1) Capital Expenditures (except that in the case of Capital Expenditures
Incurred pursuant to an acquisition, only those Capital Expenditures which are
not funded by the Incurrence of any Indebtedness) and (2) payments required to
be made (only to the extent that such payments are actually made) by the Company
and its Subsidiaries pursuant to the scheduled maturities of any Indebtedness of
the Company and its Subsidiaries (other than the repayment of any Indebtedness
of the Company with proceeds of Indebtedness incurred pursuant to the New Credit
Facility (or any refinancing thereof)).
"Excess Cash Flow Available Proceeds Amount" shall have the meaning
provided in Section 4.20.
"Excess Cash Flow Offer" shall have the meaning provided in Section
4.20.
"Excess Cash Flow Purchase Date" shall have the meaning provided in
Section 4.20.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"fair market value" or "fair value" means, with respect to any asset
or property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between an informed and willing seller and an informed
and willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair market value shall be determined by
the Board of Directors of the Company acting reasonably and in good faith and
shall be evidenced by a Board Resolution delivered to the Trustee; provided,
however, that if the aggregate non-cash consideration to be received by the
Company or any of its Subsidiaries from any Asset Sale could be reasonably
likely to exceed $5,000,000 the fair market value shall be determined by an
Independent Financial Advisor.
"Financial Advisor" means an accounting, appraisal or investment
banking firm of nationally recognized standing that is, in the reasonable and
good faith judgment of the Board of Directors of the Company, qualified to
perform the task for which such firm has been engaged.
<PAGE> 21
-13-
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio" above.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board 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, which are in effect as of the
Issue Date.
"Global Security" means a Security evidencing all or a part of the
Securities issued to the Depository in accordance with Section 2.01 and bearing
the legend prescribed in Exhibit B.
"Guarantee" shall have the meaning set forth in Section 12.01.
"Guarantor" means (i) each of Warrior, Inc. and HTAC Investments,
Inc. and (ii) each of the Company's Subsidiaries that in the future executes a
supplemental indenture in which such Subsidiary agrees to be bound by the terms
of this Indenture as a Guarantor; provided, that any Person constituting a
Guarantor as described above shall cease to constitute a Guarantor when its
respective Guarantee is released in accordance with the terms of this Indenture.
"Holder" or "Securityholder" means a Person in whose name a Security
is registered on the Registrar's books.
"Incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that (A) any Indebtedness
assumed in connection with an acquisition of assets and any Indebtedness of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) of the Company or at the time such
Person is merged or consolidated with the Company or any subsidiary of
<PAGE> 22
-14-
the Company shall be deemed to be Incurred at the time of the acquisition of
such assets or by such Subsidiary at the time it becomes, or is merged or
consolidated with, a Subsidiary of the Company or by the Company at the time of
such merger or consolidation, as the case may be, and (B) any amendment,
modification or waiver of any document pursuant to which Indebtedness was
previously Incurred shall be deemed to be an Incurrence of Indebtedness unless
such amendment, modification or waiver does not (i) increase the principal or
premium thereof or interest rate thereon (including by way of original issue
discount) or (ii) change to an earlier date the stated maturity thereof or the
date of any scheduled or required principal payment thereon or the time or
circumstances under which such Indebtedness shall be redeemed.
"Indebtedness" means with respect to any Person, without
duplication, (i) all Obligations of such Person for borrowed money, (ii) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Capitalized Lease Obligations of such Person,
(iv) all Obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business that are not overdue by
90 days or more or are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted), (v) all Obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (vi) all Indebtedness of others (including all
dividends of other Persons for the payment of which is) guaranteed, directly or
indirectly, by such Person or that is otherwise its legal liability or which
such Person has agreed to purchase or repurchase or in respect of which such
Person has agreed contingently to supply or advance funds, (vii) net liabilities
of such Person under Interest Swap Obligations and Commodity Agreements, (viii)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on any asset or property (including, without limitation, leasehold
interests and any other tangible or intangible property) of such Person, whether
or not such Indebtedness is assumed by such Person or is not otherwise such
Person's legal liability; provided that if the Obligations so secured have not
been assumed by such Person or are otherwise not such Person's legal liability,
the amount of such Indebtedness for the purposes of this definition shall be
limited to the lesser of the amount of
<PAGE> 23
-15-
such Indebtedness secured by such Lien or the fair market value of the assets or
property securing such Lien, and (ix) all Disqualified Capital Stock issued by
such Person with the amount of Indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price, but excluding
accrued dividends if any. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date; provided, that the amount outstanding at any time of any Indebtedness
issued with original issue discount is the full amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Independent" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company or
any of its Subsidiaries, or in any Affiliate of the Company or any of its
Subsidiaries and (c) is not an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions for the
Company or any of its Subsidiaries. Whenever it is provided in this Indenture
that any Independent Person's opinion or certificate shall be furnished to the
Trustee, such Person shall be appointed by the Company and approved by the
Trustee in the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read this definition and that the signer is
Independent within the meaning thereof.
"Initial Purchasers" means BT Securities Corporation
and Internationale Nederlanden (U.S.) Securities Corporation.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Intercreditor Agreement" means the intercreditor agreement dated as
of the Issue Date by and between
<PAGE> 24
-16-
Internationale Nederlanden (U.S.) Capital Corporation, as agent under the New
Credit Facility, and the Trustee, and acknowledged by the Company and Warrior,
as the same may be amended, supplemented or modified from time to time in
accordance with the terms thereof and hereof. A copy of the Intercreditor
Agreement is attached hereto as Exhibit E.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Securities.
"Interest Swap Obligations" means the obligations of any Person
under any interest rate protection agreement, interest rate future, interest
rate option, interest rate swap, interest rate cap or other interest rate hedge
or arrangement.
"Investment" by any Person means any direct or indirect (i) loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property (valued at the fair market value thereof as
of the date of transfer) to others or payments for property or services for the
account or use of others, or otherwise); (ii) purchase or acquisition of Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by any other Person; (iii) guarantee or assumption of any Indebtedness or
any other obligation of any other Person (except for an assumption of
Indebtedness for which the assuming Person receives consideration at the time of
such assumption in the form of property or assets with a fair market value at
least equal to the principal amount of the Indebtedness assumed); and (iv) all
other items that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person prepared in accordance with GAAP. The amount of any
Investment shall not be adjusted for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment. If the
Company or any Subsidiary of the Company sells or otherwise disposes of any
Common Stock of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, greater than 50% of the outstanding Common Stock of such
Subsidiary, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the fair market value of the Common
Stock of such Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of
the Securities.
<PAGE> 25
-17-
"Legal Holiday" shall have the meaning provided in
Section 13.07.
"Lien" means, with respect to any Person, any mortgage, pledge,
lien, encumbrance, easement, restriction, covenant, right-of-way, charge or
adverse claim affecting title or resulting in an encumbrance against real or
personal property of such Person, or a security interest of any kind (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option, right of first refusal or other similar agreement to sell,
in each case securing obligations of such Person and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statute or statutes) of any jurisdiction other than to reflect ownership by a
third party of property leased to the referent Person or any of its Subsidiaries
under a lease that is not in the nature of a conditional sale or title retention
agreement).
"Material Change" means an increase or decrease (excluding changes
that result solely from changes in prices) of more than 10% during a fiscal
quarter in the estimated discounted future net cash flows from proved oil and
gas reserves of the Company and its Subsidiaries, calculated in accordance with
clause (a)(i) of the definition of Adjusted Cosolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change: (i) any acquisitions during the quarter of oil and gas reserves
that have been estimated by a nationally recognized firm of independent
petroleum engineers and on which a report or reports exist and (ii) any
disposition of properties existing at the beginning of such quarter that have
been disposed of as provided in Section 4.17.
"Maturity Date" means July 15, 2002.
"Mortgage" means a mortgage (or deed of trust) executed on July 20,
1995 granted by the Company or any applicable Subsidiary Guarantor for the
benefit of the Trustee and the Holders, as the same may be amended, supplemented
or modified from time to time in accordance with the terms thereof and hereof.
"Net Award" shall have the meaning provided therefor
in the Mortgages.
<PAGE> 26
-18-
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents (including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company or any of its Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, brokerage, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or payable ((1)
including, without limitation, income taxes reasonably estimated to be actually
payable as a result of any disposition of property within two years of the date
of disposition and (2) after taking into account any reduction in tax liability
due to available tax credits or deductions and any tax sharing arrangements),
(c) appropriate amounts to be provided by the Company or any Subsidiary, as the
case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale and (d) in the case of an Asset Sale involving
Collateral, the amount of Indebtedness outstanding under the New Credit Facility
actually repaid from the proceeds of such Asset Sale.
"Net Equity Proceeds" means (a) in the case of any sale by the
Company of Qualified Capital Stock of the Company, the aggregate net cash
proceeds received by the Company, after payment of expenses, commissions and the
like (including, without limitation, brokerage, legal, accounting and investment
banking fees and commissions) incurred in connection therewith, and (b) in the
case of any exchange, exercise, conversion or surrender of any outstanding
Indebtedness of the Company or any Subsidiary issued after the Issue Date for or
into shares of Qualified Capital Stock of the Company, the amount of such
Indebtedness (or, if such Indebtedness was issued at an amount less than the
stated principal amount thereof, the accrued amount thereof as determined in
accordance with GAAP) as reflected in the consolidated financial statements of
the Company prepared in accordance with GAAP as of the most recent date next
preceding the date of such exchange, exercise, conversion or surrender (plus any
additional amount required to be paid by the holder of such Indebtedness to the
Company or to any wholly owned Subsidiary of the Company upon such exchange,
exercise, conversion or surrender and less any and all payments made to the
holders of such Indebtedness, and all other
<PAGE> 27
-19-
expenses incurred by the Company in connection therewith), in each case (a) and
(b) to the extent consummated after the Issue Date.
"Net Working Capital" means (i) all current assets of the Company
and its Subsidiaries, minus (ii) all current liabilities of the Company and its
Subsidiaries, except current liabilities included in Indebtedness, in each case
as set forth in financial statements of the Company prepared in accordance with
GAAP.
"New Credit Facility" means the Amended and Restated Credit
Agreement dated as of July 19, 1995, among the Company, the financial
institutions party thereto in their capacities as lenders thereunder and
Internationale Nederlanden (U.S.) Capital Corporation, as agent, as the same may
be amended from time to time, and any agreement evidencing the refinancing,
modification, replacement, renewal, restatement, refunding, deferral, extension,
substitution, supplement, reissuance or resale thereof.
"Non-Collateral Proceeds" has the meaning set forth in Section 4.17.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, the Secretary or Assistant Secretary of such
Person.
"Officers' Certificate" means a certificate signed by
two Officers of the Company.
"Oil and Gas Business" means (i) the acquisition, exploration,
development, operation and disposition of interests in oil, gas and other
hydrocarbon properties located in North America, and (ii) the gathering,
marketing, treating, processing, storage, selling and transporting of any
production from such interests or properties.
"Oil and Gas Related Assets Investment" means any Investment or
capital expenditure (but not including additions to working capital or
repayments of any revolving credit or
<PAGE> 28
-20-
working capital borrowings) by the Company or any Subsidiary of the Company
which is related to the business of the Company and its Subsidiaries as it is
conducted on the date of the Asset Sale giving rise to the Net Cash Proceeds to
be reinvested.
"Opinion of Counsel" means a written opinion from legal counsel
which and who are acceptable to the Trustee.
"Paying Agent" shall have the meaning set forth in Section 2.03.
"payment default" has the meaning set forth in Section 6.01.
"Payment Restriction" has the meaning set forth in Section 4.14.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Securities, this Indenture and the
Guarantees;
(ii) Commodity Agreements of the Company; provided, however, that
such Commodity Agreements are entered into to protect the Company and its
Subsidiaries from fluctuations in the prices of commodities;
(iii) Interest Swap Obligations of the Company; provided, however,
that such Interest Swap Obligations are entered into to protect the
Company and its Subsidiaries from fluctuations in interest rates on
Indebtedness Incurred in accordance with this Indenture to the extent the
notional principal amount of such Interest Swap Obligation does not exceed
the principal amount of the Indebtedness to which such Interest Swap
Obligation relates;
(iv) additional Indebtedness Incurred by the Company not to exceed
$15,000,000 outstanding at any time;
(v) Indebtedness of a direct or indirect Subsidiary of the Company
to the Company or to a direct or indirect wholly owned Subsidiary of the
Company for so long as such Indebtedness is held by the Company or a
direct or indirect wholly owned Subsidiary of the Company in each case
subject to no Lien held by a Person other than the Company or a direct or
indirect wholly owned Subsidiary of the
<PAGE> 29
-21-
Company; provided that if as of any date any Person other than the Company
or a direct or indirect wholly owned Subsidiary of the Company owns or
holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the Incurrence of Indebtedness not
constituting Permitted Indebtedness by the issuer of such Indebtedness;
(vi) Indebtedness of the Company to a direct or indirect wholly
owned Subsidiary of the Company for so long as such Indebtedness is held
by a direct or indirect wholly owned Subsidiary of the Company in each
case subject to no Lien; provided, that (a) any Indebtedness of the
Company to any direct or indirect Subsidiary of the Company is unsecured
and subordinated, pursuant to a written agreement, to the Company's
obligations under this Indenture and the Securities, and (b) if as of any
date any Person other than a direct or indirect wholly owned Subsidiary of
the Company owns or holds any such Indebtedness or any person holds a Lien
in respect of such Indebtedness, such date shall be deemed the Incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer of
such Indebtedness;
(vii) guarantees by Subsidiaries of the Company of Indebtedness of
the Company (other than Permitted Indebtedness) Incurred on or after the
Issue Date; provided, that, such Indebtedness was Incurred in compliance
with Section 4.04; and
(viii) Refinancing Indebtedness.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents; (b) Investments by the Company or by any Subsidiary of the Company
in any Person that is or will become immediately after such Investment a direct
or indirect Subsidiary of the Company; (c) any Investments in the Company by any
Subsidiary of the Company; provided that any Indebtedness evidencing such
Investment is unsecured and subordinated, pursuant to a written agreement, to
the Company's obligations in respect of the Securities and this Indenture; and
(d) Investments made by the Company or by its Subsidiaries as a result of an
Asset Sale made in compliance with Section 4.17.
"Permitted Liens" means, without duplication, each of the following:
<PAGE> 30
-22-
(i) pledges or deposits by such Person under worker's compensation
laws, unemployment insurance laws or similar legislation (other than
ERISA), or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public statutory obligations of
such Person or deposits to secure surety or appeal bonds to which such
Person is a party, or deposits as security for contested taxes or import
duties or for the payment of rent;
(ii) Liens imposed by law, such as landlords', carriers',
warehousemen's and mechanics' Liens or bankers' Liens incurred in the
ordinary course of business for sums which are not yet due or are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and for which adequate provision has been made;
(iii) Liens for taxes not yet subject to penalties for non-payment or
which are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, if adequate reserve, as may
be required by GAAP, shall have been made therefor;
(iv) Liens in favor of issuers of surety bonds or appeal bonds issued
pursuant to the request of and for the account of such Person in the
ordinary course of its business;
(v) Liens to support trade letters of credit issued
in the ordinary course of business;
(vi) survey exceptions, encumbrances, easements or reservations of,
or rights of others for, rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning or other
restrictions on the use of real property;
(vii) Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of
Default;
(viii) Liens in favor of the Company;
(ix) Liens with respect to Acquired Indebtedness Incurred in
accordance with Section 4.04; provided that
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(A) such Liens secured such Acquired Indebtedness at the time of and prior
to the Incurrence of such Acquired Indebtedness by the Company or a
Subsidiary of the Company and were not granted in connection with, or in
anticipation of, the Incurrence of such Acquired Indebtedness by the
Company or a Subsidiary of the Company, (B) such Liens do not extend to or
cover any property or assets of the Company or any of its Subsidiaries
other than the property or assets that secured the Acquired Indebtedness
prior to the time such Indebtedness became Acquired Indebtedness of the
Company or a Subsidiary of the Company and are no more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
Incurrence of such Acquired Indebtedness by the Company or a Subsidiary of
the Company and (C) the amount of Indebtedness so secured by such Liens,
together with all other Indebtedness of the Company and its Subsidiaries
secured by Liens (other than the Securities), does not exceed, at the time
of and after giving effect to the Incurrence of such Acquired
Indebtedness, 40% of the Adjusted Consolidated Net Tangible Assets of the
Company;
(x) Liens granted by the Company to secure Indebtedness Incurred in
accordance with this Indenture representing all or part of the purchase
price of assets or property acquired after the Issue Date from a Person
not an Affiliate of the Company; provided that (A) the aggregate amount of
Indebtedness secured by such Lien shall not exceed the fair market value
(or, if less, the cost) of the assets or property so acquired, (B) such
Liens shall not encumber any other assets or property of the Company or of
any Subsidiary of the Company and shall attach to such assets or property
within 60 days of the acquisition of such assets or property, and (C) the
amount of Indebtedness so secured by such Liens, together with all other
Indebtedness of the Company and its Subsidiaries secured by Liens (other
than the Securities), does not exceed, at the time of and after giving
effect to the Incurrence of such Indebtedness, 40% of the Adjusted
Consolidated Net Tangible Assets of the Company;
(xi) Liens on the property or assets of a Person that becomes a
Subsidiary after the Issue Date to the extent that such Liens are existing
at the time such Person became a Subsidiary of the Company and such liens
were not granted as a result of, in connection with or in anticipation of
such Person becoming a Subsidiary of the Company;
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provided that (A) the Indebtedness (if any) secured thereby is Acquisition
Indebtedness Incurred in accordance with the Indenture and (B) such Liens
do not extend to or cover any property or assets of the Company or of any
of its Subsidiaries other than the property or assets so acquired;
(xii) Liens to secure Indebtedness Incurred in accordance with this
Indenture under the New Credit Facility; provided, that the amount of
Indebtedness so secured by such Liens, together with all other
Indebtedness of the Company and its Subsidiaries secured by Liens (other
than the Securities), does not exceed, at the time of and after giving
effect to the Incurrence of such Indebtedness, 40% of the Adjusted
Consolidated Net Tangible Assets of the Company;
(xiii) Liens to secure Capitalized Lease Obligations; provided, that
(A) such Liens do not extend to any property or assets which is not leased
property subject to such Capitalized Lease Obligation and (B) the amount
of Indebtedness so secured by such Liens, together with all other
Indebtedness of the Company and its Subsidiaries secured by Liens (other
than the Securities), does not exceed, at the time of and after giving
effect to the incurrence of such Capitalized Lease Obligation, 40% of the
Adjusted Consolidated Net Tangible Assets of the Company;
(xiv) Liens in respect of Refinancing Indebtedness incurred to
Refinance any of the Indebtedness set forth in clauses (ix), (x) and
(xiii) above; provided that such Liens in respect of such Refinancing
Indebtedness (I) are no less favorable to the Holders and are not more
favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being Refinanced and (II) do not extend to or
cover any properties or assets of the Company or of any of the Company's
Subsidiaries, other than the property or assets that secured the
Indebtedness being Refinanced;
(xv) Liens on, or related to, properties or assets to secure all or a
part of the costs incurred in the ordinary course of the Oil and Gas
Business for the exploration, drilling, development or operation thereof;
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(xvi) Liens on pipeline or pipeline facilities which
arise out of operation of law;
(xvii) 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, areas of mutual interest agreements and other agreements which
are customary in the Oil and Gas Business; and
(xviii) Liens reserved in oil and gas mineral leases for bonus or rental
payments and for compliance with the terms of such leases.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Physical Securities" has the meaning set forth in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Securities) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on
the Securities in the form set forth on Exhibit A-1.
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's Board of Directors in consultation with its independent certified
public accountants.
"Property" has the meaning assigned to such term in
the Mortgages.
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"Purchase Agreement" means the purchase agreement dated as of July
17, 1995 by and among the Company and the Initial Purchasers of the Securities.
"Purchase Date" means the Asset Sale Purchase Date with respect to
an Asset Sale Offer, the Excess Cash Flow Purchase Date with respect to an
Excess Cash Flow Offer, or the Equity Offer Purchase Date with respect to an
Equity Proceeds Offer.
"Purchase Offer" means an Asset Sale Offer, Excess Cash Flow Offer
or Equity Proceeds Offer.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Securities.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the form of Security annexed hereto as Exhibit A.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the form of Security annexed hereto as Exhibit A.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company of
Indebtedness Incurred in accordance with Section 4.04 hereof (other than
pursuant to clause (iv), (v), (vi) or (viii) of the definition of Permitted
Indebtedness), in each case that does not (1) result in an increase in the
aggregate principal amount of Indebtedness of such Person as of the date of such
proposed Refinancing (plus the amount of any premium required to be paid under
the terms of the instrument governing
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such Indebtedness and plus the amount of reasonable expenses incurred by the
Company in connection with such Refinancing) or (2) create Indebtedness with (A)
a Weighted Average Life to Maturity that is less than the Weighted Average Life
to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier
than the final maturity of the Indebtedness being Refinanced; provided that (x)
if such Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company, and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Securities,
then such Refinancing Indebtedness shall be subordinate to the Securities at
least to the same extent and in the same manner as the Indebtedness being
Refinanced.
"Registered Exchange Offer" means the offer to exchange the Series B
Securities for all of the outstanding Series A Securities in accordance with the
Registration Rights Agreement.
"Registrar" shall have the meaning set forth in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Initial Purchaser, relating to the
Securities and dated as of the Issue Date, as the same may be amended,
supplemented or modified from time to time in accordance with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Released Interests" has the meaning provided in Section 10.05.
"Released Trust Moneys" has the meaning set forth in Section 11.03.
"Resale Restriction Termination Date" shall have the meaning
provided in Section 2.16.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Group (or any successor group) of the
Trustee, including without limitation any Vice President, any Assistant Vice
President, any Assistant Secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any of
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the above designated officers, who shall, in any case, be responsible for the
administration of this document or have familiarity with it, and also means,
with respect to particular corporate trust matters, any other officer to whom
such matter is referred because of his or her knowledge of and familiarity with
the particular subject.
"Restricted Payment" shall have the meaning provided in Section
4.03.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
under the Securities Act; provided that the Trustee shall be entitled to request
and conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and Series B Securities
as amended or supplemented from time to time in accordance with the terms hereof
that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Security Documents" means, collectively, the Mortgages and the
Intercreditor Agreement and all security agreements, mortgages, deeds of trust,
collateral assignments or other instruments evidencing or creating any security
interests in favor of the Trustee in all or any portion of the Collateral, in
each case as amended, supplemented or modified from time to time in accordance
with the terms thereof and hereof.
"Series A Securities" means the 14-7/8% Senior Secured Notes due
July 15, 2002, being issued and sold pursuant to the Purchase Agreement and this
Indenture.
"Series B Securities" means the 14-7/8% Senior Secured Notes due
July 15, 2002 (the terms of which are identical to the Series A Securities
except that the Series B Securities shall be registered under the Securities
Act, and shall not contain the restrictive legend on the face of the form of the
Series A Securities), to be issued in exchange for the
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Series A Securities pursuant to the Registered Exchange Offer and this
Indenture.
"Subsidiary", with respect to any Person, means (i) any corporation
of which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date of the execution of this
Indenture until such time as this Indenture is qualified under the TIA, and
thereafter as in effect on the date on which this Indenture is qualified under
the TIA, except as otherwise provided in Section 9.03.
"Trust Moneys" shall have the meaning set forth in Section 11.01.
"Trust Officer" means any officer within the corporate trust
administration department (or any successor group of the Trustee), including any
vice president, assistant vice president, assistant secretary or any other
officer or assistant officer of the Trustee customarily performing functions
similar to those performed by the persons who at that time shall be such
officers, and also means, with respect to a particular corporate trust matter,
any other officer to whom such trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"U.S. Government Obligations" shall have the meaning provided in
Section 8.01.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Securities" shall have the meaning set forth in
Section 2.01.
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"Volumetric Production Payments" means production payment
obligations recorded as deferred revenue in accordance with GAAP, together with
all undertakings and obligations in connection therewith.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"wholly owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities which normally have the
right to vote in the election of directors are owned by such Person or any
wholly owned Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
<PAGE> 39
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"obligor" on the indenture securities means the Company, any
Subsidiary Guarantor or any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
words in the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Series A Securities and Series B Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibits A-1
and A-2, respectively. The Securities may have notations, legends or
endorsements (including notations relating to the Guarantee) required by law,
stock exchange rule or usage. The Company and the Trustee shall approve the form
of the Securities and any notation, legend or endorsement (including notations
relating to the Guarantee) on
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them. Each Security shall be dated the date of its issuance and shall show the
date of its authentication.
The terms and provisions contained in the Securities and the
Guarantee shall constitute, and are hereby expressly made, a part of this
Indenture.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent Global Securities in registered
form, substantially in the form set forth in Exhibit A-1 ("Global Securities"),
deposited with the Trustee, as custodian for the Depository, and shall bear the
legend set forth on Exhibit B. The aggregate principal amount of any Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Securities in
registered form set forth in Exhibit A-1 (the "Offshore Physical Securities").
Securities offered and sold in reliance on any other exemption from registration
under the Securities Act other than as described in the preceding paragraph
shall be issued, and Securities offered and sold in reliance on Rule 144A may be
issued, in the form of certificated Securities in registered form in
substantially the form set forth in Exhibit A-1 (the "U.S. Physical
Securities"). The Offshore Physical Securities and the U.S. Physical Securities
are sometimes collectively herein referred to as the "Physical Securities."
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign,
or one Officer shall sign and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Securities.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless. Each
Subsidiary
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Guarantor shall execute the Guarantee in the manner set forth in Section 12.07.
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 shall authenticate (i) Series A Securities for original
issue in the aggregate principal amount of $65,000,000 and (ii) Series B
Securities from time to time for issue only in exchange for a like principal
amount of Series A Securities, in each case upon receipt of a written order of
the Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Securities to be authenticated, the series and type
of Securities and the date on which the Securities are to be authenticated. The
aggregate principal amount of Securities outstanding at any time may not exceed
$65,000,000, except as provided in Section 2.07. Upon receipt of a written order
of the Company in the form of an Officers' Certificate, the Trustee shall
authenticate Securities in substitution of Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless otherwise provided
in the 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 an Agent to deal with the Company and Affiliates of the Company.
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
Securities may be presented or surrendered for payment ("Paying Agent") and (c)
notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register
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of the Securities and of their transfer and exchange. The Company, upon notice
to the Trustee, may have one or more co-Registrars and one or more additional
Paying Agents reasonably acceptable to the Trustee. The term "Paying Agent"
includes any additional Paying Agent. The Company initially appoints the Trustee
as Registrar and Paying Agent until such time as the Trustee has resigned or a
successor has been appointed. Except as set forth in Section 2.14, neither the
Company nor any Affiliate of the Company may act as Paying Agent.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets 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. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company to the Paying Agent, the
Paying Agent shall have no further liability for such assets.
SECTION 2.05. 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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee before each Record Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities
are presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
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principal amount of Securities of other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the
Securities surrendered for transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registrations of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-Registrar's written request. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or other governmental charge payable upon exchanges or transfers
pursuant to Section 2.02, 2.10, 3.06, 3.07, 4.16, or 9.05). The Registrar or
co-Registrar shall not be required to register the transfer of or exchange of
any Security (i) during a period beginning at the opening of business 15 days
before the mailing of a notice of redemption of Securities and ending at the
close of business on the day of such mailing and (ii) selected for redemption in
whole or in part pursuant to Article Three, except the unredeemed portion of any
Security being redeemed in part.
Any Holder of the Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by the
Depository (or its agent), and that ownership of a beneficial interest in the
Global Security shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee and any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge such Holder for
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its reasonable, out-of-pocket expenses in replacing a Security, including
reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because the
Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Securities payable on that date, then on and
after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or any of its Affiliates shall be disregarded, except that,
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities that the
Trustee knows are so owned shall be disregarded.
The Trustee may require an Officers' Certificate listing Securities
owned by the Company, a Subsidiary of the Company or an Affiliate of the
Company.
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SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated. 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 upon receipt of a written order
of the Company pursuant to Section 2.02 definitive Securities in exchange for
temporary Securities.
SECTION 2.11. 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 transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new Securities
to replace Securities that it has paid or delivered to the Trustee for
cancellation. If the Company or any Subsidiary Guarantor shall acquire any of
the Securities, such acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation pursuant to this
Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities,
it shall pay interest on overdue principal and on overdue installments of
interest (without regard to any applicable grace periods) from time to time on
demand at the rate of 2% per annum in excess of the rate shown on the Security.
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SECTION 2.13. CUSIP Number.
The Company in issuing the Securities will use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities.
SECTION 2.14. Deposit of Moneys.
Prior to 10:00 a.m. New York City time on each Interest Payment Date
and Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on such
Interest Payment Date or Maturity Date, as the case may be. Alternatively, the
Company may make payments on the Series A Securities by wire transfer, in same
day funds, or check delivered to the Holders thereof at their registered
addresses. To the extent the Company makes such payments directly to the
Holders, the Company shall simultaneously notify the Trustee thereof in writing.
SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the
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operation of customary practices governing the exercise of the rights of a
Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.16. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) or (d) of Section 2.16 shall, except as otherwise provided by Section 2.16,
bear the legend regarding transfer restrictions applicable to the Physical
Securities set forth in Exhibit A-1.
(e) The Holder of any Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar with a request:
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(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal
number of Physical Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Section 2.16 for such transactions are met;
provided, however, that the Physical Securities presented or surrendered for
registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing; and
(II) in the case of Physical Securities the offer and sale of which have
not been registered under the Securities Act and are presented for
transfer or exchange prior to (x) the date which is three years
after the later of the date of original issue and the last date on
which the Company or any affiliate of the Company was the owner of
such Security, or any predecessor thereto and (y) such later date,
if any, as may be required by any subsequent change in applicable
law (the "Resale Restriction Termination Date"), such Physical
Securities shall be accompanied, in the sole discretion of the
Company, by the following additional information and documents, as
applicable:
(A) if such Physical Security is being delivered to the Registrar
by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that
effect (in substantially the form of Exhibit C hereto); or
(B) if such Physical Security is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the
Securities Act, a certification to that
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effect (in substantially the form of Exhibit C hereto); or
(C) if such Physical Security is being transferred to an
institutional "accredited investor" within the meaning of
subparagraph (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501
under the Securities Act, delivery of a Certificate of
Transfer in the form of Exhibit D hereto and an opinion of
counsel and/or other information satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (in
substantially the form of Exhibit C hereto) and an opinion of
counsel reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar of a Physical
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Registrar, together with:
(A) certification, substantially in the form of Exhibit C hereto,
that such Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act; and
(B) written instructions directing the Registrar to make, or to
direct the Depositary to make, an endorsement on the Global
Security to reflect an increase in the aggregate amount of the
Securities represented by the Global Security,
then the Registrar shall cancel such Physical Security and cause, or direct the
Depositary to cause, in accordance with the standing instructions and procedures
existing between the
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Depositary and the Registrar, the number of Securities represented by the Global
Security to be increased accordingly. If no Global Security is then outstanding,
the Company shall issue and the Registrar shall authenticate a new Global
Security in the appropriate amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global
Security for a Physical Security.
(i) Any person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Physical
Security. Upon receipt by the Registrar of written instructions or
such other form of instructions as is customary for the Depositary
from the Depositary or its nominee on behalf of any person having a
beneficial interest in a Global Security and upon receipt by the
Registrar of a written order or such other form of instructions as
is customary for the Depositary or the person designated by the
Depositary as having such a beneficial interest containing
registration instructions and, in the case of any such transfer or
exchange prior to the Resale Restriction Termination Date, the
following additional information and documents:
(A) if such beneficial interest is being transferred to the person
designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in
substantially the form of Exhibit C hereto); or
(B) if such beneficial interest is being transferred to a
qualified institutional buyer (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the
Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form of Exhibit
C hereto); or
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(C) if such beneficial interest is being transferred to an
institutional "accredited investor" within the meaning of
subparagraph (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501
under the Securities Act, delivery of a Certificate of
Transfer in the form of Exhibit D hereto and an opinion of
counsel and/or other information satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act; or
(D) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in
substantially the form of Exhibit C hereto) and an opinion of
counsel reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act,
then the Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Registrar, the aggregate amount of the Global Security to be reduced
and, following such reduction, the Company will execute and, upon
receipt of an authentication order in the form of an Officers'
Certificate, the Registrar will authenticate and deliver to the
transferee a Physical Security.
(ii) Physical Securities issued in exchange for a beneficial interest in
a Global Security pursuant to this Section 2.16(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Registrar in writing.
The Registrar shall deliver such Physical Securities to the persons
in whose names such Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.16), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or
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any such nominee to a successor Depositary or a nominee of such successor
Depositary.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless, and the Trustee is hereby authorized to
deliver Securities without the Private Placement Legend if, (i) the
circumstances contemplated by paragraph (a)(ii)(II) of this Section 2.16 exist,
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act.
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.17. Designation.
The Indebtedness evidenced by the Securities is hereby irrevocably
designated as "senior indebtedness" or such other term denoting seniority for
the purposes of any future Indebtedness of the Company which the Company makes
subordinate to any senior indebtedness or such other term denoting seniority.
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ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices 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
and the principal amount of Securities to be redeemed. The Company shall give
notice of redemption to the Paying Agent and Trustee at least 30 days but not
more than 60 days before the Redemption Date (unless a shorter notice shall be
agreed to by the Trustee in writing), together with an Officers' Certificate
stating that such redemption will comply with the conditions contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed at any time,
selection of such Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Securities are listed or, if such Securities are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed. At the Company's
request made
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at least 45 days before the Redemption Date, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. Each notice
for redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if
any;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued;
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption; and
(8) the subparagraph of the Securities pursuant to which the
Securities are to be redeemed.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee
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or Paying Agent, such Securities called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant Record Dates.
SECTION 3.05. Deposit of Redemption Price.
On or before 10:00 a.m. New York Time on the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Securities to be
redeemed on that date. The Paying Agent shall promptly return to the Company any
U.S. Legal Tender so deposited which is not required for that purpose upon the
written request of the Company, except with respect to monies owed as
obligations to the Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, interest on the Securities to be redeemed will cease to accrue
on and after the applicable Redemption Date, whether or not such Securities are
presented for payment.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. Procedures for Purchase Offers.
Notice of a Purchase Offer pursuant to this Section 3.07 shall be
mailed or caused to be mailed, by first class mail, by the Company not less than
30 nor more than 60 days before the Purchase Date to all Holders at their last
registered addresses, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Securities
pursuant to the Purchase Offer and shall state the following terms:
(1) the section of the Indenture pursuant to which the Purchase Offer is
being made and that all Securities tendered will be accepted for
payment; provided,
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however, that if the aggregate principal amount of Securities
tendered in a Purchase Offer plus accrued interest at the expiration
of such offer exceeds the Available Proceeds 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 multiples
thereof shall be purchased);
(2) the purchase price (including the amount of accrued interest) and
the Purchase Date and that the Purchase Offer will remain open for
at least 20 Business Days and until the close of business on the
Purchase Date;
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Security accepted for payment pursuant to the Purchase Offer shall
cease to accrue interest after the Purchase Date;
(5) that Holders electing to have a Security purchased pursuant to a
Purchase Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Security completed, to the Paying Agent at the address specified
in the notice prior to the close of business on the Business Day
prior to the Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to
the Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Securities the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Security
purchased; and
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; provided that each Security
purchased and each new Security issued shall be in an
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original principal amount of $1,000 or integral multiples thereof.
On or before 10:00 a.m. New York Time on the Purchase Date, the
Company shall (i) accept for payment Securities or portions thereof tendered
pursuant to the Purchase Offer which are to be purchased in accordance with item
(1) above, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the purchase price plus accrued interest, if any, of all Securities to be
purchased and (iii) deliver to the Trustee Securities so accepted together with
an Officers' Certificate stating the Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to the Holders of
Securities so accepted payment in an amount equal to the purchase price plus
accrued interest, if any. For purposes of any Purchase Offer, the Trustee shall
act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to a
Purchase Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Securities pursuant to a Purchase Offer. To the extent the provisions of any
such rule conflict with the provisions of this Indenture relating to a Purchase
Offer, the Company shall comply with the provisions of such rule and be deemed
not to have breached its obligations relating to such Purchase Offer by virtue
thereof.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the
Securities in the manner provided in the Securities. An installment of principal
of or interest on the Securities shall be considered paid on the date it is due
if the Trustee or Paying Agent holds on that date U.S. Legal Tender designated
for and sufficient to pay the installment.
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The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and it shall pay interest on overdue installments
of interest (without regard to any applicable grace periods) from time to time
on demand at the rate borne by the Securities plus 2% per annum. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, the office or agency required under Section 2.03. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13.02.
The Company hereby initially designates the office of Texas Commerce Trust
Company of New York, as agent for Texas Commerce Bank National Association
located at 80 Broad Street, 4th Floor, NY, NY 10004, as its office or agency in
the Borough of Manhattan, The City of New York.
SECTION 4.03. Limitation on Restricted Payments.
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any distribution (other than dividends or distributions payable solely in
Qualified Capital Stock of the Company) on shares of the Company's Capital Stock
to holders of such Capital Stock, (b) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of the Company, or any warrants, rights or
options to acquire shares of any class of such Capital Stock, other than through
the exchange therefor solely of Qualified Capital Stock of the Company or
warrants, rights or options to acquire Qualified Capital Stock of the Company,
(c) make any principal payment on, purchase, defease, redeem, prepay, decrease
or otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Indebtedness of the
Company that is subordinate or junior in right of payment to the Securities or
(d) make any Investment (other than Permitted Investments) in any Person (each
of the foregoing prohibited actions set forth in clauses (a), (b), (c) and (d)
being referred to as a "Restricted
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Payment"), if at the time of such proposed Restricted Payment or immediately
after giving effect thereto, (i) a Default or an Event of Default has occurred
and is continuing or would result therefrom, or (ii) the Company is not able to
Incur at least $1.00 of additional Indebtedness in accordance with paragraph (b)
of Section 4.04 (as if such Restricted Payment had been made as of the last day
of the Four Quarter Period), or (iii) the aggregate amount of Restricted
Payments (including such proposed Restricted Payment) made subsequent to the
Issue Date (the amount expended for such purposes, if other than in cash, being
the fair market value of such property as determined reasonably and in good
faith by the Board of Directors of the Company) exceeds or would exceed the sum
of: (x) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company
during the period (treating such period as a single accounting period)
subsequent to the Issue Date and prior to the date of the making of such
Restricted Payment; (y) 100% of the aggregate Net Equity Proceeds received by
the Company from any Person (other than from a Subsidiary of the Company) from
the issuance and sale subsequent to the Issue Date of Qualified Capital Stock of
the Company (excluding (A) any Qualified Capital Stock of the Company paid as a
dividend on any Capital Stock of the Company and (B) any Qualified Capital Stock
of the Company with respect to which the purchase price thereof has been
financed directly or indirectly using funds (i) borrowed from the Company or
from any of its Subsidiaries, unless and until and to the extent such borrowing
is repaid, or (ii) contributed, extended, guaranteed or advanced by the Company
or by any of its Subsidiaries (including, without limitation, in respect of any
employee stock ownership or benefit plan)) and (z) $500,000.
Notwithstanding the foregoing, these provisions do not prohibit: (1)
the payment of any dividend or making of any distribution within 60 days after
the date of its declaration if the dividend or distribution would have been
permitted on the date of declaration; (2) the acquisition of Capital Stock of
the Company or warrants, rights or options to acquire Capital Stock of the
Company either (i) solely in exchange for shares of Qualified Capital Stock of
the Company or warrants, rights or options to acquire Qualified Capital Stock of
the Company, or (ii) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of shares
of Qualified Capital Stock of the Company or warrants, rights or options to
acquire Qualified Capital Stock of the Company; (3) the acquisition of any
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Indebtedness of the Company that is subordinate or junior in right of payment to
the Securities either (i) solely in exchange for shares of Qualified Capital
Stock of the Company, or (ii) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of (A) shares of Qualified Capital Stock of the Company or warrants,
rights or options to acquire Qualified Capital Stock of the Company or (B)
Refinancing Indebtedness; (4) the payment of regularly scheduled dividends on
shares of the Company's Preferred Stock outstanding on the Issue Date; and (5)
loans by the Company to officers and directors of the Company for the purpose of
enabling such persons to purchase Capital Stock of the Company, provided that
the aggregate amount of such loans at any time outstanding shall not exceed
$500,000; provided, however, that in the case of clauses (2), (3), (4) and (5)
of this paragraph, no Default or Event of Default shall have occurred and be
continuing at the time of such payment or as a result thereof. In determining
the aggregate amount of Restricted Payments made subsequent to the Issue Date,
amounts expended pursuant to clauses (1), (2) and (4) or loaned pursuant to
clause (5) shall, in each case, be included in such calculation.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
Notwithstanding anything contained in this Section 4.03, the Company
shall be permitted to redeem the Series D Preferred Stock in the manner and at
the price set forth in the Offering Memorandum, dated July 17, 1995 relating to,
among other things, the Securities.
SECTION 4.04. Limitation on Indebtedness.
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, Incur any Indebtedness, including,
without limitation, any Acquired Indebtedness (other than Permitted
Indebtedness).
(b) Notwithstanding the foregoing limitations, the Company may Incur
Indebtedness (including, without limitation, Acquired Indebtedness) and
Subsidiaries of the Company may
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Incur Acquired Indebtedness in each case, if (i) no Default or Event of Default
shall have occurred and be continuing on the date of the proposed Incurrence
thereof or would result as a consequence of such proposed Incurrence and (ii)
immediately after giving effect to such proposed Incurrence, (x) the
Consolidated Fixed Charge Coverage Ratio of the Company is at least equal to 2.5
to 1.0 if such proposed Incurrence is on or prior to July 15, 1997 and at least
equal to 3.0 to 1.0 if such proposed Incurrence is thereafter and (y) the
Adjusted Consolidated Net Tangible Assets of the Company is at least equal to
175% of the aggregate consolidated Indebtedness of the Company and its
Subsidiaries.
(c) The Company will not, directly or indirectly, in any event Incur
any Indebtedness which by its terms (or by the terms of any agreement governing
such Indebtedness) is subordinated to any other Indebtedness of the Company
unless such Indebtedness is also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate to the Securities to the
same extent and in the same manner as such Indebtedness is subordinated pursuant
to subordination provisions that are most favorable to the holders of any other
Indebtedness of the Company.
SECTION 4.05. Corporate Existence.
Except as otherwise permitted by Article Five, the Company shall do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each of its Subsidiaries in accordance with the respective organizational
documents of each Subsidiary and the rights (charter and statutory) and material
franchises of the Company and each of its Subsidiaries; provided, however, that
the Company shall not be required to preserve any such right or franchise, or
the corporate existence of any Subsidiary, 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 each of its Subsidiaries, taken
as a whole, and that the loss thereof is not, and will not be, adverse in any
material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges
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levied or imposed upon it or any of its Subsidiaries or upon the income, profits
or property of it or any of its Subsidiaries and (ii) all lawful claims for
labor, materials and supplies which, in each case, if unpaid, might by law
become a material liability or Lien upon the property of it or any of its
Subsidiaries; 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.
SECTION 4.07. Maintenance of Properties and Insurance.
(a) The Company shall cause all material properties owned by or
leased by it or any of its Subsidiaries used or useful to the conduct of its
business or the business of any of its Subsidiaries to be improved or maintained
and kept in normal condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its judgment may
be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 4.07 shall prevent the Company or any of its
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors or of the board of directors of any
Subsidiary of the Company concerned, or of an officer (or other agent employed
by the Company or of any of its Subsidiaries) of the Company or any of its
Subsidiaries having managerial responsibility for any such property, desirable
in the conduct of the business of the Company or any Subsidiary of the Company,
and if such discontinuance or disposal is not adverse in any material respect to
the Holders.
(b) The Company shall maintain, and shall cause its Subsidiaries to
maintain, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles, retentions, self-insured amounts and
co-insurance provisions, as are customarily carried by similar businesses of
similar size, including property and casualty loss, workers' compensation and
interruption of business insurance. The Company shall provide, and shall cause
its Subsidiaries to provide, an Officers' Certificate as to compliance with the
foregoing requirements to the Trustee prior to the anniversary or
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renewal date of each such policy, together with satisfactory evidence of such
insurance, which certificate shall expressly state such expiration date for each
policy listed.
SECTION 4.08. Compliance Certificate; Notice of Default; Tax Information.
(a) The Company shall deliver to the Trustee, within 100 days after
the close of each fiscal year an Officers' Certificate stating that a review of
the activities of the Company has been made under the supervision of the signing
officers with a view to determining whether it 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 his knowledge the
Company during such preceding fiscal year has kept, observed, performed and
fulfilled each and every such covenant and no Default or Event of Default
occurred during such year and at the date of such certificate there is no
Default or Event of Default has occurred and is continuing or, if such signers
do know of such Default or Event of Default, the certificate shall describe its
status with particularity. The Officers' Certificate shall also notify the
Trustee should the Company elect to change the manner in which it fixes its
fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.10 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article 4, 5 or 6 of this Indenture insofar as they relate to
accounting matters or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants shall
not be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(c) The Company shall deliver to the Trustee, forthwith upon
becoming aware of any Default or Event of Default in the performance of any
covenant, agreement or condition contained in this Indenture, an Officers'
Certificate specifying the Default or Event of Default and describing its status
with particularity.
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(d) The Company shall calculate and deliver to the Trustee all
original issue discount information to be reported by the Trustee to Holders as
required by law.
SECTION 4.09. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries
to comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as would not in the aggregate have a
material adverse effect on the financial condition or results of operations of
the Company and its Subsidiaries taken as a whole.
SECTION 4.10. SEC Reports.
(a) The Company will file with the SEC all information, documents
and reports required to be filed with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act, whether or not the Company is subject to such filing
requirements so long as the SEC will accept such filings. The Company will file
with the Trustee within 15 days after it files them with the SEC, 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 SEC may by rules and regulations
prescribe) which the Company files with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. Upon qualification of this Indenture under the TIA, the
Company shall also comply with the provisions of TIA section 314(a).
(b) Regardless of whether the Company is required to furnish such
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause its consolidated financial statements, comparable to that which would have
been required to appear in annual or quarterly reports, to be delivered to the
Trustee and the Holders. The Company will also make such reports available to
prospective purchasers of the Securities, securities analysts and broker-dealers
upon their request.
(c) For so long as any of the Securities remain outstanding the
Company will make available to any prospective purchaser of the Securities or
beneficial owner of the
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Securities in connection with any sale thereof the information required by
Rule 144A(d)(4) under the Securities Act, until such time as the Company has
either exchanged the Series A Securities for Series B Securities identical in
all material respects which have been registered under the Securities Act or
until such time as the holders thereof have disposed of such Securities pursuant
to an effective registration statement filed by the Company.
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of and/or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture, and (to the
extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 4.12. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, conduct any business or enter into any transaction or series of
transactions with or for the benefit of any of their Affiliates (each an
"Affiliate Transaction"), except in good faith and on terms that are no less
favorable to the Company or such Subsidiary, as the case may be, than those that
could have been obtained in a comparable transaction on an arm's-length basis
from a Person not an Affiliate of the Company or such Subsidiary. All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other property
with a fair market value in excess of $250,000 shall be approved by the Board of
Directors of the Company, such approval to be evidenced by a Board Resolution
stating that such Board of Directors has determined that such transaction
complies with the foregoing provisions. If the Company or any Subsidiary of the
Company enters into an Affiliate Transaction (or a series of related Affiliate
Transactions
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related to a common plan) that involves an aggregate fair market value of more
than $3,000,000, the Company or such Subsidiary shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Subsidiary, as the
case may be, from a financial point of view, from an Independent Financial
Advisor and file the same with the Trustee. Notwithstanding the foregoing, the
restrictions set forth in this Section 4.12 shall not apply to customary
directors' fees, indemnification and similar arrangements.
SECTION 4.13. Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Subsidiaries
to, engage in the conduct of any business other than the Oil and Gas Business on
a basis consistent with the conduct of such business as it is conducted on the
Issue Date.
SECTION 4.14. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (a) pay dividends or make any other distributions
on its Capital Stock; (b) make loans or advances or pay any Indebtedness or
other obligation owed to the Company or to any Subsidiary of the Company; or (c)
transfer any of its property or assets to the Company or to any Subsidiary of
the Company (each such encumbrance or restriction in clause (a), (b), or (c) a
"Payment Restriction"), except for such encumbrances or restrictions existing
under or by reason of: (1) applicable law; (2) this Indenture and the Security
Documents; (3) customary non-assignment provisions of any lease governing a
leasehold interest of any Subsidiary of the Company; (4) any instrument
governing Acquired Indebtedness Incurred in accordance with paragraph (b) of
Section 4.04; provided, that such encumbrance or restriction is not, and will
not be, applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or asset of the Person, becoming a
Subsidiary of the Company; (5) agreements existing on the Issue Date to the
extent and in the manner such agreements are in effect on the Issue Date; (6)
restrictions imposed by Liens granted pursuant to clauses (ix)-(xiv) of the
definition of Permitted Liens solely to the extent such Liens encumber the
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transfer or other disposition of the assets subject to such Liens; (7) any
restriction or encumbrance contained in contracts for the sale of assets to be
consummated in accordance with this Indenture solely in respect of the assets to
be sold pursuant to such contract; or (8) any encumbrance or restriction
contained in Refinancing Indebtedness Incurred to Refinance the Indebtedness
issued, assumed or Incurred pursuant to an agreement referred to in clauses (2),
(4) or (5) above; provided that the provisions relating to such encumbrance or
restriction contained in any such Refinancing Indebtedness are no less favorable
to the Company or to the Holders in any material respect in the reasonable and
good faith judgment of the Board of Directors of the Company than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clause (2), (4) or (5).
SECTION 4.15. Limitation on Liens.
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist or remain in effect any Liens (i) upon any item of Collateral
other than the Liens created by the Securities, this Indenture and the Security
Documents and the Liens expressly permitted by the applicable Security Documents
and (ii) upon any other properties or assets of the Company or of any of its
Subsidiaries whether owned on the Issue Date or acquired after the Issue Date,
or on any income or profits therefrom, or assign or otherwise convey any right
to receive income or profits thereon other than, with respect to this clause
(ii), (A) Liens existing on the Issue Date to the extent and in the manner such
Liens are in effect on the Issue Date and (B) Permitted Liens.
(b) To the extent the Company or any of its Subsidiaries grants any
additional security interest in, or lien upon, any property or assets that at
the time of the granting thereof does not constitute Collateral to secure any
obligations of the Company or its Subsidiaries under the New Credit Facility,
the Company or such Subsidiary shall simultaneously grant a second priority
security interest in such property or assets upon terms which would provide the
Trustee or, if necessary, a Co-trustee, as collateral agent, substantially
similar interests in such property or assets vis-a-vis the agent under the New
Credit Facility as such parties have interests in the Collateral. The Company
shall execute, and the Trustee is hereby authorized to execute, such agreements
and other
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instruments as are necessary to grant and perfect the additional security
interests contemplated hereby.
SECTION 4.16. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer to repurchase all outstanding Securities pursuant to the offer
described in paragraph (b) below (the "Change of Control Offer") at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase.
(b) Within 30 days following the date upon which a Change of Control
occurs (the "Change of Control Date"), the Company shall send, by first class
mail, a notice to each Holder, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Change of Control Offer. Such notice shall
state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.16 and that all Securities tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date") and that the
Change of Control Offer will remain open for at least 20 Business Days and
until the close of business on the Change of Control Payment Date;
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Security accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Security purchased pursuant to a
Change of Control Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Security completed, to the Paying Agent at the address
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specified in the notice prior to the close of business on the Business Day
prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased;
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; provided that each Security
purchased and each new Security issued shall be in an original principal
amount of $1,000 or integral multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all
Securities so tendered and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Securities so accepted payment in an amount equal to the purchase
price plus accrued interest, if any, and the Trustee shall promptly authenticate
and mail to such Holders new Securities equal in principal amount to any
unpurchased portion of the Securities surrendered. Any Securities not so
accepted shall be promptly mailed by the Company to the Holder thereof. For
purposes of this Section 4.16, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to a
Change of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws
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and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Securities pursuant to a Change
of Control Offer. To the extent the provisions of any securities laws or
regulations conflict with the provisions under this Section 4.16, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.16 by virtue
thereof.
SECTION 4.17. Limitation on Sale of Assets.
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, consummate any Asset Sale unless (i) such Asset Sale is for at
least fair market value, (ii) at least 85% of the consideration therefrom
received by the Company or such Subsidiary is in the form of cash or Cash
Equivalents, (iii) if such Asset Sale involves Collateral, (x) such Asset Sale
is not between the Company and any of its Subsidiaries and (y) the Company or
Subsidiary effecting the Asset Sale shall, to the extent required by the lenders
thereunder, immediately repay Indebtedness outstanding under the New Credit
Facility, if any (and permanently reduce the amounts that may be reborrowed
thereunder by an equivalent amount), with the cash consideration received in
respect thereof and shall deposit in the Collateral Account any amounts received
by the Company or such Subsidiary in excess of the amounts so repaid and shall
otherwise be in compliance with the provisions of Article Ten and (iv) the
Company or such Subsidiary shall apply the Net Cash Proceeds of such Asset Sale
within 180 days of receipt thereof, as follows:
(a) to the extent such Net Cash Proceeds are received from an Asset
Sale not involving the sale, transfer or disposition of Collateral
("Non-Collateral Proceeds"), to repay any Indebtedness secured by the
assets involved in such Asset Sale together with a concomitant permanent
reduction in the amount of such Indebtedness (including a permanent
reduction in committed amounts therefor in the case of any revolving
credit facility so repaid); and
(b) with respect to any Non-Collateral Proceeds remaining after
application pursuant to the preceding paragraph (a) and any Net Cash
Proceeds received from an Asset Sale involving Collateral ("Collateral
Proceeds") and any Net Awards (together with such remaining Non-Collateral
Proceeds and the Net Cash Proceeds from an Asset
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Sale involving Collateral, the "Asset Sale Available Proceeds Amounts"),
the Company shall make an offer to purchase (the "Asset Sale Offer") from
all Holders up to a maximum principal amount (expressed as an integral
multiple of $1,000) of Securities equal to the Asset Sale Available
Proceeds Amount at a purchase price equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided that the Company will not be required to apply pursuant
to this paragraph (b) Net Cash Proceeds received from any Asset Sale or
Net Awards if, and only to the extent that, such Net Cash Proceeds or Net
Awards are applied to or invested in Oil and Gas Related Assets, within
180 days of such Asset Sale and, if the Net Cash Proceeds or Net Awards so
invested included Collateral Proceeds, the property and assets
constituting such Oil and Gas Related Assets and any non-cash
consideration received are made subject to the Lien of the Security
Documents in the manner contemplated hereby. If at any time any non-cash
consideration received by the Company or any Subsidiary of the Company, as
the case may be, in connection with any Asset Sale is converted into or
sold or otherwise disposed of for cash, then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the
Net Cash Proceeds thereof shall be applied in accordance with this Section
4.17. The Company may defer the Asset Sale Offer until there is an
aggregate unutilized Asset Sale Available Proceeds Amount equal to or in
excess of $5,000,000 resulting from one or more Asset Sales (at which
time, the entire unutilized Asset Sale Available Proceeds Amount, and not
just the amount in excess of $5,000,000, shall be applied as required
pursuant to this paragraph). To the extent the Asset Sale Offer is not
fully subscribed to by Holders, the Company may obtain a release of the
unutilized portion of the Asset Sale Available Proceeds Amount from the
Lien of the Security Documents.
All Collateral Proceeds shall constitute Trust Moneys and shall be
delivered by the Company to the Trustee and shall be deposited in the
Collateral Account in accordance with the Indenture. Collateral Proceeds
so deposited may be withdrawn from the Collateral Account pursuant to the
Indenture as set forth in Article Eleven.
(c) In the event of the transfer of substantially all (but not all)
of the property and assets of the
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Company and its Subsidiaries as an entirety to a Person in a transaction
permitted under Section 5.01 hereof, the successor corporation shall be
deemed to have sold the properties and assets of the Company and its
Subsidiaries not so transferred for purposes of this Section 4.17, and
shall comply with the provisions of this covenant with respect to such
deemed sale as if it were an Asset Sale. In addition, the fair market
value of such properties and assets of the Company or its Subsidiaries
deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of
this Section 4.17.
(d) In the event of such an Asset Sale Offer, the Company shall
follow the procedures (including the notice requirements set forth in
Section 3.07).
Any amounts remaining after the purchase of Securities pursuant to
an Asset Sale Offer shall be returned by the Trustee to the Company.
SECTION 4.18. Limitation on Preferred Stock of Subsidiaries.
The Company shall not cause or permit any of its Subsidiaries to
issue any Preferred Stock (other than to the Company or to a wholly owned
Subsidiary of the Company) or permit any Person (other than the Company or a
wholly owned Subsidiary of the Company) to own or hold any Preferred Stock of
any Subsidiary of the Company or any Lien or security interest therein.
SECTION 4.19. Impairment of Security Interest.
Neither the Company nor any of its Subsidiaries will take or omit to
take any action which action or omission would have the result of adversely
affecting or impairing the security interest in favor of the Trustee, on behalf
of itself and the Holders, with respect to the Collateral, and neither the
Company nor any of its Subsidiaries shall grant to any Person, or suffer any
Person (other than the Company) to have (other than to the Trustee on behalf of
the Trustee and the Holders) any interest whatsoever in the Collateral other
than Liens securing the New Credit Facility and Liens permitted by the Security
Documents. Neither the Company nor any of its Subsidiaries will enter into any
agreement or instrument that by its terms requires the proceeds received from
any sale of Collateral to be applied to repay, redeem, defease or otherwise
acquire or retire any Indebtedness of any Person, other than
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pursuant to this Indenture, the Securities and the Security Documents.
SECTION 4.20. Excess Cash Flow Offer
In the event that the Company has Excess Cash Flow in excess of
$2,000,000 in any fiscal year, beginning with the fiscal year ending December
31, 1996, the Company will be required to make an offer to purchase (the "Excess
Cash Flow Offer") Notes from all Holders in an amount equal to 50% of all Excess
Cash Flow for such fiscal year (not just the amount in excess of $2,000,000) at
a purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, (the "Excess Cash Flow Available Proceeds
Amount") to the purchase date, which must be no later than 120 days from the end
of the fiscal year referred to above, other than as may be required by law (the
"Excess Cash Flow Purchase Date").
In the event of such an Excess Cash Flow Offer, the Company shall
follow the procedures (including the notice requirements) set forth in Section
3.07 of this Indenture. To the extent that an Excess Cash Flow Offer is not
fully subscribed, the Company may retain such unutilized portion of the Excess
Cash Flow for general corporate purposes.
SECTION 4.21. Equity Proceeds Offer
In the event the Company consummates on or prior to July 15, 1997 an
Equity Offering, then following such Equity Offering the Company shall promptly
make an offer to purchase from all Holders (an "Equity Proceeds Offer") on a
date (the "Equity Offer Purchase Date") not later than the 90th day after the
date of the consummation of such Equity Offering (such consummation date to be
determined without regard to the date of the consummation of any over-allotment
option granted by the Company to the underwriters, if any) at a purchase price
equal to 110% of the aggregate principal amount of Securities to be repurchased,
plus accrued and unpaid interest thereon, if any, to the Equity Offer Purchase
Date, an aggregate principal amount of Securities equal to the lesser of (i) the
maximum principal amount of Securities such that 60% of the aggregate principal
amount of Securities originally issued remains outstanding after completion of
the offer and (ii) the maximum principal amount of the Securities which could be
purchased with 50% of the amount of net proceeds received or receivable
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by the Company from such Equity Offering (the "Equity Offer Available Proceeds
Amount").
