<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 1996
REGISTRATION NO. 333-1851
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
PLAINS RESOURCES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2898764
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1600 SMITH STREET
HOUSTON, TEXAS 77002
(713) 654-1414
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
MICHAEL R. PATTERSON
VICE PRESIDENT AND GENERAL COUNSEL
PLAINS RESOURCES INC.
1600 SMITH STREET
HOUSTON, TEXAS 77002
(713) 654-1414
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
COPY TO:
JOHN A. WATSON
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
(713) 651-5151
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
SUBJECT TO COMPLETION, DATED APRIL 24, 1996
P R O S P E C T U S
[PLAINS RESOURCES LOGO]
798,143 SHARES
COMMON STOCK
----------------
This Prospectus has been prepared for use in connection with the
proposed sale by the holders thereof (the "Selling Stockholders") of an
aggregate of 798,143 shares (the "Shares") of common stock, par value $.10 per
share (the "Common Stock"), of Plains Resources Inc. (the "Company"). The
Shares may be sold from time to time by or for the account of the Selling
Stockholders in the over-the-counter market, on the American Stock Exchange
("AMEX") or otherwise at prices and on terms then prevailing or at prices
related to the then current market price, directly or through agents designated
from time to time, or through dealers or underwriters to be designated or in
negotiated transactions. The Shares may be sold by any one or more of the
following methods: (a) a block trade (which may involve crosses) in which the
broker or dealer so engaged will attempt to sell the securities as agent but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (c) exchange
distributions and/or secondary distributions in accordance with the rules of
the AMEX; (d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; (e) through the writing of options on Shares
(whether such options are listed on an options exchange or otherwise); or (f)
privately negotiated transactions. To the extent required by applicable law,
the specific Shares to be sold, the names of the Selling Stockholders, the
respective purchase prices and public offering prices, the names of any such
agent, dealer or underwriter and any applicable commissions or discounts with
respect to a particular offer will be set forth in an accompanying Prospectus
Supplement. See "Plan of Distribution."
The Common Stock is traded on the AMEX under the symbol "PLX". On
April 22, 1996, the last reported sale price for the Common Stock on the
American Stock Exchange was $10 5/8 per share.
The Company will receive no portion of the proceeds of the sale of the
Shares offered hereby and will bear certain of the expenses incident to their
registration. See "Plan of Distribution" and "Selling Stockholders."
The Shares have not been registered for sale under the securities laws
of any state or jurisdiction as of the date of this Prospectus. Brokers or
dealers effecting transactions in the Shares should confirm the registration
thereof under the securities laws of the states in which such transactions
occur, or the existence of any exemption from registration.
----------------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET
FORTH IN THIS PROSPECTUS ON PAGES 6-8 UNDER THE CAPTION "RISK FACTORS."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
, 1996
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered by this Prospectus.
Certain of the information contained in the Registration Statement is omitted
from this Prospectus, and reference is hereby made to the Registration
Statement and exhibits and schedules relating thereto for further information
with respect to the Company and the securities offered by this Prospectus. The
Company is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information are available for
inspection at, and copies of such materials may be obtained upon payment of the
fees prescribed therefor by the rules and regulations of the Commission from
the Commission at its principal offices located at Judiciary Plaza, 450 Fifth
Street, Room 1024, Washington, D.C. 20549, and at the Regional Offices of the
Commission located at Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and at 7 World Trade Center, Suite
1300, New York, New York 10048. In addition, the Common Stock of the Company
("Common Stock") is traded on the American Stock Exchange, and such reports,
proxy statements and other information may be inspected at the offices of the
American Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (the "Form 10-K"), the Company's Current Report on Form 8-K
filed with the Commission on January 4, 1996, as amended by Amendment No.1 on
Form 8-K/A filed with the Commission on February 21, 1996, and the Company's
Current Report on Form 8-K filed with the Commission on March 5, 1996, are
hereby incorporated herein by reference.
The description of the Common Stock, which is contained in a
registration statement on Form 8-A filed under the Exchange Act, including any
amendment or reports filed for the purpose of updating such description, is
incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, after the date of this Prospectus and prior to
the termination of the Registration Statement of which this Prospectus is a
part with respect to registration of the Shares, shall be deemed to be
incorporated by reference in this Prospectus and be a part hereof from the date
of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this Prospectus shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in this Prospectus, or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference, modifies or replaces such statement.
The Company undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of any such person, a copy of any or
all of the documents incorporated by reference herein, other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into the information that this Prospectus incorporates. Written or oral
requests for such copies should be directed to: Plains Resources Inc., 1600
Smith Street, Houston, Texas 77002, Attention: Investor Relations Department,
telephone (713) 654-1414.
CERTAIN DEFINITIONS
As used in this Prospectus, "Mcf" means thousand cubic feet, "BOE"
means net barrel of oil equivalent and "MCFE" means Mcf of natural gas
equivalent. Natural gas equivalents and crude oil equivalents are determined
using the ratio of six Mcf of natural gas to one barrel of crude oil,
condensate or natural gas liquids. "Present Value of Proved Reserves" means
the present value (discounted at 10%) of estimated future net cash flows
(before income taxes) of proved oil and natural gas reserves based on product
prices in effect on the date of determination. "EBITDA" means earnings before
interest, taxes, depreciation, depletion and amortization.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements and notes set forth and
incorporated by reference in this Prospectus. As used herein, the terms
"Company" and "Plains" mean Plains Resources Inc. and its subsidiaries, except
as the context may otherwise require.
THE COMPANY
Plains is an independent energy company engaged in the acquisition,
exploitation, development, exploration and production of oil and natural gas
and the marketing, transportation, terminalling and storage of crude oil. The
Company's upstream oil and natural gas activities are focused in the Los
Angeles Basin of California (the "LA Basin"), the Sunniland Trend of South
Florida (the "Sunniland Trend"), the Illinois Basin and the Gulf Coast area of
Louisiana. The Company's downstream marketing activities are concentrated in
Oklahoma, where it owns a two million barrel, above ground crude oil
terminalling and storage facility, Texas and the Gulf Coast area of Louisiana.
Plains' upstream operations contributed approximately 90% of the Company's pro
forma EBITDA for the fiscal year ending December 31, 1995, while the Company's
downstream activities accounted for the remainder.
The Company has experienced significant growth over the last four
years. The Company's proved reserves, Present Value of Proved Reserves, and
the standardized measure of discounted future net cash flows determined in
accordance with generally accepted accounting principles (the "Standardized
Measure"), have increased from 13.7 million BOE, $71.7 million, and $69.9
million, respectively, at December 31, 1991 to 101.6 million BOE, $366.8
million and $304.8 million, respectively, at December 31, 1995. Over the same
period, the Company's average reserve replacement ratio was 617%, EBITDA
increased over 400% from $9.0 million for 1991 to $45.3 million for 1995, pro
forma for the Illinois Basin Acquisition (as defined below), and cash provided
by operating activities increased from $6.1 million in 1991 to $27.5 million in
1995, pro forma for the Illinois Basin Acquisition. Such additional proved
reserves were added at an aggregate average finding and development cost of
$2.38 per BOE ($0.40 per MCFE). During 1995, pro forma for the Illinois Basin
Acquisition, the Company's net production averaged approximately 16,657 BOE per
day and its unit gross profit (gross margin less upstream general and
administrative expense) averaged $6.75 per BOE ($1.13 per MCFE). On a BOE
basis, the Company's proved reserves are approximately 93% crude oil,
condensate and natural gas liquids and 71% of its total proved reserves are
classified as proved developed. The Company's reserve base is long-lived with
an average reserve life, or reserves to production ratio, of 16.7 years (11.9
years based on proved developed reserves only), pro forma for the Illinois
Basin Acquisition. Net cash flows used in investing activities were $76.5
million, $40.2 million and $64.4 million for 1993, 1994 and 1995, respectively.
Net cash flows provided by financing activities were $44.7 million, $19.3
million and $52.3 million for 1993, 1994 and 1995, respectively.
The Company's significant increase in proved reserves, production and
cash flow from oil and natural gas producing activities is attributable to the
acquisition and subsequent exploitation of its LA Basin Properties and
Sunniland Trend Properties and the recent acquisition of the Illinois Basin
Properties. These three core areas are comprised primarily of crude oil
properties with established production histories and together account for
approximately 96% of the Company's year-end 1995 proved reserves. The Company
believes these properties include a significant inventory of lower risk, high
return exploitation and development projects that are expected to contribute to
the Company's future growth in production and reserves. During 1996, the
Company estimates it will spend approximately $40 million on the development
and exploitation of its LA Basin, Sunniland Trend and Illinois Basin
Properties. The Company operates and owns a 100% working interest in its major
fields in each of these areas, which enables the Company to control the
exploitation of such properties.
The Company's marketing effort entails purchasing crude oil from
producers and marketing it to the refining sector. The Company aggregates
these volumes at major crude oil interchanges and trading locations and is
therefore able to obtain higher prices for its own production while realizing
profits on the production purchased from others. The Company owns and operates
a two million barrel, above ground crude oil storage and terminalling facility
in Cushing, Oklahoma (the "Cushing Terminal"), the United States' largest
inland crude oil interchange and trading location. This facility enhances the
competitive marketing ability of the Company by enabling it to take
3
<PAGE> 5
crude oil from different sources and make physical delivery of crude oil in
Cushing, the NYMEX designated delivery location. The Company's downstream
activities have expanded significantly over the last four years, with
downstream gross margin (revenues less direct expenses of purchases,
transportation, storage and terminalling) increasing over 400% from $1.2
million in 1991 to $6.4 million in 1995. Based on additional capacity
available at the Cushing Terminal, the Company believes it can increase its
downstream gross profit without expending substantial additional capital.
The Company's upstream and downstream business activities focus on
crude oil as the primary product. As a result of inefficiencies inherent in
the crude oil markets and the U.S. pipeline and transportation infrastructure,
management believes its competitive abilities are enhanced by the alternatives
afforded it by its proprietary access to the Cushing Terminal. The Company's
crude oil marketing expertise further provides it with a competitive advantage
in obtaining higher prices for the Company's existing production and
identifying potential crude oil price enhancements for properties targeted for
acquisition.
BUSINESS STRATEGY
The Company's business strategy is to increase its proved reserves and
cash flow by exploiting and producing oil and natural gas from its existing
properties, acquiring additional underdeveloped oil properties and exploring
for significant new sources of reserves. The Company concentrates its
exploitation efforts on mature but underdeveloped crude oil producing
properties in areas that meet the Company's targeted criteria. Generally, such
properties were previously owned by major integrated oil and gas companies or
large independent oil and gas companies. Management believes that it has
developed a proven record in acquiring and exploiting underdeveloped crude oil
properties where it believes substantial reserve additions and cash flow
increases can be made through improved production practices and recovery
techniques and relatively low risk development drilling. An integral component
of the Company's exploitation efforts is to increase unit operating margins,
and therefore cash flow, by reducing unit production expenses and increasing
wellhead price realizations. The Company also seeks to capitalize on
downstream opportunities that complement its oil producing activities. The
Company's marketing of its crude oil production takes advantage of the
marketing expertise and economies of scale attributable to its downstream
activities. As part of its business strategy, the Company periodically
evaluates, and from time to time has elected to sell, certain of its fully
developed producing properties. Such sales enable the Company to maintain
financial flexibility, control overhead and redeploy the sales proceeds to
activities that have potentially higher financial returns.
In order to manage its exposure to commodity price risk, the Company
has routinely hedged a portion of its crude oil production. For 1996, the
Company has committed an average of approximately 8,500 Bbls of oil per day to
fixed price arrangements that expire at various times throughout 1996. Such
arrangements represent approximately 55% of the Company's pro forma average
daily oil production for 1995 and partially mitigate the adverse impact of
potential oil price declines on the Company's operating results.
RECENT ACQUISITION
On December 22, 1995, the Company acquired all of Marathon Oil
Company's upstream oil and gas assets in the Illinois Basin (the "Illinois
Basin Properties"). The acquisition of the Illinois Basin Properties (the
"Illinois Basin Acquisition") was effective as of November 1, 1995. As a
result of such acquisition, the Company added approximately 17.3 million
barrels of oil to its proved reserve base at an aggregate cost of approximately
$51.5 million, or an average of $2.98 per BOE ($0.50 per MCFE). The Company
intends to aggressively exploit these properties to evaluate additional reserve
potential identified during its acquisition analysis. In addition, the
Company's exploitation plan for the Illinois Basin Properties targets improving
the unit gross margin by decreasing unit production expenses and increasing
price realizations as well as increasing production volumes by conducting
production enhancement activities similar to those employed in its LA Basin
Properties and Sunniland Trend Properties.
4
<PAGE> 6
1996 NOTE OFFERING
On March 19, 1996, the Company sold $150 million in aggregate
principal amount of its 10 1/4% Senior Subordinated Notes due 2006 (the "10
1/4% Notes") pursuant to a Rule 144A private placement. These notes were sold
to investors at approximately 99.38% of the principal amount resulting in a
yield to maturity of 10.35%. Net proceeds from the sale of such Notes (after
deducting expenses of the sale) were approximately $144.9 million. An aggregate
of $111.6 million was used to redeem all of the Company's 12% Senior
Subordinated Notes due 1999 (the "12% Notes") at 106% of the $100 million
principal amount outstanding plus accrued and unpaid interest through the
redemption date. The remaining $33.3 million, together with an additional
$8.3 million borrowed under the Company's revolving credit facility, was used
to retire outstanding bank indebtedness incurred to fund the Illinois Basin
Acquisition (the "Illinois Basin Acquisition Indebtedness"). The Illinois Basin
Acquisition Indebtedness bore an interest rate of LIBOR plus 2% (approximately
7.35% at December 31, 1995) through September 30, 1996 and LIBOR plus 3%
thereafter and required monthly payments of interest and principal equal to 85%
of the Field Level Net Revenues (as defined in the credit agreement). The sale
of the 10 1/4% Notes, the redemption of the 12% Notes and the retirement of the
Illinois Basin Acquisition Indebtedness enhanced the Company's financial
flexibility by increasing the average life of its subordinated debt from
approximately three years to 10 years and eliminating amortization payments of
$50 million in each of the years 1998 and 1999 and also by enabling the Company
to use the cash flow from the Illinois Basin Properties to further exploit and
develop such properties.
The indenture under which the 10 1/4% Notes were issued contains
covenants, including but not limited to, covenants with respect to the
following matters: (i) limitations on the incurrence of additional
indebtedness: (ii) limitations on certain investments; (iii) limitations on
restricted payments; (iv) limitations of dispositions of assets; (v) limitation
on dividends and other payment restrictions affecting subsidiaries; (vi)
limitations on transactions with affiliates; (vii) limitations on liens; and
(viii) restrictions on mergers, consolidations and transfers of assets.
SALES BY SELLING STOCKHOLDERS
The Shares to be sold pursuant to this Prospectus are owned by the
Selling Stockholders. The Company will not receive any of the proceeds from
the sale of the Shares. See "Selling Stockholders."
5
<PAGE> 7
RISK FACTORS
Each investor should carefully examine this entire Prospectus and
should give particular attention to the risk factors set forth below.
SUBSTANTIAL CAPITAL REQUIREMENTS
The Company makes, and will continue to make, substantial capital
expenditures for the acquisition, exploitation, development, exploration and
production of oil and gas reserves. Historically, the Company has financed
these expenditures primarily with cash generated by operations, bank
borrowings, the offering of the 12% Notes and the sale of common stock and
preferred stock. The Company intends to make an aggregate of approximately $48
million in capital expenditures in 1996. The Company believes that it will
have sufficient cash provided by operating activities and borrowings under its
revolving credit facility to fund such planned capital expenditures. If
revenues or the Company's borrowing base decrease as a result of lower oil and
gas prices, operating difficulties or declines in reserves, the Company may
have limited ability to expend the capital necessary to undertake or complete
future drilling programs. There can be no assurance that additional debt or
equity financing or cash generated by operations will be available to meet
these requirements.
MARKET CONDITIONS AND VOLATILITY OF OIL AND NATURAL GAS PRICES
The revenues generated by the Company's operations are highly
dependent upon the prices of, and demand for, oil and natural gas.
Historically, the prices for oil and natural gas have been volatile and are
likely to continue to be volatile in the future. The price received by the
Company for its oil and natural gas production and the level of such production
are subject to wide fluctuations and depend on numerous factors beyond the
Company's control, including seasonality, the condition of the United States
economy (particularly the manufacturing sector), foreign imports, political
conditions in other oil-producing and natural gas-producing countries, the
actions of the Organization of Petroleum Exporting Countries and domestic
government regulation, legislation and policies. Decreases in the prices of
oil and natural gas have had, and could have in the future, an adverse effect
on the carrying value of the Company's proved reserves and the Company's
revenues, profitability and cash flow. Although the Company is not currently
experiencing any significant involuntary curtailment of its natural gas
production, market, economic and regulatory factors may in the future
materially affect the Company's ability to sell its natural gas production.
In order to manage its exposure to price risks in the marketing of its
oil and natural gas, the Company from time to time enters into fixed price
delivery contracts, financial swaps and oil and natural gas futures contracts
as hedging devices. To ensure a fixed price for future production, the Company
may sell a futures contract and thereafter either (i) make physical delivery of
its product to comply with such contract or (ii) buy a matching futures
contract to unwind its futures position and sell its production to a customer.
These same techniques are also utilized to manage price risk for certain
production purchased from customers of the Company's marketing subsidiary,
Plains Marketing & Transportation Inc. Such contracts may expose the Company
to the risk of financial loss in certain circumstances, including instances
where production is less than expected, the Company's customers fail to
purchase or deliver the contracted quantities of oil or natural gas, or a
sudden, unexpected event materially impacts oil or natural gas prices. Such
contracts may also restrict the ability of the Company to benefit from
unexpected increases in oil and natural gas prices.
OPERATING HAZARDS AND UNINSURED RISKS
The Company's operations are subject to all of the risks normally
incident to the exploration for and the production of oil and natural gas,
including blowouts, cratering, oil spills and fires, each of which could result
in damage to or destruction of oil and natural gas wells, production facilities
or other property, or injury to persons. The relatively deep drilling
conducted by the Company from time to time involves increased drilling risks of
high pressures and mechanical difficulties, including stuck pipe, collapsed
casing and separated cable. The Company's operations in the LA Basin,
including transportation of crude oil by pipelines within the city of Los
Angeles, are especially susceptible to damage from earthquakes and involve
increased risks of personal injury, property damage and marketing interruptions
because of the population density of the area. Although the Company maintains
insurance coverage considered to be customary in the industry, it is not fully
insured against certain of these risks, including, in certain instances,
earthquake risk in the LA Basin, either because such insurance is not available
or
6
<PAGE> 8
because of high premium costs. The occurrence of a significant event that is
not fully insured against could have a material adverse effect on the Company's
financial position.
