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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 22, 1999
Key Energy Services, Inc.
__________________________________________________
(Exact Name of Registrant as Specified in Charter)
Maryland 1-8038 04-2648081
____________________________ _____________ ___________________
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Two Tower Center, 20th Floor, East Brunswick, New Jersey 08816
________________________________________________________ __________
(Address of Principal Executive Offices) (Zip Code)
Registrant"s Telephone number, including area code (732) 247-4822
_______________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
As more fully described in the Press Release attached hereto as Exhibit A
which is incorporated herein by reference (the "Press Release"), on January 22,
1999, the Registrant announced that it completed a private offering of 150,000
units, consisting of $150,000,000 of its 14% senior subordinated notes due 2009
and 150,000 warrants to purchase 2,032,565 shares of common stock at an exercise
price of $4.88125 (the "Offering"). The Registrant also disclosed in the Press
Release information concerning certain non-recurring charges, as well as its
expectations concerning its financial results for the second quarter of fiscal
1999.
In connection with the Offering, the Registrant entered into certain
transaction documents, attached hereto as Exhibits B through F, and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(3) The following exhibits are filed with this Current Report on Form 8-K:
99(a) Press Release dated January 25, 1999 issued by Registrant
99(b) Purchase Agreement dated January 19, 1999 by and among the
Registrant, certain of its subsidiaries, Lehman Brothers Inc.,
Bear, Stearns & Co. Inc., First Albany Corporation, Dain Rauscher
Wessels, a division of Dain Rauscher Incorporated
99(c) Warrant Agreement dated as of January 22, 1999 between the
Registrant and The Bank of New York, a New York banking corporation
as warrant agent .
99(d) Indenture dated as of January 22, 1999 between the Registrant and
The Bank of New York as trustee.
99(e) Registration Rights Agreement (relating to the Notes) dated January
22, 1999 by and among the Registrant, certain of its subsidiaries,
and Lehman Brothers Inc., Bear, Stearns & Co. Inc., F.A.C/Equities,
a division of First Albany Corporation, and Dain Rauscher Wessels, a
division of Dain Rauscher Incorporated.
99(f) Warrant Registration Rights Agreement dated January 22, 1999, by and
among the Registrant and Lehman Brothers Inc., Bear, Stearns & Co.
Inc., F.A.C/Equities, a division of First Albany Corporation, and
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
KEY ENERGY SERVICES, INC.
February 3, 1999 By: /s/ Francis D. John
-----------------------------
Francis D. John
Chairman, President and
Chief Executive Officer
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EXHIBIT INDEX
99(a) Press Release dated January 25, 1999 issued by Registrant
99(b) Purchase Agreement dated January 19, 1999 by and among the
Registrant, certain of its subsidiaries, Lehman Brothers Inc.,
Bear, Stearns & Co. Inc., First Albany Corporation, Dain Rauscher
Wessels, a division of Dain Rauscher Incorporated
99(c) Warrant Agreement dated as of January 22, 1999 between the
Registrant and The Bank of New York, a New York banking corporation
as warrant agent .
99(d) Indenture dated as of January 22, 1999 between the Registrant and
The Bank of New York as trustee.
99(e) Registration Rights Agreement (relating to the Notes) dated January
22, 1999 by and among the Registrant, certain of its subsidiaries,
and Lehman Brothers Inc., Bear, Stearns & Co. Inc., F.A.C/Equities,
a division of First Albany Corporation, and Dain Rauscher Wessels, a
division of Dain Rauscher Incorporated.
99(f) Warrant Registration Rights Agreement dated January 22, 1999, by and
among the Registrant and Lehman Brothers Inc., Bear, Stearns & Co.
Inc., F.A.C/Equities, a division of First Albany Corporation, and
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated.
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EXHIBIT 99(a)
[KEY LETTERHEAD]
For Immediate Release: Contact: Jim Dean
Monday, January 25, 1999 (732) 247-4822
KEY ENERGY COMPLETES REFINANCING OF BRIDGE LOAN FACILITY; REDUCES
NON-RECURRING CHARGES; UPDATES OUTLOOK FOR
SECOND QUARTER
EAST BRUNSWICK, N.J., Jan. 25, 1999 - Key Energy Services, Inc. (NYSE: KEG)
announced today that on January 22, 1999 it completed the private offering of
150,000 units consisting of $150,000,000 of its 14% senior subordinated notes
due 2009 and 150,000 warrants to purchase 2,032,565 shares of common stock at an
exercise price of $4.88125 per share. The cash proceeds from the offering were
used to repay substantially all of the remaining $148.6 million principal amount
(plus accrued interest) owed under the company's bridge loan facility arranged
in connection with the acquisition of Dawson Production Services, Inc. in
September 1998.
The company also announced that it expects to reduce its previously announced
non-recurring pretax charge of up to approximately $15 million to non-recurring
pretax charges of approximately $12.8 million, consisting of an estimated $6.7
million of restructuring costs which will be reported as a non-recurring charge
during the second quarter ended December 31, 1998 and an estimated $6.1 million
related to the non-cash write-off of unamortized debt issuance costs of the
bridge loan facility which will be reported as an extraordinary item in the
third quarter ending March 31, 1999.
While results for the second quarter have not yet been consolidated or reviewed,
the company currently expects its second quarter operating loss (excluding
non-recurring charges), to be in the range of ($0.25) to ($0.30) per basic
share. The loss is expected to be greater than the previously announced range of
($0.12) to ($0.15) per basic share as a result of market conditions that
weakened during the last three weeks of December, including a near shutdown of
drilling, workovers and completions in oil regions. In addition, the company
expects reported EBITDA for the second quarter to be approximately $25 million
and after-tax cash flow per share (excluding non-recurring charges) to be in the
range of $0.55 to $0.60 per basic share, versus the previously announced
expectation that it would exceed $0.80 per basic share. The company's financial
results for the second quarter are expected to be announced during the week of
February 8, 1999.
Thus far in January, the company has experienced improvement in rig utilization
as evidenced by sequential weekly increases in rig hours, representing a marked
increase in rig utilization relative to levels achieved at the end of December.
As a result of an increase in capital spending by major and independent oil
producers in January over November and December levels, the company believes a
modest recovery will continue to take place. A substantial recovery, however,
remains more difficult to predict and is
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based in any event upon a sustained recovery in oil prices leading to material
increases in spending by oil and gas firms that operate in the company's
markets.
Reacting to the prolonged industry downturn, the company has taken the following
steps in recent months: (i) a reduction in operating costs expected to exceed
$20 million on an annualized basis; (ii) modifications to certain of its senior
credit facility financial covenants giving the company additional flexibility to
endure the current industry downturn; (iii) a reduction in expected annualized
capital expenditures below $30 million; and (iv) the aforementioned refinancing
of the bridge loan facility. As a result of these measures, the company believes
that it has positioned itself to withstand the current industry downturn. Until
such time as oil prices recover to historically normal levels, the company
anticipates that in the interim it will continue to generate positive free cash
flow, despite the possibility of also reporting quarterly net losses.
Key Energy is the world's largest rig-based well servicing firm, owning
approximately 1,420 well service rigs, 1,130 oilfield trucks and 75 drilling
rigs. The company provides diversified energy operations including well
servicing, contract drilling and other oilfield services and oil and natural gas
production. The company has operations in all major onshore oil and gas
producing regions of the continental United States and in Argentina and Canada.
Certain comments contained in this news release concerning the business
outlook and anticipated financial results of the company constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to the safe harbor created by that
act. Whenever possible, the company has identified these "forward-looking
statements" by words such as "expects", "believes", "anticipates" and similar
phrases. The forward-looking statements are based upon management's expectations
and beliefs and, although these statements are based upon reasonable
assumptions, there can be no assurances that the financial results or components
will be as estimated. The company assumes no obligation to update publicly any
forward-looking statements whether as a result of new information, future events
or otherwise.
- # # # -
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EXHIBIT 99(b)
KEY ENERGY SERVICES, INC.
$150,000,000
150,000 UNITS CONSISTING OF 14% SENIOR SUBORDINATED NOTES
DUE 2009 AND 150,000 WARRANTS TO PURCHASE 2,032,565 SHARES OF
COMMON STOCK
PURCHASE AGREEMENT
January 19, 1999
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
FIRST ALBANY CORPORATION
DAIN RAUSCHER WESSELS, a division of
Dain Rauscher Incorporated
C/O LEHMAN BROTHERS, INC.
THREE WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10285
Ladies and Gentlemen:
Key Energy Services, Inc., a Maryland corporation (the "COMPANY"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
you, as the initial purchasers (the "INITIAL PURCHASERS"), 150,000 units (the
"UNITS"), each consisting of $1,000 aggregate principal amount of 14% Senior
Subordinated Notes due 2009 (the "SERIES A NOTES") and one warrant
(collectively, the "WARRANTS") to purchase 13.5504 shares of the common stock of
the Company, par value $0.10 per share (the "COMMON STOCK"), subject to the
terms and conditions set forth herein. Shares of Common Stock of the Company
issuable upon exercise of the Warrants are collectively referred to herein as
the "WARRANT SHARES." The Units, the Notes (as defined), the Warrants and the
Warrant Shares are collectively referred to herein as the "SECURITIES." The
Securities will have terms and provisions which are summarized in the Offering
Memorandum dated as of the date hereof. The Series A Notes are to be issued
pursuant to an Indenture (the "INDENTURE") to be entered into between the
Company, the Guarantors (as defined) and The Bank of New York, as trustee. The
Company's obligations under the Series A Notes, including the due and punctual
payment of interest on the Notes, will be unconditionally guaranteed by Yale E.
Key, Inc., a Texas corporation; Key Energy Drilling Inc., a Delaware
corporation; WellTech Eastern, Inc., a Delaware corporation; Odessa Exploration
Incorporated, a Delaware corporation; Kalkaska Oilfield Services, Inc., a
Michigan corporation; Well-Co Oil Service, Inc., a Nevada corporation; Patrick
Well Service, Inc., a Kansas corporation; Mosley Well Service, Inc., a Louisiana
corporation; Ram Oil Well Service, Inc., a New Mexico corporation; Rowland
Trucking Co., Inc., a New Mexico corporation; Landmark Fishing & Rental, Inc.,
an Oklahoma corporation; Dunbar Well Service, Inc., a Colorado corporation;
Frontier Well Service, Inc., a Wyoming corporation; Key Rocky Mountain, Inc., a
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Delaware corporation; Key Four Corners, Inc., a Delaware corporation; Jeter
Service Co., an Oklahoma corporation; Jeter Well Service, Inc., an Oklahoma
corporation; Jeter Transportation, Inc., an Oklahoma corporation; Industrial
Oilfield Supply, Inc., an Oklahoma corporation; Brooks Well Servicing, Inc., a
Delaware corporation; Updike Brothers, Inc., a Wyoming corporation; J.W. Gibson
Well Service Company, a Delaware corporation; Key Energy Services -- South
Texas, Inc., a Delaware corporation; Key Energy Services -- California, Inc., a
Delaware corporation; Watson Oilfield Service & Supply, Inc., a Delaware
corporation; WellTech Mid-Continent, Inc., a Delaware corporation; Dawson
Production Management, Inc., a Delaware corporation; Dawson Production Taylor,
Inc., a Delaware corporation; Dawson Production Acquisition Corp., a Delaware
corporation; and Dawson Production Partners, L.P., a Delaware limited
partnership (the "GUARANTORS"). The Company's obligations under the Series B
Notes (as defined), including the due and punctual payment of interest on the
Notes, will be unconditionally guaranteed by the Guarantors. As used herein, the
term Notes shall include the subsidiary guarantees thereof by the Guarantors,
unless the context otherwise requires. The Series A Notes and the Series B Notes
issuable in exchange therefor are collectively referred to herein as the
"NOTES." The Warrants will be issued pursuant to a warrant agreement to be dated
the Closing Date (the "WARRANT AGREEMENT") between the Company and The Bank of
New York, as warrant agent (the "WARRANT AGENT"). This is to confirm the
agreement concerning the purchase of the Units from the Company by the Initial
Purchasers. Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indenture.
The Units will be offered and sold to the Initial Purchasers pursuant to
an exemption from the registration requirements under the Securities Act of
1933, as amended (the "ACT"). The Company has prepared a preliminary offering
memorandum, dated January 4, 1999 (the "PRELIMINARY OFFERING MEMORANDUM"), and
an offering memorandum, dated the date hereof (the "OFFERING MEMORANDUM"),
setting forth information regarding the Company and relating to the Units. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto.
The Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum and the Offering Memorandum in connection with the offering
and resale of the Units by the Initial Purchasers.
It is understood and acknowledged that upon original issuance thereof, and
until such time as the same is no longer required under the applicable
requirements of the Act, the Securities (and all securities issued in exchange
therefor or in substitution thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT'), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF
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THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)
(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULES 903 OR 904 UNDER THE SECURITIES ACT, OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY, OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
In addition, it is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, the Securities (and all securities issued in
exchange therefor or in substitution thereof) sold by you in reliance on
Regulation S under the Act ("REGULATION S") shall bear the following legend:
HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT.
You have represented and warranted to the Company that you will make
offers (the "EXEMPT RESALES") of the Units purchased by you hereunder on the
terms set forth in the Offering Memorandum solely to (i) persons whom you
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBS") and (ii) to persons other than U.S. persons in
offshore transactions meeting the requirements of Rule 903 or 904 of Regulation
S (such persons specified in clauses (i) and (ii) being referred to herein as
the "ELIGIBLE PURCHASERS"). As used herein, the terms "offshore transaction" and
"U.S. person" have the respective meanings given to them in Regulation S. You
will offer the Units to Eligible Purchasers initially at a price equal $1,000
per Unit. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes, will
have the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will
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agree to file with the Securities and Exchange Commission (the "COMMISSION")
under the circumstances set forth therein (i) a registration statement under the
Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to the Company's 14%
Series B Notes to be offered in exchange for the Series A Notes (the "SERIES B
NOTES") (such offer to exchange being referred to as the "EXCHANGE OFFER") and
(ii) if applicable, a shelf registration statement pursuant to Rule 415 under
the Act (the "SHELF REGISTRATION STATEMENT" and, together with the Exchange
Offer Registration Statement, the "REGISTRATION STATEMENTS") relating to the
resale by certain holders of the Series A Notes, and to use their reasonable
best efforts to cause such Registration Statements to be declared and remain
effective and usable for the periods specified in the Registration Rights
Agreement and to consummate the Exchange Offer.
Holders (including subsequent transferees) of the Warrants and the Warrant
Shares will have the registration rights set forth in the Warrant registration
rights agreement, dated the Closing Date, between the Company and the Warrant
Agent (the "WARRANT REGISTRATION RIGHTS AGREEMENT") in form and substance
reasonably satisfactory to the Initial Purchasers. Pursuant to the Warrant
Agreement, the Company will agree to file a shelf registration statement (the
"WARRANT REGISTRATION STATEMENT") relating to the resale by certain holders of
the Warrants and the issuance of the Warrant Shares upon exercise of the
Warrants, and to use its reasonable best efforts to cause such Warrant
Registration Statement to be declared and remain effective and usable for the
periods specified in the Warrant Registration Rights Agreement.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
GUARANTORS. The Company and each of the Guarantors represents, warrants and
agrees that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Units have been prepared by the Company for use by the Initial
Purchasers in connection with the Exempt Resales. No order or decree preventing
the use of the Preliminary Offering Memorandum or the Offering Memorandum, or
any order asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act has been issued and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the Closing Date,
did not or will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
(c) The market-related and customer-related data and estimates
included in the Preliminary Offering Memorandum and the Offering Memorandum
concerning the Company's market share, competitors' equipment, customer needs
and the oil and gas industry, are based on or derived from sources which the
Company believes to be reliable and accurate.
(d) The Company and each of its subsidiaries (as defined in Section
15) have been
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duly incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing as foreign corporations in
each jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, except
where the failure to so register or qualify or to be in good standing would not
reasonably be expected to have a material adverse effect on the consolidated
financial condition, business, properties or results of operations of the
Company and its subsidiaries taken as a whole, (a "Material Adverse Effect"),
and have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged.
(e) The Company has an authorized capitalization as set forth in the
Offering Memorandum, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the Offering
Memorandum; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable and (except for directors' qualifying shares and except as
set forth in the Offering Memorandum) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims (except
liens held by PNC Bank pursuant to the Credit Facility, as defined in the
Offering Memorandum).
(f) The Company has all requisite power and authority to execute,
deliver and perform its obligations under the Notes, the Warrant Agreement, the
Warrant Registration Rights Agreement and the Warrants.
(g) The Company and each of the Guarantors has all requisite power
and authority to execute, deliver and perform its obligations under this
Agreement, the Indenture and the Registration Rights Agreement.
(h) The Indenture has been duly and validly authorized by the
Company and each of the Guarantors, and upon its execution and delivery and,
assuming due authorization, execution and delivery by the Trustee, will
constitute the valid and binding agreement of the Company and each of the
Guarantors, enforceable against the Company and each of the Guarantors in
accordance with its terms, subject to the qualification that the enforceability
of the Company's and the Guarantors' obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles; no qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act") is required in connection
with the offer and sale of the Series A Notes contemplated hereby or in
connection with the Exempt Resales. The Offering Memorandum contains an accurate
summary, in all material respects, of the terms of the Indenture.
(i) The Company has duly and validly authorized the issuance of the
Series A Notes and the Warrants as a Unit. When the Units are issued and
delivered to and paid for by the Initial Purchasers in accordance with the terms
of this Agreement, the Units will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to the
qualification
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that the enforceability of the Company's obligations thereunder may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors' rights generally and by
general equitable principles. The Offering Memorandum contains an accurate
summary, in all material respects, of the terms of the Units.
(j) The Series A Notes have been duly and validly authorized by the
Company, and when duly executed by the Company in accordance with the terms of
the Indenture and, assuming due authentication of the Series A Notes by the
Trustee, upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, subject to the qualification that the enforceability of the
Company's obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles. On
the Closing Date, the Series A Notes will conform as to legal matters, in all
material respects, to the description thereof contained in the Offering
Memorandum.
(k) The Series B Notes have been duly and validly authorized by the
Company, and if and when duly issued and authenticated in accordance with the
terms of the Indenture and delivered in accordance with the Registration Rights
Agreement, will constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture, enforceable against the Company in accordance
with their terms, subject to the qualification that the enforceability of the
Company's obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
(l) The Warrants have been duly authorized by the Company, and will
have been validly delivered by the Company as of the Closing Date. When the
Warrants are issued, the Warrants will be the valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms,
subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles. The Offering
Memorandum contains an accurate summary, in all material respects, of the terms
of the Warrants.
(m) The Warrant Shares have been duly and validly authorized for
issuance by the Company, and when issued in accordance with the terms of the
Warrant Agreement will be fully paid and nonassessable and will not be subject
to any preemptive or similar rights. The Offering Memorandum contains an
accurate summary, in all material respects, of the terms of the Warrant Shares.
(n) This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors, and (assuming due execution and
delivery by the Initial Purchasers) will constitute a valid binding agreement of
the Company and each of the Guarantors, enforceable against the Company and each
of the Guarantors in accordance with its terms, subject
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to the qualification that the enforceability of the Company's or the Guarantors'
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles.
(o) The Warrant Agreement has been duly and validly authorized by
the Company and, when duly executed and delivered by the Company, and (assuming
due execution and delivery by the Warrant Agent) will be a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles. The Offering
Memorandum contains an accurate summary, in all material respects, of the terms
of the Warrant Agreement.
(p) The Registration Rights Agreement has been duly and validly
authorized by the Company and each of the Guarantors, and when executed and
delivered by the Company and each of the Guarantors in accordance with its terms
(assuming due execution and delivery by the Initial Purchasers), will constitute
the valid and binding obligation of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in accordance with
its terms, subject to the qualification that enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditor's rights generally and by general equitable principles.
(q) The Warrant Registration Rights Agreement has been duly and
validly authorized by the Company and, when duly executed and delivered by the
Company, and (assuming due execution and delivery by the Initial Purchasers)
will be a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.
(r) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Warrant Registration Rights Agreement, the
Warrant Agreement, the Indenture and the issuance of the Securities by the
Company, the execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement by the each of the Guarantors
and the consummation of the transactions contemplated hereby and thereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, (i) any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, that would have a Material Adverse
Effect, (ii) the provisions of the charter or by-laws of the Company or any of
its subsidiaries, or (iii) any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets, that would have a
Material Adverse Effect; and except for the registration of the Warrants and
issuance of Warrant Shares upon exercise
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<PAGE> 8
of the Warrants and the registration of the Series B Notes under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws and the listing of the Warrant Shares on the New York Stock
Exchange, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the Registration
Rights Agreement, the Subsidiary Guarantees or the Indenture by the Company and
the Guarantors and the consummation of the transactions contemplated hereby and
thereby.
(s) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person which would require the Company
to include such securities in the securities registered pursuant to the
Registration Statements or to include the Securities in any securities being
registered pursuant to any other registration statement filed by the Company
under the Act.
(t) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Units to
violate, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(u) Other than as set forth in the Offering Memorandum, (a) neither
the Company nor any of its subsidiaries has sustained, since the date of the
latest audited financial statements included in the Offering Memorandum, any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree; and, (b) since the date of the
latest audited financial statements included in the Offering Memorandum, there
has not been any material change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any Material Adverse Effect, or any
development involving a prospective Material Adverse Effect.
(v) The financial statements (including the related notes and
supporting schedules) included in the Offering Memorandum present fairly, in all
material respects, the financial condition and results of operations of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as otherwise stated therein and in the case of unaudited
financial statements, subject to year-end audit adjustments.
(w) The consolidated historical financial statements and, pro forma
financial information, together with the related notes thereto, set forth in the
Offering Memorandum comply as to form in all material respects with the
requirements of Regulation S-X under the Act applicable to registration
statements under the Act. Such historical financial statements fairly present in
all material respects the financial position of the Company and Dawson
Production Services, Inc. at the respective dates indicated and the results of
operations and cash flows for the respective periods indicated, subject in the
case of unaudited combined financial statements to year-end audit
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<PAGE> 9
adjustments, in each case in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout such periods except as
otherwise stated therein. Such pro forma financial information has been prepared
on a basis consistent with such historical and proposed transactions
contemplated by the Offering Memorandum and this Agreement. The adjusted pro
forma financial information set forth in the Offering Memorandum represents the
Company's best estimate of the results intended to be reflected therein, and the
Company is not aware of any fact or circumstance that would lead it to believe
that any assumption, estimate or calculation under the adjusted pro forma
results is untrue or inaccurate in any material respect. The other financial
information and data included in the Offering Memorandum, historical and pro
forma, are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company.
(x) KPMG LLP, who have certified certain financial statements of the
Company and Dawson Production Services, Inc., whose reports appear in the
Offering Memorandum and who have delivered the initial letter referred to in
Section 7(f) hereof, are independent public accountants as required by the Act
and the rules and regulations thereunder.
(y) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of all
liens (except liens, encumbrances and defects permitted by the Indenture) except
such as are described in the Offering Memorandum or such as do not result in a
Material Adverse Effect and do not materially interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries; and
all real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(z) The Company and each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks that the Company believes
is adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in similar
businesses in similar industries.
(aa) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their respective
businesses, except to the extent that the failure to own or possess any such
rights would not have a Material Adverse Effect and have no reason to believe
that the conduct of their respective businesses will conflict with, and have not
received any notice of any claim of conflict with, any such rights of others.
(bb) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would have a
Material Adverse Effect; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
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<PAGE> 10
(cc) There are no contracts or other documents that would be
required to be described in the Offering Memorandum by the Act or by the rules
and regulations thereunder if such rules and regulations were applicable to the
Offering Memorandum which have not been described in the Offering Memorandum.
(dd) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that would be required
to be described in the Offering Memorandum pursuant to Regulation S-K of the Act
if Regulation S-K were applicable to the Offering Memorandum, which is not so
described.
(ee) No labor disturbance by the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is imminent which
would have a Material Adverse Effect.
(ff) The Company and its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or its subsidiaries would have any liability; the
Company and its subsidiaries have not incurred and do not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "pension plan" for which the
Company or its subsidiaries would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and, to the Company's knowledge, nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
(gg) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes due thereon other than those being contested in good faith and for
which reserves have been provided in accordance with GAAP, those currently
payable without penalty or interest, or the nonpayment of which would not have a
Material Adverse Effect. No tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had a Material Adverse Effect on
the Company and its subsidiaries (nor does the Company have any knowledge of any
tax deficiency which, if determined adversely to the Company or any of its
subsidiaries, would have such a Material Adverse Effect).
(hh) Since the date of the Preliminary Offering Memorandum through
the date hereof, and except as may otherwise be disclosed in the Offering
Memorandum or pursuant to the 1992 reorganization of the Company, the Company
has not (i) issued or granted any securities, (ii) incurred any material
liability or obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business, (iii)
entered into any material transaction not in the ordinary course of business or
(iv) declared or paid any dividend on its capital
14
<PAGE> 11
stock.
(ii) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's authorization
and (B) transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets.
(jj) To the knowledge of the Company after due inquiry, neither the
Company nor any of its subsidiaries, nor any director, officer, agent, employee
or other person associated with or acting on behalf of the Company or any of its
subsidiaries, has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(kk) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(ll) Neither the Company nor any subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the Commission thereunder.
(mm) The Company does not own more than 1% of the capital stock or
other equity interests of any corporation or entity other than its subsidiaries
or as disclosed in the Offering Memorandum.
(nn) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation
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<PAGE> 12
D ("REGULATION D") under the Act) of the Company, other than the Initial
Purchasers, has directly, or through any agent (provided that no representation
is made as to the Initial Purchasers or any person acting on their behalf), (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Act) which is or could be integrated
with the offering and sale of the Units in a manner that would require the
registration of the Securities under the Act or (ii) engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Units. No securities of the same class as
the Securities have been issued and sold by the Company, other than Common Stock
which was not issued in a public offering or which was the subject of any
general solicitation of the type described in clause (ii) above, within the
six-month period immediately prior to the date hereof.
(oo) Except as permitted by the Act, the Company has not distributed
and, prior to the Closing Date will not distribute, any offering material in
connection with the offering and sale of the Units other than the Preliminary
Offering Memorandum and Offering Memorandum.
(pp) When the Units are issued and delivered pursuant to this
Agreement, such Units will not be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or that are quoted in a United States
automated inter-dealer quotation system.
(qq) None of the Company or any of its affiliates or any person
acting on its or their behalf has engaged or will engage during the applicable
Distribution Compliance Period in any directed selling efforts within the
meaning of Rule 902(c) of Regulation S with respect to the Units, and the
Company and its affiliates and all persons acting on its or their behalf have
complied with and will comply with the offering restrictions requirements of
Regulation S in connection with the offering of the Units outside of the United
States; provided, however, that no representation or covenant is made as to the
Initial Purchasers or any person acting on their behalf.
(rr) The execution and delivery of this Agreement, the Registration
Rights Agreement, the Warrant Agreement, the Warrant Registration Rights
Agreement and the Indenture and the sale of the Units to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code. The representation
made by the Company in the preceding sentence is made in reliance upon and
subject to the accuracy of, and compliance with, the representations and
covenants made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the section entitled "Notice to Investors."
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE INITIAL PURCHASERS.
Each of the Initial Purchasers represents and warrants that:
(a) It is a QIB with such knowledge and experience in financial and
business
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<PAGE> 13
matters as are necessary in order to evaluate the merits and risks of an
investment in the Units.
(b) It (i) is not acquiring the Units with a view to any
distribution thereof or with any present intention of offering or selling any of
the Units in a transaction that would violate the Act or the securities laws of
any State of the United States or any other applicable jurisdiction; (ii) in
connection with the Exempt Resales, will solicit offers to buy the Units only
from, and will offer to sell the Units only to, the Eligible Purchasers in
accordance with this Agreement and on the terms contemplated by the Offering
Memorandum; and (iii) will not offer or sell the Units pursuant to, nor has it
offered or sold the Units by, or otherwise engaged in, any form of general
solicitation or general advertising (within the meaning of Regulation D,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Units.
(c) It understands that the Units have not been and will not be
registered under the Act and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except pursuant to an
exemption from the registration requirements of the Act or outside the U.S. or
to, or for the account or benefit of non-U.S. persons in accordance with
Regulation S. Each Initial Purchaser represents that it has not offered, sold or
delivered the Units, and will not offer, sell or deliver the Units (i) as part
of its distribution at any time or (ii) otherwise until one year after the later
of the commencement of the offering and the Closing Date or such longer period
as may then be applicable under Regulation S (such period, the "Distribution
Compliance Period"), within the United States or to, or for the account or
benefit of U.S. persons, except in accordance with Rule 144A under the Act or
another applicable exemption. Accordingly, each Initial Purchaser represents and
agrees that neither it, its affiliates nor any persons acting on its or their
behalf has engaged or will engage in any directed selling efforts within the
meaning of Rule 902(c) of Regulation S with respect to the Units, and it, its
affiliates and all persons acting on its behalf have complied and will comply
with the offering restriction requirements of Regulation S.
(d) Each Initial Purchaser agrees that at or prior to confirmation
of all sales of the Units pursuant to Regulation S, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Units from it during the Distribution Compliance
Period a confirmation or notice substantially to the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Act"), and may not be
offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until one year (in the case of equity
securities) or 40 days (in the case of debt securities) after the
later of the commencement of the offering or the closing date,
except in either case in accordance with Regulation S (or Rule 144A
if available) under the Act. Terms used above have the meanings
assigned to them in Regulation S."