In the event of such an Equity Proceeds Offer, the Company shall
follow the procedures (including the notice requirements) set forth in Section
3.07 of this Indenture. To the extent that an Equity Proceeds Offer is not fully
subscribed, the Company may retain such unutilized portion of the proceeds for
the Equity Offering for general corporate purposes.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Consolidations and Sale of Assets.
(a) The Company shall not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and the Company's Subsidiaries) whether as an
entirety or substantially as an entirety to any Person unless: (i) either (1)
the Company shall be the surviving or continuing corporation or (2) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Company
and of the Company's Subsidiaries substantially as an entirety (the "Surviving
Entity") (x) shall be a corporation organized and validly existing under the
laws of the United States or any State thereof or the District of Columbia and
(y) shall expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the due and
punctual payment of the principal of, and premium, if any, and interest on all
of the Securities and the performance of every covenant of the Securities, this
Indenture, the Security Documents and the Registration Rights Agreement on the
part of the Company to be performed or observed and the Company shall have taken
all steps necessary or reasonably requested by the Trustee to protect and
perfect the security interests granted or purported to be granted to
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the Holders under the Security Documents; (ii) immediately after giving effect
to such transaction and the assumption contemplated by clause (i)(2)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness Incurred
or anticipated to be Incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, (1)
shall have a Consolidated Net Worth equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction and (2) shall be
able to Incur at least $1.00 of additional Indebtedness pursuant to paragraph
(b) of Section 4.04 hereof; provided that in determining the Consolidated Fixed
Charge Coverage Ratio of the Company or such Surviving Entity, as the case may
be, such ratio shall be calculated as if the transaction (including the
Incurrence of any Indebtedness or Acquired Indebtedness) took place on the first
day of the Four Quarter Period; (iii) immediately before and immediately after
giving effect to such transaction and the assumption contemplated by clause
(i)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness Incurred or anticipated to be Incurred
and any Lien granted in connection with or in respect of the transaction) no
Default and no Event of Default shall have occurred or be continuing; and (iv)
the Company or the Surviving Entity shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
of this Indenture and that all conditions precedent in this Indenture relating
to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties and assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
(c) Upon any such consolidation, merger, conveyance, lease or
transfer in accordance with the foregoing, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease or transfer is made will succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture
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with the same effect as if such successor had been named as the Company therein,
and thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture and the Securities.
(d) Each Subsidiary Guarantor (other than any Subsidiary Guarantor
whose Guarantee is to be released in accordance with the terms of the Guarantee
and this Indenture in connection with any transaction complying with the
provisions of Section 4.17) will not, and the Company will not cause or permit
any Subsidiary Guarantor to, consolidate with or merge with or into any Person
other than the Company or any other Subsidiary Guarantors unless: (i) the entity
formed by or surviving any such consolidation or merger (if other than the
Subsidiary Guarantor), or to which sale, lease, conveyance or other disposition
shall have been made, is a corporation organized and existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) such
entity assumes by supplemental indenture all of the obligations of the
Subsidiary Guarantor on the Guarantee; (iii) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; and (iv) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Company could
satisfy the provisions of clause (a)(ii) of this Section 5.01. Any merger or
consolidation of a Subsidiary Guarantor with and into the Company (with the
Company being the surviving entity) or another Subsidiary Guarantor that is a
wholly-owned Subsidiary of the Company need only comply with clause (a)(iv) of
this Section 5.01.
SECTION 5.02. Successor Corporation Substituted.
Upon any such consolidation, merger, conveyance, lease or transfer
in accordance with the foregoing, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease or transfer is made will succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor had been named as the Company therein, and
thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture, the Securities, the
Security Documents and the Registration Rights Agreement.
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Security when the same
becomes due and payable and such failure continues for a period of 30
days; or
(2) the Company fails to pay the principal of or premium on any
Security, when such principal or premium becomes due and payable, whether
at maturity, upon redemption or otherwise (including the failure to make a
payment to purchase securities tendered pursuant to a Change of Control
Offer or an Asset Sale Offer); or
(3) the Company defaults in the observance or performance of any
other covenant or agreement contained in this Indenture or any Security
Document which default continues for a period of 30 days after the Company
receives written notice specifying the default from the Trustee or from
Holders of at least 25% in principal amount of outstanding Securities
(except in the case of a default with respect to Section 5.01 hereof,
which will constitute Events of Default with notice but without passage of
time); or
(4) the Company defaults under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Company or of any Subsidiary of the
Company (or the payment of which is guaranteed by the Company or any
Subsidiary of the Company) which default (a) is caused by a failure to pay
principal of or premium, if any, on such Indebtedness after any applicable
grace period provided in such Indebtedness on the date of such default (a
"payment default"), or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a payment
default or the maturity of which has been so accelerated, aggregates
$2,500,000; or
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(5) one or more judgments in an aggregate amount in excess of
$2,500,000 (which are not covered by third-party insurance as to which a
financially sound insurer has not disclaimed coverage) being rendered
against the Company or any of its Subsidiaries and such judgments remain
undischarged, or unstayed or unsatisfied for a period of 60 days after
such judgment or judgments become final and non-appealable; or
(6) the Company or any of its Subsidiaries (A) admits in writing its
inability to pay its debts generally as they become due, (B) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (C) consents to the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (D) consents to the appointment of a Custodian of it or
for substantially all of its property, (E) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it,
(F) makes a general assignment for the benefit of its creditors, or (G)
takes any corporate action to authorize or effect any of the foregoing;
(7) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any of its Subsidiaries in
an involuntary case or proceeding under any Bankruptcy Law, which shall
(A) approve as properly filed a petition seeking reorganization,
arrangement, adjustment or composition in respect of the Company or any of
its Subsidiaries, (B) appoint a Custodian of the Company or any of its
Subsidiaries or for substantially all of its property or (C) order the
winding-up or liquidation of its affairs; and such judgment, decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days;
(8) any of the Security Documents cease to be in full force and
effect (other than in accordance with their respective terms), or any of
the Security Documents cease to give the Trustee the Liens, rights, powers
and privileges purported to be created thereby, or any Security Document
is declared null and void, or the Company or any of its applicable
Subsidiary Guarantors denies any of its obligations under any Security
Document or any Collateral becomes subject to any Lien other than the
Liens created or permitted by the Security Documents or this Indenture; or
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(9) any of the Guarantees cease to be in full force and effect, or
any of the Guarantees are declared to be null and void and unenforceable
or any of the Guarantees are found to be invalid or any of the Subsidiary
Guarantors denies its liability under its Guarantee (other than by reason
of release of a Subsidiary Guarantor in accordance with the terms of this
Indenture).
The Trustee shall, within 90 days after the occurrence of any
Default known to it, give to the holders of Securities notice of such Default;
provided that, except in the case of a Default in the payment of principal of or
interest on any of the Securities, 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 of Securities.
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (6) or (7) above with respect to the Company) occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the then outstanding Securities may declare the
unpaid principal of, premium, if any, and accrued and unpaid interest on, all
the Securities then outstanding to be due and payable, by a notice in writing to
the Company (and to the Trustee, if given by Holders) and upon such declaration
such principal amount, premium, if any, and accrued and unpaid interest will
become immediately due and payable. If an Event of Default with respect to the
Company specified in clauses (6) or (7) above occurs, all unpaid principal of,
and premium, if any, and accrued and unpaid interest on, the Securities then
outstanding will ipso facto become due and payable without any declaration or
other act on the part of the Trustee or any Holder. The Holders of a majority in
principal amount of the Securities then outstanding by notice to the Trustee may
rescind an acceleration and its consequences if (i) all existing Events of
Default, other than the non-payment of the principal of the Securities which has
become due solely by such declaration of acceleration, have been cured or
waived, (ii) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid, and (iii) the
rescission would not
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conflict with any judgment or decree of a court of competent jurisdiction.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities, this Indenture or, subject to
the Intercreditor Agreement, the Security Documents.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Each Securityholder, by accepting a Security, (a) acknowledges that
the exercise of remedies by the Trustee with respect to the Collateral is
subject to the terms and conditions of the Security Documents (including without
limitation the Intercreditor Agreement) and the proceeds received upon
realization of the Collateral shall be applied by the Trustee in accordance with
Section 6.10 hereof, (b) acknowledges and consents to the terms of the Security
Documents (including the Intercreditor Agreement) and to the Trustee's
performance of its agreements thereunder and (c) acknowledges and consents to
the restrictions and obligations imposed by the Intercreditor Agreement on the
Trustee.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of not less
than a majority in principal amount of the outstanding Securities by notice to
the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on any
Security as specified in clauses (1) and (2) of Section 6.01. The Company shall
deliver to the Trustee an Officers' Certificate stating that the requisite
percentage of Holders have consented to such waiver and attaching copies of such
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consents. When a Default or Event of Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of not less than a majority in
principal amount of the outstanding Securities may 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 it. Subject to Section 7.01, however,
the Trustee may refuse to follow any direction that conflicts with any law or
this Indenture or any Security Document, that the Trustee determines may be
unduly prejudicial to the rights of another Securityholder, or that may involve
the Trustee in personal liability; provided that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.
In the event the Trustee takes any action or follows any direction
pursuant to this Indenture or any Security Document, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
any loss or expense caused by taking such action or following such direction.
SECTION 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holder or Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 60-day period the Holder or Holders of a majority in
principal amount of the outstanding
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Securities do not give the Trustee a direction which, in the opinion of
the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in such Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder except to the extent
that the institution or prosecution of such suit or entry of judgment therein
would, under applicable law, result in the surrender, impairment or waiver of
the Lien of this Indenture and the Security Documents upon the Collateral.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount of principal
and accrued interest and fees remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per annum
borne by the Securities and 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,
including, without limitation, as set forth in Sections 2.3, 3.5, 4.3 and 5.14
of the Mortgage.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders
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allowed in any judicial proceedings relating to the Company, its creditors or
its property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Securityholder 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 Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money or property in the following order,
subject to the Intercreditor Agreement:
First: to the Trustee for amounts due under Section 7.07 and for
amounts due under the Security Documents (other than payments of interest
and principal described in the next subclause);
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company or the Subsidiary Guarantors, as their
respective interests may appear.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Securityholders pursuant to this Section
6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for
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any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or
Holders of more than 10% in principal amount of the outstanding Securities.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default actually known to the Trustee has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs. The Trustee will be
under no obligation to exercise any of its rights or powers under this Indenture
at the request of any of the holders of Securities, unless they shall have
offered to the Trustee security and indemnity satisfactory to it.
(b) Except during the continuance of an Event of Default actually
known to the Trustee:
(1) The Trustee need perform only those duties as are specifically
set forth herein and no others and no implied covenants or obligations
shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions and such
other documents delivered to it pursuant to Section 13.04 hereof furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall
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examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive an indemnity satisfactory to it in
its sole discretion against such risk, liability, loss, fee or expense which
might be incurred by it in compliance with such request or direction. Without
limiting the foregoing and notwithstanding any other provision of this Indenture
or of the Security Documents, the Trustee shall not be obligated to foreclose
upon any Collateral or otherwise commence any Enforcement (as defined in the
Intercreditor Agreement) unless and until the Trustee (i) receives (if requested
by, but at no cost to, the Trustee) new environmental reports pertaining to the
Collateral that is the subject of such foreclosure or Enforcement action and
(ii) is satisfied with scope and the results of any such environmental reports.
The Company shall pay for any such environmental reports. In the event the
Company is unable or refuses to pay for such new environmental reports, the
Trustee shall promptly notify the Holders, who may (but who shall not be
obligated to) deposit with the Trustee sufficient funds to pay for the new
environmental reports.
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(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to this Section 7.01.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and an Opinion of Counsel, which shall conform to
the provisions of Section 11.05. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other
than an agent who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion
of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in accordance
with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee
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reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
(g) Subject to Section 9.02 hereof, the Trustee may (but shall not
be obligated to), without the consent of the Holders, give any consent,
waiver or approval required under the Security Documents or by the terms
hereof with respect to the Collateral, but shall not without the consent
of the Holders of not less than a majority in aggregate principal amount
of the Securities at the time outstanding (i) give any consent, waiver or
approval or (ii) agree to any amendment or modification of the Security
Documents, in each case, that shall have a material adverse effect on the
interests of any Holder. The Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any
consent, waiver, approval, amendment or modification shall have a material
adverse effect on the interests of any Holder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the value or condition of the Collateral or any part thereof, or as to the
title of the Company thereto, or as to the security afforded thereby or hereby,
or as to the validity or genuineness of any Collateral pledged and deposited
with the Trustee, or the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale of
Securities or any statement in the Securities other than the Trustee's
certificate of authentication. The Trustee makes no representations with respect
to the effectiveness or adequacy of this Indenture or any Security Document or
the validity or perfection, if any, of Liens granted under this Indenture or the
Security Documents. The Trustee shall not be responsible
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for independently ascertaining or maintaining such validity or perfection, if
any, and shall be fully protected in relying upon certificates and opinions
delivered to it in accordance with the terms of this Indenture or the Security
Documents.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and the
Trustee receives actual notice of such event, the Trustee shall mail to each
Securityholder, as their names and addresses appear on the Securityholder list
described in Section 2.05, notice of the uncured Default or Event of Default
within 90 days after the Trustee receives such notice. Except in the case of a
Default or an Event of Default in payment of principal of, or interest on, any
Security, including the failure to make payment on (i) the Change of Control
Payment Date pursuant to a Change of Control Offer or (ii) the Purchase Date
pursuant to a Purchase Offer, or the Trustee may withhold the 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 withholding the notice is in the interest of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
This Section 7.06 shall not be operative as a part of this Indenture
until this Indenture is qualified under the TIA, and, until such qualification,
this Indenture shall be construed as if this Section 7.06 were not contained
herein.
Within 60 days after each May 15 beginning with May 15, 1996, the
Trustee shall, to the extent that any of the events described in TIA section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Securityholder a brief report dated as of such May 15 that complies with
TIA section 313(a). The Trustee also shall comply with TIA sections 313(b)
313(c) and 313(d).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each securities
exchange, if any, on which the Securities are listed.
The Company shall notify the Trustee if the Securities become listed
on any securities exchange or of any delisting thereof.
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SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee and Co-trustees from time to
time reasonable compensation for its services hereunder and under the Security
Documents (which shall be agreed to from time to time by the Company and the
Trustee or Co-trustee). The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances (including reasonable fees and expenses of counsel) incurred or
made by it in addition to the compensation for its services, except any such
disbursements, expenses and advances as may be attributable to the Trustee's
negligence or bad faith. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel and any taxes or other expenses incurred by a trust created
pursuant to Section 8.01 hereof.
The Company shall indemnify the Trustee and each predecessor trustee
for, and hold it harmless against, any loss, liability, claim, damage or expense
incurred by the Trustee without negligence or willful misconduct on its part
arising out of or in connection with the administration of this trust and its
duties under this Indenture and the Security Documents, including the reasonable
expenses and attorneys' fees of defending itself against any claim of liability
arising hereunder. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. However, the
failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense (and may employ its own counsel) at the Company's
expense. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee as a result of the violation of this
Indenture by the Trustee if such violation arose from the Trustee's negligence
or bad faith.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a senior claim prior to the Securities against all money
or property held or collected by the Trustee, in its capacity as Trustee.
When the Trustee incurs expenses or renders services after an Event
of Default specified in clause (6) or (7) of Section 6.01 occurs, the expenses
(including the reasonable
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fees and expenses of its agents and counsel) and the compensation for the
services shall be preferred over the status of the Holders in a proceeding under
any Bankruptcy Law and are intended to constitute expenses of administration
under any Bankruptcy Law. The Company's obligations under this Section 7.07 and
any claim arising hereunder shall survive the resignation or removal of any
Trustee, the discharge of the Company's obligations pursuant to Article Eight
and any rejection or termination under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.07, all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under
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this Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Any resignation or removal of the Trustee pursuant to this Indenture
shall be deemed to be a resignation or removal of the Trustee (including Steven
R. Patterson with respect to the assets and property in California and Texas) in
its capacity as Trustee under the Security Documents and any appointment of a
successor Trustee pursuant to this Indenture shall be deemed to be an
appointment of a successor Trustee under the Security Documents and such
successor shall assume all of the obligations of the Trustee in its capacity as
Trustee under the Security Documents.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee (and successor Trustee
under the Security Documents).
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA sections 310(a)(1) and 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
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section 310(b); provided, however, that there shall be excluded from the
operation of TIA section 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such exclusion set forth in
TIA section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee, in its capacity as Trustee hereunder and under the
Security Documents shall comply with TIA section 311(a), excluding any creditor
relationship listed in TIA section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA section 311(a) to the extent indicated.
SECTION 7.12. Appointment of Co-Trustee.
If the Trustee deems it necessary or desirable in connection with
the Collateral and/or the enforcement of the Security Documents, the Trustee may
appoint a co-Trustee with such powers of the Trustee as may be designated by the
Trustee at the time of such appointment (including acting as separate trustee of
any Collateral), and the Company shall, on request, execute and deliver to such
co-Trustee any deeds, conveyances or other instruments required by such
co-Trustee so appointed by the Trustee to more fully and certainly vest in and
confirm to such co-Trustee its rights, powers, trusts, duties and obligations
hereunder.
All rights (including rights to indemnification hereunder), powers,
duties and obligations conferred or imposed upon the Trustee shall be conferred
or imposed upon and exercised or performed by the Trustee or jointly by the
Trustee and such co-Trustees, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-Trustees. No Trustee or co-Trustee shall be personally liable by reason
of any act or omission of any other Trustee or co-Trustee hereunder. Steven R.
Patterson is hereby appointed as co-Trustee for the limited purposes of acting
as trustee under the Mortgages pertaining to Collateral located in the states of
California and Texas. Any co-Trustee appointed pursuant to this Section 7.12 may
be removed by the Trustee pursuant to the terms of this Agreement and may be
removed and may
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resign pursuant to the provisions of the applicable Security Document and of
this Indenture.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution, at any time,
with respect to the Securities, elect to have either paragraph (b) or paragraph
(c) below be applied to the outstanding Securities upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company and the Subsidiary Guarantors
shall be deemed to have been released and discharged from its obligations with
respect to the outstanding Securities on the date the conditions set forth below
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of the Sections
and matters under this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned, except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in paragraph (d) below and as more fully set forth in such paragraph,
payments in respect of the principal of and interest on such Securities when
such payments are due and any Subsidiary Guarantor's obligations in respect
thereof, and (ii) obligations listed in Section 8.03, subject to compliance with
this Section 8.01. The Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) below with
respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article 5 and in Sections
4.03 through
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4.18 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 to be not "outstanding" for the
purpose 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 any 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 6.01(3), nor shall any event referred to in Section 6.01(4), (5)
or (8) thereafter constitute a Default or an Event of Default thereunder but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Securities:
(1) The Company shall have irrevocably deposited in trust with the
Trustee, pursuant to an irrevocable trust and security agreement in form
and substance satisfactory to the Trustee, U.S. Legal Tender or direct
non-callable obligations of, or non-callable obligations guaranteed by,
the United States of America for the payment of which obligation or
guarantee the full faith and credit of the United States of America is
pledged ("U.S. Government Obligations") maturing as to principal and
interest in such amounts and at such times as are sufficient, without
consideration of the reinvestment of such interest and after payment of
all Federal, state and local taxes or other charges or assessments in
respect thereof payable by the Trustee, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof (in form and substance reasonably satisfactory to
the Trustee) delivered to the Trustee, to pay the principal of, premium,
if any, and interest on all the outstanding Securities on the dates on
which any such payments are due and payable in accordance with the terms
of this Indenture and of the Securities;
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(2) Such deposits shall not cause the Trustee to have a conflicting
interest as defined in and for purposes of the TIA;
(3) The Trustee shall have received Officers' Certificates stating
that no Default or Event of Default or event which with notice or lapse of
time or both would become a Default or an Event of Default with respect to
the Securities shall have occurred and be continuing on the date of such
deposit or, insofar as Section 6.01(6) or (7) is concerned, at any time
during the period ending on the 91st day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied
until the expiration of such period);
(4) The Trustee shall have received Officers' Certificates stating
that such deposit will not result in a Default under this Indenture or a
breach or violation of, or constitute a default under, any other material
instrument or agreement to which the Company or any of its Subsidiaries is
a party or by which it or its property is bound;
(5) (i) In the event the Company elects paragraph (b) hereof, the
Company shall deliver to the Trustee an Opinion of Counsel in the United
States, in form and substance reasonably satisfactory to the Trustee to
the effect that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the Issue
Date, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel
shall state that Holders of the Securities will not recognize income gain
or loss for Federal income tax purposes as a result of such deposit and
the defeasance contemplated hereby and will be subject to Federal income
taxes in the same manner and at the same times as would have been the case
if such deposit and defeasance had not occurred, or (ii) in the event the
Company elects paragraph (c) hereof, the Company shall deliver to the
Trustee an Opinion of Counsel in the United States, in form and substance
reasonably satisfactory to the Trustee, to the effect that Holders of the
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and the defeasance contemplated
hereby and will be subject to Federal income tax in the same amounts and
in the same manner and at the same
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times as would have been the case if such deposit and defeasance had not
occurred;
(6) The deposit shall not result in the Company, the Trustee or the
trust becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940;
(7) The Company shall have delivered to the Trustee an Officer's
Certificate, in form and substance reasonably satisfactory to the Trustee,
stating that the deposit under clause (1) was not made by the Company or
any Subsidiary with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or any Subsidiary or others;
(8) The Company shall have delivered to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee, to
the effect that, (A) the trust funds will not be subject to the rights of
holders of Indebtedness of the Company or any Subsidiary Guarantor other
than the Securities and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the deposit
and that no Holder of Securities is an insider of the Company, after the
passage of 90 days following the deposit, the trust funds will not be
subject to any applicable bankruptcy, insolvency, reorganization or
similar law affecting creditors' rights generally; and
(9) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with; provided, however, that no deposit
under clause (1) above shall be effective to terminate the obligations of
the Company under the Securities, the Security Documents or this Indenture
prior to 90 days following any such deposit.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
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SECTION 8.02. Satisfaction and Discharge.
In addition to the Company's rights under Section 8.01, the Company
may terminate all of its obligations under this Indenture (subject to Section
8.03) when:
(1) all Securities theretofore authenticated and delivered (other
than Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.07) have been delivered to
the Trustee for cancellation;
(2) the Company has paid or caused to be paid all other sums payable
hereunder and under the Securities by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the satisfaction and discharge of
this Indenture have been complied with.
SECTION 8.03. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture and
of the Securities referred to in Section 8.01 or 8.02, the respective
obligations of the Company and the Trustee under Sections 2.02, 2.03, 2.04,
2.05, 2.06, 2.07, 2.10, 2.12, 2.13, 4.01, 4.02, 6.07, Article Seven, Sections
8.05, 8.06 and 8.07 shall survive until the Securities are no longer
outstanding, and thereafter the obligations of the Company and the Trustee under
Sections 7.07, 8.05, 8.06 and 8.07 shall survive. Nothing contained in this
Article Eight shall abrogate any of the obligations or duties of the Trustee
under this Indenture.
SECTION 8.04. Acknowledgment of Discharge by Trustee.
Subject to Section 8.07, after (i) the conditions of Section 8.01 or
8.02 have been satisfied, (ii) the Company has paid or caused to be paid all
other sums payable hereunder by the Company and (iii) the Company has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company's
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obligations under this Indenture except for those surviving obligations
specified in Section 8.03.
SECTION 8.05. Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it pursuant to this Article Eight in the irrevocable
trust established pursuant to Section 8.01. The Trustee shall apply the
deposited U.S. Legal Tender or the U.S. Government Obligations, together with
earnings thereon, through the Paying Agent, in accordance with this Indenture
and the terms of the irrevocable trust agreement established pursuant to Section
8.01, to the payment of principal of and interest on the Securities. The U.S.
Legal Tender or U.S. Government Obligations so held in trust and deposited with
the Trustee in compliance with Section 8.01 shall not be part of the trust
estate under this Indenture, but shall constitute a separate trust fund for the
benefit of all Holders entitled thereto.
SECTION 8.06. Repayment to the Company or Subsidiary Guarantors; Unclaimed
Money.
Subject to Sections 7.07 and 8.01, the Trustee shall promptly pay to
the Company, or if deposited with the Trustee by any Subsidiary Guarantor, to
such Subsidiary Guarantor, upon receipt by the Trustee of an Officers'
Certificate, any excess money, determined in accordance with Section 8.01, held
by it at any time. The Trustee and the Paying Agent shall pay to the Company or
any Subsidiary Guarantor, as the case may be, upon receipt by the Trustee or the
Paying Agent, as the case may be, of an Officers' Certificate, any money held by
it for the payment of principal, premium, if any, or interest that remains
unclaimed for one year after payment to the Holders is required; provided,
however, that the Trustee and the Paying Agent before being required to make any
payment may, but need not, at the expense of the Company cause to be published
once in a newspaper of general circulation in the City of New York or mail to
each Holder entitled to such money notice that such money remains unclaimed and
that after a date specified therein, which shall be at least 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company of any
Subsidiary Guarantor, as the case may be, Security holders entitled to money
must look solely to the Company for payment as general creditors unless an
applicable abandoned property law designates another person, and all
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liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
and only then the Company's and each Subsidiary Guarantor's, if any, obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had been made pursuant to this Indenture until such time as
the Trustee is permitted to apply all such money or U.S. Government Obligations
in accordance with this Indenture; provided, however, that if the Company or the
Subsidiary Guarantors, as the case may be, have made any payment of principal
of, premium, if any, or interest on any Securities because of the reinstatement
of its obligations, the Company or the Subsidiary Guarantors, as the case may
be, shall be, subrogated to the rights of the holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture, the Security Documents or the
Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to evidence the succession in accordance with Article V hereof
of another Person to the Company and the assumption by any such successor
of the covenants of the Company herein and in the Securities;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
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(4) to make any other change that does not materially adversely
affect the rights of any Securityholders hereunder or under the Security
Documents; or
(5) to comply with any requirements of the SEC in connection with
the qualification of this Indenture under the TIA; or
(6) to add or release any Subsidiary Guarantor pursuant to the terms
of this Indenture.
provided that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate, each stating that such amendment or supplement
complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Securities, may amend or supplement this Indenture, the Security Documents or
the Securities, without notice to any other Securityholders. Subject to Section
6.07, the Holder or Holders of a majority in aggregate principal amount of the
outstanding Securities may waive compliance by the Company with any provision of
this Indenture, the Security Documents or the Securities without notice to any
other Securityholder. Without the consent of each Securityholder affected,
however, no amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, may:
(1) change the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver of any provision of this
Indenture, the Security Documents, the Securities or the Guarantees;
(2) reduce the rate or change the time for payment of interest,
including default interest, on any Security;
(3) reduce the principal amount of any Security;
(4) change the Maturity Date of any Security, or alter the
redemption or repurchase provisions contained in this Indenture or the
Securities in a manner adverse to any Holder;
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(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of and interest on
such Security on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal amount of
the Securities to waive Defaults or Events of Default;
(6) make any changes in Section 6.04, 6.07 or this Section 9.02;
(7) make the principal of, or the interest on any Security payable
in money other than as provided for in this Indenture, the Security
Documents, the Securities and the Guarantees as in effect on the date
hereof;
(8) affect the ranking, or with respect to Collateral, the priority,
of the Securities or the Guarantees, in each case in a manner adverse to
the Holders;
(9) amend, modify or change the obligation of the Company to make or
consummate a Change of Control Offer, a Purchase Offer or waive any
default in the performance thereof or modify any of the provisions or
definitions with respect to any such offers; or
(10) release any Guarantor from any of its obligations under its
Guarantee or the Indenture otherwise than in accordance with the terms of
the Indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Compliance with TIA.
From the date on which this Indenture is qualified under the TIA,
every amendment, waiver or supplement of this
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Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by notice to the
Trustee or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such consent)
to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
persons who were Holders at such record date (or their duly designated proxies),
and only those persons, shall be entitled to revoke any consent previously
given, whether or not such persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (10) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
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SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects the changed
terms.
SECTION 9.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and the Security Documents and constituted the legal, valid and
binding obligations of the Company enforceable in accordance with its terms.
Such Opinion of Counsel shall be at the expense of the Company, and the Trustee
shall have a lien under Section 7.07 for any such expense.
ARTICLE TEN
COLLATERAL AND SECURITY
SECTION 10.01. Collateral and Security Documents; Additional Collateral.
(a) In order to secure the due and punctual payment of the principal
of and interest on the Securities when and as the same shall be due and payable,
whether on an Interest Payment Date, at maturity, by acceleration, purchase,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest (to the extent permitted by law), if any, on the Securities and the
performance of all other obligations of the Company to the Holders or the
Trustee under this Indenture and the Securities, the Company, certain of its
Subsidiary
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Guarantors and the Trustee have simultaneously with the execution of this
Indenture entered into the Security Documents pursuant to which the Company and
its applicable Subsidiary Guarantors have granted to the Trustee or Co-Trustee
for the benefit of the Securityholders a second priority Lien on and security
interest in the Collateral. The Trustee, the Company and its applicable
Subsidiary Guarantors hereby agree that the Trustee holds the Collateral in
trust for the benefit of the Securityholders pursuant to the terms of this
Indenture and the Security Documents. The Trustee is also authorized and
directed to enter into the Intercreditor Agreement.
(b) Each Securityholder, by accepting a Security, agrees to all of
the terms and provisions of the Security Documents, as the same may be amended
from time to time pursuant to the provisions of the Security Documents and this
Indenture.
SECTION 10.02. Recording and Opinions.
(a) The Company shall, and shall cause its applicable Subsidiary
Guarantors to, take or cause to be taken all action required to perfect,
maintain, preserve and protect the Lien on and security interest in the
Collateral granted by the Security Documents, including, without limitation, the
filing of financing statements, continuation statements and any instruments of
further assurance, in such manner and in such places as may be required by law
fully to preserve and protect the rights of the Holders and the Trustee under
this Indenture and the Security Documents to all property comprising the
Collateral. The Company shall from time to time promptly pay all financing and
continuation statement recording and/or filing fees, charges and taxes relating
to this Indenture and the Security Documents, any amendments thereto and any
other instruments of further assurance required pursuant to the Security
Documents.
(b) The Company shall furnish to the Trustee, at such time as
required by Section 314(b) of the TIA, Opinion(s) of Counsel either (a)
substantially to the effect that, in the opinion of such counsel, this Indenture
and the grant of a security interest in the Collateral intended to be made by
the Security Documents and all other instruments of further assurance,
including, without limitation, financing statements, have been properly recorded
and filed to the extent necessary to perfect the security interests in the
Collateral created by the Security Documents and reciting the details of such
action, and stating that as to the security interests created pursuant to
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the Security Documents, such recordings and filings are the only recordings and
filings necessary to give notice thereof and that no re-recordings or refilings
are necessary to maintain such notice (other than as stated in such opinion), or
(b) to the effect that, in the opinion of such counsel, no such action is
necessary to perfect such security interests.
(c) To the extent required by the TIA, the Company shall furnish to
the Trustee on July 15 in each year, beginning with July 15, 1996, an Opinion of
Counsel, dated as of such date, either (i)(A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, filing,
re-recording and refiling of all supplemental indentures, financing statements,
continuation statements and other documents as is necessary to maintain the Lien
of the Security Documents and reciting with respect to the security interests in
the Collateral the details of such action or referring to prior Opinions of
Counsel in which such details are given, and (B) stating that, based on relevant
laws as in effect on the date of such Opinion of Counsel, all financing
statements, continuation statements and other documents have been executed and
filed that are necessary as of such date and during the succeeding 24 months
fully to maintain the security interest of the Securityholders and the Trustee
hereunder and under the Security Documents with respect to the Collateral, or
(ii) stating that, in the opinion of such counsel, no such action is necessary
to maintain such Lien.
SECTION 10.03. Release of Collateral.
(a) The Trustee, in its capacity as Trustee under the Security
Documents, shall not at any time release Collateral from the security interest
created by this Indenture and the Security Documents unless such release is in
accordance with the provisions of this Indenture and the Security Documents.
(b) At any time when an Event of Default shall have occurred and be
continuing, no release of Collateral pursuant to the provisions of this
Indenture and the Security Documents shall be effective as against the Holders
of the Securities.
(c) The release of any Collateral from the terms of the Security
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Security Documents. To the extent
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applicable, the Company shall, and shall cause its applicable Subsidiary
Guarantors to, cause TIA Section 314(d) relating to the release of property from
the Lien of the Security Documents and relating to the substitution therefor of
any property to be subjected to the Lien of the Security Documents to be
complied with. Any certificate or opinion required by TIA Section 314(d) may be
made by an Officer of the Company or any applicable Subsidiary Guarantor, except
in cases where TIA Section 314(d) requires that such certificate or opinion be
made by an independent Person, which Person shall be an independent engineer,
appraiser or other expert selected or approved by the Trustee in the exercise of
reasonable care. A Person is "independent" if such Person (a) is in fact
independent, (b) does not have any direct financial interest or any material
indirect financial interest in the Company or any Subsidiary Guarantor or in any
Affiliate of the Company or of any Subsidiary Guarantor and (c) is not an
officer, employee, promoter, underwriter, trustee, partner or director or person
performing similar functions to any of the foregoing for the Company or any
Subsidiary Guarantor. The Trustee shall be entitled to receive and rely upon a
certificate provided by any such Person confirming that such Person is
independent within the foregoing definition.
SECTION 10.04. Possession and Use of Collateral.
Subject to and in accordance with the provisions of this Indenture
and the Security Documents, so long as no Event of Default shall have occurred
and be continuing, the Company and its applicable Subsidiary Guarantors shall
have the right to remain in possession and retain exclusive control of the
Collateral (other than Trust Moneys held by the Trustee), to operate, manage,
develop, lease, use, consume and enjoy the Collateral (other than Trust Moneys
held by the Trustee), to alter or repair any Collateral consisting of machinery
or equipment so long as such alterations and repairs do not diminish the value
thereof or impair the Lien of the Security Documents thereon and to collect,
receive, use, invest and dispose of the reversions, remainders, interest, rents,
lease payments, issues, profits, revenues, proceeds and other income thereof.
SECTION 10.05. Specified Releases of Collateral.
(a) Satisfaction and Discharge; Defeasance. The Company and its
applicable Subsidiary Guarantors shall be entitled to obtain a full release of
all of the Collateral from the Liens of this Indenture and of the Security
Documents upon
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compliance with the conditions precedent set forth in Section 8.02 for
satisfaction and discharge of this Indenture or for defeasance pursuant to
Section 8.01(d). Upon delivery by the Company and its applicable Subsidiary
Guarantors to the Trustee of an Officers' Certificate and an Opinion of Counsel,
each to the effect that such conditions precedent have been complied with (and
which may be the same Officers' Certificate and Opinion of Counsel required by
Article Eight), the Trustee shall forthwith take all necessary action (at the
request of and the expense of the Company) to release and reconvey to the
Company all of the Collateral, and shall deliver such Collateral in its
possession to the Company and its applicable Subsidiary Guarantors including,
without limitation, the execution and delivery of releases and satisfactions
wherever required.
(b) Dispositions of Collateral Permitted by Section 4.17. The
Company and its applicable Subsidiary Guarantors shall be entitled to obtain a
release of, and the Trustee shall release, items of Collateral (the "Released
Interests") subject to an Asset Sale upon compliance with the condition
precedent that the Company and its applicable Subsidiary Guarantors shall have
delivered to the Trustee the following:
(i) Company Order. A Company Order requesting release of Released
Interests, such Company Order (A) specifically describing the proposed
Released Interests, (B) specifying the value of such Released Interests on
a date within 60 days of the Company Order (the "Valuation Date"), (C)
stating that the purchase price to be received is at least equal to the
fair market value of the Released Interests, (D) stating that the release
of such Released Interests will not interfere with or impede the Trustee's
ability to realize the value of the remaining Collateral and will not
impair the maintenance and operation of the remaining Collateral, (E)
confirming the sale of, or an agreement to sell, such Released Interests
in a bona fide sale to a Person that is not an Affiliate of the Company
or, in the event that such sale is to a Person that is such an Affiliate,
confirming that such sale is being made in accordance with Section 4.12,
(F) certifying that such Asset Sale complies with the terms and conditions
of Section 4.17 hereof and (G) in the event that there is to be a
substitution of property for the Collateral subject to the Asset Sale,
specifying the property intended to be substituted for the Collateral to
be disposed of;
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(ii) Officers' Certificate. An Officers' Certificate certifying that
(A) such Asset Sale covers only the Released Interests and complies with
the terms and conditions of an Asset Sale pursuant to Section 4.17, (B)
all Net Cash Proceeds from the sale of any of the Released Interests will
be applied pursuant to Section 4.17, (C) there is no Default or Event of
Default in effect or continuing on the date thereof, the Valuation Date or
the date of such Asset Sale, (D) the release of the Collateral will not
result in a Default or Event of Default hereunder and (E) all conditions
precedent to such release have been complied with; and
(iii) Compliance with TIA and Other Documentation. All certificates,
opinions and other documentation required by the TIA or Section 10.03 of
this Indenture, if any, and, in the event there is to be a substitution of
property for the Collateral subject to the Asset Sale, all documentation
necessary to effect the substitution of such new Collateral.
Upon compliance by the Company or any applicable Subsidiary
Guarantor with the condition precedent set forth above, the Trustee shall cause
to be released and reconveyed to the Company or such applicable Subsidiary
Guarantor, the Released Interests.
(c) Eminent Domain and Other Governmental Takings. The Company and
its applicable Subsidiary Guarantors shall be entitled to obtain a release of,
and the Trustee shall release, items of Collateral taken by eminent domain or
sold pursuant to the exercise by the United States of America or any State,
municipality or other governmental authority of any right which it may then have
to purchase, or to designate a purchaser or to order a sale of, all of any part
of the Collateral, upon compliance with the condition precedent that the Company
and its applicable Subsidiary Guarantors shall have delivered to the Trustee the
following:
(i) Officers' Certificate. An Officers' Certificate certifying that
(A) such Collateral has been taken by eminent domain and the amount of the
award therefor, or that such property has been sold pursuant to a right
vested in the United States of America, or a State, municipality or other
governmental authority to purchase, or to designate a purchaser, or order
a sale of such Collateral and the
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amount of the proceeds of such sale, and (B) all conditions precedent to
such release have been complied with;
(ii) Eminent Domain Award. Cash equal to the amount of the award for
such property or the proceeds of such sale, to be held as Trust Moneys
subject to the disposition thereof pursuant to Article Eleven hereof; and
(iii) Compliance with TIA. All opinions, certificates and other
documentation required by the TIA or Section 10.03 of this Indenture, if
any.
Upon compliance by the Company or any applicable Subsidiary
Guarantor with the condition precedent set forth above, the Trustee shall cause
to be released and reconveyed to the Company or such applicable Subsidiary
Guarantor, the aforementioned items of Collateral.
SECTION 10.06. Disposition of Collateral Without Release.
So long as no Event of Default shall have occurred and be continuing
and subject to the requirements of Section 314 of the TIA, the Company and any
applicable Subsidiary Guarantor may, without any release or consent by the
Trustee, sell or otherwise dispose of any machinery, equipment, furniture,
apparatus, tools or implements or other similar property subject to the Lien of
the Security Documents, which (i) in any single transaction has a fair market
value of $25,000 (or if such $25,000 amount referred to in TIA Section 314(d)(1)
increases then to such increased amount) or less or (ii) shall have become worn
out, obsolete or otherwise in need of replacement or repair; provided that, in
the case of this clause (ii) such sale or other disposition is in conjunction
with a substantially concurrent transaction whereby additional personal property
is made subject to the Lien of the Security Documents.
SECTION 10.07. Form and Sufficiency of Release.
In the event that the Company or any applicable Subsidiary Guarantor
has sold, exchanged, or otherwise disposed of or proposes to sell, exchange or
otherwise dispose of any portion of the Collateral that under the provisions of
Section 10.05 or 10.06 may be sold, exchanged or otherwise disposed of by the
Company or any applicable Subsidiary Guarantor, and the Company or such
applicable Subsidiary Guarantor requests the Trustee to furnish a written
disclaimer, release or quit-claim of any interest in such property under this
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Indenture and the Security Documents, the Trustee, in its capacity as Trustee
under the Security Documents, shall execute, acknowledge and deliver to the
Company (in proper and recordable form) such an instrument promptly after
satisfaction of the conditions set forth herein for delivery of any such
release. Notwithstanding the preceding sentence, all purchasers and grantees of
any property or rights purporting to be released herefrom shall be entitled to
rely upon any release executed by the Trustee hereunder as sufficient for the
purpose of this Indenture and as constituting a good and valid release of the
property therein described from the Lien of this Indenture or of the Security
Documents.
SECTION 10.08. Purchaser Protected.
No purchaser or grantee of any property or rights purporting to be
released herefrom shall be bound to ascertain the authority of the Trustee to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee or any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Company or any applicable Subsidiary Guarantor be
under any obligation to ascertain or inquire into the authority of the Company
or such applicable Subsidiary Guarantor to make such sale or other disposition.
SECTION 10.09. Authorization of Actions To Be Taken by the Trustee Under the
Security Documents.
Subject to the provisions of the Security Documents, (a) the Trustee
may, in its sole discretion and without the consent of the Securityholders, take
all actions it deems necessary or appropriate in order to (i) enforce any of the
terms of the Security Documents and (ii) collect and receive any and all amounts
payable in respect of the obligations of the Company hereunder and (b) the
Trustee shall have power to institute and to maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Collateral by any act
that may be unlawful or in violation of the Security Documents or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Securityholders in
the Collateral (including the power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement
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of, or compliance with, such enactment, rule or order would impair the security
interest thereunder or be prejudicial to the interests of the Securityholders or
of the Trustee.)
SECTION 10.10. Authorization of Receipt of Funds by the Trustee Under the
Security Documents.
The Trustee is authorized to receive any funds for the benefit of
the Securityholders distributed under the Security Documents, and to make
further distributions of such funds to the Holders in accordance with the
provisions of Article Eleven and the other provisions of this Indenture.
ARTICLE ELEVEN
APPLICATION OF TRUST MONEYS
SECTION 11.01. "Trust Moneys" Defined.
All cash or Cash Equivalents received by the Trustee:
a. upon the release of Collateral from the Lien of this Indenture
and/or the Security Documents, including investment earnings thereon; or
b. pursuant to the provisions of any Mortgage; or
c. as proceeds of any other sale or other disposition of all or any
part of the Collateral by or on behalf of the Trustee or any collection,
recovery, receipt, appropriation or other realization of or from all or
any part of the Collateral pursuant to this Indenture or any of the
Security Documents or otherwise; or
d. for application under this Article Eleven as elsewhere provided
in this Indenture (including without limitation, and subject to, Section
4.17(c)) or the Security Documents, or whose disposition is not elsewhere
otherwise specifically provided for herein or in the Security Documents;
(all such moneys being herein sometimes called "Trust Moneys"; provided,
however, that Trust Moneys shall not include any property deposited with the
Trustee in violation of the Intercreditor Agreement or pursuant to Section 3.05,
4.16, 4.20
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and 4.21 or Article Eight or delivered to or received by the Trustee for
application in accordance with Section 6.10 hereof) shall be held by the Trustee
for the benefit of the Holders as a part of the Collateral and, upon any entry
upon or sale or other disposition of the Collateral or any part thereof pursuant
to enforcement of the Security Documents, said Trust Moneys shall be applied in
accordance with Section 6.10; but, prior to any such entry, sale or other
disposition, all or any part of the Trust Moneys may be withdrawn, and shall be
released, paid or applied by the Trustee, from time to time as provided in this
Article Eleven.
On the Issue Date there shall be established and, at all times
hereafter until this Indenture shall have terminated, there shall be maintained
with the Trustee an account which shall be entitled the "Collateral Account"
(the "Collateral Account"). The Collateral Account shall be established and
maintained by the Trustee at the Corporate Trust Office of the Trustee. All
Trust Moneys which are received by the Trustee shall be deposited in the
Collateral Account and thereafter shall be held, applied and/or disbursed by the
Trustee in accordance with the terms of this Article Eleven.
SECTION 11.02. Withdrawal of Net Cash Proceeds Following an Asset Sale Offer.
To the extent that any Trust Moneys consist of Net Cash Proceeds
received by the Trustee pursuant to the provisions of Section 4.17 hereof and an
Asset Sale Offer has been made and completed in accordance therewith, such Trust
Moneys may be withdrawn by the Company or any applicable Subsidiary Guarantor
and shall be paid by the Trustee to the Company or such applicable Subsidiary
Guarantor (or as otherwise directed by the Company or such applicable Subsidiary
Guarantor) upon a Company Order to the Trustee and upon receipt by the Trustee
of the following:
a. Officers' Certificate. An Officers' Certificate, dated not more
than five days prior to the Purchase Date certifying:
(i) that no Event of Default exists; (ii) (A) that such Trust
Moneys constitute Net Cash Proceeds, (B) that pursuant to and in
accordance with Section 4.17, the Company or such applicable
Subsidiary Guarantor has made an Asset Sale Offer, (C) the amount of
money to be applied to the repurchase of the
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Securities pursuant to the Asset Sale Offer, (D) the amount of money
to be retained by the Company, and (E) the Purchase Date; and (iii)
that all conditions precedent and covenants herein provided for
relating to such application of Trust Moneys have been complied with
and such application will not violate the Intercreditor Agreement;
and
b. Compliance with TIA. All opinions, certificates and other
documentation required under the TIA, if any.
Upon compliance with the foregoing provisions of this Section 11.02,
the Trustee shall apply the Trust Moneys as directed and specified by such
Company Order.
SECTION 11.03. Withdrawal of Trust Moneys for Oil and Gas Related Assets.
To the extent that any Trust Moneys consist of Net Cash Proceeds
received by the Trustee pursuant to the provisions of Section 4.17 and the
Company or any applicable Subsidiary Guarantor intends to invest such Net Cash
Proceeds in a Oil and Gas Related Assets consistent with the requirements of
clause (b) of such Section 4.17 (the "Released Trust Moneys"), such Trust Moneys
may be withdrawn by the Company or such applicable Subsidiary Guarantor and
shall be paid by the Trustee to the Company or such applicable Subsidiary
Guarantor (or as otherwise directed by the Company or such applicable Subsidiary
Guarantor) upon a Company Order to the Trustee and upon receipt by the Trustee
of the following:
a. Officers' Certificate. An Officers' Certificate certifying that
(i) the release of the Released Trust Moneys complies with the terms and
conditions of Section 4.17 of this Indenture, (ii) there is no Default or
Event of Default in effect or continuing on the date thereof, (iii) the
release of the Released Trust Moneys will not result in a Default or Event
of Default hereunder and (iv) all conditions precedent to such release
have been complied with and such release will not violate the
Intercreditor Agreement;
b. Compliance with TIA and Other Documentation. All certificates,
opinions and other documentation required under the TIA, if any, and all
documentation necessary to subject such property to a valid first priority
Lien and security interest in favor of the Trustee for the
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benefit of the Securityholders pursuant to the Security Documents.
Upon compliance with the foregoing provisions of this Indenture, the
Trustee shall apply the Released Trust Moneys as directed and specified by such
Company Order.
SECTION 11.04. Withdrawal of Trust Moneys on Basis of Retirement of Securities.
Trust Moneys may be withdrawn by the Company to be applied to the
redemption and retirement of the Securities and shall be paid by the Trustee to
the Company (or as otherwise directed by the Company) upon a Company Order to
the Trustee and upon receipt by the Trustee of an Officers' Certificate, dated
not more than 30 days prior to the date of the application for the withdrawal
and payment of such Trust Moneys, certifying that (i) there is no Default or
Event of Default in effect or continuing on the date thereof and (ii) all
conditions precedent herein provided relating to such withdrawal and application
have been complied with and such withdrawal will not violate the Intercreditor
Agreement.
Upon compliance with the foregoing provisions of this Indenture, the
Trustee shall apply the Trust Moneys as directed and specified by such Company
Order.
SECTION 11.05. Investment of Trust Moneys.
All or any part of any Trust Moneys held by the Trustee shall from
time to time be invested or reinvested by the Trustee in any Cash Equivalents
pursuant to the written direction of the Company, which shall specify the Cash
Equivalents in which such Trust Moneys shall be invested. Unless an Event of
Default occurs and is continuing, any interest on such Cash Equivalents (in
excess of any accrued interest paid at the time of purchase) that may be
received by the Trustee shall be forthwith paid to the Company. Such Cash
Equivalents shall be held by the Trustee as a part of the Collateral, subject to
the same provisions hereof as the cash used by it to purchase such Cash
Equivalents.
The Trustee shall not be liable or responsible for any loss
resulting from such investments or sales except only for its own negligent
action, its own negligent failure to act or its own willful misconduct in
complying with this Section 11.05.
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ARTICLE TWELVE
GUARANTEE
SECTION 12.01. Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally, jointly and
severally, guarantees (such guarantee to be referred to herein as the
"Guarantee") to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, the Securities or the
Obligations of the Company hereunder or thereunder, that: (i) the principal of
and interest on the Securities will be promptly paid in full when due, subject
to any applicable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and interest on any
interest, to the extent lawful, of the Securities 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 (ii) 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, subject to any applicable grace period, whether at stated maturity, by
acceleration or otherwise, subject, however, in the case of clauses (i) and (ii)
above, to the limitations set forth in Section 12.03. Each Subsidiary Guarantor
hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Securities or
this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, and action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. Each Subsidiary Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities, this Indenture and
in this Guarantee. If any Securityholder or the Trustee is required by any court
or otherwise to return to the Company, any Subsidiary Guarantor, or any
custodian, trustee, liquidator
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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 Securityholder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Subsidiary
Guarantor further agrees that, as between each Subsidiary Guarantor, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article Six
for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Subsidiary Guarantor for the
purpose of this Guarantee.
SECTION 12.02. Severability.
In case any provision of this Guarantee 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.
SECTION 12.03. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and by its acceptance hereof each Holder
hereby confirms that it is the intention of all such parties that the guarantee
by such Subsidiary Guarantor pursuant to its Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, 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 such Subsidiary Guarantor hereby irrevocably agree that the obligations of
such Subsidiary Guarantor under the Guarantee shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Guarantee or pursuant to Section 12.05, result in the obligations of such
Subsidiary Guarantor under the Guarantee not constituting such fraudulent
transfer or conveyance.
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SECTION 12.04. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.
(a) 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 of assets
or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety, to the Company or another Subsidiary Guarantor.
Upon any such consolidation, merger, sale or conveyance, the Guarantee given by
such Subsidiary Guarantor shall no longer have any force or effect.
(b) Except as set forth in Article Four and Article Five 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 corporation
or corporations other than the Company or another Subsidiary Guarantor (whether
or not affiliated with the Subsidiary Guarantor) or shall prevent any sale of
assets, or conveyance of the property, of a Subsidiary Guarantor as an entirety
or substantially as an entirety, to a corporation or corporations other than the
Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor); provided, however, that, (i) immediately after such
transaction, and giving effect thereto such transaction does not (a) violate any
covenants set forth herein or (b) result in a Default or Event of Default under
this Indenture that is continuing, and (ii) upon any such consolidation, merger,
sale or conveyance, the Subsidiary Guarantee set forth in this Article Twelve,
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 the merger), by supplemental indenture satisfactory in
form to the Trustee, executed and delivered to the Trustee, by the corporation
formed by such consolidation, or into which the Subsidiary Guarantor shall have
merged, or by the corporation that shall have acquired such assets or property.
In the case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor corporation, 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 convenants and conditions of this Indenture
to be performed by the Subsidiary Guarantor, such successor corporation shall
succeed to and be substituted for the Subsidiary Guarantor with the same effect
as if it had been named herein as a Subsidiary
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Guarantor; provided, however, that solely for purposes of computing amounts
described in subclause (iii) of the first paragraph of Section 4.03 any such
successor corporation shall only be deemed to have succeeded to and be
substituted for any Subsidiary Guarantor with respect to periods subsequent to
the effective time of such merger, consolidation or transfer of assets.
(c) Upon the sale or disposition (whether by merger, stock purchase,
asset sale or otherwise) of a Subsidiary Guarantor (or all or substantially all
its assets) to an entity which is not a Subsidiary of the Company and which sale
or disposition is otherwise in compliance with the terms of this Indenture
(including, without limitation, Sections 4.17, 4.20 and 4.21), such Subsidiary
Guarantor shall be deemed released from all obligations under this Article
Twelve without any further action required on the part of the Trustee or any
Holder; provided, however, that any such termination 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, any other Indebtedness of the Company shall also
terminate upon such release, sale or transfer.
The Trustee shall deliver an appropriate instrument evidencing such
release upon receipt of a request by the Company accompanied by an Officers'
Certificate and Opinion of Counsel certifying as to the compliance with this
Section 12.04. Any Subsidiary Guarantor not so released remains liable for the
full amount of principal of and interest on the Securities as provided in this
Article Twelve.
SECTION 12.05. Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under the Guarantee, such Funding Guarantor shall be
entitled to a contribution from all other Subsidiary Guarantors 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 the
Guarantee. "Adjusted Net Assets" of such Subsidiary Guarantor at any date shall
mean the lesser of the
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amount by which (x) the fair value of the property of such Subsidiary Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date (other than liabilities of such
Subsidiary Guarantor under Indebtedness Subordinated to such Subsidiary
Guarantor's Guarantee)), but excluding liabilities under the Guarantee, of such
Subsidiary Guarantor at such date and (y) the present fair salable value of the
assets of such Subsidiary Guarantor at such date exceeds the amount that will be
required to pay the probable liability of such Subsidiary Guarantor on its debts
(after giving effect to all other fixed and contingent liabilities incurred or
assumed on such date and after giving effect to any collection from any
Subsidiary of such Subsidiary Guarantor in respect of the obligations of such
Subsidiary under the Guarantee), excluding debt in respect of the Guarantee of
such Subsidiary Guarantor, as they become absolute and matured.
SECTION 12.06. Waiver of Subrogation.
Until all Guarantee Obligations are paid in full each Subsidiary
Guarantor hereby irreovcably waives any claims or other rights which it may now
or hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of such Subsidiary Guarantor's obligations under the
Guarantee and this Indenture, including, without limitation, any right of
subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Holder of Securities against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Subsidiary
Guarantor in violation of the preceding sentence and the Securities shall not
have been paid in full, such amount shall have been deemed to have been paid to
such Subsidiary Guarantor for the benefit of, and held in trust for the benefit
of, the Holders of the Securities, and shall, forthwith be paid to the Trustee
for the benefit of such Holders to be credited and applied upon the Securities,
whether matured or unmatured, in accordance with the terms of this Indenture.
Each Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this
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Indenture and that the waiver set forth in this Section 12.06 is knowingly made
in contemplation of such benefits.
SECTION 12.07. Execution of Guarantee.
To evidence their guarantee to the Securityholders set forth in this
Article Twelve, the Subsidiary Guarantors hereby agree to execute the Guarantee
in substantially the form included in Exhibit A-1 and A-2, which shall be
endorsed on each Security ordered to be authenticated and delivered by the
Trustee. Each Subsidiary Guarantor hereby agrees that its Guarantee set forth in
this Article Twelve shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of such Guarantee. Each such
Guarantee shall be signed on behalf of each Subsidiary Guarantor by two
Officers, or an Officer and an Assistant Secretary or one Officer shall sign and
one Officer or an Assistant Secretary (each of whom shall, in each case, have
been duly authorized by all requisite corporate actions) shall attest to such
Guarantee prior to the authentication of the Security on which it is endorsed,
and the delivery of such Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of such Guarantee on behalf of
such Subsidiary Guarantor. Such signatures upon the Guarantee may be by manual
or facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Guarantee, and in case any such officer who shall have signed
the Guarantee shall cease to be such officer before the Security on which such
Guarantee is endorsed shall have been authenticated and delivered by the Trustee
or disposed of by the Company, such Security nevertheless may be authenticated
and delivered or disposed of as though the person who signed the Guarantee had
not ceased to be such officer of the Subsidiary Guarantor.
SECTION 12.08. Waiver of Stay, Extension or Usury Laws.
Each Subsidiary Guarantor convenants (to the extent that it 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 or
extension law or any usury law or other law that would prohibit or forgive each
such Subsidiary Guarantor from performing its Guarantee as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each such Subsidiary Guarantor hereby expressly waives all
benefit or advantage of any such law, and covenants that it
<PAGE> 121
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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 THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of Section 318(c) of the TIA, the imposed
duties shall control.
SECTION 13.02. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company:
HarCor Energy, Inc.
Five Post Oak Park
Suite 2220
4400 Post Oak Park
Houston, Texas 77027-3413
Attention: President
with copies to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: John S. Watson
Facsimile: (713) 758-2346
Telephone: (713) 758-2222
<PAGE> 122
-114-
if to the Trustee:
Texas Commerce Bank National Association
600 Travis, 8th Floor
Houston, Texas 77002
Attention: Vice President of Corporate Trust
Facsimile: (713) 216-4880
Telephone: (713) 216-4181
Each of the Company and the Trustee by written notice to each other
such person may designate additional or different addresses for notices to such
person. Any notice or communication to the Company and the Trustee, shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA section 312(b) with
other Securityholders with respect to their rights under this Indenture, the
Security Documents, the Securities or the Guarantees. The Company, the Trustee,
the Registrar and any other person shall have the protection of TIA section
312(c).
<PAGE> 123
-115-
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee
at the request of the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.08, shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
<PAGE> 124
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SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee, Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 13.07. Legal Holidays.
If a payment date is not a Business Day, payment may be made on the
next succeeding day that is a Business Day.
SECTION 13.08. Governing Law.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Each of the parties hereto agrees to
submit to the jurisdiction of the courts of the State of New York in any action
or proceeding arising out of or relating to this Indenture.
SECTION 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities, this Indenture, the Security Documents or the Guarantees
or for any claim based on, in respect of or by reason of such obligations or
their creation. Each Securityholder by accepting a Security waives and releases
all such liability. Such waiver and release are part of the consideration for
the issuance of the Securities.
SECTION 13.11. Successors.
All agreements of the Company in this Indenture, the Securities and
the Guarantees shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successor.
<PAGE> 125
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SECTION 13.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy or counterpart shall be an original, but all of them together shall
represent the same agreement.
SECTION 13.13. Severability.
In case any one or more of the provisions in this Indenture, in the
Securities or in the Guarantees shall be held invalid, illegal or unenforceable,
in any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions shall not
in any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
<PAGE> 126
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date first written above.
HARCOR ENERGY, INC.
By:
---------------------------
Name: Mark G. Harrington
Title: Chairman of the Board
and Chief Executive
Officer
Attest:
----------------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By:
---------------------------
Name: Steven Horowitz
Title: Corporate Trust Officer
------------------------------
Steven R. Patterson, as Co-
Trustee pursuant to Section 7.12
<PAGE> 127
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THE SUBSIDIARY GUARANTORS:
WARRIOR, INC.
By:
---------------------------
Name: Mark G. Harrington
Title: President
Attest:
----------------------
HTAC INVESTMENTS, INC.
By:
---------------------------
Name: Mark G. Harrington
Title: President
Attest:
----------------------
<PAGE> 128
EXHIBIT A-1
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1993, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501 (A)(1), (2), (3) OR (7) PROMULGATED UNDER THE
SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 PROMULGATED
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER
SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT WITHIN THE MEANING OF
SECTION 1273(a) OF THE INTERNAL REVENUE CODE OF 1986. THE ISSUE PRICE IS $969.06
FOR EACH $1,000 OF STATED PRINCIPAL AMOUNT. THE ORIGINAL ISSUE DISCOUNT IS
$30.94 FOR EACH $1,000.00 OF STATED PRINCIPAL AMOUNT. THE ISSUE DATE IS
<PAGE> 129
JULY 24, 1995. THE YIELD TO MATURITY IS APPROXIMATELY 15.62% COMPOUNDED
SEMIANNUALLY. ORIGINAL ISSUE DISCOUNT WILL BE ALLOCATED BASED ON ACCRUAL PERIODS
ENDING ON EACH DATE ON WHICH AN INTEREST PAYMENT IS DUE AND THE 360 DAYS PER
YEAR CONVENTION.