BUSINESS RISKS
The Company must continually acquire, explore for, develop or exploit
new oil and natural gas reserves to replace those produced or sold. Without
successful drilling, acquisition or exploitation operations, the Company's oil
and natural gas reserves and revenues will decline. Drilling activities are
subject to numerous risks, including the risk that no commercially viable oil
or natural gas production will be obtained. The decision to purchase, explore,
exploit or develop an interest or property will depend in part on the
evaluation of data obtained through geophysical and geological analyses and
engineering studies, the results of which are often inconclusive or subject to
varying interpretations. The cost of drilling, completing and operating wells
is often uncertain. Drilling may be curtailed, delayed or canceled as a result
of many factors, including title problems, weather conditions, compliance with
government permitting requirements, shortages of or delays in obtaining
equipment, reductions in product prices or limitations in the market for
products. The availability of a ready market for the Company's oil and natural
gas production also depends on a number of factors, including the demand for
and supply of oil and natural gas and the proximity of reserves to pipelines or
trucking and terminal facilities. Natural gas wells may be shut in for lack of
a market or due to inadequacy or unavailability of natural gas pipeline or
gathering system capacity.
Substantially all of the Company's California crude oil production and
all of the Company's South Florida crude oil production is transported by two
pipelines owned by third parties. The inability of either one of these
pipelines to provide transportation services to the Company in the future could
result in the involuntary curtailment of a significant portion of the Company's
crude oil production.
UNCERTAINTIES IN ESTIMATING RESERVES AND FUTURE NET CASH FLOWS
There are numerous uncertainties inherent in estimating quantities and
values of proved reserves and in projecting future rates of production and
timing of development expenditures, including many factors beyond the control
of the Company. Reserve engineering is a subjective process of estimating the
recovery from underground accumulations of oil and natural gas that cannot be
measured in an exact manner, and the accuracy of any reserve estimate is a
function of the quality of available data and of engineering and geological
interpretation and judgment. Because all reserve estimates are to some degree
speculative, the quantities of oil and natural gas that are ultimately
recovered, production and operating costs, the amount and timing of future
development expenditures and future oil and natural gas sales prices may all
differ from those assumed in these estimates. In addition, different reserve
engineers may make different estimates of reserve quantities and cash flows
based upon the same available data. Therefore, the Present Value of Proved
Reserves set forth in this Prospectus represents estimates only and should not
be construed as the current market value of the estimated oil and natural gas
reserves attributable to the Company's properties. In this regard, the
information set forth in this Prospectus includes revisions of certain reserve
estimates attributable to proved properties included in the preceding year's
estimates. Such revisions reflect additional information from subsequent
activities, production history of the properties involved and any adjustments
in the projected economic life of such properties resulting from changes in
product prices. Any downward revisions could adversely affect the Company's
financial condition, borrowing base under its revolving credit facility, future
prospects and market value of its securities.
LEGAL PROCEEDINGS
The Company and certain of its officers and directors and a former
director and officer were named in two class action lawsuits filed in 1992 and
1993 seeking an aggregate of approximately $90 million in compensatory damages
and punitive damages in an unspecified amount for alleged violations of the
federal securities laws and state common law arising out of certain alleged
misrepresentations and omissions in the Company's disclosure regarding its
onshore natural gas exploration activities. Both of these cases were filed in
the United States District Court for the Southern District of Texas and are
captioned respectively, Judith Rubinstein, et al. v. Collins, et al. (C.A. No.
H-92-1297) and Moroson v. Collins, et al. (C.A. No. H-93-2305). On March 6,
1996, the Company announced that it had notified the court that a settlement in
principle had been reached in such cases. Under the terms of the settlement,
the plaintiffs agree to dismiss all claims against the Company and its officers
and directors in exchange for a cash payment of approximately $6.25 million,
including approximately $4.1 million that is expected to be paid
7
<PAGE> 9
by the Company's insurance carrier, leaving approximately $2.1 million to be
contributed by the Company. Taking into account prior costs incurred by the
Company to defend these suits, this settlement would result in a charge to its
1996 first quarter earnings of approximately $4 million. The settlement is
subject to the approval of the court. If the settlement is not consummated and
if the Company ultimately were required to pay a substantial portion of the $90
million in compensatory damages sought by the plaintiffs, it would have a
material adverse effect on the Company.
GOVERNMENT REGULATION
The Company's business is regulated by certain federal, state and
local laws and regulations relating to the development, production, marketing,
pricing, transportation and storage of oil and natural gas. The Company's
business is also subject to extensive and changing environmental and safety
laws and regulations governing plugging and abandonment, the discharge of
materials into the environment or otherwise relating to environmental
protections. Certain of the Company's properties are located in
environmentally sensitive areas that require special permits to drill. There
can be no assurance that present or future regulation will not adversely affect
the operations of the Company.
COMPETITION
The oil and natural gas industry is highly competitive. The Company's
competitors for the acquisition, exploration, exploitation and development of
oil and natural gas properties, the purchasing and marketing of oil and the
crude oil storage and terminalling business, and for capital to finance such
activities, include companies that have greater financial and personnel
resources available to them than the Company. The Company's ability to acquire
additional properties and to discover reserves in the future will be dependent
upon its ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment.
ISSUANCE OF ADDITIONAL SHARES
As of March 19, 1996, the Company had 2,693,391 shares of Common Stock
reserved for issuance upon the exercise of certain warrants and options.
The Board of Directors, without further action by the stockholders, is
authorized to issue up to two million shares of the Company's Preferred Stock,
par value $1.00 per share (the "Preferred Stock"), in one or more series and to
fix and determine as to any series all the relative rights and preferences of
shares in such series, including, without limitation, preferences, limitations
or relative rights with respect to redemption rights, conversion rights, if
any, voting rights, if any, dividend rights and preferences on liquidation.
The dividend, liquidation and voting rights of any such Preferred Stock issued
could be superior to the rights of the holders of Common Stock.
The issuance of additional shares of Preferred Stock, or the issuance
of rights to purchase such shares, could be used to discourage an unsolicited
acquisition proposal that some, or a majority, of the stockholders might
believe to be in the best interests of the Company or in which stockholders
might receive a premium for their stock over the then market price of such
stock. In addition, under certain circumstances, the issuance of Preferred
Stock could adversely affect the voting power of the holders of the Common
Stock.
The Company has in the past issued a number of series of preferred
stock which (i) had dividend and liquidation rights superior to the rights of
holders of Common Stock, (ii) were convertible into shares of Common Stock and
(iii) had certain voting rights including rights to vote as a class for
election of a specified number of directors.
RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company has not paid cash dividends on shares of the Common Stock
since the Company's inception and does not anticipate paying any cash dividends
on the Common Stock in the foreseeable future. In addition, the Company is
prohibited by provisions of the indenture governing the 10 1/4% Notes and its
revolving credit facility from paying dividends on the Common Stock.
8
<PAGE> 10
SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of Common
Stock held by the Selling Stockholders, immediately prior to and upon
completion of this offering.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE OFFERING AFTER OFFERING
---------------------------- ----------------------------
NUMBER PERCENTAGE SHARES TO NUMBER PERCENTAGE
NAME OF SHARES OF CLASS BE SOLD OF SHARES OF CLASS
---- ------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Marathon Oil Company . . . . . 537,143 3.3% 537,143 -- --
Crete Oil Company, Inc. . . . . 171,000 1.1% 171,000 -- --
Internationale Nederlanden (U.S.)
Capital Corporation (1) . . . 190,000 1.2% 90,000 100,000 0.6%
</TABLE>
- ------------
(1) Beneficial ownership includes 100,000 shares of Common Stock issuable to
Internationale Nederlanden (U.S.) Capital Corporation upon the exercise
of a warrant issued in June 1992, the exercise price of which is $9.50
per share.
In connection with the Illinois Basin Acquisition, and the financing
thereof in December 1995, the Company issued 537,143 shares of Common Stock to
Marathon Oil Company, 171,000 shares to Crete Oil Company, Inc., and 90,000
shares to Internationale Nederlanden (U.S.) Capital Corporation ("INCC').
Funding for the Illinois Acquisition was provided by a $42 million project
financing with INCC and draws under the Company's revolving credit facility
with INCC, The First National Bank of Boston, Den norske Bank, First Interstate
Bank of Texas, N.A. and Texas Commerce Bank National Association.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by or for the account of the
Selling Stockholders pursuant to this Prospectus or pursuant to Rule 144 under
the Securities Act. Sales of Shares pursuant to this Prospectus may be
effected in the over-the-counter market, on the AMEX or otherwise at prices and
on terms then prevailing or at prices related to the then current market price
(in each case as determined by the relevant Selling Stockholder), directly or
through agents designated from time to time, or through dealers or underwriters
to be designated or in negotiated transactions. The Shares may be sold by any
one or more of the following methods: (a) a block trade (which may involve
crosses) in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) exchange distributions and/or secondary distributions in
accordance with the rules of the AMEX; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (e) through the writing
of options on Shares (whether such options are listed on an options exchange or
otherwise); or (f) privately negotiated transactions. To the extent required
by applicable law, the specific Shares to be sold, the names of the Selling
Stockholders, the respective purchase prices and public offering prices, the
names of any such agent, dealer or underwriter and any applicable commissions
or discounts with respect to a particular offer will be set forth in an
accompanying Prospectus Supplement. Each Selling Stockholder may effect such
transactions by selling Shares directly to other purchasers, through agents or
through broker-dealers, and any such agents or broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from such Selling Stockholder, from purchasers of Shares for whom they act as
agents, or from both sources (and such compensation may be in excess of
customary commissions). The Selling Stockholders and any broker-dealers that
participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any commissions, and any profit on the resale of Shares, received by
the Selling Stockholders and any such broker-dealers may be deemed to be
underwriting discounts and commissions.
The Company will bear all costs and expenses incurred by it in
connection with the offering and sale of Shares pursuant to this Prospectus,
but will not be responsible for any commissions, underwriting discounts or
similar amounts payable in respect of any such sale.
9
<PAGE> 11
LEGAL OPINION
The validity of the issuance of the shares of the Common Stock offered
hereby will be passed upon for the Company by Michael R. Patterson, Esq., its
general counsel. Mr. Patterson beneficially owns 114,437 shares of Common
Stock.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 1995, and the
financial statements incorporated by reference to Amendment No. 1 on Form 8-K/A
filed February 21, 1996, have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on authority of said firm
as experts in auditing and accounting.
Information relating to the estimated proved reserves of oil and
natural gas and the related estimates of future net revenues and present values
thereof for certain periods, included in the Form 10-K and in the Notes to the
Consolidated Financial Statements of the Company in such Annual Report, has
been prepared by Netherland, Sewell & Associates, Inc., H. J. Gruy and
Associates, Inc. and Ryder Scott Company, independent petroleum engineers, and
is incorporated by reference herein in reliance upon the authority of such
firms as experts in petroleum engineering.
10
<PAGE> 12
================================================================================
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY SELLING STOCKHOLDER OR
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME AND ANY SALE MADE
HEREUNDER DOES NOT IMPLY THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
================================================================================
================================================================================
798,143 Shares
[PLAINS RESOURCES LOGO]
COMMON STOCK
------
PROSPECTUS
, 1996
------
================================================================================
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of estimated expenses incurred by the
Company in connection with the Common Stock being registered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee . . . . . . . . . . . . . $ 2,305
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 500
Engineering Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,695
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000
============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Company's Restated Certificate of Incorporation
provides that the Company shall indemnify to the full extent authorized or
permitted by law any person made, or threatened to be made, a party to any
action, suit or proceeding (whether civil, criminal or otherwise) by reason of
fact that he, his testator or intestate, is or was a director or officer of the
Company or by reason of the fact that such director or officer, at the request
of the Company, is or was serving any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, in any capacity.
The rights to indemnification set forth above are not exclusive of any other
rights to which such person may be entitled under any statute, provision of the
Company's Restated Certificate of Incorporation or bylaws, agreements, vote of
stockholders or disinterested directors or otherwise.
Additionally, Article VIII of the Company's Bylaws provides for mandatory
indemnification to at least the extent specifically allowed by Section 145 of
the General Corporation Law of the State of Delaware (the "GCL"). The Bylaws
generally follow the language of Section 145 of the GCL, but in addition
specify that any director, officer, employee or agent may apply to any court of
competent jurisdiction in the State of Delaware for indemnification to the
extent otherwise permissible under the Bylaws, notwithstanding any contrary
determination denying indemnification made by the Board, by independent legal
counsel, or by the stockholders, and notwithstanding the absence of any
determination with respect to indemnification. The Bylaws also specify certain
circumstances in which a finding is required that the person seeking
indemnification acted in good faith, for purposes of determining whether
indemnification is available. Under the Bylaws, a person shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, or, with respect to any criminal
action or proceeding, to have had no reasonable cause to believe his conduct
was unlawful, if his action is based on the records or books of account of the
Company or another enterprise, or on information supplied to him by the
officers of the Company or another enterprise in the course of their duties, or
on the advice of legal counsel for the Company or another enterprise or on
information or records given or reports made to the Company or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or another
enterprise.
Pursuant to Section 145 of the GCL, the Company generally has the power to
indemnify its current and former directors, officers, employees and agents
against expenses and liabilities incurred by them in connection with any suit
to which they are, or are threatened to be made, a party by reason of their
serving in such positions so long as they acted in good faith and in a manner
they reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, they had no reasonable cause
to believe their conduct was unlawful. With respect to suits by or in the
right of the Company, however, indemnification is generally limited to
attorneys' fees and other expenses and is not available if such person is
adjudged to be liable to the Company
II - 1
<PAGE> 14
unless the court determines that indemnification is appropriate. The statute
expressly provides that the power to indemnify authorized thereby is not
exclusive of any rights granted under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The Company also has
the power to purchase and maintain insurance for such persons.
The above discussion of the Company's Restated Certificate of Incorporation
and Bylaws and Section 145 of the GCL is not intended to be exhaustive and is
qualified in its entirety by each of such documents and such statute.
The Company has entered into an employment agreement containing
indemnification provisions with Mr. Armstrong, its President and Chief
Executive Officer. Pursuant to such agreement, the Company has agreed to
indemnify and hold him harmless to the fullest extent permitted by law, from
any loss, damage or liability incurred in the course of his employment. The
amount paid by the Company is reducible by the amount of insurance paid to or
on behalf of such officer with respect to any event giving rise to
indemnification. Such officer's right to indemnification is to survive his
death or termination of employment and the termination of his employment
agreement.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C> <C>
4(a)* -- Specimen Common Stock Certificate (incorporated by reference to Exhibit 4 to the Company's Form S-1
Registration Statement (Reg. No. 33-33986)).
4(b)+ -- Indenture dated as of March 15, 1996, between Plains Resources Inc., the Subsidiary Guarantors named
therein and Texas Commerce Bank National Association, as Trustee, relating to the Registrant's 10-1/4%
Senior Subordinated Notes due 2006.
5* -- Opinion of Michael R. Patterson, Esq.
23(a)* -- Consent of Michael R. Patterson, Esq. (contained in Exhibit 5).
23(b)+ -- Consent of Price Waterhouse LLP.
23(c)* -- Consent of Netherland, Sewell & Associates, Inc.
23(d)* -- Consent of H. J. Gruy and Associates, Inc.
23(e)* -- Consent of Ryder Scott Company.
24* -- Powers of Attorney.
</TABLE>
- ------------
+ Filed herewith
* Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; (iii) to include any material
information with respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such information in the
registration statement; provided, however, that paragraphs (a)(1)(i) and
II - 2
<PAGE> 15
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post- effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
II - 3
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on April 24, 1996.
PLAINS RESOURCES INC.
By: /s/ Greg L. Armstrong
-------------------------------------
Greg L. Armstrong
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed by the following persons,
in the capacities indicated on April 24, 1996.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Greg L. Armstrong President, Chief Executive Officer and Director
----------------------------------------------------- (Principal Executive Officer)
Greg L. Armstrong
/s/ Cynthia A. Feeback Controller (Principal Accounting Officer)
-----------------------------------------------------
Cynthia A. Feeback
/s/ Phillip D. Kramer Vice President, Chief Financial Officer and
----------------------------------------------------- Treasurer (Principal Financial Officer)
Phillip D. Kramer
* Robert A. Bezuch Director
* William M. Hitchcock Director
*Dan M. Krausse Chairman of the Board and Director
*John H. Lollar Director
</TABLE>
II - 4
<PAGE> 17
<TABLE>
<S> <C> <C>
*D. Irving Obrow Director
* Robert V. Sinnott Director
*J. Taft Symonds Director
*By: /s/ Phillip D. Kramer
-------------------------------------------------------
Phillip D. Kramer, Attorney-in-Fact
</TABLE>
II - 5
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER PAGE
------ ------------
<S> <C> <C>
4(a)* -- Specimen Common Stock Certificate (incorporated by reference to Exhibit 4 to the Company's Form S-1
Registration Statement (Reg. No. 33-33986)).
4(b)+ -- Indenture dated as of March 15, 1996, between Plains Resources Inc., the Subsidiary Guarantors named
therein and Texas Commerce Bank National Association, as Trustee, relating to the Registrant's 10-1/4%
Senior Subordinated Notes due 2006.
5* -- Opinion of Michael R. Patterson, Esq.
23(a)* -- Consent of Michael R. Patterson, Esq. (contained in Exhibit 5).
23(b)+ -- Consent of Price Waterhouse LLP.
23(c)* -- Consent of Netherland, Sewell & Associates, Inc.
23(d)* -- Consent of H. J. Gruy and Associates, Inc.
23(e)* -- Consent of Ryder Scott Company.
24* -- Powers of Attorney.
</TABLE>
- ------------
+ Filed herewith
* Previously filed.
<PAGE> 1
EXHIBIT 4
================================================================================
PLAINS RESOURCES INC.,
SUBSIDIARY GUARANTORS
NAMED HEREIN
and
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
Trustee
---------------------
INDENTURE
Dated as of March 15, 1996
---------------------
$150,000,000
10 1/4%SENIOR SUBORDINATED NOTES DUE 2006, SERIES A
10 1/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Indenture Section
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
313(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 13.02
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02; 4.03; 13.02
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.05
(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 13.02
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02; 6.04; 9.02
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.01
318(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.01
</TABLE>
______________
N.A. means Not Applicable.