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<PAGE> 14
Each Initial Purchaser further agrees that it has not entered and
will not enter into any contractual arrangement with respect to the distribution
or delivery of the Units, except with its affiliates or with the prior written
consent of the Company.
(e) Each Initial Purchaser agrees not to cause any advertisement of
the Units to be published in any newspaper or periodical or posted in any public
place and not to issue any circular relating to the Units, except such
advertisements as may be permitted by Regulation S.
(f) The sales of the Units pursuant to Regulation S are "offshore
transactions" and are not part of a plan or scheme to evade the registration
provisions of the Act.
(g) Each Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Section 7 hereof,
counsel to the Company and counsel to the Initial Purchasers will rely upon the
accuracy and truth of the foregoing representations and you hereby consent to
such reliance.
The terms used in this Section 2 that have meanings assigned to them
in Regulation S are used herein as so defined.
3. PURCHASE OF THE UNITS BY THE INITIAL PURCHASERS. The Company hereby
agrees, on the basis of the representations, warranties and agreements of the
Initial Purchasers contained herein and subject to all the terms and conditions
set forth herein, to issue and sell to the several Initial Purchasers and, upon
the basis of the representations, warranties and agreements of the Company and
the Guarantors herein contained and subject to all the terms and conditions set
forth herein, each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $967.67 per Unit, the amount
of Units set forth opposite the name of such Initial Purchaser in Schedule I
hereto. The Company shall not be obligated to deliver any of the Units to be
delivered hereunder except upon payment for all of the Units to be purchased as
provided herein.
4. DELIVERY OF THE UNITS AND PAYMENT THEREFOR.
(a) Delivery to the Initial Purchasers of and payment for the Units
shall be made at the office of Latham & Watkins, 885 Third Avenue, New York, New
York, at 9:00 A.M., New York City time, on January 20, 1999 (the "CLOSING
DATE"). The place of closing for the Units and the Closing Date may be varied by
agreement between the Initial Purchasers and the Company.
(b) The Units will be delivered to the Initial Purchasers against
payment of the purchase price therefor in immediately available funds. The Units
will be evidenced by one or more global securities in definitive form (the
"GLOBAL UNIT") and/or by additional definitive securities, and will be
registered, in the case of the Global Unit, in the name of Cede & Co. as nominee
of The Depository Trust Company ("DTC"), and in the other cases, in such names
and in such denominations as the Initial Purchasers shall request prior to 9:30
A. M., New York City time, on the second business day preceding the Closing
Date. The Units to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date.
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<PAGE> 15
(c) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
the Initial Purchaser hereunder.
5. AGREEMENTS OF THE COMPANY. The Company agrees with each Initial
Purchaser as follows:
(a) The Company will furnish to the Initial Purchasers, without
charge, as of the date of the Offering Memorandum, such number of copies of the
Offering Memorandum, and any amendments or supplements thereto, as they may
reasonably request.
(b) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised.
(c) Prior to the execution and delivery of this Agreement, the
Company shall have delivered or will deliver to the Initial Purchasers, without
charge, in such quantities as the Initial Purchasers shall have requested or may
hereafter reasonably request, copies of the Preliminary Offering Memorandum.
(d) The Company and each of the Guarantors consent to the use, in
accordance with the securities or Blue Sky laws of the jurisdictions in which
the Units are offered by the Initial Purchasers and by dealers, prior to the
date of the Offering Memorandum, of each Preliminary Offering Memorandum so
furnished by the Company and the Guarantors. The Company and each of the
Guarantors consent to the use of the Offering Memorandum in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Units are offered
by the Initial Purchasers and by all dealers to whom Units may be sold, in
connection with the offering and sale of the Units.
(e) If, at any time prior to completion of the distribution of the
Units by the Initial Purchasers to Eligible Purchasers, any event shall occur
that in the judgment of the Company or in the opinion of counsel for the Initial
Purchasers should be set forth in the Offering Memorandum in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the Offering
Memorandum in order to comply with any law, the Company will forthwith prepare
an appropriate supplement or amendment thereto, and will expeditiously furnish
to the Initial Purchasers and dealers a reasonable number of copies thereof.
(f) The Company and each of the Guarantors will cooperate with the
Initial Purchasers and with their counsel in connection with the qualification
of the Units for offering and sale by the Initial Purchasers and by dealers
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may designate and will file such consents to service of process or
other documents necessary or appropriate in order to effect such qualification;
provided, that in no event shall the Company or any of the Guarantors be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Units, in any
jurisdiction where it is not now so subject.
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<PAGE> 16
(g) So long as any of the Units, Notes or Warrants are outstanding,
the Company and the Guarantors at the request of the Initial Purchasers will
furnish to the Initial Purchasers (i) as soon as available, a copy of each
report of the Company mailed to stockholders generally or filed with any stock
exchange or regulatory body and (ii) from time to time such other information
concerning the Company and/or the Guarantors as the Initial Purchasers may
reasonably request.
(h) The Company will apply the net proceeds from the sale of the
Units to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Memorandum under the caption "Use of
Proceeds."
(i) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Company and the Guarantors have
not taken, nor will any of them take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Units to facilitate the sale
or resale of the Units. Except as permitted by the Act, the Company and the
Guarantors will not distribute any offering material in connection with the
Exempt Resales.
(j) The Company will use its reasonable best efforts to permit the
Units, Series A Notes and Warrants to be designated Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") market securities in
accordance with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the PORTAL market and to permit
the Units, Series A Notes and Warrants to be eligible for clearance and
settlement through DTC.
(k) From and after the Closing Date, so long as any of the
Securities are outstanding and are "restricted securities" within the meaning of
the Rule 144(a)(3) under the Act or, if earlier, until two years after the
Closing Date, and during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company and the Guarantors will
furnish to holders of the Securities and prospective purchasers of Securities
designated by such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Act to permit compliance with Rule 144A in connection with resale of
the Securities.
(l) The Company and the Guarantors agree not to sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Act) that would be integrated with the sale of the Units in a
manner that would require the registration under the Act of the sale to the
Initial Purchasers or the Eligible Purchasers of the Units.
(m) The Company and the Guarantors agree to comply in all material
respects with all the terms and conditions of the Indenture, the Warrant
Agreement, the Registration Rights Agreement, the Warrant Registration Rights
Agreement and all agreements set forth in the representation letters of the
Company and the Guarantors to DTC relating to the approval of the Units, Notes
and Warrants by DTC for "book entry" transfer.
(n) The Company and the Guarantors agree to cause the Exchange
Offer, if available, to be made in the appropriate form, as contemplated by the
Registration Rights
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<PAGE> 17
Agreement, to permit registration of the Series B Notes to be offered in
exchange for the Series A Notes, and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(o) The Company and the Guarantors agree that prior to any
registration of the Series B Notes pursuant to the Registration Rights
Agreement, or at such earlier time as may be required, the Indenture shall be
qualified under the 1939 Act and any necessary supplemental indentures will be
entered into in connection therewith.
(p) The Company agrees to cause the filing of the Warrant
Registration Statement, to be made on the appropriate form, as contemplated by
the Warrant Registration Rights Agreement.
(q) The Company and the Guarantors will not voluntarily claim, and
will resist actively all attempts to claim, the benefit of any usury laws
against holders of the Securities.
(r) The Company and the Guarantors will do and perform all things
required or necessary to be done and performed under this Agreement by them
prior to the Closing Date, and to satisfy all conditions precedent to the
Initial Purchasers' obligations hereunder to purchase the Units.
6. EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
the Company agrees to pay all costs, expenses, fees and taxes incident to and in
connection with: (i) the preparation, printing, filing and distribution of the
Preliminary Offering Memorandum and the Offering Memorandum (including, without
limitation, financial statements) and all amendments and supplements thereto
(but not, however, legal fees and expenses of your counsel incurred in
connection therewith), (ii) the preparation, printing (including, without
limitation, word processing and duplication costs) and delivery of this
Agreement, the Indenture, all Blue Sky Memoranda and all other agreements,
memoranda, correspondence and other documents printed and delivered in
connection herewith and with the Exempt Resales (but not, however, legal fees
and expenses of your counsel incurred connection with any of the foregoing other
than fees of such counsel plus reasonable disbursements incurred in connection
with the preparation, printing and delivery of such Blue Sky Memoranda), (iii)
the issuance and delivery by the Company of the Units, (iv) the qualification of
the Units for offer and sale under the securities or Blue Sky laws of the
several states (including, without limitation, the reasonable fees and
disbursements of your counsel relating to such registration or qualification),
(v) furnishing such copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and all amendments and supplements thereto, as may be
reasonably requested for use in connection with the Exempt Resales, (vi) the
preparation of certificates for the Notes, Warrants and Warrant Shares
(including, without limitation, printing and engraving thereof), (vii) the fees,
disbursements and expenses and listing fees in connection with the application
for quotation of the Series A Notes in PORTAL, (ix) all fees and expenses
(including fees and expenses of counsel) of the Company and the Guarantors in
connection with approval of the Units, Notes and Warrants by DTC for
"book-entry" transfer and (x) the performance by the Company and the Guarantors
of their other obligations under this Agreement.
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7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and on the Closing Date (as if made again on and as of such date), of
the representations and warranties of the Company contained herein, to the
performance by the Company and the Guarantors of their respective obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum shall have been printed and copies made
available to you not later than 6:00 p.m., New York City time, on the Business
Day following the date of this Agreement, or at such later date and time as you
may approve in writing.
(b) No Initial Purchaser shall have discovered and disclosed to the
Company on or prior to such Closing Date that the Offering Memorandum or any
amendment or supplement thereto contains an untrue statement of a fact which, in
the opinion of Latham & Watkins, counsel for the Initial Purchasers, is material
or omits to state a fact which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement and the Offering
Memorandum, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Initial Purchasers, and the Company and the
Guarantors shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(d) Porter & Hedges, L.L.P. shall have furnished to the Initial
Purchasers its written opinion, as counsel to the Company, addressed to the
Initial Purchasers and dated such Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, to the effect that:
(i) The Company and each of the Guarantors have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification, except where the failure to so register or qualify or
to be in good standing would not have a Material Adverse Effect, and have
all power and authority necessary to own or hold their respective
properties and conduct the businesses in which they are engaged;
(ii) The Purchase Agreement has been duly authorized, executed
and delivered by the Company and each of the Guarantors and (assuming due
execution and delivery by the Initial Purchasers) constitutes a valid and
legally binding agreement of the Company and each of the Guarantors,
enforceable against each of them in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles;
(iii) The Warrant Agreement has been duly authorized, executed
and delivered
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<PAGE> 19
by the Company and (assuming due authentication, execution and delivery by
the Warrant Agent) constitutes a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles;
(iv) The Indenture has been duly authorized, executed and
delivered by the Company and each of the Guarantors and (assuming due
authentication, execution and delivery by the Trustee) constitutes a valid
and legally binding agreement of the Company and each of the Guarantors,
enforceable against each of them in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles;
(v) The Warrant Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and (assuming due
execution and delivery by the Initial Purchasers) constitutes a valid and
legally binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and by general
equitable principles;
(vi) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and each of the
Guarantors and (assuming due execution and delivery by the Initial
Purchasers) constitutes a valid and legally binding agreement of the
Company and each of the Guarantors, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and by general
equitable principles;
(vii) The Series A Notes have been duly authorized, executed,
authenticated, issued and delivered by the Company as provided in the
Indenture, and constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and by general
equitable principles;
(viii) The Series B Notes have been duly authorized by the
Company, and when executed, authenticated, issued and delivered by the
Company as provided in the Indenture, will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and by general equitable principles;
(ix) The Warrants have been duly authorized, executed,
authenticated, issued and delivered by the Company as provided in the
Warrant Agreement, and constitute valid and
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<PAGE> 20
legally binding obligations of the Company, entitled to the benefits of
the Warrant Agreement and enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles;
(x) When the Units are issued and delivered, such Units will
not be of the same class (within the meaning of Rule 144A under the Act)
as securities of the Company or any Guarantor that are listed on a
national securities exchange registered under Section 6 of the Exchange
Act or that are quoted in a United States automated inter-dealer quotation
system;
(xi) No registration under the Act of the Units is required
for the sale of the Units to you as contemplated hereby or for the Exempt
Resales, assuming (i) that the Eligible Purchasers who buy the Units in
the Exempt Resales are QIBs or persons who are neither (a) U.S. Persons
(as defined in Rule 902 under the Act) nor (b) persons who purchase the
Units for the benefit of such U.S. persons and (ii) the accuracy of your
representations and those of the Company regarding the absence of general
solicitation in connection with the Exempt Resales contained herein;
(xii) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date (except for the financial statements and the notes
thereto and schedules and other financial and accounting data included
therein, as to which no opinion need be expressed), complied with the
requirements of Rule 144A of the Act;
(xiii) The Company has an authorized capitalization as set
forth in the Offering Memorandum, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description thereof
contained in the Offering Memorandum; and all of the issued shares of
capital stock of each Guarantor have been duly and validly authorized and
issued and are fully paid, non-assessable and (except for directors'
qualifying shares are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims (except liens,
encumbrances, equities or claims in favor of PNC Bank pursuant to the
Credit Facility, as defined in the Offering Memorandum);
(xiv) The Indenture, the Warrant Agreement and the Securities
conform in all material respects to the descriptions thereof contained in
the Offering Memorandum;
(xv) Other than (i) the Subordinated Convertible Notes (as
defined in the Indenture), (ii) stock options issued to employees and
directors and (iii) warrants that were issued in connection with the
Company's acquisition of WellTech, Inc. and J.W. Gibson Well Service
Company, there are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any
securities pursuant to the Company's charter or by-laws or any agreement
or other instrument known to such counsel;
(xvi)The statements contained in the Offering Memorandum under
the caption
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<PAGE> 21
"Certain Federal Income Tax Consequences", insofar as they describe
federal statutes, rules and regulations, constitute a fair summary
thereof;
(xvii) The issue and sale of the Units being delivered on the
Closing Date by the Company and the compliance by the Company with all of
the provisions of this Agreement, the Warrant Registration Rights
Agreement, the Registration Rights Agreement, the Warrant Agreement and
the Indenture, the compliance by the Guarantors with all of the provisions
of this Agreement, the Indenture and the Registration Rights Agreement and
the consummation of the transactions contemplated hereby and thereby will
not conflict with or result in a material breach or violation of any of
the terms or provisions of, or constitute a material default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any
of its subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company or
any of its subsidiaries or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets; and, except for the registration of the Series B
Notes and the Warrants and the Warrant Shares under the Act and such
consents, approvals, authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable state securities
laws in connection with the purchase and distribution of the Units by the
Initial Purchasers, and the listing of the Warrant Shares on the New York
Stock Exchange no consent, approval, authorization or order of, or filing
or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement,
the Registration Rights Agreement, the Warrant Registration Rights
Agreement, the Warrant Agreement or the Indenture by the Company, the
execution, delivery and performance of this Agreement, the Indenture and
the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby; and
(xviii) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statements or in any securities being registered pursuant to
any other registration statement filed by the Company under the Act.
In rendering such opinion, such counsel may (i) state that their
opinion is limited to matters governed by the Federal laws of the United States
of America and the laws of the States of New York, Texas, Maryland and Delaware,
and that such counsel is not admitted in Colorado, Kansas, Louisiana, Michigan,
Nevada, New Mexico, Oklahoma and Wyoming and (ii) rely (to the extent such
counsel deems proper and specifies in their opinion), as to matters involving
the application of the laws of Colorado, Kansas, Louisiana, Michigan, Nevada,
New Mexico, Oklahoma and Wyoming upon a review of the relevant statutory law of
such states, the Company and
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<PAGE> 22
Guarantor board of directors and shareholder minutes, certificates provided by
officers of the Company and the Guarantors and certificates or comparable
documents issued by the Secretary of State and other public officials of such
states, provided that such counsel shall state that they believe that both the
Initial Purchasers and they are justified in relying upon such statutes and
certificates.
Such counsel shall also have furnished to the Initial Purchasers a
written statement, addressed to the Initial Purchasers and dated such Closing
Date, in form and substance satisfactory to the Initial Purchasers, to the
effect that (x) such counsel has acted as counsel to the Company on a regular
basis (although the Company is also represented by its General Counsel and
certain other matters, by other outside counsel), has acted as counsel to the
Company in connection with previous acquisitions by the Company and financing
transactions and has acted as counsel to the Company in connection with the
preparation of the Offering Memorandum, and (y) based on the foregoing, no facts
have come to the attention of such counsel which lead it to believe that, as of
its date and as of the date of such opinion that the Offering Memorandum
contained or contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The foregoing opinion and statement may be qualified by a
statement to the effect that such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Offering Memorandum except for the statements made in the Prospectus under the
captions "Description of Other Indebtedness" and "Certain Federal Income Tax
Consequences", insofar as such statements relate to the Securities and concern
legal matters; and it being understood that such counsel need express no belief
as to the financial statements or other financial data included in the Offering
Memorandum.
(e) The Initial Purchasers shall have received from Latham &
Watkins, counsel for the Initial Purchasers, such opinion or opinions, dated
such Closing Date, with respect to the issuance and sale of the Units, the
Offering Memorandum and other related matters as the Initial Purchasers may
reasonably require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(f) At the time of execution of this Agreement, the Initial
Purchasers shall have received from KPMG LLP a letter, in form and substance
satisfactory to the Initial Purchasers, addressed to the Initial Purchasers and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Offering Memorandum, as of a date not more than three days prior to the date
hereof), the conclusions and findings of such firm with respect to the financial
information (including pro forma financial information) and other matters
ordinarily covered by accountants' "comfort letters" to initial purchasers in
connection with securities offerings.
(g) With respect to the letter of KPMG LLP referred to in the
preceding paragraph and delivered to the Initial Purchasers concurrently with
the execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Initial Purchasers a letter (the "bring-down letter")
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<PAGE> 23
of such accountants, addressed to the Initial Purchasers and dated such Closing
Date (i) confirming that they are independent public accountants within the
meaning of the Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letter.
(h) The Company shall have furnished to the Initial Purchasers a
certificate, dated such Closing Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the
Company and the Guarantors in Section 1 are true and correct as of such
Closing Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Sections 7(i) and 7(j) have been
fulfilled; and
(ii) They have carefully examined the Offering Memorandum and,
in their opinion (A) as of its date and as of the Closing Date, the
Offering Memorandum did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, and
(B) since the date hereof no event has occurred which should have been set
forth in a supplement or amendment to the Offering Memorandum.
(i) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Memorandum any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Memorandum or (ii) since such
date there shall not have been any change in the capital stock or long-term debt
of the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Offering Memorandum, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to proceed
with the delivery of the Units being delivered on such Closing Date on the terms
and in the manner contemplated in the Offering Memorandum.
(j) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
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<PAGE> 24
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
(k) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States, or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of a
majority in interest of the several Initial Purchasers, impracticable or
inadvisable to proceed with the delivery of the Units being delivered on such
Closing Date on the terms and in the manner contemplated in the Offering
Memorandum.
(l) The Company and each Guarantor shall have furnished a
Secretary's Certificate in form and substance satisfactory to the Initial
Purchasers.
(m) Latham & Watkins shall have been furnished with such other
documents and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Agreement and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and each Guarantor, jointly and severally, shall
indemnify and hold harmless each Initial Purchaser, its officers and employees
and each person, if any, who controls any Initial Purchaser within the meaning
of the Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Units), to which that Initial Purchaser, officer, employee or controlling person
may become subject, under the Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto or (B) in any blue sky application or other document
prepared or executed by the Company (or
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<PAGE> 25
based upon any written information furnished by the Company) specifically for
the purpose of qualifying any or all of the Securities under the securities laws
of any state or other jurisdiction (any such application, document or
information being hereinafter called a "BLUE SKY APPLICATION"), (ii) the
omission or alleged omission to state in any Preliminary Offering Memorandum or
the Offering Memorandum, or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Initial Purchaser in
connection with, or relating in any manner to, the Units or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company and the
Guarantors shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Initial Purchaser
through its gross negligence or willful misconduct), and shall reimburse each
Initial Purchaser and each such officer, employee or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by that Initial
Purchaser, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Offering Memorandum or the Offering Memorandum, or in
any such amendment or supplement, or in any Blue Sky Application, in reliance
upon and in conformity with written information concerning such Initial
Purchaser furnished to the Company through the Initial Purchasers by or on
behalf of any Initial Purchaser specifically for inclusion therein; and provided
further that with respect to any such untrue statement or omission made in the
Preliminary Offering Memorandum, the foregoing indemnity shall not inure to the
benefit of the Initial Purchasers (or any person who controls an Initial
Purchaser or any officer or director thereof) from whom the person asserting
such loss, claim, damage, liability or action purchased the Units, to the extent
that such sale was an initial resale by the Initial Purchasers and any such
loss, claim, damage, liability or action of the Initial Purchasers is a result
of the fact that both (i) to the extent required by applicable law, a copy of
the Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such securities to such person, and (ii) the
untrue statement or omission in the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was corrected in the Offering Memorandum unless,
in either case, such failure to deliver the Offering Memorandum was a result of
noncompliance by the Company. The foregoing indemnity agreement is in addition
to any liability which the Company or the Guarantors may otherwise have to any
Initial Purchaser or to any officer, employee or controlling person of that
Guarantors.
The Company also agrees to indemnify and hold harmless F-A-C/
Equities, a division of First Albany Corporation ("FIRST ALBANY CORPORATION")
and each person, if any, who controls First Albany Corporation within the
meaning of either Section 15 of the Act, or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages, liabilities and judgments
incurred as a result of First Albany Corporation's participation as a "qualified
independent
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<PAGE> 26
underwriter" within the meaning of Schedule E to the By-Laws of the NASD in
connection with the offering of the Units, except for any losses, claims,
damages, liabilities and judgments resulting from First Albany Corporation, or
such controlling person's willful misconduct or gross negligence.
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the meaning
of the Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer, employee or controlling person may become subject, under the
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement thereto,
or (B) in any Blue Sky Application or (ii) the omission or alleged omission to
state in any Preliminary Offering Memorandum or the Offering Memorandum, or in
any amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the 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 or on behalf of that Initial Purchaser
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer, employee or controlling person for any legal or other
expenses reasonably incurred by the Company or any such director, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Initial Purchaser may otherwise have to the Company or
any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Initial Purchasers shall have the right to employ counsel to represent
jointly the Initial Purchasers and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Initial Purchasers against the
Company under this Section 8 if, in
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the reasonable judgment of the Initial Purchasers, it is advisable for the
Initial Purchasers and those officers, employees and controlling persons to be
jointly represented by separate counsel, and in that event the fees and expenses
of such separate counsel shall be paid by the Company; provided, however, that
if indemnity may be sought pursuant to the second paragraph of Section 8(a),
then, in addition to such separate counsel for the indemnified parties, the
indemnified party shall be liable for the reasonable fees and expenses of not
more than one separate counsel (in addition to any local counsel) for First
Albany Corporation in its capacity as a "qualified independent underwriter" and
all persons, if any, who control First Albany Corporation within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act. In the case of
any such separate counsel for First Albany Corporation in its capacity as
"qualified independent underwriter" and such control persons of First Albany
Corporation, such counsel shall be designated in writing by First Albany
Corporation. No indemnifying party shall (i) without the prior written consent
of the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(c) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, the Guarantors on the one hand and the Initial
Purchaser on the other from the offering of the Units or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, the
Guarantors, on the one hand and the Initial Purchaser on the other with respect
to the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Guarantors,
on the one hand and the Initial Purchaser on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Units purchased under this Agreement (before deducting
expenses) received by the Company, the Guarantors on the one hand, and the total
underwriting discounts and commissions received by the Initial Purchaser with
respect to the Units purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the Units under this Agreement, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company,
31
<PAGE> 28
the Guarantors or the Initial Purchaser, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Initial Purchasers agree that it
would not be just and equitable if contributions pursuant to this Section were
to be determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section shall be deemed to include, for purposes of this Section
8(e), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(e), no Initial Purchasers shall
be required to contribute any amount in excess of the amount by which the total
price at which the Units purchased by it and sold to the Eligible Purchasers was
sold to the Eligible Purchasers exceeds the amount of any damages which such
Initial Purchaser has otherwise paid or become liable to pay by reason of any
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 Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Initial Purchasers' obligations to
contribute as provided in this Section 8(e) are several in proportion to their
respective underwriting obligations and not joint.
(e) The Initial Purchasers severally confirm and the Company
acknowledges that the statements with respect to the offering of the Units by
the Initial Purchasers set forth in the fifth paragraph, the sixth paragraph,
the ninth paragraph, the fifth sentence of the tenth paragraph, the eleventh
paragraph and the fourteenth paragraph under "Plan of Distribution" in the
Offering Memorandum constitute the only information concerning such Initial
Purchasers furnished in writing to the Company by or on behalf of the Initial
Purchasers specifically for inclusion in the Offering Memorandum.
9. DEFAULTING INITIAL PURCHASERS. If, on the Closing Date, any Initial
Purchaser defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Initial Purchasers shall be obligated to purchase
the Units which the defaulting Initial Purchaser agreed but failed to purchase
on such Closing Date in the respective proportions which the amount of Units set
opposite the name of each remaining non-defaulting Initial Purchaser in Schedule
1 hereto bears to the total amount of Units set opposite the names of all the
remaining non-defaulting Initial Purchasers in Schedule 1 hereto; provided,
however, that the remaining non-defaulting Initial Purchasers shall not be
obligated to purchase any of the Units on such Closing Date if the total amount
of Units which the defaulting Initial Purchaser or Initial Purchasers agreed but
failed to purchase on such date exceeds 10% of the total amount of Units to be
purchased on such Closing Date, and any remaining non-defaulting Initial
Purchasers shall not be obligated to purchase more than 110% of the amount of
Units which it agreed to purchase on such Closing Date pursuant to the terms of
Section 3. If the foregoing maximums are exceeded, the remaining non-defaulting
Initial Purchasers, or those other Initial Purchasers satisfactory to the
Initial Purchasers who so agree, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them, all
the Units to be purchased on such Closing Date. If the remaining Initial
Purchasers or other Initial Purchasers satisfactory to the Initial Purchasers do
not elect to purchase the Units which the defaulting Initial Purchaser or
Initial Purchasers agreed but failed to purchase on such
32
<PAGE> 29
Closing Date, this Agreement shall terminate without liability on the part of
any non-defaulting Initial Purchaser or the Company or the Guarantors, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 6 and 11.
Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company for damages caused by its
default. If other Initial Purchasers are obligated or agree to purchase the
Units of a defaulting or withdrawing Initial Purchaser, the Company may postpone
the Closing Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Initial Purchasers may be necessary in the Offering Memorandum or in any other
document or arrangement.
10. TERMINATION. The obligations of the Initial Purchasers hereunder may
be terminated by the Initial Purchasers by notice given to and received by the
Company prior to delivery of and payment for the Units if, prior to that time,
any of the events described in Sections 7(i), 7(j) and 7(k) shall have occurred
or if the Initial Purchasers shall decline to purchase the Units for any reason
permitted under this Agreement.
11. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If the Company shall
fail to tender the Units for delivery to the Initial Purchasers by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
obligations hereunder required to be fulfilled by the Company is not fulfilled,
or if this Agreement shall terminate or shall be terminated after execution and
delivery pursuant to any provisions hereof (otherwise than by notice given by
the Initial Purchasers terminating this Agreement pursuant to Section 10 hereof)
or if this Agreement shall be terminated by the Initial Purchasers because of
any failure or refusal on the part of the Company or any of the Guarantors to
comply with the terms or fulfill any of the conditions of this Agreement, the
Company and the Guarantors will reimburse the Initial Purchasers for all
reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by the Initial Purchasers in connection with
this Agreement and the proposed purchase of the Units, and upon demand the
Company shall pay the full amount thereof to the Initial Purchasers, but without
any further obligation on the part of the Company or any of the Guarantors for
loss of profits or otherwise. If this Agreement is terminated pursuant to
Section 9 by reason of the default of one or more Initial Purchasers, the
Company shall not be obligated to reimburse any Initial Purchaser on account of
those expenses.
12. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 212-526-6588), with a copy, in the case of any notice pursuant to Section
8(d), to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company or the Guarantors shall be delivered or sent
by mail, telex or
33
<PAGE> 30
facsimile transmission to the address of the Company set forth in the Offering
Memorandum, Attention: General Counsel (Fax: 732-247-5148);
provided, however, that any notice to an Initial Purchaser pursuant
to Section 8(d) shall be delivered or sent by mail, telex or facsimile
transmission to such Initial Purchaser at its address set forth in its
acceptance telex to the Initial Purchasers, which address will be supplied to
any other party hereto by the Initial Purchasers upon request. Any such
statements, requests, notices or agreements shall take effect at the time of
receipt thereof. The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial Purchasers
by Lehman Brothers Inc.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of and be binding upon the Initial Purchasers, the Company, the
Guarantors and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Initial Purchaser within the meaning
of Section 15 of the Act and (B) the indemnity agreement of the Initial
Purchasers contained in Section 8(c) of this Agreement shall be deemed to be for
the benefit of directors of the Company, officers and employees of the Company
and any person controlling the Company within the meaning of Section 13 of the
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 13, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
14. QUALIFIED INDEPENDENT UNDERWRITER. First Albany Corporation has agreed
to act as "qualified independent underwriter" within the meaning of the conflict
of interest provisions of the conduct rules of the National Association of
Securities Dealers, Inc.