-2-
<PAGE> 130
HARCOR ENERGY, INC.
14 7/8% Senior Secured Note
due July 15, 2002
No. $
HARCOR ENERGY, INC., a Delaware corporation (the "Company", which
term includes any successor corporation), for value received promises to pay to
or registered assigns, the principal sum of Dollars, on July 15, 2002.
Interest Payment Dates: January 15 and July 15 commencing January
15, 1996
Record Dates: January 1 and July 1
To the extent set forth in the Security Documents (as defined in the
Indenture), payment hereon is secured by a valid, perfected security interest in
the Collateral (as defined in the below-mentioned Indenture), the terms of which
security interests are more fully set forth in the Security Documents.
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Dated:
Attest: HARCOR ENERGY, INC.
By:
- ------------------------------------- -----------------------------------
Name: Name:
Title: Title:
-3-
<PAGE> 131
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
as Trustee
By
------------------------------------
Authorized Signatory
-4-
<PAGE> 132
HARCOR ENERGY, INC.
14 7/8% Senior Secured Note
due July 15, 2002
1. Interest.
HARCOR ENERGY, INC., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semi-annually on January 15
and July 15 of each year (the "Interest Payment Date"), commencing January 15,
1996. Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from July 24, 1995.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate of 2% per annum
in excess of the rate shown on the Securities and on overdue installments of
interest (without regard to any applicable grace periods) to the extent lawful.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address. Notwithstanding the foregoing, the Company shall pay or cause to be
paid all amounts payable with respect to Restricted Securities or non-DTC
eligible Securities by wire transfer of Federal funds to the account of the
Holders of such Securities.
-5-
<PAGE> 133
3. Paying Agent and Registrar.
Initially, Texas Commerce Bank National Association will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may act as Registrar or co-Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of
July 24, 1995 (the "Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. {{ 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and said Act for a statement of them. The
Securities are secured obligations of the Company limited in aggregate principal
amount to $65,000,000. Payment on each Security is guaranteed on a senior basis,
jointly and severally, by the Sudsidiary Guarantors pursuant to Article Twelve
of the Indenture.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole
at any time or in part from time to time, on and after July 15, 1999 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on July 15 of the year set
forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999............................. 110.00%
2000............................. 107.00%
2001 and thereafter.............. 100.00%
</TABLE>
On or prior to July 15, 1997, the Company may, at its option, redeem
Securities with the net proceeds remaining following an Equity Proceeds Offer at
a price equal to 110% of their aggregate principal amount plus accrued and
unpaid
-6-
<PAGE> 134
interest thereon, if any, to the date of redemption provided, however, that at
least 60% of the aggregate principle amount of securities originally issued must
remain outstanding after any such redemption.
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at such Holder's registered address. Securities in denominations of
$1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the redemption
date, interest will cease to accrue on Securities or portions thereof called for
redemption.
7. Change of Control Offer.
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase.
8. Limitation on Disposition of Assets.
The Company is subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount plus accrued and
unpaid interest to the date of repurchase with certain net cash proceeds of
certain sales or other dispositions of assets in accordance with the Indenture.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection
-7-
<PAGE> 135
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities or portions thereof selected for
redemption, except the unredeemed portion of any security being redeemed in
part.
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
11. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed
for one year, the Trustee and the Paying Agents will repay the funds to the
Company at its request subject to terms of the Indenture. After that, all
liability of the Trustee and such Paying Agents with respect to such funds shall
cease.
12. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the
Indenture, the Security Documents and the Securities except for certain
provisions thereof ("Legal Defeasance"), and may be discharged from its
obligations to comply with certain covenants contained in the Indenture, the
Security Documents and the Securities ("Covenant Defeasance"), in each case upon
satisfaction of certain conditions specified in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Security Documents
or the Securities may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture or the Securities to, among other things, cure any ambiguity, defect
or inconsistency, provide for uncertificated Securities in addition to or in
place of certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
-8-
<PAGE> 136
14. Restrictive Covenants.
The Indenture will contain certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to issue preferred or other
capital stock of subsidiaries, to sell assets, to permit restrictions on
dividends and other payments by subsidiaries to the Company, to consolidate,
merge or sell all or substantially all of its assets, to engage in transactions
with affiliates or to engage in certain businesses. The limitations are subject
to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
15. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest, including an accelerated
payment) if it determines that withholding notice is in their interest.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
17. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as
such, of the Company shall have any liability for any obligation of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such
-9-
<PAGE> 137
liability. The waiver and release are part of the consideration for the
issuance of the Securities.
18. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
19. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may be made to:
HarCor Energy, Inc., Five Post Oak Park, Suite 2220, 4400 Oak Park, Houston,
Texas 77027-3413, Attn: Chief Financial Officer.
-10-
<PAGE> 138
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the
"Indenture") referred to in the Security upon which this notation is endorsed
and each hereinafter referred to as a "Subsidiary Guarantor," which term
includes any successor person under the Indenture) have unconditionally
guaranteed on a senior basis (such guarantee by each Subsidiary Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent lawful,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
Twelve of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that 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.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Subsidiary Guarantor shall have any liability under
the Guarantee by reason of his or its status as such stockholder, officer,
director or incorporator.
The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
SUBSIDIARY GUARANTORS:
WARRIOR
By:
-----------------------------------
Name:
Title:
Attest:
------------------------------
<PAGE> 139
HTAC INVESTMENTS, INC.
By:
-----------------------------------
Name:
Title
Attest:
-------------------------------
-2-
<PAGE> 140
ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee)
_______________________________________________________________________________
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint _______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the SEC of
the effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") covering resales of this Security (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) July 24, 1998, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that:
[Check One]
/ / (a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
or
/ / (b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
<PAGE> 141
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated: ________________________ Signed: _______________________________
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: _____________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ _______________________________________
NOTICE: To be executed by
an executive officer
-2-
<PAGE> 142
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Sections 4.16, 4.17, 4.20 or 4.21 of the Indenture, check the
appropriate box:
Section 4.16 / / Section 4.17 / /
Section 4.20 / / Section 4.21 / /
If you want to elect to have only part of this Security purchased by
the Company pursuant to Sections 4.16, 4.17, 4.20 or 4.21 of the Indenture,
state the amount:
$
Date:________________________________ Your Signature:________________________
(Sign exactly as
your name appears
on the other side
of this Security)
Signature Guarantee: _________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 143
EXHIBIT A-2
[FORM OF SERIES B SECURITY]
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT WITHIN THE MEANING OF
SECTION 1273(a) OF THE INTERNAL REVENUE CODE OF 1986. THE ISSUE PRICE IS $969.06
FOR EACH $1,000 OF STATED PRINCIPAL AMOUNT. THE ORIGINAL ISSUE DISCOUNT IS
$30.94 FOR EACH $1,000.00 OF STATED PRINCIPAL AMOUNT. THE ISSUE DATE IS JULY 24,
1995. THE YIELD TO MATURITY IS APPROXIMATELY 15.62% COMPOUNDED SEMIANNUALLY.
ORIGINAL ISSUE DISCOUNT WILL BE ALLOCATED BASED ON ACCRUAL PERIODS ENDING ON
EACH DATE ON WHICH AN INTEREST PAYMENT IS DUE AND THE 360 DAYS PER YEAR
CONVENTION.
HARCOR ENERGY, INC.
14 7/8% Senior Secured Note
due July 15, 2002
No. $
HARCOR ENERGY, INC., a Delaware corporation (the "Company", which
term includes any successor corporation), for value received promises to pay to
or registered assigns, the principal sum of
Dollars, on July 15, 2002.
Interest Payment Dates: January 15 and July 15 commencing
January 15, 1996
Record Dates: January 1 and July 1
To the extent set forth in the Security Documents (as defined in the
Indenture), payment hereon is secured, on an equal and ratable basis with all
other Securities by a valid, perfected security interest in the Collateral (as
defined in the below-mentioned Indenture), the terms of which security interests
are more fully set forth in the Security Documents.
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Dated:
<PAGE> 144
Attest: HARCOR ENERGY, INC.
By:
- ------------------------------------- -----------------------------------
Name: Name:
Title: Title:
-2-
<PAGE> 145
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated:
as Trustee
By
------------------------------------
Authorized Signatory
-3-
<PAGE> 146
HARCOR ENERGY, INC.
14 7/8% Senior Secured Note
due July 15, 2002
1. Interest.
HARCOR ENERGY, INC., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semi-annually on January 15
and July 15 of each year (the "Interest Payment Date"), commencing January 15,
1996. Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from July 24, 1995.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate of 2% per annum
in excess of the rate shown on the Securities and on overdue installments of
interest (without regard to any applicable grace periods) to the extent lawful.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Securities are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by wire transfer of Federal funds, or interest by
check payable in such U.S. Legal Tender. The Company shall deliver any such
interest payment to the Paying Agent.
3. Paying Agent and Registrar.
Initially, Texas Commerce Bank National Association will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Registrar or
co-Registrar.
-4-
<PAGE> 147
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of
July 24, 1995 (the "Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. {{ 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and said Act for a statement of them. The
Securities are secured obligations of the Company limited in aggregate principal
amount to $65,000,000. Payment on each Security is guaranteed on a senior basis,
jointly and severally, by the Sudsidiary Guarantors pursuant to Article Twelve
of the Indenture.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole
at any time or in part from time to time, on and after July 15, 1999 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on July 15 of the year set
forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999............................. 110.00%
2000............................. 107.00%
2001 and thereafter.............. 100.00%
</TABLE>
On or prior to July 15, 1997, the Company may, at its option, redeem
Securities with the net proceeds remaining following an Equity Proceeds Offer at
a price equal to 110% of their aggregate principal amount plus accrued and
unpaid interest thereon, if any, to the date of redemption; provided, however,
that at least 60% of the aggregate principle amount of securities originally
issued must remain outstanding after any such redemption.
-5-
<PAGE> 148
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at such Holder's registered address. Securities in denominations of
$1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the redemption
date, interest will cease to accrue on Securities or portions thereof called for
redemption.
7. Change of Control Offer.
Upon the occurrence of a Change of Control, the Company will be
required to offer to purchase all of the outstanding Securities at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase.
8. Limitation on Disposition of Assets.
The Company is subject to certain conditions, obligated to make an
offer to purchase Securities at 100% of their principal amount plus accrued and
unpaid interest to the date of repurchase with certain net cash proceeds of
certain sales or other dispositions of assets in accordance with the Indenture.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
-6-
<PAGE> 149
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
11. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed
for one year, the Trustee and the Paying Agents will repay the funds to the
Company at its request. After that, all liability of the Trustee and such Paying
Agents with respect to such funds shall cease.
12. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the
Indenture, the Security Documents and the Securities except for certain
provisions thereof ("Legal Defeasance"), and may be discharged from its
obligations to comply with certain covenants contained in the Indenture, the
Security Documents and the Securities ("Covenant Defeasance"), in each case upon
satisfaction of certain conditions specified in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Security Documents
or the Securities may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture or the Securities to, among other things, cure any ambiguity, defect
or inconsistency, provide for uncertificated Securities in addition to or in
place of certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
14. Restrictive Covenants.
The Indenture will contain certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to issue preferred or other
capital stock of subsidiaries, to sell assets, to permit restrictions on
dividends and other payments by subsidiaries to the Company,
-7-
<PAGE> 150
to consolidate, merge or sell all or substantially all of its assets, to engage
in transactions with affiliates or to engage in certain businesses. The
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations.
15. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest, including an accelerated
payment) if it determines that withholding notice is in their interest.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
17. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as
such, of the Company shall have any liability for any obligation of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
18. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
-8-
<PAGE> 151
19. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may be made to:
HarCor Energy, Inc., Five Post Oak Park, Suite 2220, 4400 Oak Park, Houston,
Texas 77027-3413, Attn: Chief Financial Officer.
-9-
<PAGE> 152
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the
"Indenture") referred to in the Security upon which this notation is endorsed
and each hereinafter referred to as a "Subsidiary Guarantor," which term
includes any successor person under the Indenture) have unconditionally
guaranteed on a senior basis (such guarantee by each Subsidiary Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent lawful,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
Twelve of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that 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.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Subsidiary Guarantor shall have any liability under
the Guarantee by reason of his or its status as such stockholder, officer,
director or incorporator.
The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
SUBSIDIARY GUARANTORS:
WARRIOR, INC.
By:
-----------------------------------
Name:
Title:
Attest:
-----------------------------
<PAGE> 153
HTAC INVESTMENTS, INC.
By:
-----------------------------------
Name:
Title
Attest:
-------------------------------
-2-
<PAGE> 154
ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee)
_______________________________________________________________________________
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint _______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: __________________ Signed: ____________________
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: _________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 155
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Sections 4.16, 4.17, 4.20 or 4.21 of the Indenture, check the
appropriate box:
Section 4.16 / / Section 4.17 / /
Section 4.20 / / Section 4.21 / /
If you want to elect to have only part of this Security purchased by
the Company pursuant to Sections 4.16, 4.17, 4.20 or 4.21 of the Indenture,
state the amount: $
Date: _____________________________ Your Signature: ___________________________
(Sign exactly as
your name appears
on the other side
of this Security)
Signature Guarantee: _________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 156
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE> 157
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 14 7/8% Senior Secured Notes due 2002, (the "Securities") of Harcor
Energy, Inc.
This Certificate relates to ____ Securities held in* ___ book-entry
or* _______ certificated form by ______ (the "Transferor").
The Transferor:*
/ / has requested that the Registrar by written order to deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Security or Securities in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Security (or the portion thereof indicated above); or
/ / has requested that the Registrar by written order to exchange or
register the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 2.16 of such Indenture,
and that the transfer of this Securities does not require registration under the
Securities Act of 1933, as amended (the "Act") because[*]:
/ / Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16(a)(y)(A) or Section
2.16(d)(i)(A) of the
Indenture).
/ / Such Security is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on Rule 144A or in
accordance with Regulation S under the Act.
/ / Such Security is being transferred in accordance with Rule 144
under the Act.
<PAGE> 158
-2-
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act, other than Rule
144A or Rule 144 or Regulation S under the Act. An opinion of counsel to the
effect that such transfer does not require registration under the Act
accompanies this Certificate.
--------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------
Date:
--------------
*Check applicable box.
<PAGE> 159
EXHIBIT D
Transferee Letter of Representation
Harcor Energy, Inc.
Five Post Oak Park
4400 Post Oak Parkway
Suite 2220
Houston, Texas 77027-3413
Ladies and Gentlemen:
In connection with our proposed purchase of 14 7/8% Senior Secured
Notes due 2002, (the "Securities") of Harcor Energy, Inc. (the "Company") we
confirm that:
1. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") and, unless
so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account
for which we are purchasing Securities to offer, sell or otherwise
transfer such Securities prior to the date which is three years after the
later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities, or any
predecessor thereto (the "Resale Restriction Termination Date") only (a)
to the Company, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) so long as the Securities
are eligible for resale pursuant to Rule 144A, under the Securities Act,
to a person we reasonably believe is a qualified institutional buyer under
Rule 144A (a "QIB") that purchases for its own account or for the account
of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales that occur outside
the United States within the meaning of Regulation S under the Securities
Act, (e) to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act
that is purchasing for his own account or for the account of such an
institutional "accredited investor," or (f) pursuant to any other
available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that
the disposition of our property or the property of such investor account
or accounts be at all times within our or their control and to compliance
<PAGE> 160
-2-
with any applicable state securities laws. The foregoing restrictions on
resale will not apply subsequent to the Resale Restriction Termination
Date. If any resale or other transfer of the Securities is proposed to be
made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the registrar under
the Indenture pursuant to which the Securities were issued (the
"Registrar") which shall provide, among other things, that the transferee
is an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act
and that it is acquiring such Securities for investment purposes and not
for distribution in violation of the Securities Act. The Registrar and the
Company reserve the right prior to any offer, sale or other transfer prior
to the Resale Restriction Termination Date of the Securities pursuant to
clause (e) or (f) above to require the delivery of a written opinion of
counsel, certifications, and or other information satisfactory to the
Company and the Registrar.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Securities for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment for an indefinite
period.
3. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
4. You and your counsel are entitled to rely upon this letter and
you are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
<PAGE> 161
-3-
Very truly yours,
--------------------------------------
(Name of Purchaser)
By:
-----------------------------------
Date:
---------------------------------
Upon transfer the Securities would be registered in the name of the
new beneficial owner as follows:
Name:
------------------------------
Address:
---------------------------
Taxpayer ID Number:
----------------
<PAGE> 162
EXHIBIT E
CUSIP NO. _____
HarCor Energy, Inc.
65,000 Units
consisting of
14 7/8% Senior Secured Notes due 2002
and
Warrants to Purchase Shares of Common Stock
THIS GLOBAL UNIT IS COMPRISED OF THE ATTACHED GLOBAL NOTE AND GLOBAL WARRANT.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 (A)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO HARCOR ENERGY, INC. (THE "COMPANY") OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE AND THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 PROMULGATED
<PAGE> 163
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UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE, THE WARRANT AGENT AND THE COMPANY SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE AND
WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY
IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE AND THE WARRANT AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER
THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE AND THE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
<PAGE> 1
=================================================================
WARRANT AGREEMENT
Dated as of July 24, 1995
Between
HARCOR ENERGY, INC.
and
BT SECURITIES CORPORATION,
as Warrant Agent
----------------------
-------
Warrants to Purchase Shares of Series F
Convertible Preferred Stock
Par Value $.01 Per Share
=================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
<S> <C>
SECTION 1.01. Issuance of Warrants.................................. 1
SECTION 1.02. Form of Warrant Certificates.......................... 2
SECTION 1.03. Execution of Warrant Certificates..................... 2
SECTION 1.04. Authentication and Delivery........................... 3
SECTION 1.05. Temporary Warrant Certificates........................ 4
SECTION 1.06. Registration.......................................... 4
SECTION 1.07. Registration of Transfers and
Exchanges........................................ 5
SECTION 1.08. Lost, Stolen, Destroyed, Defaced or
Mutilated Warrant Certificates................... 13
SECTION 1.09. Offices for Exercise, etc............................. 14
ARTICLE II
DURATION, EXERCISE OF WARRANTS
AND EXERCISE PRICE
SECTION 2.01. Duration of Warrants.................................. 15
SECTION 2.02. Exercise, Exercise Price,
Settlement and Delivery.......................... 15
SECTION 2.03. Cancellation of Warrant
Certificates..................................... 17
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights................................. 17
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes...................................... 18
SECTION 4.02. Qualification Under the Securities
Laws............................................. 18
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Price and
Number of Shares Issuable........................ 19
SECTION 5.02. Fractional Interest................................... 28
SECTION 5.03. When Adjustment Not Required.......................... 29
SECTION 5.04. Challenge to Good Faith
Determination.................................... 29
SECTION 5.05. Treasury Stock........................................ 29
SECTION 5.06. Notices to Warrant Holders............................ 30
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent......................................... 31
SECTION 6.02. Conditions of Warrant Agent's
Obligations...................................... 31
SECTION 6.03. Resignation and Appointment of
Successor........................................ 36
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment............................................. 38
SECTION 7.02. Notices and Demands to the Company
and Warrant Agent................................ 39
SECTION 7.03. Addresses for Notices to Parties
and for Transmission of Documents................ 39
SECTION 7.04. Notices to Holders.................................... 40
SECTION 7.05. Applicable Law........................................ 40
SECTION 7.06. Obtaining of Governmental Approvals................... 40
SECTION 7.07. Persons Having Rights Under
Agreement........................................ 40
SECTION 7.08. Headings.............................................. 41
SECTION 7.09. Counterparts.......................................... 41
SECTION 7.10. Inspection of Agreement............................... 41
SECTION 7.11. Successors............................................ 41
</TABLE>
EXHIBIT A - Form of Warrant Certificate
EXHIBIT B - Certificate To Be Delivered upon
Exchange or Registration of
Transfer of Warrants
EXHIBIT C - Transferee Letter of Representation
-ii-
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Section
- ------------ -------
<S> <C>
Agreement............................................. Recitals
Business Day.......................................... 2.01
Common Stock.......................................... Recitals
Company............................................... Recitals
Convertible Securities................................ 5.01(c)
Definitive Warrants................................... 1.02
Distribution.......................................... 5.02(c)
Election To Exercise.................................. 2.02(b)
Exercisability Date................................... 2.02(a)
Exercise Date......................................... 2.02(d)
Exercise Price........................................ 2.02(a)
Expiration Date....................................... 2.01
Global Warrants....................................... 1.02
Indenture............................................. Recitals
Initial Purchasers.................................... Recitals
Majority Holders...................................... 5.04
Notes................................................. Recitals
Preferred Stock....................................... 1.01
Prospectus............................................ 4.02
Purchased Shares...................................... 5.01(e)
Registrar............................................. 1.06
Related Parties....................................... 6.02(e)
Resale Restriction Termination Date................... 1.07
Securities Act........................................ 1.07
Shares................................................ 1.01
Time of Determination................................. 5.01(g)
Trustee............................................... Recitals
Warrant Agent......................................... 6.01
Warrant Agent Office.................................. 1.09
Warrant Certificates.................................. Recitals
Warrant Exercise Office............................... 2.02(b)
Warrant Register...................................... 1.06
Warrants.............................................. Recitals
</TABLE>
-iii-
<PAGE> 5
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement"), dated as of July 24, 1995 by HarCor
Energy, Inc., a Delaware corporation (together with any successor thereto, the
"Company"), and BT Securities Corporation, as warrant agent (with any successor
Warrant Agent, the "Warrant Agent").
WHEREAS, the Company has entered into a purchase agreement dated
July 24, 1995 with BT Securities Corporation and Internationale Nederlanden
(U.S.) Securities Corporation (the "Initial Purchasers") in which the Company
has agreed, among other things, to issue to BT Securities Corporation, as
compensation for underwriting services provided, 150,000 Warrants to purchase an
equal number of shares of Series F Convertible Preferred Stock, $.01 par value
per share (the "Preferred Stock") of the Company (the "Warrants", and the
certificates evidencing the Warrants being hereinafter referred to as "Warrant
Certificates"), subject to adjustment in accordance with the terms hereof; and
WHEREAS, the Company desires the Warrant Agent as warrant agent to
assist the Company in connection with the issuance, exchange, cancellation,
replacement and exercise of the Warrants, and in this Agreement wishes to set
forth, among other things, the terms and conditions on which the Warrants may be
issued, exchanged, cancelled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants. Each Warrant Certificate shall
evidence the number of Warrants specified therein, and each Warrant evidenced
thereby shall represent the right, subject to the provisions contained herein
and therein, to purchase from the Company (and the Company shall issue and sell
to such holder of the Warrant) one fully paid and non-assessable share of the
Company's Preferred Stock, with such terms and provisions as are set forth in
the Company's Certificate of Designation for the Series F Preferred Stock duly
adopted by the Company's Board of Directors on July 18, 1995 (the shares of
Preferred Stock purchasable upon exercise of a Warrant being hereinafter
referred to as the "Shares" and, where appropriate, such term shall also mean
the other
<PAGE> 6
-2-
securities or property purchasable and deliverable upon exercise of a Warrant as
provided in Article V) at the price specified herein and therein, in each case
subject to adjustment as provided herein and therein.
SECTION 1.02. Form of Warrant Certificates. The Warrant Certificates
will initially be issued either in global form (the "Global Warrants"),
substantially in the form of Exhibit A hereto (including footnote 1 thereto), or
in registered form as definitive Warrant certificates (the "Definitive
Warrants"). The Warrant Certificates evidencing the Global Warrants or the
Definitive Warrants to be delivered pursuant to this Agreement shall be
substantially in the form set forth in Exhibit A attached hereto. Such Global
Warrants shall represent such of the outstanding Warrants as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and Depositary
(as defined below) in accordance with instructions given by the holder thereof.
The Depository Trust Company shall act as the Depositary with respect to the
Global Warrants until a successor shall be appointed by the Company and the
Warrant Agent. Upon written request, a Warrant holder may receive from the
Warrant Agent Definitive Warrants as set forth in Section 1.07 hereof.
SECTION 1.03. Execution of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of the Company by the chairman of its
Board of Directors, its president or any vice president and attested by its
secretary or assistant secretary, under its corporate seal. Such signatures may
be the manual or facsimile signatures of the present or any future such
officers. The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates. Typographical and other minor errors or defects in any such
reproduction of the seal or any such signature shall not affect the validity or
enforceability of any Warrant Certificate that has been duly countersigned and
delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be
<PAGE> 7
-3-
countersigned and delivered by the Warrant Agent or disposed of by the Company,
such Warrant Certificate nevertheless may be countersigned and delivered or
disposed of as though the person who signed such Warrant Certificate had not
ceased to be such officer of the Company; and any Warrant Certificate may be
signed on behalf of the Company by such persons as, at the actual date of the
execution of such Warrant Certificate, shall be the proper officers of the
Company, although at the date of the execution and delivery of this Agreement
any such person was not such an officer.
SECTION 1.04. Authentication and Delivery. Subject to the
immediately following paragraph, Warrant Certificates shall be authenticated by
manual signature and dated the date of authentication by the Warrant Agent and
shall not be valid for any purpose unless so authenticated and dated. The
Warrant Certificates shall be numbered and shall be registered in the Warrant
Register (as defined in Section 1.06 hereof).
Upon the receipt by the Warrant Agent of a written order of the
Company, which order shall be signed by the chairman of its Board of Directors,
its president or any vice president and attested by its secretary or assistant
secretary, and shall specify the amount of Warrants to be authenticated, whether
the Warrants are to be Global Warrants or Definitive Warrants, the date of such
Warrants and such other information as the Warrant Agent may reasonably request,
without any further action by the Company, the Warrant Agent is authorized, upon
receipt from the Company at any time and from time to time of the Warrant
Certificates, duly executed as provided in Section 1.03 hereof, to authenticate
the Warrant Certificates and deliver them. Such authentication shall be by a
duly authorized signatory of the Warrant Agent (although it shall not be
necessary for the same signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company,
such Warrant Certificate nevertheless may be delivered or disposed of as though
the person who authenticated such Warrant Certificate had not ceased to be such
authorized signatory of the Warrant Agent; and any Warrant Certificate may be
authenticated on behalf of the Warrant Agent by such persons as, at the actual
time of authentication of such Warrant Certificates, shall be the duly
authorized signatories of the Warrant Agent, although
<PAGE> 8
-4-
at the time of the execution and delivery of this Agreement any such person is
not such an authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall
be in substantially the form set forth in Exhibit A hereto.
SECTION 1.05. Temporary Warrant Certificates. Pending the
preparation of definitive Warrant Certificates, the Company may execute, and the
Warrant Agent shall authenticate and deliver, temporary Warrant Certificates,
which are printed, lithographed, typewritten or otherwise produced,
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Warrant
Certificates may determine, as evidenced by their execution of such Warrant
Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 1.09 hereof.
Subject to the provisions of Section 4.01 hereof, such exchange shall be without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Warrant Certificates, the Company shall execute, and the Warrant Agent
shall authenticate and deliver in exchange therefor, one or more definitive
Warrant Certificates representing in the aggregate a like number of Warrants.
Until so exchanged, the holder of a temporary Warrant Certificate shall in all
respects be entitled to the same benefits under this Agreement as a holder of a
definitive Warrant Certificate.
SECTION 1.06. Registration. The Company will keep, at the office or
agency maintained by the Company for such purpose, a register or registers in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of, and registration of transfer and exchange
of, Warrants as provided in this Article. Each person designated by the Company
from time to time as a person authorized to register the transfer and exchange
of the Warrants is hereinafter called, individually and collectively, the
"Registrar". The Company hereby initially appoints the Warrant Agent as
Registrar. Upon written notice to the Warrant Agent and any
<PAGE> 9
-5-
acting Registrar, the Company may appoint a successor Registrar for such
purposes.
The Company will at all times designate one person (who may be the
Company and who need not be a Registrar) to act as repository of a master list
of names and addresses of the holders of Warrants (the "Warrant Register"). The
Warrant Agent will act as such repository unless and until some other person is,
by written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each Registrar
to furnish to such repository, on a current basis, such information as to all
registrations of transfer and exchanges effected by such Registrar, as may be
necessary to enable such repository to maintain the Warrant Register on as
current a basis as is practicable.
SECTION 1.07. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Warrants. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants;
or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
1.07 hereof for such transactions are met; provided, however, that the
Definitive Warrants presented or surrendered for registration of transfer or
exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Company and the Warrant Agent,
duly executed by the holder thereof or by his attorney, duly
authorized in writing; and
(y) in the case of Warrants the offer and sale of which
have not been registered under the Securities Act of
1933, as amended (the "Securities Act") and are
presented for transfer or exchange prior to (x) the
date which is three years after the later of the date
of
<PAGE> 10
-6-
original issue and the last date on which the Company or any
affiliate of the Company was the owner of such Warrant, or any
predecessor thereto and (y) such later date, if any, as may be
required by any subsequent change in applicable law (the "Resale
Restriction Termination Date"), such Warrants shall be accompanied,
in the sole discretion of the Company, by the following additional
information and documents, as applicable:
(A) if such Warrant is being delivered to the Warrant Agent by a
holder for registration in the name of such holder, without
transfer, a certification from such holder to that effect (in
substantially the form of Exhibit B hereto); or
(B) if such Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the
Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto); or
(C) if such Warrant is being transferred to an institutional
"accredited investor" within the meaning of subparagraphs
(a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under the
Securities Act, delivery of a Certificate of Transfer in the
form of Exhibit C hereto and an opinion of counsel and/or
other information satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act;
or
(D) if such Warrant is being transferred in reliance on another
exemption from the registration requirements of the Securities
Act, a certification to that effect (in substantially the form
of Exhibit B hereto) and an opinion of counsel reasonably
acceptable to the Company to the effect that such transfer is
in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Warrant for a
Beneficial Interest in a Global Warrant. A Definitive
<PAGE> 11
-7-
Warrant may not be transferred for a beneficial interest in a Global Warrant
except upon satisfaction of the requirements set forth below. Upon receipt by
the Warrant Agent of a Definitive Warrant, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Warrant Agent,
together with:
(A) certification, substantially in the form of Exhibit B hereto,
that such Definitive Warrant is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(B) written instructions directing the Warrant Agent to make, or
to direct the Depositary to make, an endorsement on the Global
Warrant to reflect an increase in the aggregate amount of the
Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall authenticate a new Global Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Section 1.07 and the procedures
of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Warrant for a
Definitive Warrant.
(i) Any person having a beneficial interest in a Global
Warrant may upon request transfer such beneficial interest for a
Definitive Warrant. Upon receipt by the Warrant Agent of written
instructions or such other form of instructions as is customary for
the Depositary from the Depositary or its nominee on behalf of any
person having a beneficial interest in a Global Warrant and upon
receipt by the Warrant Agent of a written order or such other form
of
<PAGE> 12
-8-
instructions as is customary for the Depositary or the person
designated by the Depositary as having such a beneficial interest
containing registration instructions and, in the case of any such
transfer or exchange prior to the Resale Restriction Termination
Date, the following additional information and documents:
(A) if such beneficial interest is being transferred to the person
designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in
substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a
qualified institutional buyer (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the
Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form of Exhibit
B hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor" within the meaning of
subparagraphs (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501
under the Securities Act, delivery of a Certificate of
Transfer in the form of Exhibit C hereto and an opinion of
counsel and/or other information satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act; or
(D) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto) and an opinion of
counsel reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act,
then the Warrant Agent will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Warrant Agent, the aggregate amount of the Global Warrant to be
reduced
<PAGE> 13
-9-
and, following such reduction, the Company will execute and, upon
receipt of an authentication order in the form of an Officers'
Certificate (as defined), the Warrant Agent will authenticate and
deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in
a Global Warrant pursuant to this Section 1.07(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Warrant Agent in
writing. The Warrant Agent shall deliver such Definitive Warrants to
the persons in whose names such Warrants are so registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 1.07), a Global Warrant
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in Absence of
Depositary. If at any time:
(i) the Depositary for the Warrants notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the
Global Warrant and a successor Depositary for the Global Warrant is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon receipt of an
officers' certificate signed by two officers of the Company (one of whom must be
the principal executive officer, principal financial officer or principal
accounting officer) (an "Officers' Certificate") requesting the authentication
and delivery of Definitive Warrants, will authenticate and
<PAGE> 14
-10-
deliver Definitive Warrants, in an aggregate number equal to the aggregate
number of warrants represented by the Global Warrant, in exchange for such
Global Warrant.
(g) Legends.
(i) Except to the extent permitted by the following paragraph (ii),
each Warrant Certificate evidencing the Global Warrants and the
Definitive Warrants (and all Warrants issued in exchange therefor
or substitution thereof) shall bear a legend substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACTS OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501
(A)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO HARCOR ENERGY, INC. (THE "COMPANY")
OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 PROMULGATED
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE),
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT
<PAGE> 15
-11-
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE
OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE WARRANT AGENT AND HARCOR ENERGY, INC. (THE "COMPANY") SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SECURITYHOLDERS' AND REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 24,
1995 AMONG BT SECURITIES CORPORATION, INTERNATIONALE NEDERLANDEN (U.S.)
CORPORATION AND THE COMPANY, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY.
To the extent a Warrant Certificate evidences a Global Warrant, such
Warrant Certificate shall also bear the legend with respect thereto
substantially in the form set forth on Exhibit A hereto.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144 under
the Securities Act in accordance with Section 1.07 hereof or an
effective registration statement under the Securities Act:
(A) in the case of any Warrant that is a Definitive Warrant, the
Warrant Agent shall permit the holder thereof to exchange such
Warrant for a Definitive Warrant that does not bear the first
paragraph of the legend set forth above and rescind any
related restriction on the transfer of such Warrant; and
<PAGE> 16
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(B) any such Warrant represented by a Global Warrant
shall not be subject to the provisions set forth
in (i) above (such sales or transfers being
subject only to the provisions of Section
1.07(c) hereof); provided, however, that with
respect to any request for an exchange of a
Warrant that is represented by a Global Warrant
for a Definitive Warrant that does not bear the
first paragraph of the legend set forth above,
which request is made in reliance upon Rule 144
under the Securities Act, the holder thereof
shall certify in writing to the Warrant Agent
that such request is being made pursuant to Rule
144 under the Securities Act (such certification
to be substantially in the form of Exhibit B
hereto).
(h) Cancellation and/or Adjustment of a Global Warrant. At such time
as all beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant
shall be returned to or retained and cancelled by the Warrant Agent. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exchanged for Definitive Warrants, redeemed, repurchased or cancelled, the
number of Warrants represented by such Global Warrant shall be reduced and an
endorsement shall be made on such Global Warrant, by the Warrant Agent to
reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Definitive Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute, at the Warrant Agent's request, and the Warrant Agent
shall authenticate Definitive Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement as the Definitive
Warrants or Global Warrants surrendered upon the registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant
<PAGE> 17
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is registered as the absolute owner of such Warrant, and neither the
Warrant Agent nor the Company shall be affected by notice to the
contrary.
(j) Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of the Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for the Shares in a name
other than that of the registered holder of a Warrant Certificate surrendered
upon the exercise of a Warrant, and the Company shall not be required to issue
or deliver such Warrant Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
SECTION 1.08. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
Certificates. Upon receipt by the Company and the Warrant Agent (or any agent of
the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of indemnity reasonably satisfactory to them and,
in the case of mutilation or defacement, upon surrender thereof to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a bona fide
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding. Upon the issuance of any new Warrant Certificate under this
Section, the Company may require the payment from the holder of such Warrant
Certificate of a sum sufficient to cover any tax, stamp tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Warrant Agent and the
Registrar) in connection therewith. Every substitute Warrant Certificate
executed and delivered pursuant to this Section in lieu of any lost, stolen or
destroyed Warrant Certificate shall constitute an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall be entitled to
the benefits of (but shall
<PAGE> 18
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be subject to all the limitations of rights set forth in) this Agreement equally
and proportionately with any and all other Warrant Certificates duly executed
and delivered hereunder. The provisions of this Section 1.08 are exclusive with
respect to the replacement of lost, stolen, destroyed, defaced or mutilated
Warrant Certificates and shall preclude (to the extent lawful) any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement of lost, stolen,
destroyed, defaced or mutilated Warrant Certificates.
The Warrant Agent is hereby authorized to authenticate in accordance
with the provisions of this Agreement, and deliver the new Warrant Certificates
required pursuant to the provisions of this Section.
SECTION 1.09. Offices for Exercise, etc. So long as any of the
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of New York: (a) an office or agency where the
Warrant Certificates may be presented for exercise, (b) an office or agency
where the Warrant Certificates may be presented for registration of transfer and
for exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates pursuant to Section 1.05 hereof), and (c) an
office or agency where notices and demands to or upon the Company in respect of
the Warrants or of this Agreement may be served. The Company may from time to
time change or rescind such designation, as it may deem desirable or expedient;
provided, however, that an office or agency shall at all times be maintained in
the Borough of Manhattan, The City of New York, as provided in the first
sentence of this Section. In addition to such office or offices or agency or
agencies, the Company may from time to time designate and maintain one or more
additional offices or agencies within or outside The City of New York, where
Warrant Certificates may be presented for exercise or for registration of
transfer or for exchange, and the Company may from time to time change or
rescind such designation, as it may deem desirable or expedient. The Company
will give to the Warrant Agent written notice of the location of any such office
or agency and of any change of location thereof. The Company hereby designates
the Warrant Agent at its office in the Borough of Manhattan, the City of New
York (the "Warrant Agent Office"), as the initial agency maintained for each
such purpose.
<PAGE> 19
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ARTICLE II
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
SECTION 2.01. Duration of Warrants. Subject to the terms and
conditions established herein, the Warrants shall expire at 5:00 p.m., New York
City time, on July 24, 2000 (the "Expiration Date"). Each Warrant may be
exercised on any Business Day (as defined below) on or after the Exercisability
Date (as defined below) and on or prior to the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date relating to such Warrant shall become void, and all rights of
the holder under the Warrant Certificate evidencing such Warrant and under this
Agreement shall cease.
"Business Day" shall mean any day on which (i) banks in New York
City, (ii) the principal national securities exchange or market on which the
Common Stock is listed or admitted to trading and (iii) the principal national
securities exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
SECTION 2.02. Exercise, Exercise Price, Settlement and Delivery. (a)
Subject to the provisions of this Agreement, a holder of Warrants shall have the
right to purchase from the Company on or after July 24, 1996 (the
"Exercisability Date") and on or prior to the Expiration Date one fully paid,
registered and non-assessable Share, subject to adjustment in accordance with
Article V hereof, at the purchase price of $3.85 for each Warrant exercised (the
"Exercise Price").
(b) Warrants may be exercised on or after the Exercisability Date by
(i) surrendering at any office or agency maintained for that purpose by the
Company pursuant to Section 1.09 (each a "Warrant Exercise Office") the Warrant
Certificate evidencing such Warrants with the form of election to purchase
Shares set forth on the reverse side of the Warrant Certificate (the "Election
to Exercise") duly completed and signed by the registered holder or holders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney, and (ii) paying in full the Exercise Price for each such
Warrant exercised and any other amounts required to be paid pursuant to Section
1.07(j) hereof. Each Warrant may be exercised only in whole.
<PAGE> 20
-16-
(c) Simultaneously with the exercise of each Warrant, payment in
full of the Exercise Price shall be made in cash or by certified or official
bank check to be delivered to the office or agency where the Warrant Certificate
is being surrendered. No payment or adjustment shall be made on account of any
dividends on the Shares issued upon exercise of a Warrant.
(d) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than any
Warrant Exercise Office that also is an office of the Warrant Agent), such
Warrant Certificate and payment shall be promptly delivered to the Warrant
Agent. The "Exercise Date" for a Warrant shall be the date when all of the items
referred to in the first sentence of paragraphs (b) and (c) of this Section 2.02
are received by the Warrant Agent at or prior to 2:00 p.m., New York City time,
on a Business Day and the exercise of the Warrants will be effective as of such
Exercise Date. If any items referred to in the first sentence of paragraphs (b)
and (c) are received after 2:00 p.m., New York City time, on a Business Day, the
exercise of the Warrants to which such item relates will be effective on the
next succeeding Business Day. Notwithstanding the foregoing, in the case of an
exercise of Warrants on the Expiration Date (as defined in Section 2.01), if all
of the items referred to in the first sentence of paragraphs (b) and
(c) are received by the Warrant Agent at or prior to 5:00 p.m., New York City
time, on such Expiration Date, the exercise of the Warrants to which such items
relate will be effective on the Expiration Date.
(e) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise Price,
the Warrant Agent shall: (i) cause an amount equal to the Exercise Price to be
paid to the Company by crediting the same to the account designated by the
Company in writing to the Warrant Agent for that purpose; (ii) advise the
Company immediately by telephone of the amount so deposited to the Company's
account and promptly confirm such telephonic advice in writing; and (iii) as
soon as practicable, advise the Company in writing of the number of Warrants
(giving effect to Section 5.01(o) below) exercised in accordance with the terms
and conditions of this Agreement and the Warrant Certificates, the instructions
of each exercising holder of the Warrant Certificates with respect to delivery
of the Shares to which such holder is entitled upon such exercise, and such
other information as the Company shall reasonably request.
<PAGE> 21
-17-
(f) Subject to Section 5.02 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered holder of the Warrant Certificate evidencing such exercised Warrant
or Warrants, a certificate or certificates evidencing the Shares to which such
holder is entitled, in fully registered form, registered in such name or names
as may be directed by such holder pursuant to the Election to Exercise, as set
forth on the reverse of the Warrant Certificate. The Warrant Agent shall have no
obligation to ascertain the number of Shares to be issued with respect to the
exercised warrant or warrants. Such certificate or certificates evidencing the
Shares shall be deemed to have been issued and any persons who are designated to
be named therein shall be deemed to have become the holder of record of such
Shares as of the close of business on the Exercise Date. After such exercise of
any Warrant or Warrants, the Company shall also issue or cause to be issued to
or upon the written order of the registered holder of such Warrant Certificate,
a new Warrant Certificate, countersigned by the Warrant Agent pursuant to the
Company's written instruction, evidencing the number of Warrants, if any,
remaining unexercised unless such Warrants shall have expired.
SECTION 2.03. Cancellation of Warrant Certificates. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall be canceled by it and retired. The Warrant Agent shall
cancel all Warrant Certificates properly surrendered for exchange, substitution,
transfer or exercise. The Warrant Agent shall destroy canceled Warrant
Certificates held by it and deliver a certificate of destruction to the Company.
The Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of Warrant Shares through the exercise of such Warrants.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights. (a) Notwithstanding any of the
provisions of this Agreement, any holder of any Warrant Certificate, without the
consent of the Warrant Agent, the holder of any Shares or the holder of any
other
<PAGE> 22
-18-
Warrant Certificate, may, in and for his own behalf, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, his right to exercise the Warrant or Warrants evidenced by
his Warrant Certificate in the manner provided in such Warrant Certificate and
in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle
the holders thereof to any of the rights of a holder of Shares, including,
without limitation, the right to receive any dividends or other payments or to
receive notice as stockholders in respect of the meetings of stockholders or to
share in the assets of the Company in the event of the liquidation, dissolution
or winding up of the Company's affairs or any other matter, or any rights
whatsoever as stockholders of the Company.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes. The Company will pay all
documentary, stamp, transfer or other transactional taxes attributable to the
initial issuance of Warrants and of the Shares upon the exercise of Warrants
described in Section 4.01; provided, however, that the Company shall not be
required to pay any tax or other governmental charge which may be payable in
respect of any transfer or exchange of any Warrant Certificates or any
certificates for Shares in a name other than the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant. In any such case, no
transfer or exchange shall be made unless or until the person or persons
requesting issuance thereof shall have paid to the Company the amount of such
tax or other governmental charge or shall have established to the satisfaction
of the Company that such tax or other governmental charge has been paid or an
exemption is available therefrom.
SECTION 4.02. Qualification Under the Securities Laws. Prior to the
Exercisability Date, the Company will take all such action as is necessary to
cause the Shares issuable upon exercise of the Warrants to be registered or
otherwise qualified under the provisions of the Securities Act and pursuant to
all applicable state securities laws. So long as any unexpired Warrants remain
outstanding, the Company will file such amendments and/or supplements to any
registration statement under the Securities Act or under any state securities
<PAGE> 23
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laws covering the issuance of such Shares and supplement and keep current any
prospectus forming a part of such registration statement as may be necessary to
permit the Company to deliver to each person exercising a Warrant a prospectus
meeting the requirements of Section 10(a)(3) of the Securities Act (a
"Prospectus") and the regulations of the Securities and Exchange Commission and
otherwise complying with the Securities Act and regulations thereunder, and as
may be necessary to comply with any applicable state securities laws. The
Company shall, upon the request of any holder of Warrants that may be required
pursuant to the Securities Act to deliver a prospectus in connection with any
sale or other disposition of Shares, include within the plan of distribution
section of the Prospectus and in such other places in the Prospectus as may be
necessary, all information required under the Securities Act to enable such
holder to deliver a Prospectus in connection with sales or other dispositions of
such Shares, and the Company shall also take such action as may be necessary
under the Securities Act with respect to the related registration statement to
enable such holder to effect such delivery in connection with such sale or other
disposition. The Company further agrees to provide any holder who may be
required to deliver a prospectus upon the sale or other disposition of such
Shares, such number of copies of the Prospectus as such holder reasonably
requests. The Warrant Agent shall have no duty to monitor when such registration
or qualification is necessary nor shall the Warrant Agent be responsible for the
Company's failure to comply with this Section 4.02.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Price and Number of Shares
Issuable. The number and kind of Shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital
stock of any other class), (B) subdivide its outstanding shares of Common
Stock or (C) combine its outstanding shares of Common Stock into a smaller
number of shares, the (a) number of Shares purchasable upon exercise of
each Warrant immediately prior thereto shall be adjusted so
<PAGE> 24
-20-
that the holder of any Warrant thereafter exercised shall be entitled to
receive the number of Shares which such holder would have owned
immediately following such action had such Warrant been exercised
immediately prior thereto, and (b) the Exercise Price payable upon
exercise of each Warrant shall be adjusted by multiplying such Exercise
Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of
each Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Shares purchasable immediately
thereafter. An adjustment made pursuant to this paragraph shall become
effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of
a subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this paragraph, the holder of any Warrant
thereafter exercised shall become entitled to receive shares of two or
more classes of capital stock of the Company, the Board of Directors of
the Company (whose determination shall be conclusive) shall determine the
allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock (other
than as set forth in paragraph (a) above and other than a change in par
value, or from par value to no par value, or from no par value to par
value), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification
or change of the then outstanding shares of Common Stock or other capital
stock of the Company (other than a change in par value, or from par value
to no par value, or from par value to par value or as a result of a
subdivision or combination)) or in case of any sale or conveyance to
another corporation of all or substantially all of the assets of the
Company, then, as a condition of such reclassification, change,
consolidation, merger, sale or conveyance, the Company or such a successor
or purchasing corporation, as the case may be, shall forthwith make lawful
and adequate provision whereby the holder of such Warrant then outstanding
shall have the right thereafter to receive on exercise of such Warrant the
kind and amount of shares of stock and other securities and property
receivable upon
<PAGE> 25
-21-
such reclassification, change, consolidation, merger, sale or conveyance
by a holder of the number of shares of Preferred Stock issuable upon
exercise of such Warrant immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and enter into a
supplemental warrant agreement so providing. Such provisions shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article V. If the
issuer of securities deliverable upon exercise of Warrants under the
supplemental warrant agreement is an affiliate of the formed, surviving or
transferee corporation, that issuer shall join in the supplemental warrant
agreement. The above provisions of this paragraph (b) shall similarly
apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
In case of any such reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation (if other
than the Company) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this Warrant
Agreement to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as
may be deemed appropriate (as determined by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
the Preferred Stock for which this Warrant is exercisable which shall be
as nearly equivalent as practicable to the adjustments provided for in
this Article V. The foregoing provisions of this Section 5.01(b) shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
(c) Issuance of Options or Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof,
issue, sell, distribute or otherwise grant in any manner (including by
assumption) to all holders of the Common Stock any rights to subscribe for
or to purchase, or any warrants or options for the purchase of, Common
Stock or any stock or securities convertible into or exchangeable for
Common Stock (any such rights, warrants or options being herein called
"Options" and any such convertible or exchangeable stock or securities
being herein called "Convertible Securities") or any Convertible
Securities (other than upon exercise of any
<PAGE> 26
-22-
Option), whether or not such Options or the rights to convert or exchange
such Convertible Securities are immediately exercisable, and the price per
share at which Common Stock is issuable upon the exercise of such Options
or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the aggregate amount, if any, received or
receivable by the Company as consideration for the issuance, sale,
distribution or granting of such Options or any such Convertible Security,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Options or upon
conversion or exchange of all such Convertible Securities, plus, in the
case of Options to acquire Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the conversion or
exchange of all such Convertible Securities, by (ii) the total maximum
number of shares of Common Stock issuable upon the exercise of all such
Options or upon the conversion or exchange of all such Convertible
Securities or upon the conversion or exchange of all Convertible
Securities issuable upon the exercise of all Options) shall be less than
the current market price per share of Common Stock (determined pursuant to
Section 5.01(g)) on the record date for the issuance, sale, distribution
or granting of such Options (any such event being herein called a
"Distribution") then, effective upon such Distribution, the Exercise Price
shall be reduced to the price (calculated to the nearest 1/1,000 of one
cent) determined by multiplying the Exercise price in effect immediately
prior to such Distribution by a fraction, the numerator of which shall be
the sum of (i) the number of shares of Common Stock outstanding (exclusive
of any treasury shares) immediately prior to such Distribution multiplied
by the current market price per share of Common Stock (determined pursuant
to Section 5.01(g)) on the date of such Distribution plus (ii) the
consideration, if any, received by the Company upon such Distribution, and
the denominator of which shall be the product of (A) the total number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately after such Distribution multiplied by (B) the current market
price per share of Common Stock (determined pursuant to Section 5.01(g))
on the record date for such Distribution. For purposes of the foregoing,
the total maximum number of shares of Common Stock issuable upon exercise
of all such Options or upon the conversion or exchange of all such
Convertible Securities or upon the commission or exchange
<PAGE> 27
-23-
of the total maximum amount of the Convertible Securities issuable upon
the exercise of all such Options shall be deemed to have been issued as of
the date of such Distribution and thereafter shall be deemed to be
outstanding and the Company shall be deemed to have received as
consideration therefor such price per share, determined as provided above.
Except as provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual exercise of
such Options or upon conversion or exchange of the Convertible Securities
or upon the conversion or exchange of the Convertible Securities issuable
upon the exercise of such Options.
(d) Dividends and Distributions. In the event the Company shall, at
any time or from time to time after the date hereof, distribute to all the
holders of Common Stock any dividends or other distribution of cash,
evidences of its indebtedness, other securities or other properties or
assets (in each case other than (i) dividends payable in Common Stock,
Options or Convertible Securities and (ii) any cash dividend from current
or retained earnings), or any options, warrants or other rights to
subscribe for or purchase any of the foregoing, then (A) the Exercise
Price shall be decreased to a price determined by multiplying the Exercise
Price then in effect by a fraction, the numerator of which shall be the
current market price per share of Common Stock (determined pursuant to
Section 5.01(g)) on the record date for such distribution less the sum of
(X) the cash portion, if any, of such distribution per share of Common
Stock outstanding (exclusive of any treasury shares) on the record date
for such distribution plus (Y) the then fair market value (as determined
in good faith by the Board of Directors of the Company) per share of
Common Stock outstanding (exclusive of any treasury shares) on the record
date for such distribution of that portion, if any, of such distribution
consisting of evidences of indebtedness, other securities, properties,
assets (other than cash), options, warrants or subscription or purchase
rights, and the denominator of which shall be such current market price
per share of Common Stock and (B) the number of Shares purchasable upon
the exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Preferred Stock so purchasable
immediately prior to the record date for such distribution by a fraction,
the numerator of which shall be the Exercise Price in effect immediately
prior to the adjustment required by clause (A)
<PAGE> 28
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of this sentence and the denominator of which shall be the Exercise Price
in effect immediately after such adjustment. The adjustments required by
this paragraph (d) shall be made whenever any such distribution occurs
retroactive to the record date for the determination of stockholders
entitled to receive such distribution.
(e) Self-Tenders. In case of the consummation of a tender or
exchange offer (other than an odd-lot tender offer) made by the Company or
any subsidiary of the Company for all or any portion of the Common Stock
to the extent that the cash and value of any other consideration included
in such payment per share of Common Stock exceeds the first reported sales
price per share of Common Stock on the trading day next succeeding the
last time tenders or exchanges may be made pursuant to the tender or
exchange offer (the "Expiration Time"), the Exercise Price shall be
reduced so that the same shall equal the price determined by multiplying
the Exercise Price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) at the
Expiration Time multiplied by the first reported sales price of the Common
Stock on the trading day next succeeding the Expiration Time, and the
denominator shall be the sum of (A) the fair market value (determined by
the Board of Directors of the Company, whose determination shall be
conclusive and described in a resolution of the Board of Directors) of the
aggregate consideration payable to stockholders based on the acceptance
(up to any maximum specified in the terms of the tender or exchange offer)
of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (B) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares)
on the Expiration Time and the first reported sales price of the Common
Stock on the trading day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time.
(f) This paragraph intentionally omitted.
(g) Current Market Price. For the purpose of any computation of
current market price, the current market price per share of Common Stock
at any date shall be
<PAGE> 29
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(x) for purposes of Section 5.02, the closing price on the business day
immediately prior to the exercise of the applicable Warrant and (y) in all
other cases, the average of the daily closing prices for the shorter of
(i) the 20 consecutive trading days ending on the last full trading day on
the exchange or market specified in the second succeeding sentence prior
to the Time of Determination (as defined below) and (ii) the period
commencing on the date next succeeding the first public announcement of
the issuance, sale, distribution or granting in question through such last
full trading day prior to the Time of Determination. The term "Time of
Determination" as used herein shall be the time and date of the earlier to
occur of (A) the date as of which the current market price is to be
computed and (B) the last full trading day on such exchange or market
before the commencement of "exdividend" trading in the Common Stock
relating to the event giving rise to the adjustment required by paragraph
(a), (b), (c) or (d). The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked prices regular
way for such day, in each case (1) on the principal national securities
exchange on which the shares of Common Stock are listed or to which such
shares are admitted to trading or (2) if the Common Stock is not listed or
admitted to trading on a national securities exchange, in the
over-the-counter market as reported by the Nasdaq National Market or any
comparable system or (3) if the Common Stock is not listed on the Nasdaq
National Market or a comparable system, as furnished by two members of the
NASD selected from time to time in good faith by the Board of Directors of
the Company for that purpose. In the absence of all of the foregoing, or
if for any other reason the current market price per share cannot be
determined pursuant to the foregoing provisions of this paragraph (g), the
current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company.
(h) Certain Distributions. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (c) above, such Options or Convertible
Securities shall be deemed to have been issued or sold without
consideration.
<PAGE> 30
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(i) Consideration Received. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed for a
consideration other than cash, the amount of the consideration other than
cash received by the Company in respect thereof shall be deemed to be the
then fair market value of such consideration (as determined in good faith
by the Board of Directors of the Company). If any Options shall be issued
in connection with the issuance and sale of other securities of the
Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued without consideration;
provided, however, that if such Options have an exercise price equal to or
greater than the current market price of the Common Stock on the date of
issuance of such Options, then such Options shall be deemed to have been
issued for consideration equal to such exercise price.
(j) Deferral of Certain Adjustments. No adjustment to the Exercise
Price (including the related adjustment to the number of Shares
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one
percent (1%) of the Exercise Price; provided that any adjustments which by
reason of this paragraph (j) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. No adjustment
need be made for a change in the par value of the Common Stock. All
calculations under this Section shall be made to the nearest 1/1,000 of
one cent or to the nearest 1/1000th of a share, as the case may be.
(k) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) above, or the
rate at which any Convertible Securities referred to in paragraph (c)
above are Convertible into or exchangeable for Common Stock shall change
at any time (other than under or by reason of provisions designed to
protect against dilution upon an event which results in a related
adjustment pursuant to this Article V), the Exercise Price then in effect
and the number of Shares purchasable upon the exercise of each Warrant
shall forthwith
<PAGE> 31
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be readjusted (effective only with respect to any exercise of any Warrant
after such readjustment) to the Exercise Price and number of Shares so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with
respect to such Options and Convertible Securities as then remain
outstanding.
(l) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of Shares purchasable upon the
exercise of each Warrant shall have been made pursuant to paragraph (c) or
(k) above or this paragraph (l), any Options or Convertible Securities
shall have expired unexercised, the number of such Shares so purchasable
shall, upon such expiration, be readjusted and shall thereafter be such as
they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the
only shares of Common Stock deemed to have been issued in connection with
such Options or Convertible Securities were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such Options or
Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received
by the Company for the issuance, sale, distribution or granting of all
such Options or Convertible Securities, whether or not exercised; provided
that no such readjustment shall have the effect of decreasing the number
of such shares so purchasable by an amount (calculated by adjusting such
decrease to account for all other adjustments made pursuant to this
Article V following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution or granting of such Options or Convertible
Securities.
(m) Other Adjustments. In the event that at any time, as a result of
an adjustment made pursuant to this Article V, holders of Warrants shall
become entitled to receive any securities of the Company other than shares
of Preferred Stock, thereafter the number of such other securities so
receivable upon exercise of the Warrants and the Exercise Price applicable
to such exercise shall be
<PAGE> 32
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subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Shares of
Preferred Stock contained in this Article V.
(n) Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than any action described in this Article V, then the number
of Shares for which this Warrant is exercisable shall be adjusted in such
manner as may be equitable in the circumstances. If the Company shall at
any time and from time to time issue or sell (i) any shares of any class
of common stock other than Common Stock, (ii) any evidences of its
indebtedness, shares of stock or other securities which are convertible
into or exchangeable for such shares of common stock, with or without the
payment of additional consideration in cash or property or (iii) any
warrants or other rights to subscribe for or purchase any such shares of
common stock or any such evidences, shares of stock or other securities,
then in each such case such issuance shall be deemed to be of, or in
respect of, Common Stock for purposes of this Article V; provided,
however, that, without limiting the generality of the foregoing, if the
Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, common stock other than Common Stock, including shares of
non-voting common stock, then the number of Shares for which this Warrant
is exercisable immediately after the occurrence of any such event shall be
adjusted to equal the aggregate number of shares of such common stock and
of Common Stock which a record holder of the same number of Shares for
which this Warrant is exercisable immediately prior to the occurrence of
such event would own or be entitled to receive after the happening of such
event.
(o) Statement of Warrants. Irrespective of any adjustment in the
number or kind of Shares issuable upon the exercise of the Warrants or the
Exercise Price, Warrants theretofore or thereafter issued shall continue
to express the same number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
SECTION 5.02. Fractional Interest. The Company shall not be
required to issue fractional shares of Preferred
<PAGE> 33
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Stock on the exercise of Warrants. If more than one Warrant shall be presented
for exercise in full at the same time by the same holder, the number of full
shares of Preferred Stock which shall be issuable upon such exercise shall be
computed on the basis of the aggregate number of shares of Preferred Stock
acquirable on exercise of the Warrants so presented. If any fraction of a share
of Preferred Stock would, except for the provisions of this Section, be issuable
on the exercise of any Warrant (or specified portion thereof), the Company shall
direct the transfer agent for the Preferred Stock to pay an amount in cash
calculated by the Company to equal the then current market price per share of
Common Stock (determined pursuant to Section 5.01(g)) multiplied by such
fraction computed to the nearest whole cent. Holders of Warrants, by their
acceptances of the Warrant Certificates, expressly waive any and all rights to
receive any fraction of a share of Preferred Stock or a stock certificate
representing a fraction of a share of Preferred Stock.