<PAGE> 3
NOTE: This Cross-Reference table shall not, for any purpose, be deemed to be
part of this Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 1.03. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . -24-
SECTION 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 2.04. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 2.07. Book-Entry Provisions for Global Securities . . . . . . . . . . . . . . . . . . . . . . . -33-
SECTION 2.08. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 2.09. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
SECTION 2.10. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 2.11. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 2.12. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 2.13. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
SECTION 2.14. Private Placement Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
SECTION 3.02. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . -36-
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
SECTION 3.06. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
SECTION 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
</TABLE>
-i-
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 4.03. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
SECTION 4.04. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
SECTION 4.05. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
SECTION 4.06. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . -40-
SECTION 4.07. Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
SECTION 4.08. Maintenance of Properties and Insurance. . . . . . . . . . . . . . . . . . . . . . . . . -41-
SECTION 4.09. Limitation on Incurrence of Additional Indebtedness. . . . . . . . . . . . . . . . . . . -41-
SECTION 4.10. Limitation on Senior Subordinated Indebtedness. . . . . . . . . . . . . . . . . . . . . . -42-
SECTION 4.11. Limitation on Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
SECTION 4.12. Limitation on Disposition of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
SECTION 4.13. Limitation on Liens Securing Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . -45-
SECTION 4.14. Limitation on Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . -46-
SECTION 4.15. Limitation on Transactions with Related Persons . . . . . . . . . . . . . . . . . . . . . -46-
SECTION 4.16. Limitation on Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
SECTION 4.17. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
SECTION 4.18. Provision of Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
SECTION 4.19. Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
SECTION 4.20. Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
SECTION 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -52-
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -54-
SECTION 6.06. Limitation on Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -54-
SECTION 6.07. Rights of Holders To Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . -54-
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -56-
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -57-
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
</TABLE>
-ii-
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
SECTION 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
SECTION 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
SECTION 7.09. Successor Trustee by Merger, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . -60-
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -60-
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . -60-
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . -60-
SECTION 8.02. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
SECTION 8.03. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
SECTION 8.04. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
SECTION 8.05. Survival of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -64-
SECTION 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-
SECTION 9.04. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-
SECTION 9.05. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . -65-
SECTION 9.06. Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . -66-
SECTION 10.02. Company Not To Make Payments with Respect to Securities in Certain Circumstances. . . . -66-
SECTION 10.03. Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of Company. . . . . . . . . . . . . . . . . . . . . . . . . -67-
SECTION 10.04. Holders To Be Subrogated to Rights of Holders of Senior Indebtedness . . . . . . . . . . -68-
SECTION 10.05. Obligations of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . . -69-
SECTION 10.06. Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice . . . . . . . . . -69-
SECTION 10.07. Application by Trustee of Monies Deposited with It . . . . . . . . . . . . . . . . . . . -70-
SECTION 10.08. Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -70-
</TABLE>
-iii-
<PAGE> 7
<TABLE>
<S> <C> <C>
SECTION 10.09. Holders Authorize Trustee To Effectuate Subordination of Securities . . . . . . . . . . . -70-
SECTION 10.10. Right of Trustee To Hold Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . -71-
SECTION 10.11. Article Ten Not To Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . . -71-
SECTION 10.12. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
ARTICLE ELEVEN
GUARANTEES
SECTION 11.01. Unconditional Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
SECTION 11.02. Subsidiary Guarantors May Consolidate, etc., on Certain Terms . . . . . . . . . . . . . . -73-
SECTION 11.03. Release of a Subsidiary Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . -73-
SECTION 11.04. Limitation of Subsidiary Guarantor's Liability . . . . . . . . . . . . . . . . . . . . . -74-
SECTION 11.05. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -74-
SECTION 11.06. Execution and Delivery of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . -75-
SECTION 11.07. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -75-
ARTICLE TWELVE
SUBORDINATION OF GUARANTEES
SECTION 12.01. Guarantees Subordinated to Guarantor Senior Indebtedness . . . . . . . . . . . . . . . . -75-
SECTION 12.02. Subsidiary Guarantors Not To Make Payments with Respect to Guarantees in Certain
Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -76-
SECTION 12.03. Guarantees Subordinated to Prior Payment of All Guarantor Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Subsidiary Guarantor. . . . . . . . . . . -77-
SECTION 12.04. Holders To Be Subrogated to Rights of Holders of Guarantor Senior Indebtedness . . . . . -78-
SECTION 12.05. Obligations of the Subsidiary Guarantors Unconditional . . . . . . . . . . . . . . . . . -78-
SECTION 12.06. Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice . . . . . . . . . -79-
SECTION 12.07. Application by Trustee of Monies Deposited with It . . . . . . . . . . . . . . . . . . . -79-
SECTION 12.08. Subordination Rights Not Impaired by Acts or Omissions of Subsidiary Guarantors or
Holders of Guarantor Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . -80-
SECTION 12.09. Holders Authorize Trustee To Effectuate Subordination of Guarantee . . . . . . . . . . . -80-
SECTION 12.10. Right of Trustee To Hold Guarantor Senior Indebtedness . . . . . . . . . . . . . . . . . -80-
SECTION 12.11. Article Twelve Not To Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . -80-
SECTION 12.12. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -81-
ARTICLE THIRTEEN
MISCELLANEOUS
</TABLE>
-iv-
<PAGE> 8
<TABLE>
<S> <C> <C>
SECTION 13.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -81-
SECTION 13.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -81-
SECTION 13.03. Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . -82-
SECTION 13.04. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . -82-
SECTION 13.05. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . -82-
SECTION 13.06. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -83-
SECTION 13.07. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -83-
SECTION 13.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -83-
SECTION 13.09. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . -83-
SECTION 13.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -83-
SECTION 13.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -84-
SECTION 13.12. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -84-
SECTION 13.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -84-
SIGNATURES
</TABLE>
-v-
<PAGE> 9
THIS INDENTURE, dated as of March 15, 1996, is among PLAINS RESOURCES
INC., a Delaware corporation (hereinafter called the "Company"), the SUBSIDIARY
GUARANTORS (as defined hereinafter) and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 10 1/4%
Senior Subordinated Notes due 2006, Series A and an issue of 10 1/4% Senior
Subordinated Notes due 2006, Series B (such two issues, as amended or
supplemented from time to time in accordance with the terms hereof, being
herein collectively called the "Securities"), of substantially the tenor and in
the aggregate principal amount hereinafter set forth, and to provide therefor
the Company has duly authorized the execution and delivery of this Indenture.
The 10 1/4% Senior Notes due 2006, Series A are to be issued and sold
in transactions exempt from registration under the Securities Act, pursuant to
the Purchase Agreement, and the 10 1/4% Senior Subordinated Notes due 2006,
Series B are to be issued in exchange for the 10 1/4% Senior Subordinated Notes
due 2006, Series A, pursuant to the Registration Rights Agreement.
The Company owns, directly or indirectly, all of the equity ownership
of the outstanding Voting Stock of each initial Subsidiary Guarantor, and each
initial Subsidiary Guarantor is engaged in businesses related to the businesses
of the Company and the other Subsidiary Guarantors. Each initial Subsidiary
Guarantor will derive direct and indirect benefit from the issuance of the
Securities; accordingly, each initial Subsidiary Guarantor has authorized its
guarantee of the Company's obligations under this Indenture and the Securities,
and to provide therefor the initial Subsidiary Guarantors have duly authorized
the execution and delivery of this Indenture.
All things necessary have been done on the part of the Company and the
initial Subsidiary Guarantors to make the Securities, when issued against
consideration received and executed by the Company and authenticated and
delivered by the Trustee as herein provided, the valid obligations of the
Company, to make the Guarantees, when the notations thereof on the Securities
are executed by the initial Subsidiary Guarantors, the valid obligation of the
initial Subsidiary Guarantors and to make this Indenture a valid agreement of
the Company, the initial Subsidiary Guarantors and the Trustee, in accordance
with their respective terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities (together with the related Guarantees) by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities (together with the related Guarantees), without
preference of one series of Securities over the other, as follows:
<PAGE> 10
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, (A) the sum of (i) discounted
future net cash flows from proved oil and gas reserves of the Company and its
consolidated Subsidiaries, calculated in accordance with SEC guidelines (before
any state or federal income tax), as estimated by independent petroleum
engineers as of a date no earlier than the date of the Company's latest annual
consolidated financial statements (or, in the case that the date of
determination is after the end of the first fiscal quarter of the fiscal year
of the Company, as estimated by Company engineers as of a date no earlier than
the end of the most recent fiscal quarter, which estimates shall be confirmed
in writing by a report by independent petroleum engineers in accordance with
SEC guidelines in the event of a Material Change if the amount of Adjusted
Consolidated Net Tangible Assets is required to be computed under this
Indenture), (ii) the Net Working Capital on a date no earlier than the date of
the Company's latest consolidated annual or quarterly financial statements and
(iii) with respect to each other tangible asset of the Company or its
consolidated Subsidiaries, the greater of (a) the net book value of such other
tangible asset on a date no earlier than the date of the Company's latest
consolidated annual or quarterly financial statements, and (b) the appraised
value, as estimated by a qualified independent appraiser, of such other
tangible asset, as of a date no earlier than the date that is three years prior
to the date of determination (or such later date on which the Company shall
have a reasonable basis to believe that there has occurred a material decrease
in value since the determination of such appraised value), minus (B) minority
interests and, to the extent not otherwise taken into account in determining
Adjusted Consolidated Net Tangible Assets, any gas balancing liabilities of the
Company and its consolidated Subsidiaries. In addition to, but without
duplication of, the foregoing, for purposes of this definition, "Adjusted
Consolidated Net Tangible Assets" shall be calculated after giving effect, on a
pro forma basis, to (1) any Investment not prohibited by this Indenture, to and
including the date of the transaction giving rise to the need to calculate
Adjusted Consolidated Net Tangible Assets (the "Assets Transaction Date"), in
any other Person that, as a result of such Investment, becomes a Subsidiary of
the Company, (2) the acquisition, to and including the Assets Transaction Date
(by merger, consolidation or purchase of stock or assets), of any business or
assets, including, without limitation, Permitted Industry Investments, and (3)
any sales or other dispositions of assets permitted by this Indenture (other
than sales of Hydrocarbons or other mineral products in the ordinary course of
business) occurring on or prior to the Assets Transaction Date. For purposes
of calculating the ratio of the Company's Adjusted Consolidated Net Tangible
Assets to Indebtedness of the Company and its Subsidiaries, Indebtedness of a
Subsidiary that is not a Wholly Owned Subsidiary (which Indebtedness is
non-recourse to the Company or any other Subsidiary or any of their assets)
shall be included only to the extent of the Company's pro rata ownership
interest in such Subsidiary.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean
the lesser of the amount by which (x) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding
-2-
<PAGE> 11
liabilities under the Guarantee, of such Subsidiary Guarantor at such date and
(y) the present fair saleable value of the assets of such Subsidiary Guarantor
at such date exceeds the amount that will be required to pay the probable
liability of such Subsidiary Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities incurred or assumed on such date and
after giving effect to any collection from any Subsidiary of such Subsidiary
Guarantor in respect of the obligations of such Subsidiary under the
Guarantee), excluding debt in respect of the Guarantee, as they become absolute
and matured.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset" means each of the assets that are owned by the Company or a
Subsidiary on the date of this Indenture or that are acquired by the Company or
a Subsidiary after the date of this Indenture.
"Asset Disposition" means any sale, lease, transfer, exchange or other
disposition (or series of related sales, leases, transfers, exchanges or
dispositions) of shares of Capital Stock of a Subsidiary (other than directors'
qualifying shares), or of property or assets (including any interests therein)
(each referred to for purposes of this definition as a "disposition") by the
Company or any of its Subsidiaries, including any disposition by means of a
merger, consolidation or similar transaction (other than (A) by the Company to
a Subsidiary or by a Subsidiary to the Company or a Subsidiary (in the case of
a transfer to a Subsidiary that is not a wholly owned Subsidiary, dispositions
shall be excluded pursuant to clause (A) only to the extent of the Company's
interest in such Subsidiary after giving effect to such transfer), (B) any
Investment in an Unrestricted Subsidiary not prohibited under the provisions of
Section 4.11, (C) a disposition of Hydrocarbons or other mineral products in
the ordinary course of business, and (D) the disposition of all or
substantially all of the assets of the Company in compliance with Article Five
of this Indenture).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (i) the sum of the products
of (x) the number of years from such date to the date of each successive
scheduled principal payment of such Indebtedness multiplied by (y) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated February 11, 1994, among the Company, Internationale
Nederlanden (U.S.) Capital Corporation, The First National Bank of Boston, Den
norske Bank AS, First Interstate Bank of Texas, N.A., Texas Commerce Bank
National Association and Internationale Nederlanden (U.S.) Capital Corporation,
as agent, as amended, modified (without limitation as to amount), supplemented,
extended, restated, replaced, renewed or refinanced from time to time in whole
-3-
<PAGE> 12
or in part in one or more credit agreements, loan agreements, instruments or
similar agreements, as such may be further amended, modified (without
limitation as to amount), supplemented, extended, restated, replaced, renewed
or refinanced) from time to time.
"Board of Directors" means, with respect to any Person, the board of
directors of such Person or any committee of the board of directors of such
Person duly authorized to act on behalf of the board of directors of such
Person.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day on which the New York Stock Exchange is
open for trading and which is not a Legal Holiday.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of
corporate stock and any and all warrants, options and rights with respect
thereto, including each class of common stock and preferred stock of such
Person.
"Capitalized Lease Obligation" means the discounted present value of
the rental obligations of any Person under any lease of Property, which in
accordance with GAAP, is required to be capitalized on the balance sheet of
such Person.
"Cash Equivalents" shall mean Permitted Obligations.
"Change of Control" means (i) an event or series of events by which
any Person or other entity or group of Persons or other entities acting in
concert as a partnership or other group (a "Group of Persons") shall, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases, merger, consolidation or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
40% or more of the combined voting power of the then outstanding Voting Stock
of the Company, (ii) during any period of two consecutive years, Continuing
Directors cease for any reason to constitute a majority of the Board of
Directors then in office, or (iii) the direct or indirect sale, lease, exchange
or other transfer of all or substantially all of the Assets to any Person or
Group of Persons.
"Company" means the party named as such above, until a successor
replaces such Person in accordance with the terms of this Indenture, and
thereafter means such successor.
"Company Properties" means all Properties, and equity, partnership or
other ownership interests therein, that are related or incidental to, or used
or useful in connection with, the conduct or operation of any business
activities of the Company or the Subsidiaries, which business activities are
not prohibited by the terms of this Indenture.
-4-
<PAGE> 13
"Consolidated EBITDA" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period increased
(to the extent deducted in determining Consolidated Net Income) by the sum of:
(i) all income taxes of such Person and its subsidiaries paid or accrued
according to GAAP for such period (other than income taxes attributable to
extraordinary, unusual or non-recurring gains or losses), (ii) all interest
expense of such Person and its subsidiaries paid or accrued in accordance with
GAAP for such period (including amortization of original issue discount and the
interest portion of deferred payment obligations), (iii) depreciation and
depletion of such Person and its subsidiaries, (iv) amortization of such Person
and its subsidiaries including, without limitation, amortization of capitalized
debt issuance costs and (v) any other non-cash charges to the extent deducted
from Consolidated Net Income.
"Consolidated EBITDA Coverage Ratio" means, with respect to any
Person, the ratio of (1) Consolidated EBITDA of such Person for the period (the
"Pro Forma Period") consisting of the most recent four full fiscal quarters for
which financial information in respect thereof is available immediately prior
to the date of the transaction giving rise to the need to calculate the
Consolidated EBITDA Coverage Ratio (the "Transaction Date") to (2) the
aggregate Fixed Charges which such Person will accrue during the fiscal quarter
in which the Transaction Date occurs and the three fiscal quarters immediately
subsequent to such fiscal quarter (the "Forward Period") on the aggregate
amount of Indebtedness outstanding on the Transaction Date, including any
Indebtedness proposed to be incurred on such date and excluding any
Indebtedness repaid with the proceeds of such Indebtedness (as though all such
Indebtedness was incurred or repaid on the first day of the quarter in which
the Transaction Date occurred). In addition to, but without duplication of,
the foregoing, for purposes of this definition, "Consolidated EBITDA" shall be
calculated after giving effect (without duplication), on a pro forma basis for
the Pro Forma Period (but no longer), to (a) any Investment, during the period
commencing on the first day of the Pro Forma Period to and including the
Transaction Date (the "Reference Period"), in any other Person that, as a
result of such Investment, becomes a subsidiary of such Person, (b) the
acquisition, during the Reference Period (by merger, consolidation or purchase
of stock or assets) of any business or assets, which acquisition is not
prohibited by this Indenture, including but not limited to Permitted Industry
Investments, as if such acquisition had occurred on the first day of the
Reference Period, (c) any sales or other dispositions of assets (other than
sales of Hydrocarbons and other mineral products in the ordinary course of
business) occurring during the Reference Period, in each case as if such
incurrence, Investment, repayment, acquisition or asset sale had occurred on
the first day of the Reference Period and (d) interest income reasonably
anticipated by the Company to be received during the Pro Forma Period from
Investments in Permitted Obligations, which Investments exist on the
Transaction Date or will exist as a result of the transaction giving rise to
the need to calculate the Consolidated EBITDA Coverage Ratio. For purposes of
this definition, "Fixed Charges" shall be calculated after giving effect
(without duplication), on a pro forma basis for the Forward Period, to any
Indebtedness incurred or repaid on or after the first day of the Forward Period
and prior to the Transaction Date. For purposes of calculating the Company's
Consolidated EBITDA Coverage Ratio, Indebtedness of a Subsidiary that is not a
Wholly Owned Subsidiary (which Indebtedness is non-recourse to the Company or
any other Subsidiary or any of their assets) shall be included only to the
extent of the Company's pro rata ownership interest in such Subsidiary.
-5-
<PAGE> 14
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or loss) of such Person and its subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP, provided
that (a) the net income of (i) any Unrestricted Subsidiary and (ii) any other
Person in which such Person or any subsidiary thereof has an interest (which
interest, in the case of those Persons referred to in clause (ii), does not
cause the net income of such other Person to be consolidated with the net
income of such Person in accordance with GAAP) will be included only to the
extent of the amount of dividends or distributions actually paid to such Person
or its subsidiaries by such other Person in such period; (b) the net income of
any subsidiary of such Person that is subject to any Payment Restriction will
be excluded to the extent of such Payment Restriction; and (c) (i) the net
income (or loss) of any other Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition, (ii) any net
gain (but not loss) on the sale or other disposition by such Person or any of
its subsidiaries of assets and of the Capital Stock of any subsidiary of such
Person, and (iii) items which are extraordinary, will each be excluded;
provided that in no event shall the computation of Consolidated Net Income of
the Company include or take into effect the premium or write-off of debt
issuance costs, if any, paid by the Company optionally to redeem or otherwise
prepay the 12% Senior Subordinated Notes due 1999 issued pursuant to the Prior
Indenture or the Securities issued under this Indenture.
"Consolidated Net Worth" as of any date means with respect to any
Person the amount by which the assets of such Person and its subsidiaries on a
consolidated basis exceed (i) the total liabilities of such Person and its
subsidiaries on a consolidated basis, plus (ii) Disqualified Capital Stock of
such Person or Disqualified Capital Stock of any subsidiary of such Person
issued to any Person other than such Person or another wholly owned Subsidiary
of such Person, in each case determined in accordance with GAAP.
"Contango Market Transaction" a transaction in which the Company or
any Subsidiary either (i) establishes a position using New York Mercantile
Exchange Crude Oil Futures contracts to purchase Hydrocarbons for future
delivery to it, or (ii) purchases or commits to purchase Hydrocarbons for
future delivery to it, and contemporaneously with such purchase either (a)
establishes one or more positions using New York Mercantile Exchange Crude Oil
Futures contracts to resell at a date subsequent to such delivery date, or (b)
enters into a contract with that Person or another Person to resell at a date
subsequent to such delivery date, a similar aggregate quantity and quality of
Hydrocarbons as so purchased by the Company or such Subsidiary, as applicable,
and at an aggregate price greater than the Indebtedness incurred by the
Hydrocarbons so purchased by the Company or such Subsidiary.