15. SURVIVAL. The respective indemnities, representations, warranties and
agreements of the Company, the Guarantors and the Initial Purchasers contained
in this Agreement or made by or on behalf on them, respectively, pursuant to
this Agreement, shall survive the delivery of and payment for the Units and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them.
16. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For purposes
of this Agreement, (a) "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading and (b) "subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
19. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
34
<PAGE> 31
EXECUTION COPY
If the foregoing correctly sets forth the agreement among the Company,
the Guarantors and the Initial Purchasers, please indicate your acceptance in
the space provided for that purpose below.
Very truly yours,
KEY ENERGY SERVICES, INC.
By ___________________________________
Name:
Title:
YALE E. KEY, INC., KEY ENERGY DRILLING, INC., WELLTECH EASTERN, INC.,
ODESSA EXPLORATION INCORPORATED, KALKASKA OILFIELD SERVICES, INC.,
WELL-CO OIL SERVICE, INC., PATRICK WELL SERVICE, INC., MOSLEY WELL
SERVICE, INC., RAM OIL WELL SERVICE, INC., ROWLAND TRUCKING CO., INC.,
LANDMARK FISHING & RENTAL, INC., DUNBAR WELL SERVICE, INC., FRONTIER
WELL SERVICE, INC., KEY ROCKY MOUNTAIN, INC., KEY FOUR CORNERS, INC.,
JETER SERVICE CO., JETER WELL SERVICE, INC., JETER TRANSPORTATION,
INC., INDUSTRIAL OILFIELD SUPPLY, INC., BROOKS WELL SERVICING, INC.,
UPDIKE BROTHERS, INC., J.W. GIBSON WELL SERVICE COMPANY, KEY ENERGY
SERVICES--SOUTH TEXAS, INC., KEY ENERGY SERVICES--CALIFORNIA, INC.,
WATSON OILFIELD SERVICE & SUPPLY, INC., WELLTECH MID-CONTINENT, INC.,
DAWSON PRODUCTION MANAGEMENT, INC., DAWSON PRODUCTION TAYLOR, INC.,
DAWSON PRODUCTION ACQUISITION CORP.,
By ___________________________________
Name:
Title:
DAWSON PRODUCTION PARTNERS, L.P.
BY DAWSON PRODUCTION MANAGEMENT INC., ITS SOLE GENERAL PARTNER.
By ___________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 99(c)
WARRANT AGREEMENT
Dated as of January 22, 1999
by and among
KEY ENERGY SERVICES, INC.
and
THE BANK OF NEW YORK
as Warrant Agent
38
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Certain Definitions............................................................................ 1
SECTION 2. Appointment of Warrant Agent................................................................... 6
SECTION 3. Issuance of Warrants; Warrant Certificates..................................................... 6
SECTION 4. Separation of Warrants......................................................................... 19
SECTION 5. Registration and Countersignature.............................................................. 19
SECTION 6. Terms of Warrants; Exercise of Warrants........................................................ 19
SECTION 7. Payment of Taxes............................................................................... 22
SECTION 8. Reservation of Warrant Shares.................................................................. 22
SECTION 9. Obtaining Stock Exchange Listings.............................................................. 23
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares Issuable............................. 23
SECTION 11. Statement on Warrants.......................................................................... 29
SECTION 12. No Dilution or Impairment; Capital and Ownership Structure..................................... 29
SECTION 13. Fractional Interest............................................................................ 30
SECTION 14. Notices to Warrant Holders; No Rights as Shareholders.......................................... 29
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent....................................... 30
SECTION 16. Warrant Agent.................................................................................. 31
SECTION 17. Resignation and Removal of Warrant Agent; Appointment of Successor............................. 34
SECTION 18. Registration................................................................................... 37
SECTION 19. Reports........................................................................................ 37
SECTION 20. Rule 144A and Rule 144......................................................................... 37
SECTION 21. Notices to Company and Warrant Agent........................................................... 38
SECTION 22. Supplements and Amendments..................................................................... 38
SECTION 23. Successors..................................................................................... 39
SECTION 24. Termination.................................................................................... 39
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 25. Governing Law.................................................................................. 39
SECTION 26. Benefits of This Agreement..................................................................... 39
SECTION 27. Counterparts................................................................................... 39
</TABLE>
ii
<PAGE> 4
WARRANT AGREEMENT, dated as of January 22, 1999 (the "AGREEMENT"),
between Key Energy Services, Inc., a Maryland corporation (the "COMPANY"), and
The Bank of New York, a New York banking corporation as warrant agent (the
"WARRANT AGENT").
WHEREAS, the Company proposes to issue warrants, as hereinafter
described (the "WARRANTS"), to purchase up to an aggregate of 2,032,565 shares
of Common Stock (as defined below), in connection with the offering by the
Company of $150.0 million principal amount of the Company's 14% Senior
Subordinated Notes due 2009 (the "NOTES") and 150,000 Warrants of the Company,
each Warrant entitling the holder thereof to purchase 13.5504 shares of Common
Stock of the Company. The Notes and Warrants will be sold in Units (the
"UNITS"), each Unit consisting of $1,000 principal amount of Notes and one
Warrant.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:
SECTION 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"144A GLOBAL WARRANT" means a Global Warrant substantially in the form
of Exhibit A hereto bearing the Global Warrant Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding number of the Warrants sold in reliance on Rule 144A.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such specified Person, whether through the ownership
of voting securities, by agreement or otherwise; provided that beneficial
ownership of 10% or more of the voting securities of a Person shall be deemed to
be control.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Warrant, the rules and procedures
of the Depositary, Euroclear and Cedel Bank that apply to such transfer or
exchange.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CASHLESS EXERCISE" means the exercise of a Warrant without the payment
of cash, by reducing the number of shares of Common Stock that would be
obtainable upon the exercise of a Warrant and payment of the Exercise Price in
cash so as to yield a number of shares of Common
<PAGE> 5
Stock issuable upon the exercise of the Warrant equal to the product of (a) the
number of shares of Common Stock into which the Warrant is exercisable as of the
date of exercise (if the Exercise Price were being paid in cash) and (b) the
Cashless Exercise Ratio.
"CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
date of exercise of a Warrant over the Exercise Price per share as of the such
date and the denominator of which is the Current Market Value per share of the
Common Stock on the date of exercise of a Warrant.
"CEDEL BANK" means Cedel Bank, SA.
"CLOSING DATE" means the date hereof.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON EQUITY SECURITIES" means Common Stock and securities
convertible into, or exercisable or exchangeable for, Common Stock or rights or
options to acquire Common Stock or such other securities, excluding the
Warrants.
"COMMON STOCK" means the common stock, par value $.10 per share, of the
Company.
"COMPANY" means Key Energy Services, Inc., a Maryland corporation, and
its successors and assigns.
"CURRENT MARKET VALUE" for any Share of Common Stock means (A) if the
Common Stock is publicly traded and listed on the Nasdaq National Market or a
national securities exchange, the average closing price as quoted on the Nasdaq
National Market of the Common Stock for each of the 10 trading days immediately
prior to the exercise date (or, if the Common Stock is listed on a national
securities exchange, the average closing price as reported on such national
securities exchange during such 10-trading-day period); or (B) if the Common
Stock is not publicly traded, or otherwise is not listed on a national
securities exchange, the fair market value shall be equal to the value per share
as determined in good faith by the Board of Directors of the Company.
"DEBT REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of January 22, 1999, by and between the Company, the
Guarantors (as defined therein) and the Initial Purchasers relating to the
Notes.
"DEFINITIVE WARRANT" means, individually and collectively, each of the
Restricted Definitive Warrants and the Unrestricted Definitive Warrants in the
form of a certificated Warrant registered in the name of the Holder thereof and
issued in accordance with Section 3.5 hereof, substantially in the form of
Exhibit A hereto except that such Warrant shall not bear the Global Warrant
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Warrant" attached thereto.
"DEPOSITARY" means, with respect to the Warrants issuable or issued, in
whole or in part, in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of this Agreement.
2
<PAGE> 6
"DTC" means The Depository Trust Company.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE DATE" means any time on or after January 25, 2000.
"EXERCISE PRICE" means the purchase price per share of Common Stock to
be paid upon the exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $4.88125 per share, subject to adjustment from
time to time pursuant to Sections 10 and 12 hereof.
"EXPIRATION DATE" means 5:00 p.m., New York City time, on January 15,
2009.
"GLOBAL WARRANTS" means, individually and collectively, each of the
Restricted Global Warrants and the Unrestricted Global Warrants, substantially
in the form of Exhibit A hereto issued in accordance with Section 3.1(b) and 3.5
hereof.
"GLOBAL WARRANT LEGEND" means the legend set forth in Section
3.5(g)(ii), which is required to be placed on all Global Warrants issued under
this Warrant Agreement.
"HOLDER" means a person who holds of record any Warrants.
"INDENTURE" means the indenture, dated January 22, 1999, among the
Company, the Guarantors (as defined in the Purchase Agreement) and The Bank of
New York, the Trustee relating to the Notes.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Warrant through a Participant.
"INITIAL PURCHASERS" means Lehman Brothers Inc., Bear, Stearns & Co.
Inc., F.A.C./Equities, a division of First Albany Corporation, and Dain Rauscher
Wessels, a division of Dain Rauscher Incorporated.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared
by the Company and sent to all Holders for use by such Holders in connection
with the Registration Statement.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"NOTES" means the 14% Senior Subordinated Notes due 2009 of the
Company, being sold
3
<PAGE> 7
and issued pursuant to the Purchase Agreement and the Indenture, or any Notes
exchanged therefor as contemplated by the Indenture and the Debt Registration
Rights Agreement.
"OFFICER" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary, any Assistant Secretary or any Vice-President of such Person.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Warrant Agent in form and substance reasonably
acceptable to the Warrant Agent. The counsel may be an employee of or counsel to
the Company, any subsidiary of the Company or the Warrant Agent.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
3.5(g)(i) to be placed on all Warrants issued under this Warrant Agreement
except where otherwise permitted by the provisions of this Warrant Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of January
19, 1999, by and among the Company, the Guarantors and the Initial Purchasers
relating to the Units.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REGISTRABLE SECURITIES" shall have the meaning ascribed to such term
in the Warrant Registration Rights Agreement.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL WARRANT" means a Global Warrant in the form of
Exhibit A hereto bearing the Global Warrant Legend, the Private Placement Legend
and the Regulation S Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding number of the Warrants resold in reliance on Rule 903 or Rule 904 of
Regulation S.
"RESPONSIBLE OFFICER" means, when used with respect to the Warrant
Agent, any officer of the Warrant Agent, including any vice president, assistant
vice president, assistant secretary, assistant treasurer or any other officer of
the Warrant Agent who customarily performs functions similar to those performed
by the Persons who at the time shall be such officers, respectively, or to
4
<PAGE> 8
whom any corporate trust matter is referred because of such person's knowledge
of and familiarity with the particular subject and who shall have direct
responsibility for the administration of the Warrant Agreement.
"REGULATION S LEGEND" means the legend set forth in Section 3.5(g)(iv)
to be placed on all Registrable Securities resold pursuant to Regulation S.
"RESTRICTED DEFINITIVE WARRANT" means a Definitive Warrant bearing the
Private Placement Legend.
"RESTRICTED GLOBAL WARRANT" means a Global Warrant bearing the Private
Placement Legend.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEPARATION DATE" means the earliest of (i) July 15, 1999, (ii) the
commencement of the Exchange Offer (as defined in the Debt Registration Rights
Agreement) or the date a Registration Statement (as defined in the Debt
Registration Rights Agreement) with respect to the Notes is declared effective
under the Securities Act or (iii) such date as Lehman Brothers shall determine.
"TRUSTEE" means The Bank of New York, a New York banking corporation,
the trustee under the Indenture.
"UNRESTRICTED GLOBAL WARRANT" means a Global Warrant substantially in
the form of Exhibit A attached hereto that bears the Global Warrant Legend and
that has the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Warrants that do not bear the
Private Placement Legend.
"UNRESTRICTED DEFINITIVE WARRANT" means one or more Definitive Warrants
that do not bear and are not required to bear the Private Placement Legend.
"U.S. PERSON" means a U.S. person as defined in Rule 902(k) under the
Securities Act.
"WARRANT AGENT" means The Bank of New York or the successor or
successors of such Warrant Agent appointed in accordance with the terms hereof.
"WARRANT COUNTERSIGNATURE ORDER" has the meaning assigned to such term
in Section 3.2 hereof.
5
<PAGE> 9
"WARRANT REGISTRAR" has the meaning assigned to such term in Section
3.3 hereof.
"WARRANT CERTIFICATE" has the meaning assigned to such term in Section
3.1(a) hereof.
"WARRANT REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of January 22, 1999, by and among the Company and the
Initial Purchasers relating to the Warrants and the Warrant Shares.
"WARRANT SHARES" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants.
SECTION 2. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 3. Issuance of Warrants; Warrant Certificates.
3.1 Form and Dating.
(a) General.
The Warrants shall be substantially in the form of Exhibit A hereto
(the "WARRANT CERTIFICATES"). The Warrants may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Warrant shall
be dated the date of the countersignature.
The terms and provisions contained in the Warrants shall constitute,
and are hereby expressly made, a part of this Warrant Agreement. The Company and
the Warrant Agent, by their execution and delivery of this Warrant Agreement,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Warrant conflicts with the express provisions
of this Warrant Agreement, the provisions of this Warrant Agreement shall govern
and be controlling.
(b) Global Warrants.
Each Global Warrant shall represent such of the outstanding Warrants as
shall be specified therein and each shall provide that it shall represent the
number of outstanding Warrants from time to time endorsed thereon and that the
number of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the number of outstanding Warrants represented thereby shall be made
by the Warrant Agent in accordance with instructions given by the Holder thereof
as required by Section 3.5 hereof.
(c) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in
6
<PAGE> 10
the Regulation S Global Warrant that are held by Participants through Euroclear
or Cedel Bank.
3.2 Execution.
An Officer shall sign the Warrants for the Company by manual or
facsimile signature.
If the Officer whose signature is on a Warrant no longer holds that
office at the time a Warrant is countersigned, the Warrant shall nevertheless be
valid.
A Warrant shall not be valid until countersigned by the manual
signature of the Warrant Agent. The signature shall be conclusive evidence that
the Warrant has been properly issued under this Warrant Agreement.
The Warrant Agent shall, upon a written order of the Company signed by
an Officer (a "WARRANT COUNTERSIGNATURE ORDER"), countersign Warrants for
original issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an agent acceptable to the Company to
countersign Warrants. Such an agent may countersign Warrants whenever the
Warrant Agent may do so. Each reference in this Warrant Agreement to a
countersignature by the Warrant Agent includes a countersignature by such agent.
Such an agent has the same rights as the Warrant Agent to deal with the Company
or an Affiliate of the Company.
3.3 Warrant Registrar.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange (the "WARRANT
REGISTRAR"). The Warrant Registrar shall keep a register of the Warrants and of
their transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The
Company may change any Warrant Registrar without notice to any holder. The
Company shall notify the Warrant Agent in writing of the name and address of any
Warrant Registrar not a party to this Warrant Agreement. If the Company fails to
appoint or maintain another entity as Warrant Registrar, the Warrant Agent shall
act as such. The Company or any of its subsidiaries may act as Warrant
Registrar.
The Company initially appoints DTC to act as Depositary with respect to
the Global Warrants.
The Company initially appoints the Warrant Agent to act as the Warrant
Registrar with respect to the Global Warrants.
3.4 Holder Lists.
The Warrant Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders. If the Warrant Agent is not the Warrant Registrar, the Company
shall promptly furnish to the Warrant Agent at such times as the Warrant Agent
may request in writing, a list in such form and as of such date as the Warrant
Agent
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<PAGE> 11
may reasonably require of the names and addresses of the Holders.
3.5 Transfer and Exchange.
(a) Transfer and Exchange of Global Warrants. A Global Warrant
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Warrants will be exchanged by the Company for Definitive Warrants if (i) the
Company delivers to the Warrant Agent notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Warrants (in whole but not in part) should
be exchanged for Definitive Warrants and delivers a written notice to such
effect to the Warrant Agent. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Definitive Warrants shall be issued in such names
as the Depositary shall instruct the Warrant Agent. Global Warrants also may be
exchanged or replaced, in whole or in part, as provided in Sections 3.6 and 3.7
hereof. Every Warrant countersigned and delivered in exchange for, or in lieu
of, a Global Warrant or any portion thereof, pursuant to this Section 3.5 or
Sections 3.6 or 3.7 hereof, shall be countersigned and delivered in the form of,
and shall be, a Global Warrant. A Global Warrant may not be exchanged for
another Warrant other than as provided in this Section 3.5(a), however,
beneficial interests in a Global Warrant may be transferred and exchanged as
provided in Section 3.5(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Warrants. The transfer and exchange of beneficial interests in the Global
Warrants shall be effected through the Depositary, in accordance with the
provisions of this Warrant Agreement and the Applicable Procedures. Beneficial
interests in the Restricted Global Warrants shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Warrants also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global
Warrant. Beneficial interests in any Restricted Global Warrant may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Warrant in accordance
with the transfer restrictions set forth in the Private Placement
Legend. Beneficial interests in any Unrestricted Global Warrant may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Warrant. No written
orders or instructions shall be required to be delivered to the Warrant
Registrar to effect the transfers described in this Section 3.5(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Warrants. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 3.5(b)(i) above,
the transferor of any such beneficial interest must deliver
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<PAGE> 12
to the Warrant Registrar either (A) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Warrant in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order
from a Participant or an Indirect Participant given to the Depositary
in accordance with the Applicable Procedures directing the Depositary
to cause to be issued a Definitive Warrant in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Warrant Registrar containing information
regarding the Person in whose name such Definitive Warrant shall be
registered. Upon effectiveness of the Registration Statement in
accordance with Section 3.5(f) hereof, the requirements of this Section
3.5(b)(ii) shall be deemed to have been satisfied upon receipt by the
Warrant Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Warrants. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Warrants contained in this Agreement and the Warrants or otherwise
applicable under the Securities Act, the Warrant Agent shall adjust the
principal amount of the relevant Global Warrant(s) pursuant to Section
3.5(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Warrant. A beneficial interest in any Restricted Global Warrant
may be transferred to a Person who takes delivery thereof in the form
of a beneficial interest in another Restricted Global Warrant if the
transfer complies with the requirements of Section 3.5(b)(ii) above and
the Warrant Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Warrant, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Global Warrant,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Warrant for Beneficial Interests in the Unrestricted
Global Warrant. A beneficial interest in any Restricted Global Warrant
may be exchanged by any Holder thereof for a beneficial interest in an
Unrestricted Global Warrant or transferred to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Warrant if the exchange or transfer complies with
the requirements of Section 3.5(b)(ii) above and:
(A) such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
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<PAGE> 13
(1) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Warrant, a
certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a)
thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
beneficial interest in an Unrestricted Global
Warrant, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
If any such transfer is effected pursuant to subparagraph (B) above at
a time when an Unrestricted Global Warrant has not yet been issued, the Company
shall issue and, upon receipt of an Warrant Countersignature Order in accordance
with Section 3.2 hereof, the Warrant Agent shall countersign one or more
Unrestricted Global Warrants in the number equal to the number of beneficial
interests transferred pursuant to subparagraph (B) above.
(c) Transfer and Exchange of Beneficial Interests for
Definitive Warrants.
(i) Beneficial Interests in Restricted Global
Warrants to Restricted Definitive Warrants. If any holder of a
beneficial interest in a Restricted Global Warrant proposes to exchange
such beneficial interest for a Restricted Definitive Warrant or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Warrant, then, upon
receipt by the Warrant Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such beneficial
interest for a Restricted Definitive Warrant, a certificate
from such holder in the form of Exhibit C hereto, including
the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
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<PAGE> 14
(E) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Warrant Agent shall 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 reduced by the number of Warrants to be represented by the
Definitive Warrant pursuant to Section 3.5(h) hereof, and the Company
shall execute and the Warrant Agent shall countersign and deliver to
the Person designated in the instructions a Definitive Warrant in the
appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this
Section 3.5(c) shall be registered in such name or names as the holder
of such beneficial interest shall instruct the Warrant Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Warrant Agent shall deliver such Definitive
Warrants to the Persons in whose names such Warrants are so registered.
Any Definitive Warrant issued in exchange for a beneficial interest in
a Restricted Global Warrant pursuant to this Section 3.5(c)(i) shall
bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Warrants to
Unrestricted Definitive Warrants. A holder of a beneficial interest in a
Restricted Global Warrant may exchange such beneficial interest for an
Unrestricted Definitive Warrant or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Warrant only if:
(A) such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
exchange such beneficial interest for a Definitive
Warrant that does not bear the Private Placement
Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in
item (1)(b) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
Definitive Warrant that does not bear the Private
Placement Legend, a certificate from such holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities
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<PAGE> 15
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Warrants to
Unrestricted Definitive Warrants. If any holder of a beneficial
interest in an Unrestricted Global Warrant proposes to exchange such
beneficial interest for an Unrestricted Definitive Warrant or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Warrant, then, upon
satisfaction of the conditions set forth in Section 3.5(b)(ii) hereof,
the Warrant Agent shall cause the amount of the applicable Unrestricted
Global Warrant to be reduced accordingly pursuant to Section 3.5(h)
hereof, and the Company shall execute and the Warrant Agent shall
countersign and deliver to the Person designated in the instructions an
Unrestricted Definitive Warrant in the appropriate principal amount.
Any Unrestricted Definitive Warrant issued in exchange for a beneficial
interest pursuant to this Section 3.5(c)(iii) shall be registered in
such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Warrant
Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Warrant Agent shall deliver such
Unrestricted Definitive Warrants to the Persons in whose names such
Warrants are so registered. Any Unrestricted Definitive Warrant issued
in exchange for a beneficial interest pursuant to this Section
3.5(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Warrants for
Beneficial Interests.
(i) Restricted Definitive Warrants to Beneficial
Interests in Restricted Global Warrants. If any Holder of a Restricted
Definitive Warrant proposes to exchange such Warrant for a beneficial
interest in a Restricted Global Warrant or to transfer such Restricted
Definitive Warrants to a Person who takes delivery thereof in the form
of a beneficial interest in a Restricted Global Warrant, then, upon
receipt by the Warrant Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive
Warrant proposes to exchange such Warrant for a beneficial
interest in a Restricted Global Warrant, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Warrant is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Warrant is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Warrant is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
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(E) if such Restricted Definitive Warrant is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(F) if such Restricted Definitive Warrant is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Warrant Agent shall cancel the Restricted Definitive Warrant,
increase or cause to be increased the amount of, in the case of clause
(A) above, the appropriate Restricted Global Warrant, in the case of
clause (B) above, the 144A Global Warrant, and in the case of clause
(C) above, the Regulation S Global Warrant.
(ii) Restricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of a Restricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Restricted Definitive
Warrant to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Warrant only if:
(A) such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Definitive
Warrants proposes to exchange such Warrants for a
beneficial interest in the Unrestricted Global
Warrant, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such Definitive
Warrants proposes to transfer such Warrants to a
Person who shall take delivery thereof in the form of
a beneficial interest in the Unrestricted Global
Warrant, a certificate from such Holder in the form
of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (d), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 3.5(d)(ii), the Warrant Agent shall cancel the Definitive
Warrants and increase or cause to be increased the aggregate amount of
the applicable Unrestricted Global Warrant.
(iii) Unrestricted Definitive Warrants to Beneficial Interests
in Unrestricted Global Warrants. A Holder of an Unrestricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Definitive Warrants to a
Person who takes delivery thereof in the form of a beneficial interest
in an Unrestricted Global Warrant at any time. Upon receipt of a
request for such an exchange or
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<PAGE> 17
transfer, the Warrant Agent shall cancel the applicable Unrestricted
Definitive Warrant and increase or cause to be increased the amount of
one of the Unrestricted Global Warrants.
If any such exchange or transfer from a Definitive Warrant to a
beneficial interest is effected pursuant to subparagraphs (ii)(B) or
(iii) above at a time when an Unrestricted Global Warrant has not yet
been issued, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2 hereof, the
Warrant Agent shall countersign one or more Unrestricted Global
Warrants in the number equal to the number of beneficial interests of
Definitive Warrants so transferred.
(e) Transfer and Exchange of Definitive Warrants for
Definitive Warrants. Upon request by a Holder of Definitive Warrants and such
Holder's compliance with the provisions of this Section 3.5(e), the Warrant
Registrar shall register the transfer or exchange of Definitive Warrants. Prior
to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Warrant Registrar the Definitive Warrants duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Warrant Registrar duly executed by such Holder or by its
attorney, duly authorized in writing. In addition, the requesting Holder shall
provide any additional certifications, documents and information, as applicable,
required pursuant to the following provisions of this Section 3.5(e).
(i) Restricted Definitive Warrants to Restricted Definitive
Warrants. Any Restricted Definitive Warrant may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Warrant if the Warrant Registrar receives
the following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; or
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Warrants to Unrestricted Definitive
Warrants. Any Restricted Definitive Warrant may be exchanged by the
Holder thereof for an Unrestricted Definitive Warrant or transferred to
a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Warrant if:
(A) any such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
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<PAGE> 18
(1) if the Holder of such Restricted
Definitive Warrants proposes to exchange such
Warrants for an Unrestricted Definitive Warrant, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted
Definitive Warrants proposes to transfer such
Warrants to a Person who shall take delivery thereof
in the form of an Unrestricted Definitive Warrant, a
certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Warrants to Unrestricted
Definitive Warrants. A Holder of Unrestricted Definitive Warrants may
transfer such Warrants to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Warrant. Upon receipt of a request
to register such a transfer, the Warrant Registrar shall register the
Unrestricted Definitive Warrants pursuant to the instructions from the
Holder thereof.
(f) Registration Statement. Upon the effectiveness of the
Registration Statement in accordance with the Warrant Registration Rights
Agreement, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2, the Warrant Agent shall
countersign one or more Unrestricted Global Warrants in an amount up to the
amount of the beneficial interests in the Restricted Global Warrants covered by
such Shelf Registration Statement and concurrently with the resales or exercise
of Warrants pursuant to the Registration Statement, the Warrant Agent shall
cause the amount of the applicable Restricted Global Warrants to be reduced
accordingly, will increase the beneficial interests in the Unrestricted Global
Warrant or issue additional Unrestricted Definitive Warrants as provided in this
Section 3. Resales of Warrants represented by Restricted Definitive Warrants
pursuant to the Registration Statement shall be dealt with pursuant to the
provisions of this Section 3.
(g) Legends. The following legends shall appear on the face of
all Global Warrants and Definitive Warrants issued under this Warrant Agreement
unless specifically stated otherwise in the applicable provisions of this
Warrant Agreement.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below,
each Global Warrant and each Definitive Warrant (and all
Warrants issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED,
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<PAGE> 19
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Warrant
or Definitive Warrant issued pursuant to subparagraphs
(b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
(e)(iii) or (f) to this Section 3.5 (and all Warrants issued
in exchange therefor or substitution thereof) shall not bear
the Private Placement Legend.
(ii) Global Warrant Legend. Each Global Warrant shall bear a
legend in substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN
THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY
FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL
WARRANT MAY BE EXCHANGED OR TRANSFERRED PURSUANT TO SECTIONS 3.5(a),
3.6 AND 3.7 OF THE WARRANT AGREEMENT AND (III) THIS GLOBAL WARRANT MAY
BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION
3.8 OF THE WARRANT AGREEMENT."
(iii) Unit Legend. Each Warrant issued prior to the Separation
Date shall bear a legend in substantially the following form:
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH
CONSISTS OF $1,000 PRINCIPAL AMOUNT OF THE 14% SENIOR SUBORDINATED
NOTES DUE 2009 (THE "NOTES") OF KEY ENERGY SERVICES, INC. (THE
"COMPANY") AND ONE WARRANT OF THE COMPANY (THE "WARRANTS") INITIALLY
ENTITLING THE HOLDER THEREOF TO PURCHASE 13.5504 SHARES, PAR VALUE
$0.10 PER SHARE, OF THE COMMON STOCK
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OF THE COMPANY. PRIOR TO THE EARLIEST TO OCCUR OF (i) JULY 15, 1999,
(ii) THE COMMENCEMENT OF THE EXCHANGE OFFER OR THE DATE A REGISTRATION
STATEMENT WITH RESPECT TO THE NOTES IS DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, OR (iii) SUCH DATE AS LEHMAN BROTHERS SHALL DETERMINE,
THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY
TOGETHER WITH, THE NOTES."
(iv) Regulation S Legend. Each Warrant that is a Registrable
Security and issued pursuant to Regulation S shall bear the following
legends on the face thereof:
"THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS
EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE
WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
IN ORDER TO EXERCISE THIS WARRANT, THE HOLDER MUST FURNISH TO THE
COMPANY AND THE WARRANT AGENT EITHER (A) A WRITTEN CERTIFICATION THAT
IT IS NOT A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED ON
BEHALF OF A U.S. PERSON OR (B) A WRITTEN OPINION OF COUNSEL TO THE
EFFECT THAT THE SECURITIES DELIVERED UPON EXERCISE OF THE WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OR THAT THE DELIVERY OF SUCH
SECURITIES IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT."
"HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
(h) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular
Global Warrant have been exercised or exchanged for Definitive Warrants or a
particular Global Warrant has been exercised, redeemed, repurchased or canceled
in whole and not in part, each such Global Warrant shall be returned to or
retained and canceled by the Warrant Agent in accordance with Section 3.8
hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Warrant is exercised or exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Warrant or for Definitive Warrants, the amount of Warrants represented by such
Global Warrant shall be reduced accordingly and an endorsement shall be made on
such Global Warrant by the Warrant Agent or by the Depositary at the direction
of the Warrant Agent to reflect such reduction; and if the beneficial interest
is being exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Warrant, such other
Global Warrant shall be increased accordingly and an endorsement shall be made
on such Global Warrant by the Warrant Agent or by the Depositary at the
direction of the Warrant Agent to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute Global Warrants and Definitive
Warrants at the Warrant Registrar's request. The
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<PAGE> 21
Warrant Agent shall countersign Global Warrants and Definitive Warrants
in accordance with the provisions of Section 3.2 hereof.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Warrant or to a holder of a Definitive
Warrant 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 similar governmental charge payable upon
exchange or transfer pursuant to Section 7 hereof).
(iii) All Global Warrants and Definitive Warrants issued
upon any registration of transfer or exchange of Global Warrants or
Definitive Warrants shall be the duly authorized, executed and issued
warrants for Common Stock of the Company, not subject to any preemptive
rights, and entitled to the same benefits under this Warrant Agreement,
as the Global Warrants or Definitive Warrants surrendered upon such
registration of transfer or exchange.
(iv) Prior to due presentment for the registration of a
transfer of any Warrant, the Warrant Agent, the Warrant Registrar and
the Company may deem and treat the Person in whose name any Warrant is
registered as the absolute owner of such Warrant for all purposes and
none of the Warrant Agent, the Warrant Registrar or the Company shall be
affected by notice to the contrary.
(j) Facsimile Submissions to Warrant Agent.
All certifications, certificates and Opinions of Counsel
required to be submitted to the Warrant Registrar pursuant to this Section 3.5
to effect a registration of transfer or exchange may be submitted by facsimile.
Notwithstanding anything herein to the contrary, as to any
certificates and/or certifications delivered to the Warrant Registrar pursuant
to this Section 3.5, the Warrant Registrar's duties shall be limited to
confirming that any such certifications and certificates delivered to it are in
the form of Exhibits B and C attached hereto. The Warrant Registrar shall not be
responsible for confirming the truth or accuracy of representations made in any
such certifications or certificates. As to any Opinions of Counsel delivered
pursuant to this Section 3.5, the Warrant Registrar may conclusively rely upon,
and be fully protected in relying upon, such Opinions.
3.6 Replacement Warrants.
In case any of the Warrant Certificates shall be mutilated,
lost, stolen or destroyed, the Company may in its discretion issue and the
Warrant Agent may countersign, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company and the Warrant Agent of such loss, theft or destruction of such Warrant
Certificate. If required by the Warrant Agent or the Company, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the Warrant
Agent and the Company to protect the Company, the Warrant Agent, and any other
agent for purposes of the countersignature from any loss that any of them may
suffer if a Warrant is replaced. Applicants for such
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<PAGE> 22
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company and the Warrant
Agent may prescribe. The Company may charge for its expenses in replacing a
Warrant.
Every replacement Warrant is an additional warrant of the
Company and shall be entitled to all of the benefits of this Warrant Agreement
equally and proportionately with all other Warrants duly issued hereunder.
3.7 Temporary Warrants.
Until certificates representing Warrants are ready for
delivery, the Company may prepare and the Warrant Agent, upon receipt of a
Warrant Countersignature Order, shall issue temporary Warrants. Temporary
Warrants shall be substantially in the form of certificated Warrants but may
have variations that the Company considers appropriate for temporary Warrants
and as shall be reasonably acceptable to the Warrant Agent. Without unreasonable
delay, the Company shall prepare and the Warrant Agent shall countersign
definitive Warrants in exchange for temporary Warrants.
Holders of temporary Warrants shall be entitled to all of the
benefits of this Warrant Agreement.
3.8 Cancellation.
Subject to Section 3.5(h) hereof, the Company at any time may deliver
Warrants to the Warrant Agent for cancellation. The Warrant Registrar shall
forward to the Warrant Agent any Warrants surrendered to them for registration
of transfer, exchange or exercise. The Warrant Agent and no one else shall
cancel all Warrants surrendered for registration of transfer, exchange,
exercise, replacement or cancellation and shall return such canceled Warrants to
the Company (subject to the record retention requirement of the Exchange Act).
The Company may not issue new Warrants to replace Warrants that have been
exercised or that have been delivered to the Warrant Agent for cancellation.
SECTION 4. Separation of Warrants. The Notes and Warrants shall not be
separately transferable prior to the Separation Date.
SECTION 5. Registration and Countersignature. (a) The Warrant Agent,
on behalf of the Company, shall number and register the Warrant Certificates in
a register as they are issued by the Company.
(b) Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned.
(c) The Company and the Warrant Agent may deem and treat the
Holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary. Prior to Separation Date, DTC shall
be deemed the registered Holder of such Warrants for all purposes hereunder.
SECTION 6. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this
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<PAGE> 23
Agreement, each Holder shall have the right, which may be exercised commencing
at the opening of business on the Exercise Date and until 5:00 p.m., New York
City time on the Expiration Date to receive from the Company the number of fully
paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares; provided that no Holder shall be
entitled to exercise such Holder's Warrants at any time, unless, at the time of
exercise (A) (i) a registration statement under the Securities Act relating to
the Warrant Shares has been filed with, and declared effective by, the
Commission, and no stop order suspending the effectiveness of such registration
statement has been issued by the Commission or (ii) the issuance of the Warrant
Shares is permitted pursuant to an exemption from the registration requirements
of the Securities Act; (B) such Warrant Shares are qualified for sale or exempt
from qualification under the applicable securities laws of the states in which
the various holders of the Warrants or other Persons to whom it is proposed that
the Warrant Shares be issued on exercise of the Warrants reside; and (C) the
Black Out Period as defined in the Warrant Registration Rights Agreement is not
in effect. Each Warrant not exercised prior to 5:00 p.m., New York City time, on
the Expiration Date shall become void and all rights thereunder and all rights
in respect thereof under this Agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants.
The Company shall give notice not less than 90, and not more than 120,
days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
the 5:00 p.m., New York City time on the Expiration Date. If the Company fails
to give such notice, the Warrants will not expire until 90 days after the
Company gives such notice, provided in no event will Holders be entitled to any
damages or other remedy for the Company's failure to give such notice other than
any such extension.
In order to exercise all or any of the Warrants represented by a
Warrant Certificate, (i) in the case of Definitive Warrants, the Holder thereof
must surrender for exercise the Warrant Certificate to the Company at the office
of the Warrant Agent at its New York corporate trust office, (ii) in the case of
a book-entry interest in a Global Warrant, the exercising Participant whose name
appears on a securities position listing of the Depositary as the holder of such
book-entry interest must comply with the Applicable Procedures relating to the
exercise of such book-entry interest in such Global Warrant and (iii) in the
case of both Global Warrants and Definitive Warrants, the holder thereof or the
Participant, as applicable, must deliver to the Company at the office of the
Warrant Agent the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be medallion guaranteed by an
institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, which is set forth in the form of
Warrant Certificate as adjusted as herein provided, for the number of Warrant
Shares in respect of which such Warrants are then exercised. In addition, if the
Holder is exercising warrants resold pursuant to Regulation S, (A) such Holder
must certify in writing (i) it is not a "U.S. person" within the meaning of Rule
902(k) of Regulation S under the Securities Act, (ii) the Warrants are not being
purchased or exercised on behalf of or for the account or benefit of a "U.S.
person," (iii) such Holder will resell such Warrants only in accordance with the
provisions of Rules 901 through 905 of Regulation S, pursuant to registration
under the Securities Act or pursuant to an available exemption from registration
and (iv) such Holder will not engage in hedging transactions with regard to the
Warrants and the shares issuable on exercise of such Warrants unless in
compliance with the Securities Act or (B) give a written opinion of counsel to
the effect that the warrant and the securities delivered upon exercise thereof
have been registered under the Securities Act or are exempt from registration
thereunder.
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<PAGE> 24
Payment of the aggregate Exercise Price shall be made (i) in cash by
wire transfer or by certified or official bank check, payable to the order of
the Company in United States dollars or (ii) by a Cashless Exercise for any
share of Common Stock.
When a Holder surrenders a Warrant Certificate representing more than
one Warrant in connection with an option to elect a Cashless Exercise, the
number of shares of Common Stock deliverable upon such Cashless Exercise shall
be equal to the number of shares of Common Stock issuable upon the exercise of
the Warrants that the Holder specifies are to be exercised pursuant to a
Cashless Exercise multiplied by the Cashless Exercise Ratio. The exercise of
Warrants by Holders of beneficial interest in Global Warrants shall be effected
only in accordance with this Agreement and the procedures of the Depositary
therefor.
Subject to the provisions of Section 7 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above, the Warrant Agent
shall thereupon promptly notify the Company, and the Company shall or shall
cause its Transfer Agent (as defined) promptly transfer to the Holder of such
Warrant Certificate a certificate or certificates for the appropriate number of
Warrant Shares or other securities or property (including any money) to which
the Holder is entitled, registered or otherwise placed in, or payable to the
order of, such name or names as may be directed in writing by the Holder, and
shall deliver such certificate or certificates representing the Warrant Shares
and any other securities or property (including any money) to the person or
persons entitled to receive the same, together with an amount in cash in lieu of
any fraction of a share as provided in Section 13 hereof. Any such certificate
or certificates representing the Warrant Shares shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a Holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Exercise Date, at
the election of the Holders thereof, either in full or from time to time in
part. If less than all the Warrants represented by a Definitive Warrant are
exercised, such Definitive Warrant shall be surrendered and a new Definitive
Warrant of the same tenor and for the number of Warrants which were not
exercised shall be executed by the Company and delivered to the Warrant Agent
and the Warrant Agent shall countersign the new Definitive Warrant, registered
in such name or names as may be directed in writing by the Holder, and shall
deliver the new Definitive Warrant to the Person or Persons entitled to receive
the same. The Warrant Agent shall make such notations on the "Schedule of
Exchanges of Interests on the Global Warrants" to each Global Warrant as are
required to reflect any change in the number of Warrants represented by such
Global Warrant resulting from any exercise in accordance with the terms hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled by the Warrant Agent. Such canceled Warrant Certificates shall then be
disposed of by the Warrant Agent in a manner satisfactory 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 the Warrant Shares through the exercise of such
Warrants. The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder by or from the Company available for inspection by
the Holders during normal business
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<PAGE> 25
hours at its office. The Company shall supply the Warrant Agent from time to
time with such numbers of copies of this Agreement as the Warrant Agent may
reasonably request.
All certificates representing Warrant Shares issued in a transaction
exempt from registration under the Securities Act shall bear the following
legend (provided that if no legend is required none shall be placed on the
Warrant Shares):
"THIS SECURITY MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM REGISTRATION
REQUIREMENTS."
SECTION 7. Payment of Taxes. The Company shall pay all documentary
stamp taxes attributable (a) to the initial issuance of Warrant Shares upon the
exercise of Warrants or (b) to any Separation Date; provided that, in each case,
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 Warrant Shares in a name other than that of the 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 8. Reservation of Warrant Shares.
(a) The Company shall at all times reserve and keep available,
free from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its treasury, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
(b) The Company will be irrevocably authorized and directed at
all times to reserve such number of authorized shares of Common Stock as shall
be required for issuance upon exercise of the Warrants.
(c) Before taking any action which would cause an adjustment
pursuant to Sections 10 or 12 hereof to reduce the Exercise Price below the then
par value (if any) of the Warrant Shares, the Company will take any corporate
action which may, in the opinion of its counsel (which may be counsel employed
by the Company), be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
(d) The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants in accordance with the terms of this Agreement
(including the terms of the Exercise Price) will, after receipt of the Exercise
Price and upon issue, be duly and validly issued, fully paid and nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof (other than those created by the
Holders).
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SECTION 9. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets (including, without limitation,
the Nasdaq Stock Market) within the United States of America, if any, on which
other shares of Common Stock are then listed. Upon the listing of such Warrant
Shares, the Company shall notify the Warrant Agent in writing. The Company will
obtain and keep all required permits and records in connection with such
listing.
SECTION 10. Adjustment of Exercise Price and Number of Warrant 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, (C)
combine its outstanding shares of Common Stock into a smaller number of shares
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect immediately prior to
such action shall be adjusted so that the Holder of any Warrant thereafter
exercised shall be entitled to receive upon payment of the Exercise Price the
number of shares of capital stock of the Company which such Holder would have
owned immediately following such action had such Warrant been exercised
immediately prior thereto. 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 issuable
upon exercise of the Warrants (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 as a result of a subdivision or combination), 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 issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of the assets of the Company as an entirety or substantially as an
entirety, 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 or other securities or 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
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<PAGE> 27
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 Section 10. 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.
(c) Issuance of Options or Convertible Securities. In the event
that both (x) 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 (y) 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 such Options) shall be less than the current market price per
share of Common Stock on the record date for the issuance, sale, distribution or
granting of such Options or Convertible Securities (any such event being herein
called a "DISTRIBUTION"), then, effective upon such Distribution, (I) 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 (1) the number of shares of Common Stock outstanding immediately prior to
such Distribution multiplied by the current market price per share of Common
Stock on the date of such Distribution plus (2) the consideration, if any,
received by the Company upon such Distribution plus consideration to be received
by the Company upon the exercise, conversion or exchange of such Options or
Convertible Securities, if any, and the denominator of which shall be the
product of (A) the total number of shares of Common Stock outstanding
immediately after such Distribution multiplied by (B) the current market price
per share of Common Stock on the record date for such Distribution and (II) the
number of shares of Common Stock 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 (I) of this
sentence and the denominator of which shall be the Exercise Price in
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<PAGE> 28
effect immediately after such adjustment (for the purposes of this clause (ii)
without giving effect to the provisions of Section 10(j)). For purposes of the
foregoing, the total maximum number of shares of Common Stock issuable upon
exercise of all such Options or upon conversion or exchange of all such
Convertible Securities or upon the conversion 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. No adjustment to the number of Warrant Shares issuable upon the
exercise of the Warrants or to the Exercise Price shall be made, however, as a
result of (i) the issuance of shares of Common Stock under any Options or upon
the exercise, conversion or exchange of Options or Convertible Securities
existing on the date hereof or issued pursuant hereto, (ii) the issuance of
shares of Common Stock in bona fide public or private offerings or (iii) the
issuance of Options or shares of Common Stock pursuant to any Option, under any
employee benefit plans approved by the Board of Directors. Such adjustments
shall be made whenever such rights, options or warrants or convertible
securities are issued. Except as provided in paragraphs (l) and (m) 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) Other Issuances of Common Stock, Options or Convertible
Securities. Upon any issuance of Common Stock, Options or Convertible Securities
as to which paragraphs (a), (b) and (c) above are not applicable, in the event
that at any time or from time to time the Company shall issue (i) shares of
Common Stock (subject to the provisions below), (ii) Options (provided, however,
that no adjustment shall be made upon the exercise of such Options) or (iii)
Convertible Securities (provided, however, that no adjustment shall be made upon
the conversion, exchange or exercise of such securities (other than issuances
specified in (i), (ii) or (iii) which are made as the result of antidilution
adjustments in such securities)), at a price per share at the record date of
such issuance that is less than the then current market price per share of
Common Stock, then the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such sale or
issuance plus the number of additional shares of Common Stock offered for
subscription or purchase or into or for which such securities that are issued
are convertible, exchangeable or exercisable, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
sale or issuance plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by the Company (assuming the
exercise or conversion of all such Options or Convertible Securities, if any)
would purchase at the then current market price per share of Common Stock, and
subject to paragraph (j) below, the Exercise Price shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to such date of
issuance by the aforementioned fraction; provided, however, that no adjustment
to the number of Warrant Shares issuable upon the exercise of the Warrants or to
the Exercise Price shall be made as a result of (i) the issuance of shares of
Common Stock under any Options existing on the date hereof or issued pursuant
hereto or upon the conversion or exchange of any Convertible Securities, (ii)
the issuance of shares of Common Stock in bona fide public or private offerings
or (iii) the issuance of Options or shares of
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Common Stock pursuant to any Option, under any employee benefit plans approved
by the Board of Directors. Such adjustments shall be made whenever such rights,
options or warrants or convertible securities are issued. No adjustment shall be
made pursuant to this paragraph (d) which shall have the effect of decreasing
the number of shares of Common Stock issuable upon exercise of each warrant or
of increasing the Exercise Price, except by operation of paragraph (l) below.
For purposes of this paragraph (c) hereof and this paragraph (d) only, any
issuance of Common Stock, Options or Convertible Securities, which issuance (or
agreement to issue) (A) is in exchange for or otherwise in connection with the
bona fide acquisition of property or assets of any kind (excluding any such
exchange exclusively for cash) of any Person and (B) is at a price per share
determined by the Board of Directors to be equal to the fair market value
thereof at the time an agreement in principle is reached or at the time a
definitive agreement is entered into, shall be deemed to have been made at a
price per share equal to the current market price per share at the record date
with respect to such issuance (the time of closing or consummation of such
exchange or acquisition) if such definitive agreement is entered into within 90
days of the date of such agreement in principle. The consideration the Company
receives in any public or private offering shall be deemed to include the amount
of fees, discounts and commissions paid to underwriters, agents and financial
advisors.
(e) Combination; Liquidation. In the event of (A) a
consolidation or merger of the Company or a sale of all or substantially all of
the assets of the Company where consideration to the holders of Common Stock in
exchange for their shares is payable solely in cash or (B) the dissolution,
liquidation or winding-up of the Company, Holders shall be entitled to receive,
upon surrender of their Warrant Certificates, distributions on an equal basis
with the holders of Common Stock or other securities, issuable upon exercise of
the Warrants, as if the Warrants had been exercised immediately prior to such
event, less the Exercise Price. Upon receipt of such payment, if any, the
Warrants will expire and the rights of the Holders will cease. In case of any
combination described in this paragraph (e), the surviving or acquiring Person
and, in the event of any dissolution, liquidation or winding-up of the Company,
the Company shall deposit promptly with the Warrant Agent the funds, if any,
necessary to pay to the holders of the Warrant the amounts to which they are
entitled as described above. After such funds and the surrendered Warrant
Certificates are received, the Warrant Agent is required to deliver a check in
such amount as is appropriate (or, in the case of consideration other than cash,
such other consideration as is appropriate) to such Person or Persons as it may
be directed in writing by the Holders surrendering such Warrants.
(f) Dividends and Distributions. In the event the Company shall,
at any time or from time to time after the date thereof, distribute to all the
holders of Common Stock any dividend 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 and other cash distribution 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 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
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the record date for such distribution of that portion, if any, of such
distribution consisting of evidences of indebtedness, other securities,
properties, assets, 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 of Common Stock 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 (for the purposes of this clause (B)
without giving effect to the provisions of Section 10(j)). The adjustments
required by this paragraph (f) shall be made whenever any such distribution
occurs retroactive to the record date for the determination of stockholders
entitled to receive such distribution.
(g) Current Market Price. For the purpose of any computation of
current market price under this Section 10, Section 12 and Section 13, the
current market price per share of Common Stock at any date shall be (x) for
purposes of Section 12, the closing price on the business day immediately prior
to the exercise of the applicable Warrant pursuant to Section 6 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), (d), (e) or (f). 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
Nasdaq National Market or any comparable system or (3) if the Common Stock is
not listed on 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
payable in Options or Convertible Securities 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.
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(i) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed for
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
current market price 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, that if such Options have
an exercise price equal to or greater than the fair market value 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 of
Common Stock 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 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
1/1,000 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 paragraphs (c) and (d)
above, the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in paragraphs (c) and (d)
above, or the rate at which any Convertible Securities referred to in paragraphs
(c) and (d) 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 Section 10), the Exercise Price then in effect and the number
of shares of Common Stock 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 of
Common Stock 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 of Common Stock purchasable
upon the exercise of each Warrant shall have been made pursuant to paragraph
(c), (d) or (k) above or this paragraph (l), any Options or Convertible
Securities shall have expired unexercised, the number of such shares purchasable
upon the exercise of each Warrant 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
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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 Section 10 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 Section 10, the Holders 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 Section 10.
(n) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to this Section 10 or upon the occurrence of any event
or action which would require an adjustment of the Exercise Price pursuant to
this Section 10 but for Section 10(j), each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock obtained by dividing (i) the sum of the adjusted number
of Warrant Shares issuable upon exercise of a Warrant by payment of the adjusted
Exercise Price plus the Exercise Price prior to adjustment by (ii) the adjusted
Exercise Price (without giving effect to the provisions of Section 10(j)).
SECTION 11. Statement on Warrants. Irrespective of any adjustment in
the number or kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 12. No Dilution or Impairment; Capital and Ownership Structure.
If any event shall occur, which in the judgment of a majority in interest of the
Holders, requires an adjustment to the Exercise Price or the number of Warrant
Shares issuable hereunder, but as to which the provisions of Section 10 are not
strictly applicable (the "Proposed Adjustments"), the Holders shall send to the
Company a written demand notice specifically setting forth such Proposed
Adjustments within 30 days after the events giving rise to such Proposed
Adjustments. If the Company does not receive the written demand notice within
such 30-day period, the Holders shall be deemed to have waived any demands for
Proposed Adjustments. If the Company rejects the Proposed Adjustments specified
in the demand notice, then within 60 days after delivery thereof, the Company
and a majority in interest of the Holders shall mutually agree on the retention
of a nationally-recognized investment banking firm (the "Firm") to review the
propriety of the Proposed Adjustments. The Firm shall render a written report
within 90 days of its retention setting forth its independent
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financial advice as to whether the Proposed Adjustments are warranted. If the
Firm determines the Proposed Adjustments are warranted, the Company will make
such adjustments and pay the fees and expenses of the Firm. If the Firm
determines the Proposed Adjustments are not warranted, such adjustments will not
be made and the Holders shall pay the firm's fees and expenses.
The Company will not, by amendment of its certificate of incorporation
or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holders against dilution or other impairment.
Without limiting the generality of the foregoing, the Company (a) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock on
the exercise of the Warrants from time to time outstanding and (b) will not take
any action which results in any adjustment of the Exercise Price if the total
number of Warrant Shares issuable after the action upon the exercise of all of
the Warrants would exceed the total number of shares of Common Stock then
authorized by the Company's certificate of incorporation and available for the
purposes of issue upon such exercise. A consolidation, merger, reorganization or
transfer of assets involving the Company covered by Section 10(b) shall not be
prohibited by or require any adjustment under this Section 12.
It is the intent of this Agreement to provide that, on and as of the
Closing Date, the number of Warrant Shares into which the Warrants are
exercisable represent 10% of the issued and outstanding shares of Common Stock
on a fully diluted basis. For purposes of this paragraph, the phrase "on a fully
diluted basis" shall include any and all options, warrants or other rights to
acquire common equity of the Company, whether or not exercisable on the Closing
Date but excluding all such options, warrants (other than the Warrants) or other
rights to acquire common equity at an exercise or conversion price greater than
the exercise price of the Warrants as of the Closing Date, as adjusted. If
either (i) the issuance of the Warrants causes the application of the
anti-dilution provisions of any of the Company's warrants, options or
convertible securities outstanding as of the Closing Date to result in an
increase in the number of shares of Common Stock issuable thereunder or (ii)
after the Closing Date the exercise price of the Company's then outstanding
warrants, options or convertible securities is adjusted to an exercise price
equal to or less than the Exercise Price of the Warrants, such additional shares
of Common Stock, or such shares of Common Stock issuable upon the exercise or
conversion of such warrants, options or convertible securities, as the case may
be, will be included in the calculation of the Common Stock on a fully basis,
then the number of Warrant Shares issuable upon exercise of each Warrant
automatically shall be adjusted upward by an amount sufficient to bring the
total number of Warrant Shares issuable pursuant to the Warrant Agreement to a
number representing 10% of the then issued and outstanding shares of Common
Stock of the Company on a fully diluted basis.
SECTION 13. 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
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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 to pay an amount in cash
calculated by it to equal the then current market price per share multiplied by
such fraction computed to the nearest whole cent less such fraction of the
Exercise Price. The Holders, by their acceptance 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 14. Notices to Warrant Holders; No Rights as Shareholders. Upon
any adjustment of the Exercise Price pursuant to Sections 10 or 12, the Company
shall promptly thereafter (i) cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of nationally 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
Warrant 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) cause to be given to each of the registered
Holders (or the DTC Participants with interests in the Global Warrant) at
his/her address appearing on the Warrant register written notice of such
adjustments by first-class mail, postage prepaid. The Warrant Agent shall be
entitled to 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 reasonable business hours. 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 of Common Stock or
other stock or property 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 of Common Stock or other stock or
property 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.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in shares
of Common Stock or distributions referred to in Section 10 hereof); or
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<PAGE> 35
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) a Change of Control (as defined in the Indenture) occurs;
or
(f) the Company proposes to take any other action that would
require an adjustment of the Exercise Price or the number of Warrant
Shares pursuant to Sections 10 or 12;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered Holders of the Warrant Certificates at
such Holder's address appearing on the Warrant register, at least 20 days (or 10
days in any case specified in clauses (a) or (b) above) prior to the applicable
record date hereinafter specified, or promptly in the case of events for which
there is no record date, by first class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up or Change of Control is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up or Change of Control. The failure to give the notice required by this Section
14 or any defect therein shall not affect the legality or validity of any
distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or Change of Control or the
vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the Holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor warrant agent under the provisions of
Section 17. Any such successor Warrant Agent shall promptly cause notice of its
succession as Warrant Agent to be mailed (by first class mail, postage prepaid)
to each Holder at such Holder's last address as shown on the register maintained
by the Warrant Agent pursuant this Agreement. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, and
in case at that time any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor
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to the Warrant Agent may adopt the countersignature of the original Warrant
Agent; and in case at that time any of the Warrant Certificates shall not have
been countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent or in
the name of the successor to the Warrant Agent; and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 16. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the Holders of Warrants, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrant
Certificates except as otherwise provided by the express terms of this
Agreement.
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this Agreement
or in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel of
its own selection (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any Holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) Before the Warrant Agent acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel, or both. The
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder of any Warrant Certificate for any action taken in reliance on any
Warrant Certificate, certificate of shares, notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument (whether in its
original or facsimile form) believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent such
compensation as shall be agreed upon from time to time in writing for all
services rendered by the Warrant Agent in the execution of this Agreement, to
reimburse the Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature reasonably incurred by the Warrant
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Agent in the execution of this Agreement and to indemnify the Warrant Agent and
any predecessor Warrant Agent and save it harmless against any and all
liabilities, claims, damages, losses and expenses (including taxes other than
taxes based on the income of the Warrant Agent) including judgments, reasonable
costs and counsel fees and expenses, for anything done or omitted by the Warrant
Agent in the execution of this Agreement or arising out of or in connection with
its performance of its obligations or duties under this Agreement, except to the
extent such liabilities are attributable to its gross negligence or willful
misconduct. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity; provided that the failure by the Warrant Agent to
so notify the Company shall not relieve or reduce its obligations hereunder
except to the extent the failure to so notify the Company of any claim of which
a Responsible Officer of the Warrant Agent has actual knowledge materially
prejudices the Company. The Company shall defend the claim and the Warrant
Agent shall cooperate in the defense. The Warrant Agent may have separate
counsel and the Company shall pay the reasonable fees and expense of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(f) The Warrant Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Holders of Warrant
Certificates shall furnish the Warrant Agent with security and indemnity
reasonably satisfactory to it for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Warrant Agent to take such
action as is necessary, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent and any recovery of judgment shall
be for the ratable benefit of the Holders of the Warrants, as their respective
rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for
the Company, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement except for its own gross negligence
or willful misconduct.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the
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<PAGE> 38
method employed in making the same. The Warrant Agent shall not be accountable
with respect to the validity or value or the kind or amount of any Warrant
Shares or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or with respect to whether any such
Warrant Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.
(j) The Warrant Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Warrant
Agent.
(k) The Warrant Agent may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Warrant Agent and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Warrant Agent, the Warrant Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).
(l) The Warrant Agent shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved
that the Warrant Agent was negligent in ascertaining the pertinent facts.
(m) The Warrant Agent shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority interest of Warrants relating to the
time, method and place of conducting any proceeding for any remedy available to
the Warrant Agent, or exercising any trust or power conferred upon the Warrant
Agent, under this Agreement with respect to the Units, Warrants or Notes, as
applicable.
(n) No provision of this Agreement shall require the Warrant
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(o) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Warrant Agent shall be subject to the
provisions of this Section.
(p) The Warrant Agent may conclusively rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(q) The Warrant Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
35
<PAGE> 39
direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Warrant Agent, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Warrant Agent shall determine to make such further inquiry or
investigation, it shall be entitled to, during reasonable business hours,
examine the books, records and premises of the Company, personally or by agent
or attorney at the sole cost of the Warrant Agent and shall incur no liability
or additional liability of any kind by any reason of such inquiry or
investigation.