SECTION 5.03. When Adjustment Not Required. If the Company shall
take a record of the holders of its Common 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 to stockholders thereof,
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.
SECTION 5.04. Challenge to Good Faith Determination. Whenever the
Board of Directors of the Company shall be required to make a determination in
good faith of the fair value of any item under this Article V, such
determination may be challenged in good faith by holders holding a majority of
the outstanding Warrants (the "Majority Holders"), and any dispute shall be
resolved by an investment banking firm of national standing selected by the
Company. The fee of such investment banking firm shall be paid by the Company,
unless such fair market value as determined by the investment banking firm is
more than 95% of the fair market value determined by the Board of Directors of
the Company, in which case the challenging holders shall be jointly and
severally liable for such fee.
SECTION 5.05. Treasury Stock. The sale or other disposition of any
issued shares of Common Stock owned or held
<PAGE> 34
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by or for the account of the Company shall be deemed an issuance thereof and a
repurchase thereof and designation of such shares as treasury stock shall be
deemed to be a redemption thereof for the purposes of this Agreement.
SECTION 5.06. Notices to Warrant Holders. In connection with any
adjustment of the Exercise Price pursuant to this Article V, the Company shall
(i) promptly after such adjustment or, if earlier, at least five (5) days prior
to the date on which notice of such adjustment is required to be given, if at
all, to The Depository Trust Company cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company (who may be the regular
auditors of the Company) setting forth the Exercise Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of shares
(or portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) promptly after such adjustment cause to be given to each
of the registered holders of the Warrant Certificates at his address appearing
on the Warrant Register written notice of such adjustments by first-class mail,
postage prepaid. The Warrant Agent shall be entitled to conclusively rely on the
above-referenced accountant's certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time to any Holder desiring an inspection thereof during normal
business hours upon reasonable notice. The Warrant Agent shall not at any time
be under any duty or responsibility to any holder to determine whether any facts
exist that may require any adjustment of the number of Shares issuable on
exercise of the Warrants or the Exercise Price, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method employed
in making such adjustment or the validity or value (or the kind or amount) of
any Shares which may be issuable on exercise of the Warrants. The Warrant Agent
shall not be responsible for any failure of the Company to make any cash payment
or to issue, transfer or deliver any shares of Preferred Stock or stock
certificates or property upon the exercise of any Warrant.
The Company shall, in addition, promptly notify the holders of the
Warrants of any determination of its Board of
<PAGE> 35
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Directors pursuant to Section 5.01(n) that any actions affecting its Common
Stock will not require an adjustment to the Exercise Price or the number of
Shares for which a Warrant is exercisable, and shall specify in such notice the
reasons for such determination. In the event that the Majority Holders shall
challenge any of the calculations set forth in such notice within 20 days after
the Company's delivery thereof, the Company shall retain a firm of independent
certified public accountants of national standing selected by the Company to
prepare and execute a certificate verifying that no adjustment is required. The
Company shall promptly cause a signed copy of any certificate prepared pursuant
to this Section 5.06 to be delivered to each holder at his address appearing in
the Warrant Register. The Company shall keep at its office or agency designated
pursuant to Section 1.09 copies of all such certificates and cause the same to
be available for inspection at said office during normal business hours upon
reasonable notice by any holder or any prospective purchaser of a Warrant
designated by a holder thereof.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent. The Company hereby appoints BT
Securities Corporation as warrant agent (and in all capacities in this
agreement, the "Warrant Agent") of the Company in respect of the Warrants and
the Warrant Certificates upon the terms and subject to the conditions herein and
in the Warrant Certificates set forth; and BT Securities Corporation hereby
accepts such appointment. The Warrant Agent shall have the powers and authority
specifically granted to and conferred upon it in the Warrant Certificates and
hereby and such further powers and authority to act on behalf of the Company as
the Company may hereafter grant to or confer upon it and it shall accept in
writing. All of the terms and provisions with respect to such powers and
authority contained in the Warrant Certificates are subject to and governed by
the terms and provisions hereof.
SECTION 6.02. Conditions of Warrant Agent's Obligations. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof and in the Warrant Certificates, including the following, to all of which
the Company agrees and to all of which the rights hereunder of the holders from
time to time of the Warrant Certificates shall be subject:
<PAGE> 36
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(a) The Warrant Agent shall be entitled to compensation to be agreed
upon with the Company in writing for all services rendered by it and the Company
agrees promptly to pay such compensation and to reimburse the Warrant Agent for
its reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred without gross negligence or willful misconduct on its part in
connection with the services rendered by it hereunder. The Company also agrees
to indemnify the Warrant Agent, each predecessor Warrant Agent, and their
respective directors, officers, affiliates, agents and employees for, and to
hold it and its directors, officers, affiliates, agents and employees harmless
against, any loss, liability or expense of any nature whatsoever (including,
without limitation, fees and expenses of counsel) incurred without gross
negligence or willful misconduct on the part of the Warrant Agent or predecessor
Warrant Agent, arising out of or in connection with its acting as such Warrant
Agent hereunder and its exercise or failure to exercise of its rights and
performance of its obligations hereunder. The obligations of the Company under
this Section 6.02 shall survive the exercise and the expiration of the Warrant
Certificates and the resignation and removal of the Warrant Agent.
(b) In acting under this Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship of agency or trust for or
with any of the owners or holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel and any advice or
written opinion of such 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 accordance with such advice or opinion.
(d) The Warrant Agent shall be fully protected and shall incur no
liability for or in respect of any action taken or omitted to be taken or thing
suffered by it in reliance upon any Warrant Certificate, notice, direction,
consent, certificate, affidavit, opinion of counsel, instruction, statement or
other paper or document reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors, affiliates and
employees ("Related Parties"), may become the owners of, or acquire any interest
in, Warrant Certificates, shares or other obligations of the Company with the
same rights
<PAGE> 37
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that it or they would have it if were not the Warrant Agent hereunder and, to
the extent permitted by applicable law, it or they may engage or be interested
in any financial or other transaction with the Company and may act on, or as
depositary, trustee or agent for, any committee or body of holders of shares or
other obligations of the Company as freely as if it were not the Warrant Agent
hereunder. Nothing in this Agreement shall be deemed to prevent the Warrant
Agent or such Related Parties from acting in any other capacity for the Company.
(f) The Warrant Agent shall not be under any liability for interest
on, and shall not be required to invest, any monies at any time received by it
pursuant to any of the provisions of this Agreement or of the Warrant
Certificates.
(g) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement (or any term or provision hereof) or
the execution and delivery hereof (except the due execution and delivery hereof
by the Warrant Agent) or in respect of the validity or execution of any Warrant
Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in the
Warrant Certificates (except as to the Warrant Agent's authentication thereon)
shall be taken as the statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of the same. The Warrant Agent does not make
any representation as to the validity or sufficiency of this Agreement or the
Warrant Certificates, except for its due execution and delivery of this
Agreement; provided, however, that the Warrant Agent shall not be relieved of
its duty to authenticate the Warrant Certificates as authorized by this
Agreement. The Warrant Agent shall not be accountable for the use or application
by the Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Warrant Agreement, it may require:
(1) an Officers' Certificate (as defined in the Indenture) stating
that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Warrant Agreement relating to the proposed action
have been complied with; and
<PAGE> 38
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(2) if reasonably necessary in the sole judgment of the Warrant
Agent, an opinion of counsel for the Company stating that, in the opinion
of such counsel, all such conditions precedent have been complied with.
Each Officers' Certificate or, if requested, an opinion of counsel
with respect to compliance with a condition or covenant provided for in this
Warrant Agreement shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she has
made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such duties as
are herein and in the Warrant Certificates specifically set forth and no implied
duties or obligations shall be read into this Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Agreement. The Warrant Agent shall have no
duty or responsibility in case of any default by the Company in the performance
of its covenants or agreements contained in the Warrant Certificates or in the
case of the receipt of any written demand from a holder of a Warrant Certificate
with respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 7.02 hereof,
to make any demand upon the Company. The Warrant Agent shall not be obligated to
perform any duty to the extent prohibited by law.
<PAGE> 39
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(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the Company
made or given under any provision of this Agreement shall be sufficient if
signed by its chairman of the Board of Directors, its president, its treasurer,
its controller or any vice president or its secretary or any assistant
secretary.
(l) The Warrant Agent shall have no responsibility in respect of any
adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge
and deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the Warrant
Agent of the provisions of this Agreement.
(n) The Warrant Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties hereunder
from any one of the chairman of the Board of Directors, the president, the
treasurer, the controller, any vice president or the secretary of the Company or
any other officer or official of the Company reasonably believed to be
authorized to give such instructions and to apply to such officers or officials
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions with respect to any matter arising in connection
with the Warrant Agent's duties and obligations arising under this Agreement.
Such application by the Warrant Agent for written instructions from the Company
may, at the option of the Warrant Agent, set forth in writing any action
proposed to be taken or omitted by the Warrant Agent with respect to its duties
or obligations under this Agreement and the date on or after which such action
shall be taken and the Warrant Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall be not less than 10 Business
Days after the Company receives such application unless the Company consents to
a shorter period), provided that (i) such application includes a statement to
the effect that it is being made pursuant to this paragraph (n) and that unless
objected to prior to such date specified in the application, the Warrant Agent
will not be liable for any such action or omission to the extent set forth in
such application and (ii) prior to taking or omitting any such
<PAGE> 40
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action, the Warrant Agent has not received written instructions objecting to
such proposed action or omission.
(o) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the chairman of the Board of
Directors, the president, the treasurer, the controller, any vice president or
the secretary of the Company or any other officer or official of the Company
reasonably believed to be authorized to give such instructions and delivered to
the Warrant Agent; and such certificate shall be full authorization to the
Warrant Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(p) The Warrant Agent shall not be required to risk or expend its
own funds in the performance of its obligations and duties hereunder.
SECTION 6.03. Resignation and Appointment of Successor. (a) The
Company agrees, for the benefit of the holders from time to time of the Warrant
Certificates, that there shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective, provided that
such date shall be at least 30 days after the date on which such notice is given
unless the Company agrees to accept less notice. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor Warrant Agent,
qualified as provided in Section 6.03(d) hereof, by written instrument in
duplicate signed on behalf of the Company, one copy of which shall be delivered
to the resigning Warrant Agent and one copy to the successor Warrant Agent. As
provided in Section 6.03(d) hereof, such resignation shall become effective upon
the earlier of (x) the acceptance of the appointment by the successor Warrant
Agent or (y) 30 days after receipt by the Company of notice of such resignation.
The Company may, at any time and for any reason, and shall, upon any event set
forth in the next succeeding sentence, remove the Warrant Agent and appoint a
successor Warrant Agent by written instrument in duplicate,
<PAGE> 41
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specifying such removal and the date on which it is intended to become
effective, signed on behalf of the Company, one copy of which shall be delivered
to the Warrant Agent being removed and one copy to the successor Warrant Agent.
The Warrant Agent shall be removed as aforesaid if it shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Warrant Agent or of its property shall be appointed, or any public officer shall
take charge or control of it or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation. Any removal of the Warrant Agent
and any appointment of a successor Warrant Agent shall become effective upon
acceptance of appointment by the successor Warrant Agent as provided in Section
6.03(d). As soon as practicable after appointment of the successor Warrant
Agent, the Company shall cause written notice of the change in the Warrant Agent
to be given to each of the registered holders of the Warrants in the manner
provided for in Section 7.04 hereof.
(c) Upon resignation or removal of the Warrant Agent, if the Company
shall fail to appoint a successor Warrant Agent within a period of 30 days after
receipt of such notice of resignation or removal, then the holder of any Warrant
Certificate or the Warrant Agent may apply to a court of competent jurisdiction
for the appointment of a successor to the Warrant Agent. Pending appointment of
a successor to the Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company.
(d) Any successor Warrant Agent, whether appointed by the Company or
by a court, shall be a bank or trust company in good standing, incorporated
under the laws of the United States of America or any State thereof and having,
at the time of its appointment, a combined capital surplus of at least $50
million. Such successor Warrant Agent shall execute and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Warrant Agent hereunder,
and such predecessor shall thereupon become obligated to (i) transfer and
deliver, and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.02(a)
<PAGE> 42
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hereof, pay over, and such successor Warrant Agent shall be entitled to receive,
all monies deposited with or held by any predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder
may be merged or converted, or any corporation or bank with which the Warrant
Agent may be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation or bank to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust business, shall be the successor
to the Warrant Agent under this Agreement (provided that such corporation or
bank shall be qualified as aforesaid) without the execution or filing of any
document or any further act on the part of any of the parties hereto.
(f) No Warrant Agent under this Warrant Agreement shall be
personally liable for any action or omission of any successor Warrant Agent or
of the Company.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment. This Agreement and the terms of the
Warrants may be amended by the Company and the Warrant Agent, without the
consent of the holder of any Warrant Certificate, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein or in any other manner which
the Company may deem necessary or desirable and which shall not adversely affect
in any material respect the interests of the holders of the Warrant
Certificates.
The Company and the Warrant Agent may modify this Agreement and the
terms of the Warrants with the consent of not less than a majority in number of
the then outstanding Warrants for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the holders of the outstanding Warrants;
provided, however, that no such modification that decreases the Exercise Rate,
reduces the period of time during which the Warrants are exercisable hereunder,
otherwise materially and adversely affects the exercise rights of the holders of
the Warrants, reduces the percentage required for modification, or effects any
change to this Section 7.01
<PAGE> 43
-39-
may be made with respect to an outstanding Warrant without the consent of the
holder of such Warrant.
Any modification or amendment made in accordance with this Agreement
will be conclusive and binding on all present and future holders of Warrant
Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.
SECTION 7.02. Notices and Demands to the Company and Warrant Agent.
If the Warrant Agent shall receive any notice or demand addressed to the Company
by the holder of a Warrant Certificate pursuant to the provisions hereof or of
the Warrant Certificates, the Warrant Agent shall promptly forward such notice
or demand to the Company.
SECTION 7.03. Addresses for Notices to Parties and for Transmission
of Documents. All notices hereunder to the parties hereto shall be deemed to
have been given when sent by certified or registered mail, postage prepaid, or
by telex or telecopy, confirmed by first class mail, postage prepaid, addressed
to any party hereto as follows:
To the Company:
HarCor Energy, Inc.
Five Post Oak Park
4400 Post Oak Parkway
Suite 2220
Houston, Texas 77027-3413
Attention: President
with copies to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: John S. Watson
Facsimile: (713) 758-2346
Telephone: (713) 758-2222
<PAGE> 44
-40-
To the Warrant Agent:
BT Securities Corporation
One Bankers Trust Plaza
130 Liberty Street
30th Floor
New York, NY 10006
Attention: Corporate Finance Department
Facsimile: (212) 250-7200
Telephone: (212) 250-2500
or at any other address of which either of the foregoing shall have notified the
other in writing.
SECTION 7.04. Notices to Holders. Notices to holders of Warrants
shall be mailed to such holders at the addresses of such holders as they appear
in the Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid.
SECTION 7.05. APPLICABLE LAW. THE VALIDITY, INTERPRETATION AND
PERFORMANCE OF THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER AND
OF THE RESPECTIVE TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
SECTION 7.06. Obtaining of Governmental Approvals. The Company will
from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities acts filings
under United States Federal and State laws, and the rules and regulations of all
stock exchanges on which the Warrants are listed which may be or become
requisite in connection with the issuance, sale, transfer, and delivery of the
Warrant Certificates, the exercise of the Warrants or the issuance, sale,
transfer and delivery of the shares issued upon exercise of the Warrants.
SECTION 7.07. Persons Having Rights Under Agreement. Nothing in this
Agreement expressed or implied and nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the Company, the Warrant Agent and
<PAGE> 45
-41-
the holders of the Warrant Certificates any right, remedy or claim under or by
reason of this Agreement or of any covenant, condition, stipulation, promise or
agreement hereof; and all covenants, conditions, stipulations, promises and
agreements in this Agreement contained shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and their successors and of the
holders of the Warrant Certificates.
SECTION 7.08. Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 7.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.10. Inspection of Agreement. A copy of this Agreement
shall be available at all reasonable times at the principal corporate trust
office of the Warrant Agent, for inspection by the holder of any Warrant
Certificate. The Warrant Agent may require such holder to submit his Warrant
Certificate for inspection by it.
SECTION 7.11. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
<PAGE> 46
-42-
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
HARCOR ENERGY, INC.
By: ____________________________
Name: Mark Harrington
Title: Chief Executive
Officer
BT SECURITIES CORPORATION,
as Warrant Agent
By: ____________________________
Name: Brian McBride
Title: Vice President
<PAGE> 47
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
[Unless and until it is exchanged in whole or in part for Warrants
in certificated form, this Warrant may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.](1)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACTS OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501
(A)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO HARCOR ENERGY, INC. (THE "COMPANY")
OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED
- -------------------------
1 This paragraph is to be included only if the Warrant is in
global form.
A-1
<PAGE> 48
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 PROMULGATED
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE),
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE WARRANT AGENT AND HARCOR ENERGY, INC.
(THE "COMPANY") SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SECURITYHOLDERS' AND REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 24,
1995 AMONG BT SECURITIES CORPORATION, INTERNATIONALE NEDERLANDEN (U.S.)
CORPORATION AND THE COMPANY, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY.
A-2
<PAGE> 49
CUSIP #[ ]
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
HARCOR ENERGY, INC.
This Warrant Certificate certifies that [ ], or registered assigns,
is the registered holder of [ ] Warrants (the "Warrants") to purchase shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of HARCOR
ENERGY, INC., a Delaware corporation (the "Company"). Each Warrant entitles the
holder to purchase from the Company at any time on or after July 24 1996 until
5:00 p.m., New York City time, on July 24, 2000 (the "Expiration Date"), one
fully paid and nonassessable share of Preferred Stock (a "Share", or, if
adjusted, the "Shares", which may also include any other securities or property
purchasable upon exercise of a Warrant, such adjustment and inclusion each as
provided in the Warrant Agreement) at the exercise price (the "Exercise Price")
of $3.85 per Warrant upon surrender of this Warrant Certificate and payment of
the Exercise Price at any office or agency maintained for that purpose by the
Company (the "Warrant Agent Office"), subject to the conditions set forth herein
and in the Warrant Agreement.
The Exercise Price shall be payable by certified check or official
bank check or by such other means as is acceptable to the Company in the lawful
currency of the United States of America which as of the time of payment is
legal tender for payment of public or private debts. The Company has initially
designated the corporate trust office of the Warrant Agent in the Borough of
Manhattan, the City of New York, as the initial Warrant Agent Office. The number
of Shares issuable upon exercise of the Warrants ("Exercise Rate") is subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on July 24, 2000 shall thereafter be void.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as though
fully set forth at this place. Capitalized terms used in this Warrant
Certificate but not defined
A-3
<PAGE> 50
herein shall have the meanings ascribed thereto in the Warrant Agreement.
This Warrant Certificate shall not be valid unless authenticated by
the Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
A-4
<PAGE> 51
WITNESS the facsimile seal of the Company and facsimile signatures
of its duly authorized officers.
Dated:
HARCOR ENERGY, INC.
By: __________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
BT SECURITIES CORPORATION,
as Warrant Agent
By: _____________________________
Authorized Signatory
A-5
<PAGE> 52
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
HARCOR ENERGY, INC.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants, each of which represents the right to
purchase at any time on or after July 24, 1996, until 5:00 p.m., New York City
time, on July 24, 2000, one share of Preferred Stock of the Company, subject to
adjustment as set forth in the Warrant Agreement. The Warrants are issued
pursuant to a Warrant Agreement dated as of July 24, 1995 (the "Warrant
Agreement"), duly executed and delivered by the Company to BT Securities
Corporation, as Warrant Agent (the "Warrant Agent"), which Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the holders (the words "holders" or "holder" meaning the registered holders
or registered holder) of the Warrants. Warrants may be exercised by (i)
surrendering at any Warrant Agent Office this Warrant Certificate with the form
of Election to Exercise set forth hereon duly completed and executed and (ii)
paying in full the Warrant Exercise Price for each such Warrant exercised and
any other amounts required to be paid pursuant to the Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 2:00 p.m.,
New York City time, on a Business Day, the exercise of the Warrant to which such
items relate will be effective on such Business Day. If any items referred to in
the last sentence of the preceding paragraph are received after 2:00 p.m., New
York City time, on a Business Day, the exercise of the Warrants to which such
item relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on the
Expiration Date, if all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 5:00 p.m.,
New York City time, on such Expiration Date, the exercise of the Warrants to
which such items relate will be effective on the Expiration Date.
Subject to the terms of the Warrant Agreement, as soon as
practicable after the exercise of any Warrant or Warrants, the Company shall
issue or cause to be issued to or upon the written order of the registered
holder of this Warrant Certificate, a certificate or certificates evidencing the
Share or Shares to which such holder is entitled, in fully registered
A-6
<PAGE> 53
form, registered in such name or names as may be directed by such holder
pursuant to the Election to Exercise, as set forth on the reverse of this
Warrant Certificate. Such certificate or certificates evidencing the Share or
Shares shall be deemed to have been issued and any persons who are designated to
be named therein shall be deemed to have become the holder of record of such
Share or Shares as of the close of business on the date upon which the exercise
of this Warrant was deemed to be effective as provided in the preceding
paragraph.
The Company will not be required to issue fractional shares of
Preferred Stock upon exercise of the Warrants or distribute Share certificates
that evidence fractional shares of Preferred Stock. In lieu of fractional shares
of Preferred Stock, there shall be paid to the registered Holder of this Warrant
Certificate at the time such Warrant Certificate is exercised an amount in cash
equal to the same fraction of the Current Market Value per share of Common Stock
as determined in accordance with the Warrant Agreement.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof in
person or by legal representative or attorney duly authorized in writing, may be
exchanged for a new Warrant Certificate or new Warrant Certificates evidencing
in the aggregate a like number of Warrants, in the manner and subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone) for the
purpose of any exercise hereof and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in New
York City, (ii) the principal national securities exchange or market on which
the Common Stock is listed or
A-7
<PAGE> 54
admitted to trading and (iii) the principal national securities exchange or
market on which the Warrants are listed or admitted to trading are open for
business.
A-8
<PAGE> 55
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise _____ of the
Warrants represented by this Warrant Certificate and purchase the whole number
of Shares issuable upon the exercise of such Warrants and herewith tenders
payment for such Shares in the amount of $_________ in cash or by certified or
official bank check, in accordance with the terms hereof. The undersigned
requests that a certificate representing such Shares be registered in the name
of ______________________ whose address is _____________________________ and
that such certificate be delivered to ___________________________ whose address
is __________________________. Any cash payments to be paid in lieu of a
fractional Share should be made to __________________ whose address is
________________________ and the check representing payment thereof should be
delivered to ______________________ whose address is
__________________.
Dated __________________, 19__
Name of holder of
Warrant Certificate: _______________________________
(Please Print)
Tax Identification or
Social Security Number: ____________________________
Address: ___________________________________________
___________________________________________
Signature: _________________________________________
Note: The above signature must
correspond with the name as written upon the
face of this Warrant Certificate in every
particular, without alteration or enlargement
or any change whatever.
Dated ____________________, 19__
A-9
<PAGE> 56
[FORM OF ASSIGNMENT]
For value received _______________________ hereby sells, assigns and
transfers unto _____________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint __________________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Dated ____________________, 199__
Signature: ________________________________________
Note: The above signature must
correspond with the name as written upon the
face of this Warrant Certificate in every
particular, without alteration or enlargement
or any change whatever.
A-10
<PAGE> 57
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(2)
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
<TABLE>
<CAPTION>
Number of
Warrants of
Amount of Amount of this Global
decrease in increase in Warrant Signature of
Number of Number of following authorized
Date of Warrants of this Warrants of this such decrease officer of
Exchange Global Warrant Global Warrant (or increase) Warrant Agent
_______________________________________________________________________________
<S> <C> <C> <C> <C>
</TABLE>
______________________
(2) This is to be included only if the Warrant is in global form.
A-11
<PAGE> 58
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Preferred Stock (the "Warrants")
of Harcor Energy, Inc.
This Certificate relates to ____ Warrants held in* ___ book-entry
or* _______ certificated form by ______ (the "Transferor").
The Transferor:*
/ / has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Warrant (or the portion thereof indicated above); or
/ / has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such Warrant,
the Transferor does hereby certify that the Transferor is familiar with the
Warrant Agreement relating to the above captioned Warrants and the restrictions
on transfers thereof as provided in Section 1.07 of such Warrant Agreement, and
that the transfer of this Warrant does not require registration under the
Securities Act of 1933, as amended (the "Act") because[*]:
/ / Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 1.07(a)(y)(A) or Section
1.07(d)(i)(A) of the Warrant Agreement).
/ / Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Act), in reliance on Rule 144A or in
accordance with Regulation S under the Act.
/ / Such Warrant is being transferred in accordance with Rule 144 under
the Act.
B-1
<PAGE> 59
/ / Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act, other than Rule
144A or Rule 144 or Regulation S under the Act. An opinion of counsel to the
effect that such transfer does not require registration under the Act
accompanies this Certificate.
_______________________________
[INSERT NAME OF TRANSFEROR]
By: _________________________
Date: _____________
*Check applicable box.
B-2
<PAGE> 60
EXHIBIT C
Transferee Letter of Representation
Harcor Energy, Inc.
Five Post Oak Park
4400 Post Oak Parkway
Suite 2220
Houston, Texas 77027-3413
Ladies and Gentlemen:
In connection with our proposed purchase of warrants to purchase
Preferred Stock, par value $.01 per share, (the "Securities") of Harcor Energy,
Inc. (the "Company") we confirm that:
1. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") and, unless
so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account
for which we are purchasing Securities to offer, sell or otherwise
transfer such Securities prior to the date which is three years after the
later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities, or any
predecessor thereto (the "Resale Restriction Termination Date") only (a)
to the Company, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) so long as the Securities
are eligible for resale pursuant to Rule 144A, under the Securities Act,
to a person we reasonably believe is a qualified institutional buyer under
Rule 144A (a "QIB") that purchases for its own account or for the account
of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales that occur outside
the United States within the meaning of Regulation S under the Securities
Act, (e) to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act
that is purchasing for his own account or for the account of such an
institutional "accredited investor," or (f) pursuant to any other
available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that
the disposition of our property or the property of such investor account
or accounts be at
C-1
<PAGE> 61
all times within our or their control and to compliance with any
applicable state securities laws. The foregoing restrictions on resale
will not apply subsequent to the Resale Restriction Termination Date. If
any resale or other transfer of the Securities is proposed to be made
pursuant to clause (e) above prior to the Resale Restriction Termination
Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the warrant agent under the
Warrant Agreement pursuant to which the Securities were issued (the
"Warrant Agent") which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act
and that it is acquiring such Securities for investment purposes and not
for distribution in violation of the Securities Act. The Warrant Agent and
the Company reserve the right prior to any offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Securities
pursuant to clause (e) or (f) above to require the delivery of a written
opinion of counsel, certifications, and or other information satisfactory
to the Company and the Warrant Agent.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Securities for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment for an indefinite
period.
3. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
C-2
<PAGE> 62
4. You, the Warrant Agent, and your respective counsel are entitled
to rely upon this letter and you are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to the matters
covered hereby.
Very truly yours,
_________________________
(Name of Purchaser)
By:______________________
Date:____________________
Upon transfer the Securities would be registered in the name of the
new beneficial owner as follows:
Name:______________________________
Address:___________________________
Taxpayer ID Number:________________
C-3
<PAGE> 1
===============================================================================
WARRANT AGREEMENT
Dated as of July 24, 1995
Between
HARCOR ENERGY, INC.
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Warrant Agent
----------------------
-------
Warrants to Purchase Shares of Common Stock
Par Value $.10 Per Share
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants.................................. 2
SECTION 1.02. Form of Warrant Certificates.......................... 2
SECTION 1.03. Execution of Warrant Certificates..................... 2
SECTION 1.04. Authentication and Delivery........................... 3
SECTION 1.05. Temporary Warrant Certificates........................ 4
SECTION 1.06. Separation of Warrants and Notes...................... 5
SECTION 1.07. Registration.......................................... 5
SECTION 1.08. Registration of Transfers and Exchanges............... 5
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or Mutilated
Warrant Certificates............................. 13
SECTION 1.10. Offices for Exercise, etc............................. 14
ARTICLE II
DURATION, EXERCISE OF WARRANTS
AND EXERCISE PRICE
SECTION 2.01. Duration of Warrants.................................. 15
SECTION 2.02. Exercise, Exercise Price, Settlement and Delivery..... 15
SECTION 2.03. Cancellation of Warrant Certificates.................. 18
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights................................. 18
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes...................................... 18
SECTION 4.02. Qualification Under the Securities Laws............... 19
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE V
ADJUSTMENTS
<S> <C>
SECTION 5.01. Adjustment of Exercise Price and
Number of Shares Issuable........................ 20
SECTION 5.02. Fractional Interest................................... 29
SECTION 5.03. When Adjustment Not Required.......................... 29
SECTION 5.04. Challenge to Good Faith Determination.............. 30
SECTION 5.05. Treasury Stock..................................... 30
SECTION 5.06. Notices to Warrant Holders......................... 30
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent......................................... 32
SECTION 6.02. Conditions of Warrant Agent's Obligations............. 32
SECTION 6.03. Resignation and Appointment of Successor.............. 37
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment............................................. 39
SECTION 7.02. Notices and Demands to the Company and Warrant Agent.. 39
SECTION 7.03. Addresses for Notices to Parties and for Transmission
of Documents..................................... 40
SECTION 7.04. Notices to Holders.................................... 40
SECTION 7.05. Applicable Law........................................ 41
SECTION 7.06. Obtaining of Governmental Approvals................... 41
SECTION 7.07. Persons Having Rights Under Agreement................. 41
SECTION 7.08. Headings.............................................. 41
SECTION 7.09. Counterparts.......................................... 41
SECTION 7.10. Inspection of Agreement............................... 41
SECTION 7.11. Successors............................................ 42
</TABLE>
EXHIBIT A - Form of Warrant Certificate
EXHIBIT B - Certificate To Be Delivered upon
Exchange or Registration of
Transfer of Warrants
EXHIBIT C - Transferee Letter of Representation
-ii-
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Section
- ------------ -------
<S> <C>
Agreement............................................. Recitals
Business Day.......................................... 2.01
Common Stock.......................................... 1.01
Company............................................... Recitals
Convertible Securities................................ 5.01(c)
Definitive Warrants................................... 1.02
Distribution.......................................... 5.02(c)
Election To Exercise.................................. 2.02(b)
Exercisability Date................................... 2.02(a)
Exercise Date......................................... 2.02(d)
Exercise Price........................................ 2.02(a)
Expiration Date....................................... 2.01
Global Warrants....................................... 1.02
Indenture............................................. Recitals
Initial Purchasers.................................... Recitals
Majority Holders...................................... 5.04
Notes................................................. Recitals
Prospectus............................................ 4.02
Purchased Shares...................................... 5.01(e)
Registrar............................................. 1.07
Related Parties....................................... 6.02(e)
Resale Restriction Termination Date................... 1.08
Securities Act........................................ 1.06
Shares................................................ 1.01
Time of Determination................................. 5.01(g)
Trustee............................................... Recitals
Units................................................. Recitals
Warrant Agent......................................... 6.01
Warrant Agent Office.................................. 1.10
Warrant Certificates.................................. Recitals
Warrant Exercise Office............................... 2.02(b)
Warrant Register...................................... 1.07
Warrants.............................................. Recitals
</TABLE>
-iii-
<PAGE> 5
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement"), dated as of July 24, 1995 by HarCor
Energy, Inc., a Delaware corporation (together with any successor thereto, the
"Company"), and Texas Commerce Bank National Association, a national banking
association, as warrant agent (with any successor Warrant Agent, the "Warrant
Agent").
WHEREAS, the Company has entered into a purchase agreement dated
July 24, 1995 with BT Securities Corporation and Internationale Nederlanden
(U.S.) Securities Corporation (the "Initial Purchasers") in which the Company
has agreed, among other things, to sell to the Initial Purchasers (A) 65,000
units (the "Units") consisting in the aggregate of (i) $65,000,000 aggregate
principal amount of 14 7/8% Senior Secured Notes due 2002 (the "Notes") of the
Company to be issued under an indenture dated as of July 24, 1995 (the
"Indenture"), among the Company and Warrior, Inc. and HTAC Investments, Inc., as
guarantors and Texas Commerce Bank National Association, as trustee (the
"Trustee"), and (ii) 1,430,000 Warrants to purchase an equal number of shares of
common stock, $.10 par value per share (the "Common Stock"), of the Company (the
"Note Warrants") and (B) 350,000 Warrants to purchase an equal number of shares
of Common Stock (the "Additional Warrants" and, together with the Note Warrants,
the "Warrants", and the certificates evidencing the Warrants being hereinafter
referred to as "Warrant Certificates"), in each case subject to adjustment in
accordance with the terms hereof; and
WHEREAS, the Note Warrants and the Notes comprising part of the
Units shall be separately transferable immediately; and
WHEREAS, the Company desires the Warrant Agent as warrant agent to
assist the Company in connection with the issuance, exchange, cancellation,
replacement and exercise of the Warrants, and in this Agreement wishes to set
forth, among other things, the terms and conditions on which the Warrants may be
issued, exchanged, cancelled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE> 6
-2-
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants. Each Warrant Certificate shall
evidence the number of Warrants specified therein, and each Warrant evidenced
thereby shall represent the right, subject to the provisions contained herein
and therein, to purchase from the Company (and the Company shall issue and sell
to such holder of the Warrant) one fully paid and non-assessable share of the
Company's Common Stock (the shares of Common Stock purchasable upon exercise of
a Warrant being hereinafter referred to as the "Shares" and, where appropriate,
such term shall also mean the other securities or property purchasable and
deliverable upon exercise of a Warrant as provided in Article V) at the price
specified herein and therein, in each case subject to adjustment as provided
herein and therein.
SECTION 1.02. Form of Warrant Certificates. The Warrant Certificates
will initially be issued either in global form (the "Global Warrants"),
substantially in the form of Exhibit A hereto (including footnote 1 thereto), or
in registered form as definitive Warrant certificates (the "Definitive
Warrants"). The Warrant Certificates evidencing the Global Warrants or the
Definitive Warrants to be delivered pursuant to this Agreement shall be
substantially in the form set forth in Exhibit A attached hereto. Such Global
Warrants shall represent such of the outstanding Warrants as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and Depositary
(as defined below) in accordance with instructions given by the holder thereof.
The Depository Trust Company shall act as the Depositary with respect to the
Global Warrants until a successor shall be appointed by the Company. Upon
written request, a Warrant holder may receive from the Warrant Agent Definitive
Warrants as set forth in Section 1.08 hereof.
SECTION 1.03. Execution of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of the Company by the chairman of its
Board of Directors, its
<PAGE> 7
-3-
president or any vice president and attested by its secretary or assistant
secretary, under its corporate seal. Such signatures may be the manual or
facsimile signatures of the present or any future such officers. The seal of the
Company may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates. Typographical and
other minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any Warrant
Certificate that has been duly countersigned and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be countersigned and delivered by the Warrant Agent
or disposed of by the Company, such Warrant Certificate nevertheless may be
countersigned and delivered or disposed of as though the person who signed such
Warrant Certificate had not ceased to be such officer of the Company; and any
Warrant Certificate may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Warrant Certificate, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Agreement any such person was not such an officer.
SECTION 1.04. Authentication and Delivery. Subject to the
immediately following paragraph, Warrant Certificates shall be authenticated by
manual signature and dated the date of authentication by the Warrant Agent and
shall not be valid for any purpose unless so authenticated and dated. The
Warrant Certificates shall be numbered and shall be registered in the Warrant
Register (as defined in Section 1.07 hereof).
Upon the receipt by the Warrant Agent of a written order of the
Company, which order shall be signed by the chairman of its Board of Directors,
its president or any vice president and attested by its secretary or assistant
secretary, and shall specify the amount of Warrants to be authenticated, whether
the Warrants are to be Global Warrants or Definitive Warrants, the date of such
Warrants and such other information as the Warrant Agent may reasonably request,
without any further action by the Company, the Warrant Agent is authorized, upon
receipt from the Company at any time and from time to time of the Warrant
Certificates, duly executed as provided in Section 1.03 hereof, to authenticate
the Warrant Certificates and deliver them. Such authentication shall be by a
duly authorized signatory of the Warrant Agent (although it shall not be
<PAGE> 8
-4-
necessary for the same signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company,
such Warrant Certificate nevertheless may be delivered or disposed of as though
the person who authenticated such Warrant Certificate had not ceased to be such
authorized signatory of the Warrant Agent; and any Warrant Certificate may be
authenticated on behalf of the Warrant Agent by such persons as, at the actual
time of authentication of such Warrant Certificates, shall be the duly
authorized signatories of the Warrant Agent, although at the time of the
execution and delivery of this Agreement any such person is not such an
authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall
be in substantially the form set forth in Exhibit A hereto.
SECTION 1.05. Temporary Warrant Certificates. Pending the
preparation of definitive Warrant Certificates, the Company may execute, and the
Warrant Agent shall authenticate and deliver, temporary Warrant Certificates,
which are printed, lithographed, typewritten or otherwise produced,
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Warrant
Certificates may determine, as evidenced by their execution of such Warrant
Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 1.10 hereof.
Subject to the provisions of Section 4.01 hereof, such exchange shall be without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Warrant Certificates, the Company shall execute, and the Warrant Agent
shall authenticate and deliver in exchange therefor, one or more definitive
Warrant Certificates representing in the aggregate a like number of Warrants.
Until so exchanged, the holder of a temporary Warrant Certificate shall
<PAGE> 9
-5-
in all respects be entitled to the same benefits under this Agreement as a
holder of a definitive Warrant Certificate.
SECTION 1.06. Separation of Warrants and Notes. The Notes and
Warrants will be separately transferable immediately.
SECTION 1.07. Registration. The Company will keep, at the office or
agency maintained by the Company for such purpose, a register or registers in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of, and registration of transfer and exchange
of, Warrants as provided in this Article. Each person designated by the Company
from time to time as a person authorized to register the transfer and exchange
of the Warrants is hereinafter called, individually and collectively, the
"Registrar". The Company hereby initially appoints the Warrant Agent as
Registrar. Upon written notice to the Warrant Agent and any acting Registrar,
the Company may appoint a successor Registrar for such purposes.
The Company will at all times designate one person (who may be the
Company and who need not be a Registrar) to act as repository of a master list
of names and addresses of the holders of Warrants (the "Warrant Register"). The
Warrant Agent will act as such repository unless and until some other person is,
by written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each Registrar
to furnish to such repository, on a current basis, such information as to all
registrations of transfer and exchanges effected by such Registrar, as may be
necessary to enable such repository to maintain the Warrant Register on as
current a basis as is practicable.
SECTION 1.08. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Warrants. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants,
<PAGE> 10
-6-
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
1.08 hereof for such transactions are met; provided, however, that the
Definitive Warrants presented or surrendered for registration of transfer or
exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Company and the Warrant Agent,
duly executed by the holder thereof or by his attorney, duly
authorized in writing; and
(y) in the case of Warrants the offer and sale of which have not been
registered under the Securities Act and are presented for transfer
or exchange prior to (x) the date which is three years after the
later of the date of original issue and the last date on which the
Company or any affiliate of the Company was the owner of such
Warrant, or any predecessor thereto and (y) such later date, if any,
as may be required by any subsequent change in applicable law (the
"Resale Restriction Termination Date"), such Warrants shall be
accompanied, in the sole discretion of the Company, by the following
additional information and documents, as applicable:
(A) if such Warrant is being delivered to the Warrant Agent by a
holder for registration in the name of such holder, without
transfer, a certification from such holder to that effect (in
substantially the form of Exhibit B hereto); or
(B) if such Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the
Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto); or
(C) if such Warrant is being transferred to an institutional
"accredited investor" within the meaning of subparagraphs
(a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under the
Securities Act,
<PAGE> 11
-7-
delivery of a Certificate of Transfer in the form of Exhibit C
hereto and an opinion of counsel and/or other information
satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; or
(D) if such Warrant is being transferred in reliance on another
exemption from the registration requirements of the Securities
Act, a certification to that effect (in substantially the form
of Exhibit B hereto) and an opinion of counsel reasonably
acceptable to the Company to the effect that such transfer is
in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Warrant for a
Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
transferred for a beneficial interest in a Global Warrant except upon
satisfaction of the requirements set forth below. Upon receipt by the Warrant
Agent of a Definitive Warrant, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Warrant Agent, together
with:
(A) certification, substantially in the form of Exhibit B hereto,
that such Definitive Warrant is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(B) written instructions directing the Warrant Agent to make, or
to direct the Depositary to make, an endorsement on the Global
Warrant to reflect an increase in the aggregate amount of the
Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall authenticate a new Global Warrant in the appropriate amount.
<PAGE> 12
-8-
(c) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Section 1.08 and the procedures
of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global
Warrant for a Definitive Warrant.
(i) Any person having a beneficial interest in a Global Warrant may upon
request transfer such beneficial interest for a Definitive Warrant.
Upon receipt by the Warrant Agent of written instructions or such
other form of instructions as is customary for the Depositary from
the Depositary or its nominee on behalf of any person having a
beneficial interest in a Global Warrant and upon receipt by the
Warrant Agent of a written order or such other form of instructions
as is customary for the Depositary or the person designated by the
Depositary as having such a beneficial interest containing
registration instructions and, in the case of any such transfer or
exchange prior to the Resale Restriction Termination Date, the
following additional information and documents:
(A) if such beneficial interest is being transferred to the person
designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in
substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a
qualified institutional buyer (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 or Regulation S under the
Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form of Exhibit
B hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor" within the meaning of
subparagraphs (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501
under the Securities Act, delivery of a Certificate of
Transfer
<PAGE> 13
-9-
in the form of Exhibit C hereto and an opinion of counsel
and/or other information satisfactory to the Company to the
effect that such transfer is in compliance with the Securities
Act; or
(D) if such beneficial interest is being transferred
in reliance on another exemption from the
registration requirements of the Securities Act,
a certification to that effect (in substantially
the form of Exhibit B hereto) and an opinion of
counsel reasonably acceptable to the Company to
the effect that such transfer is in compliance
with the Securities Act,
then the Warrant Agent will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Warrant Agent, the aggregate amount of the Global Warrant to be
reduced and, following such reduction, the Company will execute and,
upon receipt of an authentication order in the form of an Officers'
Certificate (as defined), the Warrant Agent will authenticate and
deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in
a Global Warrant pursuant to this Section 1.08(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Warrant Agent in
writing. The Warrant Agent shall deliver such Definitive Warrants to
the persons in whose names such Warrants are so registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 1.08), a Global Warrant
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
<PAGE> 14
-10-
(f) Authentication of Definitive Warrants in Absence of
Depositary. If at any time:
(i) the Depositary for the Warrants notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the
Global Warrant and a successor Depositary for the Global Warrant is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon receipt of an
officers' certificate signed by two officers of the Company (one of whom must be
the principal executive officer, principal financial officer or principal
accounting officer) (an "Officers' Certificate") requesting the authentication
and delivery of Definitive Warrants, will authenticate and deliver Definitive
Warrants, in an aggregate number equal to the aggregate number of warrants
represented by the Global Warrant, in exchange for such Global Warrant.
(g) Legends.
(i) Except to the extent permitted by the following paragraph (ii), each
Warrant Certificate evidencing the Global Warrants and the
Definitive Warrants (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501
(A)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS
<PAGE> 15
-11-
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO HARCOR ENERGY, INC. (THE "COMPANY") OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 PROMULGATED
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE),
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE WARRANT AGENT AND HARCOR ENERGY, INC.
(THE "COMPANY") SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SECURITYHOLDERS' AND REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 24,
1995 AMONG BT SECURITIES CORPORATION, INTERNATIONALE NEDERLANDEN (U.S.)
SECURITIES CORPORATION AND THE
<PAGE> 16
-12-
COMPANY, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
To the extent a Warrant Certificate evidences a Global Warrant, such
Warrant Certificate shall also bear the legend with respect thereto
substantially in the form set forth on Exhibit A hereto.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144 under
the Securities Act in accordance with Section 1.08 hereof or an
effective registration statement under the Securities Act:
(A) in the case of any Warrant that is a Definitive Warrant, the
Warrant Agent shall permit the holder thereof to exchange such
Warrant for a Definitive Warrant that does not bear the first
paragraph of the legend set forth above and rescind any
related restriction on the transfer of such Warrant; and
(B) any such Warrant represented by a Global Warrant shall not be
subject to the provisions set forth in (i) above (such sales
or transfers being subject only to the provisions of Section
1.08(c) hereof); provided, however, that with respect to any
request for an exchange of a Warrant that is represented by a
Global Warrant for a Definitive Warrant that does not bear the
first paragraph of the legend set forth above, which request
is made in reliance upon Rule 144 under the Securities Act,
the holder thereof shall certify in writing to the Warrant
Agent that such request is being made pursuant to Rule 144
under the Securities Act (such certification to be
substantially in the form of Exhibit B hereto).
(h) Cancellation and/or Adjustment of a Global Warrant. At such
time as all beneficial interests in a Global Warrant have either been exchanged
for Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant
shall be returned to or retained and cancelled by the Warrant Agent. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exchanged for Definitive Warrants, redeemed, repurchased or cancelled, the
number of Warrants represented by such Global Warrant shall be reduced and
<PAGE> 17
-13-
an endorsement shall be made on such Global Warrant, by the Warrant Agent to
reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Definitive Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute, at the Warrant Agent's request, and the Warrant Agent
shall authenticate Definitive Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement as the Definitive
Warrants or Global Warrants surrendered upon the registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant is registered as the absolute owner
of such Warrant, and neither the Warrant Agent nor the Company shall
be affected by notice to the contrary.
(j) Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of the Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for the Shares in a name
other than that of the registered holder of a Warrant Certificate surrendered
upon the exercise of a Warrant, and the Company shall not be required to issue
or deliver such Warrant Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
Certificates. Upon receipt by the Company and the Warrant Agent (or any agent of
the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of indemnity reasonably satisfactory to them and,
in the case of mutilation or
<PAGE> 18
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defacement, upon surrender thereof to the Warrant Agent for cancellation, then,
in the absence of notice to the Company or the Warrant Agent that such Warrant
Certificate has been acquired by a bona fide purchaser or holder in due course,
the Company shall execute, and an authorized signatory of the Warrant Agent
shall manually authenticate and deliver, in exchange for or in lieu of the lost,
stolen, destroyed, defaced or mutilated Warrant Certificate, a new Warrant
Certificate representing a like number of Warrants, bearing a number or other
distinguishing symbol not contemporaneously outstanding. Upon the issuance of
any new Warrant Certificate under this Section, the Company may require the
payment from the holder of such Warrant Certificate of a sum sufficient to cover
any tax, stamp tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Warrant
Agent and the Registrar) in connection therewith. Every substitute Warrant
Certificate executed and delivered pursuant to this Section in lieu of any lost,
stolen or destroyed Warrant Certificate shall constitute an additional
contractual obligation of the Company, whether or not the lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone, and
shall be entitled to the benefits of (but shall be subject to all the
limitations of rights set forth in) this Agreement equally and proportionately
with any and all other Warrant Certificates duly executed and delivered
hereunder. The provisions of this Section 1.09 are exclusive with respect to the
replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates and shall preclude (to the extent lawful) any and all other rights
or remedies notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement of lost, stolen, destroyed, defaced
or mutilated Warrant Certificates.
The Warrant Agent is hereby authorized to authenticate in accordance
with the provisions of this Agreement, and deliver the new Warrant Certificates
required pursuant to the provisions of this Section.
SECTION 1.10. Offices for Exercise, etc. So long as any of the
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of New York: (a) an office or agency where the
Warrant Certificates may be presented for exercise, (b) an office or agency
where the Warrant Certificates may be presented for registration of transfer and
for exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates
<PAGE> 19
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pursuant to Section 1.05 hereof), and (c) an office or agency where notices and
demands to or upon the Company in respect of the Warrants or of this Agreement
may be served. The Company may from time to time change or rescind such
designation, as it may deem desirable or expedient; provided, however, that an
office or agency shall at all times be maintained in the Borough of Manhattan,
The City of New York, as provided in the first sentence of this Section. In
addition to such office or offices or agency or agencies, the Company may from
time to time designate and maintain one or more additional offices or agencies
within or outside The City of New York, where Warrant Certificates may be
presented for exercise or for registration of transfer or for exchange, and the
Company may from time to time change or rescind such designation, as it may deem
desirable or expedient. The Company will give to the Warrant Agent written
notice of the location of any such office or agency and of any change of
location thereof. The Company hereby designates the Warrant Agent at its agent's
office in the Borough of Manhattan, the City of New York (the "Warrant Agent
Office"), as the initial agency maintained for each such purpose.
ARTICLE II
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
SECTION 2.01. Duration of Warrants. Subject to the terms and
conditions established herein, the Warrants shall expire at 5:00 p.m., New York
City time, on July 24, 2000 (the "Expiration Date"). Each Warrant may be
exercised on any Business Day (as defined below) on or after the Exercisability
Date (as defined below) and on or prior to the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date relating to such Warrant shall become void, and all rights of
the holder under the Warrant Certificate evidencing such Warrant and under this
Agreement shall cease.
"Business Day" shall mean any day on which (i) banks in New York
City, (ii) the principal national securities exchange or market on which the
Common Stock is listed or admitted to trading and (iii) the principal national
securities exchange or market, if any, on which the Warrants are listed or
admitted to trading are open for business.
SECTION 2.02. Exercise, Exercise Price, Settlement and Delivery. (a)
Subject to the provisions of this
<PAGE> 20
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Agreement, a holder of Warrants shall have the right to purchase from the
Company on or after July 24, 1996 (the "Exercisability Date") and on or prior to
the Expiration Date one fully paid, registered and non-assessable Share, subject
to adjustment in accordance with Article V hereof, at the purchase price of
$3.85 for each Warrant exercised (the "Exercise Price").
(b) Warrants may be exercised on or after the Exercisability Date
by (i) surrendering at any office or agency maintained for that purpose by the
Company pursuant to Section 1.10 (each a "Warrant Exercise Office") the Warrant
Certificate evidencing such Warrants with the form of election to purchase
Shares set forth on the reverse side of the Warrant Certificate (the "Election
to Exercise") duly completed and signed by the registered holder or holders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney, and (ii) paying in full the Exercise Price for each such
Warrant exercised and any other amounts required to be paid pursuant to Section
1.08(j) hereof. Each Warrant may be exercised only in whole.
(c) Simultaneously with the exercise of each Warrant, payment in
full of the Exercise Price shall be made in cash or by certified or official
bank check to be delivered to the office or agency where the Warrant Certificate
is being surrendered. No payment or adjustment shall be made on account of any
dividends on the Shares issued upon exercise of a Warrant.
(d) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than any
Warrant Exercise Office that also is an office of the Warrant Agent), such
Warrant Certificate and payment shall be promptly delivered to the Warrant
Agent. The "Exercise Date" for a Warrant shall be the date when all of the items
referred to in the first sentence of paragraphs (b) and (c) of this Section 2.02
are received by the Warrant Agent at or prior to 2:00 p.m., New York City time,
on a Business Day and the exercise of the Warrants will be effective as of such
Exercise Date. If any items referred to in the first sentence of paragraphs (b)
and (c) are received after 2:00 p.m., New York City time, on a Business Day, the
exercise of the Warrants to which such item relates will be effective on the
next succeeding Business Day. Notwithstanding the foregoing, in the case of an
exercise of Warrants on the Expiration Date (as defined in Section 2.01), if all
of the items referred
<PAGE> 21
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to in the first sentence of paragraphs (b) and (c) are received by the Warrant
Agent at or prior to 5:00 p.m., New York City time, on such Expiration Date, the
exercise of the Warrants to which such items relate will be effective on the
Expiration Date.
(e) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise Price,
the Warrant Agent shall: (i) cause an amount equal to the Exercise Price to be
paid to the Company by crediting the same to the account designated by the
Company in writing to the Warrant Agent for that purpose; (ii) advise the
Company immediately by telephone of the amount so deposited to the Company's
account and promptly confirm such telephonic advice in writing; and (iii) as
soon as practicable, advise the Company in writing of the number of Warrants
(giving effect to Section 5.01(o) below) exercised in accordance with the terms
and conditions of this Agreement and the Warrant Certificates, the instructions
of each exercising holder of the Warrant Certificates with respect to delivery
of the Shares to which such holder is entitled upon such exercise, and such
other information as the Company shall reasonably request.
(f) Subject to Section 5.02 hereof, as soon as practicable after
the exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered holder of the Warrant Certificate evidencing such exercised Warrant
or Warrants, a certificate or certificates evidencing the Shares to which such
holder is entitled, in fully registered form, registered in such name or names
as may be directed by such holder pursuant to the Election to Exercise, as set
forth on the reverse of the Warrant Certificate. The Warrant Agent shall have no
obligation to ascertain the number of Shares to be issued with respect to the
exercised Warrant or Warrants. Such certificate or certificates evidencing the
Shares shall be deemed to have been issued and any persons who are designated to
be named therein shall be deemed to have become the holder of record of such
Shares as of the close of business on the Exercise Date. After such exercise of
any Warrant or Warrants, the Company shall also issue or cause to be issued to
or upon the written order of the registered holder of such Warrant Certificate,
a new Warrant Certificate, countersigned by the Warrant Agent pursuant to the
Company's written instruction, evidencing the number of Warrants, if any,
remaining unexercised unless such Warrants shall have expired.
<PAGE> 22
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SECTION 2.03. Cancellation of Warrant Certificates. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall be canceled by it and retired. The Warrant Agent shall
cancel all Warrant Certificates properly surrendered for exchange, substitution,
transfer or exercise. The Warrant Agent shall destroy canceled Warrant
Certificates held by it and deliver a certificate of destruction to the Company.
The Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of Warrant Shares through the exercise of such Warrants.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights. (a) Notwithstanding any of the
provisions of this Agreement, any holder of any Warrant Certificate, without the
consent of the Warrant Agent, the holder of any Shares or the holder of any
other Warrant Certificate, may, in and for his own behalf, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, his right to exercise the Warrant or Warrants evidenced by
his Warrant Certificate in the manner provided in such Warrant Certificate and
in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle
the holders thereof to any of the rights of a holder of Shares, including,
without limitation, the right to vote or to receive any dividends or other
payments or to consent or to receive notice as stockholders in respect of the
meetings of stockholders or for the election of directors of the Company or to
share in the assets of the Company in the event of the liquidation, dissolution
or winding up of the Company's affairs or any other matter, or any rights
whatsoever as stockholders of the Company.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial
<PAGE> 23
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issuance of Warrants and of the Shares upon the exercise of Warrants or to the
separation of the Warrants and Notes as described in Section 4.01; provided,
however, that the Company shall not be required to pay any tax or other
governmental charge which may be payable in respect of any transfer or exchange
of any Warrant Certificates or any certificates for Shares in a name other than
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant. In any such case, no transfer or exchange shall be made unless or
until the person or persons requesting issuance thereof shall have paid to the
Company the amount of such tax or other governmental charge or shall have
established to the satisfaction of the Company that such tax or other
governmental charge has been paid or an exemption is available therefrom.
SECTION 4.02. Qualification Under the Securities Laws. Prior to the
Exercisability Date, the Company will take all such action as is necessary to
cause the Shares issuable upon exercise of the Warrants to be registered or
otherwise qualified under the provisions of the Securities Act and pursuant to
all applicable state securities laws. So long as any unexpired Warrants remain
outstanding, the Company will file such amendments and/or supplements to any
registration statement under the Securities Act or under any state securities
laws covering the issuance of such Shares and supplement and keep current any
prospectus forming a part of such registration statement as may be necessary to
permit the Company to deliver to each person exercising a Warrant a prospectus
meeting the requirements of Section 10(a)(3) of the Securities Act (a
"Prospectus") and the regulations of the Securities and Exchange Commission and
otherwise complying with the Securities Act and regulations thereunder, and as
may be necessary to comply with any applicable state securities laws. The
Company shall, upon the request of any holder of Warrants that may be required
pursuant to the Securities Act to deliver a prospectus in connection with any
sale or other disposition of Shares, include within the plan of distribution
section of the Prospectus and in such other places in the Prospectus as may be
necessary, all information required under the Securities Act to enable such
holder to deliver a Prospectus in connection with sales or other dispositions of
such Shares, and the Company shall also take such action as may be necessary
under the Securities Act with respect to the related registration statement to
enable such holder to effect such delivery in connection with such sale or other
disposition. The Company further agrees to provide any holder who may be
required to deliver a prospectus upon the sale or other disposition of such
Shares, such number
<PAGE> 24
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of copies of the Prospectus as such holder reasonably requests. The Warrant
Agent shall have no duty to monitor when such registration or qualification is
necessary nor shall the Warrant Agent be responsible for the Company's failure
to comply with this Section 4.02.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Price and Number of Shares
Issuable. The number and kind of Shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital
stock of any other class), (B) subdivide its outstanding shares of Common
Stock or (C) combine its outstanding shares of Common Stock into a smaller
number of shares, the (a) number of Shares purchasable upon exercise of
each Warrant immediately prior thereto shall be adjusted so that the
holder of any Warrant thereafter exercised shall be entitled to receive
the number of Shares which such holder would have owned immediately
following such action had such Warrant been exercised immediately prior
thereto, and (b) the Exercise Price payable upon exercise of each Warrant
shall be adjusted by multiplying such Exercise Price immediately prior to
such adjustment by a fraction, of which the numerator shall be the number
of Shares purchasable upon the exercise of each Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of
Shares purchasable immediately thereafter. An adjustment made pursuant to
this paragraph shall become effective immediately after the record date in
the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to this
paragraph, the holder of any Warrant thereafter exercised shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall
be conclusive) shall determine the allocation of the adjusted Exercise
Price between or among shares of such classes of capital stock.
<PAGE> 25
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(b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock (other
than as set forth in paragraph (a) above and other than a change in par
value, or from par value to no par value, or from no par value to par
value, or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification
or change of the then outstanding shares of Common Stock or other capital
stock of the Company (other than a change in par value, or from par value
to no par value, or from par value to par value or as a result of a
subdivision or combination)) or in case of any sale or conveyance to
another corporation of all or substantially all of the assets of the
Company, then, as a condition of such reclassification, change,
consolidation, merger, sale or conveyance, the Company or such a successor
or purchasing corporation, as the case may be, shall forthwith make lawful
and adequate provision whereby the holder of such Warrant then outstanding
shall have the right thereafter to receive on exercise of such Warrant the
kind and amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale
or conveyance by a holder of the number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and enter into a
supplemental warrant agreement so providing. Such provisions shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article V. If the
issuer of securities deliverable upon exercise of Warrants under the
supplemental warrant agreement is an affiliate of the formed, surviving or
transferee corporation, that issuer shall join in the supplemental warrant
agreement. The above provisions of this paragraph (b) shall similarly
apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
In case of any such reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation (if other
than the Company) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this Warrant
Agreement to be performed and observed by the
<PAGE> 26
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Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments
of shares of the Common Stock for which this Warrant is exercisable which
shall be as nearly equivalent as practicable to the adjustments provided
for in this Article V. The foregoing provisions of this Section 5.01(b)
shall similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of assets.