"Continuing Directors" means any member of the Board of Directors of
the Company on the Issue Date, any director elected since the date thereof in
any annual meeting of the stockholders upon the recommendation of the Board of
Directors of the Company and any other member of the Board of Directors of the
Company who will be recommended or elected to succeed a Continuing Director by
a majority of Continuing Directors who are then members of the Board of
Directors of the Company.
"Currency Agreement" means the obligations of any Person pursuant to
any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect such Person or any of its
subsidiaries against fluctuations in currency values.
-6-
<PAGE> 15
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default.
"Disqualified Capital Stock" means, with respect to any Person, any
Capital Stock of such Person or its subsidiaries that, by its terms, by the
terms of any agreement related thereto or by the terms of any security into
which, mandatorily or at the option of the holder, it is convertible or
exchangeable, is, or upon the happening of an event or the passage of time
would be, required to be redeemed or repurchased by such Person or its
subsidiaries, including at the option of the holder, in whole or in part, or
has, upon the happening of an event or the passage of time would have, a
redemption or similar payment due, in each such case on or prior to the
Maturity Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Exchange Offer" means the offer by the Company, pursuant to an
effective registration statement filed with the SEC, to exchange for any and
all of the Series A Securities a like aggregate principal amount of Series B
Securities in accordance with the terms and provisions of the Registration
Rights Agreement.
"Exchange Offer Consummation Date" means the date on which the
Exchange Offer is consummated in accordance with the terms and provisions of
the Registration Rights Agreement.
"Fixed Charges" means, with respect to any Person, for any period, the
aggregate amount of (i) interest, whether expensed or capitalized, paid,
accrued or scheduled to be paid or accrued during such period (except to the
extent accrued in a prior period) in respect of all Indebtedness of such Person
and its consolidated subsidiaries (including (a) original issue discount on any
Indebtedness and (b) the interest portion of all deferred payment obligations,
calculated in accordance with the effective interest method, in each case to
the extent attributable to such period) and (ii) dividend requirements on
Disqualified Capital Stock of such Person and its consolidated subsidiaries
(whether in cash or otherwise (except dividends payable in shares of Qualified
Capital Stock) (non-cash dividends being valued as determined in good faith by
the Board of Directors of such Person, as evidenced by a Board Resolution))
paid, accrued or scheduled to be paid or accrued during such period (except to
the extent accrued in a prior period) and excluding items eliminated in
consolidation.
For purposes of the definition of Fixed Charges, (a) interest
on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Board of Directors of such Person (as evidenced by
a Board Resolution) to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP; (b) interest on Indebtedness that is
determined on a fluctuating basis shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest of such Indebtedness in effect on
the date Fixed Charges are being calculated, subject to the proviso in clause
(c); (c) interest on Indebtedness that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rate, shall be deemed to have been based upon
the rate actually chosen, or, if none, then based upon such optional rate
chosen as the Company may designate, (provided that, for the period following
the date on which the rate
-7-
<PAGE> 16
actually chosen ceases to be in effect, the Company may designate an optional
rate other than that actually chosen, which optional rate shall be deemed to
accrue at a fixed per annum equal to the rate of interest on such optional rate
in effect on the date Fixed Charges are being calculated); and (d) Fixed
Charges shall be increased or reduced by the net cost (including amortization
of discount) or benefit associated with obligations under Interest Rate
Agreements attributable to such period.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America as of any date of determination.
"Guarantee" means, individually and collectively, the guarantees given
by the Subsidiary Guarantors pursuant to Article Eleven hereof, including a
notation in the Securities substantially in the form attached hereto as Exhibit
A-1.
"Guarantor Senior Indebtedness" means all Indebtedness of a Subsidiary
Guarantor (present and future) created, incurred, assumed or guaranteed by the
Subsidiary Guarantor (and all renewals, extensions, increases or refundings
thereof) (including the principal of, interest on and fees, premiums, expenses
(including costs of collection), indemnities and other amounts payable in
connection with such Indebtedness, and including any Post-Commencement
Amounts), unless the instrument governing such Indebtedness expressly provides
that such Indebtedness is not senior or superior in right of payment to the
Guarantee. Notwithstanding the foregoing, Guarantor Senior Indebtedness does
not include (i) any Indebtedness of the Subsidiary Guarantor to the Company or
any Subsidiary or any Unrestricted Subsidiary, and (ii) any amounts payable or
other liabilities to trade creditors.
"Holder" means a Person in whose name a Security is registered on the
Registrar's books.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all constituents, elements or compounds thereof and products refined or
processed therefrom.
"Indebtedness" means, with respect to any Person, without duplication,
any liability, contingent or otherwise, of such Person (i) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (ii) evidenced by bonds, notes,
debentures or similar instruments, (iii) representing the deferred and unpaid
balance of the purchase price of any property or interest therein (other than
(A) any such balance that represents an account payable or any other monetary
obligation to a trade creditor created, incurred, assumed or guaranteed by such
Person in the ordinary course of business of such Person in connection with
obtaining goods, materials or services and due within twelve months (or such
longer period for payment as is customarily extended by such trade creditor) of
the incurrence thereof, which account is not overdue by more than 150 days,
according to the original terms of sale, unless such account payable is being
contested in good faith or has been extended, and (B) the Indebtedness with
respect to the Restructure Agreement dated as of February 25, 1991 by and among
the Company, The Aetna Casualty and Surety Company and Aetna Life Insurance
Company), (iv) for the payment of a Capitalized Lease Obligation of such
Person, (v) with respect to the reimbursement of any letter of credit, banker's
-8-
<PAGE> 17
acceptance or similar credit transaction, (vi) with respect to Indebtedness (as
otherwise defined in this definition) of another Person secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person (provided that if the obligations so secured have not been assumed in
full by such Person or are not otherwise such Person's legal liability in full,
then such obligations shall be deemed to be in an amount equal to the greater
of (A) the lesser of (1) the full amount of such obligations, and (2) the fair
market value of such assets, as determined in good faith by the Board of
Directors of such Person, which determination shall be evidenced by a Board
Resolution, and (B) the amount of obligations as have been assumed by such
Person or which are otherwise such Person's legal liability), (vii) with
respect to production payments in connection with oil and gas properties of
such Person, other than any Permitted Production Payment Obligations, (viii) to
the extent not otherwise included, under Currency Agreements and Interest Rate
Agreements entered into other than in the ordinary course of such Person's
business, (ix) in the case of such Person, the liquidation preference and any
mandatory redemption payment obligations in respect of Disqualified Capital
Stock, and, in the case of a subsidiary of such Person, the liquidation
preference and any mandatory redemption payment obligations in respect of
preferred stock of such subsidiary, and (x) in respect of all Indebtedness of
others which such Person has guaranteed, endorsed with recourse (otherwise than
for collection, deposit or other similar transactions in the ordinary course of
business), agreed to purchase or repurchase or in respect of which such Person
has agreed contingently to supply or advance funds or for which such Person has
otherwise become liable; provided, however, Indebtedness arising pursuant to
clause (iii)(A) of this definition as a result of such account payable becoming
overdue by more than 150 days shall only be deemed to be incurred at a time
when Indebtedness, other than such Indebtedness, is incurred.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Independent Director" means any director of the Company who is
neither (i) an executive officer or an employee of the Company or of any of its
Subsidiaries or Affiliates, nor (ii) a Related Person.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, (a) an insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization proceeding or other similar case or
proceeding, relative to such Person or to its creditors, as such, or its
assets, or (b) any liquidation, dissolution, or reorganization proceeding of
such Person, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of such Person.
"Interest Rate Agreement" means the obligations of any Person pursuant
to any interest swap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect such Person or any of its
subsidiaries against fluctuations in interest rates.
-9-
<PAGE> 18
"Investment" means, in respect of any Person, any investment in
another Person, whether by means of a share purchase, capital contribution,
loan, advance (other than advances to employees for moving and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business)
or similar credit extension constituting Indebtedness of such other Person and
any guaranty of Indebtedness of any other Person. For purposes of Section 4.11
and the definition of Permitted Unrestricted Subsidiary Investments, (i) an
"Investment" in an Unrestricted Subsidiary shall be deemed to include and be
valued at the fair market value of the net assets of any Subsidiary at the time
that such Subsidiary is designated an Unrestricted Subsidiary, and (ii) any
Investment in an Unrestricted Subsidiary shall be valued at fair market value
at the time of such Investment (except, however, when such Investment consists
of a loan or advance by a Person to another Person that is of an intercompany
or similar nature between such Persons and arises pursuant to an agreement or
understanding in the ordinary course of business relating to tax sharing,
administrative or similar arrangements, then such Investment shall be valued at
fair market value at the time that the investing Person shall have paid monies
or transferred other consideration to another Person for the benefit of the
Person in whom the agreement to make such loan or advance was made), in each
case as determined by the Board of Directors of the Company and such
Subsidiary, as applicable, in good faith.
"Issue Date" means the date of first issuance of the Series A
Securities under this Indenture.
"Lien" means, with respect to any Person, any mortgage, pledge, lien,
encumbrance, easement, restriction, covenant, right-of-way, charge or adverse
claim affecting title or resulting in an encumbrance against real or personal
property of such Person, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option, right of first refusal or other similar agreement to sell,
in each case securing obligations of such Person and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or
equivalent statute or statutes) of any jurisdiction).
"Material Change" means an increase or decrease of more than 10%
during a fiscal quarter in the discounted future net cash flows (excluding
changes that result solely from changes in prices) from proved oil and gas
reserves of the Company and consolidated Subsidiaries (before any state or
federal income tax); provided, however, that the following will be excluded
from the Material Change calculation: (i) any acquisitions during the quarter
of oil and gas reserves that have been estimated by independent petroleum
engineers and on which a report or reports exist, (ii) any reserves added
during the quarter attributable to the drilling or recompletion of wells not
included in previous reserve estimates, but which will be included in future
quarters, and (iii) any disposition of properties existing at the beginning of
such quarter that have been disposed of as provided in Section 4.12.
"Material Subsidiary" means any Subsidiary of the Company which, as of
the relevant date of determination, would be a "significant subsidiary" as
defined in Reg. Section 230.405 promulgated pursuant to the Securities Act as
in effect on the Issue Date, assuming the Company is the "registrant" referred
to in such definition, except that the 10% amounts referred to in such
definition shall be deemed to be 5%.
"Maturity Date" means March 15, 2006.
-10-
<PAGE> 19
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Proceeds" means, with respect to any Asset Disposition
of any Person, cash proceeds received (including any cash proceeds received by
way of deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received, and excluding any other
consideration until such time as such consideration is converted into cash)
therefrom, in each case net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state or
local taxes required to be accrued as a liability as a consequence of such
Asset Disposition, and in each case net of all Indebtedness which is secured by
such Assets, in accordance with the terms of any Lien upon or with respect to
such Assets, or which must, by its terms or in order to obtain a necessary
consent to such Asset Disposition or by applicable law, be repaid out of the
proceeds from such Asset Disposition and which is actually so repaid.
"Net Proceeds" means (a) in the case of any sale by the Company of
Qualified Capital Stock, the aggregate net cash proceeds received by the
Company, after payment of expenses, commissions and the like incurred in
connection therewith, and (b) in the case of any exchange, exercise, conversion
or surrender of any outstanding securities or Indebtedness of the Company for
or into shares of Qualified Capital Stock of the Company, the net book value of
such outstanding securities or Indebtedness as adjusted on the books of the
Company on the date of such exchange, exercise, conversion or surrender (plus
any additional amount required to be paid by the holder of such Indebtedness or
securities to the Company upon such exchange, exercise, conversion or surrender
and less any and all payments made to the holders of such Indebtedness or
securities, and all other expenses incurred by the Company in connection
therewith).
"Net Working Capital" means (i) all current assets of the Company and
its consolidated Subsidiaries, minus (ii) all current liabilities of the
Company and its consolidated Subsidiaries, except current liabilities included
in Indebtedness.
"Non-Recourse Indebtedness" means Indebtedness that, under the terms
thereof or pursuant to applicable law, neither the Company nor any Subsidiary
of the Company (other than a Subsidiary being designated as an Unrestricted
Subsidiary) is directly or indirectly liable for and there is no recourse
against any of the assets or properties of the Company or such Subsidiary.
"Obligations" mean the due and punctual payment of principal of and
interest on the Securities when due, whether at maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of the Company
under this Indenture and the Securities and the due and punctual performance of
all other obligations of the Company under this Indenture and the Securities.
"Officer" means, with respect to any Person, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer or the
Treasurer of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either a Secretary,
Assistant Secretary or Assistant Treasurer of such Person.
-11-
<PAGE> 20
"Oil and Gas Properties" means all Properties, including equity or
other ownership interests therein, owned by such Person which have been
assigned "proved oil and gas reserves" as defined in Rule 4-10 of Regulation
S-X of the Securities Act as in effect on the Issue Date.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company (or any Subsidiary Guarantor, if applicable).
"Permitted Acquisition Indebtedness" means Indebtedness of the Company
or any Subsidiary to the extent such Indebtedness is incurred to finance the
acquisition of Oil and Gas Properties (and development costs related thereto)
and does not exceed the principal amount of $50 million with respect to any
such acquisition transaction or series of related acquisition transactions if
on the date of the incurrence (i) (A) the Adjusted Consolidated Net Tangible
Assets acquired are equal to or greater than 200% of the Indebtedness incurred,
and (B) the Adjusted Consolidated Net Tangible Assets of the Company (after
giving effect to such acquisition) are equal to or greater than 125% of the
consolidated Indebtedness of the Company and its Subsidiaries or (ii) (A) the
Property Net Revenue Coverage Ratio would have been equal to or greater than
2.5 to 1.0, (B) the Adjusted Consolidated Net Tangible Assets acquired are
equal to or greater than 150% of the Indebtedness incurred, and (C) the
Adjusted Consolidated Net Tangible Assets of the Company (after giving effect
to such acquisition) are equal to or greater than 125% of the consolidated
Indebtedness of the Company and its Subsidiaries.
"Permitted Contango Market Transaction Obligations" means Indebtedness
of the Company or any Subsidiary under letter of credit or borrowed money
obligations, or in lieu of or in addition to such letters of credit or borrowed
money, guarantees of such Indebtedness or other obligations of the Company or
any Subsidiary by the Company or any other Subsidiary, as applicable, related
to a Contango Market Transaction, provided that, (1) if the Company or such
Subsidiary has entered into such a contract to resell at a subsequent date, as
distinguished from establishing a position using New York Mercantile Exchange
Crude Oil Future contracts to resell at a subsequent date, (A) the Person
with which the Company or such Subsidiary has such contract to sell has an
investment grade credit rating by S&P or Moody's, or in lieu thereof, a Person
guaranteeing the payment of such obligated Person has an investment grade
credit rating by S&P or Moody's, or (B) such Person posts a letter of credit in
favor of the Company or such Subsidiary with respect to such contract and (2)
for the period commencing on the date the Company or such Subsidiary is
obligated to take delivery of such Hydrocarbons so purchased by it and until
and including the date on which delivery to the purchaser is fulfilled, the
Company or such Subsidiary has the right and ability to store such quantity and
quality of Hydrocarbons in storage facilities owned, leased, operated or
otherwise controlled by the Company or any Subsidiary.
"Permitted Indebtedness" means (i) Indebtedness under the Series A
Securities and any Series B Securities issued in exchange for Series A
Securities of equal principal amount; (ii) Indebtedness outstanding in an
aggregate principal amount at any one time outstanding not to exceed $100
million under the Bank Credit Agreement, plus all interest and fees under such
agreements and any guarantee of any such Indebtedness; (iii) the Guarantees of
the Securities (and any assumption of the obligations guaranteed thereby); (iv)
Permitted Refinancing Indebtedness; (v) Indebtedness of the Company to any
Wholly Owned Subsidiary, and any
-12-
<PAGE> 21
Indebtedness of any Wholly Owned Subsidiary to the Company or to any Wholly
Owned Subsidiary of the Company; provided, that in each case, such Indebtedness
has not been incurred in contemplation of any subsequent issuance or transfer
of any Capital Stock or any other event which would result in any such Wholly
Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any other
subsequent transfer of any such Indebtedness (except to the Company or a Wholly
Owned Subsidiary), and if incurred in contemplation of any of the foregoing
events, then such Indebtedness shall be deemed to be incurred and shall be
treated as an incurrence of Indebtedness for purposes of the "Limitation on
Indebtedness" covenant at the time the Wholly Owned Subsidiary in question
ceased to be a Wholly Owned Subsidiary; (vi) Permitted Marketing Obligations
and Permitted Contango Market Transaction Obligations; (vii) Permitted
Acquisition Indebtedness; (viii) Permitted Operating Obligations; (ix) other
Indebtedness outstanding at any time in an aggregate principal amount not to
exceed the greater of $15 million or 2.5% of Adjusted Consolidated Net Tangible
Assets of the Company; and (x) Indebtedness outstanding on the Issue Date.
Permitted Refinancing Indebtedness that constitutes a refinancing of amounts
referred to in clauses (ii) and (ix) shall be deemed to be incurred pursuant to
and subject to the limitations in clauses (ii) and (ix), respectively. The
Company may elect at any time that amounts of Indebtedness incurred under
clauses (ii) or (ix) be deemed to be incurred pursuant to the first paragraph
of the "Limitation on Incurrence of Additional Indebtedness" covenant (if then
permitted to be so incurred), in which event such amounts so incurred shall be
deemed not to be incurred under clause (ii) or (ix); provided, however, any
such Indebtedness deemed not to be incurred under clause (ii) shall still be
treated as Indebtedness under and governed by the Bank Credit Agreement for
purposes of all other provisions of this Indenture.
"Permitted Industry Investments" means (i) capital expenditures,
including, without limitation, acquisitions of Company Properties and interests
therein; (ii) (a) entry into operating agreements, joint ventures, working
interests, royalty interests, mineral leases, unitization agreements, pooling
arrangements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the oil and gas business, or (b) exchanges of Company
Properties for other Company Properties of at least equivalent value as
determined in good faith by the Board of Directors of the Company; (iii)
Investments by the Company or any Subsidiary in any Subsidiary (or in any
Person that becomes a Subsidiary as a result of such Investment) that are not
subject to any Payment Restriction; (iv) Investments in the Company or another
Subsidiary that are not subject to any Payment Restriction by any Subsidiary;
and (v) Investments of operating funds on behalf of co-owners of Oil and Gas
Properties of the Company or the Subsidiaries pursuant to joint operating
agreements.
"Permitted Investments" means Permitted Obligations and Permitted
Industry Investments (in each case, other than Investments in Unrestricted
Subsidiaries).