(r) The Warrant Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Warrant Agent shall not be responsible for any
willful misconduct or gross negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(s) The Warrant Agent shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Agreement.
(t) The rights, privileges, protections, immunities and benefits
given to the Warrant Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Warrant Agent in
each of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 17. Resignation and Removal of Warrant Agent; Appointment of
Successor. No resignation or removal of the Warrant Agent and no appointment of
a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence, willful misconduct or bad faith) after giving written notice to the
Company. The Company may remove the Warrant Agent upon written notice, and the
Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall,
at the Company's expense, cause to be mailed (by first class mail, postage
prepaid) to each Holder at his last address as shown on the register of the
Company maintained by the Warrant Registrar a copy of said notice of resignation
or notice of removal, as the case may be. Upon such resignation or removal, the
Company shall appoint in writing a successor warrant agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such resignation by the resigning Warrant Agent or after
such removal, then the resigning Warrant Agent or the Holder of any Warrant may
at the expense of the Company apply to any court of competent jurisdiction for
the appointment of a new warrant agent. Any new warrant agent, whether appointed
by the Company or by such a court, shall be a corporation doing business under
the laws of the United States or any state thereof, in good standing and having
a combined capital and surplus of not less than $50,000,000. The combined
capital and surplus of any such new warrant agent shall be deemed to be the
combined capital and surplus as set forth in the most recent annual report of
its condition published by such warrant agent prior to its appointment, provided
that such reports are published at least annually pursuant to law or to the
requirements of a federal or state supervising or examining authority. After
acceptance in writing of such appointment by the
36
<PAGE> 40
new warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
SECTION 18. Registration. The Company and the Warrant Agent acknowledge
that Holders shall have the registration rights set forth in the Warrant
Registration Rights Agreement, a copy of which is attached hereto as Exhibit D.
The Warrant Agent further acknowledges and agrees that pursuant to the terms
thereof it may be required, upon receipt of written instructions of the Company,
to remit to Holders certain Liquidated Damages payable by the Company to such
Holders upon receipt of such monies from the Company.
SECTION 19. Reports. (a) So long as any of the Warrants remain
outstanding, and to the extent the Company is required to send such documents to
the holders of its outstanding Common Stock, the Company shall, upon request,
furnish to the registered Holders of the Warrants and to the beneficial Holders,
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants; and (ii) all current reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports. In addition, whether or not required by the rules and regulations
of the Commission, the Company will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request.
Delivery of such reports, information and documents to the Warrant
Agent is for informational purposes only and the Warrant Agent's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Warrant Agent is
entitled to rely exclusively on Officers' Certificates).
(b) The Company shall provide the Warrant Agent with a
sufficient number of copies of all reports filed with the Commission pursuant to
clause (a) above that the Warrant Agent may be required to deliver to the
Holders of the Warrants under this Section 19.
SECTION 20. Rule 144A and Rule 144. The Company hereby agrees with each
Holder, for so long as any Registrable Securities remain outstanding, and during
any period in which the Company (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder of Registrable
Securities, to such Holder or beneficial owner of Registrable
37
<PAGE> 41
Securities, the information required by Rule 144A(d)(4) under the Securities Act
in order to permit resales of such Registrable Securities pursuant to Rule 144A,
and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all
filings required thereby in a timely manner in order to permit resales of such
Registrable Securities pursuant to Rule 144.
SECTION 21. Notices to Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
Holder Certificate to or on the Company shall be sufficiently given or made when
and if deposited in the mail, first class or registered, postage prepaid,
addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:
Key Energy Services, Inc.
Two Tower Center, 20th Floor
East Brunswick, NJ 08816
Telecopier No.: (732) 247-5148
Attention: General Counsel
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by
the Holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Fax: (212) 815-5915
SECTION 22. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any Holders of Warrant Certificates in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Warrant Agent may deem necessary or desirable and which shall not in any
way materially adversely affect the interests of any Holder of Warrant
Certificates. Any amendment or supplement to this Agreement that has a material
adverse effect on the interests of Holders shall require the written consent of
Holders representing a majority of the then outstanding Warrants (excluding
Warrants held by the Company or any of its Affiliates). The consent of each
Holder affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than pursuant to adjustments
provided by this Agreement). The Warrant Agent shall be entitled to receive and,
subject to Section 18, shall be fully protected in relying upon, an officers'
certificate
38
<PAGE> 42
and opinion of counsel as conclusive evidence that any such amendment or
supplement is authorized or permitted hereunder, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company in accordance
with its terms.
SECTION 23. 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.
SECTION 24. Termination. This Agreement (other than the Company's
obligations with respect to Warrants previously exercised and with respect to
indemnification under Section 17) shall terminate on the earlier to occur of (i)
5:00 p.m., New York City time on the Expiration Date (ii) the date on which all
Warrants are exercised into Warrant Shares or (iii) the payment to Holders of
the distributions referred to in Section 10(e) upon surrender of their Warrant
Certificates.
SECTION 25. Governing Law. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF
LAWS PRINCIPLES.
SECTION 26. Benefits of This Agreement. (a) Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the Holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Warrant Agent and the
Holders of the Warrant Certificates.
(b) Prior to the exercise of the Warrants, no Holder of a
Warrant Certificate, as such, shall be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein.
The Holders of the Warrants are not entitled to share in the assets of the
Company in the event of the liquidation, dissolution or winding up of the
Company's affairs.
(c) All rights of action in respect of this Agreement are
vested in the Holders of the Warrants, and any Holder of any Warrant, without
the consent of the Warrant Agent or the Holder of any other Warrant, may, on
such Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's rights hereunder,
including the right to exercise, exchange or surrender for purchase such
Holder's Warrants in the manner provided in this Agreement.
SECTION 27. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
39
<PAGE> 43
[Signature Pages Follow]
40
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
KEY ENERGY SERVICES, INC.
By: _____________________________________
Name:
Title:
THE BANK OF NEW YORK, as Warrant Agent
By: ____________________________
(Authorized Signature)
Warrant Agreement Signature Pages
<PAGE> 1
EXHIBIT 99(d)
KEY ENERGY SERVICES, INC.
SERIES A AND SERIES B
14% SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
Dated as of January 22, 1999
The Bank of New York
Trustee
<PAGE> 2
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310....................................................(a)(1) 7.10
(a)(2).................................................... 7.10
(a)(3).................................................... N.A.
(a)(4).................................................... N.A.
(a)(5).................................................... 7.10
(b)....................................................... 7.10
(c)....................................................... N.A.
311.......................................................(a) 7.11
(b)....................................................... 7.11
(c)....................................................... N.A.
312.......................................................(a) 2.05
(b)....................................................... 11.03
(c)....................................................... 11.03
313.......................................................(a) 7.06
(b)(1).................................................... 10.03
(b)(2).................................................... 7.07
(c)....................................................... 7.06; 11.02
(d)....................................................... 7.06
314.......................................................(a) 4.03; 11.02
(b)....................................................... 10.02
(c)(1).................................................... 11.04
(c)(2).................................................... 11.04
(c)(3).................................................... N.A.
(e)....................................................... 11.05
(f)....................................................... N.A.
315.......................................................(a) 7.01
(b)....................................................... 7.05, 11.02
(c)....................................................... 7.01
(d)....................................................... 7.01
(e)....................................................... 6.11
316........................................(a)(last sentence) 2.09
(a)(1)(A)................................................. 6.05
(a)(1)(B)................................................. 6.04
(a)(2).................................................... N.A.
(b)....................................................... 6.07
(c)....................................................... 2.12
317....................................................(a)(1) 6.08
(a)(2).................................................... 6.09
(b)....................................................... 2.04
318.......................................................(a) 11.01
(b)....................................................... N.A.
(c)....................................................... 11.01
<PAGE> 3
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions......................................................1
Section 1.02. Other Definitions...............................................18
Section 1.03. Incorporation by Reference of Trust Indenture Act...............18
Section 1.04. Rules of Construction...........................................19
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.................................................19
Section 2.02. Execution and Authentication....................................20
Section 2.03. Registrar and Paying Agent......................................20
Section 2.04. Paying Agent to Hold Money in Trust.............................21
Section 2.05. Holder Lists....................................................21
Section 2.06. Transfer and Exchange...........................................21
Section 2.07. Replacement Notes...............................................33
Section 2.08. Outstanding Notes...............................................34
Section 2.09. Treasury Notes..................................................34
Section 2.10. Temporary Notes.................................................34
Section 2.11. Cancellation....................................................34
Section 2.12. Defaulted Interest..............................................35
Section 2.13. CUSIP Numbers...................................................35
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee..............................................35
Section 3.02. Selection of Notes to Be Redeemed...............................35
Section 3.03. Notice of Redemption............................................36
Section 3.04. Effect of Notice of Redemption..................................37
Section 3.05. Deposit of Redemption Price.....................................37
Section 3.06. Notes Redeemed in Part..........................................37
Section 3.07. Optional Redemption.............................................37
Section 3.08. Mandatory Redemption............................................38
Section 3.09. Offer to Purchase by Application of Excess Proceeds.............38
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes................................................40
Section 4.02. Maintenance of Office or Agency.................................40
Section 4.03. Reports.........................................................41
Section 4.04. Compliance Certificate..........................................41
Section 4.05. Taxes...........................................................42
Section 4.06. Stay, Extension and Usury Laws..................................42
Section 4.07. Restricted Payments.............................................43
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries..45
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock......46
Section 4.10. Asset Sales.....................................................48
Section 4.11. Transactions with Affiliates....................................49
Section 4.12. Liens...........................................................49
Section 4.13. Business Activities.............................................50
i
<PAGE> 5
Section 4.14. Corporate Existence.............................................50
Section 4.15. Offer to Repurchase Upon Change of Control......................50
Section 4.16. No Senior Subordinated Debt.....................................51
Section 4.17. No Amendment of Subordination Provisions........................51
Section 4.18. Limitation on Sale and Leaseback Transactions...................52
Section 4.19. Designation of Restricted and Unrestricted Subsidiaries.........52
Section 4.20. Limitation on Issuances of Guarantees of Indebtedness;
Additional Guarantors...........................................52
Section 4.21. Payments for Consent............................................53
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets........................53
Section 5.02. Successor Corporation Substituted...............................53
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default...............................................54
Section 6.02. Acceleration....................................................56
Section 6.03. Other Remedies..................................................57
Section 6.04. Waiver of Past Defaults.........................................57
Section 6.05. Control by Majority.............................................57
Section 6.06. Limitation on Suits.............................................57
Section 6.07. Rights of Holders of Notes to Receive Payment...................58
Section 6.08. Collection Suit by Trustee......................................58
Section 6.09. Trustee May File Proofs of Claim................................58
Section 6.10. Priorities......................................................59
Section 6.11. Undertaking for Costs...........................................59
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee...............................................59
Section 7.02. Rights of Trustee...............................................60
Section 7.03. Individual Rights of Trustee....................................61
Section 7.04. Trustee's Disclaimer............................................61
Section 7.05. Notice of Defaults..............................................62
Section 7.06. Reports by Trustee to Holders of the Notes......................62
Section 7.07. Compensation and Indemnity......................................62
Section 7.08. Replacement of Trustee..........................................63
Section 7.09. Successor Trustee by Merger, etc................................64
Section 7.10. Eligibility; Disqualification...................................64
Section 7.11. Preferential Collection of Claims Against Company...............64
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........65
Section 8.02. Legal Defeasance and Discharge..................................65
Section 8.03. Covenant Defeasance.............................................65
Section 8.04. Conditions to Legal or Covenant Defeasance......................66
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions..................................67
Section 8.06. Repayment to Company............................................68
ii
<PAGE> 6
Section 8.07. Reinstatement...................................................68
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.............................68
Section 9.02. With Consent of Holders of Notes................................69
Section 9.03. Compliance with Trust Indenture Act.............................70
Section 9.04. Revocation and Effect of Consents...............................70
Section 9.05. Notation on or Exchange of Notes................................71
Section 9.06. Trustee to Sign Amendments, etc.................................71
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.......................................71
Section 10.02. Certain Definitions............................................71
Section 10.03. Liquidation; Dissolution; Bankruptcy...........................72
Section 10.04. Default on Designated Senior Debt..............................72
Section 10.05. Acceleration of Securities.....................................73
Section 10.06. When Distribution Must Be Paid Over............................73
Section 10.07. Notice by Company..............................................74
Section 10.08. Subrogation....................................................74
Section 10.09. Relative Rights................................................74
Section 10.10. Subordination May Not Be Impaired by Company...................74
Section 10.11. Distribution or Notice to Representative.......................74
Section 10.12. Rights of Trustee and Paying Agent.............................75
Section 10.13. Authorization to Effect Subordination..........................75
Section 10.14. Amendments.....................................................75
Section 10.15. Trustee Not Fiduciary for Holders of Senior Debt...............75
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls...................................76
Section 11.02. Notices........................................................76
Section 11.03. Communication by Holders of Notes with Other Holders of Notes..77
Section 11.04. Certificate and Opinion as to Conditions Precedent.............77
Section 11.05. Statements Required in Certificate or Opinion..................77
Section 11.06. Rules by Trustee and Agents....................................78
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders...................................................78
Section 11.08. Governing Law..................................................78
Section 11.09. No Adverse Interpretation of Other Agreements..................78
Section 11.10. Successors.....................................................78
Section 11.11. Severability...................................................79
Section 11.12. Counterpart Originals..........................................79
Section 11.13. Table of Contents, Headings, etc...............................79
ARTICLE 12
NOTE GUARANTEES
Section 12.01. Guarantee......................................................79
Section 12.02. Subordination of Note Guarantee................................80
Section 12.03. Limitation on Guarantor Liability..............................80
Section 12.04. Execution and Delivery of Note Guarantee.......................80
iii
<PAGE> 7
Section 12.05. Guarantors May Consolidate, etc., on Certain Terms.............81
Section 12.06. Releases Following Sale of Assets..............................82
iv
<PAGE> 8
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF NOTE GUARANTEE
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
v
<PAGE> 9
INDENTURE dated as of January 22, 1999 between Key Energy Services, Inc.,
a Maryland corporation (the "Company"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the 14% Series A Senior
Subordinated Notes due 2009 (the "Series A Notes") and the 14% Series B Senior
Subordinated Notes due 2009 (the "Series B Notes" and, together with the Series
A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person; and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means: (i) the sale, lease, conveyance or other disposition
of any assets or rights, other than sales of inventory in the ordinary course of
business consistent with past practices and sales of accounts receivables under
a Credit Facility permitted to be incurred as Indebtedness; provided that the
sale, conveyance or other disposition of all or substantially all of the assets
of the
1
<PAGE> 10
Company and its Restricted Subsidiaries taken as a whole will be governed by
Section 4.15 hereof and/or Section 5.01 hereof and not by Section 4.10 hereof
and (ii) the issuance of Equity Interests by any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales: (1) any single transaction or series of related transactions that:
(a) involves assets having a fair market value of less than $2.0 million; or (b)
results in net proceeds to the Company and its Restricted Subsidiaries of less
than $2.0 million; (2) a transfer of assets between or among the Company and any
Restricted Subsidiary; (3) an issuance of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary; and (4) a
Restricted Payment that is permitted by Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means: (i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited); and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
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<PAGE> 11
"Cash Equivalents" means: (i) United States dollars; (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than twelve months from the date of acquisition; (iii)
certificates of deposit and eurodollar time deposits with maturities of twelve
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding twelve months and overnight bank deposits, in each
case, with any domestic commercial bank having capital and surplus in excess of
$500 million and a Thompson Bank Watch Rating of "B" or better; (iv) repurchase
obligations with a term of not more than thirty days for underlying securities
of the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above; (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition; and (vi) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (i) through (v) of this definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following: (i) the
sale, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act); (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company; (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the Company, measured by
voting power rather than number of shares; (iv) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors; or (v) the Company consolidates with, or merges with or
into, any Person, or any Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where the Voting
Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person immediately
after giving effect to such issuance. For the purposes of this definition of
"Change of Control", any transfer of an equity interest of an entity that was
formed for the purpose of acquiring Voting Stock of the Company will be deemed
to be a transfer of an equity interest in the Company.
"Company" means Key Energy Services, Inc., and any and all successors
thereto.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus: (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
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<PAGE> 12
extent that such provision for taxes was deducted in computing such Consolidated
Net Income; plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments, if any, pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income; plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses including asset impairment
charges pursuant to FASB 121 (excluding any such non-cash expense to the extent
that it represents an accrual of or reserve for cash expenses in any future
period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income; plus (v) for the fiscal year
ending June 30, 1999 only, (a) minority interest adjustments related to Dawson
and (b) severance, consolidation and restructuring charges associated with the
acquisition and integration of Dawson which charges were taken before the date
of this Indenture (each of (a) and (b) to the extent deducted in calculating
Consolidated Cash Flow); minus (vi) non-cash items increasing such Consolidated
Net Income for such period, other than items that were accrued or otherwise
recorded in the ordinary course of business, in each case, on a consolidated
basis and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that: (i) the Net Income of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Guarantor; (ii) the Net
Income of any Restricted Subsidiary that is not a Guarantor shall be excluded to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders; (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded; (iv) the Net Income (and loss) of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to the specified Person or one of its
Subsidiaries; and (v) the cumulative effect of a change in accounting principles
shall be excluded.
"Continuing Directors" means, as of any 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 of this Indenture; or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
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<PAGE> 13
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means that certain Second Amended and Restated Credit
Agreement, dated as of June 6, 1997, as amended and restated on September 14,
1998, as amended on November 19, 1998, as subsequently amended as of December
29, 1998, by and among the Company, PNC Bank, National Association, as
administrative agent, the other lenders, agents and arrangers named therein and
the other parties thereto, providing for up to $500 million of borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
restated, supplemented, modified, renewed, refunded, replaced or refinanced from
time to time.
"Credit Facilities" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Credit Agreement) or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Dawson" means Dawson Production Services, Inc., formerly a Texas
corporation.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Noncash Consideration" means the fair market value of noncash
consideration received by the Company or one of its Subsidiaries in connection
with an Asset Sale that is designated as Designated Noncash Consideration
pursuant to an Officer's Certificate, setting forth the basis of such valuation,
executed by the Chief Financial Officer of the Company, less the amount of cash
or Cash Equivalents received in connection with a sale of such Designated
Noncash Consideration.
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<PAGE> 14
"Designated Senior Debt" means (i) any Indebtedness under the Credit
Agreement and (ii) any other Senior Debt permitted under this Indenture the
principal amount of which is $25.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 4.07
hereof.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any sale of common stock of the Company for cash
in which the gross proceeds to the Company are at least $10.0 million.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, and any successor thereto, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means up to $395.0 million in aggregate principal
amount of Indebtedness of the Company and its Restricted Subsidiaries in
existence on the date of this Indenture, until such amounts are repaid.
"Exploration and Production Assets" means the oil and gas exploration and
production assets of Odessa held by Odessa as of the date of this Indenture, and
any such oil and gas assets received in exchange for oil and gas assets held by
Odessa as of the date of this Indenture.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of: (i) the consolidated interest expense of such Person
and its Restricted Subsidiaries
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<PAGE> 15
for such period, whether paid or accrued, including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments, if any, pursuant to Hedging
Obligations, but excluding the amortization of fees paid (or one-time
syndication fees owed) prior to the date hereof with respect to (a) the Credit
Agreement, (b) any Credit Facility that was in place prior to the date of this
Indenture, (c) the Notes and (d) the Subordinated Convertible Notes; plus (ii)
the consolidated interest of such Person and its Restricted Subsidiaries that
was capitalized during such period; plus (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries, whether or not such Guarantee or Lien is called
upon; plus (iv) the product of (a) all dividend payments, whether or not in
cash, on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than
revolving credit borrowings) or issues or redeems preferred stock subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of calculating the Fixed Charge Coverage Ratio: (i) acquisitions that
have been made by the specified Person or any of its Restricted Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income; (ii) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded; and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date.
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<PAGE> 16
"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 have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, letters of credit and
reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"Guarantors" means each of: (i) Yale E. Key, Inc., a Texas corporation;
Key Energy Drilling, Inc., a Delaware corporation; WellTech Eastern, Inc., a
Delaware corporation; Odessa Exploration Incorporated, a Delaware corporation;
Kalkaska Oilfield Services, Inc., a Michigan corporation; Well-Co Oil Service,
Inc., a Nevada corporation; Patrick Well Service, Inc., a Kansas corporation;
Mosley Well Service, Inc., a Louisiana corporation; Ram Oil Well Service, Inc.,
a New Mexico corporation; Rowland Trucking Co., Inc., a New Mexico corporation;
Landmark Fishing & Rental, Inc., an Oklahoma corporation; Dunbar Well Service,
Inc., a Colorado corporation; Frontier Well Service, Inc., a Wyoming
corporation; Key Rocky Mountain, Inc., a Delaware corporation; Key Four Corners,
Inc., a Delaware corporation; Jeter Service Co., an Oklahoma corporation; Jeter
Well Service, Inc., an Oklahoma corporation; Jeter Transportation, Inc., an
Oklahoma corporation; Industrial Oilfield Supply, Inc., an Oklahoma corporation;
Brooks Well Servicing, Inc., a Delaware corporation; Updike Brothers, Inc., a
Wyoming corporation; J.W. Gibson Well Service Company, a Delaware corporation;
Key Energy Services -- South Texas, Inc., a Delaware corporation; Key Energy
Services -- California, Inc., a Delaware corporation; Watson Oilfield Service &
Supply, Inc., a Delaware corporation; WellTech Mid-Continent, Inc., a Delaware
corporation; Dawson Production Management, Inc., a Delaware corporation; Dawson
Production Taylor, Inc., a Delaware corporation; Dawson Production Acquisition
Corp., a Delaware corporation; and Dawson Production Partners, L.P., a Delaware
limited partnership; and (ii) any other subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of this Indenture; and their
respective successors and assigns.
"Guarantor Senior Debt" means with respect to any Guarantor (i) all
Indebtedness of such Guarantor outstanding under Credit Facilities whether
outstanding on the date hereof or hereafter
8
<PAGE> 17
incurred and all hedging Obligations with respect thereto; (ii) all Indebtedness
(including Guarantees) permitted to be incurred by such Guarantor under the
terms of this Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to such Guarantor's Note Guarantee; and (iii) all Obligations with
respect to such Indebtedness. Notwithstanding anything to the contrary in the
preceding, Guarantor Senior Debt will not include Indebtedness resulting from:
(a) any liability for federal, state, local or other taxes owed or owing by the
Company or any Guarantor; (b) any Indebtedness of the Company or any Guarantor
to the Company or any of its Subsidiaries or other Affiliates; (c) any trade
payables incurred for the purchase of goods or materials or for services
obtained in the ordinary course of business; (d) any Indebtedness that is
incurred in violation of this Indenture; or (e) any Obligation with respect to
the Subordinated Convertible Notes or any Guarantee thereof.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under: (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements; and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in commodity
prices, interest rates or the value of foreign currencies purchased or received
by the Company the ordinary course of business and not for the purposes of
speculation.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of: (i)
borrowed money; (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof); (iii) banker's acceptances; (iv) Capital Lease Obligations; (v) the
balance deferred and unpaid of the purchase price of any property, except any
such balance that constitutes an accrued expense or trade payable; (vi) any
Hedging Obligations; or (vii) obligations of special purpose entities formed to
borrow money that are secured or financed by accounts receivable of the Company
or any Restricted Subsidiary; if and to the extent any of the preceding items
(other than letters of credit, Hedging Obligations and receivables financings)
would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP. In addition, the term "Indebtedness" includes
all Indebtedness of others secured by a Lien on any asset of the specified
Person (whether or not such Indebtedness is assumed by the specified Person)
and, to the extent not otherwise included, the Guarantee by such Person of any
indebtedness of any other Person. The amount of any Indebtedness outstanding as
of any date shall be: (i) the accreted value thereof, in the case of any
Indebtedness issued with original issue discount; and (ii) the principal amount
thereof, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
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<PAGE> 18
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, 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 Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person and its Restricted Subsidiaries, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however: (i) any gain or loss together with any related provision for taxes on
such gain or loss realized in connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and (ii) any extraordinary gain or loss, together
with any related provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of
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<PAGE> 19
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof, in each case after taking into account any available tax credits
or deductions and any tax sharing arrangements and amounts required to be
applied to the repayment of Indebtedness, other than Senior Debt, secured by a
Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness: (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or
otherwise, or (c) constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit upon notice, lapse of
time or both any holder of any other Indebtedness (other than the Notes) of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and on the Notes, executed pursuant to
the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Odessa" means Odessa Exploration Incorporated, a Delaware corporation.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
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<PAGE> 20
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to DTC, shall include Euroclear and Cedel).
"Permitted Business" means the business engaged in by the Company and its
Subsidiaries on the date of this Indenture and all reasonable extensions thereof
and other businesses ancillary or related thereto or to the oil and gas well
servicing business.
"Permitted Investments" means: (i) any Investment in the Company or in a
Restricted Subsidiary of the Company that is a Guarantor; (ii) any Investment in
Cash Equivalents; (iii) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such Investment: (a)
such Person becomes a Restricted Subsidiary of the Company and a Guarantor; or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company that is a Guarantor; (iv)
any Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof
or in connection with the settlement or release of claims in an insolvency or
similar proceeding or a settlement in lieu of an insolvency or similar
proceeding; (v) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company; (vi) other
Investments in any Subsidiary that is not a Guarantor having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), which when taken together with
all other Investments made pursuant to this clause (vi) not to exceed $25.0
million outstanding at any time (without giving effect to any reduction for any
writedown or writeoff of such Investments); and (vii) other Investments in any
Person having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause
(vii) since the date of this Indenture, not to exceed $25.0 million outstanding
at any time (without giving effect to any reduction for any writedown or
writeoff of such Investments).
"Permitted Junior Securities" means: (i) Equity Interests in the Company
or any Guarantor; or (ii) debt securities of the Company or any Guarantor that
are subordinated to all Senior Debt and any debt securities issued in exchange
for Senior Debt to substantially the same extent as, or to a greater extent
than, the Notes and the Note Guarantees are subordinated to Senior Debt pursuant
to this Indenture.
"Permitted Liens" means: (i) Liens securing Senior Debt, Obligations under
Credit Facilities and all Guarantees thereof, in each case, that are permitted
by the terms of this Indenture to be incurred; (ii) Liens in favor of the
Company or any Guarantor; (iii) Liens on property of a Person existing at the
time such Person is merged with or into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were not incurred in
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company;
(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Subsidiary of the Company, provided that such Liens were not
incurred in contemplation of such acquisition; (v) Liens to secure the
performance of statutory obligations,
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<PAGE> 21
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (iv) of the second
paragraph of Section 4.09 hereof covering only the assets acquired with such
Indebtedness and the proceeds thereof; (vii) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (x) of the second
paragraph of Section 4.09 hereof; (viii) Liens existing on the date of this
Indenture; (ix) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (x) carriers',
warehousemen's, mechanics', landlords', materialmen's, repairmen's or other
similar Liens arising in the ordinary course of business; (xi) Liens consisting
of pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation; (xii) Liens on property of the Company or any Subsidiary securing
(a) the performance of bids, trade contacts (other than for borrowed money),
leases and statutory obligations, (b) surety bonds and (c) other obligations of
a like nature, including pledges or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security legislation, in each case, incurred in the
ordinary course of business; (xiii) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of business which, in
the aggregate, do not interfere with the ordinary conduct of the businesses of
the Company and its Subsidiaries taken as a whole; (xiv) purchase money security
interests on any property acquired by the Company or any Subsidiary in the
ordinary course of business, securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such property,
provided that (a) any such Lien attaches to such property concurrently with or
within 180 days after the acquisition thereof, (b) such Lien attached solely to
the property so acquired in such transaction and the proceeds thereof and (c)
the principal amount of the Indebtedness secured thereby does not exceed 100% of
the costs of such property; (xv) Liens arising solely by virtue of any statutory
or common law provisions relating to banker's liens, rights of setoff or similar
rights and remedies as to deposit accounts or the funds maintained with a
creditor depository institution, provided that (a) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the Federal Reserve Board, and (b) such deposit account is not intended by the
Company or any Subsidiary to provide collateral to the depository institution;
(xvi) extensions, renewals and replacements of Liens referred to in clauses (i)
through (xv) above; provided that any such extension, renewal or replacement
Lien is limited to the property or assets covered by the Lien extended, renewed
or replaced and does not secure any Indebtedness in principal amount (or
accreted value) in excess of the principal amount (or accreted value) secured
immediately prior to such extension, renewal or replacement; (xvii) Liens
consisting of the rights of lessees with respect to assets leased by the Company
or any Subsidiary to such lessees; and (xviii) Liens incurred in the ordinary
course of business of the Company or any Subsidiary of the Company with respect
to obligations that do not exceed $5.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its
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<PAGE> 22
Restricted Subsidiaries (other than intercompany Indebtedness); provided that:
(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date not sooner than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Preferred Stock" means preferred stock of the Company, provided
that when first issued, the Company would, after giving pro forma effect to such
issuance, have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of January 22, 1999, by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended, modified
or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Responsible Officer," when used with respect to the Trustee, any officer
within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who
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<PAGE> 23
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means: (i) all Indebtedness outstanding under Credit
Facilities whether outstanding on the date hereof or thereafter incurred and all
Hedging Obligations with respect thereto; (ii) any other Indebtedness permitted
to be incurred by the Company under the terms of this Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Notes; and (iii)
all Obligations with respect to the items listed in the preceding clauses (i)
and (ii). Notwithstanding anything to the contrary in the preceding, Senior Debt
will not include: (i) any liability for federal, state, local or other taxes
owed or owing by the Company; (ii) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates; (iii) any trade payables incurred for the
purchase of goods or materials or for services obtained in the ordinary course
of business; (iv) any Indebtedness that is incurred in violation of this
Indenture; or (v) any Obligation with respect to the Subordinated Convertible
Notes.