(c) Issuance of Options or Convertible Securities. In the event
the Company shall, at any time or from time to time after the date hereof,
issue, sell, distribute or otherwise grant in any manner (including by
assumption) to all holders of the Common Stock any rights to subscribe for
or to purchase, or any warrants or options for the purchase of, Common
Stock or any stock or securities convertible into or exchangeable for
Common Stock (any such rights, warrants or options being herein called
"Options" and any such convertible or exchangeable stock or securities
being herein called "Convertible Securities") or any Convertible
Securities (other than upon exercise of any Option), whether or not such
Options or the rights to convert or exchange such Convertible Securities
are immediately exercisable, and the price per share at which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as
consideration for the issuance, sale, distribution or granting of such
Options or any such Convertible Security, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon
the exercise of all such Options or upon conversion or exchange of all
such Convertible Securities, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of all such Options or upon the
conversion or exchange of all such Convertible Securities or upon the
conversion or exchange of all Convertible Securities issuable upon the
exercise of all Options) shall be less than the current market price per
share of Common Stock (determined pursuant to Section 5.01(g)) on the
record date for the issuance,
<PAGE> 27
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sale, distribution or granting of such Options (any such event being
herein called a "Distribution") then, effective upon such Distribution,
the Exercise Price shall be reduced to the price (calculated to the
nearest 1/1,000 of one cent) determined by multiplying the Exercise price
in effect immediately prior to such Distribution by a fraction, the
numerator of which shall be the sum of (i) the number of shares of Common
Stock outstanding (exclusive of any treasury shares) immediately prior to
such Distribution multiplied by the current market price per share of
Common Stock (determined pursuant to Section 5.01(g)) on the date of such
Distribution plus (ii) the consideration, if any, received by the Company
upon such Distribution, and the denominator of which shall be the product
of (A) the total number of shares of Common Stock outstanding (exclusive
of any treasury shares) immediately after such Distribution multiplied by
(B) the current market price per share of Common Stock (determined
pursuant to Section 5.01(g)) on the record date for such Distribution. For
purposes of the foregoing, the total maximum number of shares of Common
Stock issuable upon exercise of all such Options or upon the conversion or
exchange of all such Convertible Securities or upon the commission or
exchange of the total maximum amount of the Convertible Securities
issuable upon the exercise of all such Options shall be deemed to have
been issued as of the date of such Distribution and thereafter shall be
deemed to be outstanding and the Company shall be deemed to have received
as consideration therefor such price per share, determined as provided
above. Except as provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual exercise of
such Options or upon conversion or exchange of the Convertible Securities
or upon the conversion or exchange of the Convertible Securities issuable
upon the exercise of such Options.
(d) Dividends and Distributions. In the event the Company shall, at
any time or from time to time after the date hereof, distribute to all the
holders of Common Stock any dividends or other distribution of cash,
evidences of its indebtedness, other securities or other properties or
assets (in each case other than (i) dividends payable in Common Stock,
Options or Convertible Securities and (ii) any cash dividend from current
or retained earnings), or any options, warrants or other rights to
subscribe for or purchase any of the foregoing, then (A) the Exercise
Price shall be decreased to a price determined by
<PAGE> 28
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multiplying the Exercise Price then in effect by a fraction, the numerator
of which shall be the current market price per share of Common Stock
(determined pursuant to Section 5.01(g)) on the record date for such
distribution less the sum of (X) the cash portion, if any, of such
distribution per share of Common Stock outstanding (exclusive of any
treasury shares) on the record date for such distribution plus (Y) the
then fair market value (as determined in good faith by the Board of
Directors of the Company) per share of Common Stock outstanding (exclusive
of any treasury shares) on the record date for such distribution of that
portion, if any, of such distribution consisting of evidences of
indebtedness, other securities, properties, assets (other than cash),
options, warrants or subscription or purchase rights, and the denominator
of which shall be such current market price per share of Common Stock and
(B) the number of Shares purchasable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of
shares of Common Stock so purchasable immediately prior to the record date
for such distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to the adjustment required by
clause (A) of this sentence and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment. The
adjustments required by this paragraph (d) shall be made whenever any such
distribution occurs retroactive to the record date for the determination
of stockholders entitled to receive such distribution.
(e) Self-Tenders. In case of the consummation of a tender or
exchange offer (other than an odd-lot tender offer) made by the Company or
any subsidiary of the Company for all or any portion of the Common Stock
to the extent that the cash and value of any other consideration included
in such payment per share of Common Stock exceeds the first reported sales
price per share of Common Stock on the trading day next succeeding the
last time tenders or exchanges may be made pursuant to the tender or
exchange offer (the "Expiration Time"), the Exercise Price shall be
reduced so that the same shall equal the price determined by multiplying
the Exercise Price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) at the
Expiration Time multiplied by the first reported sales price of the Common
Stock on the trading
<PAGE> 29
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day next succeeding the Expiration Time, and the denominator shall be the
sum of (A) the fair market value (determined by the Board of Directors of
the Company, whose determination shall be conclusive and described in a
resolution of the Board of Directors) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to
as the "Purchased Shares") and (B) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the first reported sales price of the Common Stock on the trading
day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day
following the Expiration Time.
(f) This paragraph intentionally omitted.
(g) Current Market Price. For the purpose of any computation of
current market price, the current market price per share of Common Stock
at any date shall be (x) for purposes of Section 5.02, the closing price
on the business day immediately prior to the exercise of the applicable
Warrant and (y) in all other cases, the average of the daily closing
prices for the shorter of (i) the 20 consecutive trading days ending on
the last full trading day on the exchange or market specified in the
second succeeding sentence prior to the Time of Determination (as defined
below) and (ii) the period commencing on the date next succeeding the
first public announcement of the issuance, sale, distribution or granting
in question through such last full trading day prior to the Time of
Determination. The term "Time of Determination" as used herein shall be
the time and date of the earlier to occur of (A) the date as of which the
current market price is to be computed and (B) the last full trading day
on such exchange or market before the commencement of "ex-dividend"
trading in the Common Stock relating to the event giving rise to the
adjustment required by paragraph (a), (b), (c) or (d). The closing price
for any day shall be the last reported sale price regular way or, in case
no such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case (1) on the
principal national securities exchange on which the shares of Common Stock
are listed or
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to which such shares are admitted to trading or (2) if the Common Stock is
not listed or admitted to trading on a national securities exchange, in
the over-the-counter market as reported by the Nasdaq National Market or
any comparable system or (3) if the Common Stock is not listed on the
Nasdaq National Market or a comparable system, as furnished by two members
of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this
paragraph (g), the current market price per share shall be the fair market
value thereof as determined in good faith by the Board of Directors of the
Company.
(h) Certain Distributions. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (c) above, such Options or Convertible
Securities shall be deemed to have been issued or sold without
consideration.
(i) Consideration Received. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed for a
consideration other than cash, the amount of the consideration other than
cash received by the Company in respect thereof shall be deemed to be the
then fair market value of such consideration (as determined in good faith
by the Board of Directors of the Company). If any Options shall be issued
in connection with the issuance and sale of other securities of the
Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued without consideration;
provided, however, that if such Options have an exercise price equal to or
greater than the current market price of the Common Stock on the date of
issuance of such Options, then such Options shall be deemed to have been
issued for consideration equal to such exercise price.
(j) Deferral of Certain Adjustments. No adjustment to the Exercise
Price (including the related adjustment to the number of Shares
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
<PAGE> 31
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provided below, would result in an increase or decrease of at least one
percent (1%) of the Exercise Price; provided that any adjustments which by
reason of this paragraph (j) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. No adjustment
need be made for a change in the par value of the Common Stock. All
calculations under this Section shall be made to the nearest 1/1,000 of
one cent or to the nearest 1/1000th of a share, as the case may be.
(k) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) above, or the
rate at which any Convertible Securities referred to in paragraph (c)
above are Convertible into or exchangeable for Common Stock shall change
at any time (other than under or by reason of provisions designed to
protect against dilution upon an event which results in a related
adjustment pursuant to this Article V), the Exercise Price then in effect
and the number of Shares purchasable upon the exercise of each Warrant
shall forthwith be readjusted (effective only with respect to any exercise
of any Warrant after such readjustment) to the Exercise Price and number
of Shares so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration or conversion rate, as the case may be, but only
with respect to such Options and Convertible Securities as then remain
outstanding.
(l) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of Shares purchasable upon the
exercise of each Warrant shall have been made pursuant to paragraph (c) or
(k) above or this paragraph (l), any Options or Convertible Securities
shall have expired unexercised, the number of such Shares so purchasable
shall, upon such expiration, be readjusted and shall thereafter be such as
they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the
only shares of Common Stock deemed to have been issued in connection with
such Options or Convertible Securities were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such Options or
<PAGE> 32
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Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received
by the Company for the issuance, sale, distribution or granting of all
such Options or Convertible Securities, whether or not exercised; provided
that no such readjustment shall have the effect of decreasing the number
of such shares so purchasable by an amount (calculated by adjusting such
decrease to account for all other adjustments made pursuant to this
Article V following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution or granting of such Options or Convertible
Securities.
(m) Other Adjustments. In the event that at any time, as a result
of an adjustment made pursuant to this Article V, holders of Warrants
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of the Warrants and the Exercise Price applicable
to such exercise shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Shares of Common Stock contained in this Article V.
(n) Other Action Affecting Common Stock. In case at any time or
from time to time the Company shall take any action in respect of its
Common Stock, other than any action described in this Article V, then the
number of Shares for which this Warrant is exercisable shall be adjusted
in such manner as may be equitable in the circumstances. If the Company
shall at any time and from time to time issue or sell (i) any shares of
any class of common stock other than Common Stock, (ii) any evidences of
its indebtedness, shares of stock or other securities which are
convertible into or exchangeable for such shares of common stock, with or
without the payment of additional consideration in cash or property or
(iii) any warrants or other rights to subscribe for or purchase any such
shares of common stock or any such evidences, shares of stock or other
securities, then in each such case such issuance shall be deemed to be of,
or in respect of, Common Stock for purposes of this Article V; provided,
however, that, without limiting the generality of the foregoing, if the
<PAGE> 33
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Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, common stock other than Common Stock, including shares of
non-voting common stock, then the number of Shares for which this Warrant
is exercisable immediately after the occurrence of any such event shall be
adjusted to equal the aggregate number of shares of such common stock and
of Common Stock which a record holder of the same number of Shares for
which this Warrant is exercisable immediately prior to the occurrence of
such event would own or be entitled to receive after the happening of such
event.
(o) Statement of Warrants. Irrespective of any adjustment in the
number or kind of Shares issuable upon the exercise of the Warrants or the
Exercise Price, Warrants theretofore or thereafter issued shall continue
to express the same number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
SECTION 5.02. Fractional Interest. The Company shall not be required
to issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full shares of Common Stock which shall be issuable
upon such exercise shall be computed on the basis of the aggregate number of
shares of Common Stock acquirable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall direct the transfer agent for the Common Stock to
pay an amount in cash calculated by the Company to equal the then current market
price per share (determined pursuant to Section 5.01(g)) multiplied by such
fraction computed to the nearest whole cent. Holders of Warrants, by their
acceptances of the Warrant Certificates, expressly waive any and all rights to
receive any fraction of a share of Common Stock or a stock certificate
representing a fraction of a share of Common Stock.
SECTION 5.03. When Adjustment Not Required. If the Company shall
take a record of the holders of its Common 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 to stockholders thereof,
legally abandon its plan to pay or deliver such dividend,
<PAGE> 34
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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.
SECTION 5.04. Challenge to Good Faith Determination. Whenever the
Board of Directors of the Company shall be required to make a determination in
good faith of the fair value of any item under this Article V, such
determination may be challenged in good faith by holders holding a majority of
the outstanding Warrants (the "Majority Holders"), and any dispute shall be
resolved by an investment banking firm of national standing selected by the
Company. The fee of such investment banking firm shall be paid by the Company,
unless such fair market value as determined by the investment banking firm is
more than 95% of the fair market value determined by the Board of Directors of
the Company, in which case the challenging holders shall be jointly and
severally liable for such fee.
SECTION 5.05. Treasury Stock. The sale or other disposition of any
issued shares of Common Stock owned or held by or for the account of the Company
shall be deemed an issuance thereof and a repurchase thereof and designation of
such shares as treasury stock shall be deemed to be a redemption thereof for the
purposes of this Agreement.
SECTION 5.06. Notices to Warrant Holders. In connection with any
adjustment of the Exercise Price pursuant to this Article V, the Company shall
(i) promptly after such adjustment or, if earlier, at least five (5) days prior
to the date on which notice of such adjustment is required to be given, if at
all, to The Depository Trust Company cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company (who may be the regular
auditors of the Company) setting forth the Exercise Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of shares
(or portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) promptly after such adjustment cause to be given to each
of the registered holders of the Warrant Certificates at his address appearing
on the Warrant Register written notice of
<PAGE> 35
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such adjustments by first-class mail, postage prepaid. The Warrant Agent shall
be entitled to conclusively rely on the above-referenced accountant's
certificate and shall be under no duty or responsibility with respect to any
such certificate, except to exhibit the same from time to time to any Holder
desiring an inspection thereof during normal business hours upon reasonable
notice. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder to determine whether any facts exist that may
require any adjustment of the number of Shares issuable on exercise of the
Warrants or the Exercise Price, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed in making such
adjustment or the validity or value (or the kind or amount) of any Shares which
may be issuable on exercise of the Warrants. The Warrant Agent shall not be
responsible for any failure of the Company to make any cash payment or to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
common stock or property upon the exercise of any Warrant.
The Company shall, in addition, promptly notify the holders of the
Warrants of any determination of its Board of Directors pursuant to Section
5.01(n) that any actions affecting its Common Stock will not require an
adjustment to the Exercise Price or the number of Shares for which a Warrant is
exercisable, and shall specify in such notice the reasons for such
determination. In the event that the Majority Holders shall challenge any of the
calculations set forth in such notice within 20 days after the Company's
delivery thereof, the Company shall retain a firm of independent certified
public accountants of national standing selected by the Company to prepare and
execute a certificate verifying that no adjustment is required. The Company
shall promptly cause a signed copy of any certificate prepared pursuant to this
Section 5.06 to be delivered to each holder at his address appearing in the
Warrant Register. The Company shall keep at its office or agency designated
pursuant to Section 1.10 copies of all such certificates and cause the same to
be available for inspection at said office during normal business hours upon
reasonable notice by any holder or any prospective purchaser of a Warrant
designated by a holder thereof.
<PAGE> 36
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ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent. The Company hereby appoints Texas
Commerce Bank National Association as warrant agent (and in all capacities in
this Agreement, the "Warrant Agent") of the Company in respect of the Warrants
and the Warrant Certificates upon the terms and subject to the conditions herein
and in the Warrant Certificates set forth; and Texas Commerce Bank National
Association hereby accepts such appointment. The Warrant Agent shall have the
powers and authority specifically granted to and conferred upon it in the
Warrant Certificates and hereby and such further powers and authority to act on
behalf of the Company as the Company may hereafter grant to or confer upon it
and it shall accept in writing. All of the terms and provisions with respect to
such powers and authority contained in the Warrant Certificates are subject to
and governed by the terms and provisions hereof.
SECTION 6.02. Conditions of Warrant Agent's Obligations. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof and in the Warrant Certificates, including the following, to all of which
the Company agrees and to all of which the rights hereunder of the holders from
time to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be
agreed upon with the Company in writing for all services rendered by it and the
Company agrees promptly to pay such compensation and to reimburse the Warrant
Agent for its reasonable out-of-pocket expenses (including reasonable fees and
expenses of counsel) incurred without gross negligence or willful misconduct on
its part in connection with the services rendered by it hereunder. The Company
also agrees to indemnify the Warrant Agent, each predecessor Warrant Agent, and
their respective directors, officers, affiliates, agents and employees for, and
to hold it and its directors, officers, affiliates, agents and employees
harmless against, any loss, liability or expense of any nature whatsoever
(including, without limitation, fees and expenses of counsel) incurred without
gross negligence or willful misconduct on the part of the Warrant Agent or
predecessor Warrant Agent, arising out of or in connection with its acting as
such Warrant Agent hereunder and its exercise or failure to exercise of its
rights and performance of its obligations hereunder. The obligations of the
<PAGE> 37
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Company under this Section 6.02 shall survive the exercise and the expiration of
the Warrant Certificates and the resignation and removal of the Warrant Agent.
(b) In acting under this Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship of agency or trust for or
with any of the owners or holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel and any advice or
written opinion of such 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 accordance with such advice or opinion.
(d) The Warrant Agent shall be fully protected and shall incur no
liability for or in respect of any action taken or omitted to be taken or thing
suffered by it in reliance upon any Warrant Certificate, notice, direction,
consent, certificate, affidavit, opinion of counsel, instruction, statement or
other paper or document reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors, affiliates and
employees ("Related Parties"), may become the owners of, or acquire any interest
in, Warrant Certificates, shares or other obligations of the Company with the
same rights that it or they would have it if were not the Warrant Agent
hereunder and, to the extent permitted by applicable law, it or they may engage
or be interested in any financial or other transaction with the Company and may
act on, or as depositary, trustee or agent for, any committee or body of holders
of shares or other obligations of the Company as freely as if it were not the
Warrant Agent hereunder. Nothing in this Agreement shall be deemed to prevent
the Warrant Agent or such Related Parties from acting in any other capacity for
the Company.
(f) The Warrant Agent shall not be under any liability for
interest on, and shall not be required to invest, any monies at any time
received by it pursuant to any of the provisions of this Agreement or of the
Warrant Certificates.
(g) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement (or any term or provision hereof) or
the execution and delivery hereof
<PAGE> 38
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(except the due execution and delivery hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant Certificate (except its
authentication thereof).
(h) The recitals and other statements contained herein and in the
Warrant Certificates (except as to the Warrant Agent's authentication thereon)
shall be taken as the statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of the same. The Warrant Agent does not make
any representation as to the validity or sufficiency of this Agreement or the
Warrant Certificates, except for its due execution and delivery of this
Agreement; provided, however, that the Warrant Agent shall not be relieved of
its duty to authenticate the Warrant Certificates as authorized by this
Agreement. The Warrant Agent shall not be accountable for the use or application
by the Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Warrant Agreement, it may require:
(1) an Officers' Certificate (as defined in the Indenture) stating
that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Warrant Agreement relating to the proposed action
have been complied with; and
(2) if reasonably necessary in the sole judgment of the Warrant
Agent, an opinion of counsel for the Company stating that, in the opinion
of such counsel, all such conditions precedent have been complied with.
Each Officers' Certificate or, if requested, an opinion of counsel
with respect to compliance with a condition or covenant provided for in this
Warrant Agreement shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she has
made such examination or investigation as is
<PAGE> 39
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necessary to enable him or her to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such duties as
are herein and in the Warrant Certificates specifically set forth and no implied
duties or obligations shall be read into this Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Agreement. The Warrant Agent shall have no
duty or responsibility in case of any default by the Company in the performance
of its covenants or agreements contained in the Warrant Certificates or in the
case of the receipt of any written demand from a holder of a Warrant Certificate
with respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 7.02 hereof,
to make any demand upon the Company. The Warrant Agent shall not be obligated to
perform any duty to the extent prohibited by law.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the Company
made or given under any provision of this Agreement shall be sufficient if
signed by its chairman of the Board of Directors, its president, its treasurer,
its controller or any vice president or its secretary or any assistant
secretary.
(l) The Warrant Agent shall have no responsibility in respect of
any adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge
and deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the Warrant
Agent of the provisions of this Agreement.
<PAGE> 40
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(n) The Warrant Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties hereunder
from any one of the chairman of the Board of Directors, the president, the
treasurer, the controller, any vice president or the secretary of the Company or
any other officer or official of the Company reasonably believed to be
authorized to give such instructions and to apply to such officers or officials
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions with respect to any matter arising in connection
with the Warrant Agent's duties and obligations arising under this Agreement.
Such application by the Warrant Agent for written instructions from the Company
may, at the option of the Warrant Agent, set forth in writing any action
proposed to be taken or omitted by the Warrant Agent with respect to its duties
or obligations under this Agreement and the date on or after which such action
shall be taken and the Warrant Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall be not less than 10 Business
Days after the Company receives such application unless the Company consents to
a shorter period), provided that (i) such application includes a statement to
the effect that it is being made pursuant to this paragraph (n) and that unless
objected to prior to such date specified in the application, the Warrant Agent
will not be liable for any such action or omission to the extent set forth in
such application and (ii) prior to taking or omitting any such action, the
Warrant Agent has not received written instructions objecting to such proposed
action or omission.
(o) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the chairman of the Board of
Directors, the president, the treasurer, the controller, any vice president or
the secretary of the Company or any other officer or official of the Company
reasonably believed to be authorized to give such instructions and delivered to
the Warrant Agent; and such certificate shall be full authorization to the
Warrant Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
<PAGE> 41
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(p) The Warrant Agent shall not be required to risk or expend its
own funds in the performance of its obligations and duties hereunder.
SECTION 6.03. Resignation and Appointment of Successor. (a) The
Company agrees, for the benefit of the holders from time to time of the Warrant
Certificates, that there shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective, provided that
such date shall be at least 30 days after the date on which such notice is given
unless the Company agrees to accept less notice. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor Warrant Agent,
qualified as provided in Section 6.03(d) hereof, by written instrument in
duplicate signed on behalf of the Company, one copy of which shall be delivered
to the resigning Warrant Agent and one copy to the successor Warrant Agent. As
provided in Section 6.03(d) hereof, such resignation shall become effective upon
the earlier of (x) the acceptance of the appointment by the successor Warrant
Agent or (y) 30 days after receipt by the Company of notice of such resignation.
The Company may, at any time and for any reason, and shall, upon any event set
forth in the next succeeding sentence, remove the Warrant Agent and appoint a
successor Warrant Agent by written instrument in duplicate, specifying such
removal and the date on which it is intended to become effective, signed on
behalf of the Company, one copy of which shall be delivered to the Warrant Agent
being removed and one copy to the successor Warrant Agent. The Warrant Agent
shall be removed as aforesaid if it shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Warrant Agent or of
its property shall be appointed, or any public officer shall take charge or
control of it or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation. Any removal of the Warrant Agent and any
appointment of a successor Warrant Agent shall become effective upon acceptance
of appointment by the successor Warrant Agent as provided in Section 6.03(d). As
soon as practicable after appointment of the successor Warrant Agent, the
Company shall cause written notice of the change in the Warrant Agent to be
given to each of the registered holders of the Warrants in the manner provided
for in Section 7.04 hereof.
<PAGE> 42
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(c) Upon resignation or removal of the Warrant Agent, if the
Company shall fail to appoint a successor Warrant Agent within a period of 30
days after receipt of such notice of resignation or removal, then the holder of
any Warrant Certificate or the Warrant Agent may apply to a court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to the Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company.
(d) Any successor Warrant Agent, whether appointed by the Company
or by a court, shall be a bank or trust company in good standing, incorporated
under the laws of the United States of America or any State thereof and having,
at the time of its appointment, a combined capital surplus of at least $50
million. Such successor Warrant Agent shall execute and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Warrant Agent hereunder,
and such predecessor shall thereupon become obligated to (i) transfer and
deliver, and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.02(a) hereof, pay over, and such successor Warrant
Agent shall be entitled to receive, all monies deposited with or held by any
predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder
may be merged or converted, or any corporation or bank with which the Warrant
Agent may be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation or bank to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust business, shall be the successor
to the Warrant Agent under this Agreement (provided that such corporation or
bank shall be qualified as aforesaid) without the execution or filing of any
document or any further act on the part of any of the parties hereto.
<PAGE> 43
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(f) No Warrant Agent under this Warrant Agreement shall be
personally liable for any action or omission of any successor Warrant Agent or
of the Company.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment. This Agreement and the terms of the
Warrants may be amended by the Company and the Warrant Agent, without the
consent of the holder of any Warrant Certificate, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein or in any other manner which
the Company may deem necessary or desirable and which shall not adversely affect
in any material respect the interests of the holders of the Warrant
Certificates.
The Company and the Warrant Agent may modify this Agreement and the
terms of the Warrants with the consent of not less than a majority in number of
the then outstanding Warrants for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the holders of the outstanding Warrants;
provided, however, that no such modification that decreases the Exercise Rate,
reduces the period of time during which the Warrants are exercisable hereunder,
otherwise materially and adversely affects the exercise rights of the holders of
the Warrants, reduces the percentage required for modification, or effects any
change to this Section 7.01 may be made with respect to an outstanding Warrant
without the consent of the holder of such Warrant.
Any modification or amendment made in accordance with this Agreement
will be conclusive and binding on all present and future holders of Warrant
Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.
SECTION 7.02. Notices and Demands to the Company and Warrant Agent.
If the Warrant Agent shall receive any notice or demand addressed to the Company
by the holder of a Warrant
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Certificate pursuant to the provisions hereof or of the Warrant Certificates,
the Warrant Agent shall promptly forward such notice or demand to the Company.
SECTION 7.03. Addresses for Notices to Parties and for Transmission
of Documents. All notices hereunder to the parties hereto shall be deemed to
have been given when sent by certified or registered mail, postage prepaid, or
by telex or telecopy, confirmed by first class mail, postage prepaid, addressed
to any party hereto as follows:
To the Company:
HarCor Energy, Inc.
Five Post Oak Park
4400 Post Oak Parkway
Suite 2220
Houston, Texas 77027-3413
Attention: President
with copies to:
Vinson & Elkins L.L.P.
1001 Fourth, Suite 2300
Houston, Texas 77024
Attention: John S. Watson
Facsimile: (713) 758-2346
Telephone: (713) 758-2222
To the Warrant Agent:
Texas Commerce Bank National Association
600 Travis, 8th Floor
Houston, Texas 77002
Attention: Vice President of Corporate Trust
or at any other address of which either of the foregoing shall have notified the
other in writing.
SECTION 7.04. Notices to Holders. Notices to holders of Warrants
shall be mailed to such holders at the addresses of such holders as they appear
in the Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid.
<PAGE> 45
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SECTION 7.05. APPLICABLE LAW. THE VALIDITY, INTERPRETATION AND
PERFORMANCE OF THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER AND
OF THE RESPECTIVE TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
SECTION 7.06. Obtaining of Governmental Approvals. The Company
will from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities acts filings
under United States Federal and State laws, and the rules and regulations of all
stock exchanges on which the Warrants are listed which may be or become
requisite in connection with the issuance, sale, transfer, and delivery of the
Warrant Certificates, the exercise of the Warrants or the issuance, sale,
transfer and delivery of the shares issued upon exercise of the Warrants.
SECTION 7.07. Persons Having Rights Under Agreement. Nothing in
this Agreement expressed or implied and nothing that may be inferred from any of
the provisions hereof is intended, or shall be construed, to confer upon, or
give to, any person or corporation other than the Company, the Warrant Agent and
the holders of the Warrant Certificates any right, remedy or claim under or by
reason of this Agreement or of any covenant, condition, stipulation, promise or
agreement hereof; and all covenants, conditions, stipulations, promises and
agreements in this Agreement contained shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and their successors and of the
holders of the Warrant Certificates.
SECTION 7.08. Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 7.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.10. Inspection of Agreement. A copy of this Agreement
shall be available at all reasonable times at the principal corporate trust
office of the Warrant Agent, for inspection by the holder of any Warrant
Certificate. The
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Warrant Agent may require such holder to submit his Warrant Certificate for
inspection by it.
SECTION 7.11. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
<PAGE> 47
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
HARCOR ENERGY, INC.
By:
--------------------------------
Name: Mark G. Harrington
Title: Chairman of the Board
of Directors and
Chief Executive Officer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Warrant Agent
By:
--------------------------------
Name: Steven Horowitz
Title: Corporate Trust Officer
<PAGE> 48
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
[Unless and until it is exchanged in whole or in part for Warrants
in certificated form, this Warrant may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.](1)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 (A)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO HARCOR ENERGY, INC. (THE "COMPANY") OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN
- -------------------------
(1) This paragraph is to be included only if the Warrant is in global form.
A-1
<PAGE> 49
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 PROMULGATED UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE WARRANT AGENT AND HARCOR ENERGY, INC. (THE "COMPANY")
SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SECURITYHOLDERS'
AND REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 24, 1995 AMONG BT SECURITIES
CORPORATION, INTERNATIONALE NEDERLANDEN (U.S.) SECURITIES CORPORATION AND THE
COMPANY, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
CUSIP #[ ]
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
HARCOR ENERGY, INC.
This Warrant Certificate certifies that [ ], or registered
assigns, is the registered holder of [ ] Warrants (the "Warrants") to purchase
shares of Common Stock, par value $.10 per share (the "Common Stock"), of HARCOR
ENERGY, INC., a Delaware corporation (the "Company"). Each Warrant entitles the
holder to purchase from the Company at any time on or after July 24, 1996 until
5:00 p.m., New York City time, on July 24, 2000 (the "Expiration Date"), one
fully paid and nonassessable share of Common Stock (a "Share", or, if adjusted,
A-2
<PAGE> 50
the "Shares", which may also include any other securities or property
purchasable upon exercise of a Warrant, such adjustment and inclusion each as
provided in the Warrant Agreement) at the exercise price (the "Exercise Price")
of $3.85 per Warrant upon surrender of this Warrant Certificate and payment of
the Exercise Price at any office or agency maintained for that purpose by the
Company (the "Warrant Agent Office"), subject to the conditions set forth herein
and in the Warrant Agreement.
The Exercise Price shall be payable by cash, certified check or
official bank check or by such other means as is acceptable to the Company in
the lawful currency of the United States of America which as of the time of
payment is legal tender for payment of public or private debts. The Company has
initially designated the office of the Warrant Agent at its agent's office in
the Borough of Manhattan, the City of New York, as the initial Warrant Agent
Office. The number of Shares issuable upon exercise of the Warrants ("Exercise
Rate") is subject to adjustment upon the occurrence of certain events set forth
in the Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on July 24, 2000 shall thereafter be void.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as though
fully set forth at this place. Capitalized terms used in this Warrant
Certificate but not defined herein shall have the meanings ascribed thereto in
the Warrant Agreement.
This Warrant Certificate shall not be valid unless authenticated by
the Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
A-3
<PAGE> 51
WITNESS the facsimile seal of the Company and facsimile signatures
of its duly authorized officers.
Dated:
HARCOR ENERGY, INC.
By:
--------------------------------
Name:
Title:
Attest:
By:
-----------------------
Name:
Title:
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Warrant Agent
By:
-----------------------------
Authorized Signatory
A-4
<PAGE> 52
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
HARCOR ENERGY, INC.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants, each of which represents the right to
purchase at any time on or after July 24, 1996, until 5:00 p.m., New York City
time, on July 24, 2000, one share of Common Stock of the Company, subject to
adjustment as set forth in the Warrant Agreement. The Warrants are issued
pursuant to a Warrant Agreement dated as of July 24, 1995 (the "Warrant
Agreement"), duly executed and delivered by the Company to Texas Commerce Bank
National Association, as Warrant Agent (the "Warrant Agent"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. Warrants may be
exercised by (i) surrendering at any Warrant Agent Office this Warrant
Certificate with the form of Election to Exercise set forth hereon duly
completed and executed and (ii) paying in full the Warrant Exercise Price for
each such Warrant exercised and any other amounts required to be paid pursuant
to the Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 2:00 p.m.,
New York City time, on a Business Day, the exercise of the Warrant to which such
items relate will be effective on such Business Day. If any items referred to in
the last sentence of the preceding paragraph are received after 2:00 p.m., New
York City time, on a Business Day, the exercise of the Warrants to which such
item relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on the
Expiration Date, if all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 5:00 p.m.,
New York City time, on such Expiration Date, the exercise of the Warrants to
which such items relate will be effective on the Expiration Date.
Subject to the terms of the Warrant Agreement, as soon as
practicable after the exercise of any Warrant or Warrants, the Company shall
issue or cause to be issued to or upon the written order of the registered
holder of this Warrant Certificate, a certificate or certificates evidencing the
Share or
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<PAGE> 53
Shares to which such holder is entitled, in fully registered form, registered in
such name or names as may be directed by such holder pursuant to the Election to
Exercise, as set forth on the reverse of this Warrant Certificate. Such
certificate or certificates evidencing the Share or Shares shall be deemed to
have been issued and any persons who are designated to be named therein shall be
deemed to have become the holder of record of such Share or Shares as of the
close of business on the date upon which the exercise of this Warrant was deemed
to be effective as provided in the preceding paragraph.
The Company will not be required to issue fractional shares of
Common Stock upon exercise of the Warrants or distribute Share certificates that
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, there shall be paid to the registered Holder of this Warrant
Certificate at the time such Warrant Certificate is exercised an amount in cash
equal to the same fraction of the Current Market Value per share as determined
in accordance with the Warrant Agreement.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof in
person or by legal representative or attorney duly authorized in writing, may be
exchanged for a new Warrant Certificate or new Warrant Certificates evidencing
in the aggregate a like number of Warrants, in the manner and subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone) for the
purpose of any exercise hereof and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in New
York City, (ii) the principal national
A-6
<PAGE> 54
securities exchange or market on which the Common Stock is listed or admitted to
trading and (iii) the principal national securities exchange or market on which
the Warrants are listed or admitted to trading are open for business.
A-7
<PAGE> 55
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise _____ of the
Warrants represented by this Warrant Certificate and purchase the whole number
of Shares issuable upon the exercise of such Warrants and herewith tenders
payment for such Shares in the amount of $_________ in cash or by certified or
official bank check, in accordance with the terms hereof. The undersigned
requests that a certificate representing such Shares be registered in the name
of ______________________ whose address is _____________________________ and
that such certificate be delivered to ___________________________ whose address
is __________________________. Any cash payments to be paid in lieu of a
fractional Share should be made to __________________ whose address is
________________________ and the check representing payment thereof should be
delivered to ______________________ whose address is ______________________.
Dated __________________, 19__
Name of holder of
Warrant Certificate: _______________________________
(Please Print)
Tax Identification or
Social Security Number: ____________________________
Address: ___________________________________________
___________________________________________
Signature: _________________________________________
Note: The above signature must corre-
pond with the name as written
upon the face of this Warrant
Certificate in every particular,
without alteration or
enlargement or any change
whatever.
Dated ____________________, 19__
A-8
<PAGE> 56
[FORM OF ASSIGNMENT]
For value received _______________________ hereby sells, assigns and
transfers unto _____________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint __________________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Dated ____________________, 199__
Signature: ________________________________________
Note: The above signature must corre-
spond with the name as written
upon the face of this Warrant
Certificate in every particular,
without alteration or
enlargement or any change
whatever.
A-9
<PAGE> 57
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(2)
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
<TABLE>
<CAPTION>
Number of
Warrants of
Amount of Amount of this Global
decrease in increase in Warrant Signature of
Number of Number of following authorized
Date of Warrants of this Warrants of this such decrease officer of
Exchange Global Warrant Global Warrant (or increase) Warrant Agent
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------
(2) This is to be included only if the Warrant is in global form.
A-10
<PAGE> 58
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants")
of HarCor Energy, Inc.
This Certificate relates to ____ Warrants held in* ___ book-entry
or* _______ certificated form by ______ (the "Transferor").
The Transferor:*
/ / has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Warrant (or the portion thereof indicated above); or
/ / has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such Warrant,
the Transferor does hereby certify that the Transferor is familiar with the
Warrant Agreement relating to the above captioned Warrants and the restrictions
on transfers thereof as provided in Section 1.08 of such Warrant Agreement, and
that the transfer of this Warrant does not require registration under the
Securities Act of 1933, as amended (the "Act") because[*]:
/ / Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 1.08(a)(y)(A) or Section
1.08(d)(i)(A) of the Warrant
Agreement).
/ / Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Act), in reliance on Rule 144A or in
accordance with Regulation S under the Act.
/ / Such Warrant is being transferred in accordance with Rule 144 under
the Act.
B-1
<PAGE> 59
/ / Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act, other than Rule
144A or Rule 144 or Regulation S under the Act. An opinion of counsel to the
effect that such transfer does not require registration under the Act
accompanies this Certificate.
_______________________________
[INSERT NAME OF TRANSFEROR]
By: _________________________
Date: _____________
*Check applicable box.
B-2
<PAGE> 60
EXHIBIT C
Transferee Letter of Representation
HarCor Energy, Inc.
Five Post Oak Park
4400 Post Oak Parkway
Suite 2220
Houston, Texas 77027-3413
Ladies and Gentlemen:
In connection with our proposed purchase of warrants to purchase
Common Stock, par value $.10 per share, (the "Securities") of HarCor Energy,
Inc. (the "Company") we confirm that:
1. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") and, unless
so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account
for which we are purchasing Securities to offer, sell or otherwise
transfer such Securities prior to the date which is three years after the
later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities, or any
predecessor thereto (the "Resale Restriction Termination Date") only (a)
to the Company, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) so long as the Securities
are eligible for resale pursuant to Rule 144A, under the Securities Act,
to a person we reasonably believe is a qualified institutional buyer under
Rule 144A (a "QIB") that purchases for its own account or for the account
of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales that occur outside
the United States within the meaning of Regulation S under the Securities
Act, (e) to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act
that is purchasing for his own account or for the account of such an
institutional "accredited investor," or (f) pursuant to any other
available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that
the disposition of our property or the property of such investor account
or accounts be at
C-1
<PAGE> 61
all times within our or their control and to compliance with any
applicable state securities laws. The foregoing restrictions on resale
will not apply subsequent to the Resale Restriction Termination Date. If
any resale or other transfer of the Securities is proposed to be made
pursuant to clause (e) above prior to the Resale Restriction Termination
Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the warrant agent under the
Warrant Agreement pursuant to which the Securities were issued (the
"Warrant Agent") which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act
and that it is acquiring such Securities for investment purposes and not
for distribution in violation of the Securities Act. The Warrant Agent and
the Company reserve the right prior to any offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Securities
pursuant to clause (e) or (f) above to require the delivery of a written
opinion of counsel, certifications, and or other information satisfactory
to the Company and the Warrant Agent.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Securities for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment for an indefinite
period.
3. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
4. You, the Warrant Agent and your respective counsel are entitled
to rely upon this letter and you are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to the matters
covered hereby.
Very truly yours,
C-2
<PAGE> 62
______________________________
(Name of Purchaser)
By:___________________________
Date:_________________________
Upon transfer the Securities would be registered in the name of the
new beneficial owner as follows:
Name:______________________________
Address:___________________________
Taxpayer ID Number:________________
C-3
<PAGE> 1
================================================================================
SECURITYHOLDERS' AND REGISTRATION RIGHTS AGREEMENT
Dated as of July 24, 1995
Among
HARCOR ENERGY, INC.,
BT SECURITIES CORPORATION
AND
INTERNATIONALE NEDERLANDEN (U.S.) SECURITIES CORPORATION
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
Section 1. Definitions............................................... 1
Section 2. Registration Rights....................................... 6
2.1(a) Demand Registration....................................... 6
2.1(b) Effective Registration.................................... 6
2.1(c) Restrictions on Sale by Holders........................... 7
2.1(d) Underwritten Registrations................................ 8
2.1(e) Expenses.................................................. 8
2.1(f) Priority in Demand Registration........................... 8
2.2(a) Piggy-Back Registration................................... 9
2.2(b) Priority in Piggy-Back Registration....................... 10
2.3 Limitations, Conditions and
Qualifications to Obligations
Under Registration Covenants............................ 12
2.4 Restrictions on Sale by the Company
and Others.............................................. 14
2.5 Rule 144 and Rule 144A.................................... 15
Section 3. Registration Procedures................................... 15
Section 4. Indemnification and Contribution.......................... 23
Section 5. Miscellaneous............................................. 28
(a) No Inconsistent Agreements................................ 28
(b) Agreements Affecting Registrable
Securities.............................................. 28
(c) Amendments and Waivers.................................... 28
(d) Notices................................................... 29
(e) Successors and Assigns.................................... 29
(f) Counterparts.............................................. 29
(g) Headings.................................................. 29
(h) Governing Law............................................. 29
(i) Severability.............................................. 30
(j) Third Party Beneficiary................................... 30
(k) Entire Agreement.......................................... 30
(l) Securities Held by the Company or
Its Affiliates.......................................... 30
</TABLE>
-i-
<PAGE> 3
SECURITYHOLDERS' AND REGISTRATION RIGHTS AGREEMENT
THIS SECURITYHOLDERS' AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made and entered into as of July 24, 1995, among HARCOR ENERGY,
INC., a Delaware corporation (the "Company"), BT SECURITIES CORPORATION and
INTERNATIONALE NEDERLANDEN (U.S.) SECURITIES CORPORATION (the "Initial
Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated July 17, 1995, among the Company, the Subsidiary Guarantors
named therein, and the Initial Purchasers (the "Purchase Agreement"), which
provides for the issuance and sale to the Initial Purchasers of (i) 65,000 units
consisting of an aggregate of $65,000,000 aggregate principal amount 14 7/8%
Senior Secured Notes due 2002, Series A and 1,430,000 warrants (the "Note
Warrants"), initially exercisable for an equal number of shares of common stock,
par value $0.10 per share, of the Company (the "Common Stock") (ii) 350,000
warrants (the "Purchaser Warrants" and, together with the Note Warrants, the
"Common Stock Warrants") initially exrciseable for an equal number of shares of
Common Stock and (iii) 150,000 warrants (the "Preferred Stock Warrants" and,
together with the Common Stock Warrants, the "Warrants") initially exercisable
for an equal number of shares of Series F Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Stock"). In order to induce the Initial
Purchaser to enter into the Purchase Agreement, the Company has agreed to
provide to each of the Initial Purchasers and the Holders (as defined herein),
among other things, the registration rights for the Warrant Shares (as defined
herein) set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the obligations of the Initial Purchasers under the
Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
Section 1. Definitions. As used in this Agreement, the following defined
terms shall have the following meanings:
"Advice" has the meaning ascribed to such term in the last
paragraph of Section 3 hereof.
"Agreement" has the meaning ascribed to such term in the
preamble of this Agreement.
<PAGE> 4
-2-
"Business Day" shall mean a day that is not a Legal Holiday.
"Common Stock" has the meaning ascribed to such term in the
preamble of this Agreement.
"Company" shall have the meaning ascribed to that term in the
preamble of this Agreement and shall also include the Company's
successors and assigns.
"Demand Registration" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"DTC" has the meaning ascribed to such term in Section 3(i)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time and the rules and regulations of the SEC
promulgated thereunder.
"Holder" means each of the Initial Purchasers, for so long as
it owns any Warrants and/or Warrant Shares, and each of its
successors, assigns and direct and indirect transferees who become
registered owners of such Warrants or Warrant Shares.
"Included Securities" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"indemnified party" has the meaning ascribed to such term in
Section 4(c) hereof.
"indemnifying party" has the meaning ascribed to such term in
Section 4(c) hereof.
"Initial Purchasers" means BT Securities Corporation and
Internationale Nederlanden (U.S.) Securities Corporation.
"Inspectors" has the meaning ascribed to such term in Section
3(n) hereof.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on
which banking institutions in New York, New York are required by
law, regulation or executive order to remain closed.
<PAGE> 5
-3-
"Notes" means the $65,000,000 aggregate principal amount of 14
7/8% Senior Notes due 2002 of the Company.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Piggy-Back Registration" has the meaning ascribed to such
term in Section 2.2 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus
supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference
in such Prospectus.
"Purchase Agreement" has the meaning ascribed to such term in
the preamble of this Agreement.
"Registrable Securities" means any of (i) the Warrant Shares
(whether or not the related Warrants have been exercised) and (ii)
any other securities issued or issuable with respect to any Warrant
Shares by way of stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities
when (i) a Registration Statement with respect to the offering of
such securities by the Holder thereof shall have been declared
effective under the Securities Act and such securities shall have
been disposed of by such Holder pursuant to such Registration
Statement, (ii) such securities are eligible for sale to the public
pursuant to Rule 144(k) (or any similar provision then in force, but
not Rule 144A) promulgated under the Securities Act, (iii) such
securities shall have been otherwise
<PAGE> 6
-4-
transferred by such Holder and new certificates for such securities
not bearing a legend restricting further transfer shall have been
delivered by the Company or its transfer agent and subsequent
disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then
in force or (iv) such securities shall have ceased to be
outstanding.
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with its obligations.
under this Agreement, including, without limitation, all SEC and
stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees and expenses, fees and expenses of
compliance with securities or blue sky laws (including, without
limitation, reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the
Registrable Securities), preparing, printing, filing, duplicating
and distributing the Registration Statement and the related
Prospectus, the cost of printing stock certificates, the cost and
charges of any transfer agent, rating agency fees, printing
expenses, messenger, telephone and delivery expenses, fees and
disbursements of counsel for the Company and all independent
certified public accountants, the fees and disbursements of
underwriters customarily paid by issuers or sellers of securities
(but not including any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable
Securities by Selling Holders), fees and expenses of one counsel for
the Holders and other reasonable out-of-pocket expenses of the
Holders.
"Registration Statement" shall mean any appropriate
registration statement of the Company filed with the SEC pursuant to
the Securities Act which covers any of the 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.
<PAGE> 7
-5-
"Requisite Securities" shall mean a number of Registrable
Securities equal to not less than 25% of the Registrable Securities
held in the aggregate by all Holders (without taking into account,
for purposes of this calculation of the Registrable Securities only,
any Purchaser Warrants, any shares of Common Stock issuable upon
exercise of the Purchaser Warrants, any Preferred Stock Warrants,
any shares of Series F Preferred Stock issuable upon exercise of the
Preferred Stock Warrants and any shares of Common Stock issuable
upon conversion of the Preferred Stock).
"Rule 144" shall mean Rule 144 promulgated under the
Securities Act, as such Rule may be amended from time to time, or
any similar rule (other than Rule 144A) or regulation hereafter
adopted by the SEC providing for offers and sales of securities made
in compliance therewith resulting in offers and sales by subsequent
holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements
of the Securities Act.
"Rule 144A" shall mean Rule 144A promulgated under the
Securities Act, as such Rule may be amended from time to time, or
any similar rule (other than Rule 144) or regulation hereafter
adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time and the rules and regulations of the SEC
promulgated thereunder.
"Securityholder" means, collectively, each Holder and their
respective successors and assigns.
"Selling Holder" shall mean a Holder who is selling
Registrable Securities in accordance with the provisions of Section
2.1 or 2.2 hereof.
"Warrants" has the meaning ascribed to such term in the
preamble of this Agreement.
<PAGE> 8
-6-
"Warrant Shares" means the shares of Common Stock deliverable
upon exercise of the Common Stock Warrants and the Preferred Stock
deliverable upon exercise of the Preferred Stock Warrants.
"Withdrawal Election" has the meaning ascribed to such term in
Section 2.2(b) hereof.
Section 2. Registration Rights.
2.1 (a) Demand Registration. At any time and from time to time
Holders owning, individually or in the aggregate, not less than the Requisite
Securities may make a written request for registration under the Securities Act
of their Registrable Securities (a "Demand Registration"). Within 120 days of
the receipt of such written request for a Demand Registration, the Company shall
file with the SEC and use its best efforts to cause to become effective under
the Securities Act a Registration Statement with respect to such Registrable
Securities. Any such request will specify the number of Registrable Securities
proposed to be sold and will also specify the intended method of disposition
thereof. The Company shall give written notice of such registration request to
all other Holders of Registrable Securities within 15 days after the receipt
thereof. Within 20 days after receipt by any Holder of Registrable Securities
of such notice from the Company, such Holder may request in writing that such
Holder's Registrable Securities be included in such Registration Statement and
the Company shall include in such Registration Statement the Registrable
Securities of any such Holder requested to be so included (the "Included
Securities"). Each such request by such other Holders shall specify the number
of Included Securities proposed to be sold and the intended method of
disposition thereof. Subject to Section 2.1(b) hereof, the Company shall be
required to register Registrable Securities pursuant to this Section 2.1(a) on a
maximum of two separate occasions.
Subject to Section 2.1(f) hereof, no other securities of the Company
except securities held by any Holder and any Person entitled to exercise "piggy
back" registration rights pursuant to contractual commitments of the Company
shall be included in a Demand Registration.
(b) Effective Registration. A Registration Statement will not be
deemed to have been effected as a Demand Registration unless it has been
declared effective by the SEC and the Company has complied in a timely manner
and in all material
<PAGE> 9
-7-
respects with all of its obligations under this Agreement with respect thereto;
provided, however, that if, after such Registration Statement has become
effective, the offering of Registrable Securities pursuant to such Registration
Statement is or becomes the subject of any stop order, injunction or other order
or requirement of the SEC or any other governmental or administrative agency or
court that prevents, restrains or otherwise limits the sale of Registrable
Securities pursuant to such Registration Statement for any reason not
attributable to any Holder participating in such registration and such
Registration Statement has not become effective within a reasonable time period
thereafter (not to exceed 30 days), such Registration Statement will be deemed
not to have been effected. If (i) a registration requested pursuant to this
Section 2.1 is deemed not to have been effected or (ii) a Demand Registration
does not remain effective under the Securities Act until at least the earlier of
(A) an aggregate of 180 days after the effective date thereof or (B) the
consummation of the distribution by the Holders of all of the Registrable
Securities covered thereby, then the Company shall continue to be obligated to
effect an additional Demand Registration pursuant to this Section 2.1 provided,
that a Demand Registration shall not be counted as such unless the Selling
Holders have sold at least 80% of the Registrable Securities covered thereby.
For purposes of calculating the 180-day period referred to in the preceding
sentence, any period of time during which such Registration Statement was not in
effect shall be excluded. The Holders of Registrable Securities shall be
permitted to withdraw all or any part of the Registrable Securities from a
Demand Registration at any time prior to the effective date of such Demand
Registration.
(c) Restrictions on Sale by Holders. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Registration Statement
filed pursuant to this Section 2.1 and are to be sold thereunder agrees, if and
to the extent reasonably requested by the managing underwriter or underwriters
in an underwritten offering, not to effect any public sale or distribution of
Registrable Securities or of securities of the Company of the same class as any
securities included in such Registration Statement, including a sale pursuant to
Rule 144 (except as part of such underwritten offering), during the 30-day
period prior to, and during the 120-day period beginning on, the closing date of
each underwritten offering made pursuant to such Registration Statement, to the
extent timely notified in writing by the Company or such managing underwriter or
underwriters.
<PAGE> 10
-8-
The foregoing provisions of Section 2.1(c) shall not apply to any
Holder of Registrable Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, however,
that any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any such public sale or distribution of
Registrable Securities or of securities of the Company of the same class as any
securities included in such Registration Statement, including a sale pursuant to
Rule 144 (except as part of such underwritten offering) during such period,
unless it has provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(d) Underwritten Registrations. If any of the Registrable
Securities covered by a Demand Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of not less than a
majority of the Registrable Securities then outstanding to be sold thereunder
and will be reasonably acceptable to the Company.
No Holder of Registrable Securities may participate in any
underwritten registration pursuant to a Registration Statement filed under this
Agreement unless such Holder (a) agrees to (i) sell such Holder's Registrable
Securities on the basis provided in and in compliance with any underwriting
arrangements approved by the Holders of not less than a majority of the
Registrable Securities to be sold thereunder and (ii) comply with Rules 10b-6
and 10b-7 under the Exchange Act and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
(e) Expenses. The Company will pay all Registration Expenses in
connection with the registrations requested pursuant to Section 2.1(a) hereof.
Each Holder of Registrable Securities 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 a Registration Statement
requested pursuant to this Section 2.1.
(f) Priority in Demand Registration. In a registration pursuant
to Section 2.1 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the
<PAGE> 11
-9-
Company and the Selling Holders who have requested such Demand Registration or
who have sought inclusion therein that in such underwriter's or underwriters'
opinion the total number of securities which the Selling Holders and any other
Person desiring to participate in such registration intend to include in such
offering is such as to adversely affect the success of such offering, including
the price at which such securities can be sold, then the Company will be
required to include in such registration only the amount of securities which it
is so advised should be included in such registration. In such event, securities
shall be registered in such registration in the following order of priority: (i)
first, the securities which have been requested to be included in such
registration by the Holders of Registrable Securities pursuant to this Agreement
(pro rata based on the amount of securities sought to be registered by such
Persons) and (ii) second, provided that no securities sought to be included by
the Holders have been excluded from such registration, the securities of other
Persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments of the Company (pro rata based on the amount of
securities sought to be registered by such Persons).
2.2 (a) Piggy-Back Registration. If at any time the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of any of
its security- holders of any class of its common equity securities (other than
(i) a Registration Statement on Form S-4 or S-8 (or any substitute form that may
be adopted by the SEC) or (ii) a Registration Statement filed in connection with
an exchange offer or offering of securities solely to the Company's existing
securityholders), then the Company shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event fewer than 20 days before the anticipated filing date), and such notice
shall offer such Holders the opportunity to register such number of shares of
Registrable Securities as each such Holder may request in writing within 30 days
after receipt of such written notice from the Company (which request shall
specify the Registrable Securities intended to be disposed of by such Selling
Holder and the intended method of distribution thereof) (a "Piggy-Back
Registration"). The Company shall use its best efforts to keep such Piggy-Back
Registration continuously effective under the Securities Act until at least the
earlier of (A) an aggregate of 180 days after the effective date thereof or (B)
the consummation of the distribution by the
<PAGE> 12
-10-
Holders of all of the Registrable Securities covered thereby. The Company shall
use its best efforts to cause the managing underwriter or underwriters, if any,
of such proposed offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on the same terms and
conditions as any similar securities of the Company or any other securityholder
included therein and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof. Any
Selling Holder shall have the right to withdraw its request for inclusion of its
Registrable Securities in any Registration Statement pursuant to this Section
2.2 by giving written notice to the Company of its request to withdraw. The
Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective or the Company may elect to delay the registration; provided,
however, that the Company shall give prompt written notice thereof to
participating Selling Holders. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.2, and each Holder of Registrable Securities 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 a
Registration Statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration upon the request of Holders of Registrable
Securities pursuant to Section 2.1 hereof, and no failure to effect a
registration under this Section 2.2 and to complete the sale of securities
registered thereunder in connection therewith shall relieve the Company of any
other obligation under this Agreement.
(b) Priority in Piggy-Back Registration. In a registration
pursuant to Section 2.2 hereof involving an underwritten offering, if the
managing underwriter or underwriters of such underwritten offering have
informed, in writing, the Company and the Selling Holders requesting inclusion
in such offering that in such underwriter's or underwriters' opinion the total
number of securities which the Company, the Selling Holders and any other
Persons desiring to participate in such registration intend to include in such
offering is such as to adversely affect the success of such offering, including
the price at which such securities can be sold, then the Company will be
required to include in such registration only the
<PAGE> 13
-11-
amount of securities which it is so advised should be included in such
registration. In such event: (x) in cases initially involving the registration
for sale of securities for the Company's own account, securities shall be
registered in such offering in the following order of priority: (i) first, the
securities which the Company proposes to register, (ii) second, provided that no
securities proposed to be registered by the Company have been excluded from such
registration, the securities which have been requested to be included in such
registration by the Holders and Persons entitled to exercise "piggy-back"
registration rights pursuant to contractual commitments of the Company entered
into prior to, and as in existence on, the date hereof (pro rata on the amount
of securities sought to be registered by such Persons), and (iii) third,
provided that no securities sought to be included by the Holders or such Persons
have been excluded from such registration, the securities of other Persons
entitled to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company entered into subsequent to the date hereof (pro rata
based on the amount of securities sought to be registered by such Persons); and
(y) in cases not initially involving the registration for sale of securities for
the Company's own account, securities shall be registered in such offering in
the following order of priority: (i) first, the securities of any Person whose
exercise of a "demand" registration right pursuant to a contractual commitment
of the Company is the basis for the registration (provided that if such Person
is a Holder of Registrable Securities, as among Holders of Registrable
Securities there shall be no priority and Registrable Securities sought to be
included by Holders of Registrable Securities shall be included pro rata based
on the amount of securities sought to be registered by such Persons), (ii)
second, provided that no securities of any person whose exercise of a "demand"
registration right pursuant to a contractual commitment of the Company is the
basis for such registration have been excluded from such registration, the
securities requested to be included in such registration by the Holders of
Registrable Securities pursuant to this Agreement and Persons entitled to
exercise "piggy-back" registration rights pursuant to contractual commitments of
the Company entered into prior to, and as in existence on, the date hereof (pro
rata based on the total amount of securities sought to be registered by such
Persons), (iii) third, provided that no securities sought to be included by the
Holders or such Persons have been excluded from such registration, securities of
other Persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments entered into subsequent to the date hereof (pro rata
based on the amount of
<PAGE> 14
-12-
securities sought to be registered by such Persons) and (iv) fourth, provided
that no securities sought to be included by other Persons entitled to exercise
"piggy-back" registration rights pursuant to contractual commitments have been
excluded from such registration, the securities which the Company proposes to
register.
Holders agree not to effect any public sale or distribution of any
equity securities of the Company obtained through a private placement, including
a sale pursuant to Rule 144 or Rule 144A under the Securities Act (except as
part of a registration effected pursuant to that certain registration rights
agreement dated as of November 23, 1992 among the Company and Trust Company of
the West (a "TCW Registration"), if permitted, pursuant to a Registration
Statement on Form S-8, or to the extent that sale or distribution involves less
than 100,000 shares of Common Stock) 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 a TCW
Registration.
If, as a result of the provisions of this Section 2.2(b), any
Selling Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Selling Holder has requested to be included,
such Selling Holder may elect to withdraw his request to include Registrable
Securities in such registration (a "Withdrawal Election"); provided, however,
that a Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, a Selling Holder shall no longer have any right to include Registrable
Securities in the registration as to which such Withdrawal Election was made.
2.3 Limitations, Conditions and Qualifications to Obligations Under
Registration Covenants. The obligations of the Company set forth in Sections
2.1 and 2.2 hereof are subject to each of the following limitations, conditions
and qualifications:
(i) Subject to the next sentence of this paragraph, the Company
shall be entitled to postpone, for a reasonable period of time, the filing or
effectiveness of, or suspend the rights of any Holders to make sales pursuant
to, any Registration Statement otherwise required to be prepared, filed and made
and kept effective by it hereunder; provided, however, that the duration of such
postponement or suspension may not exceed the earlier to occur of (A) 15 days
after the cessation of the circumstances described in the next sentence of this
<PAGE> 15
-13-
paragraph on which such postponement or suspension is based or (B) 120 days
after the date of the determination of the Board of Directors referred to in the
next sentence, and the duration of any such postponement or suspension shall be
excluded from the calculation of the 180-day period described in Section 2.1(b)
hereof. Such postponement or suspension may only be effected if the Board of
Directors of the Company determines in good faith that the filing or
effectiveness of, or sales pursuant to, such Registration Statement would
materially impede, delay or interfere with any financing, offer or sale of
securities, acquisition, corporate reorganization or other significant
transaction involving the Company or any of its affiliates or require disclosure
of material information which the Company has a bona fide business purpose for
preserving as confidential. If the Company shall so postpone the filing or
effectiveness of a Registration Statement or so suspend the rights of Holders to
make sales it shall, as promptly as possible, notify any Selling Holders of such
determination, and the Selling Holders shall (y) have the right, in the case of
a postponement of the filing or effectiveness of a Registration Statement, upon
the affirmative vote of the Holders of not less than a majority of the
Registrable Securities to be included in such Registration Statement, to
withdraw the request for registration by giving written notice to the Company
within 10 days after receipt of such notice or (z) in the case of a suspension
of the right to make sales, receive an extension of the registration period
equal to the number of days of the suspension. Any Demand Registration as to
which the withdrawal election referred to in the preceding sentence has been
effected shall not be counted for purposes of the two Demand Registrations the
Company is required to effect pursuant to Section 2.1 hereof.
(ii) The Company shall not be required by this Agreement to include
securities in a Registration Statement pursuant to Section 2.2 hereof if (i) in
the written opinion of counsel to the Company, addressed to the Holders and
delivered to them, the Holders of such securities seeking registration would be
free to sell all such securities within the current calendar quarter, without
registration, under Rule 144, which opinion may be based in part upon the
representation by such Holders, which representation shall not be unreasonably
withheld, that each such Holder is not an affiliate of the Company within the
meaning of the Securities Act and (ii) all requirements under the Securities Act
for effecting such sales are satisfied at such time.
<PAGE> 16
-14-
(iii) The Company's obligations shall be subject to the obligations
of the Selling Holders, which the Selling Holders acknowledge, to furnish all
information and materials and to take any and all actions as may be required
under applicable federal and state securities laws and regulations to permit the
Company to comply with all applicable requirements of the SEC and to obtain any
acceleration of the effective date of such Registration Statement.