"Permitted Liens" means (i) Liens for taxes, assessments and
governmental charges not yet delinquent or being contested in good faith and
for such adequate reserves have been established to the extent required by
GAAP, (ii) landlord's, carriers, warehouseman's, storage, mechanics',
workmen's, materialmen's, operator's or similar Liens arising in the ordinary
course of business, (iii) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions,
-13-
<PAGE> 22
easements, licenses, restrictions on the use of Company Properties or minor
imperfections in title thereto which, in the aggregate, are not material in
amount, and which do not in any case materially detract from the Company
Properties subject thereto or interfere with the ordinary conduct of the
business of the Company or the Subsidiaries, (iv) Liens on, or related to,
Properties to secure all or part of the costs incurred in the ordinary course
of business of exploration, drilling, development, production, processing,
transportation, marketing or storage, or operation thereof, (v) Liens on
pipeline or pipeline facilities, Hydrocarbons or Company Properties which arise
out of operation of law, (vi) judgment and attachment Liens not giving rise to
an Event of Default or Liens created by or existing from any litigation or
legal proceeding that are currently being contested in good faith by
appropriate proceedings and for which adequate reserves have been made, (vii)
(a) Liens upon any Property of any Person existing at the time of acquisition
thereof by the Company, (b) Liens upon any Property of a Person existing at the
time such Person is merged or consolidated with the Company or any Subsidiary
or existing at the time of the sale or transfer of any such Property of such
Person to the Company or any Subsidiary, or (c) Liens upon any Property of a
Person existing at the time such Person becomes a Subsidiary; provided that in
each case such Lien has not been created in contemplation of such sale,
merger, consolidation, transfer or acquisition, and provided further that in
each such case no such Lien shall extend to or cover any Property of the
Company or any Subsidiary other than the Property being acquired and
improvements thereon, (viii) Liens existing on the Issue Date, (ix) Liens on
deposits made in the ordinary course of business, including, without
limitation, pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation and deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a similar nature incurred in the ordinary course of business,
(x) Liens in favor of collecting or payor banks having a right of setoff,
revocation, refund or chargeback with respect to money or instruments of the
Company or any Subsidiary on deposit with or in possession of such bank, (xi)
royalties, overriding royalties, revenue interests, net revenue interests, net
profit interests, reversionary interests, production payments, production sales
contracts, operating agreements and other similar interests, properties,
arrangements and agreements, all as ordinarily exist with respect to Company
Properties, (xii) Liens upon any Property which were created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of such
Property; provided that no such Lien shall extend to or cover any Property of
the Company or any Subsidiary other than the Property so acquired and
improvements thereon, (xiii) Liens securing Senior Indebtedness or Guarantor
Senior Indebtedness, whether in whole or part thereof, (xiv) with respect to
any Company Properties, Liens arising under, or in connection with, or related
to, farm-out, farm-in, joint operating, area of mutual interest agreements
and/or other similar or customary arrangements, agreements or interests that
the Company or any Subsidiary determines in good faith to be necessary for the
economic development of such Property, and (xv) Liens upon any Property
securing obligations under hedging agreements, swap agreements or other similar
agreements entered into for the purpose of protecting against fluctuations in
oil or natural gas prices.
"Permitted Marketing Obligations" means, other than Permitted
Operating Obligations or Indebtedness relating to Contango Market Transactions,
Indebtedness of the Company or any Subsidiary under letter of credit or
borrowed money obligations, or in lieu of or in addition to such letters of
credit or borrowed money, guarantees of such Indebtedness or other obligations
-14-
<PAGE> 23
of the Company or any Subsidiary by any other Subsidiary or the Company, as
applicable, related to the purchase by the Company or any Subsidiary of
Hydrocarbons for which the Company or such Subsidiary has contracts to sell;
provided, that in the event that such Indebtedness or obligations are
guaranteed by the Company or any Subsidiary, then either (i) the Person with
which the Company or such Subsidiary has contracts to sell has an investment
grade credit rating from S&P or Moody's, or in lieu thereof, a Person
guaranteeing the payment of such obligated Person has an investment grade
credit rating from S&P or Moody's, or (ii) such Person posts, or has posted for
it, a letter of credit in favor of the Company and such Subsidiary with respect
to all of such Person's obligations to the Company or such Subsidiary under
such contracts.
"Permitted Obligations" means the following kinds of instruments if,
in the case of instruments referred to in clauses (i) through (iv) below, on
the date of purchase or other acquisition of any such instrument by the Company
or any Subsidiary, the remaining term to maturity is not more than one year:
(i) readily marketable obligations issued or unconditionally guaranteed as to
principal and interest by the United States of America or by any agency or
authority controlled or supervised by and acting as an instrumentality of the
United States of America; (ii) repurchase obligations for instruments of the
type described in clause (i) for which delivery of the instrument is made
against payment; (iii) obligations (including, but not limited to, demand or
time deposits, bankers' acceptances and certificates of deposit) issued by a
depository institution or trust company incorporated or doing business under
the laws of the United States of America, any state thereof or the District of
Columbia or a branch or subsidiary of any such depository institution or trust
company operating outside the United States, provided that such depository
institution or trust company has, at the time of the Company's or such
Subsidiary's investment therein or contractual commitment providing for such
investment, capital, surplus or undivided profits (as of the date of such
institution's most recently published financial statements), in excess of
$100,000,000; (iv) commercial paper issued by any Person, if such commercial
paper has, at the time of the Company's or any Subsidiary's investment therein
or contractual commitment providing for such investment, credit ratings of A-1
by S&P and P-1 by Moody's; and (v) money market mutual or similar funds having
assets in excess of $100,000,000.
"Permitted Operating Obligations" means Indebtedness of the Company or
any Subsidiary in respect of one or more standby letters of credit, bid,
performance or surety bonds, or other reimbursement obligations, issued for the
account of, or entered into by, the Company or any Subsidiary in the ordinary
course of business (excluding obligations related to the purchase by the
Company or any Subsidiary of Hydrocarbons for which the Company or such
Subsidiary has contracts to sell), or in lieu of any thereof or in addition to
any thereto, guarantees and letters of credit supporting any such obligations
and Indebtedness (in each case, other than for an obligation for borrowed
money, other than borrowed money represented by any such letter of credit, bid,
performance or surety bond, or reimbursement obligation itself, or any
guarantee and letter of credit related thereto).
"Permitted Production Payment Obligations" means obligations with
respect to production payments entered into in the ordinary course of the
Company's or any Subsidiary's business, which obligations are non-recourse to
the Company and its Subsidiaries other than to Hydrocarbon production from the
properties subject to such obligations.
-15-
<PAGE> 24
"Permitted Refinancing Indebtedness" means (a) Senior Indebtedness of
the Company or any Subsidiary, the net proceeds of which are used solely to
renew, extend, refinance, refund or repurchase outstanding Securities,
including the amount of reasonable fees and expenses and premium, if any,
incurred by the Company or such Subsidiary in connection therewith; or (b)
Indebtedness of the Company or any Subsidiary, the net proceeds of which are
used to renew, extend, refinance, refund or repurchase (including, without
limitation, pursuant to a Change of Control Offer as required by the terms of
the Securities) outstanding Indebtedness of the Company, provided that (i) if
the Indebtedness (including the Securities) being renewed, extended,
refinanced, refunded or repurchased is pari passu with or subordinated in right
of payment to either the Securities or the Guarantees, then such Indebtedness
is pari passu with or subordinated in right of payment to, as the case may be,
the Securities or the Guarantees at least to the same extent as the
Indebtedness being renewed, extended, refinanced, refunded or repurchased, (ii)
such Indebtedness is scheduled to mature no earlier than the Indebtedness being
renewed, extended, refinanced, refunded or repurchased, and (iii) such
Indebtedness has an Average Life at the time such Indebtedness is incurred that
is greater than the Average Life of the Indebtedness being renewed, extended,
refinanced, refunded or repurchased; provided, further, that such Indebtedness
(to the extent that such Indebtedness constitutes Permitted Refinancing
Indebtedness) is in an aggregate principal amount (or, if such Indebtedness is
issued at a price less than the principal amount thereof, the aggregate amount
of gross proceeds therefrom is) not in excess of the aggregate principal amount
then outstanding of the Indebtedness being renewed, extended, refinanced,
refunded or repurchased (or if the Indebtedness being renewed, extended,
refinanced, refunded or repurchased was issued at a price less than the
principal amount thereof, then not in excess of the amount of liability in
respect thereof determined in accordance with GAAP) plus the amount of
reasonable fees and expenses and premium, if any, incurred by the Company or
such Subsidiary in connection therewith.
"Permitted Unrestricted Subsidiary Investments" means Investments in
Unrestricted Subsidiaries in a cumulative aggregate amount (in cash or the fair
market value of property other than cash, as determined in good faith by the
Board of Directors of the Company) not to exceed the sum of (i) $25 million and
(ii) cash or cash equivalent distributions made from any Unrestricted
Subsidiary and received, after the Issue Date, as such by the Company, provided
that any amount included in this clause (ii) shall be deducted from any amounts
referred to in clause (y)(3) of Section 4.11. Notwithstanding the foregoing,
Permitted Unrestricted Subsidiary Investments shall also include any
Investments in Unrestricted Subsidiaries to the extent such Investment consists
of (A) Qualified Capital Stock of the Company or (B) amounts referred to in
clause (y)(2) of Section 4.11, which Investments shall be excluded from the sum
in the previous sentence, provided that the amount of any Investments pursuant
to clause (B) shall be deducted from amounts referred to in clause (y)(2) of
Section 4.11.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Post-Commencement Amounts" means all interest and fees accrued or
accruing after the commencement of any Insolvency or Liquidation Proceeding in
accordance with and at the contract rate (including, without limitation, any
non-usurious rate applicable upon default) and all premiums, expenses
(including costs of collection), indemnities and other amounts that would
-16-
<PAGE> 25
have accrued or been incurred after the commencement of any Insolvency or
Liquidation Proceeding in any case as specified in any agreement or instrument
creating, evidencing, or governing any Senior Indebtedness or any Guarantor
Senior Indebtedness, as the case may be, whether or not, pursuant to applicable
law or otherwise, the claim for such interest, fees, premiums, expenses,
indemnities or other amounts is allowed and non-avoidable as a claim in such
Insolvency or Liquidation Proceeding.
"Prior Indenture" means the Indenture dated as of October 1, 1992
among the Company, the "Subsidiary Guarantors" (as therein defined) and Texas
Commerce Bank National Association, successor to Ameritrust Texas National
Association, as trustee, and providing for the issue of the Company's 12%
Senior Subordinated Notes due 1999 in the aggregate principal amount of $100
million.
"Preferred Stock" of an entity means the Capital Stock of that entity
which is preferred as to the payment of dividends or the distribution of assets
on any voluntary or involuntary liquidation, over the shares of any other class
or series of Capital Stock of said entity.
The term "principal" of a debt security means the principal amount of
the security plus the premium, if any, on the security.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth in Exhibit A attached hereto.
The term "pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms of this Indenture, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act, as
amended.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including, without limitation, Capital Stock,
partnership interests and other equity or ownership interests in any other
Person.
"Property Net Revenue Coverage Ratio" means, with respect to Property
to be acquired by the Company or any Subsidiary, the ratio of (i) the amount
equal to (A) the revenues attributable to the sale of Hydrocarbons from such
Property for the most recent four full fiscal quarters for which financial
information is available immediately prior to the acquisition date, (the "Pro
Forma Period") minus (B) the production and general and administrative expenses
attributable to such Property during the Pro Forma Period (the "Property Net
Revenue") to (ii) the aggregate Fixed Charges the Company or any Subsidiary
will accrue during the fiscal quarter in which the acquisition date occurs and
the three fiscal quarters immediately subsequent to such fiscal quarter as a
result of Indebtedness incurred for the purpose of making such acquisition (as
though all such Indebtedness was incurred or repaid on the first day of the
quarter in which the acquisition date occurs). For purposes of this
definition, Property Net Revenue shall be calculated, after giving effect on a
pro forma basis for the Pro Forma Period, to (a) any adjustments in revenues
from the sale of Hydrocarbons as a result of fixed price or other contract
arrangements entered into as of the acquisition date and (b) any adjustments in
-17-
<PAGE> 26
production and general and administrative expenses which are fixed or
determinable as of the acquisition date.
"Public Equity Offering" means an underwritten public offer and sale
of common stock (that is Qualified Capital Stock) of the Company pursuant to a
registration statement that has been declared effective by the SEC pursuant to
the Securities Act (other than a registration statement on Form S-8 or
otherwise relating to equity securities issuable under any employee benefit
plan of the Company).
"Purchase Agreement" means the Purchase Agreement dated March 14, 1996
among the Company, the Subsidiary Guarantors and the Purchasers.
"Purchasers" means the initial purchasers of Series A Securities named
in Schedule I attached to the Purchase Agreement.
"Purchase Money Obligations" means indebtedness evidenced by a note,
debenture, bond or other security or investment (whether or not secured by any
lien or other security interest) issued to or assumed in favor of a vendor as
all or part of the purchase price of property acquired by the Company or any
Subsidiary; provided, however, that such term shall not include any account
payable or any other indebtedness incurred, created or assumed in the ordinary
course of business in connection with the obtaining of material, products or
services.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" has the meaning attributed thereto in
Rule 144A under the Securities Act.
"Rating Agency" means S&P and Moody's or, if S&P or Moody's shall have
ceased to be a "nationally recognized statistical rating organization" (as
defined in Rule 436 under the Act) or shall have ceased to make publicly
available a rating on any outstanding securities of any company engaged
primarily in the oil and gas business, such other organization or
organizations, as the case may be, then making publicly available a rating on
the Securities as is selected by the Company.
"Rating Date" means, in respect of each Change of Control, the date
that is immediately prior to the date of the first public announcement of an
event or series of events that results in a Change of Control.
"Rating Decline" means the occurrence on any date following the Rating
Date and prior to a date that is 90 days after the occurrence of a
corresponding Change of Control (which period shall be deemed to be extended so
long as prior to the end of such 90-day period and continuing thereafter the
rating of the Securities is under publicly announced consideration for possible
downgrade by either Rating Agency) of either of the following: (i) the rating
of the Securities by either Rating Agency within such period shall be at least
one gradation below the rating of the Securities by such Rating Agency on the
Rating Date, or (ii) either Rating Agency shall withdraw its ratings of the
Securities. A gradation shall include changes within rating
-18-
<PAGE> 27
categories (e.g., with respect to S&P a decline in a rating from BB+ to BB, or
from B to B-, will constitute a decrease of one gradation).
"Registration Default" shall have the meaning ascribed thereto in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated March 14, 1996, among the Company, the Subsidiary Guarantors
and the Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Related Person" means (i) any Affiliate of the Company, (ii) any
individual or other Person who directly or indirectly holds 10% or more of the
combined voting power of the then outstanding Voting Stock of the Company,
(iii) any relative of any individual referred to in clauses (i), (ii) and (iv)
hereof by blood, marriage or adoption not more remote than first cousin and
(iv) any officer or director of the Company.
"Representative" means the indenture trustee or other trustee, agent
or representative for any issue of Senior Indebtedness or Guarantor Senior
Indebtedness.
"Restricted Debt Prepayment" means any purchase, redemption,
defeasance (including, but not limited to, in substance or legal defeasance) or
other acquisition or retirement for value, directly or indirectly, by the
Company or a Subsidiary, prior to the scheduled maturity or prior to any
scheduled repayment of principal or sinking fund payment, as the case may be,
in respect of Indebtedness of the Company or any Subsidiary that is subordinate
in right to the Securities or the Guarantees, provided, however, that any such
acquisition shall be deemed not to be a Restricted Debt Prepayment to the
extent it is made (x) in exchange for or with the proceeds from the
substantially concurrent issuance of Qualified Capital Stock or (y) in exchange
for or with the proceeds from the substantially concurrent issuance of
Indebtedness, in a principal amount (or, if such Indebtedness provides for an
amount less than the principal amount thereof to be due and payable upon the
acceleration thereof, with an original issue price) not to exceed the lesser of
(i) the principal amount of Indebtedness being acquired in exchange therefor
(or with the proceeds therefrom) and (ii) if such Indebtedness being acquired
was issued at an original issue discount, the original issue price thereof plus
amortization of the original issue discount at the time of the incurrence of
the Indebtedness being issued in exchange therefor (or the proceeds of which
will finance such acquisition), and provided further that any such Indebtedness
shall have an Average Life not less than the Average Life of the Indebtedness
being acquired, and shall contain subordination and default provisions no less
favorable, in any material respect, to holders of the Securities than those
contained in such Indebtedness being acquired.
"Restricted Payment" means any (i) Stock Payment, (ii) Investment
(other than Permitted Investments and other than Permitted Unrestricted
Subsidiary Investments) or (iii) Restricted Debt Prepayment.
"Rule 144A" means Rule 144A under the Securities Act.
-19-
<PAGE> 28
"S&P" means Standard & Poor's Ratings Group and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Series A Securities or any Series B
Securities authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Indebtedness" means all Indebtedness of the Company (present
and future) created, incurred, assumed or guaranteed by the Company (and all
renewals, extensions or refundings thereof) (including the principal of,
interest on and fees, premiums, expenses (including costs of collection),
indemnities and other amounts payable in connection with such Indebtedness, and
including any Post-Commencement Amounts), unless the instrument governing such
Indebtedness expressly provides that such Indebtedness is not senior or
superior in right of payment to the Securities. Notwithstanding the foregoing,
Senior Indebtedness of the Company does not include (i) any Indebtedness of the
Company to any Subsidiary or any Unrestricted Subsidiary and (ii) any amounts
payable or other liabilities to trade creditors.
"Series A Securities" means the 10 1/4% Senior Subordinated Notes due
2006, Series A, being issued and sold pursuant to the Purchase Agreement and
this Indenture.
"Series B Securities" means the 10 1/4% Senior Subordinated Notes due
2006, Series B, being issued and sold pursuant to the Registration Rights
Agreement and this Indenture.
"Stock Payment" means, with respect to any Person, (a) the declaration
or payment by such Person, either in cash or in property, of any dividend on
(except, in the case of the Company, dividends payable solely in Qualified
Capital Stock of the Company), or the making by such Person or any of its
subsidiaries of any other distribution in respect of, such Person's Capital
Stock or any warrants, rights or options to purchase or acquire shares of any
class of such Capital Stock (except for the issuance of Qualified Capital Stock
pursuant to the exercise thereof), or (b) the redemption, repurchase,
retirement or other acquisition for value by such Person or any of its
subsidiaries, directly or indirectly, of such Person's or any of its
subsidiaries' Capital Stock or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock other than, in the case of
the Company, through the issuance in exchange therefor solely of Qualified
Capital Stock of the Company; provided, however, that in the case of a
Subsidiary, the term "Stock Payment" shall not include (i) any such payment
with respect to its Capital Stock or warrants, rights or options to purchase or
acquire shares of any class of its Capital Stock payable to the Company or a
Wholly Owned Subsidiary, or (ii) the payment of pro rata dividends to holders
of minority interests in Capital Stock of a Subsidiary.
A "subsidiary" of any Person means (i) a corporation a majority of
whose Voting Stock is at the time, directly or indirectly, owned by such
Person, by one or more wholly owned subsidiaries of such Person or by such
Person and one or more wholly owned subsidiaries of such Person, (ii) a
partnership in which such Person or a wholly owned subsidiary of such
-20-
<PAGE> 29
Person is, at the date of determination, a general or limited partner of such
partnership, but only if such Person or its wholly owned subsidiary is entitled
to receive more than fifty percent of the assets of such partnership upon its
dissolution, or (iii) any other Person (other than a corporation or
partnership) in which such Person, a wholly owned subsidiary of such Person or
such Person and one or more wholly owned subsidiaries of such Person, directly
or indirectly, at the date of determination thereof, has (x) at least a
majority ownership interest or (y) the power to elect or direct the election of
a majority of the directors or other governing body of such Person.