"Separation Date" means the earliest of (i) July 15, 1999, (ii) the
commencement of the Exchange Offer or the effectiveness of any shelf
registration statement with respect to the Notes and (iii) such date as Lehman
Brothers shall determine.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
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<PAGE> 24
"Significant Subsidiary" means, at any time, any Subsidiary that, at such
time, would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect
on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness or as such scheduled maturity date may have been
deferred, and shall not include any contingent obligations to repay, redeem or
repurchase any such interest or principal prior to the date originally scheduled
for the payment thereof.
"Subordinated Convertible Note Indentures" means those certain indentures,
dated as of July 3, 1996 and September 25, 1997, between the Company and
American Stock Transfer & Trust Company, as trustee, as amended or supplemented
from time to time, relating to the Subordinated Convertible Notes.
"Subordinated Convertible Notes" means the Company's 5% Senior
Subordinated Notes due 2004 and the 7% Senior Subordinated Debentures due 2003
issued pursuant to the Subordinated Convertible Note Indentures.
"Subsidiary" means, with respect to any Person: (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof); and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (Sections)
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note substantially in
the form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the
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<PAGE> 25
extent that such Subsidiary: (i) has no Indebtedness other than Non-Recourse
Debt; (ii) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Company or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company; (iii) is a
Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; (iv) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or any of its
Restricted Subsidiaries; and (v) has at least one director on its board of
directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period and (2) no Default or Event of Default would be in existence
following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election 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: (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person and/or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
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<PAGE> 26
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction"...................................... 4.11
"Asset Sale"................................................. 4.10
"Asset Sale Offer"........................................... 3.09
"Authentication Order"....................................... 2.02
"Bankruptcy Law"............................................. 4.01
"Change of Control Offer".................................... 4.15
"Change of Control Payment".................................. 4.15
"Change of Control Payment Date"............................. 4.15
"Covenant Defeasance"........................................ 8.03
"Event of Default"........................................... 6.01
"Excess Proceeds"............................................ 4.10
"incur"...................................................... 4.09
"Legal Defeasance"........................................... 8.02
"Offer Amount"............................................... 3.09
"Offer Period"............................................... 3.09
"Paying Agent"............................................... 2.03
"Permitted Debt"............................................. 4.09
"Purchase Date".............................................. 3.09
"Registrar".................................................. 2.03
"Restricted Payments"........................................ 4.07
"Unit Legend"................................................ 2.06
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
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<PAGE> 27
"obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules adopted
by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from
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<PAGE> 28
time to time endorsed thereon and that the aggregate principal amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Note to reflect the amount of any increase or decrease in the
aggregate principal amount of outstanding Notes represented thereby shall be
made by the Trustee or the Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain
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<PAGE> 29
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also
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<PAGE> 30
may be exchanged or replaced, in whole or in part, as provided in Sections 2.07
and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in
lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that prior to
the expiration of the Restricted Period, transfers of beneficial interests
in the Regulation S Global Note may not be made to a U.S. Person or for
the account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above. Upon consummation of an Exchange
Offer
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by the Company in accordance with Section 2.06(f) hereof, the requirements
of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon
receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note.
A beneficial interest in any Restricted Global Note may be transferred to
a Person who takes delivery thereof in the form of a beneficial interest
in another Restricted Global Note if the transfer complies with the
requirements of Section 2.06(b)(ii) above and the Registrar receives the
following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
in item (1) thereof;
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Global Note, then the transferor must deliver
a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a beneficial
interest in the IAI Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
and certificates and Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of the beneficial interest to be transferred, in the case of an exchange,
or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to
the aggregate principal amount of beneficial interests transferred
pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted
Definitive Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;
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<PAGE> 33
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the Company
or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter
of
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<PAGE> 34
Transmittal that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a Definitive
Note that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for
a Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
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(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note
or to transfer such Restricted Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(G) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer
such
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<PAGE> 36
Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii)
above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall
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<PAGE> 37
issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required
by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery thereof
in the form of an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
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(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following
form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.07 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL SECURITY MAY BE TRANSFERRED TO A
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SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Unit Legend. Each Note issued prior to the Separation Date shall
bear the following legend (the "Unit Legend") on the face thereof:
"THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL
AMOUNT OF THE NOTES AND ONE WARRANT(S) (THE "WARRANTS") INITIALLY
ENTITLING THE HOLDER THEREOF TO PURCHASE 13.5504 SHARES, PAR VALUE
$0.10 PER SHARE, OF THE COMMON STOCK OF THE COMPANY. PRIOR TO THE
CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (i) JULY 15, 1999,
(ii) THE COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES
OR THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT RELATING TO
THE NOTES OR (iii) SUCH DATE AS LEHMAN BROTHERS SHALL DETERMINE, THE
NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY
TOGETHER WITH, THE WARRANTS."
(iv) Regulation S Legend. Each certificate evidencing a Regulation S Unit
will contain a legend in substantially the following form:
"HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive
Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration
of
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<PAGE> 41
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
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the
valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Global Notes or
Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal of and interest on such
Notes and for all other purposes, and none of the Trustee, any Agent or
the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to
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<PAGE> 42
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note; however, Notes held by the Company or a Subsidiary of the Company
shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
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<PAGE> 43
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
canceled Notes (subject to the record retention requirement of the Exchange Act)
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
Section 2.13. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before
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<PAGE> 44
a redemption date, an Officers' Certificate setting forth (i) the clause of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption
price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Trustee shall select the Notes to be redeemed or
purchased among the Holders of the Notes in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes (including CUSIP Numbers) to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
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<PAGE> 45
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
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<PAGE> 46
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to January 15, 2004. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on January 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004.................................................. 107.000%
2005.................................................. 104.667%
2006.................................................. 102.333%
2007 and thereafter................................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to January 15, 2002, the Company may on any one or more occasions
redeem up to 35% of the aggregate principal amount of Notes totally issued under
this Indenture at a redemption price of 114% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings;
provided that at least 65% of the aggregate principal amount of the Notes
totally issued remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its Subsidiaries); and that
the redemption must occur within 45 days of the date of the closing of such
Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
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<PAGE> 47
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
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On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. 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
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<PAGE> 49
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes within the time periods specified in the SEC's rules and regulations (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's independent public
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. If the
Company has designated any of its Subsidiaries as Unrestricted Subsidiaries,
then the quarterly and annual financial information required by this Section
4.03(a) shall include a reasonably detailed presentation, either on the face of
the financial statements or in the footnotes thereto, and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, of the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company. In addition, following
consummation of the Exchange Offer, whether or not required by the rules and
regulations of the SEC, the Company shall file a copy of all such information
and reports with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. The Company shall at all times comply with
TIA Section 314(a). Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(b) For so long as any Notes remain outstanding, the Company and the
Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate.
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<PAGE> 50
(a) The Company and each Guarantor (to the extent that such Guarantor is
so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof 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, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors 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, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such
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<PAGE> 51
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) or to the direct or indirect holders of the Company's
or any of its Restricted Subsidiaries' Equity Interests in their capacity as
such (other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Company or to the Company or a Restricted
Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire
for value (including, without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests of the Company or any
direct or indirect parent of the Company or any Restricted Subsidiary of the
Company (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company); (iii) make any payment on or with respect
to, or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes or the Note Guarantees, except a
payment of interest, principal, premium or liquidated damages at the Stated
Maturity thereof or in accordance with the mandatory provisions thereof
(provided that the other requirements of this Indenture, with respect to the
events giving rise to such mandatory provisions are first complied with); or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) with respect to all Restricted Payments other than regular dividends
on Qualified Preferred Stock, the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less than the
sum, without duplication, of (1) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the beginning of
the first fiscal quarter commencing after the date of this Indenture to the end
of the Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (2) 100% of the aggregate net cash proceeds received by the
Company since the date of this Indenture as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of convertible or
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exchangeable Disqualified Stock or convertible or exchangeable debt securities
of the Company that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of the Company), plus (3) to the extent that
any Restricted Investment that was made after the date of this Indenture is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (i) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (ii) the initial amount of such Restricted Investment,
plus (4) to the extent not otherwise included in Consolidated Net Income or
otherwise increasing amounts available for Restricted Payments or Permitted
Investments, 50% of all dividends, distributions or interest payments in respect
of Restricted Investments.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any Guarantor or
of any Equity Interests of the Company or any Restricted Subsidiary in exchange
for, or out of the net cash proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company) of, Equity Interests of the Company (other
than Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (c) (2) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the
declaration or payment of any dividend or other distribution by a Restricted
Subsidiary of the Company to the holders of its common Equity Interests on a pro
rata basis; (v) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company or any Restricted Subsidiary of
the Company held by any member of the Company's (or any of its Subsidiaries')
management pursuant to any management equity subscription agreement or stock
option agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$1.0 million in any twelve-month period; (vi) the redemption, repurchase,
retirement, defeasance or other acquisition of the Convertible Subordinated
Debentures; provided that at least 90% of such Convertible Subordinated
Debentures have been converted; (vii) the redemption, repurchase, retirement,
defeasance or other acquisition of the 1997 Convertible Subordinated Notes;
provided that at least 90% of such 1997 Convertible Subordinated Notes have been
converted; and (viii) Restricted Payments not to exceed $10.0 million under this
clause (8); provided that in the case of clauses (ii), (iii), (v) and (viii) no
Default or Event of Default should have occurred and be continuing immediately
after such transaction.
The amount of all Restricted Payments (other than Restricted Payments made
in cash) shall be the fair market value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued by the Company
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any assets or securities that are required to
be valued by this Section 4.07 shall be determined by the Board of Directors
whose resolution with respect thereto shall be delivered to the Trustee. The
Board of Directors' determination must be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if the fair market value exceeds $10.0 million. Not later than the date
of making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that
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such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with a copy
of any fairness opinion or appraisal required by this Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to: (a) pay dividends or make any other distributions on its Capital
Stock to the Company or any of the Company's Restricted Subsidiaries, or with
respect to any other interest or participation in, or measured by, its profits,
or pay any indebtedness owed to the Company or any of the Company Restricted
Subsidiaries; (b) make loans or advances to the Company or any of the Company's
Restricted Subsidiaries; or (c) transfer any of its properties or assets to the
Company or any of the Company's Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of: (i) the Credit Agreement and
Existing Indebtedness as in effect on the date of this Indenture and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are not materially more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in the Credit Agreement or such Existing Indebtedness, as in effect on
the date of this Indenture; (ii) this Indenture, the Subsidiary Guarantees and
the Notes; (iii) applicable law; (iv) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred; (v) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices; (vi)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions on the property so acquired of the nature
described in clause (c) of the preceding paragraph; (vii) any agreement for the
sale or other disposition of a Restricted Subsidiary that restricts
distributions by such Restricted Subsidiary pending its sale or other
disposition; (viii) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are not materially more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced; (ix)
Liens securing Indebtedness otherwise permitted to be incurred pursuant to the
provisions of Section 4.12 hereof that limit the right of the Company or any of
its Restricted Subsidiaries to dispose of the assets subject to such Lien; (x)
provisions with respect to the disposition or distribution of assets or property
in joint venture agreements and other similar agreements entered into in the
ordinary course of business; (xi) restrictions on cash or other deposits or net
worth imposed by customers under contracts entered into in the ordinary course
of business; and (xii) restrictions imposed with respect to a Subsidiary of the
Company imposed pursuant to a binding agreement which has been entered into for
the sale or
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disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, provided that such disposition will comply with the provision of
Section 4.10 hereof.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock if:
(i) the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 2.0 to 1 (if such
incurrence or issuance is on or before December 31, 1999, and 2.25 to 1
thereafter), determined on a pro forma basis (including a pro forma application
of the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period; and
(ii) no Default or Event of Default has occurred and is continuing.
The provisions of the first paragraph of this Section 4.09 shall not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) The incurrence by the Company of Indebtedness under Credit Facilities;
provided that the aggregate principal amount of all Indebtedness of the Company
and its Restricted Subsidiaries outstanding under all Credit Facilities incurred
under this clause (i) after giving effect to such incurrence does not exceed an
amount equal to $550.0 million less the aggregate amount of all Net Proceeds of
Asset Sales applied by the Company or any of its Restricted Subsidiaries to
permanently reduce the Indebtedness or commitments under the Credit Facilities;
(ii) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes originally issued on the date of this Indenture, the Guarantees and this
Indenture;
(iv) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company or such
Subsidiary, in an aggregate principal amount not to exceed $25.0 million at any
time outstanding;
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(v) the incurrence of Indebtedness solely in respect of bankers'
acceptances, letters of credit, surety or performance bonds (to the extent that
such incurrence does not result in the incurrence of any obligation for the
payment of borrowed money of others), all in the ordinary course of business;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by this Indenture to be incurred
under the first paragraph of this Section 4.09 or clauses (ii) or (iii) of this
paragraph;
(vii) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that: (a) if the Company or any
Guarantor is the obligor on such Indebtedness, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of all Obligations
with respect to the Notes, in the case of the Company, or the Note Guarantee of
such Guarantor, in the case of a Guarantor; and (b) (i) any subsequent issuance
or transfer of Equity Interests or other event that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness
to a Person that is not either the Company or a Restricted Subsidiary thereof
shall be deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (vii);
(viii) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations;
(ix) the guarantee by the Company or any of the Guarantors of Indebtedness
of the Company or a Restricted Subsidiary of the Company that was permitted to
be incurred by another provision of this Section 4.09;
(x) the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (x), not to exceed $60.0 million outstanding at any
time;
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Company that was not permitted by
this clause (xi); and
(xii) the accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock;
provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
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For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xii)
above, or is entitled to be incurred pursuant to the first paragraph of this
Section 4.09, the Company will be permitted to classify or reclassify such item
of Indebtedness on the date of its incurrence or from time to time thereafter in
any manner that then complies with this Section 4.09, except that the
Indebtedness outstanding on the date of this Indenture under the Credit
Agreement shall be deemed to have been incurred only under clause (i) above.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless: (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of; (ii) if the Net Proceeds
received with respect to any Asset Sale exceed $10 million, such fair market
value is determined by the Company's Board of Directors and evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee; and (iii) except with respect to a disposition of the
Exploration and Production Assets of Odessa (including by way of the sale of the
capital stock of Odessa), at least 75% of the consideration therefor received by
the Company or such Restricted Subsidiary is in the form of cash. For purposes
of this provision, each of the following shall be deemed to be cash: (a) any
liabilities of the Company or any Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes or any Note Guarantee) that
are assumed by the transferee of any such assets; (b) any securities, notes or
other obligations received by the Company or any such Restricted Subsidiary from
such transferee that are contemporaneously (subject to ordinary settlement
periods) converted by the Company or such Restricted Subsidiary into cash (to
the extent of the cash received in that conversion); (c) any assets received in
exchange for assets in a "like-kind" exchange or an exchange of assets of the
Company or any Restricted Subsidiary for other assets which are useful in the
business of the Company and the Restricted Subsidiaries (whether such assets are
of "like kind"); and (d) any Designated Noncash Consideration (which shall not
at any time exceed, in the aggregate, $25.0 million outstanding.)
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option: (1) to repay permanently
Senior Debt; (2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Person engaged in a Permitted Business;
(3) to make a capital expenditure; or (4) to acquire other long-term assets that
are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the second preceding paragraph shall constitute Excess Proceeds.
Within 30 days of each date on which the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company shall make an Asset Sale
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Offer to all Holders of Notes and all holders of other Indebtedness that is pari
passu with the Notes containing provisions similar to those set forth in this
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets to purchase the maximum principal amount of Notes and such other
pari passu Indebtedness that may be purchased out of the Excess Proceeds. The
offer price in any Asset Sale Offer shall be equal to 100% of principal amount
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and shall be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other pari passu Indebtedness to be purchased on a pro
rata basis. Upon completion of each Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless: (i) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person; and (ii) the Company delivers to the Trustee: (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $2.5 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with this Section 4.11 and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors; and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, shall not be subject to the provisions of the prior paragraph: (i)
any employment agreement or arrangements (including loan arrangements and
advances) with officers and employees entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business; (ii) transactions
between or among the Company and/or its Restricted Subsidiaries; (iii) payment
of reasonable directors fees and the provision of customary indemnification
arrangements to officers, directors and employees of the Company or its
Restricted Subsidiaries; and (iv) Restricted Payments that are permitted by the
provisions of Section 4.07 hereof.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing Indebtedness,
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Attributable Debt or trade payables on any asset now owned or hereafter
acquired, except (i) Permitted Liens or (ii) if the Obligations under the Notes
(or a Guarantee of the Notes) and this Indenture are equally and ratably secured
(or secured on a senior basis if such other obligations are subordinated to the
Obligations under the Notes or the Guarantees of the Notes) with the other
obligations so secured until such time as such other obligations are no longer
secured by such Lien.
Section 4.13. Business Activities.
The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of purchase the "Change
of Control Payment"). Within 10 business days following any Change of Control,
the Company shall mail a notice to each Holder stating: (1) that the Change of
Control Offer is being made pursuant to this Section 4.15 and that all Notes
tendered shall be accepted for payment; (2) the purchase price and the purchase
date, which shall be no later than 30 business days from the date such notice is
mailed (the "Change of Control Payment Date"); (3) that any Note not tendered
shall continue to accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes 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 any Notes
purchased pursuant to a Change of Control Offer shall be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (6) that Holders shall be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a statement
that such Holder is withdrawing his election to have the Notes
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purchased; and (7) that Holders whose Notes are being purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. 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 repurchase of Notes in connection with a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful: (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer; (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered; and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. Prior to complying with any of
the provisions of this Section 4.15, but in any event within 90 days following a
Change of Control, the Company shall either repay all outstanding Senior Debt or
obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt to permit the repurchase of Notes required by this
Section 4.15. The Company will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur, create, issue, assume, guarantee, or otherwise become liable
for any Indebtedness that is subordinate or junior in right of payment to any
Senior Debt of the Company and senior in any respect in right of payment to the
Notes, and (ii) no Guarantor shall incur, create, issue, assume, guarantee, or
otherwise become liable for any Indebtedness that is subordinated or junior in
right of payment to any Senior Debt of such Guarantor and senior in any respect
in right of payment to such Guarantor's Note Guarantee.
Section 4.17. No Amendment of Subordination Provisions.
Without the consent of each Holder of Notes so affected, the Company shall
not amend, modify or alter the Subordinated Convertible Note Indentures in any
way that will (i) increase the principal of, advance the final maturity date of
or shorten the Weighted Average Life to Maturity of
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any Subordinated Convertible Notes, (ii) alter the redemption provisions or the
price or terms at which the Company is required to offer to purchase such
Convertible Subordinated Notes in any manner adverse to such Holder or (iii)
amend the provisions of Article 10 of this Indenture (which relate to
subordination) in any manner adverse to such Holder.
Section 4.18. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary of the Company that is a Guarantor may
enter into a sale and leaseback transaction if: (1) the Company or that
Guarantor, as applicable, could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
under the Fixed Charge Coverage Ratio test in the first paragraph of Section
4.09 hereof and (b) incurred a Lien to secure such Indebtedness pursuant to the
provisions of Section 4.12 hereof; (2) the gross cash proceeds of that sale and
leaseback transaction are at least equal to the fair market value, which (if in
excess of $10 million) shall be determined in good faith by the Board of
Directors and set forth in an Officers' Certificate delivered to the Trustee, of
the property that is the subject of such sale and leaseback transaction; and (3)
the transfer of assets in that sale and leaseback transaction is permitted by,
and the Company applies the proceeds of such transaction in compliance with,
Section 4.10 hereof.
Section 4.19. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary so designated shall be deemed to be an Investment made as of the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of Section 4.07 hereof or Permitted
Investments, as applicable. All such outstanding Investments shall be valued at
their fair market value at the time of such designation. That designation shall
only be permitted if such Restricted Payment would be permitted at that time and
if such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
Section 4.20. Limitation on Issuances of Guarantees of Indebtedness;
Additional Guarantors.
The Company shall not permit any Subsidiary, directly or indirectly, to
Guarantee or pledge any assets to secure the payment of any Indebtedness of the
Company under any Credit Facility unless such Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a Note
Guarantee by such Subsidiary, which Note Guarantee shall be subordinated to the
Guarantee of the Credit Facility to the same extent as the Notes are
subordinated to the Credit Facility. Notwithstanding the foregoing, any Note
Guarantee by a Subsidiary shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale of all
of the capital stock of a Guarantor (including a sale by way of merger or
consolidation), if immediately after giving effect to such sale, there is no
Default or Event of Default
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that has occurred or is continuing, or if the Company designates any Restricted
Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with
the applicable provisions of this Indenture. The form of such Note Guarantee is
attached as Exhibit D hereto.
Section 4.21. Payments for Consent.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid and is paid to all Holders of
the Notes that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or amendment.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly: (i) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of its properties or assets, in one or more related
transactions, to another Person; unless: (1) either: (a) the Company is the
surviving corporation; or (b) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any state
thereof or the District of Columbia; (2) the Person formed by or surviving any
such consolidation or merger (if other than the Company) or the Person to which
such sale, assignment, transfer, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Notes and this
Indenture pursuant to agreements reasonably satisfactory to the Trustee; (3)
immediately after such transaction no Default or Event of Default exists; and
(4) the Company or the Person formed by or surviving any such consolidation or
merger (if other than the Company) shall, on the date of such transaction after
giving pro forma effect thereto and any related financing transactions as if the
same had occurred at the beginning of the applicable four-quarter period, either
(a) be permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof; or (b) have a Fixed Charge Coverage Ratio that is the same or
higher than the Fixed Charge Coverage Ratio of the Company immediately prior to
such transactions. In addition, the Company may not, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to any other Person. This Section 5.01 shall not apply to
a sale, assignment, transfer, conveyance or other disposition of assets between
or among the Company and any of its Wholly Owned Subsidiaries or any of the
Guarantors.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section
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5.01 hereof, the successor corporation formed by such consolidation or into or
with which the Company is merged or to which such sale, assignment, transfer,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of this Indenture
referring to the "Company" shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein; provided, however, that the predecessor Company shall not
be relieved from the obligation to pay the principal of and interest on the
Notes except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults for 30 days in the payment when due of interest
on, or Liquidated Damages with respect to, the Notes, whether or not prohibited
by Article 10 hereof;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes (including in connection with an offer to
purchase) whether or not prohibited by Article 10 hereof;
(c) the Company fails to comply with any of the provisions of Section 4.10
or Section 5.01 hereof and such failure shall have continued for 15 days, after
notice from the Company or any Holder of the Notes or the Company or any of its
Subsidiaries fails to comply with the provisions of Section 4.07 or Section 4.09
hereof, and such failure shall have continued for 30 days after notice from the
Company or any Holder of the Notes;
(d) the Company or any of its Restricted Subsidiaries fails to observe or
perform any other covenant or other agreement in this Indenture and such failure
continues for 60 days after notice to the Company by the Trustee or the Holders
of at least 25% in aggregate principal amount of the Notes then outstanding;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, if that default: (i) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such mortgage, indenture
or instrument (a "Payment Default"); or (ii) results in the acceleration of such
Indebtedness prior to its express maturity, and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness
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under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries that are Significant Subsidiaries or any
group of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $10.0
million;
(g) the Company or any of its Restricted Subsidiaries that are Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary or for all or substantially all of the property of the Company
or any of its Restricted Subsidiaries that are Significant Subsidiaries or
any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries that are Significant Subsidiaries or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary;
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and the order or decree remains unstayed and in effect for 60 consecutive days;
or
(i) except as permitted by this Indenture, any Note Guarantee is held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under such
Guarantor's Note Guarantee.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately. Upon any such declaration, the Notes shall
become due and payable immediately. Notwithstanding the foregoing, if an Event
of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with
respect to the Company, any of its Restricted Subsidiaries that are Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to a Responsible Officer of the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after January 15, 2004 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to January 15,
2004 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on January 15 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount of the Notes on the date of payment that would otherwise be due but for
the provisions of this sentence):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1999.................................................. 114.0%
2000.................................................. 112.6%
2001.................................................. 111.2%
2002.................................................. 109.8%
2003.................................................. 108.4%
</TABLE>
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Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note 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. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to a Responsible Officer of the Trustee
written notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
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(d) 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
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on the Note, on or after the respective due dates expressed in the Note
(including in connection with an offer to purchase), 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 such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest 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.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to 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
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder
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any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on
the Notes for principal, premium, if any and interest, respectively;
and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a 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 and expenses, 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 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties that
are specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(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.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall
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be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(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 or direction of
any of the Holders unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to it against the costs, expenses
and liabilities that might be incurred by it in compliance with such request or
direction.
(g) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney at the sole cost of the
Company and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation;
(h) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Officer of the
Trustee, and such notice references the securities and this Indenture; and
(i) the rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
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The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Officer of the Trustee, the Trustee shall mail
to Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each January 15 beginning with the January 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA (Section) 313(a) (but if
no event described in TIA (Section) 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (Section) 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA (Section) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (Section) 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange and any delisting therefrom.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed upon from time to time in writing for its
acceptance of this Indenture and services hereunder. 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 promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee (and any predecessor Trustee)
against any and all losses, liabilities, claims, damages or expenses (including
taxes other than taxes based on the income of the Trustee) or expenses incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture, including the costs and expenses of enforcing
this Indenture against the Company (including this Section 7.07) and defending
itself against any claim
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(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability, claims, damages or
expense may be attributable to its negligence or willful misconduct. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
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. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (Section) 313(b)(2)
to the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) 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 promptly appoint a successor
Trustee. Within one year after the
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successor Trustee takes office, the Holders of a majority in principal amount of
the then outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 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 then outstanding Notes
may petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (Section) 310(a)(1), (2) and (5). The Trustee is subject to
TIA (Section) 310(b).
Section 7.11. Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA (Section) 311(a), excluding any creditor
relationship listed in TIA (Section) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (Section) 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
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Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes and all
outstanding Note Guarantees upon compliance with the conditions set forth below
in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes and the
Guarantors shall, subject the satisfaction of the conditions set forth in
Section 8.04 hereof, be deemed to have been discharged from their obligations
with respect to all outstanding Note Guarantees on the date the conditions set
forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose,
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes and the
Guarantors shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Note Guarantees, which shall thereafter be deemed
to be "outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all their other obligations under such Notes and Note Guarantees and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest and Liquidated Damages, if any, on such Notes when such
payments are due, (b) the Company's obligations with respect to such Notes under
Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article Eight. Subject to compliance with this Article
Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.05,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 (except with respect to the
obligation to maintain the corporate existence of the Company), 4.15, 4.16,
4.17, 4.18, 4.19, 4.20, and 4.21 hereof and clause (4) of clause (ii) and the
penultimate sentence of Section 5.01 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that,
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with respect to the outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events shall not constitute a Default or an Event
of Default under Section 6.01 hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(f)
hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that (i) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (ii) since the date
of this Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be
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applied to such deposit) or insofar as Sections 6.01(g) and 6.01(h) hereof are
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof),
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are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
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(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to add Guarantors of the Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof) , the Note Guarantees and the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture, the Note Guarantees or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes). In addition, without the consent of at least 75% in principal amount of
the Notes then outstanding, no waiver or amendment to this Indenture may make
any change in the provisions of Article 10 hereof that adversely affects the
rights of any Holder of Notes. Section 2.08 hereof shall determine which Notes
are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
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It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes 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 amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes except as
provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 or 4.15 hereof); or
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
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Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
Section 10.02. Certain Definitions.
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"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
Section 10.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment in full
in cash or Cash Equivalents of all Obligations due in respect of such
Senior Debt (including interest accruing after the commencement of any
such proceeding at the rate specified in the applicable Senior Debt)
before Holders of the Notes shall be entitled to receive any payment
with respect to the Notes (except that Holders may receive (A)
Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01
hereof); and
(ii) until all Obligations with respect to Senior Debt (as provided in
clause (i) above) are paid in full, any distribution to which Holders
would be entitled but for this Article 10 shall be made to holders of
Senior Debt (except that Holders of Notes may receive (A) Permitted
Junior Securities and (B) payments and other distributions made from
any defeasance trust created pursuant to Section 8.01 hereof), as their
interests may appear.