(iv) The Company shall not be obligated to cause any special audit
to be undertaken in connection with any registration pursuant to this Agreement
unless such audit is requested by the underwriters with respect to such
registration.
2.4. Restrictions on Sale by the Company and Others. The Company
covenants and agrees that (i) it shall not, and that it shall not cause or
permit any of its subsidiaries to, effect any public sale or distribution of any
securities of the same class as any of the Registrable Securities or any
securities convertible into or exchangeable or exercisable for such securities
(or any option or other right for such securities) during the 30-day period
prior to, and during the 120-day period beginning on, the commencement of any
underwritten offering of Registrable Securities pursuant to a Demand
Registration which has been requested pursuant to this Agreement, or a
Piggy-Back Registration which has been scheduled, prior to the Company or any of
its subsidiaries publicly announcing its intention to effect any such public
sale or distribution; (ii) that any agreement entered into after the date of
this Agreement pursuant to which the Company (or, if applicable, any subsidiary
of the Company) grants registration rights with respect to any securities of the
Company shall contain (x) a provision under which the holders of such securities
agree, in the event of an underwritten offering of Registrable Securities, not
to effect any public sale or distribution of any securities of the same class as
any of the Registrable Securities or any securities convertible into or
exchangeable or exercisable for any such securities (or any option or other
right for such securities) during the periods described in clause (i) of this
Section 2.4, in each case including a sale pursuant to Rule 144 and (y) a
provision that effects, upon notice given pursuant to Section 2.1 hereof to the
Company that a Demand Registration of Registrable Securities is to be
undertaken, the lapse of any demand registration rights with respect to any
securities of the Company until the expiration of 90 days after the date of the
completion of any such underwritten offering; (iii) the Company will not, and
the Company will not cause or permit any
<PAGE> 17
-15-
subsidiary of the Company to, after the date hereof, enter into any agreement or
contract that conflicts with or limits or prohibits the full and timely exercise
by the Holders of Registrable Securities of the rights herein to request a
Demand Registration or to join in any Piggy-Back Registration; and (iv) that it
shall use its reasonable best efforts to secure the written agreement of each of
its officers, directors and stockholders to not effect any public sale or
distribution of any securities of the same class as the Registrable Securities
or any securities convertible into or exchangeable or exercisable for any such
securities (or any option or right for such securities) during the period
described in clause (i) of this Section 2.4.
2.5 Rule 144 and Rule 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Registrable Securities, make
publicly available other information so long as necessary to permit sales
pursuant to Rule 144 and Rule 144A (to the extent Registrable Securities may
then be sold pursuant to Rule 144A). The Company further covenants for so long
as any Registrable Securities remain outstanding to make available to any Holder
or beneficial owner of Registrable Securities in connection with any sale
thereof and any prospective purchaser of such Registrable Securities from such
Holder or beneficial owner, the information required by Rule 144A(d)(y) under
the Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A. Upon the request of any Holder of Registrable
Securities, the Company will in a timely manner deliver to such Holder a written
statement as to whether it has complied with such information requirements.
Section 3. Registration Procedures. In connection with the obligations
of the Company with respect to any Registration Statement pursuant to Sections
2.1 and 2.2 hereof, the Company shall:
(a) Prepare and file with the SEC as soon as practicable each such
Registration Statement (but in any event on or prior to the date of filing
thereof required under this Agreement) and cause each such Registration
Statement to become effective and remain effective as provided herein;
provided, however, that before filing any such Registration Statement or
any Prospectus or any amendments
<PAGE> 18
-16-
or supplements thereto (including documents that would be incorporated or
deemed to be incorporated therein by reference, including such documents
filed under the Exchange Act that would be incorporated therein by
reference), the Company shall afford promptly to the Holders of the
Registrable Securities covered by such Registration Statement, their
counsel and the managing underwriter or underwriters, if any, an
opportunity to review copies of all such documents proposed to be filed a
reasonable time prior to the proposed filing thereof. The Company shall
not file any Registration Statement or Prospectus or any amendments or
supplements thereto if the Holders of a majority of the Registrable
Securities covered by such Registration Statement, their counsel, or the
managing underwriter or underwriters, if any, shall reasonably object in
writing unless failure to file any such amendment or supplement would
involve a violation of the Securities Act or other applicable law.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to such Registration Statement as may be
necessary to keep such Registration Statement continuously effective for
the time periods prescribed hereby; cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of
the Securities Act, the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to it with respect to the
disposition of all securities covered by such Registration Statement as so
amended or such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities, their counsel and
the managing underwriter or underwriters, if any, promptly (but in any
event within two (2) Business Days), and confirm such notice in writing,
(i) when a Prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or
any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules and exhibits), (ii) of the issuance by the SEC of any stop order
<PAGE> 19
-17-
suspending the effectiveness of such Registration Statement or of any
order preventing or suspending the use of any Prospectus or the initiation
or threatening of any proceedings for that purpose, (iii) if at any time
when a prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities the representations
and warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated by Section 3(m) below cease to be
true and correct in any material respect, (iv) of the receipt by the
Company of any notification with respect to (A) the suspension of the
qualification or exemption from qualification of the Registration
Statement or any of the Registrable Securities covered thereby for offer
or sale in any jurisdiction, or (B) the initiation of any proceeding for
such purpose, (v) of the happening of any event, the existence of any
condition or information becoming known that requires the making of any
change in any Registration Statement or Prospectus so that, in the case of
such Registration Statement, it will conform in all material respects with
the requirements of the Securities Act and it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that in the case of any Prospectus, it will conform in all
material respects with the requirements of the Securities Act and it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the Company's reasonable determination
that a post-effective amendment to such Registration Statement would be
appropriate.
(d) Use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities covered thereby for sale in any jurisdiction, and, if any such
order is issued, to obtain the withdrawal of any such order at the
earliest possible moment.
(e) If requested by the managing underwriter or underwriters, if
any, or the Holders of a majority of the
<PAGE> 20
-18-
Registrable Securities being sold in connection with an underwriting
offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters, if any, or such Holders reasonably request to be included
therein to comply with applicable law, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment,
and (iii) supplement or make amendments to such Registration Statement.
(f) Furnish to each Holder of Registrable Securities who so
requests and to counsel for the Holders of Registrable Securities and each
managing underwriter, if any, without charge, upon request, one conformed
copy of the Registration Statement and each post-effective amendment
thereto, including financial statements and schedules, and of all
documents incorporated or deemed to be incorporated therein by reference
and all exhibits (including exhibits incorporated by reference).
(g) Deliver to each Holder of Registrable Securities, their counsel
and each underwriter, if any, without charge, as many copies of each
Prospectus and each amendment or supplement thereto as such Persons may
reasonably request; and, subject to the last paragraph of this Section 3,
the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders of Registrable
Securities and the underwriter or underwriters or agents, if any, in
connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, to register or
qualify, and cooperate with the Holders of such Registrable Securities,
the managing underwriter or underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
from such registration or qualification) of, such Registrable Securities
for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as the managing underwriter or
underwriters reasonably request in writing, or, in the event of a
non-underwritten offering, as the Holders of a majority of
<PAGE> 21
-19-
such Registrable Securities may request; provided, however, that where
Registrable Securities are offered other than through an underwritten
offering, the Company agrees to cause its counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 3(h); keep each such registration or
qualification (or exemption therefrom) effective during the period the
Registration Statement relating to such Registrable Securities is required
to be kept effective pursuant to this Agreement and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the securities covered thereby; provided, however, that
the Company will not be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B) take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) become subject to
taxation in any jurisdiction where it is not then so subject.
(i) Cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive
legends whatsoever and shall be in a form eligible for deposit with The
Depository Trust Company ("DTC"); and enable such Registrable Securities
to be in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably request at
least two business days prior to any sale of Registrable Securities in a
firm commitment underwritten public offering.
(j) Use its best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with or approved by
such other governmental agencies or authorities within the United States
as may be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities, except as may be required solely as a consequence
of the nature of such selling Holder's business, in which case the Company
will cooperate in all reasonable respects with the filing of the
Registration Statement and the granting of such approvals.
<PAGE> 22
-20-
(k) Upon the occurrence of any event contemplated by Section
3(c)(v) or 3(c)(vi) above, as promptly as practicable prepare a supplement
or post-effective amendment to the Registration Statement or a supplement
to the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and, subject to Section 3(a) hereof,
file such with the SEC so that, as thereafter delivered to the purchasers
of Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and will otherwise comply with law.
(l) Prior to the effective date of a Registration Statement, (i)
provide the registrar for the Registrable Securities with certificates for
such securities in a form eligible for deposit with DTC and (ii) provide a
CUSIP number for such securities.
(m) Enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and take all such
other actions as are reasonably requested by the managing underwriter or
underwriters in order to expedite or facilitate the registration or
disposition of such Registrable Securities in any underwritten offering to
be made of the Registrable Securities in accordance with this Agreement,
and in such connection, (i) make such representations and warranties to,
and covenants with, the underwriter or underwriters, with respect to the
business of the Company and the subsidiaries of the Company, and the
Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, 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)
use reasonable efforts to obtain opinions of counsel to the Company and
updates thereof, addressed to the underwriter or underwriters covering the
matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
underwriters; (iii) use reasonable efforts to obtain "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if applicable, the subsidiaries of the
Company) and, if necessary, any other
<PAGE> 23
-21-
independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements
and financial data are, or are required to be, included in the
Registration Statement, addressed to each of the underwriters, 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 such other matters as reasonably requested by
the managing underwriter or underwriters and as permitted by the Statement
of Auditing Standards No. 72; and (iv) if an underwriting agreement is
entered into, the same shall contain customary indemnification provisions
and procedures no less favorable than those set forth in Section 5 (or
such other provisions and procedures acceptable to Holders of a majority
of Registrable Securities covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to the
extent required thereunder.
(n) Make available for inspection by a representative of the
Holders of Registrable Securities being sold, any underwriter
participating in any such disposition of Registrable Securities, if any,
and any attorney or accountant retained by such representative of the
Holders or underwriter (collectively, the "Inspectors"), at the offices
where normally kept, during reasonable business hours, all financial and
other records and pertinent corporate documents of the Company and the
subsidiaries of the Company, and cause the officers, directors and
employees of the Company and the subsidiaries of the Company to supply all
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement; provided, however, that all
information shall be kept confidential by such Inspector, except to the
extent that (i) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in the Registration Statement, (ii)
the release of such information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary or
advisable in connection with any action, claim, suit or proceeding,
directly or indirectly, involving or potentially involving such Inspector
and arising out of, based upon, relating to
<PAGE> 24
-22-
or involving this Agreement or any of the transactions contemplated hereby
or arising hereunder, or (iv) such information has been made generally
available to the public. Each Selling Holder of such Registrable
Securities agrees that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company or
of any of its affiliates unless and until such is generally available to
the public. Each Selling Holder of such Registrable Securities further
agrees that it will, upon learning that disclosure of such information is
sought in a court of competent jurisdiction, give prompt notice to the
Company and allow the Company to undertake appropriate action to prevent
disclosure of the information deemed confidential at the Company's sole
expense.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than forty-five (45) days after the end of any 12-month period
(or ninety (90) days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to an underwriter or to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold
to an underwriter or to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the
effective date of the relevant Registration Statement, which statements
shall cover said 12-month periods.
(p) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are
then listed.
(q) 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 registered in such names as the Selling Holders
may reasonably request at least two business days prior to the closing of
any sale of Registrable Securities.
<PAGE> 25
-23-
Each seller of Registrable Securities as to which any registration
is being effected agrees, as a condition to the registration obligations with
respect to such Holder provided herein, to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
to comply with the Securities Act and other applicable law. The Company may
exclude from such registration the Registrable Securities of any seller who
fails to furnish such information within a reasonable time after receiving such
request. If the identity of a seller of Registrable Securities is to be
disclosed in the Registration Statement, such seller shall be permitted to
include all information regarding such seller as it shall reasonably request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(c)(ii), 3(c)(iv),
3(c)(v), or 3(c)(vi) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by the Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(k) hereof), or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto, and, if so directed by the Company, such Holder will
deliver to the Company all copies, 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. In the event the Company shall
give any such notice, the period of time for which a Registration Statement is
required hereunder to be effective shall be extended by the number of days
during such periods from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities covered by
such Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 3(k) hereof or (y)
the Advice.
Section 4. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Holder and each Person, if any, who controls
such Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, or is under common control with, or is
controlled by, such Holder, from and against any and all losses,
<PAGE> 26
-24-
claims, damages and liabilities (including, without limitation, the reasonable
legal fees and other reasonable out-of-pocket expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted), caused
by, arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (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 required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (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 in any such
Prospectus a material fact required to be stated or 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 made in reliance upon and in comformity with information relating to
any Holder furnished to the Company in writing by such Holder expressly for use
therein; provided, however, that the Company will not be liable if such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the Prospectus or any
amendment or supplement thereto and the Prospectus does not contain any other
untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and any such
loss, liability, claim, damage or expense suffered or incurred by the Holders
resulted from any action, claim or suit by any Person who purchased Registrable
Securities which are the subject thereof from such Holder and it is established
in the related proceeding that such Holder failed to deliver or provide a copy
of the Prospectus (as amended or supplemented) to such Person with or prior to
the confirmation of the sale of such Registrable Securities sold to such Person
if required by applicable law, unless such failure to deliver or provide a copy
of the Prospectus (as amended or supplemented) was a result of noncompliance by
the Company with Section 5 of this Agreement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign any Registration
Statement, and each Person, if any, who controls the Company within the meaning
of either
<PAGE> 27
-25-
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such Holder, but only with
reference to information relating to such Holder furnished to the Company in
writing by such Holder expressly for use in any Registration Statement or any
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus. The liability of any Holder under this paragraph shall in no event
exceed the proceeds received by such Holder from sales of Registrable Securities
giving rise to such obligations.
(c) In case any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
either paragraph (a) or (b) above, such Person (the "indemnified party") shall
promptly notify the Person against which 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 reasonably designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred of such counsel relating to such
proceeding; provided, however, that the failure to so notify the indemnifying
party shall not relieve it of any obligation or liability which it may have
hereunder or otherwise (unless and only to the extent that such failure directly
results in the loss or compromise of any material rights or defenses by such
indemnifying party and such indemnifying party was not otherwise aware of such
action or claim). 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 in writing to the contrary,
(ii) the indemnifying party shall have failed to retain within a reasonable
period of time counsel reasonably satisfactory to such indemnified party or
parties or (iii) the named parties to any such proceeding (including any
impleaded parties) include both such indemnified party or parties and the
indemnifying parties or an affiliate of the indemnifying parties or such
indemnified parties 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, unless there exists a conflict among indemnified parties,
the indemnifying parties shall not, in connection with any proceeding or related
proceedings in the same
<PAGE> 28
-26-
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 promptly after receipt of the invoice
therefore as they are incurred. Any such separate firm for the Holders and such
control Persons of the Holders shall be designated in writing by Holders who
sold a majority in interest of Registrable Securities sold by all such Holders
and any such separate firm for the Company, its directors, its officers and such
control Persons of the Company shall be designated in writing by the Company.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its prior written consent, but if settled with such consent or
if there is a final non-appealable judgment for the plaintiff for which the
indemnified party is entitled to indemnification pursuant to this Agreement, the
indemnifying party agrees to indemnify any 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 reasonable fees and
expenses actually incurred by counsel as contemplated by the third sentence of
this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its prior 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; provided, however, that the indemnifying
party shall not be liable for any settlement effected without its consent
pursuant to this sentence if the indemnifying party is contesting, in good
faith, the request for reimbursement. 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 (1) includes an unconditional release
of such indemnified party in form and substance satisfactory to such indemnified
party from all liability on claims that are the subject matter of such
proceeding and (2) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in paragraph (a) or (b) of
this Section 4 is unavailable (other than by
<PAGE> 29
-27-
reason of the exceptions specifically provided therein) to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities referred to therein, then each indemnifying party under such
paragraphs, in lieu of indemnifying such indemnified party thereunder and in
order to provide for just and equitable contribution, 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
(i) the relative benefits received by the Company on the one hand and the
Holders on the other hand from the offering of such Registrable Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the Company on the one hand and the Holders on the other in connection with the
statements or omissions (or alleged statements or omissions) that resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and the Holders 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 or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 4 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 the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4, in no event shall a Holder be
required to contribute any amount in excess of the amount by which proceeds
received by such Holder from sales of Registrable Securities exceeds the amount
of any damages that such Holder has otherwise been required to pay or has paid
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person
<PAGE> 30
-28-
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.
(f) The indemnity and contribution agreements contained in this
Section 4 will be in addition to any which the indemnifying parties may
otherwise have to the indemnified parties referred to above.
Section 5. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into
nor will the Company on or after the date of this Agreement enter into, or cause
or permit any of its subsidiaries to 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.
(b) Adjustments Affecting Registrable Securities. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability of the
Holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement 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
prior written consent of Holders of not less than a majority of the outstanding
Warrants and/or Registrable Securities; provided, however, that Section 4 hereof
and this Section 5(c) may not be amended, modified or supplemented without the
prior written consent of each Holder (including any Person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement).
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Securities may be given by the Holders of not less than a majority of the
Registrable Securities proposed to be sold by such Holders pursuant to such
Registration Statement. In addition, each such amendment, modification,
<PAGE> 31
-29-
supplement and waiver must be agreed to in writing by the Company.
(d) 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 of such Holder as set
forth in the register for the Warrants or the Warrant Shares, which address
initially is, with respect to the Initial Purchasers, the address set forth in
the Purchase Agreement and (ii) if to the Company, initially at the Company's
address set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 5(d).
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.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto and the Holders; provided, however, that this Agreement shall not inure
to the benefit of or be binding upon a successor or assign of a Holder unless
such successor or assign holds Registrable Securities.
(f) 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.
(g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE
<PAGE> 32
-30-
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) THIRD PARTY BENEFICIARY. THE HOLDERS ARE INTENDED THIRD PARTY
BENEFICIARIES OF THIS AGREEMENT AND THIS AGREEMENT MAY BE ENFORCED BY SUCH
PERSONS.
(k) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Warrant Agreement, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. This Agreement, the Purchase
Agreement and the Warrant Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
(l) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities or Warrants is required hereunder, Registrable Securities or Warrants
held by the Company or by any of its affiliates (as such term is defined in Rule
405 under the Securities Act) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
<PAGE> 33
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
HARCOR ENERGY, INC.
By:
-----------------------------
Name:
Title:
BT SECURITIES CORPORATION
By:
-----------------------------
Name:
Title:
INTERNATIONALE NEDERLANDEN (U.S.)
SECURITIES CORPORATION
By:
-----------------------------
Name:
Title:
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
Dated as of July 24, 1995
by and among
HARCOR ENERGY, INC.,
THE SUBSIDIARY GUARANTORS
named herein
and
BT SECURITIES CORPORATION
and INTERNATIONALE NEDERLANDEN (U.S.)
SECURITIES CORPORATION,
as Initial Purchasers
------------------------------
$65,000,000
14-7/8% SENIOR SECURED NOTES DUE 2002
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions................................................. 1
2. Exchange Offer.............................................. 5
3. Shelf Registration.......................................... 9
4. Additional Interest......................................... 11
5. Registration Procedures..................................... 13
6. Registration Expenses....................................... 24
7. Indemnification............................................. 25
8. Rules 144 and 144A.......................................... 29
9. Underwritten Registrations.................................. 30
10. Miscellaneous............................................... 30
(a) No Inconsistent Agreements............................ 30
(b) Adjustments Affecting Registrable
Notes............................................... 30
(c) Amendments and Waivers................................ 31
(d) Notices............................................... 31
(e) Successors and Assigns................................ 33
(f) Counterparts.......................................... 33
(g) Headings.............................................. 33
(h) Governing Law......................................... 33
(i) Severability.......................................... 33
(j) Notes Held by the Issuers
or Their Affiliates................................. 33
(k) Third Party Beneficiaries............................. 34
(l) Entire Agreement...................................... 34
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of July 24, 1995, by and among HarCor Energy, Inc., a Delaware
corporation (the "Company"), each of the subsidiaries of the Company listed on
the signature pages hereto (collectively, the "Subsidiary Guarantors"), and BT
Securities Corporation and Internationale Nederlanden (U.S.) Securities
Corporation (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of July 17, 1995, by and among the Company, the Subsidiary
Guarantors and the Initial Purchasers (the "Purchase Agreement") which provides
for, among other things, the issuance and sale to the Initial Purchasers of
65,000 units consisting of an aggregate of $65,000,000 aggregate principal
amount of the Company's 14-7/8% Senior Secured Notes due 2002, Series A (the
"Notes"), and 1,430,000 warrants to purchase an equal number shares of common
stock, par value $.10 per share, of the Company. In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company and the Subsidiary
Guarantors have agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchasers and their direct and
indirect transferees and assigns. The execution and delivery of this Agreement
is a condition to the Initial Purchasers' obligation to purchase the Units under
the Purchase Agreement. The Company and the Subsidiary Guarantors are
collectively referred to herein as the "Issuers."
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Agreement: See the first introductory paragraph to
this Agreement.
Applicable Period: See Section 2(b).
Business Day: A day that is not a Saturday, a Sunday, or a day on
which banking institutions in New York, New York are required to be closed.
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Company: See the first introductory paragraph to this Agreement.
Effectiveness Date: The 120th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 30th day after the Issue Date.
Holder: Any registered holder of Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of July 24, 1995, by and among
the Company, the Subsidiary Guarantors and Texas Commerce Bank National
Association, as trustee, pursuant to which the Notes are being issued, as
amended or supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: See the first introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the Notes were sold to the Initial
Purchasers pursuant to the Purchase Agreement.
Issuers: See the second introductory paragraph to this Agreement.
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NASD: National Association of Securities Dealers, Inc.
Notes: See the second introductory paragraph to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
Records: See Section 5(o).
Registrable Notes: Each Note upon original issuance thereof and at
all times subsequent thereto, each Exchange Note as to which Section 2(c)(iv)
hereof is applicable upon original issuance thereof and at all times subsequent
thereto and each Private Exchange Note upon original issuance thereof and at all
times subsequent thereto, until, in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(iv) hereof is applicable, the Exchange Registration
Statement)
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covering such Note, Exchange Note or Private Exchange Note, as the case may be,
has been declared effective by the SEC and such Note, Exchange Note or Private
Exchange Note, as the case may be, has been disposed of in accordance with such
effective Registration Statement, (ii) such Note, Exchange Note or Private
Exchange Note, as the case may be, is sold in compliance with Rule 144, (iii) in
the case of any Note, such Note has been exchanged pursuant to the Exchange
Offer for an Exchange Note or Exchange Notes which may be resold without
restriction under state and federal securities laws, or (iv) such Note, Exchange
Note or Private Exchange Note, as the case may be, ceases to be outstanding for
purposes of the Indenture.
Registration Statement: Any registration statement of the Issuers,
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
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Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
Subsidiary Guarantors: See the first introductory paragraph to this
Agreement.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Underwritten registration or underwritten offering: A registration
in which securities of one or more of the Issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) Each of the Issuers agrees to file with the SEC no later than
the Filing Date, an offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes (other than Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company, guaranteed by the
Subsidiary Guarantors, which are identical in all material respects to the Notes
(the "Exchange Notes") (and which are entitled to the benefits of the Indenture
or a trust indenture which is identical in all material respects to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC to effect
or maintain the qualification thereof under the TIA) and which, in either case,
has been qualified under the TIA), except that the Exchange Notes shall have
been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and shall comply with all applicable tender
offer rules and regulations under the Exchange Act. Each of the Issuers agrees
to use its best efforts to (x) cause the Exchange Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 calendar days (or longer if
required by applicable law) after the date that notice of the Exchange Offer is
mailed to Holders; and (z) consummate the Exchange Offer on or prior to the 45th
day following the date on which the Exchange
<PAGE> 8
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Registration Statement is declared effective. If after such Exchange
Registration Statement is initially declared effective by the SEC, the Exchange
Offer or the issuance of the Exchange Notes thereunder is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Exchange Registration Statement shall be
deemed not to have become effective for purposes of this Agreement. Each Holder
who participates in the Exchange Offer will be required to represent that any
Exchange Notes received by it will be acquired in the ordinary course of its
business, that at the time of the consummation of the Exchange Offer such Holder
will have no arrangement or understanding with any Person to participate in the
distribution of the Exchange Notes in violation of the provisions of the
Securities Act, and that such Holder is not an affiliate of any of the Issuers
within the meaning of the Securities Act. Upon consummation of the Exchange
Offer in accordance with this Section 2, the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely with respect to Registrable Notes
that are Private Exchange Notes and Exchange Notes held by Participating
Broker-Dealers, and the Issuers shall have no further obligation to register
Registrable Notes (other than Private Exchange Notes and other than in respect
of any Exchange Notes as to which clause 2(c)(iv) hereof applies) pursuant to
Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
judgment of the Initial Purchasers, represent the prevailing views of the staff
of the SEC. Such "Plan of Distribution" section shall also allow, to the extent
permitted by applicable policies and regulations of the SEC, the use of the
Prospectus by all Persons subject to the prospectus delivery requirements of the
Securities Act, including, to the extent so permitted, all Participating
Broker-Dealers, and include a statement describing the manner in which
Participating Broker-Dealers may resell the Exchange Notes.
<PAGE> 9
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Each of the Issuers shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such Persons must comply with such requirements
in order to resell the Exchange Notes (the "Applicable Period").
If, upon consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Company upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company, guaranteed by the Subsidiary Guarantors, that
are identical in all material respects to the Exchange Notes except for the
existence of restrictions on transfer thereof under the Securities Act and
securities laws of the several states of the U.S. (the "Private Exchange Notes")
(and which are issued pursuant to the same indenture as the Exchange Notes);
provided, however, the Issuers shall not be required to effect such exchange if,
in the written opinion of counsel for the Issuers (a copy of which shall be
delivered to the Initial Purchasers and any Holder affected thereby), such
exchange cannot be effected without registration under the Securities Act. The
Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from (A) the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if the
Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B) if no interest has been paid on the Notes, from the date of
the original issuance of the Notes.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement,
<PAGE> 10
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together with an appropriate letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York, which may be
the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at any
time prior to the close of business, New York time, on the last business
day on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with
all applicable laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange, as the case may be;
(2) deliver to the Trustee for cancellation all
Registrable Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Registrable Notes, Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the Notes
of such Holder so accepted for exchange.
The Exchange Offer and the Private Exchange shall be subject to the
following conditions: (i) the Exchange Offer or the Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the staff of the SEC, (ii) no action or proceeding is instituted or threatened
in any court or by any governmental agency which might materially impair the
ability of the Issuers to proceed with the Exchange Offer or the Private
Exchange and no material adverse development has occurred in any existing action
or proceeding with respect to the Issuers and (iii) all governmental approvals
have been obtained, which approvals the Issuers deem necessary for the
consummation of the Exchange Offer or Private Exchange.
<PAGE> 11
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The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture, which in either event will provide that the Exchange Notes
will not be subject to the transfer restrictions set forth in the Indenture and
that the Exchange Notes, the Private Exchange Notes and the Notes, if any, will
vote and consent together on all matters as one class and that none of the
Exchange Notes, the Private Exchange Notes or the Notes, if any, will have the
right to vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 150 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests in
writing to the Issuers within 120 days after the consummation of the Exchange
Offer or (iv) in the case of any Holder that participates in the Exchange Offer,
such Holder does not receive Exchange Notes on the date of the exchange that may
be sold without restriction under state and federal securities laws (other than
due solely to the status of such Holder as an affiliate of any of the Issuers
within the meaning of the Securities Act) and so notifies the Company within 60
days after such Holder first becomes aware of such restrictions and providing a
reasonable basis for its conclusions, in the case of each of clauses (i)-(iv),
then the Issuers shall promptly deliver to the Holders and the Trustee written
notice thereof (the "Shelf Notice") and shall file a Shelf Registration pursuant
to Section 3.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c),
then:
(a) Shelf Registration. The Issuers shall as promptly as reasonably
practicable file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Initial Shelf Registration"). If the Issuers shall not have yet
filed the Exchange Registration Statement, each of the Issuers shall use its
best efforts to file with the SEC the Initial Shelf Registration on or prior to
the Filing Date and shall use its best efforts to cause such Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date. Otherwise, each of the
<PAGE> 12
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Issuers shall use its best efforts to file with the SEC the Initial Shelf
Registration within 30 days of the delivery of the Shelf Notice and shall use
its best efforts to cause such Shelf Registration to be declared effective under
the Securities Act as promptly as practicable thereafter. The Initial Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in any Shelf Registration (as defined
below). The Issuers shall use their best efforts to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 36 months from the effective date of such Initial Shelf Registration
(subject to extension pursuant to the last paragraph of Section 5 hereof) (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Notes covered by the Initial Shelf Registration have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration or (ii) a Subsequent
Shelf Registration (as defined below) covering all of the Registrable Notes has
been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), each of the Issuers shall
use its best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend such Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, each of the Issuers shall use its best efforts to cause
the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf Registrations was previously
continuously effective. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
<PAGE> 13
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(c) Supplements and Amendments. The Issuers shall promptly
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Shelf Registration or by any underwriter of
such Registrable Notes.
4. Additional Interest
(a) The Issuers and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers, jointly and severally, agree to pay, as liquidated damages,
additional interest on the Notes ("Additional Interest") under the circumstances
and to the extent set forth below (each of which shall be given independent
effect):
(i) if the Exchange Registration Statement has not been filed on or
prior to the Filing Date, then commencing on the day after the Filing
Date, Additional Interest shall accrue on the Notes over and above the
stated interest at a rate of 0.50% per annum for the first 90 days
immediately following the Filing Date, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
subsequent 90-day period;
(ii) if the Exchange Registration Statement is not declared effective
on or prior to the Effectiveness Date, then commencing on the day after
the Effectiveness Date, Additional Interest shall accrue on the Notes over
and above the stated interest at a rate of 0.50% per annum for the first
90 days immediately following the day after the Effectiveness Date, such
Additional Interest rate increasing by an additional 0.50% per annum at
the beginning of each subsequent 90-day period; and
(iii) if (A) the Issuers have not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 45th day after the date on which the Exchange
Registration Statement is declared effective or (B) the Initial Shelf
Registration, if required to be filed hereunder, is not declared effective
on or prior to the 150th day after the
<PAGE> 14
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Issue Date or (C) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effectiveness Period, then Additional Interest shall accrue on
the Notes over and above the stated interest at a rate of 0.50% per annum
for the first 90 days commencing on the (x) 45th day after the date on
which the Exchange Registration Statement is declared effective, in the
case of (A) or (B) above, or (y) the day such Shelf Registration ceases to
be effective in the case of (C) above, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each such
subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 2.0% per annum; and provided further, that (1)
upon the filing of the Exchange Registration Statement (in the case of (i)
above), (2) upon the effectiveness of the Exchange Registration Statement (in
the case of (ii) above), or (3) upon the exchange of Exchange Notes for all
Notes tendered (in the case of (iii)(A) above), upon the effectiveness of the
Initial Shelf Registration (in the case of (iii)(B) above) or upon the
effectiveness of a Shelf Registration which had ceased to remain effective (in
the case of (iii)(C) above), Additional Interest on the Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
(b) The Issuers shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable semi-annually by wire transfer of immediately available funds
or by federal funds check on each regular interest payment date specified in the
Indenture (to the Holders of record on the regular record date therefor
(specified in the Indenture) immediately preceding such dates), commencing with
the first such regular interest payment date occurring after any such Additional
Interest commences to accrue. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes, multiplied by a fraction, the numerator of which
is the number of days such Additional Interest rate was applicable during such
period (determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed),
and the denominator of which is 360.
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5. Registration Procedures
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit
the sale of such securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Issuers hereunder, the Issuers
shall:
(a) Prepare and file with the SEC prior to the Filing Date, the
Exchange Registration Statement or if the Exchange Registration Statement
is not filed because of the circumstances contemplated by Section 2(c)(i),
a Shelf Registration as prescribed by Section 2 or 3, and use their best
efforts to cause each such Registration Statement to become effective and
remain effective as provided herein; provided that, if (1) a Shelf
Registration is filed pursuant to Section 3, or (2) a Prospectus contained
in an Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker- Dealer who seeks to sell Exchange Notes during the Applicable
Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuers shall, if requested,
furnish to and afford the Holders of the Registrable Notes to be
registered pursuant to such Shelf Registration or each such Participating
Broker-Dealer, as the case may be, covered by such Registration Statement,
their counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies of
any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at least five business days
prior to such filing). The Issuers shall not file any such Registration
Statement or Prospectus or any amendments or supplements thereto if the
Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement, or any such Participating
Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement,
as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the
<PAGE> 16
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Applicable Period, as the case may be; cause the related Prospectus to be
supplemented by any Prospectus supplement required by applicable law, and
as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act applicable
to it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities
being sold by a Participating Broker-Dealer covered by any such
Prospectus. The Company shall be deemed not to have used its best efforts
to keep a Registration Statement effective during the Applicable Period if
it voluntarily takes any action that would result in selling Holders of
the Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law or unless the Company complies with this
Agreement, including, without limitation, the provisions of paragraph 5(k)
hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period from whom the Company has received written notice
that it will be a Participating Broker-Dealer in the Exchange Offer,
notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event within two
business days), and confirm such notice in writing, (i) when a Prospectus
or any Prospectus supplement or post-effective amendment has been filed,
and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without
charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending
the effectiveness of a
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Registration Statement or of any order preventing or suspending the use of
any Prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act
to be delivered in connection with sales of the Registrable Notes the
representations and warranties of the Issuers contained in any agreement
(including any underwriting agreement) contemplated by Section 5(n) hereof
cease to be true and correct, (iv) of the receipt by the Issuers of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of
any event, the existence of any condition or any information becoming
known that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in, or amendments or supplements to,
such Registration Statement, Prospectus or documents so that, in the case
of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (vi)
of any of the Issuers' reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use its best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Notes or the Exchange Notes to be sold by any Participating Broker-
Dealer, for sale in any
<PAGE> 18
-16-
jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold
in connection with an underwritten offering, (i) promptly as practicable
incorporate in a prospectus supplement or post-effective amendment such
information or revisions to information therein relating to such
underwriters or selling Holders as the managing underwriters, if any, or
such Holders or their counsel reasonably request to be included or made
therein and (ii) make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after the Issuers
have received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes
and to each such Participating Broker-Dealer who so requests and to
counsel and each managing underwriter, if any, without charge, one
conformed copy of the Registration Statement or Registration Statements
and each post-effective amendment thereto, including financial statements
and schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, their
respective counsel, and the underwriters, if any, without charge, as many
copies of the Prospectus and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and,
<PAGE> 19
-17-
subject to the last paragraph of this Section 5, each Issuer hereby
consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and
sale of the Registrable Notes covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and any
amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, to use its best efforts to register or qualify, and
to cooperate with the selling Holders of Registrable Notes or each such
Participating Broker- Dealer, as the case may be, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Notes or Exchange Notes, as the case may be, for offer
and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters, if any,
reasonably request in writing; provided that where Exchange Notes held by
Participating Broker-Dealers or Registrable Notes are offered other than
through an underwritten offering, the Issuers agree to cause their counsel
to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Exchange
Notes held by Participating Broker-Dealers or the Registrable Notes
covered by the applicable Registration Statement; provided that none of
the Issuers shall be required to (A) qualify generally to do business in
any jurisdiction where it is not then so qualified, (B) take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
<PAGE> 20
-18-
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Notes to be sold,
which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable
such Registrable Notes to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders may
reasonably request.
(j) Use its best efforts to cause the Registrable Notes covered by
any Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Notes, except as may be required solely as
a consequence of the nature of such selling Holder's business, in which
case each of the Issuers will cooperate in all reasonable respects with
the filing of such Registration Statement and the granting of such
approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare
and (subject to Section 5(a) hereof) file with the SEC, at the joint and
several expense of each of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
<PAGE> 21
-19-
(l) Use its best efforts to cause the Registrable Notes covered by a
Registration Statement to be rated with the appropriate rating agencies,
if so requested by the Holders of a majority in aggregate principal amount
of Registrable Notes covered by such Registration Statement or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with printed
certificates for the Registrable Notes in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Notes.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
Notes and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate
the registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations, warranties to, and covenants
with, the underwriters, with respect to the business of the Issuers and
their respective subsidiaries and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the
Notes, and confirm the same in writing if and when requested; (ii) obtain
the opinion of counsel to the Issuers and updates thereof in form and
substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by underwriters; (iii) obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Issuers (and, if necessary, any other independent
certified public accountants of any subsidiary of any of the Issuers or of
any business acquired by any of the Issuers for which financial statements
and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters,
<PAGE> 22
-20-
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and such
other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration
Statement and the managing underwriter or underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or
as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder
of such Registrable Notes being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Registrable Notes, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records and
pertinent corporate documents of the Issuers and their respective
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the
Issuers and their respective subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such
Registration Statement. Such Records shall be kept confidential by each
Inspector and shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, (iii) the information in such Records is public or
has been made
<PAGE> 23
-21-
generally available to the public other than as a result of a disclosure
or failure to safeguard by such Inspector or (iv) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary or
advisable in connection with any action, claim, suit or proceeding,
directly or indirectly, involving or potentially involving such Inspector
and arising out of, based upon, related to, or involving this Agreement,
or any transactions contemplated hereby or arising hereunder. Each selling
Holder of such Registrable Notes and each such Participating Broker-
Dealer will be required to agree that information obtained by it as a
result of such inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the securities of
the Issuers unless and until such is made generally available to the
public. Each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, give notice to the Issuers and allow the
Issuers to undertake appropriate action to prevent disclosure of the
Records deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Offer or the first Registration Statement relating to the Registrable
Notes; and in connection therewith, cooperate with the trustee under any
such indenture and the Holders of the Registrable Notes, to effect such
changes to such indenture as may be required for such indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use
its best efforts to cause such 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 such indenture to be so
qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month
<PAGE> 24
-22-
period (or 90 days after the end of any 12-month period if such period is
a fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Notes are sold to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of
the Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(r) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuers, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the
Private Exchange, as the case may be, that the Exchange Notes or the
Private Exchange Notes, as the case may be, and the related indenture
constitute legally valid and binding obligations of each of the Issuers,
enforceable against each of the Issuers in accordance with their
respective terms subject to customary exceptions and qualifications.
(s) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in exchange
for the Exchange Notes or the Private Exchange Notes, as the case may be,
the Issuers shall mark, or caused to be marked, on such Registrable Notes
that such Registrable Notes are being cancelled in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be; in no
event shall such Registrable Notes be marked as paid or otherwise
satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the NASD.
(u) Use its best efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered by a
Registration Statement
contemplated hereby.
<PAGE> 25
-23-
The Issuers may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuers all information required to be disclosed in order to
make the information previously furnished to the Issuers by such seller not
materially misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Issuers of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will
forthwith discontinue disposition of such Registrable Notes covered by a
Registration Statement and such Participating Broker Dealer will forthwith
discontinue disposition of such Exchange Notes pursuant to any Prospectus and,
in each case, forthwith discontinue dissemination of such Prospectus until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k), or until it is
advised in writing (the "Advice") by the Issuers that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto and, if so directed by the Issuers, such Holder or
Participating Broker-Dealer, as the case may be, will deliver to the Issuers all
copies, other than permanent file copies, then in such Holder's or Participating
Broker-Dealer's possession, of the Prospectus covering such Registrable
Securities current at the time of the receipt of such notice. In the event the
Issuers shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Notes covered by such Registration
Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as
the case may be, shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) or (y) the Advice.
<PAGE> 26
-24-
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the Issuers,
jointly and severally, whether or not the Exchange Offer or a Shelf Registration
is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, or by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or by any Participating Broker-Dealer during the Applicable Period, as
the case may be, (iii) reasonable messenger, telephone and delivery expenses
incurred in connection with the Exchange Registration Statement and any Shelf
Registration, (iv) fees and disbursements of counsel for the Issuers and
reasonable fees and disbursements of special counsel for the sellers of
Registrable Notes (subject to the provisions of Section 6(b)), (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Issuers desire such insurance, (viii) fees and expenses of all other Persons
retained by the Issuers, (ix) internal expenses of the Issuers (including,
without limitation, all salaries and expenses of officers and employees of the
Issuers performing legal or accounting duties), (x) the expense of any annual
audit, (xi) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities
<PAGE> 27
-25-
exchange and (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the
Issuers, jointly and severally, shall reimburse the Holders of the Registrable
Notes being registered in such registration for the fees and disbursements, not
to exceed $25,000, of not more than one counsel (in addition to appropriate
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Registrable Notes to be included in such Shelf Registration and other
out-of-pocket expenses of Holders of Registrable Notes incurred in connection
with the registration and sale of Registrable Notes.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to indemnify
and hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the officers
and directors of each such Person, and each Person, if any, who controls any
such Person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (as amended
or supplemented if the Issuers shall have furnished any amendments or
supplements thereto) or caused by, arising out of or based upon 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 (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) or caused by, arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or 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 untrue
<PAGE> 28
-26-
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information relating to any Participant furnished to
the Issuers in writing by or on behalf of such Participant expressly for use
therein; provided, however, that the Company will not be liable if such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the Prospectus or any
amendment or supplement thereto and the Prospectus does not contain any other
untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and any such
loss, liability, claim, damage or expense suffered or incurred by the
Participants resulted from any action, claim or suit by any Person who purchased
Registrable Notes or Exchange Notes which are the subject thereof from such
Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Notes or Exchange Notes sold to such Person if required by
applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their respective directors and officers and each
Person who controls any of the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the
<PAGE> 29
-27-
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
actually incurred by such counsel related to such proceeding; provided, however,
that the failure to so notify the Indemnifying Person shall not relieve it of
any obligation or liability which it may have hereunder or otherwise (unless and
only to the extent that such failure directly results in the loss or compromise
of any material rights or defenses by the Indemnifying Person and the
Indemnifying Person was not otherwise aware of such action or claim). In any
such proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person 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, unless there is a
conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any proceeding or related proceeding 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 Indemnified Persons, and that all such fees and
expenses shall be reimbursed promptly after receipt of the invoice therefor as
they are incurred. Any such separate firm for the Participants and such control
Persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Registrable Notes sold by all such Participants and
any such separate firm for the Issuers, their directors, their officers and such
control Persons of the Issuers shall be designated in writing by the Company.
The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent, but if settled with such consent or
if there is a final non-appealable judgment for the plaintiff for which the
Indemnified Person is entitled to indemnification pursuant to this Agreement,
the Indemnifying Person agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse
<PAGE> 30
-28-
the Indemnified Person for reasonable fees and expenses actually incurred by
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its prior written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Person shall not be liable
for any settlement effected without its consent pursuant to this sentence if the
Indemnifying Person is contesting, in good faith, the request for reimbursement.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement (A) includes an unconditional release of such Indemnified
Person, in form and substance satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (B) does
not include any statement as to an admission of fault, culpability or failure to
act by or on behalf of an Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable (other than by reason of the
exceptions specifically provided therein) to, or insufficient to hold harmless,
an Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Registrable
Notes or Exchange Notes, as the case may be or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the Indemnifying Person or
Persons on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions (or alleged statements or omissions)
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any
<PAGE> 31
-29-
other relevant equitable considerations. The relative fault of the parties 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 Issuers on the one hand
or by the Participants or such other Indemnified Person, as the case may be, on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants 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 the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant 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.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Issuers covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time it is not
<PAGE> 32
-30-
required to file such reports, it will, upon the request of any Holder of
Registrable Notes, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A. Each of the
Issuers further covenants, for so long as any Registrable Notes remain
outstanding, to make available to any Holder or beneficial owner of Registrable
Notes in connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. None of the Issuers has entered, as
of the date hereof, and none of the Issuers shall enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. None of the Issuers
has entered and none of the Issuers will enter into any agreement with respect
to any of its securities which will grant to any Person piggy-back rights with
respect to a Registration Statement.
(b) Adjustments Affecting Registrable Notes. Neither the Company nor
the Subsidiary Guarantors shall, directly or indirectly, take any action with
respect to the Registrable
<PAGE> 33
-31-
Notes as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Registrable Notes and (B) in circumstances that
would adversely affect Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal amount of
the Exchange Notes held by all Participating Broker-Dealers; provided, however,
that Section 7 and this Section 10(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker- Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being tendered pursuant to the Exchange Offer or sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Notes being tendered or being sold by such Holders
pursuant to such Registration Statement.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
<PAGE> 34
-32-
BT SECURITIES CORPORATION
INTERNATIONAL NEDERLANDEN (U.S.)
SECURITIES CORPORATION
c/o BT Securities Corporation
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No.: (212) 250-7200
Attention: Corporate Finance
Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Daniel J. Zubkoff, Esq.
2. if to the Initial Purchasers, at the address
specified in Section 10(d)(1);
3. if to an Issuer, as follows:
c/o HarCor Energy, Inc.
4400 Post Oak Parkway
Suite 2220
Houston, Texas
Facsimile No.: (713)
Attention: Chief Executive Officer
with copies to:
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2300
Houston, Texas 77002-6760
Facsimile No.: (713) 758-2346
Attention: John S. Watson, Esq.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
<PAGE> 35
-33-
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto and the Holders; provided, however, that this Agreement shall not inure
to the benefit of or be binding upon a successor or assign of a Holder unless
such successor or assign holds Registrable Notes.
(f) 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.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Issuers or Their Affiliates. Whenever the
consent or approval of Holders of a specified
<PAGE> 36
-34-
percentage of Registrable Notes is required hereunder, Registrable Notes held by
the Issuers or their affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchasers on
the one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
<PAGE> 37
-35-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
HARCOR ENERGY, INC.
By:
---------------------------------
Name: Mark G. Harrington
Title: Chairman of the Board and
Chief Executive Officer
WARRIOR, INC.
By:
---------------------------------
Name: Mark G. Harrington
Title: President
HTAC INVESTMENTS, INC.
By:
---------------------------------
Name: Mark G. Harrington
Title: President
BT SECURITIES CORPORATION
By:
---------------------------------
Name: Brian McBride
Title: Vice President
INTERNATIONALE NEDERLANDEN (U.S.)
SECURITIES CORPORATION
By:
---------------------------------
Name:
Title:
<PAGE> 1
Execution Copy
===============================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
HARCOR ENERGY, INC.
and
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION
as Agent
and
LENDERS
(identified herein)
-------------------------------------
$15,000,000
July 19, 1995
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
AMENDED AND RESTATED CREDIT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I - Amendment and Restatement, Definitions and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Amendment and Restatement; Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Exhibits and Schedules; Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.3 Amendment of Defined Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.4 References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1.5 Calculations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II - The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.1. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.2. Requests for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.3. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4. Rate Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.7. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.8. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.9. Loan Amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.10. Payments to Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.11. Initial Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.12. Subsequent Determinations of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.13. Borrower's Reduction of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.14. Capital Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.15. Increased Cost of Fixed Rate Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.16. Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.17. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.18. Reimbursable Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.2. Documents to be Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.3. Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.1. Borrower's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.2. Representation by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V - Covenants of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 5.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI - Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.1. The Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.2. Agreement to Deliver Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.3. Perfection and Protection of Security Interests and Liens . . . . . . . . . . . . . . . . . . . . . 31
Section 6.4. Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.5. Guaranties of Borrower's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.6. Production Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII - Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII - Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.1. Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.2. Exculpation, Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.3. Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.5. Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.6. Sharing of Set-Offs and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.8. Benefit of Article VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.1. Waivers and Amendments; Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.2. Survival of Agreements; Cumulative Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.4. Joint and Several Liability; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.5. GOVERNING LAW; SUBMISSION TO PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.6. Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.7. Termination; Limited Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.10. ACKNOWLEDGEMENT OF NO CLAIMS, OFFSETS OR DEFENSES; RELEASE BY THE RELATED PARTIES . . . . . . . . . 41
SECTION 9.11. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of July 19,
1995, by and among HarCor Energy, Inc., a Delaware corporation (herein called
"Borrower"), Internationale Nederlanden (U.S.) Capital Corporation, a Delaware
corporation ("INCC"), individually as a Lender, and the other Lenders from time
to time party to this Agreement, and INCC as agent for the Lenders (in such
capacity, "Agent").
RECITALS
1. Borrower and Internationale Nederlanden (U.S.) Capital Corporation
entered into that certain Credit Agreement dated June 24, 1994 (the "Prior
Agreement") which amended and restated in its entirety an Amended and Restated
Credit Agreement, dated as of March 18, 1994, and various amendments thereto;
and
2. Borrower and Lenders desire to amend and restate the Prior
Agreement in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein the parties hereto agree as follows:
ARTICLE I - Amendment and Restatement, Definitions and References
Section 1.1 Amendment and Restatement; Defined Terms. The parties
hereto agree that the Prior Agreement shall be amended and restated in its
entirety by this Agreement, and all of the terms and provisions hereof shall
supersede the terms and provisions of the Prior Agreement. As used in this
Agreement, each of the following terms has the meaning given it in this Section
1.1 or in the sections and subsections referred to below:
"Advance" has the meaning given it in Section 2.1.
"Aggregate Maximum Loan Amount" means the sum of the Maximum Loan
Amount for all Lenders, which shall initially be $15,000,000, subject to
reduction as provided herein.
"Affiliate" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 30% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors or managing general partners; or
(b) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
1
<PAGE> 5
"Agent" shall have the meaning assigned to such term in the first
paragraph of this Agreement as agent hereunder, and its successors in such
capacity; provided, however, that until such time as a Lender other than INCC
becomes a party hereto, "Agent" shall mean INCC individually.
"Agreement" means this Credit Agreement.
"Base Rate" means the rate of interest one half of one percent (0.5%)
above the Reference Rate. For purposes of this definition, "Reference Rate"
means the arithmetic average of the rates of interest publicly announced by The
Chase Manhattan Bank (National Association), Citibank, N.A. and Morgan Guaranty
Trust Company of New York (or their respective successors) as their respective
prime commercial lending rates (or, as to any such bank that does not announce
such a rate, such bank's 'base' or other rate determined by Agent to be the
equivalent rate announced by such bank), except that, if any such bank shall,
for any period, cease to announce publicly its prime commercial lending (or
equivalent) rate, Agent shall, during such period, determine the "Base Rate"
based upon the prime commercial lending (or equivalent) rates announced
publicly by the other such banks. The Base Rate shall in no event, however,
exceed the Highest Lawful Rate.
"Base Rate Portion" means that portion of the unpaid principal balance
of the Loans which is not made up of Fixed Rate Portions.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.11 or the amount determined by Agent in
accordance with the provisions of Section 2.12, as reduced by Borrower pursuant
to Section 2.13; provided, however, that in no event shall the Borrowing Base
ever exceed the Aggregate Maximum Loan Amount.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Fixed Rate Portions (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
London interbank market.
"Capital Expenditures" means those costs and expenses associated with
the development and redevelopment of the oil and gas properties of Borrower and
its Consolidated Subsidiaries which pursuant to GAAP are required to be
capitalized and subject to depletion, depreciation or amortization.
"Change of Control" means the occurrence of any of the following
events (whether or not approved by the board of directors of the Borrower): (i)
Borrower consolidates with or merges with or into another Person or any Person
consolidates with, or merges with or into, Borrower (in each case, whether or
not in compliance with the terms of this Agreement), in any such event pursuant
to a transaction in which immediately after the consummation thereof Persons
owning a majority of the Voting Stock of Borrower immediately prior to such
consummation shall cease to own a majority of the Voting Stock of the Borrower
or the surviving entity if other than Borrower; (ii) Borrower or any of its
Subsidiaries, directly or
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<PAGE> 6
indirectly, sells, assigns, conveys, transfers, leases or otherwise disposes
of, in one transaction or a series of related transactions, all or
substantially all of the property or assets of the Borrower and its
Subsidiaries (determined on a Consolidated basis) to any Person or group of
related Persons for purposes of Section 13(d) of the Securities Act of 1934, as
amended ("Group of Persons"); (iii) the adoption of any plan of liquidation or
dissolution of Borrower; (iv) any Person or Group of Persons is or becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Securities and Exchange
Commission under the Securities Act of 1934, as amended ("Exchange Act"),
directly or indirectly, of 40% of the Voting Stock of Borrower; or (v) the
first day on which a majority of the members of the board of directors of
Borrower are not Continuing Directors.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Commitment Period" means the period from and including the Effective
Date and including January 31, 1996 (or, if earlier, the day on which the Notes
first become due and payable in full, or the date on which the Commitment
Period is terminated pursuant to Section 7.1 as a result of the occurrence of
an Event of Default).
"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries. References
herein to a Person's Consolidated financial statements, financial position,
financial condition, liabilities, etc. refer to the consolidated financial
statements, financial position, financial condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Continuing Directors" means, as of the date of determination, any
member of the board of directors of Borrower, who (i) was a member of such
board of directors on the date of this Agreement, or (ii) was nominated for
election or elected to such board of directors with the affirmative vote of a
majority of the Continuing Directors who were members of such board at the time
of such election or nomination.
"Debt" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Determination Date" has the meaning given it in Section 2.12.
"Disclosure Report" means either a notice given by Borrower under
Section 5.1(d) or a certificate given by Borrower's chief financial officer
under Section 5.1(b)(ii).
"Disclosure Schedule" means Schedule 1 hereto.
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"Effective Date" has the meaning given it in Section 3.1.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 5.1(b)(iv).
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA maintained by any Related Person or any Affiliate thereof with respect to
which any Related Person has a fixed or contingent liability.
"Eurodollar Rate" means, with respect to each particular Fixed Rate
Portion and the related Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) reported, on the date two Business Days
prior to the first day of such Interest Period, on Telerate Access Service Page
3750 (British Bankers Association Settlement Rate) as the London Interbank
Offered Rate for dollar deposits having a term comparable to such Interest
Period and in an amount of $1,000,000 or more (or, if such Page shall cease to
be publicly available or if the information contained on such Page, in Agent's
sole judgment, shall cease to accurately reflect such London Interbank Offered
Rate, as reported by any publicly available source of similar market data
selected by Agent that, in Agent's sole judgment, accurately reflects such
London Interbank Offered Rate).
"Event of Default" has the meaning given it in Section 7.1.
"Excess Cash Flow" has the meaning set forth in the 2002 Indenture.
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"Fixed Rate" means, with respect to each particular Fixed Rate Portion
and the associated Eurodollar Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Fixed Rate = Eurodollar Rate
------------------------------- + A
100.0% - Reserve Percentage
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<PAGE> 8
where A means 2.5%. If the Reserve Percentage changes during the Interest
Period for a Fixed Rate Portion, Agent may, at its option, either change the
Fixed Rate for such Fixed Rate Portion or leave it unchanged for the duration
of such Interest Period. The Fixed Rate shall in no event, however, exceed the
Highest Lawful Rate.
"Fixed Rate Portion" means any portion of the unpaid principal balance
of the Loan which Borrower designates as such in a Rate Election.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of
Borrower and its Consolidated subsidiaries, are applied for all periods after
the date hereof in a manner consistent with the manner in which such principles
and practices were applied to the Initial Financial Statements. If any change
in any accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to Borrower or
with respect to Borrower and its Consolidated subsidiaries may be prepared in
accordance with such change, but all calculations and determinations to be made
hereunder may be made in accordance with such change only after notice of such
change is given to each Lender and Majority Lenders agree to such change
insofar as it affects the accounting of Borrower or of Borrower and its
Consolidated subsidiaries.
"Guarantor" means any Person who has guaranteed some or all of the
Obligations pursuant to a guaranty listed on the Security Schedule or any other
Person who has guaranteed some or all of the Obligations and who has been
accepted by Agent as a Guarantor or any Subsidiary of Borrower which now or
hereafter executes and delivers a guaranty to Agent pursuant to Section 6.5.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Highest Lawful Rate" means the maximum nonusurious rate of interest
that each Lender is permitted under applicable law to contract for, take,
charge, or receive with respect to its Loan.
"Initial Engineering Report" means, the engineering report concerning
oil and gas properties of Borrower dated March 17, 1995 prepared by Ryder Scott
Company as of December 31, 1994.
"Initial Financial Statements" means (i) the audited annual
Consolidated financial statements of Borrower dated as of December 31, 1994,
and (ii) the unaudited quarterly Consolidated financial statements of Borrower
dated as of March 31, 1995.
"Interest Period" means, with respect to each particular Fixed Rate
Portion, a period of 1, 2, 3 or 6 consecutive calendar months, as specified in
the Rate Election applicable thereto, beginning on and including the date
specified in such Rate Election (which must be a
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<PAGE> 9
Business Day), and ending on but not including the same day of the month as the
day on which it began (e.g., a period beginning on the third day of one month
shall end on but not include the third day of another month), provided that
each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (unless such next succeeding
Business Day is the first Business Day of a calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day) and each
Interest Period which commences on a day for which there is no numerically
corresponding day in the appropriate subsequent month shall end on the last day
of the appropriate subsequent month. No Interest Period may be elected which
would extend past the date on which the Notes are due and payable in full.
"Intercreditor Agreement" means the Intercreditor Agreement dated as
of the date of the 2002 Indenture among the Agent, the trustee for the holders
of the 2002 Notes, Guarantor, and Borrower.
"Late Payment Rate" means, at the time in question, four percent
(4.0%) per annum plus the Base Rate then in effect; provided that, with respect
to any Fixed Rate Portion with an Interest Period extending beyond the date
such Fixed Rate Portion becomes due and payable, "Late Payment Rate" shall mean
four percent (4.0%) per annum plus the related Fixed Rate. The Late Payment
Rate shall in no event, however, exceed the Highest Lawful Rate.
"Lenders" means each signatory hereto (other than Borrower), including
Internationale Nederlanden (U.S.) Capital Corporation, in its capacity as a
lender hereunder rather than as Agent, and the successors of each as holder of
a Note.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied out
of such property or assets prior to the general creditors of any owner thereof,
including any lien, mortgage, security interest, pledge, deposit, production
payment, rights of a vendor under any title retention or conditional sale
agreement or lease substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business.
"Lien" also means any filed financing statement, any registration of a pledge
(such as with an issuer of uncertificated securities), or any other arrangement
or action which would serve to perfect a Lien described in the preceding
sentence, regardless of whether such financing statement is filed, such
registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Loan" has the meaning given it in Section 2.1.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Intercreditor Agreement, the warrants to purchase common stock
of Borrower issued to each Lender, any Permitted Swap Agreements, and all other
agreements, certificates, documents, instruments and writings at any time
delivered in connection herewith or therewith (exclusive
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<PAGE> 10
of term sheets, commitment letters, correspondence and similar documents used
in the negotiation hereof, except to the extent the same contain information
about Borrower or its Affiliates, properties, business or prospects).
"Majority Lenders" means at the time in question one or more Lenders
whose Percentage Shares total not less than 50%.
"Maximum Loan Amount" means with respect to each Lender, the amount
set forth for such Lender opposite its signature hereto, as such amount is
reduced pursuant to Section 2.8.
"Note" has the meaning given it in Section 2.1.
"Obligations" means the sum of all Debt from time to time owing by any
of the Related Persons to Agent or any Lender under or pursuant to any of the
Loan Documents. "Obligation" means any part of the Obligations.
"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.5, in any Request for Advance or when no Loans are
outstanding hereunder the percentage set forth opposite such Lender's name on
the signature pages of this Agreement, and (b) when used otherwise, the
percentage equal to the unpaid principal balance of such Lender's Loan at the
time in question divided by the aggregate unpaid principal balance of all Loans
at such time.
"Permitted Investments" means investments:
(a) in open market commercial paper, maturing within 270
days after acquisition thereof, which has the highest or second
highest credit rating given by either Standard & Poor's Corporation or
Moody's Investors Service, Inc.
(b) in marketable obligations, maturing within 12 months
after acquisition thereof, issued or unconditionally guaranteed by the
United States of America or an instrumentality or agency thereof and
entitled to the full faith and credit of the United States of America.