"Subsidiary" means any subsidiary of the Company; provided, that an
Unrestricted Subsidiary shall not be deemed a subsidiary of the Company for
purposes of this Indenture.
"Subsidiary Guarantor" means (i) Calumet Florida, Inc., a Delaware
corporation, Plains Marketing & Transportation Inc., a Delaware corporation,
Plains Illinois Inc., a Delaware corporation, Plains Resources International
Inc., a Delaware corporation, PRI Producing Inc., a Delaware corporation, PLX
Crude Lines Inc., a Delaware corporation, PLX Ingleside, a Delaware
corporation, Stocker Resources, Inc., a California corporation, Stocker
Resources, L.P., a California limited partnership, and Plains Terminal &
Transfer Corporation, a Delaware corporation, (ii) each of the Company's
Subsidiaries that becomes a guarantor of the Securities in compliance with the
provisions of Article Eleven hereof and (iii) each of the Company's
Subsidiaries executing a supplemental indenture in which such Subsidiary agrees
to be bound by the terms of this Indenture.
"Transfer Restricted Security" has the meaning attributed thereto in
the Registration Rights Agreement; provided, however, that the Trustee shall be
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether or not any Security is a Transfer Restricted Security.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended and in force at the date as of which this Indenture was executed
until such time as this Indenture is qualified under the TIA, and thereafter as
in effect on the date on which this Indenture is qualified under the TIA,
except as provided in Section 9.03 hereof.
"Trust Officer" means any officer or assistant officer within the
corporate trust department of the Trustee assigned by the Trustee to administer
its corporate trust matters.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.
"U.S. Legal Tender" means such coin or currency of the United States
as at the time of payment shall be legal tender for the payment of public and
private debts.
"United States" means the United States of America.
"Unrestricted Subsidiary" means (1) any subsidiary of the Company
which at the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below) and (2)
any subsidiary of an Unrestricted Subsidiary. The
-21-
<PAGE> 30
Board of Directors of the Company may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary
through merger or consolidation or Investment therein) to be an Unrestricted
Subsidiary only if: (A) such Subsidiary does not own any Capital Stock of, or
own or hold any Lien on any property of, any other Subsidiary of the Company
which is not a Subsidiary of the Subsidiary to be so designated or otherwise an
Unrestricted Subsidiary; (B) all the Indebtedness of such Subsidiary shall at
the date of designation, and will at all times thereafter, consist of
Non-Recourse Indebtedness; (C) the Company certifies that such designation
complies with Section 4.11; and (D) such Subsidiary, either alone or in the
aggregate with all other Unrestricted Subsidiaries, does not operate, directly
or indirectly, all or substantially all of the business of the Company and the
Subsidiaries. Any such designation by the Board of Directors of the Company
shall be evidenced to the Trustee by filing with the Trustee a Board Resolution
of the Board of Directors of the Company giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions. If, at any time, such Unrestricted Subsidiary would fail
to meet the foregoing 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 as of such date. The Board of Directors of the Company may designate
any Unrestricted Subsidiary to be a Subsidiary; provided that immediately after
giving effect to such designation, the Company could incur at least $1.00 of
additional Indebtedness (excluding Permitted Indebtedness) pursuant to the
first paragraph of Section 4.09 on a pro forma basis taking into account such
designation.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors or other governing body of such Person.
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock
(other than directors' qualifying shares, if applicable) of which is owned by
the Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
<S> <C>
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . 2.07
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . 6.01
"Change of Control Offer" . . . . . . . . . . . . . . . . . 4.17
"Change of Control Notice" . . . . . . . . . . . . . . . . . 4.17
"Change of Control Purchase Date" . . . . . . . . . . . . . 4.17
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"DTC" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12
"Event of Default" . . . . . . . . . . . . . . . . . . . . . 6.01
"Funding Guarantor" . . . . . . . . . . . . . . . . . . . . 11.05
"Global Security" . . . . . . . . . . . . . . . . . . . . . 2.01
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . 13.07
"Net Proceeds Offer" . . . . . . . . . . . . . . . . . . . . 4.12
</TABLE>
-22-
<PAGE> 31
<TABLE>
<S> <C>
"Net Proceeds Offer Amount" . . . . . . . . . . . . . . . . 4.12
"Net Proceeds Payment Date" . . . . . . . . . . . . . . . . 4.12
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Payment Default" . . . . . . . . . . . . . . . . . . . . . 10.02
"Payment Notice" . . . . . . . . . . . . . . . . . . . . . . 10.02
"Payment Restriction" . . . . . . . . . . . . . . . . . . . 4.14
"Physical Securities" . . . . . . . . . . . . . . . . . . . 2.01
"Project Period" . . . . . . . . . . . . . . . . . . . . . . 4.12
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Related Person Transaction" . . . . . . . . . . . . . . . . 4.15
"Security Register" . . . . . . . . . . . . . . . . . . . . 2.06
"Subsidiary Guarantor Payment Default" . . . . . . . . . . . 12.02
"Subsidiary Guarantor Payment Notice" . . . . . . . . . . . 12.02
"U.S. Government Obligations" . . . . . . . . . . . . . . . 8.02
</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, if used in this Indenture, have the following
meanings:
"indenture securities" means the Securities and the
Guarantees.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, the
Subsidiary Guarantors and any other obligor on the Securities or the
Guarantees.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them therein.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
-23-
<PAGE> 32
(4) words in the singular include the plural, and words
in the plural include the singular;
(5) any gender used in this Indenture shall be deemed to
include the neuter, masculine or feminine genders;
(6) provisions apply to successive events and
transactions;
(7) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other Subdivision; and
(8) when used with reference to the Securities, the
expression "of like tenor" refers to Securities of the same series.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The definitive Securities shall be printed, lithographed or engraved
on steel-engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities or notations of
Guarantees, as the case may be, as evidenced by their execution of such
Securities or notations of Guarantees, as the case may be.
Except as indicated in the next succeeding paragraph, Securities
(including the notations thereon relating to the Guarantees and the Trustee's
certificate of authentication) shall be issued initially in the form of one or
more permanent global Securities substantially in the form set forth in
Exhibits A, A-1 and A-2 (each being herein called a "Global Security")
deposited with the Trustee, as custodian for DTC, duly executed by the Company
and authenticated by the Trustee as hereinafter provided, and each shall bear
the legend set forth on Exhibit A hereto. Subject to the limitation set forth
in Section 2.02, the principal amounts of the Global Securities may be
increased or decreased from time to time by adjustments made on the records of
the Trustee, as custodian for DTC, as hereinafter provided.
Securities (including the notations thereon relating to the Guarantees
and the Trustee's certificate of authentication) originally issued and sold in
reliance on any exemption from registration under the Securities Act other than
Rule 144A shall be issued, and Securities originally offered and sold in
reliance on Rule 144A may be issued, in the form of permanent certificated
securities in registered form in substantially the form set forth in Exhibits A
and A-1 ("Physical Securities"). The Securities may also have such insertions,
omissions, substitutions and variations as may be permitted by or consistent
with this Indenture. The provisions of Exhibits A, A-1 and A-2 are part of
this Indenture. The Securities may have notations, legends and endorsements
required by law, stock exchange rule or usage. The Company shall approve the
form of the Securities and any notation, legend or endorsement on them. Each
Security shall be dated the date of its authentication.
-24-
<PAGE> 33
The terms and provisions contained in the Securities and the
Guarantees shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company, the Subsidiary Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
SECTION 2.02. Execution and Authentication.
One Officer and the Secretary or an Assistant Secretary of the Company
shall sign the Securities for the Company by manual or facsimile signature.
The Company's seal shall be reproduced on the Physical Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall be valid
nevertheless.
A Security shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The aggregate principal amount of Series A Securities which may be
authenticated and delivered under this Indenture for original issue is limited
to $150,000,000, and the aggregate principal amount of Series B Securities
which may be authenticated and delivered under this Indenture for original
issue is limited to $150,000,000. The aggregate principal amount of Securities
outstanding at any one time may not exceed $150,000,000 except as provided in
Section 2.08 hereof.
The Series A Securities and the Series B Securities shall be
considered collectively to be a single class for all purposes of this
Indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase.
As provided in the Registration Rights Agreement and subject to the
limitations set forth therein, at the option of the Holders, the Series A
Securities shall be exchangeable for Series B Securities of like aggregate
principal amount pursuant to the Exchange Offer.
At any time after the execution and delivery of this Indenture, the
Company may deliver Series A Securities executed by the Company and having the
notations of Guarantees executed by the Subsidiary Guarantors to the Trustee
for authentication, together with a request from the Company for the
authentication and delivery of such Series A Securities, and the Trustee in
accordance with such request shall authenticate and deliver such Series A
Securities with the notations of Guarantees thereon as provided in this
Indenture. Such request from the Company shall specify the principal amount of
the Series A Securities to be authenticated and the date on which the original
issue of Series A Securities is to be authenticated. In addition, on or prior
to the Exchange Offer Consummation Date, the Company may deliver Series B
Securities executed by the Company and having the notations of Guarantees
executed by the Subsidiary Guarantors to the Trustee for authentication,
together with a request from the Company for the authentication and delivery of
such Series B Securities, and the Trustee in accordance with such request shall
authenticate and deliver such Series B Securities with the notations of
Guarantees thereon as provided in this Indenture. Such request from the
Company shall specify the
-25-
<PAGE> 34
principal amount of the Series B Securities to be authenticated and the date on
which the Series B Securities are to be exchanged for an equal principal amount
of Series A Securities.
In connection with the transfer of an entire Global Security to
beneficial owners pursuant to this Section, the Global Security shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall upon a request from the Company authenticate and
deliver, to each beneficial owner identified by DTC, in exchange for its
beneficial interest in the Global Security, an equal aggregate principal amount
of Physical Securities of authorized denominations.
The Holder of a Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever the
Trustee may do so except on original issuance. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
the Company or its Affiliates.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency designated pursuant to
Section 4.04 where Securities may be presented for registration of transfer or
for exchange (the "Registrar") and an office or agency designated pursuant to
Section 4.04 where Securities may be presented for payment (the "Paying
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co-registrars and one
or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. Such agency agreement shall provide for
reasonable compensation for such services. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee of the name and address of any such Agent and shall furnish
the Trustee with an executed counterpart of any such agency agreement. If the
Company fails to maintain or act as Registrar or Paying Agent, the Trustee
shall act as such and shall be duly compensated therefor.
The Registrar or a co-registrar and a Paying Agent shall be maintained
by the Company in the City of New York. The Company initially designates the
Trustee as the Registrar and Paying Agent.
-26-
<PAGE> 35
SECTION 2.04. Paying Agent to Hold Money in Trust.
On or prior to each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent immediately available
funds sufficient to pay such principal and interest becoming due. The Company
shall require each Paying Agent other than the Trustee to hold in trust for the
benefit of Holders or the Trustee all money held by such Paying Agent for the
payment of principal or interest on the Securities, and to notify the Trustee
of any Default by the Company or any Subsidiary Guarantor in making any such
payment. While any such Default continues, the Trustee may require the Paying
Agent to pay all money held by it to the Trustee. Except as provided in the
immediately preceding sentence, the Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon doing so, such Paying
Agent (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 as separate trust funds all money held by it as Paying
Agent.
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 name and addresses of
Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall furnish or cause to be furnished to the
Trustee at least five Business Days before each semiannual interest payment
date, and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of Holders, and the Company shall otherwise comply with TIA
Section 312(a).
SECTION 2.06. Transfer and Exchange.
The Company shall cause to be kept a register (the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. The Security Register shall be in written form or any
other form capable of being converted into written form within a reasonable
time. At all reasonable times and during normal business hours, the Security
Register shall be open to inspection by the Trustee.
Subject to the provisions of this Section 2.06 and Section 2.07
hereof, upon surrender for registration of transfer of any Security at the
office or agency of the Company designated pursuant to Section 4.04 hereof, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
like tenor and of any authorized denomination and of a like aggregate principal
amount, each such Security having the notation of Guarantees thereon.
Furthermore, any Holder of a Global Security shall, by acceptance of
such Global Security, be deemed to have agreed that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by DTC (or its agent), and that ownership of a beneficial
interest in a Global Security shall be required to be reflected in book entry
form.
-27-
<PAGE> 36
At the option of any Holder, Securities may be exchanged for other
Securities of like tenor and of any authorized denomination and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
the office or agency of the Company designated pursuant to Section 4.04 hereof.
Further, at the option of any Holder Series A Securities may be exchanged,
pursuant to the Exchange Offer, for Series B Securities of like aggregate
principal amount, upon surrender of the Series A Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, the Subsidiary Guarantors shall execute
notations of Guarantees on, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities and the Guarantees noted thereon issued upon any
registration of transfer or exchange of Securities shall be the valid
obligations of the Company and the respective Subsidiary Guarantors, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. As a special condition to
registration of transfer or exchange of any Transfer Restricted Securities
involving removal of a Private Placement Legend (other than pursuant to an
effective registration statement under the Securities Act), the Holder
requesting such registration of transfer or exchange shall furnish the Opinion
of Counsel called for by Section 2.14 hereof. The following additional special
conditions shall apply to the indicated types of transfers or exchanges:
(a) Respecting any requested registration of transfer or
exchange of Transfer Restricted Securities in the form of Physical
Securities, such Physical Securities shall be accompanied, in the sole
discretion of the Company, by the following additional information and
documents, as applicable:
(1) if such Physical Security is being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect (in substantially the form of Exhibit
A-3 hereto); or
(2) if such Physical Security is being
transferred to a Qualified Institutional Buyer in accordance
with Rule 144A under the Securities Act, a certification to
that effect (in substantially the form of Exhibit A-3 hereto);
or
(3) if such Physical Security is being
transferred to an Institutional Accredited Investor, delivery
of a certification to that effect (in substantially the form
of Exhibit A-3 hereto), a Transferee Certificate for
Institutional Accredited Investors in the form of Exhibit A-4
hereto and an Opinion of Counsel to the effect that such
transfer is in compliance with the Securities Act; or
-28-
<PAGE> 37
(4) if such Physical Security is being
transferred in reliance on Regulation S, delivery of a
certification to that effect (substantially in the form of
Exhibit A-3 hereto), a Transferor Certificate for Regulation S
Transfers in the form of Exhibit A-5 hereto and an Opinion of
Counsel to the effect that such transfer is in compliance with
the Securities Act; or
(5) if such Physical Security is being
transferred in reliance on Rule 144, delivery of a
certification to that effect (substantially in the form of
Exhibit A-3 hereto) and an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act;
or
(6) if such Physical Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form of
Exhibit A-3 hereto) and an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act.
(b) Respecting any requested exchange of a Physical
Security for a beneficial interest in a Global Security, such Physical
Security shall be accompanied, in the sole discretion of the Company,
by the following additional information and documents:
(1) a certification, substantially in the form of
Exhibit A-3 hereto, that such Physical Security is being
transferred to a Qualified Institutional Buyer; and
(2) written instructions directing the Registrar
to make, or to direct DTC to make, an endorsement on the
Global Security to reflect an increase in the aggregate amount
of the Securities represented by the Global Security;
whereupon the Registrar shall cancel such Physical Security and cause,
or direct DTC to cause, in accordance with the standing instructions
and procedures existing between DTC and the Registrar, the aggregate
principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Security is then outstanding,
the Company shall issue and the Trustee shall upon a request from the
Company authenticate a new Global Security in the appropriate amount.
(c) Any Person having a beneficial interest in a Global
Security may upon request to the Registrar exchange such beneficial
interest for a Physical Security. Upon receipt by the Registrar of
written instructions (or such other form of instructions as is
customary for DTC) from DTC or its nominee on behalf of any Person
having a beneficial interest in a Global Security and upon receipt by
the Registrar of a written order or such other form of instructions as
is customary for DTC or the Person designated by DTC as having such a
beneficial interest containing registration instructions and, in the
case of any such transfer or exchange of a beneficial interest in
Transfer Restricted Securities, the following additional information
and documents:
(1) if such beneficial interest is being
transferred to the Person designated by DTC as being the
beneficial owner, a certification from such Person to that
effect (in substantially the form of Exhibit A-3 hereto); or
-29-
<PAGE> 38
(2) if such beneficial interest is being
transferred to a Qualified Institutional Buyer in accordance
with Rule 144A under the Securities Act, a certification to
that effect (in substantially the form of Exhibit A-3 hereto);
or
(3) if such beneficial interest is being
transferred to an Institutional Accredited Investor, delivery
of a certification to that effect (substantially in the form
of Exhibit A-3 hereto), a Transferee Certificate for
Institutional Accredited Investors in the form of Exhibit A-4
hereto and an Opinion of Counsel to the effect that such
transfer is in compliance with the Securities Act; or
(4) if such beneficial interest is being
transferred in reliance on Regulation S, delivery of a
certification to that effect (substantially in the form of
Exhibit A-3 hereto), a Transferor Certificate for Regulation S
Transfers in the form of Exhibit A-5 hereto and an Opinion of
Counsel to the effect that such transfer is in compliance with
the Securities Act; or
(5) if such beneficial interest is being
transferred in reliance on Rule 144 under the Securities Act,
delivery of a certification to that effect (substantially in
the form of Exhibit A-3 hereto) and an Opinion of Counsel to
the effect that such transfer is in compliance with the
Securities Act; or
(6) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form of
Exhibit A-3 hereto) and an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act,
then the Registrar will cause, in accordance with the standing
instructions and procedures existing between DTC and the Registrar,
the aggregate principal amount of the Global Security to be reduced
and, following such reduction, the Company will execute and, upon
receipt of a request from the Company, the Trustee will authenticate
and deliver to the transferee a Physical Security. Securities issued
in exchange for a beneficial interest in a Global Security pursuant to
this Section 2.06(c) shall be registered in such names and in such
authorized denominations as DTC, pursuant to instructions from Agent
Members or otherwise, shall instruct the Registrar in writing. The
Registrar shall deliver such Physical Securities to the Persons in
whose names such Physical Securities are so registered.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to the Exchange Offer or Section
2.11, 3.06 or 9.05 hereof not involving any transfer.
Neither the Trustee, the Registrar nor the Company shall be required
(i) to issue, register the transfer of or exchange any Physical Security during
a period of 30 days before a selection of Securities to be redeemed, or (ii) to
register the transfer of or exchange any Physical Security
-30-
<PAGE> 39
so selected for redemption in whole or in part, except the unredeemed portion
of any such Security being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Securities.
Each Global Security shall be (i) registered in the name of DTC or its
nominee, (ii) delivered to the Trustee as custodian for DTC and (iii) bear the
legend set forth in Exhibit A-2 hereto.
Members of, or participants in, DTC ("Agent Members") shall have no
rights under this Indenture with respect to any Global Security held on their
behalf by DTC, or the Trustee as its custodian, or under such Global Security,
and DTC may be treated by the Company, the Subsidiary Guarantors, the Trustee
and any agent of the Company, the Subsidiary Guarantors or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Subsidiary Guarantors, the Trustee or any agent of the Company, the Subsidiary
Guarantors or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by DTC or shall impair, as between DTC
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Security.