Section 10.04. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution to the Trustee
or any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (A) Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full if:
(i) a default in the payment of any principal or other Obligations with
respect to Designated Senior Debt occurs and is continuing beyond any
applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior Debt
occurs and is continuing that then permits holders of the Designated
Senior Debt to accelerate its maturity and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from a Person who
may give it pursuant to Section 10.12 hereof. If the Trustee receives
any such Payment Blockage Notice, no subsequent Payment Blockage Notice
shall be effective for purposes
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of this Section unless and until (A) at least 360 days shall have
elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (B) all scheduled payments of principal, premium,
if any, and interest on the Securities that have come due have been
paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to
the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been waived for a period
of not less than 180 days.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) the date upon which the default is cured or waived, by written
notice to the Trustee and the Company from the Person or Persons who
gave such Payment Blockage Notice and, in the case of designated Senior
Debt that has been accelerated, such acceleration has been rescinded,
or
(ii) in the case of a default referred to in clause (ii) of this
Section 10.04(a), 179 days after notice is received if the maturity of
such Designated Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.05. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.06. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of
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Senior Debt, and shall not be liable to any such holders if the Trustee shall
pay over or distribute to or on behalf of Holders or the Company or any other
Person money or assets to which any holders of Senior Debt shall be entitled by
virtue of this Article 10, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee.
Section 10.07. Notice by Company.
The Company shall promptly notify a Responsible Officer of the Trustee
and a Responsible Officer of the Paying Agent of any facts known to the Company
that would cause a payment of any Obligations with respect to the Notes to
violate this Article 10, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt as provided in this Article 10.
Section 10.08. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
Section 10.09. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes, the obligation
of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior
Debt; or
(iii) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions
and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
Section 10.10. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
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Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
Section 10.14. Amendments.
The provisions of this Article 10 shall not be amended or modified in
any manner adverse to any holder of Senior Debt without the written consent of
such holder.
Section 10.15. Trustee Not Fiduciary for Holders of Senior
Debt.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or
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distribute to Holders of Notes or to the Company or to any other person cash,
property or securities to which any holders of Senior Debt shall be entitled by
virtue of this Article or otherwise. With respect to the holders of Senior Debt,
the Trustee undertakes to perform or to observe only such of its covenants or
obligations as are specifically set forth in this Article and no implied
covenants or obligations with respect to holders of Senior Debt shall be read
into this Indenture against the Trustee.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (Section) 318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company [and/or any Guarantor]:
Key Energy Services, Inc.
Two Tower Center
20th Floor
East Brunswick, NJ 08816
Telecopier No.: (732) 247-5148
Attention: General Counsel
With a copy to:
Porter & Hedges, L.L.P.
700 Louisiana St.
Suite 3500
Houston, TX 77002
Telecopier No.: (713) 226-0229
Attention: Samuel N. Allen
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If to the Trustee:
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust
Trustee Administration
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) 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 acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (Section) 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other
Holders of Notes.
Holders may communicate pursuant to TIA (Section) 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA (Section) 312(c).
Section 11.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
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(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (Section) 314(a)(4)) shall comply with the provisions of TIA
(Section) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the Note
Guarantees, this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
Section 11.08. Governing Law.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 11.09. No Adverse Interpretation of Other Agreements.
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This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Guarantor in this Indenture shall bind
its successors, except as otherwise provided in Section 12.06.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes 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 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
ARTICLE 12
NOTE GUARANTEES
Section 12.01. Guarantee.
Subject to this Article 12, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that 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.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
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The Guarantors hereby agree that (subject to the provisions of Section
12.02 hereof) their obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Notes or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each 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 covenant
that this Note Guarantee shall not be discharged except by complete performance
of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, 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 6 hereof
for the purposes of this Note 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 declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.
Section 12.02. Subordination of Note Guarantee.
The Obligations of each Guarantor under its Note Guarantee pursuant to
this Article 12 shall be junior and subordinated to all Guarantor Senior Debt of
such Guarantor on the same basis as the Notes are junior and subordinated to
Senior Debt of the Company. For the purposes of the foregoing sentence, the
Trustee and the Holders shall have the right to receive and/or retain payments
by any of the Guarantors only at such times as they may receive and/or retain
payments in respect of the Notes pursuant to this Indenture, including Article
10 hereof.
Section 12.03. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will, after giving effect
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to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 12, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.
Section 12.04. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 12.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit D shall be endorsed by an Officer of such Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Presidents.
Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
If required by Section 4.20 hereof, the Company shall cause such
Subsidiaries to execute supplemental indentures to this Indenture and Note
Guarantees in accordance with Section 4.20 hereof and this Article 12, to the
extent applicable.
Section 12.05. Guarantors May Consolidate, etc., on Certain
Terms.
Except as otherwise provided in Section 12.06, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 12.06 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set
forth herein or therein and immediately after giving effect to such transaction,
no Default or Event of Default exists; or
(b) the Note Guarantee of such Guarantor is to be released pursuant to
Section 12.06.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and
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satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Guarantor, such successor
Person shall succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such successor Person
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 12.06. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee, if immediately after giving effect to such
sale, there is no Default or Event of Default that has occurred and is
continuing. If such Guarantor is not released and relieved of its obligations
under its Note Guarantee because a Default or Event of Default has occurred and
is continuing immediately after giving effect to such sale, such Guarantor will
be released and relieved of such obligations as soon thereafter as all Defaults
and Events of Default have been waived or cured. If the Company designates any
Restricted Subsidiary that is a Guarantor or an Unrestricted Subsidiary in
accordance with the provisions of Section 4.19 hereof, such Restricted
Subsidiary will be released and relieved of any obligations under its Note
Guarantee. The Trustee shall execute any documents reasonably required in order
to evidence the release of any Guarantor, pursuant to the provisions of this
Section 12.06, from its obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 12.
[Signatures on following page]
SIGNATURES
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Dated as of January __, 1999
KEY ENERGY SERVICES, INC.
By ___________________________________
Name:
Title:
THE BANK OF NEW YORK.
By ___________________________________
Name:
Title:
YALE E. KEY, INC., KEY ENERGY DRILLING, INC., WELLTECH EASTERN, INC.,
ODESSA EXPLORATION INCORPORATED, KALKASKA OILFIELD SERVICES, INC.,
WELL-CO OIL SERVICE, INC., PATRICK WELL SERVICE, INC., MOSLEY WELL
SERVICE, INC., RAM OIL WELL SERVICE, INC., ROWLAND TRUCKING CO., INC.,
LANDMARK FISHING & RENTAL, INC., DUNBAR WELL SERVICE, INC., FRONTIER
WELL SERVICE, INC., KEY ROCKY MOUNTAIN, INC., KEY FOUR CORNERS, INC.,
JETER SERVICE CO., JETER WELL SERVICE, INC., JETER TRANSPORTATION,
INC., INDUSTRIAL OILFIELD SUPPLY, INC., BROOKS WELL SERVICING, INC.,
UPDIKE BROTHERS, INC., J.W. GIBSON WELL SERVICE COMPANY, KEY ENERGY
SERVICES--SOUTH TEXAS, INC., KEY ENERGY SERVICES--CALIFORNIA, INC.,
WATSON OILFIELD SERVICE & SUPPLY, INC., WELLTECH MID-CONTINENT, INC.,
DAWSON PRODUCTION MANAGEMENT, INC., DAWSON PRODUCTION TAYLOR, INC.,
DAWSON PRODUCTION ACQUISITION CORP.,
By ___________________________________
Name:
Title:
DAWSON PRODUCTION PARTNERS, L.P.
BY DAWSON PRODUCTION MANAGEMENT INC., ITS SOLE GENERAL PARTNER
By ___________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 99(e)
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JANUARY 22, 1999
BY AND AMONG
KEY ENERGY SERVICES, INC.,
Yale E. Key, Inc.; Key Energy Drilling, Inc.;
WellTech Eastern, Inc.; Odessa Exploration
Incorporated; Kalkaska Oilfield Services, Inc.;
Well-Co Oil Service, Inc.; Patrick Well Service,
Inc.; Mosley Well Service, Inc.; Ram Oil Well
Service, Inc.; Rowland Trucking Co., Inc.; Landmark
Fishing & Rental, Inc.; Dunbar Well Service, Inc.;
Frontier Well Service, Inc.; Key Rocky Mountain,
Inc.; Key Four Corners, Inc.; Jeter Service Co.;
Jeter Well Service, Inc.; Jeter Transportation, Inc.;
Industrial Oilfield Supply, Inc.; Brooks Well
Servicing, Inc.; Updike Brothers, Inc.; J.W. Gibson
Well Service Company; Key Energy Services -- South
Texas, Inc.; Key Energy Services -- California, Inc.;
Watson Oilfield Service & Supply, Inc.; WellTech
Mid-Continent, Inc.; Dawson Production Management,
Inc.; Dawson Production Taylor, Inc.; Dawson
Production Acquisition Corp.; and Dawson Production
Partners, L.P.
AND
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
F-A-C/EQUITIES,
a division of First Albany Corporation
DAIN RAUSCHER WESSELS,
a division of Dain Rauscher Incorporated
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of January 22, 1999, by and among Key Energy Services, Inc., a
Maryland corporation (the "COMPANY"), Yale E. Key, Inc., a Texas corporation;
Key Energy Drilling, Inc., a Delaware corporation; WellTech Eastern, Inc., a
Delaware corporation; Odessa Exploration Incorporated, a Delaware corporation;
Kalkaska Oilfield Services, Inc., a Michigan corporation; Well-Co Oil Service,
Inc., a Nevada corporation; Patrick Well Service, Inc., a Kansas corporation;
Mosley Well Service, Inc., a Louisiana corporation; Ram Oil Well Service, Inc.,
a New Mexico corporation; Rowland Trucking Co., Inc., a New Mexico corporation;
Landmark Fishing & Rental, Inc., an Oklahoma corporation; Dunbar Well Service,
Inc., a Colorado corporation; Frontier Well Service, Inc., a Wyoming
corporation; Key Rocky Mountain, Inc., a Delaware corporation; Key Four Corners,
Inc., a Delaware corporation; Jeter Service Co., an Oklahoma corporation; Jeter
Well Service, Inc., an Oklahoma corporation; Jeter Transportation, Inc., an
Oklahoma corporation; Industrial Oilfield Supply, Inc., an Oklahoma corporation;
Brooks Well Servicing, Inc., a Delaware corporation; Updike Brothers, Inc., a
Wyoming corporation; J.W. Gibson Well Service Company, a Delaware corporation;
Key Energy Services -- South Texas, Inc., a Delaware corporation; Key Energy
Services -- California, Inc., a Delaware corporation; Watson Oilfield Service &
Supply, Inc., a Delaware corporation; WellTech Mid-Continent, Inc., a Delaware
corporation; Dawson Production Management, Inc., a Delaware corporation; Dawson
Production Taylor, Inc., a Delaware corporation; Dawson Production Acquisition
Corp., a Delaware corporation; and Dawson Production Partners, L.P., a Delaware
limited partnership (collectively, the "GUARANTORS") and Lehman Brothers Inc.,
Bear, Stearns & Co. Inc., F- A- C/Equities, a division of First Albany
Corporation and Dain Rauscher Wessels, a division of Dain Rauscher Incorporated
(collectively, the "INITIAL PURCHASERS") who have agreed pursuant to the
Purchase Agreement (as defined below) to purchase severally and not jointly an
aggregate of 150,000 Units of the Company (the "UNITS") consisting of
$150,000,000 aggregate principal amount of the Company's 14% Senior Subordinated
Notes due 2009 (the "NOTES") and 150,000 Warrants (the "WARRANTS") to purchase
an aggregate of 2,032,565 shares of common stock, par value $0.10 per share, of
the Company (the "COMMON STOCK").
This Agreement is made pursuant to the Purchase Agreement, dated
January 19, 1999 (the "PURCHASE AGREEMENT"), by and among the Company, the
Guarantors and the Initial Purchasers relating to the purchase by the Initial
Purchasers of the Company's Units.
In order to induce the Initial Purchasers to purchase the Units, the
Company has agreed to provide the registration rights for the Notes set forth in
this Agreement. Capitalized terms used herein and not otherwise defined shall
have the meaning assigned to them in the Indenture, dated January 22, 1999,
relating to the Notes and the New Notes (the "INDENTURE") between the Company
and The Bank of New York, as trustee (the "TRUSTEE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
BUSINESS DAY: As defined in the Exchange Act.
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<PAGE> 3
CERTIFICATED SECURITIES: Definitive Notes as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrars under the Indenture of New Notes in the same aggregate principal
amount as the aggregate principal amount of Notes tendered by Holders thereof
pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The offer by the Company to exchange and issue a
principal amount of New Notes (which issuance shall be registered pursuant to
the Exchange Offer Registration Statement) equal to the outstanding principal
amount of the Notes that are tendered by such Holders in connection with such
offer to exchange and issue in accordance with the terms and conditions of this
Agreement.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Units to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
NEW NOTES: The Company's 14% Senior Subordinated Notes due 2009,
identical in all material respects to the Notes, to be issued pursuant to the
Indenture (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and
the Guarantors relating to (a) an offering of New Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer
2
<PAGE> 4
Restricted Securities pursuant to the Shelf Registration Statement, in each
case, (i) that is filed pursuant to the provisions of this Agreement and (ii)
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each (A) Note, until the earliest to
occur of (i) the date on which such Note is exchanged in the Exchange Offer for
a New Note which is entitled to be resold to the public by the Holder thereof
without complying with the prospectus delivery requirements of the Act, (ii) the
date on which such Note has been disposed of pursuant to a Shelf Registration
Statement (and the purchasers thereof have been issued New Notes), or (iii) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Act and each (B) New Note held by a Broker Dealer until the date on which
such New Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "HOLDER") whenever such Person is the holder of record of
Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section 6(a)(i) below
have been complied with), the Company and the Guarantors will use their
reasonable best effort to (i) cause the Exchange Offer Registration Statement to
be filed with the Commission no later than 60 days after the Closing Date (such
60th day being the "FILING DEADLINE"), (ii) to cause such Exchange Offer
Registration Statement to become effective no later than 150 days after the
Closing Date (such 150th day being the "EFFECTIVENESS DEADLINE"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the New Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) subject to Section 6(d) hereof, upon the effectiveness of such Exchange
Offer Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer Registration Statement shall be on the appropriate form
permitting (i) registration of the issuance of New Notes to be offered in
exchange for the Notes that are Transfer Restricted Securities and (ii) resales
of New Notes by Broker-Dealers that tendered into the Exchange Offer Notes that
such Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Notes acquired directly from
the Company or any of its Affiliates) as contemplated by Section 3(c) below.
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<PAGE> 5
(b) Subject to Section 6(d) hereof, the Company and the
Guarantors shall use their respective reasonable best efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Company and the Guarantors shall cause the Exchange
Offer to comply with all applicable federal and state securities laws. Subject
to Section 6(d) hereof, the Company and the Guarantors shall use their
respective reasonable best efforts to cause the Exchange Offer to be Consummated
within 30 Business Days after the Exchange Offer Registration Statement has
become effective (such 30th day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Broker-Dealer who holds Transfer Restricted Securities
that were acquired for the account of such Broker-Dealer as a result of
market-making activities or other trading activities (other than Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter (available
July 2, 1993).
Because such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of any New Notes received by such Broker-Dealer in the Exchange Offer, the
Company and the Guarantors shall subject to Section 6(d) hereof, permit the use
of the Prospectus contained in the Exchange Offer Registration Statement by such
Broker-Dealer to satisfy such prospectus delivery requirement. To the extent
necessary to ensure that the prospectus contained in the Exchange Offer
Registration Statement is available for sales of New Notes by Broker-Dealers,
the Company and the Guarantors agree, subject to Section 6(d) hereof, to use
their respective reasonable best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as required
by and subject to the provisions of Section 6(a) and (c) hereof and in
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the Consummation Deadline or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto. The Company and the Guarantors shall
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not
permitted by applicable law or Commission policy (after the Company and the
Guarantors have complied with the procedures set forth in Section 6(a)(i) hereof
and, if applicable, this Section 4(a) hereof) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company within 20 Business Days following
the Consummation Deadline (and the Company does not reasonably object based on
advice of counsel with respect to applicable law) that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the New Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the Prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder or (C) such Holder is a Broker-Dealer and holds
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<PAGE> 6
Notes acquired directly from the Company or any of its Affiliates, then the
Company and the Guarantors shall:
(x) subject to Section 6(d) hereof, cause to be filed, on or
prior to 90 days after the earlier of (i) the date on which the
Company determines that the Exchange Offer Registration Statement
cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii)
above, (such earlier date, the "FILING DEADLINE"), a shelf
registration statement pursuant to Rule 415 under the Act (which may
be an amendment to the Exchange Offer Registration Statement (the
"SHELF REGISTRATION STATEMENT")), relating to all Transfer Restricted
Securities, and
(y) subject to Section 6(d) hereof, shall use its reasonable best
efforts to cause such Shelf Registration Statement to become
effective on or prior to 150 days after the Filing Deadline for the
Shelf Registration Statement (such 150th day the "EFFECTIVENESS
DEADLINE").
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law (i.e.,
clause (a)(i) above), then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
provided that, in such event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a) and the other
securities required to be registered therein pursuant to Section 6(b)(ii)
hereof, the Company and the Guarantors shall use their respective reasonable
best efforts to keep any Shelf Registration Statement required by this Section
4(a) continuously effective, supplemented, amended and current as required by
and subject to the provisions of Sections 6(b) and (c) hereof and in conformity
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years following the Closing Date, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 days after receipt of a request
therefor, the information specified in Item 507 or 508 of Regulation S-K, as
applicable, of the Act for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No Holder of
Transfer Restricted Securities shall be entitled to liquidated damages pursuant
to Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) the Exchange Offer Registration Statement required by
this Agreement is not filed with the Commission on or prior to the applicable
Filing Deadline, (ii) the Exchange Offer Registration Statement has not been
declared effective by the Commission on or prior to the applicable Effectiveness
Deadline, (iii) the Exchange Offer has not been Consummated on or prior to the
date which is 180 days after the date hereof, (iv) subject to Section 6(d)
hereof, the Shelf Registration Statement has not been filed with the
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<PAGE> 7
Commission on or prior to the applicable Effectiveness Deadline or if the Shelf
Registration Statement has not been declared effective by the Commission, or (v)
subject to Section 6(d) hereof, any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective immediately (each such
event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then
the Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages in
an amount equal to $.05 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.20 per week per $1,000 principal
amount of Transfer Restricted Securities; provided that the Company and the
Guarantors shall in no event be required to pay liquidated damages for more than
one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, upon fulfilling the obligation that gave rise to the
obligation of the Company to pay liquidated damages as provided above, the
accrual of liquidated damages shall cease.
All accrued liquidated damages shall be paid to the Holders
entitled thereto, in the manner provided for the payment of interest in the
Indenture, on each Interest Payment Date, as more fully set forth in the
Indenture and the Notes. Notwithstanding the fact that any securities for which
liquidated damages are due cease to be Transfer Restricted Securities, all
obligations of the Company and the Guarantors to pay liquidated damages with
respect to securities shall survive until such time as such obligations with
respect to such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Company and the Guarantors shall subject to Section 6(d)
hereof, (x) comply, in all material respects, with all applicable provisions of
Section 6(c) below, (y) use their respective reasonable best efforts to effect
such exchange and to permit the resale of the New Notes by Broker-Dealers that
tendered in the Exchange Offer and (z) comply with all of the following
provisions:
(i) If, following the date hereof there has been
announced a change in Commission policy with respect to exchange offers
such as the Exchange Offer, that in the reasonable opinion of counsel to
the Company raises a substantial question as to whether the Exchange
Offer is permitted by applicable federal law, the Company and the
Guarantors hereby agree to either (i) seek a no-action letter or other
favorable decision from the Commission allowing the Company and the
Guarantors to Consummate an Exchange Offer for such Transfer Restricted
Securities or (ii) make available a Shelf Registration Statement
pursuant to and within the time periods prescribed in Section 4(a)
hereof. If the Company and the Guarantors elect to proceed under clause
(i) above, the Company and the Guarantors hereby agree to pursue the
issuance of such a decision to the Commission staff level, and the
Company and the Guarantors hereby further agree to take all such other
actions as may be requested by the Commission or otherwise required in
connection with the issuance of such decision, including without
limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared
by counsel to the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff.
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<PAGE> 8
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker Dealer) shall furnish, upon the
request of the Company, prior to the Consummation of the Exchange Offer,
a written representation to the Company and the Guarantors (which may be
contained in the letter of transmittal contemplated by the Exchange
Offer Registration Statement) to the effect that (A) it is not an
Affiliate of the Company, (B) it is not engaged in, and does not intend
to engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the New Notes to be issued in the
Exchange Offer and (C) it is acquiring the New Notes in its ordinary
course of business. As a condition to its participation in the Exchange
Offer, each Holder using the Exchange Offer to participate in a
distribution of the New Notes shall acknowledge and agree that, if the
resales are of New Notes obtained by such Holder in exchange for Notes
acquired directly from the Company or an Affiliate thereof, it (1) could
not, under Commission policy as in effect on the date of this Agreement,
rely on the position of the Commission enunciated in Morgan Stanley and
Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the registration
and prospectus delivery requirements of the Act in connection with a
secondary resale transaction and that such a secondary resale
transaction must be covered by an effective registration statement
containing the selling security holder information required by Item 507
or 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall, upon
request by the Commission, provide a supplemental letter to the
Commission (A) stating that the Company and the Guarantors are
registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
interpreted in the Commission's letter to Shearman & Sterling dated July
2, 1993, and, if applicable, any no-action letter obtained pursuant to
clause (i) above, (B) including a representation that neither the
Company nor any Guarantor has entered into any arrangement or
understanding with any Person to distribute the New Notes to be received
in the Exchange Offer and that, to the best of the Company's and each
Guarantor's information and belief, each Holder participating in the
Exchange Offer is acquiring the New Notes in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the New Notes received in the
Exchange Offer and (C) any other undertaking or representation required
by the Commission as set forth in any no-action letter obtained pursuant
to clause (i) above, if applicable.
(b) Shelf Registration Statement.
In connection with the Shelf Registration Statement, the
Company and the Guarantors shall:
(i) subject to Section 6(d) hereof, comply, in all
material respects, with all the provisions of Section 6(c) below and use
their respective reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof
(as indicated in the information furnished to the Company pursuant to
Section 4(b) hereof), and pursuant thereto the Company and the
Guarantors will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the
Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods
of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof, and
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<PAGE> 9
(ii) issue, upon the request of any Holder or purchaser
of Notes covered by any Shelf Registration Statement contemplated by
this Agreement, New Notes having an aggregate principal amount equal to
the aggregate principal amount of Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation;
the Company shall register New Notes on the Shelf Registration Statement
for this purpose and issue the New Notes to the purchaser(s) of
securities subject to the Shelf Registration Statement in the names as
such purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company and
the Guarantors shall:
(i) subject to Section 6(d) hereof, use their respective
reasonable best efforts to keep such Registration Statement continuously
effective and provide all requisite financial statements for the period
specified in Section 3 or 4 of this Agreement, as applicable. Upon the
occurrence of any event that would cause any such Registration Statement
or the Prospectus contained therein (A) to contain an untrue statement
of material fact or omit to state any material fact necessary to make
the statements therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company and the Guarantors shall subject
to Section 6(d) hereof, file promptly an appropriate amendment to such
Registration Statement curing such defect, and, if Commission review is
required, use their respective reasonable best efforts to cause such
amendment to be declared effective as soon as practicable.
(ii) subject to Section 6(d) hereof, prepare and file
with the Commission such amendments and post-effective amendments to the
applicable Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period set forth in
Section 3 or 4 hereof, as the case may be; subject to Section 6(d)
hereof, cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution
by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by
such Holder, confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement (other than a Prospectus Supplement relating
solely to the resale of Transfer Restricted Securities under a
Registration Statement) or post-effective amendment has been filed, and,
with respect to any applicable Registration Statement or any
post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to
make the statements therein not misleading, or that requires the making
of any additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness
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<PAGE> 10
of the Registration Statement, or any state securities commission or
other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the
Company and the Guarantors shall use their respective reasonable best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) subject to Section 6(c)(i) and Section 6(d) hereof,
if any fact or event contemplated by Section 6(c)(iii)(D) above shall
exist or have occurred, prepare a supplement or post-effective amendment
to the Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(v) furnish to each Holder promptly after the time of
filing with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements (excluding
Prospectus supplements relating solely to the resale of Transfer
Restricted Securities under a Registration Statement) to any such
Registration Statement or Prospectus (excluding all documents
incorporated by reference).
(vi) make available, at reasonable times, for inspection
by each Holder and any attorney or accountant retained by such Holders,
all financial and other records, pertinent corporate documents of the
Company and the Guarantors and cause the Company's and the Guarantors'
officers, directors and employees to supply all information reasonably
requested by any such Holders, attorney or accountant in connection with
such Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(vii) subject to Section 6(d) hereof, if requested by any
Holders, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities and the use
of the Registration Statement or Prospectus for market making
activities; and subject to Section 6(d) hereof, make all required
filings of such Prospectus supplement or post-effective amendment as
soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(viii) furnish to each Holder upon request, without
charge, at least one copy of the Registration Statement, as first filed
with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(ix) deliver to each Holder without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request;
the Company and the Guarantors hereby consent to the use (in accordance
with law and subject to Section 6(d) hereof) of the Prospectus and any
amendment or supplement thereto by each selling Holder in connection
with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto;
(x) upon the request of any Holder, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition
of the Transfer
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<PAGE> 11
Restricted Securities pursuant to any Shelf Registration Statement
contemplated by this Agreement as may be reasonably requested by any
Holder in connection with any sale or resale pursuant to any Shelf
Registration Statement but only in connection with an underwritten
public offering for a minimum of $50,000,000 principal amount of Notes.
In such connection, the Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use their respective reasonable best efforts to cause to
be furnished) to each Holder, upon consummation of the Exchange Offer or upon
the effectiveness of the Shelf Registration Statement, as the case may be:
(3) a certificate, dated such date, signed on behalf
of the Company and each Guarantor by (x) the President or any
Vice President and (y) a principal financial or accounting
officer of the Company and such Guarantor, confirming, as of
the date thereof, the matters set forth in Sections 1, 7(h),
7(i) and 7(j) of the Purchase Agreement and such other similar
matters as such Holder may reasonably request;
(4) an opinion, dated the date of Consummation of the
Exchange Offer or date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Guarantors covering matters similar to those
set forth in paragraph (e) of Section 9 of the Purchase
Agreement and such other matter as such Person may reasonably
request, and in any event including a statement to the effect
that such counsel has participated in conferences with
officers and other representatives of the Company and the
Guarantors, representatives of the independent public
accountants for the Company and the Guarantors and has
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness
of such statements; and that such counsel advises that, on the
basis of the foregoing, no facts came to such counsel's
attention that caused such counsel to believe that the
applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective and in the case of the Exchange Offer
Registration Statement, as of the date of Consummation of the
Exchange Offer, 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 therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer,
as of the date of Consummation, contained an untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may
state further that such counsel assumes no responsibility for,
and has not independently verified, the accuracy, completeness
or fairness of the financial statements, notes and schedules
and other financial data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
(5) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the case
may be, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 7(f) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by
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<PAGE> 12
the selling Holders to evidence compliance with the matters covered in clause
(A) above and with any customary conditions contained in the any agreement
entered into by the Company and the Guarantors pursuant to this clause (x);
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may reasonably request and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; provided, however,
that neither the Company nor any Guarantor shall be required to register
or qualify as a foreign corporation where it is not now so qualified or
to take any action that would subject it to the service of process in
suits or to taxation, other than as to matters and transactions relating
to the Registration Statement, in any jurisdiction where it is not now
so subject;
(xii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities in such
denominations and such names as the selling Holders may request at least
two Business Days prior to such sale of Transfer Restricted Securities;
(xiii) use their respective reasonable best efforts to
cause the disposition of the Transfer Restricted Securities covered by
the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xi) above;
(xiv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee
under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xv) otherwise use their respective reasonable best
efforts to comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders with
regard to any applicable Registration Statement, as soon as practicable,
a consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in paragraph (c) of Rule 158 under the Act);
(xvi) cause the Indenture to be qualified under the TIA
not later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders to effect such changes to the 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 reasonable best efforts to
cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so qualified in
a timely manner; and
(xvii) provide promptly to each Holder and affiliated
market maker, upon request, each document filed with the Commission
pursuant to the requirements of Section 13 or Section 15(d) of the
Exchange Act.
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(d) Restrictions on Holders. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(iii)(C) or any notice from the Company of the existence of any
fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed
(in each case, the "RECOMMENCEMENT DATE", with each such period of time from the
Suspension Notice until the Recommencement Date being referred to herein as a
"Black Out Period"). Each Holder receiving a Suspension Notice hereby agrees
that it will either (i) destroy any Prospectuses, other than permanent file
copies, then in such Holder's possession which have been replaced by the Company
with more recently dated Prospectuses or (ii) deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. If
the Company issues a Suspension Notice after commencement, before completion, of
the Exchange Offer, then the Exchange Offer will be suspended immediately until
the Recommencement Date. On the Recommencement Date, the Exchange Offer will
recommence and will remain effective for the periods set forth in Section 3(b)
as if the Exchange Offer had commenced on the Recommencement Date.