(c) in demand deposits, and time deposits (including
certificates of deposit) maturing within 12 months from the date of
deposit thereof, with a domestic office of any national or state bank
or trust company which is organized under the laws of the United
States of America or any state therein, which has capital, surplus and
undivided profits of at least $500,000,000, and whose certificates of
deposit have at least the third highest credit rating given by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
"Permitted Swap Agreements" means the Master Forward and Protection
Agreement dated as of September 16, 1991 between ING Capital Corp. and
Borrower, that certain Master Forward and Protection Agreement dated as of
August, 1994 between Internationale Nederladen (U.S.) Capital Corporation and
Borrower, and any other similar master swap
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<PAGE> 11
agreements between a Related Person and any Lender (or its Affiliates) together
with all transactions and confirmations under such agreements.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture, court
or governmental unit or any agency or subdivision thereof, or any other legally
recognizable entity.
"Prior Agreement" shall have the meaning set forth in the recitals to
this Agreement.
"Prior Note" means that certain Promissory Note dated as of June 24,
1994, made by Borrower payable to the order of Internationale Nederlanden
(U.S.) Capital Corporation in the maximum principal amount of $17,200,000.
"Prior Unsecured Senior Credit Agreement" means that certain Unsecured
Senior Credit Agreement dated June 24, 1994 between Borrower and Internationale
Nederlanden (U.S.) Capital Corporation.
"Prohibited Lien" means any Lien not expressly allowed under Section
5.2(b).
"Projected Production" means the projected production of oil or gas
(measured by volume unit or BTU equivalent, not sales price) for a specified
period of time from properties and interests owned by any Related Person which
are located in or offshore of the United States and which have attributable to
them proved oil or gas reserves, as such production is projected in the most
recent report delivered pursuant to Section 5.1(b)(iv), after deducting
projected production from any properties or interests sold or under contract
for sale that had been included in such report and after adding projected
production from any such properties or interests that had not been reflected in
such report but that are reflected in separate or supplemental reports meeting
the requirements of such Section 5.1(b)(iv) and otherwise are satisfactory to
Agent.
"Rate Election" has the meaning given it in Section 2.4.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Related Person" means any of Borrower, each Subsidiary of Borrower,
and each Guarantor.
"Request for Advance" means a written or telephonic request, or a
written confirmation, made by Borrower which meets the requirements of Section
2.2.
"Reserve Percentage" means, on any day with respect to each particular
Fixed Rate Portion, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply under Regulation D with respect to "Eurocurrency
liabilities" (as such term is defined in Regulation D) equal in
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<PAGE> 12
amount to such Fixed Rate Portion. If such reserve requirement shall change
after the date hereof, the Reserve Percentage shall be automatically increased
or decreased, as the case may be, from time to time as of the effective time of
each such change in such reserve requirement.
"Restricted Debt" of any Person means Debt in any of the following
categories:
(a) Debt for borrowed money,
(b) Debt constituting an obligation to pay the deferred
purchase price of property,
(c) Debt evidenced by a bond, debenture, note or similar
instrument,
(d) Debt which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) is payable more than one year
from the date of creation thereof (other than reserves for taxes and
reserves for contingent obligations),
(e) Debt arising under futures contracts, swap contracts, or
similar agreements,
(f) Debt constituting principal under leases capitalized in
accordance with GAAP,
(g) Debt arising under conditional sales or other title
retention agreements,
(h) Debt owing under direct or indirect guaranties of Debt of
any other Person or constituting obligations to purchase or acquire or
to otherwise protect or insure a creditor against loss in respect of
Debt of any other Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, or agreements to
purchase Debt, assets, goods, securities or services), but excluding
endorsements in the ordinary course of business of negotiable
instruments in the course of collection,
(i) Debt (for example, repurchase agreements) consisting of
an obligation to purchase securities or other property, if such Debt
arises out of or in connection with the sale of the same or similar
securities or property,
(j) Debt with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Debt with respect to payments received in consideration
of oil, gas, or other minerals yet to be acquired or produced at the
time of payment (including obligations under "take-or-pay" contracts
to deliver gas in return for payments already received and the
undischarged balance of any production payment created by such Person
or for the creation of which such Person directly or indirectly
received payment), or
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(l) Debt with respect to other obligations to deliver goods
or services in consideration of advance payments therefor;
provided, however, that the "Restricted Debt" of any Person shall not include
Debt that was incurred by such Person on ordinary trade terms to vendors,
suppliers, or other Persons providing goods and services for use by such Person
in the ordinary course of its business, unless and until such Debt is
outstanding more than 120 days after the incurrence thereof.
"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Related Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Related
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 2 hereto.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any Related Person or
of any Affiliate of any Related Person from an ERISA Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or
the treatment of any ERISA Plan amendment as a termination under Section 4041
of ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by
the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e)
any other event or condition which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any ERISA Plan.
"Tranche" has the meaning given it in Section 2.4.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of capital stock in such Person entitling the holders thereof
(whether at all times or only so long no senior class of stock has voting power
by reason of any contingency) to vote in the election of members of the board
of directors of such Person.
"2002 Indenture" means that certain Indenture dated as of July 24,
1995 between Borrower and Texas Commerce Bank National Association, as Trustee,
pursuant to which the 2002 Notes were issued.
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<PAGE> 14
"2002 Notes" means Borrower's 14 7/8% Senior Notes due 2002 issued
pursuant to the 2002 Indenture in the aggregate principal amount of
$65,000,000.
Section 1.2 Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which
definitions are incorporated herein by reference.
Section 1.3 Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing contained in this section shall be construed to authorize any such
renewal, extension, modification, amendment or restatement.
Section 1.4 References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation". Pronouns in masculine, feminine and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5 Calculations and Determinations. All calculations under
the Loan Documents of fees and of interest shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 360
days. Each determination by Agent or a Lender of amounts to be paid under
Sections 2.14 through 2.18 or any other matters which are to be determined
hereunder by Agent or a Lender (such as any Eurodollar Rate, Fixed Rate,
Business Day, Interest Period, or Reserve Percentage) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Lenders otherwise consent all financial statements and reports
furnished to Agent or any Lender hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance
with GAAP.
ARTICLE II - The Loan
Section 2.1. Advances. Subject to the terms and conditions hereof,
each Lender agrees to the extent that the principal of the indebtedness
outstanding hereunder does not
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exceed the Borrowing Base such Lender will make Advances to Borrower (herein
called "Advances") upon request from time to time during the Commitment Period
so long as (a) each Advance by such Lender does not exceed such Lender's
Percentage Share of the aggregate amount of Advances then requested from all
Lenders, and (b) the aggregate amount of Advances outstanding at any time does
not exceed the lesser of such Lender's Percentage Share of the Borrowing Base
or such Lender's Maximum Loan Amount, as determined as of the date on which the
requested Advance is to be made. The aggregate amount of all Advances
requested of all Lenders in any Request for Advance must be greater than or
equal to $100,000 or must equal the unadvanced portion of the Borrowing Base.
The obligation of Borrower to repay to each Lender the aggregate amount of all
Advances made by such Lender (herein called such Lender's "Loan"), together
with interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Lender's "Note") made by Borrower payable
to the order of such Lender in the form of Exhibit A with appropriate
insertions. The amount of principal owing on any Lender's Note at any given
time shall be the aggregate amount of all Advances theretofore made by such
Lender minus all payments of principal theretofore received by such Lender on
such Note. Interest on each Note shall accrue and be due and payable as
provided herein and therein. Subject to the terms and conditions hereof,
Borrower may borrow, repay, and reborrow hereunder.
Section 2.2. Requests for Advances. Borrower must give notice to
Agent of any requested Advance as follows:
(a) if all of such Advance is designated as a Base Rate
Portion, by 10:00 a.m., Eastern Time, on the first Business Day
preceding the date such Advance is requested to be made; and
(b) if any part of such Advance is designated as a Fixed Rate
Portion, by 10:00 a.m., Eastern Time, on the third Business Day
preceding the date such Advance is requested to be made.
Each request for Advance shall be made in writing or by telephonic notice
promptly confirmed in writing. Each such written request or confirmation must
be made in writing in the form and substance of the "Request for Advance"
attached hereto as Exhibit B, duly completed. Each such telephonic request
shall be deemed a representation, warranty, acknowledgment and agreement by
Borrower as to the matters which are to be set out in such written
confirmation. Promptly after receiving any telephonic request for Advance,
Agent shall notify each Lender thereof and Agent shall promptly provide to each
Lender a copy of any written Request for Advance received from Borrower. If
all conditions precedent to such Advance have been met, each Lender will on the
date requested make such Advance available to Agent in immediately available
funds by transfer to Agent's account at Morgan Guaranty Trust Company of New
York in New York, New York. Agent shall then promptly make the Advance
available to Borrower at such bank account as may be modified from time to time
by agreement of the parties hereto. Unless Agent shall have received prompt
notice from a Lender that such Lender will not make available to Agent such
Lender's Advance, Agent may in its discretion assume that such Lender has made
such Advance and, in reliance upon such assumption, may (but shall not be
required to) make the amount thereof available to Borrower. If and to the
extent such Lender shall not so make its Advance available to Agent,
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Borrower agrees to repay to Agent, and such Lender agrees that to the extent
that Borrower shall fail to make such repayment such Lender shall pay to Agent,
within three days after demand, the amount of such Advance so made available by
the Agent together with interest thereon, for each day from the date such
amount is made available by Agent to Borrower until the date such amount is
paid or repaid to Agent, at the interest rate applicable at the time to the
other Advances made on such date. The failure of any Lender to make any
Advance to be made by it hereunder shall not relieve any other Lender of its
obligation hereunder, if any, to make its Advance, but no Lender shall be
responsible for the failure of any other Lender to make any Advance to be made
by such other Lender.
Section 2.3. Use of Proceeds. Borrower shall use all funds lent
hereunder to finance working capital, the acquisition of new oil and gas
properties and the development of new and existing oil and gas properties. In
no event shall the funds from any Advance be used directly or indirectly by any
Person for personal, family, household or agricultural purposes or for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" or any "margin securities" (as such terms are
defined respectively in Regulation U and Regulation G promulgated by the Board
of Governors of the Federal Reserve System) or to extend credit to others
directly or indirectly for the purpose of purchasing or carrying any such
margin stock or margin securities. Borrower represents and warrants that
Borrower is not engaged principally, or as one of Borrower's important
activities, in the business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.
Section 2.4. Rate Elections. Borrower may from time to time
designate all or any portion of the Loans (including any yet to be made
Advances which are to be made prior to or at the beginning of the designated
Interest Period but excluding any portion of the Loan which is required to be
repaid prior to the end of the designated Interest Period) as a "Tranche",
which term refers to a set of Fixed Rate Portions with identical Interest
Periods and with each Lender participating in such Tranche in accordance with
its Percentage Share. Without the consent of Majority Lenders, Borrower may
make no such election during the continuance of a Default and Borrower may make
such an election with respect to outstanding Fixed Rate Portions only if such
election will take effect at or after the termination of the Interest Period
applicable thereto. Each election by Borrower of a Tranche shall:
(a) Be made in writing in the form and substance of the "Rate
Election" attached hereto as Exhibit C, duly completed;
(b) Specify the amount of the Loans which Borrower desires to
designate as such Tranche, the first day of the Interest Period which
is to apply thereto, and the length of such Interest Period; and
(c) Be received by Agent not later than 10:00 a.m., Eastern
Time, on the third Business Day preceding the first day of the
specified Interest Period.
Promptly after receiving any such election (herein called a "Rate Election")
which meets the requirements of this section, Agent shall notify each Lender
thereof. Each Rate Election shall
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<PAGE> 17
be irrevocable. Borrower may make no Rate Election which does not specify an
Interest Period complying with the definition of "Interest Period" in Section
1.1, and the aggregate amount of the Tranche elected in any Rate Election must
be an integral multiple of $100,000. Upon the termination of each Interest
Period, the portion of each Loan within the related Tranche shall, unless the
subject of a new Rate Election then taking effect, automatically become a part
of the Base Rate Portion of such Loan and become subject to all provisions of
the Loan Documents governing such Base Rate Portion. Borrower shall have no
more than five (5) Tranches in effect at any time.
Section 2.5. Fees. In consideration of each Lender's commitment to
make Advances, Borrower will pay, in addition to any payments made prior to the
date hereof, the following fees:
(a) to Agent for the account of each Lender, on or before the
Effective Date, a facility fee as determined under a separate
agreement between Borrower and Agent.
(b) to Agent for the account of each Lender a commitment fee
determined on a daily basis by applying a rate of one-half of one
percent (0.5%) per annum to the unused portion of the Borrowing Base
on each day during the Commitment Period, determined for each such day
by deducting from the amount of the Borrowing Base at the end of such
day the unpaid principal balance of all Loans at the end of such day.
This commitment fee shall be due and payable in arrears on the last
day of each March, June, September and December and at the end of the
Commitment Period.
Section 2.6. Agent's Fees. In addition to all other amounts due to
Agent under the Loan Documents, Borrower will pay a non-refundable annual fee
of $25,000 to Agent on each anniversary of this Agreement until the Obligations
have been paid in full; provided that, no such fee shall be due during any
period, or any portion thereof, in which there shall be only one Lender under
this Agreement. Each such fee shall be payable in arrears, for the period
commencing on the date following the previous payment (or for the first period,
the date hereof) and ending on the date of such payment.
Section 2.7. Optional Prepayments. Borrower may, upon one (1)
Business Days' notice to each Lender, from time to time and without premium or
penalty prepay the Notes, in whole or in part, so long as the aggregate amount
of all partial prepayments of principal on the Notes is greater than or equal
to $100,000, and so long as Borrower does not prepay any Fixed Rate Portion
except on the last day of the relevant Interest Period, and so long as Borrower
does not make any prepayments which would reduce the aggregate unpaid principal
balance of the Loans to less than $100,000 without first either (a) terminating
this Agreement or (b) providing assurance satisfactory to Agent in its
discretion that Lenders' legal rights under the Loan Documents are in no way
affected by such reduction. Each partial prepayment of principal made after
the end of the Commitment Period shall be applied to the regular installments
of principal due under the Notes in the inverse order of their maturities.
Each prepayment of principal under this section shall be accompanied by all
interest then accrued and unpaid on the principal so prepaid. Any principal or
interest prepaid pursuant to this section shall be in addition to, and not in
lieu of, all payments otherwise required to be paid under the Loan Documents at
the time of such prepayment.
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<PAGE> 18
Section 2.8. Mandatory Prepayments. If the aggregate unpaid
principal balance of the Loans ever exceeds the Borrowing Base Borrower shall,
within thirty (30) Business Days after Agent gives notice of such fact to
Borrower, prepay the principal of the Loans in an amount at least equal to such
excess. Each prepayment of principal under this section shall be accompanied
by all interest then accrued and unpaid on the principal so prepaid. Any
principal or interest prepaid pursuant to this section shall be in addition to,
and not in lieu of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.
Section 2.9. Loan Amortization. The principal of the Loans will be
due and payable in quarterly installments on the last day of December, March,
June, and September, beginning March 31, 1996, and continuing regularly
thereafter until December 31, 1998. Each installment shall be equal to a
percentage of the outstanding principal balance of the Notes at the end of the
Commitment Period (prior to any payments on that date) which percentage is set
out opposite such installment as follows:
<TABLE>
<CAPTION>
INSTALLMENT DATE PAYMENT PERCENTAGE
---------------- ------------------
<S> <C>
March 31, 1996 6.00%
June 30, 1996 6.00%
September 30, 1996 6.00%
December 31, 1996 6.00%
March 31, 1997 11.25%
June 30, 1997 11.25%
September 30, 1997 11.25%
December 31, 1997 11.25%
March 31, 1998 7.75%
June 30, 1998 7.75%
September 30, 1998 7.75%
December 31, 1998 7.75% (or outstanding balance)
</TABLE>
All unpaid principal of the Loans together with all accrued unpaid
interest thereon shall be due and payable in full on December 31, 1998.
Section 2.10. Payments to Lenders. Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of the Lender
to whom such payment is owed. Each such payment must be received by Agent not
later than 11:00 a.m., Eastern Time, on the date such payment becomes due and
payable, in lawful money of the United States of America, without set-off,
deduction or counterclaim, and in immediately available funds. Any payment
received by Agent after such time will be deemed to have been made on the next
following Business Day. Should any such payment become due and payable on a
day other than a Business Day, the maturity of such payment shall be extended
to the next succeeding Business Day, and, in the case of a payment of principal
or past due interest, interest shall accrue and be payable thereon for the
period of such extension as provided in the Loan Document under which such
payment is due. Each payment under a Loan Document shall be due and payable at
the place provided therein and, if no specific place of payment is provided,
shall be due and payable at the place of payment of the Agent's
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<PAGE> 19
Note. When Agent collects or receives money on account of the Obligations
which is insufficient to pay all the Obligations then due and payable, Agent
may apply such money as it elects to the various Obligations which are then due
and payable.
Section 2.11. Initial Borrowing Base. Subject to the provisions of
Section 2.12 and 2.13, during the period from the date hereof to the first
Determination Date, the Borrowing Base shall be $10,000,000.
Section 2.12. Subsequent Determinations of Borrowing Base. By
September 30, 1995 Borrower shall furnish to each Lender all information,
reports and data which Agent has then requested concerning Borrower's
businesses and properties (including Borrower's oil and gas properties and
interests and the reserves and production relating thereto), together with the
Engineering Report described in Section 5.1(b)(iv). Within forty-five (45)
days after receiving such information, reports and data, or as promptly
thereafter as practicable, Lenders whose Percentage Shares total not less than
75% shall by notice to Borrower designate the new Borrowing Base available to
Borrower hereunder, which designation shall take effect immediately on the date
such notice is sent (herein called a "Determination Date") and shall remain in
effect until but not including the next date as of which the Borrowing Base is
redetermined. If Borrower does not furnish all such information, reports and
data by the date specified in the first sentence of this section Agent may
nonetheless designate the Borrowing Base at any amount which Lenders whose
Percentage Shares total not less than 75% determine and may redesignate the
Borrowing Base from time to time thereafter until each Lender receives all such
information, reports and data, whereupon Lenders whose Percentage Shares total
not less than 75% shall designate a new Borrowing Base as described above.
Lenders whose Percentage Shares total not less than 75% shall determine the
amount of the Borrowing Base based upon the loan collateral value which they in
their discretion assign to the various oil and gas properties of Borrower at
the time in question and based upon such other credit factors (including
without limitation the assets, liabilities, cash flow, business, properties,
prospects, management and ownership of Borrower and its Affiliates) as they in
their discretion deem significant. It is expressly understood that Lenders and
Agent have no obligation to designate the Borrowing Base at any particular
amount, whether in relation to the Maximum Loan Amount or otherwise, and that
Lenders' commitment to advance funds hereunder is determined by reference to
the Borrowing Base from time to time in effect, which Borrowing Base shall be
used for calculating commitment fees under Section 2.5(b) and, to the extent
permitted by law and regulatory authorities, for the purposes of Section 2.14.
In addition to the foregoing, Lenders whose Percentage Shares total not less
than 75% shall also have the right to redetermine the Borrowing Base at any
time and from time to time upon the occurrence of any event or condition which
causes any loss of or damage to any Collateral (regardless of whether covered
by insurance), upon the institution of any condemnation proceedings involving
any Collateral, if such loss, damage or condemnation is reasonably likely to
result in at least a $100,000 diminution in the value of the Collateral
(without regard to any insurance which may be available), upon the sale of any
part of the Collateral with a value in excess of $100,000 which is not in the
ordinary course of business, and upon the occurrence of any event or condition
which could reasonably be expected to have a material adverse effect upon the
value of the Collateral.
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<PAGE> 20
Section 2.13. Borrower's Reduction of Borrowing Base. Until the
termination of the Commitment Period Borrower may at any time by notice to
Agent reduce the Borrowing Base then in effect to any lesser amount. Each such
notice shall take effect on the date specified therein, which may not be
earlier than the date on which such notice is received by Agent, and shall
continue in effect until the next date as of which the Borrowing Base is
redetermined.
Section 2.14. Capital Reimbursement. If either (a) the introduction
or implementation of or the compliance with or any change in or in the
interpretation of any law, rule or regulation, or (b) the introduction or
implementation of or the compliance with any request, directive or guideline
from any central bank or other governmental authority (whether or not having
the force of law) affects or would affect the amount of capital required or
expected to be maintained by any Lender or any corporation controlling any
Lender based on the existence of such Lender's Loan or commitments under this
Agreement, then, upon demand by such Lender, Borrower will pay to Agent for the
benefit of such Lender, from time to time as specified by such Lender, such
additional amount or amounts which such Lender shall determine to be
appropriate to compensate such Lender or any corporation controlling such
Lender in light of such circumstances, to the extent that such Lender
reasonably determines that the amount of any such capital would be increased or
the rate of return on any such capital would be reduced by or in whole or in
part based on the existence of such Lender's Loan or commitments under this
Agreement.
Section 2.15. Increased Cost of Fixed Rate Portions. If any
applicable domestic or foreign law, treaty, rule or regulation (whether now in
effect or hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(a) shall change the basis of taxation of payments to any
Lender of any principal, interest, or other amounts attributable to
any Fixed Rate Portion or otherwise due under this Agreement in
respect of any Fixed Rate Portion (other than taxes imposed on the
overall net income of any Lender or any lending office of any Lender
by any jurisdiction in which such Lender or any such lending office is
located); or
(b) shall change, impose, modify, apply or deem applicable
any reserve, special deposit or similar requirements in respect of any
Fixed Rate Portion owing to any Lender (excluding those for which such
Lender is fully compensated pursuant to adjustments made in the
definition of Fixed Rate) or against assets of, deposits with or for
the account of, or credit extended by, such Lender; or
(c) shall impose on any Lender or the London interbank
deposit market any other condition affecting any Fixed Rate Portion,
the result of which is to increase the cost to such Lender of funding
or maintaining any Fixed Rate Portion or to reduce the amount of any
sum receivable by such Lender in respect of any Fixed Rate Portion by
an amount deemed by such Lender to be material,
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<PAGE> 21
then such Lender shall promptly notify Agent and Borrower in writing of the
happening of such event and of the amount required to compensate such Lender
for such event (on an after-tax basis, taking into account any taxes on such
compensation), whereupon (i) Borrower shall pay such amount to Agent for the
account of such Lender and (ii) Borrower may elect, by giving to Agent and such
Lender not less than three Business Days' notice, to convert all (but not less
than all) of any such Fixed Rate Portion into a part of the Base Rate Portion.
Section 2.16. Availability. If (a) any change in applicable laws,
treaties, rules or regulations or in the interpretation or administration
thereof of or in any jurisdiction whatsoever, domestic or foreign, shall make
it unlawful or impracticable for any Lender to fund or maintain Fixed Rate
Portions, or shall materially restrict the authority of such Lender to purchase
or take offshore deposits of dollars (i.e., "eurodollars"), or (b) such Lender
determines that matching deposits appropriate to fund or maintain any Fixed
Rate Portion are not available to it, or (c) such Lender determines that the
formula for calculating the Adjusted Eurodollar Rate does not fairly reflect
the cost to such Lender of making or maintaining loans based on such rate, then
Borrower's right to elect Fixed Rate Portions shall be suspended to the extent
and for the duration of such illegality, impracticability or restriction and
all Fixed Rate Portions of such Lender's Loan (or portions thereof) which are
then outstanding or are then the subject of any Rate Election and which cannot
lawfully or practicably be maintained or funded shall immediately become or
remain part of the Base Rate Portion of such Lender's Loan. Borrower agrees to
indemnify each Lender and hold it harmless against all costs, expenses, claims,
penalties, liabilities and damages which may result from any such change in
law, treaty, rule, regulation, interpretation or administration. Such
indemnification shall be on an after-tax basis, taking into account any taxes
imposed on the amounts paid as indemnity.
Section 2.17. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify Agent and each Lender against, and reimburse
Agent and each Lender on demand for, any loss or expense incurred or sustained
by Agent or such Lender (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by a Lender
to fund or maintain Fixed Rate Portions or Advances), as a result of (a) any
payment or prepayment (whether authorized or required hereunder or otherwise)
of all or a portion of a Fixed Rate Portion on a day other than the day on
which the applicable Interest Period ends, (b) any payment or prepayment,
whether required hereunder or otherwise, of the Loan made after the delivery,
but before the effective date, of a Rate Election, if such payment or
prepayment prevents such Rate Election from becoming fully effective, (c) the
failure of any Advance to be made or of any Rate Election to become effective
due to any condition precedent not being satisfied or due to any other action
or inaction of any Related Person, or (d) any conversion (whether authorized or
required hereunder or otherwise) of all or any portion of any Fixed Rate
Portion into the Base Rate Portion or into a different Fixed Rate Portion on a
day other than the day on which the applicable Interest Period ends. Such
indemnification shall be on an after-tax basis, taking into account any taxes
imposed on the amounts paid as indemnity.
Section 2.18. Reimbursable Taxes. Borrower covenants and agrees that:
(a) Borrower will indemnify Agent and each Lender against and
reimburse Agent and each Lender for all present and future income,
stamp and other taxes,
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<PAGE> 22
levies, costs and charges whatsoever imposed, assessed, levied or
collected on or in respect of this Agreement or any Fixed Rate
Portions (whether or not legally or correctly imposed, assessed,
levied or collected), excluding, however, any taxes imposed on or
measured by the overall net income of Agent or such Lender or any
lending office of Agent or such Lender (all such non-excluded taxes,
levies, costs and charges being collectively called "Reimbursable
Taxes" in this section). Such indemnification shall be on an
after-tax basis, taking into account any taxes imposed on the amounts
paid as indemnity.
(b) All payments on account of the principal of, and interest
on, each Lender's Loan and each Lender's Note, and all other amounts
payable by Borrower to Agent and each Lender hereunder, shall be made
in full without set-off or counterclaim and shall be made free and
clear of and without deductions or withholdings of any nature by
reason of any Reimbursable Taxes, all of which will be for the account
of Borrower. In the event of Borrower being compelled by law or other
regulations to make any such deduction or withholding from any payment
to Agent or any Lender, Borrower shall pay on the due date of such
payment, by way of additional interest, such additional amounts as are
needed to cause the amount receivable by Agent or such Lender after
such deduction or withholding to equal the amount which would have
been receivable in the absence of such deduction or withholding. If
Borrower should make any deduction or withholding as aforesaid,
Borrower shall within 60 days thereafter forward to Agent or such
Lender an official receipt or other official document evidencing
payment of such deduction or withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax
with respect to any Fixed Rate Portion, Borrower may elect, by giving
to Agent and each Lender not less than three Business Days' notice, to
convert all (but not less than all) of any such Fixed Rate Portion
into a part of the Base Rate Portion, but such election shall not
diminish Borrower's obligation to pay all Reimbursable Taxes.
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<PAGE> 23
ARTICLE III - Conditions Precedent
Section 3.1. Conditions Precedent. This Agreement shall not become
effective for any purpose and no Lender shall have any obligation to make the
initial Advance unless and until Borrower shall have received, before July 31,
1995, at least $64,500,000 in gross proceeds from the issuance of the 2002
Notes (including warrants) and shall have applied a portion of such proceeds to
(i) pay in full all obligations of Borrower under the Prior Unsecured Senior
Credit Agreement, (ii) redeem Borrower's Series D Preferred Stock, and (iii)
pay all obligations under the Prior Agreement, other than the portion of the
principal of Lender's Loan thereunder which is not in excess of the Borrowing
Base hereunder, which to the extent not so paid will be deemed to constitute
the initial Advance under this Agreement. The date on which the conditions set
forth in this Section 3.1 shall be satisfied shall be deemed to be the
effective date of this Agreement ("Effective Date").
Section 3.2. Documents to be Delivered. In addition, no Lender has
any obligation to make the initial Advance unless Agent shall have received all
of the following, at Agent's office in New York, New York, duly executed and
delivered and in form, substance and date satisfactory to Agent and each
Lender:
(a) A Note payable to each Lender in the principal amount
equal to the Maximum Loan Amount for such Lender.
(b) The Intercreditor Agreement.
(c) An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of Borrower, which shall contain
the names and signatures of the officers of Borrower authorized to
execute Loan Documents and which shall certify to the truth,
correctness and completeness of the following exhibits attached
thereto: (i) a copy of resolutions duly adopted by the Board of
Directors of Borrower and in full force and effect at the time this
Agreement is entered into, authorizing the execution of this Agreement
and the other Loan Documents delivered or to be delivered in
connection herewith and the consummation of the transactions
contemplated herein and therein, (ii) a copy of the charter documents
of Borrower and all amendments thereto, certified by the appropriate
official of Borrower's state of organization, and (iii) a copy of any
bylaws of Borrower and all amendments thereto.
(d) A certificate (or certificates) of the due formation,
valid existence and good standing of Borrower in its state of
organization, issued by the appropriate authorities of such
jurisdiction.
(e) A "Compliance Certificate" of the Chairman of the Board
or President and of the chief financial officer of Borrower, of even
date with such Advance, in which such officers certify to the
satisfaction of the conditions set out in subsections (a), (b), (c)
and (d) of Section 3.3.
(f) An opinion of Messrs. Vinson & Elkins L.L.P., counsel for
Borrower in form and substance satisfactory to each Lender.
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<PAGE> 24
(g) An opinion of Messrs. Donovan Leisure Newton & Irvine,
special New York counsel for Agent as to the enforceability of the
Loan Documents governed by New York law.
(h) Each Security Document listed in the Security Schedule.
(i) Certificates of Borrower's good standing and due
qualification to do business, issued by appropriate officials in any
states in which Borrower owns property subject to Security Documents
(including, without limitation, California).
Section 3.3. Additional Conditions Precedent. No Lender has any
obligation to make any Advance (including the initial Advance) unless the
following conditions precedent have been satisfied:
(a) All representations and warranties made by any Related
Person in any Loan Document shall be true on and as of the date of
such Advance as if such representations and warranties had been made
as of the date of such Advance, and all Security Documents shall be in
full force and effect and provide the security intended thereby.
(b) No Default shall exist or will occur as a result of the
making of such Advance.
(c) No material adverse change shall have occurred to
Borrower's individual or Consolidated financial condition or
businesses, since the date of this Agreement.
(d) Each Related Person shall have performed and complied
with all agreements and conditions required in the Loan Documents to
be performed or complied with by it on or prior to the date of such
Advance.
(e) The making of such Advance shall not be prohibited by any
law or any regulation or order of any court or governmental agency or
authority and shall not subject such Lender to any penalty or other
onerous condition under or pursuant to any such law, regulation or
order.
(f) Agent shall have received all documents and instruments
provided for herein which Agent has then requested, in addition to
those described in Section 3.2 (including opinions of legal counsel
for the Related Persons and Agent; corporate documents and records;
documents evidencing governmental authorizations, consents, approvals,
licenses and exemptions; and certificates of public officials and of
officers and representatives of Borrower and other Persons), as to (i)
the accuracy and validity of or compliance with all representations,
warranties and covenants made by any of the Related Persons in this
Agreement and the other Loan Documents, (ii) the satisfaction of all
conditions contained herein or therein, and (iii) all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be reasonably satisfactory to Agent and each Lender
in form, substance and date.
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<PAGE> 25
(g) All legal matters relating to the Loan Documents and the
consummation of the transactions contemplated thereby shall be
satisfactory to Messrs. Thompson & Knight, P.C. counsel to Agent.
ARTICLE IV - Representations and Warranties
Section 4.1. Borrower's Representations and Warranties. To confirm
each Lender's understanding concerning Borrower and Borrower's business,
properties and obligations and to induce each Lender to enter into this
Agreement and to make the Loan, Borrower represents and warrants to Agent and
each Lender that:
(a) No Default. Borrower is not in default in the
performance of any of the covenants and agreements contained herein.
No event has occurred and is continuing which constitutes a Default.
(b) Organization and Good Standing. Each Related Person
which is a corporation or partnership is duly organized, validly
existing and in good standing under the laws of its state of
organization, having all corporate or partnership powers required to
carry on its business and enter into and carry out the transactions
contemplated hereby. Each such Related Person is duly qualified, in
good standing, and authorized to do business in all other
jurisdictions within the United States wherein the character of the
properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary, except where the
failure to so qualify would not have, or be likely to have a material
adverse effect on any such person. Each such Related Person has taken
all actions and procedures customarily taken in order to enter, for
the purpose of conducting business or owning property, each
jurisdiction outside the United States wherein the character of the
properties owned or held by it or the nature of the business
transacted by it makes such actions and procedures desirable.
(c) Authorization. Each Related Person which is a
corporation or partnership has duly taken all corporate or partnership
action necessary to authorize the execution and delivery by it of the
Loan Documents to which it is a party and to authorize the
consummation of the transactions contemplated thereby and the
performance of its obligations thereunder. Borrower is duly
authorized to borrow funds hereunder.
(d) No Conflicts or Consents. The execution and delivery by
the various Related Persons of the Loan Documents to which each is a
party, the performance by each of its obligations under such Loan
Documents, and the consummation of the transactions contemplated by
the various Loan Documents, do not and will not (i) conflict with any
provision of (1) any domestic or foreign law, statute, rule or
regulation, (2) the articles or certificate of incorporation, bylaws,
charter, or partnership agreement or certificate of any Related
Person, or (3) any agreement, judgment, license, order or permit
applicable to or binding upon any Related Person, (ii) result in the
acceleration of any Debt owed by any Related Person, or (iii) result
in or require the creation of any Lien upon any assets or properties
of any Related Person
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<PAGE> 26
except as expressly contemplated in the Loan Documents. Except as
expressly contemplated in the Loan Documents no consent, approval,
authorization or order of, and no notice to or filing with, any court
or governmental authority or third party is required in connection
with the execution, delivery or performance by any Related Person of
any Loan Document or to consummate any transactions contemplated by
the Loan Documents.
(e) Enforceable Obligations. This Agreement is, and the
other Loan Documents when duly executed and delivered will be, legal,
valid and binding obligations of each Related Person which is a party
hereto or thereto, enforceable in accordance with their terms except
as such enforcement may be limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights.
(f) Initial Financial Statements. The Initial Financial
Statements fairly present Borrower's Consolidated financial position
at the respective dates thereof and the Consolidated results of
Borrower's operations and Borrower's Consolidated cash flows for the
respective periods thereof. Since the date of the audited annual
Initial Financial Statements no material adverse change has occurred
in Borrower's financial condition or businesses or in Borrower's
Consolidated financial condition or businesses, except as reflected in
the quarterly Initial Financial Statements or in the Disclosure
Schedule. All Initial Financial Statements were prepared in
accordance with GAAP.
(g) Other Obligations and Restrictions. No Related Person
has any outstanding Debt of any kind (including contingent
obligations, tax assessments, and unusual forward or long-term
commitments) which is, in the aggregate, material to Borrower or
material with respect to Borrower's Consolidated financial condition
and not shown in the Initial Financial Statements or disclosed in the
Disclosure Schedule or a Disclosure Report. Except as shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule,
no Related Person is subject to or restricted by any franchise,
contract, deed, charter restriction, or other instrument or
restriction which is reasonably likely in the foreseeable future to
materially and adversely affect the businesses, properties, prospects,
operations, or financial condition of such Related Person or of
Borrower on a Consolidated basis.
(h) Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Related Person to
Agent or any Lender in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby
contains any untrue statement of a material fact or omits to state any
material fact known to any Related Person (other than industry-wide
risks normally associated with the types of businesses conducted by
the Related Persons) necessary to make the statements contained herein
or therein not misleading as of the date made or deemed made. There
is no fact known to any Related Person (other than industry-wide risks
normally associated with the types of businesses conducted by the
Related Persons) that has not been disclosed to Agent and each Lender
in writing which could materially and adversely affect Borrower's
properties, business, prospects
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<PAGE> 27
or condition (financial or otherwise) or Borrower's Consolidated
properties, businesses, prospects or condition (financial or
otherwise). There are no statements or conclusions in any Engineering
Report which are based upon or include misleading information or fail
to take into account material information regarding the matters
reported therein, it being understood that each Engineering Report is
necessarily based upon professional opinions, estimates and
projections and that Borrower does not warrant that such opinions,
estimates and projections will ultimately prove to have been accurate.
Borrower has heretofore delivered to Agent and each Lender true,
correct and complete copies of the Initial Financial Statements and
the Initial Engineering Report.
(i) Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions,
suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Related Person threatened, against
any Related Person before any federal, state, municipal or other
court, department, commission, body, board, bureau, agency, or
instrumentality, domestic or foreign, which do or may materially and
adversely affect Borrower or, on a Consolidated basis, Borrower and
its properly Consolidated subsidiaries, their ownership or use of any
of their assets or properties, their businesses or financial condition
or prospects, or the right or ability of any Related Person to enter
into the Loan Documents to which it is a party or to consummate the
transactions contemplated thereby or to perform its obligations
thereunder and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such governmental entity against any
Related Person or any Related Person's stockholders, partners,
directors or officers which have or may have any such effect.
(j) ERISA Liabilities. All currently existing ERISA Plans
are listed in the Disclosure Schedule or a Disclosure Report. Except
as disclosed in the Initial Financial Statements or in the Disclosure
Schedule, no Termination Event has occurred with respect to any ERISA
Plan and the Related Persons are in compliance with ERISA in all
material respects. No Related Person is required to contribute to, or
has any other absolute or contingent liability in respect of, any
"multiemployer plan" as defined in Section 4001 of ERISA. Except as
set forth in the Disclosure Schedule: (i) no "accumulated funding
deficiency" (as defined in Section 412(a) of the Internal Revenue Code
of 1986, as amended) exists with respect to any ERISA Plan, whether or
not waived by the Secretary of the Treasury or his delegate, and (ii)
the current value of each ERISA Plan's benefits does not exceed the
current value of such ERISA Plan's assets available for the payment of
such benefits by more than $500,000.
(k) Environmental and Other Laws. As used in this
subsection: "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, "CERCLIS" means
the Comprehensive Environmental Response, Compensation and Liability
Information System List of the Environmental Protection Agency, and
"Release" has the meaning given such term in 42 U.S.C. Section
9601(22). Except as set forth in the Disclosure Schedule:
(i) The Related Persons are conducting their
businesses in material compliance with all applicable federal,
state and local laws, including
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Environmental Laws, and have all permits, licenses and
authorizations required in connection with the conduct of
their businesses. Each Related Person is in compliance with
the terms and conditions of all such permits, licenses and
authorizations, and is also in compliance with all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in
any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent
failure to comply would not have a material adverse effect on
the financial condition, operations, business or prospects of
any Related Person.
(ii) No notice, notification, demand, request for
information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed, and no
investigation or review is pending or threatened by any
governmental agency or entity or any other Person with respect
to (1) any alleged generation, treatment, storage, recycling,
transportation, disposal, or Release of any Hazardous
Materials, either by any Related Person or on any property
owned by any Related Person, (2) any material remedial action
which might be needed to respond to any such alleged
generation, treatment, storage, recycling, transportation,
disposal, or Release, or (3) any alleged failure by any
Related Person to have any permit, license or authorization
required in connection with the conduct of its business or
with respect to any such generation, treatment, storage,
recycling, transportation, disposal, or Release.
(iii) No Related Person otherwise has any known
material contingent liability in connection with any alleged
generation, treatment, storage, recycling, transportation,
disposal, or Release of any Hazardous Materials.
(iv) No Related Person has handled any Hazardous
Materials, other than as a generator, on any properties now or
previously owned or leased by any Related Person to an extent
that such handling has, or may reasonably be expected to have,
a material adverse effect on the financial condition,
operations, business or prospects of any Related Person; and
(1) no PCBs are or have been present at any
properties now owned or leased by any Related
Person or, to the best knowledge of each
Related Person, previously owned or leased by
any Related Person;
(2) no asbestos is or has been present at any
properties now owned or leased by any Related
Person or, to the best knowledge of each
Related Person, previously owned or leased by
any Related Person;
(3) there are no underground storage tanks for
Hazardous Materials, active or abandoned, at
any properties now owned or leased by
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any Related Person or, the best knowledge of
each Related Person, previously owned or
leased by any Related Person;
(4) no Hazardous Materials have been released, in
a reportable quantity, where such a quantity
has been established by statute, ordinance,
rule, regulation or order, at, on or under
any properties now owned or leased by any
Related Person or, the best knowledge of each
Related Person, previously owned or leased by
any Related Person;
(5) no Hazardous Materials have been otherwise
released at, on or under any properties now
owned or leased by any Related Person or, the
best knowledge of each Related Person,
previously owned or leased by any Related
Person, to an extent that such release has,
or may reasonably be expected to have, a
material adverse effect on the financial
condition, operations, business or prospects
of any Related Person.
(v) No Related Person has transported or arranged
for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under
CERCLA, listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in
CERCLIS, or listed on any similar state list or which is the
subject of federal, state or local enforcement actions or
other investigations which may lead to claims against any
Related Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including,
but not limited to, claims under CERCLA.
(vi) No Hazardous Material generated by any
Related Person has been recycled, treated, stored, disposed of
or released by any Related Person at any location other than
those listed in the Disclosure Schedule.
(vii) No oral or written notification of a Release
of a Hazardous Material has been filed by or on behalf of any
Related Person (and to the best knowledge of Borrower, no such
notification has been filed with respect to any Related Person
by any other Person), and no property now owned or leased by
any Related Person, or, the best knowledge of each Related
Person, previously owned or leased by any Related Person, is
listed or proposed for listing on the National Priority list
promulgated pursuant to CERCLA, in CERCLIS, or on any similar
state list of sites requiring investigation or clean-up.
(viii) There are no Liens arising under or pursuant
to any Environmental Laws on any of the real properties or
properties now owned or leased by any Related Person or, the
best knowledge of each Related Person, previously owned or
leased by any Related Person, and no government actions have
been taken or are in process which could subject any of such
properties to such Liens; nor would any Related Person be
required to place any notice or
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restriction relating to the presence of Hazardous Materials at
any properties owned by it in any deed to such properties.
(ix) There have been no environmental
investigations, studies, audits, tests, reviews or other
analyses conducted by or which are in the possession of any
Related Person in relation to any properties or facility now
or previously owned or leased by any Related Person which have
not been made available to Agent and the Lenders.
(l) Names and Places of Business. Borrower has not, during
the preceding five years, had, been known by, or used any other
corporate, trade, or fictitious name, except as disclosed in the
Disclosure Schedule. Except as otherwise indicated in the Disclosure
Schedule or a Disclosure Report, the chief executive office and
principal place of business of Borrower are (and for the preceding
five years have been) located at the address of Borrower specified on
the signature pages hereto. Except as indicated in the Disclosure
Schedule, Borrower has no other office or place of business.
(m) Borrower's Subsidiaries. Borrower does not presently
have any Subsidiary or own any stock in any other corporation or
association except those listed in the Disclosure Schedule. Borrower
is not a member of any general or limited partnership, joint venture
or association of any type whatsoever except those listed in the
Disclosure Schedule. Except as otherwise revealed in a Disclosure
Report, Borrower owns, directly or indirectly, the equity interest in
each of its Subsidiaries which is indicated in the Disclosure
Schedule.
(n) Title to Properties. Each Related Person has good
and defensible title to all of its material properties and assets,
free and clear of all Prohibited Liens and of all impediments to the
use of such properties and assets in such Related Person's business,
except that no representation or warranty is made with respect to any
oil, gas or mineral property or interest to which no proved oil or gas
reserves are attributed in the latest Engineering Report.
(o) Government Regulation. Neither Borrower nor any
other Related Person owing Obligations is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or any other statute, law, regulation or decree which
regulates the incurring by such Person of Debt, including statutes,
laws, regulations or decrees relating to common contract carriers or
the sale of electricity, gas, steam, water or other public utility
services.
(p) Insider. Neither Borrower, nor any other Related
Person, nor any Person having "control" (as that term is defined in 12
U.S.C. Section 375b(9) or in regulations promulgated pursuant
thereto) of Borrower, is a "director" or an "executive officer" or
"principal shareholder" (as those terms are defined in 12 U.S.C.
Section 375b(8) or (9) or in regulations promulgated pursuant
thereto) of Agent or any Lender, of a
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bank holding company of which Agent or any Lender is a Subsidiary or
of any Subsidiary of a bank holding company of which Agent or any
Lender is a Subsidiary.
Section 4.2. Representation by Lenders. Each Lender hereby
represents that it will acquire its Note for its own account in the ordinary
course of its commercial lending business; however, the disposition of such
Lender's property shall at all times be and remain within its control and, in
particular and without limitation, such Lender may sell or otherwise transfer
its Note, any participation interest or other interest in its Note, or any of
its other rights and obligations under the Loan Documents. In the event of any
transfer of a Note or an interest therein, Agent agrees to give notice thereof
to Borrower within a reasonable time after such transfer.
ARTICLE V - Covenants of Borrower
Section 5.1. Affirmative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce such Lender to enter into this Agreement and make the
Loans, Borrower shall, and shall cause each Related Person to, warrant,
covenant and agree that until the full and final payment of the Obligations and
the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:
(a) Payment and Performance. Borrower will pay all amounts
due under the Loan Documents in accordance with the terms thereof and
will observe, perform and comply with every covenant, term and
condition expressed or implied in the Loan Documents. Borrower will
cause the other Related Persons to observe, perform and comply with
every such term, covenant and condition.
(b) Books, Financial Statements and Reports. Each Related
Person will at all times maintain full and accurate books of account
and records. Borrower will maintain and will cause its Subsidiaries
to maintain a standard system of accounting and will furnish the
following statements and reports to Agent and each Lender at
Borrower's expense:
(i) As soon as available, and in any event within 90
days after the end of each Fiscal Year, complete Consolidated
and consolidating financial statements of Borrower together
with all notes thereto, prepared in reasonable detail in
accordance with GAAP, together with an opinion, based on an
audit using generally accepted auditing standards, by Arthur
Andersen & Co., or other independent certified public
accountants selected by Borrower and acceptable to Majority
Lenders, stating that such Consolidated financial statements
have been so prepared. These financial statements shall
contain a Consolidated and consolidating balance sheet as of
the end of such Fiscal Year and Consolidated and consolidating
statements of earnings, of cash flows, and of changes in
owners' equity for such Fiscal Year, each setting forth in
comparative form the corresponding figures for the preceding
Fiscal Year. In addition, within 120 days after the end of
each Fiscal Year Borrower will
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furnish a report signed by such accountants stating that they
have read this Agreement, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Year
with the requirements of Sections 5.2(f), (l) and (m), and
further stating that in making the examination and reporting
on the Consolidated financial statements described above they
did not conclude that any Default existed at the end of such
Fiscal Year or at the time of their report, or, if they did
conclude that a Default existed, specifying its nature and
period of existence.
(ii) As soon as available, and in any event within
45 days after the end of each Fiscal Quarter, Borrower's
Consolidated and consolidating balance sheet as of the end of
such Fiscal Quarter and Consolidated and consolidating
statements of Borrower's earnings and cash flows for the
period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to changes resulting
from normal year-end adjustments. In addition Borrower will,
together with each such set of financial statements and each
set of financial statements furnished under subsection (b)(i)
of this section, furnish a certificate in the form of Exhibit
D signed by the chief financial officer of Borrower stating
that such financial statements are accurate and complete,
stating that he has reviewed the Loan Documents, containing
calculations showing compliance (or non-compliance) at the end
of such Fiscal Quarter with the requirements of Sections
5.2(f), (l) and (m), and stating that no Default exists at the
end of such Fiscal Quarter or at the time of such certificate
or specifying the nature and period of existence of any such
Default.
(iii) Promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy
statements sent by any Related Person to its stockholders and
all registration statements, periodic reports and other
statements and schedules filed by any Related Person with any
securities exchange, the Securities and Exchange Commission or
any similar governmental authority.
(iv) By March 31 of each year, engineering reports
prepared by Huddleston & Co., Inc. and Ryder Scott Company, or
other independent petroleum engineers chosen by Borrower and
acceptable to Majority Lenders, and by September 30 of the
each year engineering reports prepared by Borrower (or at
Borrower's option, by an independent petroleum engineers
chosen by Borrower and acceptable to Majority Lenders), each
such report to address all oil and gas properties and
interests owned by Borrower which are located in or offshore
of the United States and which have attributable to them
proved oil or gas reserves. Each report shall be in form and
substance satisfactory to Agent, shall contain sufficient
information to enable Borrower to meet the reporting
requirements concerning oil and gas reserves contained in
Regulations S-K and S-X promulgated by the Securities and
Exchange Commission, shall take into account any
"over-produced" status under gas balancing arrangements, and
shall contain information and analysis comparable
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in scope to that contained in the Initial Engineering Report.
Each report shall distinguish (or shall be delivered together
with a certificate from an appropriate officer of Borrower
which distinguishes) those properties treated in the report
which are Collateral from those properties treated in the
report which are not Collateral.
(v) As soon as available, and in any event within
forty-five (45) days after the end of each month, a report
describing by lease or unit the net and gross volumes of
production and sales attributable to production during such
month from the properties described in subsection (b)(iv)
above and describing the related severance taxes, other taxes,
leasehold operating expenses and capital costs attributable
thereto and incurred during such month.
(vi) As soon as available, and in any event within
thirty (30) days after the end of each Fiscal Year, Borrower
shall deliver to Agent an environmental compliance certificate
signed by the president or chief executive officer of Borrower
in the form attached hereto as Exhibit E. Further, if
requested by Agent, Borrower shall permit and cooperate with
an environmental and safety review made in connection with the
operations of Borrower's oil and gas properties one time
during each Fiscal Year beginning with the Fiscal Year 1995,
by Pilko & Associates or other consultants selected by
Majority Lenders which review shall, if requested by Agent, be
arranged and supervised by environmental legal counsel for
Agent, all at Borrower's cost and expense. The consultant
shall render a verbal or written report, as specified by
Agent, based upon such review at Borrower's cost and expense.
(vii) Concurrently with the annual renewal of the
Borrower's insurance policies, Borrower shall, if requested by
Agent in writing, cause a certificate or report to be issued
by J. H. Blades & Co., Inc. or other insurance consultants
satisfactory to Agent certifying that Borrower's insurance for
the next succeeding year after such renewal (or for such
longer period for which such insurance is in effect) complies
with the provisions of this Agreement and the Security
Documents.
(viii) As soon as available, and in any event by May
31 of each year, Borrower shall prepare and deliver to Agent
and each Lender budgets, forecasts and business plans of
Borrower's operations for the then current Fiscal Year.
(ix) As soon as available, and in any event within
forty five (45) days after the end of each Fiscal Quarter,
Borrower shall deliver to Agent and each Lender a detailed
summary of (A) its Consolidated general and administrative
expenses and capital and other expenditures for the Fiscal
Quarter most recently ended and (B) its projected Consolidated
general and administrative expenses and capital and other
expenditures for the then current Fiscal Quarter.
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(x) By March 31 and September 30 of each year,
Borrower shall prepare and submit to Agent and each Lender for
Majority Lender's prior approval, a capital expense budget
setting forth all Capital Expenditures expected to paid by
Borrower and it Consolidated Subsidiaries in the next six
month period, describing the nature of such expenditures, the
budgeted amount and the expected date of payment thereof.
(c) Other Information and Inspections. Each Related Person
will furnish to Agent and each Lender any information which Agent may
from time to time reasonably request concerning any covenant,
provision or condition of the Loan Documents or any matter in
connection with the Related Persons' businesses and operations. Each
Related Person will permit representatives appointed by Agent or any
Lender (including independent accountants, agents, attorneys,
appraisers and any other Persons), to visit and inspect, during normal
business hours, any of such Related Person's property, including its
books of account, other books and records, and any facilities or other
business assets, and to make extra copies therefrom and photocopies
and photographs thereof, and to write down and record any information
such representatives obtain, and each Related Person shall permit
Agent or its representatives to investigate and verify the accuracy of
the information furnished to Agent or any Lender in connection with
the Loan Documents and to discuss all such matters with its officers,
employees and representatives. Each of Agent and Lenders agrees that,
until the occurrence of a Default, it will take all reasonable steps
to keep confidential any proprietary information given to it by any
Related Person, provided, however, that this restriction shall not
apply to information which (i) has at the time in question entered the
public domain, (ii) is required to be disclosed by law or by any
order, rule or regulation (whether valid or invalid) of any court or
governmental agency, or authority, (iii) is disclosed to any Lender's
Affiliates, auditors, attorneys, or agents, or (iv) is furnished to
any purchaser or prospective purchaser of participations or other
interests in the Loan or any Loan Document.
(d) Notice of Material Events and Change of Address.
Borrower will promptly notify Agent and each Lender:
(i) of any material adverse change in Borrower's
financial condition or Borrower's Consolidated financial
condition or in the aggregate value of the Collateral or any
event or condition which could reasonably be expected to have
a material adverse effect on Borrower's financial condition or
Borrower's Consolidated financial condition or in the
aggregate value of the Collateral.
(ii) of the occurrence of any Default,
(iii) of the acceleration of the maturity of any
Debt owed by any Related Person or of any default by any
Related Person under any indenture, mortgage, agreement,
contract or other instrument to which any of them is a party
or by which any of them or any of their properties is bound,
if such acceleration or default might have a material adverse
effect upon Borrower's
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Consolidated financial condition or on the value of any
material part of the Collateral,
(iv) of the occurrence of any Termination Event,
(v) of any claim of $250,000 or more, any notice
of potential liability under any Environmental Laws which
might exceed such amount, or any other material adverse claim
asserted against any Related Person or with respect to any
Related Person's properties, and
(vi) of the filing of any suit or proceeding
against any Related Person in which an adverse decision could
have a material adverse effect upon any Related Person's
financial condition, business or operations or on the value of
any Collateral.
Upon the occurrence of any of the foregoing the Related Persons will
take all necessary or appropriate steps to remedy promptly any such
material adverse change, Default, acceleration, default or Termination
Event, to protect against any such adverse claim, to defend any such
suit or proceeding, and to resolve all controversies on account of any
of the foregoing. Borrower will also notify Agent and Agent's counsel
in writing at least twenty Business Days prior to the date that any
Related Person changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its
books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting
Agent and its counsel to prepare the same.
(e) Maintenance of Properties. Each Related Person will
maintain, preserve, protect, and keep all Collateral and all other
property used or useful in the conduct of its business in good
condition and in compliance with all applicable laws, rules and
regulations, and will from time to time make all repairs, renewals and
replacements needed to enable the business and operations carried on
in connection therewith to be promptly and advantageously conducted at
all times.
(f) Maintenance of Existence and Qualifications. Each
Related Person which is a corporation or partnership will maintain and
preserve its corporate or partnership existence and its rights and
franchises in full force and effect and will qualify to do business as
a foreign corporation or partnership in all states or jurisdictions
where required by applicable law, except where the failure so to
qualify will not have any material adverse effect on Borrower or the
rights or remedies of Agent or any Lender under the Loan Documents.
(g) Payment of Trade Debt, Taxes, etc. Each Related Person
will (i) timely file all required tax returns; (ii) timely pay all
taxes, assessments, and other governmental charges or levies imposed
upon it or upon its income, profits or property; (iii) within 120 days
after the same was incurred pay all Debt owed by it on ordinary trade
terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business, except as
permitted by
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Section 5.2(a); (iv) pay and discharge when due all other Debt now or
hereafter owed by it; and (v) maintain appropriate accruals and
reserves for all of the foregoing in accordance with GAAP. Each
Related Person may, however, delay paying or discharging any of the
foregoing so long as it is in good faith contesting the validity
thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor.
(h) Insurance. Each Related Person will keep or cause to be
kept insured by financially sound and reputable insurers its property
in accordance with Schedule 3. Borrower will maintain the additional
insurance coverage as described in the respective Security Documents.
Upon demand by Agent any insurance policies covering Collateral shall
be endorsed (i) to provide for payment of losses to Agent as its
interests may appear, (ii) to provide that such policies may not be
cancelled or reduced or affected in any material manner for any reason
without fifteen days prior notice to Agent, (iii) to provide for any
other matters specified in any applicable Security Document or which
Agent may reasonably require; and (iv) to provide for insurance
against fire, casualty and any other hazards normally insured against,
in the amount of the full value (less a reasonable deductible not to
exceed amounts customary in the industry for similarly situated
businesses and properties) of the property insured. Each Related
Person shall at all times maintain insurance against its liability for
injury to persons or property in accordance with Schedule 3, which
insurance shall be by financially sound and reputable insurers.
Without limiting the foregoing, each Related Person shall at all time
maintain liability insurance in the amounts set out on Schedule 3.
(i) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly
(and in any event, within 30 days after any invoice or other statement
or notice) pay (i) all reasonable costs and expenses incurred by or on
behalf of Agent or any Lender (including travel expenses, similar
out-of-pocket costs, attorneys' fees, consultants fees and engineering
fees) in connection with (1) the negotiation, preparation, execution
and delivery of the Loan Documents, and any and all consents, waivers
or other documents or instruments relating thereto, (2) the filing,
recording, refiling and re-recording of any Loan Documents and any
other documents or instruments or further assurances required to be
filed or recorded or refiled or re-recorded by the terms of any Loan
Document, (3) the borrowings hereunder and other action reasonably
required in the course of administration hereof, (4) monitoring or
confirming (or preparation or negotiation of any document related to)
Borrower's compliance with any covenants or conditions contained in
this Agreement or in any Loan Document, and (5) the defense or
enforcement of the Loan Documents (including this section) or the
defense of Agent's or any Lender's exercise of its rights under any of
the Loan Documents; and (ii) all transfer, stamp, mortgage,
documentary or other similar taxes, assessments or charges levied by
any governmental or revenue authority in respect of this Agreement or
any of the other Loan Documents or any other document referred to
herein or therein. In addition to the foregoing, until all
Obligations have been paid in full, Borrower will also pay or
reimburse Agent for all reasonable out-of-pocket costs and expenses of
Agent or its agents or employees in connection with the continuing
administration of
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the Loans and the related due diligence of Agent, including travel and
miscellaneous expenses and fees and expenses of Agent's outside
counsel, reserve engineers and consultants engaged in connection with
the Loan Documents.
(j) Performance on Borrower's Behalf. If any Related Person
fails to pay any taxes, insurance premiums, expenses, attorneys' fees
or other amounts it is required to pay under any Loan Document, Agent
may pay the same. Borrower shall immediately reimburse Agent for any
such payments and each amount paid by Agent shall constitute an
Obligation owed hereunder which is due and payable on the date such
amount is paid by Agent.
(k) Interest. Borrower hereby promises to pay interest to
Agent and Lenders at the Late Payment Rate on all Obligations which
Borrower has in this Agreement promised to pay (including Obligations
to pay fees or to reimburse or indemnify Agent or any Lender) and
which are not paid when due. Such interest shall accrue from the date
such Obligations become due until they are paid.
(l) Compliance with Agreements and Law. Each Related Person
will perform all material obligations it is required to perform under
the terms of each indenture, mortgage, deed of trust, security
agreement, lease, franchise, agreement, contract or other instrument
or obligation to which it is a party or by which it or any of its
properties is bound. Each Related Person will conduct its business
and affairs in compliance with all laws, regulations, and orders
applicable thereto.
(m) Environmental Matters; Environmental Reviews.
(i) Each Related Person will comply in all
material respects with all Environmental Laws now or hereafter
applicable to such Related Person or its property and shall
obtain, at or prior to the time required by applicable
Environmental Laws, all environmental, health and safety
permits, licenses and other authorizations necessary for its
operations and will maintain such authorizations in full force
and effect.
(ii) Borrower will promptly furnish to Agent all
written notices of violation, orders, claims, citations,
complaints, penalty assessments, suits or other proceedings
received by Borrower, or of which it has notice, pending or
threatened against Borrower, by any governmental authority
with respect to any alleged violation of or non-compliance
with any Environmental Laws or any permits, licenses or
authorizations in connection with its ownership or use of its
properties or the operation of its business.
(iii) Borrower will promptly furnish to Agent all
requests for information, notices of claim, demand letters,
and other notifications, received by Borrower in connection
with its ownership or use of its properties or the conduct of
its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Material
at any location.