Transfers of a Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to DTC, its successors or their
respective nominees. Interests of beneficial owners in a Global Security may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of DTC and the provisions of Section 2.06 hereof. In addition,
Physical Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in a Global Security if, and only if, either (1)
DTC notifies the Company that it is unwilling or unable to continue as
depositary for the Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice, (2) an Event of Default has
occurred and is continuing and the Registrar has received a request from DTC to
issue Physical Securities in lieu of all or a portion of the Global Security
(in which case the Company shall deliver Physical Securities within 30 days of
such request) or (3) the Company determines not to have the Securities
represented by the Global Security and notifies DTC and the Registrar thereof.
In connection with the transfer of an entire Global Security to
beneficial owners pursuant to this Section, the Global Security shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall upon request of the Company authenticate and
deliver, to each beneficial owner identified by DTC, in exchange for its
beneficial interest in the Global Security, an equal aggregate principal amount
of Physical Securities of authorized denominations.
The Holders of a Global Security may grant proxies or otherwise
authorize any Persons, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
-31-
<PAGE> 40
SECTION 2.08. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or the Registrar
or if the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of the Trustee are met.
An indemnity bond may be required by the Trustee, the Company or any Subsidiary
Guarantor that is sufficient in the judgment of the Company, the Subsidiary
Guarantors and the Trustee to protect the Company, the Subsidiary Guarantors,
the Trustee or any Agent from any loss which any of them may suffer if a
Security is replaced. The Company may charge for its expenses (including fees
and expenses of the Trustee) in replacing a Security.
SECTION 2.09. Outstanding Securities.
Securities outstanding at any time are all Securities authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.09 as not outstanding.
Except as set forth in Section 2.10, a Security does not cease to be
outstanding because the Company, the Subsidiary Guarantors or any of their
respective Subsidiaries or Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.
SECTION 2.10. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, any Subsidiary Guarantor or an Affiliate of the Company shall
be considered as though they are not outstanding, except that for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned shall be so disregarded.
SECTION 2.11. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and, upon written order of the Company, the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate and deliver definitive
Securities in exchange for temporary Securities surrendered to it.
-32-
<PAGE> 41
SECTION 2.12. Cancellation.
The Company or any Subsidiary Guarantor at any time may deliver
Securities to the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange or payment. The Trustee shall cancel all Securities surrendered for
registration, transfer, exchange, payment or cancellation and shall destroy
cancelled Securities or retain cancelled Securities in accordance with the
Trustee's standard retention policy unless the Company directs their return to
the Company. Except as provided in Section 2.08, the Company may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee
for cancellation.
Securities that are mandatorily or optionally redeemed by the Company
or that are purchased by the Company pursuant to a Net Proceeds Offer, or
pursuant to a Change of Control Offer, or that are otherwise acquired by the
Company, will be surrendered to the Trustee for cancellation.
SECTION 2.13. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner (plus interest on such
defaulted interest to the extent lawful) to the persons who are Holders on a
subsequent special record date, in each case at the rate provided in the
Securities and in Section 4.01 hereof. The Company shall fix the special
record date and payment date. At least 10 days before the special record date,
the Company shall mail to each Holder a notice that states the special record
date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.14. Private Placement Legend.
(a) All Series A Securities issued hereunder on the Issue Date
shall bear the Private Placement Legend. Upon the transfer, exchange or
replacement of Securities bearing the Private Placement Legend, the Registrar
shall deliver only Securities that bear the Private Placement Legend unless,
and the Trustee is hereby authorized to deliver Securities without the Private
Placement Legend if, (i) there is delivered to the Trustee an Opinion of
Counsel to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Securities Act or (ii) such Security has been sold pursuant to an effective
registration statement under the Securities Act, which fact has been certified
to the Trustee in an Officers' Certificate. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend.
(b) By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
-33-
<PAGE> 42
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notice to Trustee.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the redemption price and the
principal amount of Securities to be redeemed.
The Company shall give each notice provided for in this Section at
least 35 days before the redemption date (unless a shorter notice period shall
be satisfactory to the Trustee). Any notice given pursuant to this Section
3.01 may be cancelled at any time prior to notice of such redemption being
mailed to any Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed in multiples of $1,000 pro rata, by
lot or by any other method that the Trustee considers fair and appropriate and,
if the Securities are listed on any securities exchange, by a method that
complies with the requirements of such exchange. The Trustee shall make the
selection from outstanding Securities not previously called for redemption.
The Trustee may select for redemption portions of the principal of Securities
that have denominations larger than $1,000. Securities and portions of them it
selects shall be in amounts of $1,000 or whole multiples of $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be called for
redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption by first-class mail to each
Holder of Securities to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
-34-
<PAGE> 43
(5) that, unless the Company defaults in the payment of
the redemption price or accrued interest, interest on Securities
called for redemption ceases to accrue on and after the redemption
date;
(6) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and
that, after the redemption date, upon surrender of such Security, a
new Security or Securities in principal amount equal to the unredeemed
portion will be issued; and
(7) the subparagraph of paragraph 5 of the Securities
pursuant to which the Securities called for redemption are being
redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the redemption date
at the redemption price. Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price, plus accrued interest to the redemption
date.
SECTION 3.05. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Paying Agent immediately available funds sufficient to pay the redemption price
of, and accrued interest on, the Securities to be redeemed on that date. The
Paying Agent shall promptly return to the Company any money so deposited which
is not required for that purpose upon the written request of the Company,
except with respect to monies owed as obligations to the Trustee pursuant to
Article Seven.
If any Security called for redemption shall not be so paid upon
redemption because of the failure of the Company to comply with the preceding
paragraph, interest will continue to be payable on the unpaid principal,
including 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 Securities and in Section 4.01 hereof.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Security or Securities equal in
aggregate amount to the unredeemed portion of the Security surrendered.
-35-
<PAGE> 44
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities and this Indenture.
Principal of and interest on the Securities shall be considered paid on the
date due if, subject to Articles Ten and Twelve hereof, the Trustee or Paying
Agent holds on that date money deposited by the Company designated for and
sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal at the rate borne
by the Securities and shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
The Company shall notify the Trustee and any Paying Agent immediately
upon the occurrence of any Registration Default and, with respect to Additional
Interest payments pursuant to Section 4 of the Registration Rights Agreement,
the Company shall notify the Trustee and any Paying Agent prior to the date of
any interest payment of the amount of Additional Interest payable to each
Holder.
SECTION 4.02. SEC Reports.
(a) Each of the Company and the Subsidiary Guarantors shall file
with the Trustee within 15 days after it files them with the SEC copies of the
annual reports and of the information, documents, and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which each of the Company and the Subsidiary Guarantors
is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. If the Company is not subject to the requirements of such
Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Trustee such reports, information and other documents as required pursuant to
Section 4.18 hereof. The Company and each of the Subsidiary Guarantors also
shall comply with the other provisions of TIA Section 314(a).
(b) So long as any of the Securities remain outstanding, the
Company shall cause each annual, quarterly and other financial report mailed or
otherwise furnished by it generally to stockholders to be filed with the
Trustee and mailed to the Holders at their addresses appearing in the register
of Securities maintained by the Registrar, in each case at the time of such
mailing or furnishing to stockholders.
(c) The Company and the Subsidiary Guarantors shall provide the
Trustee with a sufficient number of copies of all reports and other documents
and information that the Trustee may be required to deliver to Holders under
this Section 4.02.
-36-
<PAGE> 45
SECTION 4.03. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company, 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
such Officer's 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 hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which such Officer may
have knowledge and what action the Company is taking or proposes to take with
respect thereto) and that to the best of such Officer's knowledge 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 Securities are prohibited. Such
Officers' Certificate shall comply with TIA Section 314(a)(4).
(b) The Company and the Subsidiary Guarantors will, so long as any
of the Securities are outstanding, deliver to the Trustee forthwith upon any
Officer becoming aware of any Default or Event of Default or default in the
performance of any covenant, agreement or condition contained in this
Indenture, an Officers' Certificate specifying such Default or Event of Default
and what action the Company or any Subsidiary Guarantor proposes to take with
respect thereto.
(c) The Company shall promptly deliver to the Trustee an Officers'
Certificate notifying the Trustee of any refunding, refinancing or replacement
of each Bank Credit Agreement.
SECTION 4.04. Maintenance of Office or Agency.
The Company will maintain in the City of New York, an office or agency
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 13.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the City of New
York, for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
-37-
<PAGE> 46
SECTION 4.05. Corporate Existence.
Subject to Article Five, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each Material
Subsidiary in accordance with the respective organizational documents of the
Company and each Material Subsidiary and the material rights (charter and
statutory) and material franchises of the Company and the Material
Subsidiaries; provided, that the Company shall not be required to preserve any
such right or franchise, or the corporate existence of any Material Subsidiary,
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not, and will not be, adverse to the payment and
performance of the obligations under the Securities and otherwise under this
Indenture.
SECTION 4.06. Waiver of Stay, Extension or Usury Laws.
The Company and each Subsidiary Guarantor covenants (to the extent
that each may lawfully do so) that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension, or usury law or other law, which would prohibit or forgive the
Company or any Subsidiary Guarantor from paying all or any portion of the
principal of and/or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company and each Subsidiary Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 4.07. Payment of Taxes and Other Claims.
The Company and each Material Subsidiary will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (1)
all taxes, assessments and governmental charges levied or imposed upon the
Company or any Material Subsidiary or upon the income, profits or property of
the Company or any Material Subsidiary other than any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which appropriate provision has
been made in accordance with GAAP, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien (other than
a Permitted Lien) upon the property of the Company or any Material Subsidiary,
in each case except to the extent the failure to do so would have, in the
judgment of the Company, a material adverse effect on the Company and the
Subsidiaries taken as a whole.
SECTION 4.08. Maintenance of Properties and Insurance.
(a) The Company shall cause all material Property used or useful
in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order (ordinary wear
and tear excepted) and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
-38-
<PAGE> 47
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company or any Subsidiary from discontinuing the
operation or maintenance of any such Property, or disposing of it, if such
discontinuance or disposal is, in the judgment of the Company or such
Subsidiary, desirable in the conduct of its business and not adverse to the
payment and performance of the obligations under the Securities and otherwise
under this Indenture.
(b) The Company shall provide or cause to be provided, for itself
and each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company are adequate and appropriate for the conduct of the business of
the Company and such Subsidiaries in a prudent manner, with reputable insurers
or with the government of the United States or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall
be either (i) consistent with past practices of the Company or the applicable
Subsidiary or (ii) customary, in the reasonable, good faith opinion of the
Company, for corporations similarly situated in the industry, unless the
failure to provide such insurance (together with all other such failures) would
not have a material adverse effect on the financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole.
SECTION 4.09. Limitation on Incurrence of Additional Indebtedness.
The Company will not, and will not permit any of the Subsidiaries
directly or indirectly, to issue, incur, assume, guarantee, become liable,
contingently or otherwise, with respect to or otherwise become responsible for
the payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default with
respect to the Securities shall have occurred and be continuing at the time or
as a consequence at the incurrence of such Indebtedness, the Company and the
Subsidiaries or any of them may incur Indebtedness if on the date of the
incurrence, (i) both (A) the Company's Consolidated EBITDA Coverage Ratio would
have been greater than 2.25 to 1.0 for the period from the Issue Date to March
31, 1997 and 2.5 to 1.0 from April 1, 1997 and thereafter, respectively, and
(B) the Company's Adjusted Consolidated Net Tangible Assets are equal to or
greater than 150% of Indebtedness of the Company and the Subsidiaries, or (ii)
the Company's Adjusted Consolidated Net Tangible Assets are equal to or greater
than 200% of Indebtedness of the Company and the Subsidiaries.
For purposes of determining any particular amount of Indebtedness
incurred under this Section 4.09, (i) guarantees of Indebtedness otherwise
included in the determination of such amount shall not also be included and
(ii) any Indebtedness incurred by the Company or any Subsidiary incurred for,
or related to, a Person other than another Subsidiary or the Company, as
applicable, shall be deemed to be in an amount equal to the greater of (i) the
lesser of (A) the full amount of the Indebtedness of such other Person or (B)
the fair market value of the assets and properties of the Company or such
Subsidiary, as to which the holder or holders of such Indebtedness are
expressly limiting the obligations of the Company or such Subsidiary, the value
of which assets and properties of the Company or any Subsidiary will be
determined in good faith by the Board of Directors of the Company or such
Subsidiary, as applicable (which determination shall be evidenced by a Board
Resolution of the applicable Person), and (ii) the
-39-
<PAGE> 48
amount of the Indebtedness of such other Person as has been expressly
contractually assumed or guaranteed by the Company or such Subsidiary.
Notwithstanding anything to the contrary in this Section 4.09, no
Subsidiary that is not already a Subsidiary Guarantor shall incur any
Indebtedness with respect to any Indebtedness of the Company or any other
Subsidiary unless such Subsidiary, the Company and the Trustee execute and
deliver a supplemental indenture evidencing such Subsidiary's Guarantee of the
Securities, such Guarantee to be a senior subordinated unsecured obligation of
such Subsidiary.
SECTION 4.10. Limitation on Senior Subordinated Indebtedness.
The Company will not, directly or indirectly, issue, assume,
guarantee, incur or otherwise become liable for any Indebtedness which is both
subordinate or junior in right of payment to any Senior Indebtedness and senior
or superior in right of payment to the Securities. The Subsidiary Guarantors
will not, directly or indirectly, issue, assume, guarantee, incur or otherwise
become liable for any Indebtedness which is both subordinate or junior in right
of payment to any Guarantor Senior Indebtedness and senior or superior in right
of payment to the Guarantees.
SECTION 4.11. Limitation on Restricted Payments.
The Company will not, and will not permit any of the Subsidiaries to,
directly or indirectly, make any Restricted Payment, if at the time of such
Restricted Payment, or on a pro forma basis after giving effect thereto:
(x) a Default or an Event of Default under this Indenture
has occurred and is continuing;
(y) the aggregate amount expended for all Restricted
Payments subsequent to the Issue Date exceeds the sum of (without
duplication):
(1) 50% of aggregate Consolidated Net Income (net
of losses resulting from full costs ceiling writedowns
attributable to any oil and gas properties of the Company or
any Subsidiary) of the Company (or if such Consolidated Net
Income is a loss, minus 100% of such loss) earned on a
cumulative basis during the period beginning on the Issue Date
and ending on the last date of the Company's fiscal quarter
immediately preceding such Restricted Payment; plus
(2) 100% of the aggregate Net Proceeds, received
by the Company from any Person other than a Subsidiary from
the issuance and sale subsequent to the Issue Date of
Qualified Capital Stock (excluding (A) any Qualified Capital
Stock paid as a dividend on any Capital Stock or as interest
on any Indebtedness, (B) the issuance of Qualified Capital
Stock upon the conversion of, or in exchange for, any
Qualified Capital Stock and (C) any Qualified Capital Stock
with regard to issuances and sales financed directly or
indirectly using funds borrowed from the Company or any
Subsidiary, until and to the extent such borrowing is repaid);
plus
-40-
<PAGE> 49
(3) to the extent not otherwise included in
Consolidated Net Income, dividends, repayments of loans or
advances, or other transfers of assets, in each case to the
Company or a Subsidiary after the Issue Date from any
Unrestricted Subsidiary or from the redesignation of an
Unrestricted Subsidiary as a Subsidiary (valued in each case
as provided in the definition of Investment) other than
amounts constituting Permitted Unrestricted Subsidiary
Investments; and
(4) $15 million; or
(z) the Company would not be able to incur $1.00 of
additional Indebtedness (excluding Permitted Indebtedness) as provided
in the first paragraph of Section 4.09.
The foregoing provisions of this covenant will not prevent the payment
of any dividend within 60 days after the date of its declaration if the
dividend would have been permitted on the date of declaration; provided,
however, that payments made in accordance with this paragraph shall be counted
for purposes of computing amounts expended pursuant to subclause (y) in the
immediately preceding paragraph.
SECTION 4.12. Limitation on Disposition of Assets.
The Company will not, and will not permit any Subsidiary to, make any
Asset Disposition unless:
(i) in the case of any Asset Disposition or series of
related Asset Dispositions having a fair market value of more than $10
million, the Company or such Subsidiary receives consideration at the
time of such Asset Disposition at least equal to the fair market
value, the determination of which, including the value of all non-cash
consideration, must be approved in good faith by the Board of
Directors of the Company and such Subsidiary, if any,
(ii) the proceeds from any Asset Disposition (other than
any Asset Disposition or series of related Asset Dispositions that
have a value of less than $1 million) consist of cash and Cash
Equivalents or Permitted Industry Investments or any combination of
the foregoing; provided that the Company or such Subsidiary may accept
proceeds from such Asset Disposition in other than cash and Cash
Equivalents or Permitted Industry Investments or any combination of
the foregoing if the aggregate amount of all proceeds from all Asset
Dispositions after the Issue Date, that are other than cash and Cash
Equivalents or Permitted Industry Investments after such Asset
Disposition does not exceed 15% of Adjusted Consolidated Net Tangible
Assets at the date of such Asset Disposition, and
(iii) within 365 days following the receipt of the Net
Available Proceeds from such Asset Disposition, 100% of the Net
Available Proceeds from such Asset Disposition are applied by the
Company or such Subsidiary:
(a) to the payment of Indebtedness under the Bank
Credit Agreement and the payment of any other Senior
Indebtedness;
-41-
<PAGE> 50
(b) at the Company's option to the extent that
such Net Available Proceeds are not applied to Senior
Indebtedness, to Permitted Industry Investments made by the
Company or a Subsidiary (or, to the extent not so applied
during such 365 day period, to Permitted Industry Investments
specifically identified during such 365 day period reasonably
anticipated in good faith by the Board of Directors of the
Company to be expended within 180 days after being
specifically identified (such 180-day period, the "Project
Period")); and
(c) to the extent that any Net Available Proceeds
are not applied to Senior Indebtedness or applied or to be
applied to Permitted Industry Investments, to make an offer to
purchase (the "Net Proceeds Offer") (on a business day (the
"Net Proceeds Payment Date") not later than the later of (1)
365 days following the receipt of such Net Available Proceeds
or (2) in the case of application of proceeds intended to be
applied under clause (b), 35 business days following any
Project Period) the Securities at a price equal to 100% of the
principal amount of the Securities plus accrued interest to
the Net Proceeds Payment Date.
Notwithstanding the foregoing, the Company and its Subsidiaries will
not be required to apply any Net Available Proceeds in accordance with such
provisions except to the extent that the Net Available Proceeds from all Asset
Dispositions which are not applied in accordance with such provisions exceed $5
million.
Notice of a Net Proceeds Offer to purchase the Securities will be made
on behalf of the Company not less than 25 business days nor more than 60
business days before the Net Proceeds Payment Date. Securities tendered to the
Company pursuant to a Net Proceeds Offer will cease to accrue interest after
the Net Proceeds Payment Date. The Company will not be entitled to any credit
against the above obligations for the principal amount of Securities previously
acquired by the Company. For purposes of this covenant, the term "Net Proceeds
Offer Amount" means the principal of outstanding Securities in an aggregate
principal amount equal to any remaining Net Available Proceeds.