Notwithstanding the provisions of Section 5 hereof, no liquidated damages shall
accrue pursuant to clauses (iv) and (v) of Section 5 hereof during any Black Out
Period or during the period the Company is seeking a no-action letter or other
favorable decision pursuant to Section 6(a)(i) hereof.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the New Notes to be issued in the Exchange Offer and printing of
Prospectuses whether for exchanges, sales, market making or otherwise),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company and the Guarantors; (v) all application and filing
fees in connection with listing the New Notes on a national securities exchange
or automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by
this Agreement, the Holders of Transfer Restricted Securities who are tendering
Notes into in the Exchange Offer and/or selling or reselling Notes or New Notes
pursuant to the "Plan of Distribution" contained in the Exchange Offer
Registration Statement or the Shelf Registration Statement, as applicable, shall
be responsible for all of their expenses incurred including the fees and
disbursements of its counsel.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally,
to indemnify and hold harmless each Holder, its directors, officers and each
person, if any, who controls such Holder (within the
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<PAGE> 14
meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and
against any and all losses, claims, damages, liabilities, judgments, (including
without limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action that could give rise
to any such losses, claims, damages, liabilities or judgments) caused by any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto) provided by the Company to any Holder or any purchaser of
the New Notes or of the registered Notes, 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, except insofar as such
losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the Company
by any of the Holders.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company and the Guarantors, and their directors and
officers, and each Person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Company or the Guarantors
to the same extent as the foregoing indemnity from the Company and the
Guarantors set forth in section (a) above, but only with reference to
information relating to such Holders furnished in writing to the Company by such
Holders expressly for use in any Registration Statement. In no event shall any
Holder, its directors, officers or any Person who controls such Holder be liable
or responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages that such Holder, its directors, officers or any Person who controls
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all reasonable fees and expenses of such counsel, as
incurred (except that in the case of any action in respect of which indemnity
may be sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be
required to assume the defense of such action pursuant to this Section 8(c), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action failed (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company and the Guarantors, in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and
13
<PAGE> 15
against any and all losses, claims, damages, liabilities and judgments by reason
of any settlement of any action (i) effected with its written consent or (ii)
effected without its written consent if the settlement is entered into more than
20 Business Days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Guarantors, on the one hand, and the Holders, on the other hand, from their
sale of Transfer Restricted Securities or (ii) if the allocation provided by
clause 8(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) hereof but also the relative fault of the Company and the Guarantors, on
the one hand, and of the Holders, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors, on the one
hand, and of 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 such Guarantor, on the one
hand, or by the Holders, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and judgments referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of this Section 8(d), any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any matter, including any action that could have given use to such
losses, claims, damages, liabilities or judgments.
The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the preceding paragraph. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or judgments referred to in the preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any matter, including any action that could have
given rise to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the
14
<PAGE> 16
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the respective principal amounts of Transfer Restricted Securities
held by each Holder.
SECTION 9. RULE 144A and RULE 144
The Company and the Guarantors agree with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company or such Guarantor (i) is not subject to Section 13
or 15(d) of the Exchange Act, to make available, upon request of any Holder, to
such Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to
Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and
agree that any failure by the Company and/or the Guarantors to comply with their
respective obligations under Sections 3 and 4 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company's and the Guarantors' obligations under
Sections 3 and 4 hereof. The Company and the Guarantors further agree to waive
the defense in any action for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Neither the Company nor any
Guarantor will, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise materially conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not conflict
with and are not materially inconsistent with the rights granted to the holders
of the Company's and the Guarantors' securities under any agreement in effect on
the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case of
Section 5 hereof and this Section 10(c)(i), the Company has obtained the written
consent of Holders of all outstanding Transfer Restricted Securities and (ii) in
the case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer or that are being resold pursuant to the Exchange Offer
Registration Statement or the Shelf Registration Statement, and that does not
affect directly or indirectly the rights of other Holders whose Transfer
Restricted Securities are not being tendered pursuant to such Exchange Offer or
that are not being resold pursuant to the Exchange Offer Registration Statement
or the Shelf Registration Statement, may be given by the Holders of a majority
of the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the
15
<PAGE> 17
agreements made hereunder between the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Company or the Guarantors:
Key Energy Services, Inc.
Two Tower Center, 20th Floor
East Brunswick, NJ 08816
Telecopier No.: (732) 247-5148
Attention: General Counsel
With a copy to:
Porter & Hedges, L.L.P.
700 Louisiana Street, 35th Floor
Houston, TX 77002
Telecopier No.: (713) 226-0227
Attention: Samuel N. Allen
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 receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders; provided, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Transfer Restricted
Securities in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Transfer Restricted
Securities in any manner, whether by operation of law or otherwise, such
Transfer Restricted Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted Securities such
Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
16
<PAGE> 18
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and 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. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(l) Universal Shelf Registration Statements. The Initial
Purchasers acknowledge that the Company currently has on file with the
Commission two shelf registration statements on Forms S-3 and S-4 covering a
specific dollar amount of unspecified securities (the "UNIVERSAL SHELF
REGISTRATION STATEMENTS"). The Initial Purchasers agree that the Company may
amend the Universal Shelf Registration Statements to satisfy the requirements to
file Registration Statements within the applicable Filing Deadlines provided
that the Universal Shelf Registration Statements cover the type of transactions
required to be registered herein in accordance with applicable law and the rules
and regulations of the Commission; and provided, that such use of the Universal
Shelf Registration Statements do not affect the exemption from registration
under the Act of the issuance and sale of the Units to the Initial Purchasers.
(Signature pages follow)
17
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
KEY ENERGY SERVICES, INC.
By _________________________________
Name:
Title:
YALE E. KEY, INC., KEY ENERGY DRILLING, INC., WELLTECH EASTERN, INC.,
ODESSA EXPLORATION INCORPORATED, KALKASKA OILFIELD SERVICES, INC.,
WELL-CO OIL SERVICE, INC., PATRICK WELL SERVICE, INC., MOSLEY WELL
SERVICE, INC., RAM OIL WELL SERVICE, INC., ROWLAND TRUCKING CO., INC.,
LANDMARK FISHING & RENTAL, INC., DUNBAR WELL SERVICE, INC., FRONTIER
WELL SERVICE, INC., KEY ROCKY MOUNTAIN, INC., KEY FOUR CORNERS, INC.,
JETER SERVICE CO., JETER WELL SERVICE, INC., JETER TRANSPORTATION,
INC., INDUSTRIAL OILFIELD SUPPLY, INC., BROOKS WELL SERVICING, INC.,
UPDIKE BROTHERS, INC., J.W. GIBSON WELL SERVICE COMPANY, KEY ENERGY
SERVICES--SOUTH TEXAS, INC., KEY ENERGY SERVICES--CALIFORNIA, INC.,
WATSON OILFIELD SERVICE & SUPPLY, INC., WELLTECH MID-CONTINENT, INC.,
DAWSON PRODUCTION MANAGEMENT, INC., DAWSON PRODUCTION TAYLOR, INC.,
DAWSON PRODUCTION ACQUISITION CORP.,
By _________________________________
Name:
Title:
DAWSON PRODUCTION PARTNERS, L.P.
BY DAWSON PRODUCTION MANAGEMENT INC., ITS SOLE GENERAL
PARTNER.
By _________________________________
Name:
Title:
<PAGE> 20
Accepted:
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
F-A-C/Equities, a division
of First Albany Corporation
DAIN RAUSCHER WESSELS, a division
of Dain Rauscher Incorporated
By: LEHMAN BROTHERS INC.
By _________________________________
Name:
Title:
By: BEAR, STEARNS & CO. INC.
By _________________________________
Name:
Title:
By: F-A-C/Equities, a division
of First Albany Corporation
By _________________________________
Name:
Title:
By: DAIN RAUSCHER WESSELS, a division
of Dain Rauscher Incorporated
<PAGE> 21
By _________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 99(f)
WARRANT
REGISTRATION RIGHTS AGREEMENT
KEY ENERGY SERVICES, INC.
----------------------------------------
150,000 Warrants to Purchase an aggregate of 2,032,565 Shares of Common Stock
----------------------------------------
Dated as of January 22, 1999
-------------------
LEHMAN BROTHERS INC.,
BEAR, STEARNS & CO. INC.,
F-A-C/EQUITIES,
A DIVISION OF FIRST ALBANY CORPORATION
AND
DAIN RAUSCHER WESSELS,
a division of Dain Rauscher Incorporated
<PAGE> 2
This Warrant Registration Rights Agreement (this "Agreement") is made
and entered into as of January 22, 1999, by and among Key Energy Services, Inc.,
a Maryland corporation (the "Issuer"), and Lehman Brothers Inc., Bear, Stearns &
Co. Inc., F.A.C/Equities, a division of First Albany Corporation, and Dain
Rauscher Wessels, a division of Dain Rauscher Incorporated (the "Initial
Purchasers"), which have agreed to purchase the Warrants of the Issuer issued
pursuant to the warrant agreement (the "Warrant Agreement") between the Issuer
and The Bank of New York, a New York banking corporation, as warrant agent (the
"Warrant Agent").
The Warrants are being issued and sold in connection with the offering
by the Issuer of 150,000 Units each consisting of (i) $1,000 principal amount at
maturity of 14% Senior Subordinated Notes due 2009 (the "Notes") of the Issuer
and (ii) one warrant to purchase 13.5504 shares of common stock (each a
"Warrant" and collectively the "Warrants").
This Agreement is made pursuant to the Purchase Agreement, dated
January 19, 1999 (the "Purchase Agreement"), by and between the Issuer, the
Guarantors (as defined in the Purchase Agreement) and the Initial Purchasers. In
order to induce the Initial Purchasers to purchase the Warrants, the Issuer has
agreed to provide the registration rights set forth in this Agreement.
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Warrant Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144.
Black Out Notice: As defined in Section 4(b) hereof.
"Business Day": As defined in the Exchange Act
Black Out Period: As defined in Section 3(a) hereof.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Common Stock: The common stock, par value $.10 per share, of the
Issuer.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expiration Date: 5:00 p.m. New York City time on January 15, 2009.
Holders: As defined in Section 2 hereof.
Liquidated Damages: As defined in Section 3(b) hereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other
<PAGE> 3
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Registration Statement: Any registration statement of the Issuer
relating to the registration for resale of Registrable Securities and the
issuance of the Warrant Shares that is filed pursuant to the provisions of this
Agreement and including the Prospectus included therein, all amendments and
supplements thereto, including post-effective amendments, and all exhibits and
material incorporated by reference therein.
Registrable Securities: The Registrable Warrants and the Registrable
Warrant Shares; provided that a security ceases to be a Registrable Security
when it is no longer a Transfer Restricted Security.
Registrable Warrant Shares: Warrant Shares issued upon exercise of the
Warrants the resale of which is required to be registered under the Act.
Registrable Warrants: All Warrants originally issued pursuant to the
Warrant Agreement.
Rule 144: Rule 144 promulgated under the Act.
Transfer Restricted Securities: The Registrable Securities upon
original issuance thereof; provided that a Registrable Security is no longer a
Transfer Restricted Security when such Registrable Security is sold pursuant to
the Registration Statement contemplated by Section 3 or is freely transferable
without restrictions pursuant to Rule 144(k) or any successor rule under the
Act.
Warrant Shares: The shares of Common Stock issued or issuable upon the
exercise of the Warrants.
2. HOLDERS
A Person is deemed to be a holder of Registrable Securities (each, a
"Holder") whenever such Person is the holder of record of Registrable
Securities.
3. SHELF REGISTRATION
(a) Shelf Registration Shelf Registration. The Issuer shall prepare
and cause to be filed with the Commission on or before 60 days from the Closing
Date pursuant to Rule 415 under the Act a Registration Statement on the
appropriate form relating to the resale of Warrants, the issuance of the Common
Stock upon exercise of the Warrants and, under certain circumstances if required
by law, the resale of the Common Stock issuable upon exercise of the Warrants.
The Company shall use its reasonable best efforts to cause the Registration
Statement to be declared effective by the Commission on or before 150 days after
the Closing Date; provided that the Registration Statement with respect to the
issuance of the Common Stock or the resale of the Common Stock need not be
declared effective before the Warrants first become exercisable.
To the extent necessary to ensure that the Registration Statement is
available for sales of Registrable Securities by the Holders thereof entitled to
the benefit of this Section 3(a), the Issuer shall use its reasonable best
efforts to keep any Registration Statement required by this Section 3(a)
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Section 4(a) hereof and
2
<PAGE> 4
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, until
the earlier of (A) the Expiration Date and (B) the first date as of which all
Warrants have been exercised by the Holders thereof; provided that such
obligation shall expire before such date if the Issuer delivers to the Warrant
Agent a written opinion of counsel to the Issuer (which opinion of counsel shall
be satisfactory to the Issuer) that all Holders of Warrants and Warrant Shares
may resell the Warrants and the Warrant Shares without registration under the
Act and without restriction as to the manner, timing or volume of any such sale.
Notwithstanding the foregoing, the Issuer shall not be required to amend or
supplement any Registration Statement, any related prospectus or any document
incorporated therein by reference, or otherwise keep any Registration Statement
continuously effective for a period (a "Black Out Period") not to exceed, for so
long as this Agreement is in effect, two 45 consecutive-day periods (except for
the 45 consecutive-day period immediately before the Expiration Date) in any
calendar year, in the event that (i) an event occurs and is continuing as a
result of which the Registration Statement, any related prospectus or any
document incorporated therein by reference as then amended or supplemented
would, in the Issuer's good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (ii)(A) the Issuer determines in its good faith
judgment that the disclosure of such event at such time would have a material
adverse effect on the business, operations or prospects of the Issuer or (B) the
disclosure otherwise relates to a material business transaction which has not
yet been publicly disclosed; provided that such Black Out Period shall be
extended for any period, not to exceed an aggregate of 30 days in any calendar
year, during which the Commission is reviewing any proposed amendment or
supplement to the Registration Statement, any related prospectus or any document
incorporated therein by reference which has been filed by the Issuer; and
provided, further, if any Black Out Period is in effect during the three months
prior to January 15, 2009 the Expiration Date shall be extended by one day for
each day that any Black Out Period is in effect during such three month period.
(b) Liquidated Damages. If (i) the Registration Statement has not been
declared effective by the Commission in the time period required by subsection
(a) above or (ii) the Registration Statement is filed and declared effective but
shall thereafter cease to be effective or fail to be usable for its intended
purpose at any time within the time period required for effectiveness in
subsection (a) above without being succeeded immediately by a post-effective
amendment to the Registration Statement that cures such failure and that is
itself immediately declared effective (each such event referred to in clauses
(i) and (ii), a "Registration Default"), the Company shall pay liquidated
damages ("Liquidated Damages") to each holder of Registrable Securities in an
amount equal to $0.05 per Warrant held by such holder for each week or portion
thereof during which any Registration Default continues. The amount of such
Liquidated Damages shall increase on each 90-day anniversary of the day the
first Registration Default occurred by an additional $0.05 per Warrant Share for
each week or portion thereof during which any Registration Default continues
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $0.20 per week or portion thereof per Warrant Share. All
accrued Liquidated Damages shall be paid by wire transfer of immediately
available funds or by federal funds check on each Interest Payment Date, as
defined in the Indenture relating to the Notes, by and between the Issuer, the
Guarantors and The Bank of New York, as trustee, and dated as of the date
hereof. Liquidated Damages will be paid to the Warrant Agent for the benefit of
the Holders of record of a Warrant on the corresponding record date for the
interest payment on the Notes. Following the cure of all Registration Defaults
relating to any particular Registrable Security, the accrual of Liquidated
Damages with respect to such Registrable Security will cease. Except as provided
in Section 6 hereof, no holder of Registrable Securities shall be entitled to
any damages for a Registration Default beyond the Liquidated Damages provided
for herein.
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(c) Provision by Holders of Certain Information in Connection
with the Registration Statement Provision by Holders of Certain Information in
Connection with the Registration Statement. No Holder of Registrable Securities
may include any of its Registrable Securities for resale in any Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuer in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Registration Statement or Prospectus or
preliminary Prospectus included therein. Each selling Holder agrees to promptly
furnish additional information required to be disclosed in order to make the
information previously furnished to the Issuer by such Holder not materially
misleading. No such information shall be required with respect to the
registration of the issuance of the Warrant Shares upon exercise of the
Warrants.
4. REGISTRATION PROCEDURES
(a) In connection with the Registration Statement and any
related Prospectus required by this Agreement and, where applicable, subject to
any Black Out Period, the Issuer shall:
(i) use its reasonable best efforts to effect such registration
to permit the sale of the Registrable Securities being sold in
accordance with the intended method or methods of distribution
thereof (as indicated in the information furnished to the Issuer
pursuant to Section 3(c) hereof), and pursuant thereto the Issuer
will use its reasonable best efforts to prepare and file with the
Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be
available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution
thereof within the time periods and otherwise in accordance with
the provisions hereof;
(ii) use its reasonable best efforts to keep such Registration
Statement continuously effective. Upon the occurrence of any
event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain an untrue statement
of material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading or (B) not to be
effective and usable for resale of Registrable Securities during
the period required by this Agreement, the Issuer shall file
promptly an appropriate amendment to such Registration Statement
or a supplement to the Prospectus, as applicable, curing such
defect, and, in the case of an amendment, use its reasonable best
efforts to cause such amendment to be declared effective as soon
as practicable;
(iii) use its reasonable best efforts to prepare and file with
the Commission such amendments and post-effective amendments to
the applicable Registration Statement as may be necessary to keep
such Registration Statement effective for the applicable period
set forth in Section 3; cause the Prospectus contained therein to
be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and
to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions
of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable
period in accordance with the intended
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<PAGE> 6
method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the
Prospectus contained therein;
(iv) advise the Initial Purchasers promptly and, if requested
by the Initial Purchasers, confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request
by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the
Registrable Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding
purposes, and (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in
the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to
or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of
any additions to or changes in the Prospectus in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from
qualification of the Registrable Securities under state
securities or Blue Sky laws, the Issuer shall use its reasonable
best efforts to obtain the withdrawal or lifting of such order at
the earliest possible time;
(v) subject to Section 4(a)(ii), if any fact or event
contemplated by Section 4(a)(iv)(D) hereof shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of
Registrable Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vi) furnish to the Initial Purchasers, promptly after the time
of filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements (excluding Prospectus Supplements relating solely to
the resale of Registrable Securities under a Registration
Statement) to any such Registration Statement or Prospectus
(excluding all documents incorporated by reference).
(vii) make available, at reasonable times, for inspection by
the Initial Purchasers and any attorney or accountant retained by
the Initial Purchasers, all financial and other records,
pertinent corporate documents of the Issuer, and cause the
Issuer's officers, directors and employees to supply all
information reasonably requested by the Initial Purchasers or
then attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to
the filing thereof and prior to its effectiveness;
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<PAGE> 7
(viii) if requested by the Initial Purchasers, promptly include in
any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as the Initial
Purchasers may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution"
of the Registrable Securities and the use of the Registration
Statement or Prospectus for market-making activities; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Issuer is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(ix) furnish to the Initial Purchasers and each Holder, upon request,
without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto,
including, upon request and without change, all documents incorporated
by reference therein and all exhibits (including exhibits incorporated
therein by reference);
(x) deliver to the Initial Purchasers and each Holder, without
charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as the Initial
Purchasers or such Holder reasonably may request; the Issuer hereby
consents to the use (in accordance with law and subject to Section
4(b) hereof) of the Prospectus and any amendment or supplement thereto
by each selling Person in connection with the offering and the sale of
the Registrable Securities covered by the Prospectus or any amendment
or supplement thereto and all market-making activities of the Initial
Purchasers, as the case may be;
(xi) upon the request of the Initial Purchasers, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the
disposition of the Registrable Securities pursuant to any applicable
Registration Statement contemplated by this Agreement as may be
reasonably requested by the Initial Purchasers in connection with any
sale or resale pursuant to any applicable Registration Statement but
only in connection with an underwritten public offering for a minimum
of 800,000 Warrant Shares. In such connection, the Issuer shall:
(A) upon request of the Initial Purchasers, furnish (or in the
case of paragraphs (2) and (3), use its reasonable best efforts
to cause to be furnished) to the Initial Purchasers, upon the
effectiveness of the Registration Statement:
(1) a certificate, dated such date, signed on behalf of
the Issuer by (x) the President or any Vice President and
(y) a principal financial or accounting officer of the
Issuer, confirming, as of the date thereof, the matters set
forth in Sections 1, 7(h), 7(i) and 7(j) of the Purchase
Agreement and such other similar matters as such Person may
reasonably request;
(2) an opinion, dated the date of effectiveness of the
Registration Statement, of counsel for the Issuer covering
matters similar to those set
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<PAGE> 8
forth in Section 7(d) of the Purchase Agreement, and in any
event including a statement to the effect that such counsel
has participated in conferences with officers and other
representatives of the Issuer, representatives of the
independent public accountants for the Issuer and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to
materiality to the extent such counsel deems appropriate
upon the statements of officers and other representatives of
the Issuer and without independent check or verification),
no facts came to such counsel's attention that caused such
counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective 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 therein not misleading, or that the
Prospectus contained in such Registration Statement as of
its date contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading. Without limiting
the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of the financial statements, notes and schedules
and other financial data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated the date of
effectiveness of the Registration Statement, from the
Issuer's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Sections 7(f) and 7(g)
of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the Initial Purchasers to evidence compliance
with the matters covered in clause (A) above and with any customary
conditions contained in any agreement entered into by the Issuer
pursuant to this clause;
(xii) prior to any public offering of Registrable Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Registrable Securities under the
securities or Blue Sky laws of such jurisdictions as the selling Holders
may reasonably request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration Statement;
provided that the Issuer shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
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<PAGE> 9
(xiii) in connection with any sale of Registrable Securities that will
result in such securities no longer being Registrable Securities, cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and to register such Registrable Securities in
such denominations and such names as the selling Holders may request at
least two Business Days prior to such sale of Registrable Securities;
(xiv) use its reasonable best efforts to cause the disposition of the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities, subject to the
proviso contained in clause (xiii) above;
(xv) provide a CUSIP number for all Registrable Securities not later than
the effective date of a Registration Statement covering such Registrable
Securities and provide the Warrant Agent with certificates for the
Registrable Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xvi) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in Rule 158(c) under the
Act); and
(xvii) provide promptly to the Initial Purchasers, upon request, each
document filed with the Commission pursuant to the requirements of Section
13 or Section 15(d) of the Exchange Act.
(b) Restrictions on Holders. Each Holder agrees by acquisition of a
Registrable Security and the Initial Purchasers agrees that, upon receipt of the
notice from the Issuer of the commencement of a Black Out Period (in each case,
a "Black Out Notice"), such Person will forthwith discontinue disposition of
Registrable Securities pursuant to the applicable Registration Statement until
such Person is advised in writing by the Issuer of the termination of the Black
Out Period. Each Person receiving a Black Out Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Person's possession which have been replaced by the Issuer with more
recently dated Prospectuses or (ii) deliver to the Issuer (at the Issuer's
expense) all copies, other than permanent file copies, then in such Person's
possession of the Prospectus covering such Registrable Securities that was
current at the time of receipt of the Black Out Notice.
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<PAGE> 10
5. REGISTRATION EXPENSES
All expenses incident to the Issuer's performance of or compliance with
this Agreement will be borne by the Issuer, regardless of whether a Registration
Statement becomes effective, including, without limitation: (i) all registration
and filing fees and expenses; (ii) all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws; (iii) all expenses of
printing (including printing Prospectuses (whether for sales, market-making or
otherwise), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Issuer; (v) all application and filing fees in
connection with listing the Warrant Shares on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the Issuer
(including the expenses of any special audit and comfort letters required by or
incident to such performance). The Issuer will not be responsible for the
payment of any brokerage commissions, underwriting discounts or other expenses
of the Holders.
The Issuer will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Issuer.
6. INDEMNIFICATION
(a) The Issuer agrees to indemnify and hold harmless each Holder, its
directors, officers and each Person, if any, who controls such Holder (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from
and against any and all losses, claims, damages, liabilities, judgments,
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto) provided by the Issuer to any Holder or
any purchaser of Registrable Securities, 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, except insofar as such
losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the Issuer by
any of the Holders.
(b) Each Holder of Registrable Securities agrees, severally and not
jointly, to indemnify and hold harmless the Issuer, its directors and officers,
and each Person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Issuer, to the same extent as the
foregoing indemnity from the Issuer set forth in Section 6(a) hereof, but only
with reference to information relating to such Holder furnished in writing to
the Issuer by such Holder expressly for use in any Registration Statement. In no
event shall any Holder, its directors, officers or any Person who controls such
Holder be liable or responsible for any amount in excess of the amount by which
the total amount received by such Holder with respect to its sale of Registrable
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Registrable Securities and (ii) the amount of any damages
that such Holder, its directors, officers or any Person who controls such Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
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(c) In case any action shall be commenced involving any Person in
respect of which indemnity may be sought pursuant to Section 6(a) or 6(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing,
and the indemnifying party assume the defense of such action, including the
employment of counsel reasonably satisfactory to the indemnified party and the
payment of all reasonable fees and expenses of such counsel, as incurred (except
that, in the case of any action in respect of which indemnity may be sought
pursuant to both Sections 6(a) and 6(b), a Holder shall not be required to
assume the defense of such action pursuant to this Section 6(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party,
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or failed to employ
counsel reasonably satisfactory to the indemnified party or (iii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 6(a), and by
the Issuer, in the case of parties indemnified pursuant to Section 6(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than 20 Business Days after the indemnifying party shall have received a request
from the indemnified party for reimbursement for the fees and expenses of
counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuer, on
the one hand, and the Holders, on the other hand, from their sale of Registrable
Securities or (ii) if the allocation provided by clause 6(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 6(d)(i) hereof but also the relative
fault of the Issuer, on the one hand, and of the Holders, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable
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<PAGE> 12
considerations. The relative fault of the Issuer, on the one hand, and
of 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 Issuer, on the one hand, or by the Holders, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 6(a),
any legal or other fees or expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments.
The Issuer and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the preceding paragraph. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or judgments referred to in the preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with the
investigating or defending any matter, including any action that could have
given use to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 6, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Registrable Securities
pursuant to a Registration Statement exceeds (i) the amount paid by such Holder
for such Registrable Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 6(d) are several in proportion to the respective principal amount of
Registrable Securities held by each Holder.
The Issuer agrees that the indemnity and contribution
provisions of this Section 6 shall apply to the Initial Purchasers to the same
extent, on the same conditions, as it applies to Holders.
7. RULE 144
The Issuer agrees with each Holder, for so long as any Registrable
Securities remain outstanding and during any period in which the Issuer is
subject to Section 13 or 15(d) of the Exchange Act, to make all filings required
thereby in a timely manner in order to permit resales of such Registrable
Securities pursuant to Rule 144.
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8. MISCELLANEOUS
(a) Remedies. The Issuer acknowledges and agrees that any failure
by the Issuer to comply with its obligations under Section 3 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Issuer's obligations under Section 3
hereof. The Issuer further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuer will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Issuer's securities
under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case of
this Section 8(c), the Issuer has obtained the written consent of Holders of all
outstanding Registrable Securities, and (ii) in the case of all other provisions
hereof, the Issuer has obtained the written consent of Holders of a majority of
the outstanding principal amount of Registrable Securities (excluding
Registrable Securities held by the Issuer, any Guarantor, or any of their
respective Affiliates); provided that this Agreement may be amended or
supplemented without the consent of any Holder in the same manner and to the
same extent to which the Warrant Agreement may be amended or supplemented
pursuant to Section 22 thereof.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements granting rights to Holders made hereunder
between the Issuer, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
they may deem such enforcement necessary or advisable to protect its rights or
the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records
of the Warrant Agent, with a copy to the Warrant Agent; and
(ii) if to the Issuer:
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Key Energy Services, Inc.
Two Tower Center - 20th Floor
East Brunswick, NJ 08816
Telecopier: (732) 247-5148
Attention: General Counsel
With a copy to:
Porter & Hedges, L.L.P.
700 Louisiana St.
Houston, TX 77002
Telecopy: (713) 226-0227
Attention: Samuel N. Allen
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 receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Warrant Agent at the
address specified in Warrant Agreement.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation, and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms hereof or of the Purchase Agreement or the Warrant
Agreement. If any transferee of any Holder shall acquire Registrable Securities
in any manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and
such Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
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(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and 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. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(l) Universal Shelf Registration Statement. The Initial Purchasers
acknowledge that the Company currently has on file with the Commission a shelf
registration statement on Form S-3 covering a specific dollar amount of
unspecified securities (the "UNIVERSAL SHELF REGISTRATION STATEMENT"). The
Initial Purchasers agree that the Company may amend the Universal Shelf
Registration Statement to satisfy the requirements to file a Registration
Statement within the applicable filing deadline specified in Section 3(a)
hereof; provided that the Universal Shelf Registration Statement covers the type
of transactions required to be registered herein in accordance with applicable
law and the rules and regulations of the Commission; and provided, that such use
of the Universal Shelf Registration Statement does not affect the exemption from
registration under the Act of the issuance and sale of the Units to the Initial
Purchasers.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
KEY ENERGY SERVICES, INC.
By: ________________________________
Name:
Title:
LEHMAN BROTHERS INC.
By: ________________________________
Name:
Title:
BEAR, STEARNS & CO. INC.
By: ________________________________
Name:
Title:
14
<PAGE> 16
F.A.C/EQUITIES,
a division of First Albany Corporation
By: ________________________________
Name:
Title:
DAIN RAUSCHER WESSELS,
a division of Dain Rauscher Incorporated
By: ________________________________
Name:
Title:
15