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(n) Evidence of Compliance. Each Related Person will furnish
to each Lender at such Related Person's or Borrower's expense all
evidence which Agent or any Lender from time to time reasonably
requests as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by any Related Person
in the Loan Documents, the satisfaction of all conditions contained
therein, and all other matters pertaining thereto.
(o) Additional Reports to be Delivered to Agent. Within 30
days following the date of the Agreement, Agent shall have received,
in form and substance satisfactory to Agent, a favorable report of
J.H. Blades & Co., Inc. regarding their assessment of the insurance
maintained by the Related Persons.
(p) Excess Cash Flow Offer. If the Borrower has Excess Cash
Flow in excess of $1,000,000 in any Fiscal Year, beginning with the
Fiscal Year ending December 31, 1996, Borrower is required to apply an
amount equal to fifty percent (50%) of all Excess Cash Flow for such
Fiscal Year (not just the amount in excess of $1,000,000) to (i) the
prepayment of the Notes as provided in Section 2.7 and/or (ii) the
acquisition and/or development of new and existing oil and gas
properties.
Section 5.2. Negative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower shall, and shall cause each Related Person to,
warrant, covenant and agree that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
(a) Restricted Debt. No Related Person will in any manner
owe or be liable for Restricted Debt except:
(i) the Obligations.
(ii) (A) the indebtedness and obligations of
Borrower under the 2002 Notes and the 2002 Indenture (as such
instruments are in effect on the date hereof), and (B) the
indebtedness and obligations of any Related Person under any
guaranties of the indebtedness and obligations of Borrower
under subsection (A) above.
(iii) obligations under Permitted Swap Agreements.
(iv) obligations under hedging agreements incurred
pursuant to the provisions of Section 5.2(c).
(v) obligations under the Gas Purchase and Sale
Agreement dated October 2, 1992 and the Gas Price Agreement
dated March 1, 1993, each between Washington Energy Marketing,
Inc. and Borrower, as successor in interest to South Texas
Limited Partnership.
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(vi) Debt incurred by such Related Person on
ordinary trade terms to service contractors (each a
"Contractor") which is contemplated to be paid more than 120
days after the same is incurred, provided that (A) such Debt
is not delinquent, and (B) the Contractor (x) has entered into
an agreement with Lenders, in form satisfactory to Agent,
expressly subordinating the Debt of such Related Person to the
Contractor to the Obligations, and (y) has executed and
delivered such lien waivers and other agreements, in form
satisfactory to Agent, as Agent may request in its sole
discretion.
(b) Limitation on Liens. No Related Person will create,
assume or permit to exist any Lien upon any of the properties or
assets which it now owns or hereafter acquires, except, to the extent
not otherwise forbidden by the Security Documents:
(i) Liens which secure Obligations only.
(ii) Liens which secure the 2002 Notes, provided
such Liens are subordinate to any Liens upon the same
properties or assets which secure Obligations.
(iii) statutory Liens for taxes, statutory
mechanics' and materialmen's Liens incurred in the ordinary
course of business, Liens under operating agreements in the
ordinary course of business, and other similar Liens incurred
in the ordinary course of business, provided such Liens do not
secure Restricted Debt and secure only Debt which is not
delinquent or which is being contested in good faith by
appropriate proceedings and as to which adequate reserves in
accordance with GAAP have been established.
(iv) the "Permitted Encumbrances" as such term is
defined in the Security Documents, and any Liens expressly
permitted under any similar provisions of any other Security
Document.
(c) Hedging Contracts. No Related Person will be a party to
or in any manner be liable on any forward, future, swap or hedging
contract, including any Permitted Swap Agreements, except:
(i) contracts entered into with the purpose and
effect of fixing prices on oil or gas expected to be produced
by the Related Persons, provided that at all times: (1) no
such contract fixes a price for a term of more than twelve
(12) months; (2) the aggregate monthly production covered by
all such contracts (determined, in the case of contracts that
are not settled on a monthly basis, by a monthly proration
acceptable to Majority Lenders) for any single month does not
in the aggregate exceed eighty-five percent (85%) of the
Related Persons' aggregate Projected Production of oil and gas
anticipated to be sold in the ordinary course of the Related
Persons' businesses for such month, (3) no such contract
(other than a Permitted Swap Agreement) requires any Related
Person to put up money, assets, letters of credit or other
security against the event of its nonperformance prior to
actual default by such Related
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Person in performing its obligations thereunder, and (4) each
such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty
is a Lender or one of its Affiliates) at the time the contract
is made has long-term obligations rated AA or Aa2 or better,
respectively, by Standard & Poor's Ratings Group or Moody's
Investors Services, Inc. (or a successor credit rating
agency).
(ii) contracts entered into by a Related Person
with the purpose and effect of fixing interest rates on a
principal amount of indebtedness of such Related Person that
is accruing interest at a variable rate, provided that (1) the
aggregate notional amount of such contracts never exceeds
seventy-five percent (75%) of the anticipated outstanding
principal balance of the indebtedness to be hedged by such
contracts or an average of such principal balances calculated
using a generally accepted method of matching interest swap
contracts to declining principal balances, (2) the floating
rate index of each such contract generally matches the index
used to determine the floating rates of interest on the
corresponding indebtedness to be hedged by such contract and
(3) each such contract is with a counterparty or has a
guarantor of the obligation of the counterparty who (unless
such counterparty is a Lender or one of its Affiliates) at the
time the contract is made has long-term obligations rated AA
or Aa2 or better, respectively, by Standard & Poor's Ratings
Group or Moody's Investors Services, Inc. (or a successor
credit rating agency).
(d) Limitation on Mergers, Issuances of Securities. Except
as expressly provided in this subsection no Related Person will merge
or consolidate with or into any other business entity. Any Subsidiary
of Borrower may, however, be merged into or consolidated with (i)
another Subsidiary of Borrower, so long as a Guarantor is the
surviving business entity, or (ii) Borrower, so long as Borrower is
the surviving business entity. Borrower will not issue any securities
other than shares of its common or preferred stock and any options or
warrants giving the holders thereof only the right to acquire such
shares, except the 2002 Notes issued as of the date hereof. No
Subsidiary of Borrower will issue any additional shares of its capital
stock or other securities or any options, warrants or other rights to
acquire such additional shares or other securities except to Borrower
and only to the extent not otherwise forbidden under the terms hereof.
No Subsidiary of Borrower which is a partnership will allow any
diminution of Borrower's interest (direct or indirect) therein.
(e) Limitation on Sales of Property. No Related Person will
sell, transfer, lease, exchange, alienate or dispose of any of its
material assets or properties or any material interest therein except,
to the extent not otherwise forbidden under the Security Documents:
(i) equipment which is worthless or obsolete or
which is replaced by equipment of equal suitability and value.
(ii) inventory (including oil and gas sold as
produced and seismic data) which is sold in the ordinary
course of business on ordinary trade terms.
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(iii) interests in oil and gas leases, or portions
thereof (if released or abandoned but not otherwise sold or
transferred), so long as no well situated on the property
transferred, or located on any unit containing all or any part
thereof, is capable (or is subject to being made capable
through commercially feasible operations) of producing oil,
gas or other hydrocarbons or minerals in commercial
quantities.
(iv) other property which is sold for fair
consideration if (A) the aggregate of such consideration in
any fiscal year of the Borrower does not exceed $500,000 with
respect to properties with values, as set forth in the
Engineering Reports delivered to Agent and each Lender, taken
into account in determining the most recent Borrowing Base, or
$750,000 for properties not used in determining the most
recent Borrowing Base, and (B) the sale of such properties
will not materially impair or diminish the value of the assets
subject to the Security Documents or the Borrower's and its
Subsidiaries' consolidated financial condition, businesses or
operations.
Neither Borrower nor any of Borrower's Subsidiaries will sell,
transfer or otherwise dispose of capital stock of any of Borrower's
Subsidiaries except that any Subsidiary of Borrower may sell or issue
its own capital stock to the extent not otherwise prohibited
hereunder. No Related Person will discount, sell, pledge or assign
any notes payable to it, accounts receivable or future income except
to the extent expressly permitted under the Loan Documents.
(f) Limitation on Dividends and Redemptions. No Related
Person will declare or pay any dividends on, or make any other
distribution in respect of, any class of its capital stock or any
partnership or other interest in it, nor will any Related Person
directly or indirectly make any capital contribution to or purchase,
redeem, acquire or retire any shares of the capital stock of or
partnership interests in any Related Person (whether such interests
are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Related
Person, except as expressly provided in this section. Such dividends,
distributions, contributions, purchases, redemptions, acquisitions,
retirements or reductions may be made (i) by the Guarantors without
limitation to Borrower, and (ii) so long as no Default shall have
occurred and be continuing, by Borrower to pay cash dividends on its
Series A, Series B, Series C and Series E preferred stock (but no
other stock), provided that the aggregate amount of such dividends
(determined on the basis of when such dividends are paid) shall not
exceed $530,000 in any Fiscal Year.
(g) Limitation on Investments and New Businesses. No Related
Person will (i) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the
ordinary course of business, (ii) engage directly or indirectly in any
business or conduct any operations except in connection with or
incidental to its present businesses and operations, (iii) make any
acquisitions of or capital contributions to or other investments in
any Person, other than Permitted Investments, or (iv) make any
acquisitions or investments in any properties, other than oil and gas
properties, with a purchase price in excess of $500,000.
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(h) Limitation on Credit Extensions. Except for Permitted
Investments, no Related Person will extend credit, make advances or
make loans other than (i) normal and prudent extensions of credit to
customers buying goods and services in the ordinary course of
business, which extensions shall not be for longer periods than those
extended by similar businesses operated in a normal and prudent manner
and (ii) loans to Borrower.
(i) Transactions with Affiliates. Neither Borrower nor any
of its Subsidiaries will engage in any material transaction with any
of its Affiliates on terms which are less favorable to it than those
which would have been obtainable at the time in arm's-length dealing
with Persons other than such Affiliates.
(j) Certain Contracts; Amendments; Multiemployer ERISA Plans.
Except as expressly provided for in the Loan Documents, no Related
Person will, directly or indirectly, enter into, create, or otherwise
allow to exist any contract or other consensual restriction on the
ability of any Person to: (i) pay dividends or make other
distributions to Borrower, (ii) to redeem equity interests held in it
by Borrower, (iii) to repay loans and other indebtedness owing by it
to Borrower, or (iv) to transfer any of its assets to Borrower. No
Related Person will enter into any "take-or-pay" contract or other
contract or arrangement for the purchase of goods or services which
obligates it to pay for such goods or service regardless of whether
they are delivered or furnished to it. No Related Person will amend
or permit any amendment to any contract or lease which releases,
qualifies, limits, makes contingent or otherwise detrimentally affects
the rights and benefits of Agent or any Lender under or acquired
pursuant to any Loan Documents. No Related Person will incur any
obligation to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA.
(k) Fiscal Year. No Related Person will change its Fiscal
Year.
(l) Working Capital and Current Ratio. The ratio of
Borrower's Consolidated current assets to Borrower's Consolidated
current liabilities will never be less than 1.0 to 1.0. For purposes
of this subsection, Borrower's Consolidated current liabilities will
be calculated without including any payments of principal on the Notes
which are required to be repaid within one year from the time of
calculation.
(m) Tangible Net Worth. The remainder of (i) all
Consolidated assets of Borrower, other than intangible assets
(including without limitation as intangible assets such assets as
patents, copyrights, licenses, franchises, goodwill, trade names,
trade secrets and leases other than oil, gas or mineral leases or
leases required to be capitalized under GAAP), minus (ii) all
Consolidated liabilities and similar balance sheet items of Borrower
will never be less than the sum of (i) $6,750,000, plus (ii) seventy
five percent (75%) of Borrower's cumulative Consolidated net income
beginning with the 1995 Fiscal Year plus (iii) ninety percent (90%) of
the net proceeds from the sale of any equity securities issued by
Borrower or any of its Subsidiaries on or after the date hereof.
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ARTICLE VI - Security
Section 6.1. The Security. The Obligations will be secured by the
Security Documents listed in the Security Schedule and any additional Security
Documents hereafter delivered by any Related Person and accepted by Agent.
Section 6.2. Agreement to Deliver Security Documents. Borrower
agrees to deliver and to cause its Subsidiaries to deliver, to further secure
the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property
now owned or hereafter acquired by any of the Related Persons. Borrower also
agrees to deliver, whenever requested by Agent in its sole and absolute
discretion, title opinions from legal counsel acceptable to Agent with respect
to any Related Person's properties and interests designated by Agent, based
upon abstract or record examinations to dates acceptable to Agent and (a)
stating that such Related Person has good and defensible title to such
properties and interests, free and clear of all Prohibited Liens, (b)
confirming that such properties and interests are subject to Security Documents
securing the Obligations that constitute and create legal, valid and duly
perfected first deed of trust or mortgage liens in such properties and
interests and first priority assignments of and security interests in the oil
and gas attributable to such properties and interests and the proceeds thereof,
and (c) covering such other matters as Agent may request.
Section 6.3. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver to Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by the Related
Persons in form and substance satisfactory to Agent, which Agent requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.
Section 6.4. Offset. To secure the repayment of the Obligations
Borrower hereby grants to Agent and each Lender a security interest, a lien,
and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of Agent or any Lender at common law, under the
Loan Documents, or otherwise, and each of which shall be upon and against (a)
any and all moneys, securities or other property (and the proceeds therefrom)
of Borrower now or hereafter held or received by or in transit to Agent or any
Lender from or for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, (b) any and all deposits
(general or special, time or demand, provisional or final) of Borrower with
Agent or any Lender, and (c) any other credits and claims of Borrower at any
time existing against Agent or any Lender, including claims under certificates
of deposit. Upon the occurrence of any Default, each of Agent and Lenders is
hereby authorized to foreclose upon, offset, appropriate, and apply, at any
time and from time to time, without notice to Borrower, any and all items
hereinabove referred to against the Obligations then due and payable.
Section 6.5. Guaranties of Borrower's Subsidiaries. Each Subsidiary
of Borrower now existing or created, acquired or coming into existence after
the date hereof shall, promptly
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upon request by Agent, execute and deliver to Agent an absolute and
unconditional guaranty of the timely repayment of the Obligations and the due
and punctual performance of the obligations of Borrower hereunder, which
guaranty shall be satisfactory to Agent in form and substance. Borrower will
cause each of its Subsidiaries to deliver to Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Agent and its
counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such guaranty and any other documents which it is required to execute.
Section 6.6. Production Proceeds. Notwithstanding that, by the terms
of the various Security Documents, Borrower is and will be assigning to Agent
and Lenders all of the "Production Proceeds" (as defined therein) accruing to
the property covered thereby, so long as no Default has occurred Borrower may
continue to receive from the purchasers of production all such Production
Proceeds, subject, however, to the Liens created under the Security Documents,
which Liens are hereby affirmed and ratified. Upon the occurrence of a
Default, Agent and Lenders may exercise all rights and remedies granted under
the Security Documents, including the right to obtain possession of all
Production Proceeds then held by Borrower or to receive directly from the
purchasers of production all other Production Proceeds. In no case shall any
failure, whether purposed or inadvertent, by Agent or Lenders to collect
directly any such Production Proceeds constitute in any way a waiver, remission
or release of any of its rights under the Security Documents, nor shall any
release of any Production Proceeds by Agent or Lenders to Borrower constitute a
waiver, remission, or release of any other Production Proceeds or of any rights
of Agent or Lenders to collect other Production Proceeds thereafter.
ARTICLE VII - Events of Default and Remedies
Section 7.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Related Person fails to pay any Obligation when due
and payable, whether at a date for the payment of a fixed installment
or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any "default" or "event of default" occurs under any Loan
Document which defines either such term, and the same is not remedied
within the applicable period of grace (if any) provided in such Loan
Document;
(c) Any Related Person fails to duly observe, perform or
comply with any covenant, agreement or provision of Section 5.1(d) or
Section 5.2 (other than Section 5.2(l));
(d) Any Related Person fails (other than as referred to in
subsections (a), (b) or (c) above) to duly observe, perform or comply
with any covenant, agreement, condition or provision of any Loan
Document, and such failure remains unremedied for a period of thirty
(30) days after notice of such failure is given by Agent to
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Borrower, provided that such grace period shall not apply to any such
failure if Borrower has not given notice thereof to Agent and Lenders
as required in Section 5.1(d)(ii);
(e) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of any Related Person in
connection with any Loan Document shall prove to have been false or
incorrect in any material respect on any date on or as of which made,
or any Loan Document at any time ceases to be valid, binding and
enforceable as warranted in Section 4.1(e) for any reason other than
its release or subordination by Agent;
(f) Any Related Person fails to duly observe, perform or
comply with any agreement with any Person or any term or condition of
any instrument, if such agreement or instrument is materially
significant to Borrower or to Borrower and its subsidiaries on a
Consolidated basis, and such failure is not remedied within the
applicable period of grace (if any) provided in such agreement or
instrument;
(g) Any Related Person (i) fails to pay any portion, when
such portion is due, of any of its Debt under the 2002 Notes or the
2002 Indenture or any of its other Debt in excess of $100,000, or (ii)
breaches or defaults in the performance of any agreement or instrument
by which any such Debt is issued, evidenced, governed, or secured, and
any such failure, breach or default continues beyond any applicable
period of grace provided therefor;
(h) Either (i) any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $100,000 exists with respect to any ERISA Plan,
whether or not waived by the Secretary of the Treasury or his
delegate, or (ii) any Termination Event occurs with respect to any
ERISA Plan and the then current value of such ERISA Plan's benefit
liabilities exceeds the then current value of such ERISA Plan's assets
available for the payment of such benefit liabilities by more than
$100,000 (or in the case of a Termination Event involving the
withdrawal of a substantial employer, the withdrawing employer's
proportionate share of such excess exceeds such amount);
(i) Any Related Person:
(i) suffers the entry against it of a judgment,
decree or order for relief by a court of competent
jurisdiction in an involuntary proceeding commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such
proceeding commenced against it which remains undismissed for
a period of thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in
effect, including the federal Bankruptcy Code, as from time to
time amended; or applies for or consents to the entry of an
order for relief in an involuntary case under any such law; or
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makes a general assignment for the benefit of creditors; or
fails generally to pay (or admits in writing its inability to
pay) its debts as such debts become due; or takes corporate or
other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of all or a
substantial part of its assets or of any part of the
Collateral in a proceeding brought against or initiated by it,
and such appointment or taking possession is neither made
ineffective nor discharged within thirty days after the making
thereof, or such appointment or taking possession is at any
time consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final
judgment for the payment of money in excess of $250,000,
unless the same is discharged within thirty days after the
date of entry thereof or an appeal or appropriate proceeding
for review thereof is taken within such period and a stay of
execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any
similar process to be issued by any court against all or any
substantial part of its assets or any material part of the
Collateral, and such writ or warrant of attachment or any
similar process is not stayed or released within thirty days
after the entry or levy thereof or after any stay is vacated
or set aside;
(j) A Change of Control occurs.
Upon the occurrence of an Event of Default described in subsection (i)(i),
(i)(ii) or (i)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Related Person who at any time
ratifies or approves this Agreement. During the continuance of any other Event
of Default, Agent at any time and from time to time may (and upon written
instructions from Majority Lenders, or from any Lender as provided in Section
2.3(c) of the Intercreditor Agreement, Agent shall) without notice to Borrower
or any other Related Person declare any or all of the Obligations immediately
due and payable, and all such Obligations shall thereupon be immediately due
and payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of
any kind, all of which are hereby expressly waived by Borrower and each Related
Person who at any time ratifies or approves this Agreement. After any such
acceleration (whether automatic or due to declaration by Agent), any obligation
of Lenders to make any further Advances or loans of any kind under any
agreement with any Related Person shall be permanently terminated. In
addition, upon the occurrence of any Event of Default, the Majority Lenders
shall have the right to terminate the Commitment Period.
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Section 7.2. Remedies. If any Default shall occur and be continuing,
each Lender may protect and enforce its rights under the Loan Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Loan Document, and each Lender may
enforce the payment of any Obligations due or enforce any other legal or
equitable right. All rights, remedies and powers conferred upon Agent and
Lenders under the Loan Documents shall be deemed cumulative and not exclusive
of any other rights, remedies or powers available under the Loan Documents or
at law or in equity.
Section 7.3. INDEMNITY. Borrower agrees to indemnify Agent and each
Lender, upon demand, from and against any and all liabilities, obligations,
claims, losses, damages, penalties, fines, actions, judgments, suits,
settlements, costs, expenses or disbursements (including reasonable fees of
attorneys, accountants, experts and advisors) of any kind or nature whatsoever
(in this section collectively called "liabilities and costs") which to any
extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent or any Lender growing out of, resulting from or in any other way
associated with any of the Collateral, the Loan Documents, or the transactions
and events (including the enforcement or defense thereof) at any time
associated therewith or contemplated therein (including any violation or
noncompliance with any Environmental Laws by any Related Person or any
liabilities or duties of any Related Person or of Agent or any Lender with
respect to Hazardous Materials found in or released into the environment). THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS
ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR
THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT OR ANY LENDER, provided only
that neither Agent nor any Lender shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including
Borrower or any of its Affiliates) ever alleges such gross negligence or
willful misconduct by Agent or any Lender, the indemnification provided for in
this section shall nonetheless be paid upon demand, subject to later adjustment
or reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. AS USED IN THIS SECTION THE TERMS "AGENT" AND "LENDERS"
SHALL REFER NOT ONLY TO THE PERSON DESIGNATED AS SUCH IN SECTION 1.1 BUT ALSO
TO EACH DIRECTOR, OFFICER, SHAREHOLDER, SUBSIDIARY, SUCCESSOR, ASSIGN, AGENT,
ATTORNEY, EMPLOYEE, REPRESENTATIVE AND AFFILIATE OF SUCH PERSON.
ARTICLE VIII - Agent
Section 8.1. Appointment and Authority. Each Lender hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein, to
hold and deal with all Liens securing the Obligations, and to take all other
actions and to exercise such powers under the Loan Documents as are
specifically delegated to Agent by the terms hereof or thereof, together
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with all other powers reasonably incidental thereto, subject, with respect to
the Security Documents, to the provisions of the Intercreditor Agreement. The
relationship of Agent to Lenders is only that of one commercial bank acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any holder of
any of the Notes or of any participation therein nor to impose on Agent duties
and obligations other than those expressly provided for in the Loan Documents.
With respect to any matters not expressly provided for in the Loan Documents
and any matters which the Loan Documents place within the discretion of Agent,
Agent shall not be required to exercise any discretion or take any action, and
it may request instructions from Lenders with respect to any such matter, in
which case it shall be required to act or to refrain from acting (and shall be
fully protected and free from liability to all Lenders in so acting or
refraining from acting) upon the instructions of Majority Lenders (including
itself), provided, however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to the Loan Documents or to applicable law. Upon receipt
by Agent from Borrower of any communication calling for action on the part of
Lenders or upon notice from any Lender to Agent of, or Agent otherwise
obtaining actual knowledge of, any Default or Event of Default, Agent shall
promptly notify each Lender thereof.
Section 8.2. Exculpation, Agent's Reliance, Etc. NEITHER AGENT NOR
ANY OF ITS DIRECTORS, OFFICERS, AGENTS, ATTORNEYS, OR EMPLOYEES SHALL BE LIABLE
FOR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY ANY OF THEM UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS, INCLUDING THEIR NEGLIGENCE OF ANY KIND,
EXCEPT THAT EACH SHALL BE LIABLE FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Without limiting the generality of the foregoing, Agent (a) may
treat the payee of any Note as the holder thereof until Agent receives written
notice of the assignment or transfer thereof in accordance with this Agreement,
signed by such payee and in form satisfactory to Agent; (b) may consult with
legal counsel (including counsel for Borrower), independent public accountants
and other experts selected by it and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts; (c) makes no warranty or representation
to any Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with the Loan Documents;
(d) except as otherwise expressly provided in any Loan Document, shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of the Loan Documents on the part of any
Related Person or to inspect the property (including the books and records) of
any Related Person; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Loan Document or any instrument or document furnished in
connection therewith; (f) may rely upon the representations and warranties of
the Related Persons and Lenders in exercising its powers hereunder; and (g)
shall incur no liability under or in respect of the Loan Documents by acting
upon any notice, consent, certificate or other instrument or writing (including
any telecopy, telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper Person or Persons.
Section 8.3. Lenders' Credit Decisions. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any other Lender,
made its own analysis of Borrower and the transactions contemplated hereby and
its own independent decision to enter
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into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender 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 the Loan Documents.
Section 8.4. INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY AGENT
(TO THE EXTENT NOT REIMBURSED BY BORROWER WITHIN TEN (10) DAYS AFTER DEMAND)
FROM AND AGAINST SUCH LENDER'S PERCENTAGE SHARE OF ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED
WITH ANY OF THE COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS
(INCLUDING THE ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR
CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY
ENVIRONMENTAL LAWS BY ANY PERSON OR ANY LIABILITIES OR DUTIES OF ANY PERSON
WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT, PROVIDED ONLY THAT NO LENDER
SHALL BE OBLIGATED UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF
ANY, OF ANY LIABILITIES AND COSTS WHICH IS PROXIMATELY CAUSED BY AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT.
CUMULATIVE OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE AGENT OR ANY OTHER
LENDER PROMPTLY UPON DEMAND FOR SUCH LENDER'S PERCENTAGE SHARE OF ANY COSTS AND
EXPENSES TO BE PAID TO AGENT OR SUCH OTHER LENDER BY BORROWER UNDER SECTION
5.1(I) TO THE EXTENT THAT AGENT OR SUCH OTHER LENDER IS NOT TIMELY REIMBURSED
FOR SUCH EXPENSES BY BORROWER AS PROVIDED IN SUCH SECTION. AS USED IN THIS
SECTION THE TERM "AGENT" SHALL REFER NOT ONLY TO THE PERSON DESIGNATED AS SUCH
IN SECTION 1.1 BUT ALSO TO EACH DIRECTOR, OFFICER, AGENT, ATTORNEY, EMPLOYEE,
REPRESENTATIVE AND AFFILIATE OF SUCH PERSON.
Section 8.5. Rights as Lender. In its capacity as a Lender, Agent
shall have the same rights and obligations as any Lender and may exercise such
rights as though it were not Agent. Subject to the Intercreditor Agreement,
Agent may accept deposits from, lend money to, act as Trustee under indentures
of, and generally engage in any kind of business with any of the Related
Persons or their Affiliates, all as if it were not Agent hereunder and without
any duty to account therefor to any other Lender.
Section 8.6. Sharing of Set-Offs and Other Payments. Each of Agent
and Lender agrees that if it shall, whether through the exercise of rights
under Security Documents or rights of banker's lien, set off, or counterclaim
against Borrower or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by
Agent under Section 2.10, causes Agent or such Lender to have received more
than it would have received had such payment been received by Agent and
distributed pursuant to Section 2.10, then (a) it shall be deemed to have
simultaneously purchased and shall be obligated to purchase interests in the
Obligations as necessary to cause
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Agent and all Lenders to share all payments as provided for in Section 2.10,
and (b) such other adjustments shall be made from time to time as shall be
equitable to ensure that Agent and all Lenders share all payments of
Obligations as provided in Section 2.10; provided, however, that nothing herein
contained shall in any way affect the right of Agent or any Lender to obtain
payment (whether by exercise of rights of banker's lien, set-off or
counterclaim or otherwise) of indebtedness other than the Obligations, subject,
however, to the terms of the Intercreditor Agreement. Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such
interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted by
law exercise any and all rights of banker's lien, set-off, or counterclaim as
fully as if such holder were a holder of the Obligations in the amount of such
interest or other participation. If all or any part of any funds transferred
pursuant to this section is thereafter recovered from the seller under this
section which received the same, the purchase provided for in this section
shall be deemed to have been rescinded to the extent of such recovery, together
with interest, if any, if interest is required pursuant to court order to be
paid on account of the possession of such funds prior to such recovery.
Section 8.7. Investments. Whenever Agent in good faith determines
that it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.
Section 8.8. Benefit of Article VIII. The provisions of this Article
(other than the following Section 8.9) are intended solely for the benefit of
Agent and Lenders, and no Related Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent or
any Lender. Agent and Lenders may waive or amend such provisions as they
desire without any notice to or consent of Borrower or any Related Person.
Section 8.9. Resignation. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Each such notice shall set
forth the date of such resignation. Upon any such resignation Borrower may,
with the written concurrence of Lenders whose aggregate Percentage Shares
exceed fifty percent (50%), designate a successor Agent. If within fifteen
days after the date of such resignation Borrower makes no such designation or
such written concurrence is not given, Majority Lenders shall have the right to
appoint a successor Agent. A successor must be appointed for any retiring
Agent, and such Agent's resignation shall become effective when such successor
accepts such appointment. If, within thirty days after the date of the
retiring Agent's resignation, no successor Agent has been appointed and has
accepted such appointment, then the retiring Agent may appoint a
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successor Agent, which shall be a commercial bank organized or licensed to
conduct a banking or trust business under the laws of the United States of
America or of any state thereof. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder the provisions of
this Article VIII shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the Loan Documents.
ARTICLE IX - Miscellaneous
Section 9.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by
course of conduct or otherwise) by Agent or any Lender in exercising
any right, power or remedy which Agent or such Lender may have under
any of the Loan Documents shall operate as a waiver thereof or of any
other right, power or remedy, nor shall any single or partial exercise
by Agent or such Lender of any such right, power or remedy preclude
any other or further exercise thereof or of any other right, power or
remedy. No waiver of any provision of any Loan Document and no
consent to any departure therefrom shall ever be effective unless it
is in writing and signed as provided below in this Section, and then
such waiver or consent shall be effective only in the specific
instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Related
Person shall in any case of itself entitle any Related Person to any
other or further notice or demand in similar or other circumstances.
This Agreement and the other Loan Documents set forth the entire
understanding and agreement of the parties hereto and thereto with
respect to the transactions contemplated herein and therein and
supersede all prior discussions and understandings with respect to the
subject matter hereof and thereof. No modification or amendment of or
supplement to this Agreement or the other Loan Documents, no waiver of
any provision of any Loan Document and no consent to any departure
therefrom shall be valid or effective against any party unless the
same is in writing and is signed by such party (and if such party is a
Lender, is signed by such Lender or by Agent on behalf of Lenders with
the written consent of Majority Lenders or, in the circumstances set
forth in the next sentence, each Lender). Notwithstanding the
foregoing or anything to the contrary herein, Agent shall not, without
the prior consent of each individual Lender, execute and deliver on
behalf of such Lender any waiver or amendment which would: (1) waive
any of the conditions specified in Article III (provided that Agent
may in its discretion withdraw any request it has made under Section
3.3(f)), (2) increase the Maximum Loan Amount of such Lender or
subject such Lender to any additional obligations, (3) reduce any fees
hereunder, or the principal of, or interest on, such Lender's Note or
any other Obligation owing to such Lender, (4) postpone any date fixed
for any payment of any fees hereunder, or principal of, or interest
on, such Lender's Note or any other Obligation owing to such Lender,
(5) amend the definition herein of "Majority Lenders" or otherwise
change the aggregate amount of Percentage Shares or percentage of
Obligations held which is required for Agent, Lenders or any of them
to take any particular action under the
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Loan Documents, (6) release during any Fiscal Year, Collateral with an
aggregate value in excess of $250,000, as set forth in the latest
Engineering Reports delivered to Agent and each Lender, and (7)
release Borrower from its obligation to pay such Lender's Note or any
other Obligation owing to such Lender or release any Guarantor from
its guaranty of such payment, or (8) amend or waive any provision of
the Intercreditor Agreement.
(b) Acknowledgements and Admissions. Borrower hereby
represents, warrants, acknowledges and admits that (i) it has been
advised by counsel in the negotiation, execution and delivery of the
Loan Documents to which it is a party, (ii) it has made an independent
decision to enter into this Agreement and the other Loan Documents to
which it is a party, without reliance on any representation, warranty,
covenant or undertaking by Agent or any Lender, whether written, oral
or implicit, other than as expressly set out in this Agreement or in
another Loan Document delivered on or after the date hereof, (iii)
there are no representations, warranties, covenants, undertakings or
agreements by Agent or any Lender as to the Loan Documents except as
expressly set out in this Agreement or in another Loan Document
delivered on or after the date hereof, (iv) neither Agent nor any
Lender owes any fiduciary duty to Borrower with respect to any Loan
Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower, on one
hand, and Agent and each Lender, on the other hand, is and shall be
solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
of Borrower, Agent and Lenders, (vii) Agent is not Borrower's Agent,
but Agent for Lenders, (viii) should an Event of Default or Default
occur or exist Agent and each Lender will determine in its sole
discretion and for its own reasons what remedies and actions it will
or will not exercise or take at that time, subject however, to the
terms of the Loan Documents, (ix) without limiting any of the
foregoing, Borrower is not relying upon any representation or covenant
by Agent or any Lender, or any representative thereof, and no such
representation or covenant has been made, that Agent or any Lender
will, at the time of an Event of Default or Default, or at any other
time, waive, negotiate, discuss, or take or refrain from taking any
action permitted under the Loan Documents with respect to any such
Event of Default or Default or any other provision of the Loan
Documents, and (x) Agent and all Lenders have relied upon the
truthfulness of the acknowledgements in this section in deciding to
execute and deliver this Agreement and to make the Loans.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Section 9.2. Survival of Agreements; Cumulative Nature. All of the
Related Persons' various representations, warranties, covenants and agreements
in the Loan Documents shall survive the execution and delivery of this
Agreement and the other Loan Documents and the
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performance hereof and thereof, including the making or granting of the Loan
and the delivery of the Note and the other Loan Documents, and shall further
survive until all of the Obligations are paid in full to Agent and Lenders and
all of Agent's and Lenders' obligations to Borrower are terminated. All
statements and agreements contained in any certificate or other instrument
delivered by any Related Person to Agent or any Lender under any Loan Document
shall be deemed representations and warranties by Borrower or agreements and
covenants of Borrower under this Agreement. The representations, warranties,
and covenants made by the Related Persons in the Loan Documents, and the
rights, powers, and privileges granted to Agent and Lenders in the Loan
Documents, are cumulative, and, except for expressly specified waivers and
consents, no Loan Document shall be construed in the context of another to
diminish, nullify, or otherwise reduce the benefit to Agent or any Lender of
any such representation, warranty, covenant, right, power or privilege. In
particular and without limitation, no exception set out in this Agreement to
any representation, warranty or covenant herein contained shall apply to any
similar representation, warranty or covenant contained in any other Loan
Document, and each such similar representation, warranty or covenant shall be
subject only to those exceptions which are expressly made applicable to it by
the terms of the various Loan Documents.
Section 9.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document, and
shall be deemed sufficiently given or furnished if delivered by personal
delivery, by telecopy, by delivery service with proof of delivery, or by
registered or certified United States mail, postage prepaid, to Borrower and
the Related Persons at the address of Borrower specified on the signature pages
hereto and to Agent and the other Lenders at their addresses specified on the
signature pages hereto (unless changed by similar notice in writing given by
the particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery at the
address and in the manner provided herein, (b) in the case of telecopy, upon
receipt, or (c) in the case of registered or certified United States mail,
three days after deposit in the mail; provided, however, that no Request for
Advance or Rate Election shall become effective until actually received.
Section 9.4. Joint and Several Liability; Parties in Interest. All
Obligations which are incurred by two or more Related Persons shall be their
joint and several obligations and liabilities. All grants, covenants and
agreements contained in the Loan Documents shall bind and inure to the benefit
of the parties thereto and their respective successors and assigns; provided,
however, that no Related Person may assign or transfer any of its rights or
delegate any of its duties or obligations under any Loan Document without the
prior consent of Lenders.
SECTION 9.5. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE
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LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW. IN CHOOSING NEW YORK LAW, THE PARTIES SPECIFICALLY INTEND TO AVOID
THE APPLICATION OF ANY OTHER STATE'S LAWS CONCERNING, INTER ALIA, THE
AVAILABILITY OF A DEFICIENCY JUDGEMENT BEFORE, DURING OR AFTER JUDICIAL OR
NONJUDICIAL FORECLOSURES OF ANY OR ALL OF THE COLLATERAL AND TO AVOID ANY SUCH
OTHER STATE'S REQUIREMENTS THAT RESORT MUST BE HAD BY AGENT OR LENDERS FIRST TO
ALL OR ANY PART OF THE COLLATERAL PRIOR TO PURSUING OTHER ASSETS OF ANY RELATED
PARTY OR OBTAINING A PERSONAL JUDGEMENT AGAINST BORROWER OR ANY RELATED PARTY
FOR ALL OR ANY PART OF THE OBLIGATIONS AND/OR ANY REQUIREMENT THAT ONLY "ONE
ACTION" MAY BE HAD BY AGENT OR LENDERS IN ENFORCING SOME OR ALL OF THEIR RIGHTS
UNDER ANY LOAN DOCUMENT. SPECIFICALLY, BORROWER ACKNOWLEDGES, UNDERSTANDS, AND
WAIVES THE BENEFITS OF ANY AND ALL SUCH OTHER STATE'S LAWS, OR CHOICE OF LAW
RULES OF SUCH OTHER STATE, WHICH WOULD OTHERWISE DETRACT FROM THE ELECTION OF
NEW YORK LAW HEREUNDER, INCLUDING WITHOUT LIMITATION SPECIFICALLY ACKNOWLEDGING
AND WAIVING ANY BENEFIT OR PROTECTION THAT MIGHT OTHERWISE HAVE ARISEN UNDER
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A, 580D AND/OR 726, OR ANY CLAIM
THAT ANY SIMILAR LAWS OF A STATE OTHER THAN NEW YORK SHALL GOVERN THE
SUBSTANTIVE OR PROCEDURAL RIGHTS OF AGENT AND LENDERS AS REGARDS THE
OBLIGATIONS AND/OR THE COLLATERAL. TO THIS END, BORROWER REPRESENTS, WARRANTS
AND ACKNOWLEDGES THAT SUFFICIENT CONTACTS EXIST BETWEEN BORROWER AND THE STATE
OF NEW YORK TO JUSTIFY AND RENDER REASONABLE THE NEW YORK CHOICE OF LAW
PROVISIONS HEREIN, THAT THE CHOICE OF LAW PROVISION HAS BEEN EXPRESSLY
NEGOTIATED AND ANALYZED BY THE PARTIES, AND THAT BORROWER KNOWINGLY ACCEPTS THE
CONSEQUENCES OF THE CHOICE OF NEW YORK LAW TO GOVERN THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, THE OBLIGATIONS AND THE COLLATERAL.
BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST
BORROWER WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS AGENT, AT THE DIRECTION OF
THE MAJORITY LENDERS, MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF,
BORROWER ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND
AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY AGENT AND
LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY IT
AGAINST AGENT AND LENDERS AND ANY QUESTIONS RELATING TO USURY. BORROWER AGREES
THAT SECTIONS 5- 1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO
DISMISS ANY ACTION OR
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PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. IN
FURTHERANCE OF THE FOREGOING, BORROWER HEREBY IRREVOCABLY DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM, 1633 BROADWAY, NEW YORK, NEW YORK, AS AGENT OF
BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST BORROWER WITH
RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED
BY LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW,
BUT THE FAILURE OF BORROWER OR SUCH LAW FIRM TO RECEIVE SUCH COPIES SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL
FURNISH TO AGENT A CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT HEREUNDER
PRIOR TO THE EFFECTIVE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF AGENT, AT THE DIRECTION OF MAJORITY LENDERS, TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT, AT THE
DIRECTION OF MAJORITY LENDERS, TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT CORPORATION SYSTEM
SHALL RESIGN OR OTHERWISE CEASE TO ACT AS AGENT, BORROWER HEREBY IRREVOCABLY
AGREES TO (a) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT ACCEPTABLE TO AGENT
AND MAJORITY LENDERS TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW
AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL
PURPOSES HEREOF AND (b) PROMPTLY DELIVER TO AGENT THE WRITTEN CONSENT (IN FORM
AND SUBSTANCE SATISFACTORY TO AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN
SUCH CAPACITY.
Section 9.6. Limitation on Interest. Agent, each Lender, the Related
Persons and the other parties to the Loan Documents intend to contract in
strict compliance with applicable usury law from time to time in effect. In
furtherance thereof such persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to provide
for interest in excess of the maximum amount of interest permitted to be
charged by applicable law from time to time in effect. Neither any Related
Person nor any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable
for unearned interest thereon or shall ever be required to pay interest thereon
in excess of the maximum amount that may be lawfully charged under applicable
law from time to time in effect, and the provisions of this section shall
control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith.
Section 9.7. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
notice delivered to Agent to terminate this Agreement. Upon receipt by Agent
of such a notice, if no Obligations are then owing this Agreement and all other
Loan Documents shall thereupon be terminated and the parties thereto released
from all prospective obligations thereunder. Notwithstanding the
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foregoing or anything herein to the contrary, any waivers or admissions made by
any Related Person in any Loan Documents, any Obligations under Sections 2.14
through 2.18, and any obligations which any Person may have to indemnify or
compensate Agent or any Lender shall survive any termination of this Agreement
or any other Loan Document. At the request and expense of Borrower, Agent
shall prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents. Agent is hereby authorized to execute all
such instruments on behalf of all Lenders, without the joinder of or further
action by any Lender.
Section 9.8. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section 9.9. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
SECTION 9.10. ACKNOWLEDGEMENT OF NO CLAIMS, OFFSETS OR DEFENSES;
RELEASE BY THE RELATED PARTIES. BORROWER, ON BEHALF OF ITSELF AND EACH OF THE
OTHER RELATED PERSONS, ACKNOWLEDGES THAT NO RELATED PERSON NOR ANY OF THEIR
RESPECTIVE OWNERS, DIRECTORS, SUCCESSORS, ASSIGNS, AGENTS, OFFICERS, EMPLOYEES,
AND REPRESENTATIVES (COLLECTIVELY, THE "BORROWER AFFILIATED PARTIES") HAS ANY
CLAIM, DEMAND, RIGHT OF OFFSET, CAUSE OF ACTION IN LAW OR IN EQUITY, LIABILITY
OR DAMAGES OF ANY NATURE WHATSOEVER, WHETHER FIXED OR CONTINGENT (HEREINAFTER
COLLECTIVE CALLED "CLAIMS") THAT COULD BE ASSERTED IN CONNECTION WITH, OR WHICH
WOULD IN ANY OTHER MANNER BE RELATED TO, THE PRIOR NOTE, THE PRIOR AGREEMENT OR
ANY OTHER AGREEMENTS, TRANSACTIONS OR OTHER ACTIONS PRIOR TO THE DATE HEREOF
INVOLVING ANY OF THE BORROWER AFFILIATED PARTIES AND INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION OR ANY OR ITS PREDECESSORS IN INTEREST ("THE PRIOR
INCC AGREEMENTS AND ACTIVITIES"). NOTWITHSTANDING THE FOREGOING, HOWEVER,
BORROWER HEREBY AGREES THAT IN CONSIDERATION OF THE CREDIT EXTENDED TO BORROWER
AND THE RELATED PARTIES UNDER THE LOAN DOCUMENTS AND AS A MATERIAL INDUCEMENT
TO THE LENDERS TO ENTER INTO SUCH LOAN DOCUMENTS AND EXTEND SUCH CREDIT TO
BORROWER, BORROWER, ON BEHALF OF ITSELF AND ALL OF THE OTHER BORROWER
AFFILIATED PARTIES HEREBY RELEASES AND FOREVER DISCHARGES, EACH LENDER, EACH
SUBSEQUENT HOLDER OF ANY OF THE OBLIGATIONS, AND EACH AND ALL OF THEIR PARENT,
SUBSIDIARY AND AFFILIATED CORPORATIONS PAST AND PRESENT, AS WELL AS THEIR
RESPECTIVE OWNERS, DIRECTORS, SUCCESSORS, ASSIGNS, AGENTS, OFFICERS, EMPLOYEES,
AND REPRESENTATIVES (COLLECTIVELY, THE "RELEASED PARTIES"), OF AND FROM ANY AND
ALL CLAIMS WHICH BORROWER AND THE OTHER BORROWER AFFILIATED PARTIES MAY HAVE OR
HEREAFTER ACQUIRE AGAINST ANY OR ALL OF THE RELEASED
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PARTIES BY REASON OF, OR RELATED IN ANY WAY TO, THE PRIOR INCC AGREEMENTS AND
ACTIVITIES.
SECTION 9.11. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. TO THE
EXTENT PERMITTED BY LAW, EACH OF AGENT, LENDERS AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS. EACH OF BORROWER, AGENT AND LENDERS HEREBY FURTHER
(a) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (b) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (c) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
HARCOR ENERGY, INC.
By: /s/
---------------------------------------
Name:
Title:
Address:
Five Post Oak Park
Suite 2220
Houston, Texas 77027-3416
Attention: Chairman of the Board and Chief
Executive Officer
Telephone: (713) 961-1804
Telecopy: (713) 961-9773
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, Agent and Lender
By: /s/ Trond O. Rokholt
---------------------------------------
Name: Trond O. Rokholt
Title: Vice President
Address:
135 East 57th Street
New York, New York 10022-2101
Attention: Trond O. Rokholt
Telephone: (212) 446-1943
Telecopy: (212) 832-3616
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<PAGE> 59
SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, Borrower hereby makes the following disclosures:
1. Section 4.1(f) Initial Financial Statements:
2. Section 4.1(g) Other Obligations and Restrictions:
3. Section 4.1(i) Litigation:
4. Section 4.1(j) ERISA Liabilities:
5. Section 4.1(k) Environmental and Other Laws:
6. Sections 4.1(l) and 8.3 Names and Places of Business:
Borrower has not used a name other than HarCor Energy, Inc.
Borrower's Subsidiaries' names during this period are as
follows:
HTAC Investments
HCO Energy
HTAC Partners
Warrior, Inc.
HarCor Capital Markets
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<PAGE> 60
Previous Addresses:
11766 Wilshire Blvd. 9401 Wilshire Blvd.
Suite 720 Suite 520
Los Angeles, CA 90045 Beverly Hills, CA 90212
Current Address:
Five Post Oak
Suite 2220
Houston, Texas 77027-3416
7. Section 4.1(m) Borrower's Subsidiaries:
Warrior, Inc.
HTAC Investments
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<PAGE> 61
SCHEDULE 2
SECURITY SCHEDULE
1. First Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement
of even date herewith executed by Borrower in favor of Agent.
2. UCC-1 Financing Statements executed by Borrower in favor of Agent in
connection with the Mortgages.
3. Second Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement and Financing Statement of even date
herewith executed by Borrower in favor of Agent.
4. Amended and Restated Guaranty of even date herewith executed by
Warrior, Inc., a Texas corporation ("Warrior"), in favor of Agent.
5. Amended and Restated Stock Pledge Agreement executed by Borrower in
favor of Agent.
6. Second Amendment to Deed of Trust, Mortgage, Assignment, Security
Agreement and Financing Statement of even date herewith executed by
Warrior in favor of Agent (the "Warrior Mortgage").
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SCHEDULE 3
INSURANCE
1
<PAGE> 63
EXHIBIT A
PROMISSORY NOTE
$_________________ New York, New York July ___, 1995
FOR VALUE RECEIVED, the undersigned, HarCor Energy, Inc., a Delaware
corporation (herein called "Borrower"), hereby promises to pay to the order of
_______________ (herein called "Lender"), the principal sum of _______________
_______________ DOLLARS ($_______________) or, if less, the aggregate unpaid
principal amount of the Loan made under this Note by Lender to Borrower
pursuant to the terms of the Credit Agreement (as hereinafter defined),
together with interest on the unpaid principal balance thereof as hereinafter
set forth, both principal and interest payable as herein provided in lawful
money of the United States of America at the offices of Agent, 135 East 57th
Street, New York, New York or at such other place (or account which is held)
within New York County, New York, as from time to time may be designated by the
holder of this Note.
This Note (a) is issued and delivered under that certain Amended and
Restated Credit Agreement dated July 19, 1995 among Borrower, Internationale
Nederlanden (U.S.) Capital Corporation, as Agent, and the Lenders (including
Lender) referred to therein (herein, as from time to time, supplemented,
amended or restated, called the "Credit Agreement"), and is a Note as defined
therein, (b) is subject to the terms and provisions of the Credit Agreement,
which contains provisions for payments and prepayments hereunder and
acceleration of the maturity hereof upon the happening of certain stated
events, and (c) is secured by and entitled to the benefits of certain Security
Documents (as identified and defined in the Credit Agreement). Payments on
this Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a description
of certain rights, limitations of rights, obligations and duties of the parties
hereto and for the meanings assigned to terms used and not defined herein and
to the Security Documents for a description of the nature and extent of the
security thereby provided and the rights of the parties thereto.
This Note is given in renewal and restatement of (but not in
extinguishment or novation of) that certain Promissory Note dated as of June
24, 1994, made by Borrower payable to the order of Lender in the stated
principal amount of $17,200,000.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the last day of each month,
beginning March 31, 1996, and (ii) any day on which past due interest
or principal is owed hereunder and is unpaid. If the terms hereof or
of the Credit Agreement provide that payments of interest or principal
hereon shall be deferred from one Base Rate Payment Date to another
day, such other day shall also be a Base Rate Payment Date.
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"Fixed Rate Payment Date" means, with respect to any Fixed
Rate Portion: (i) the day on which the related Interest Period ends
(and, if such Interest Period is three months or longer, the
three-month anniversary of the first day of such Interest Period), and
(ii) any day on which past due interest or past due principal is owed
hereunder with respect to such Fixed Rate Portion and is unpaid. If
the terms hereof or of the Credit Agreement provide that payments of
interest or principal with respect to such Fixed Rate Portion shall be
deferred from one Fixed Rate Payment Date to another day, such other
day shall also be a Fixed Rate Payment Date.
The principal of this Note shall be due and payable in quarterly
installments, each of which shall be due on the last day of December, March,
June and September, beginning March 31, 1996 and continuing regularly
thereafter until December 31, 1998. Each installment due in one of the years
listed in the following table (the "Quarterly Amortization Schedule") shall be
equal to a percentage of the outstanding principal balance of this Note at the
end of the Commitment Period (prior to any payments on that date) which
percentage is set out opposite such year as follows:
<TABLE>
<CAPTION>
INSTALLMENT DATE PAYMENT PERCENTAGE
---------------- ------------------
<S> <C>
March 31, 1996 6.00%
June 30, 1996 6.00%
September 30, 1996 6.00%
December 31, 1996 6.00%
March 31, 1997 11.25%
June 30, 1997 11.25%
September 30, 1997 11.25%
December 31, 1997 11.25%
March 31, 1998 7.75%
June 30, 1998 7.75%
September 30, 1998 7.75%
December 31, 1998 7.75% (or outstanding balance)
</TABLE>
All outstanding principal of this Note and all accrued and unpaid
interest thereon shall be due and payable on December 31, 1998.
The outstanding principal of this Note is also required to be prepaid
pursuant to the Credit Agreement, including, without limitation, quarterly
prepayments from Quarterly Net Cash Flow.
The Base Rate Portion of the Loan (exclusive of any past due principal
or interest) from time to time outstanding shall bear interest on each day
outstanding at the Base Rate in effect on such day. On each Base Rate Payment
Date Borrower shall pay to the holder hereof all unpaid interest which has
accrued on the Base Rate Portion to but not including such Base Rate Payment
Date. Each Fixed Rate Portion of the Loan (exclusive of any past due principal
or interest) shall bear interest on each day during the related Interest Period
at the related Fixed Rate in effect on such day. On each Fixed Rate Payment
Date relating to such Fixed Rate Portion Borrower shall pay to the holder
hereof all unpaid interest which has
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accrued on such Fixed Rate Portion to but not including such Fixed Rate Payment
Date. All past due principal of and past due interest on the Loan shall bear
interest on each day outstanding at the Late Payment Rate in effect on such
day, and such interest shall be due and payable daily as it accrues.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum interest which, under applicable law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how
interest accrues hereon.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Note jointly and severally agree
to pay reasonable attorneys' fees and collection costs to the holder hereof in
addition to the principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of dishonor
and nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in
any of its terms, provisions and covenants, or any releases or substitutions of
any security, or any delay, indulgence or other act of any trustee or any
holder hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
3
<PAGE> 66
EXHIBIT B
REQUEST FOR ADVANCE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 1995 (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
are used herein with the meanings given them in the Agreement. Pursuant to the
terms of the Agreement Borrower hereby requests Lenders to make Advances to
Borrower in the principal amount of $ __________ and specifies ____________,
19__, as the date Borrower desires for Lenders to make such Advances and for
Agent to deliver to Borrower the proceeds thereof.
To induce Lenders to make such Advances, Borrower hereby represents,
warrants, acknowledges, and agrees that:
(a) The officer of Borrower signing this instrument is the
duly elected, qualified and acting officer of Borrower as indicated
below such officer's signature hereto having all necessary authority
to act for Borrower in making the request herein contained.
(b) The representations and warranties of Borrower set forth
in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on
which such representations and warranties are based have been changed
by the extension of credit under the Agreement), with the same effect
as though such representations and warranties had been made on and as
of the date hereof.
(c) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 9.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Advance
requested hereby. Borrower will use the Advance hereby requested in
compliance with Section 2.3 of the Agreement.
(d) Except to the extent waived in writing as provided in
Section 9.1(a) of the Agreement, Borrower has performed and complied
with all agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior to the date hereof,
and each of the conditions precedent to Advances contained in the
Agreement remains satisfied.
(e) The unpaid principal balance of the Loan, after the
making of the Advance requested hereby, will not be in excess of the
Borrowing Base on the date requested for the making of such Advance.
(f) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any
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other means not provided for in Section 9.1(a) of the Agreement. The
Agreement and the other Loan Documents are hereby ratified, approved,
and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
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<PAGE> 68
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
3
<PAGE> 69
EXHIBIT C
RATE ELECTION
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 1995 (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
and which are used but not defined herein are used herein with the meanings
given them in the Agreement. Pursuant to the terms of the Agreement Borrower
hereby elects a Tranche of Fixed Rate Portions in the aggregate amount of
$__________ with an Interest Period beginning on _______________ and continuing
for a period of _________________.
To meet the conditions set out in the Agreement for the making of such
election, Borrower hereby represents, warrants, acknowledges and agrees that:
(a) The officer of Borrower signing this instrument is a duly
elected, qualified and acting ____________ of Borrower, having all
necessary authority to act for Borrower in making the election herein
contained.
(b) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 9.1(a) of the Agreement.
(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
9.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF this instrument is executed as of ________________.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
1
<PAGE> 70
EXHIBIT D
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 199___ (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"), which Agreement is in full force and effect
on the date hereof. Terms which are defined in the Agreement are used herein
with the meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 5.1(b)(ii) of the
Agreement. Together herewith Borrower is furnishing to Agent and each Lender
Borrower's *[audited/unaudited] financial statements (the "Financial
Statements") as at ____________ (the "Reporting Date"). Borrower hereby
represents, warrants, and acknowledges to Agent and each Lender that:
(a) the officer of Borrower signing this instrument is the
duly elected, qualified and acting ____________ of Borrower and as
such is Borrower's chief financial officer;
(b) the Financial Statements are accurate and complete and
satisfy the requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing
Borrower's compliance as of the Reporting Date with the requirements
of Sections ____________ of the Agreement *[and Borrower's
non-compliance as of such date with the requirements of Section(s)
____________ of the Agreement];
(d) on the Reporting Date Borrower was, and on the date
hereof Borrower is, in full compliance with the disclosure
requirements of Section 5.1(d) of the Agreement, and no Default
otherwise existed on the Reporting Date or otherwise exists on the
date of this instrument *[except for Default(s) under Section(s)
____________ of the Agreement, which [is/are] more fully described on
a schedule attached hereto].
The officer of Borrower signing this instrument hereby certifies that
he has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his opinion necessary to enable him
to express an informed opinion with respect to the above representations,
warranties and acknowledgments of Borrower and, to the best of his knowledge,
such representations, warranties, and acknowledgments are true, correct and
complete.
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IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
2
<PAGE> 72
EXHIBIT E
ENVIRONMENTAL COMPLIANCE CERTIFICATE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of July ___, 1995 (as from time to time amended, the
"Agreement"), by and among HarCor Energy, Inc. ("Borrower"), Internationale
Nederlanden (U.S.) Capital Corporation, as Agent ("Agent") and certain
financial institutions ("Lenders"). Terms which are defined in the Agreement
are used herein with the meanings given them in the Agreement. The
undersigned, being the *[President/Chief Executive Officer] of Borrower, hereby
certifies to each Lender as follows:
1. For the Fiscal Year ending immediately prior to the
date hereof, Borrower has complied and is complying with Section
5.1(m) of the Credit Agreement *[except as set forth in Schedule I
attached hereto];
2. To the best knowledge of the undersigned after due
inquiry, Borrower is on the date hereof in compliance with all
applicable Environmental Laws, noncompliance with which could have a
material adverse effect on the financial condition or operations of
Borrower;
3. Borrower has taken (and continues to take) steps to
minimize the generation of potentially harmful effluents;
4. Borrower has established an ongoing program of
conducting an internal audit of each operating facility of Borrower to
identify actual or potential environmental liabilities which could
have a material adverse effect on the financial condition or
operations of Borrower; and
5. Borrower has established an ongoing program of
training its employees in issues of environmental, health and safety
compliance, and Borrower presently has one or more individuals in
charge of implementing such training program.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry and consultation with the
operating officers of Borrower, the above representations, warranties,
acknowledgements, and agreements of Borrower are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
HARCOR ENERGY, INC.
By:
-----------------------------------
Name:
Title:
1
<PAGE> 1
[HARCOR ENERGY, INC. LETTERHEAD]
Contact:
Mark G. Harrington, Chairman & CEO
Francis H. Roth, President and COO
713/961-1804
HarCor Energy, Inc. Announces
Private Placement of $65 Million of Senior Secured Notes with Warrants
HOUSTON, TEXAS, July 20, 1995 -- HarCor Energy, Inc. (NASDAQ:HARC)
announced today that it has priced the private placement of 65,000 Units
consisting of an aggregate of $65 million of 14-7/8% Senior Secured Notes due
2002 with warrants to purchase 1,430,000 shares of HarCor's Common Stock, at
$3.85 per share.
The Company will use the net proceeds of approximately $61.6 million
from the private placement primarily for the repayment of existing bank debt,
retirement of its Series D Preferred Stock, and development of its Bakersfield
Properties.
The Units, the Notes and the Warrants have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold in the United States without registration under the Securities
Act or pursuant to an applicable exemption therefrom. Closing is anticipated
to occur on July 24.
HarCor Energy, Inc. is an independent energy company engaged in the
acquisition, development and production of crude oil and natural gas within the
United States.
*****
- --------------------------------------------------------------------------------
Five Post Oak Park, Suite 2220, Houston, TX 77027-3413 Phone (713) 961-1804
Fax (713) 961-9773
<PAGE> 1
[HARCOR ENERGY LETTERHEAD]
Contact:
Mark G. Harrington, Chairman & CEO
Francis II, Roth, President and COO
713/961-1804
HarCor Energy, Inc. Announces
Completion of Private Placement of $65 Million of
Senior Secured Notes with Warrants
HOUSTON, TEXAS, July 25, 1995 -- HarCor Energy, Inc. (NASDAQ:HARC)
announced today that it has completed the private placement of 65,000 Units
consisting of an aggregate of $65 million of 14-7/8% Senior Secured Notes due
2002 with warrants to purchase 1,430,000 shares of HarCor's Common Stock,
at $3.85 per share.
The Company immediately used $50.3 million of the total net proceeds of
approximately $61.6 million from the private placement to repay existing bank
debt and redeem its Series D Preferred Stock. The Company will use the balance
of the proceeds in the development of its Bakersfield Properties.
The Units, the Notes and the Warrants have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold in the United States without registration under the Securities
Act or pursuant to an applicable exemption therefrom.
HarCor Energy, Inc. is an independent energy company engaged in the
acquisition, development and production of crude oil and natural gas within the
United States.