To exercise the repurchase right, the Holder must deliver on or before
the fifth calendar day prior to the Net Proceeds Payment Date, written notice
to the Company (or an agent designated by the Company for such purpose) of the
Holder's exercise of such right, together with (i) the Security or Securities
with respect to which the right is being exercised, duly endorsed for transfer
with the form entitled "Option of Holder to Elect Purchase" on the reverse side
of the Security completed, and (ii) if the Net Proceeds Payment Date falls
between any record date for the payment of interest on the Securities and the
next succeeding interest payment date, an amount equal to the interest which
the Holder is entitled to receive on such interest payment date; provided,
however, that with respect to Securities held of record by The Depository Trust
Company ("DTC"), the Company or its designated agent may accept as tendered for
repurchase pursuant to this Section Securities tendered by means of book entry
in accordance with the normal procedures of DTC, provided that any such
interest amount shall be delivered by the Holder to the Company or its
designated agent.
On the Net Proceeds Payment Date, the Company will (i) accept for
payment Securities or portions thereof tendered pursuant to the Net Proceeds
Offer in an aggregate principal amount
-42-
<PAGE> 51
equal to the Net Proceeds Offer Amount or such lesser amount of Securities as
has been tendered, (ii) deposit with the Paying Agent money sufficient to pay
the purchase price of all Securities or portions thereof so tendered in an
aggregate principal amount equal to the Net Proceeds Offer Amount or such
lesser amount, and (iii) deliver or cause to be delivered to the Trustee,
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof tendered to the Company. If the aggregate
principal amount of Securities tendered exceeds the Net Proceeds Offer Amount,
the Trustee will select the Securities to be purchased on a pro rata basis
based on the principal amount of Securities so tendered. The Paying Agent will
promptly mail or deliver to Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Company will execute and the
Trustee will promptly authenticate and mail or make available for delivery to
such Holders of Physical Securities a new Security equal in principal amount to
any unpurchased portion of the Security surrendered. Any Securities not so
accepted will be promptly mailed or delivered to the Holder thereof. The
Company will publicly announce the results of the Net Proceeds Offer on or as
soon as practicable after the Net Proceeds Payment Date. For purposes of this
Section 4.12, the Trustee will act as the Paying Agent.
SECTION 4.13. Limitation on Liens Securing Indebtedness.
The Company will not, and will not permit any of the Subsidiaries to,
create, incur, assume or suffer to exist any Liens (other than Permitted Liens)
upon any of their respective Properties securing (i) any Indebtedness of the
Company, unless the Securities are equally and ratably secured or (ii) any
Indebtedness of any Subsidiary Guarantor, unless the Securities or the
Guarantees, as the case may be, are equally and ratably secured; provided that
if such Indebtedness is expressly subordinated to the Securities or the
Guarantees, the Lien securing such Indebtedness will be subordinated and junior
to the Lien securing the Securities or the Guarantees, with the same relative
priority as such Subordinated Indebtedness will have with respect to the
Securities or the Guarantees, as the case may be.
SECTION 4.14. Limitation on Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any Subsidiary to, directly
or indirectly, create or suffer to exist or allow to become effective any
consensual encumbrance or restriction of any kind (i) on the ability of any of
the Subsidiaries (a) to pay dividends or make other distributions on its
Capital Stock or make payments on any Indebtedness owed to the Company or any
other Subsidiary, (b) to make loans or advances to the Company or any other
Subsidiary, or (c) to transfer any of its Property to the Company or any other
Subsidiary; or (ii) on the ability of such Person or any other subsidiary of
such Person to receive or retain any such (a) dividends, distributions or
payments, (b) loans or advances, or (c) transfers of Property (any such
restriction being referred to herein as a "Payment Restriction"), except for
such encumbrances or restrictions existing under or by reason of (A) the Bank
Credit Agreement as in effect on the date of this Indenture, (B) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of the Company or any Subsidiary, (C) any instrument
governing Indebtedness of a Person acquired by the Company or a Subsidiary at
the time of such acquisition, which encumbrance or restriction is not
applicable to any Person, other than the Person, or the Property of the Person,
so acquired, provided that such Indebtedness was not incurred in anticipation
of such acquisition, (D) with respect to clauses
-43-
<PAGE> 52
(i)(c) and (ii)(c) above, Purchase Money Obligations for Property acquired in
the ordinary course of business, (E) Indebtedness existing pursuant to a
written agreement in effect on the date of this Indenture, (F) Indebtedness
under this Indenture, or (G) Indebtedness incurred to refinance, refund, extend
or renew Indebtedness referred to in clauses (A), (C), (D), (E) or (F) above;
provided that the Payment Restrictions contained therein are not materially
more restrictive than those provided for in the Indebtedness being refinanced,
refunded, extended or renewed.
SECTION 4.15. Limitation on Transactions with Related Persons.
Neither the Company nor any of the Subsidiaries will (i) sell, lease,
transfer or otherwise dispose of any of its Property to, (ii) purchase any
property from, (iii) make any Investment (other than Permitted Unrestricted
Subsidiary Investments and other Investments in accordance with the provisions
of Section 4.11) in, or (iv) enter into any contract or agreement with or for
the benefit of, a Related Person of the Company or any Subsidiary (other than
the Company or any such Subsidiary in which no Related Person (other than the
Company or another Wholly Owned Subsidiary) owns, directly or indirectly, an
equity interest) (a "Related Person Transaction"), other than Related Person
Transactions which are on terms (which terms are in writing) no less favorable
to the Company or a Subsidiary, as applicable, than could be obtained in a
comparable arm's length transaction from an unaffiliated party; provided that,
if the Company or any Subsidiary enters into a Related Person Transaction or
series of Related Person Transactions involving or having an aggregate value of
more than $5 million, such Related Person Transaction will have been approved
by a majority of the Independent Directors of the Company. Notwithstanding
anything to the contrary in the foregoing, the foregoing restrictions shall not
apply to (i) Related Person Transactions that are approved by the Board of
Directors of the Company and such Subsidiary, if applicable, as in the best
interests of the Company or such Subsidiary, which transactions together with
all other Related Person Transactions in a related series involve or have an
aggregate value not exceeding $1 million in each fiscal year; (ii) fees and
compensation paid to or agreements with officers, directors, employees or
consultants of the Company or any Subsidiary in each case that are reasonable,
as determined by the Board of Directors or senior management thereof in good
faith; and (iii) Restricted Payments that are not prohibited by Section 4.11.
SECTION 4.16. Limitation on Conduct of Business.
The Company and the Subsidiaries will be operated in a manner such
that their business activities will be the oil and gas business, including the
exploration for and the development, acquisition, production, processing,
marketing, storage and transportation of, Hydrocarbons and other related energy
and natural resources businesses, and such other businesses as are reasonably
necessary or desirable to facilitate the conduct and operations of the
foregoing businesses.
SECTION 4.17. Change of Control.
(a) Upon the occurrence of a Change of Control and a corresponding
Rating Decline, the Company shall be obligated to make an offer to purchase (a
"Change of Control Offer") all of the then outstanding Securities from the
Holders of such Securities, at a purchase price (the "Change of Control
Purchase Price") equal to 101% of the aggregate principal amount of such
-44-
<PAGE> 53
Securities, plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date (as defined below), in accordance with the procedures set forth
in paragraphs (b), (c) and (d) of this Section. The Company shall, subject to
the provisions described below, be required to purchase all Securities properly
tendered pursuant to a Change of Control Offer and not withdrawn.
(b) The Change of Control Offer shall remain open for at least 20
Business Days and until the close of business on the fifth Business Day prior
to the Change of Control Purchase Date (as defined below).
(c) Not later than the 30th day following the occurrence of the
Rating Decline corresponding to any Change of Control (or, in the event the
Rating Decline occurs prior to the corresponding Change of Control, not later
than the 30th day following the occurrence of the Change of Control), the
Company shall mail to the Trustee and to each Holder of the Securities a notice
(the "Change of Control Notice") stating:
(1) that a Change in Control and corresponding Rating
Decline has occurred and that such Holder has the right to require the
Company to repurchase such Holder's Securities, or portion thereof, at
the Change of Control Purchase Price;
(2) any information regarding such Change of Control
required to be furnished pursuant to Rule 13e-1 under the Exchange Act
and any other securities laws and regulations thereunder;
(3) a purchase date (the "Change of Control Purchase
Date") which shall be on a Business Day and no earlier than 30 days
nor later than 60 days after the occurrence of a Rating Decline that
follows a Change of Control (or, in the event the Rating Decline
occurs prior to the corresponding Change of Control, no earlier than
30 days nor later than 60 days following the occurrence of the Change
of Control);
(4) that any Security, or portion thereof, not tendered
or accepted for payment will continue to accrue interest:
(5) that unless the Company defaults in making payments
therefor, or payment is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Purchase
Date; and
(6) the instructions a Holder must follow in order to
have his Securities repurchased in accordance with paragraph (d) of
this Section.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repurchase right.
(d) To exercise the repurchase right, the Holder must deliver, on
or before the fifth calendar day prior to the Change of Control Purchase Date,
written notice to the Company (or an agent designated by the Company for such
purpose) of the Holder's exercise of such right, together with (i) the Security
or Securities with respect to which the right is being exercised,
-45-
<PAGE> 54
duly endorsed for transfer with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, and (ii) if the Change of
Control Purchase Date falls between any record date for the payment of interest
on the Securities and the next succeeding interest payment date, an amount
equal to the interest which the Holder is entitled to receive on such interest
payment date; provided, however, that with respect to Securities held of record
by DTC, the Company or its designated agent may accept as tendered for
repurchase pursuant to this Section Securities tendered by means of a book
entry in accordance with the normal procedures of DTC, provided that any such
interest amount shall be delivered by the Holder to the Company or its
designated agent. Notwithstanding the foregoing, if prior to the date that a
Change of Control Notice is required to be mailed, a notice of optional
redemption of all of the outstanding Securities has been mailed in accordance
with the terms of this Indenture, the Company's obligation to send the Change
of Control Notice shall be suspended (unless the Company shall default in the
payment of the redemption price or accrued interest).
(e) On the Change of Control Purchase Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Notice, (ii) if the Company appoints a depository or Paying
Agent, deposit with such depository or Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so tendered and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof tendered to the Company.
DTC, the Company or the Paying Agent, as the case may be, shall promptly mail
to the Holder of Securities so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail to such
Holders of Physical Securities a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. The Company will publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date. For purposes of this
Section 4.17, the Trustee shall act as the Paying Agent.
(f) The Company, to the extent applicable and if required by law,
will comply with Sections 13 and 14 of the Exchange Act and the provisions of
Regulation 14E and any other tender offer rules under the Exchange Act and any
other federal and state securities laws, rules and regulations which may then
be applicable to any offer by the Company to purchase the Securities pursuant
to the provisions of this Section 4.17.
SECTION 4.18. Provision of Financial Information.
The Company shall file on a timely basis with the SEC, to the extent
such filings are accepted by the SEC and whether or not the Company has a class
of securities registered under the Exchange Act, the annual reports, quarterly
reports and other documents that the Company would be required to file if it
were subject to Section 13 or 15 of the Exchange Act. The Company shall also
file with the Trustee (with exhibits), and provide to each Holder of Securities
(without exhibits), without cost to such Holder, copies of such reports and
documents within 15 days after the date on which the Company files such reports
and documents with the SEC or the date on which the Company would be required
to file such reports and documents if the Company were so required and, if
filing such reports and documents with the SEC is not accepted by the SEC or is
prohibited under the Exchange Act, the Company shall supply at its cost copies
of such reports and documents (including any exhibits thereto) to any Holder of
Securities promptly upon written request.
-46-
<PAGE> 55
SECTION 4.19. Registration Rights Agreement.
The Company will comply with all of the terms and provisions of the
Registration Rights Agreement, including, without limitation, its obligation to
pay Additional Interest (as defined therein) and to notify the Trustee
immediately of the occurrence of any Registration Default (as defined therein)
thereunder.
SECTION 4.20. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the Registration Rights Agreement and shall
pay all costs and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith. In connection with any such
qualification of this Indenture under the TIA, the Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel
or other documentation as it may reasonably request.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge with any Person or
convey, transfer or lease all or substantially all of its Property to any
Person, unless:
(1) the Company survives such merger or the Person formed
by such consolidation or into which the Company is merged or that
acquires by conveyance or transfer, or which leases, all or
substantially all of the Property of the Company is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia and expressly assumes, by
supplemental indenture, the due and punctual payment of the principal
of and interest on all the Securities and the performance of every
other covenant and obligation of the Company under this Indenture;
(2) immediately before and after giving effect to such
transaction no Default or Event of Default exists;
(3) immediately after giving effect to such transaction
on a pro forma basis, the Consolidated Net Worth of the Company (or,
if not the Company, the surviving or transferee entity) is equal to or
greater than the Consolidated Net Worth of the Company immediately
before such transaction; and
(4) immediately after giving effect to such transaction
on a pro forma basis, the Company (or, if not the Company, the
surviving or transferee entity) would be able to incur $1.00 of
additional Indebtedness (excluding Permitted Indebtedness) under the
test described in the first paragraph of Section 4.09.
-47-
<PAGE> 56
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and
an Opinion of Counsel stating that the proposed transaction and such
supplemental indenture comply with this Indenture.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation, merger, lease, conveyance or transfer in
accordance with Section 5.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such lease, conveyance or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such successor had been named as the Company herein and thereafter
(except in the case of a lease) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture and the Securities.
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs upon:
(1) default in the payment of principal of the Securities
when due at maturity, upon repurchase, upon acceleration or otherwise,
including failure of the Company to repurchase the Securities required
to be repurchased, at the required purchase price, upon a Change of
Control and corresponding Rating Decline or in the event of a Net
Proceeds Offer, and failure to make any optional redemption payment,
whether or not such payment is prohibited by Articles Ten or Twelve;
(2) default in the payment of any installment of interest
on the Securities when due (including any interest payable in
connection with optional redemption payments) and continuance of such
default for 30 days, whether or not such payment is prohibited by
Articles Ten or Twelve;
(3) default on any other Indebtedness of the Company, any
Subsidiary Guarantor or any other Subsidiary if either (a) such
default results from the failure to pay principal of or interest on
any such Indebtedness when due which aggregates in excess of $5
million and continuance of such default beyond any applicable cure,
forbearance or notice period, or (b) as a result of such default, the
maturity of such Indebtedness has been accelerated prior to its
scheduled maturity, without such default and acceleration having been
rescinded or annulled within a period of 10 days, and the principal
amount of such Indebtedness, together with the principal amount of any
other such Indebtedness in default, or the maturity of which has been
so accelerated, aggregates $5 million or more;
(4) default in the performance, or breach, of any other
covenant of the Company or any Subsidiary Guarantor in this Indenture
and failure to remedy such
-48-
<PAGE> 57
default within a period of 60 days after written notice thereof from
the Trustee or Holders of 25% in principal amount of the outstanding
Securities;
(5) the entry by a court of one or more judgments or
orders against the Company, any Subsidiary Guarantor or any other
Subsidiary in an aggregate amount in excess of $10 million and which
are not covered by insurance written by third parties that has not
been vacated, discharged, satisfied or stayed pending appeal within 60
days from the entry thereof;
(6) a Guarantee by a Subsidiary Guarantor that is a
Material Subsidiary shall cease to be in full force and effect (other
than a release of a Guarantee by designation of a Subsidiary Guarantor
as an Unrestricted Subsidiary) or any Subsidiary Guarantor shall deny
or disaffirm its obligations with respect thereto;
(7) the Company or any Material Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property,
(D) makes a general assignment for the benefit of
its creditors, or
(E) admits in writing that it generally is unable
to pay its debts as the same become due;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief (with respect to the petition
commencing such case) against the Company or any Material
Subsidiary in an involuntary case or proceeding,
(B) appoints a Custodian of the Company or any
Material Subsidiary or for all or substantially all of its
respective property, or
(C) orders the liquidation of the Company or any
Material Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
-49-
<PAGE> 58
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (7) and (8)) under Section 6.01 occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in principal
amount of the outstanding Securities may declare the unpaid principal of (or
the Change of Control purchase price if the Event of Default includes failure
to pay the Change of Control purchase price), and accrued and unpaid interest
on, all the Securities then outstanding to be due and payable, by a notice in
writing to the Company (and to the Trustee, if given by Holders) and upon any
such declaration such principal and accrued and unpaid interest shall become
immediately due and payable, notwithstanding anything contained in this
Indenture or the Securities to the contrary. If an Event of Default specified
in clauses (7) or (8) above occurs, all unpaid principal of, and accrued
interest on, the Securities then outstanding will become due and payable,
without any declaration or other act on the part of the Trustee or any Holder.
Except as set forth in the first sentence of this paragraph, the Company hereby
waives presentment, demand, notice of dishonor, notice of acceleration, notice
of intent to accelerate, and all other notices and demands.
The Holders of a majority in principal amount of the then outstanding
Securities, by written notice to the Company, the Subsidiary Guarantors and the
Trustee, may rescind and annul a declaration of acceleration and its
consequences if (1) the Company or any Subsidiary Guarantor has paid or
deposited with such Trustee a sum sufficient to pay (A) all overdue
installments of interest on all the Securities, (B) the principal of any
Securities that has become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor in
the Securities, (C) to the extent that payment of such interest is lawful,
interest on the defaulted interest at the rate or rates prescribed therefor in
the Securities, and (D) all money paid or advanced by the Trustee thereunder
and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; (2) all Events of Default, other than the
non-payment of the principal of any Securities that have become due solely by
such declaration of acceleration, have been cured or waived as provided in this
Indenture; and (3) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction. No such rescission will affect
any subsequent Event of Default or impair any right consequent thereon.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue, in its own name and as trustee of an express trust, any available
remedy by proceeding at law or in equity to collect the payment of principal or
interest on the Securities or to enforce the performance of any provision of
the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
-50-
<PAGE> 59
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 6.07 and 9.02, the Holders of at least a majority
in principal amount of Securities then outstanding by notice to the Trustee may
waive an existing Default or Event of Default and its consequences, except a
Default or Event of Default in payment of principal or interest on the
Securities, including any optional redemption payments or Change of Control or
Net Proceeds Offer payments.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount of the Securities will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on such Trustee, provided that (1) such direction is not in
conflict with any rule of law or with this Indenture and (2) the Trustee may
take any other action deemed proper by such Trustee that is not inconsistent
with such direction.
SECTION 6.06. Limitation on Remedies.
No Holder of any of the Securities will have any right to institute
any proceeding, judicial or otherwise, or for the appointment of a receiver or
trustee or pursue any remedy under this Indenture, unless:
(1) such Holder has previously given notice to the
Trustee of a continuing Event of Default,
(2) the Holders of not less than 25% in principal amount
of the outstanding Securities have made written request to such
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee under this Indenture,
(3) such Holder or Holders have offered to such Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request,
(4) such Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding, and
(5) no direction inconsistent with such written request
has been given to such Trustee during such 30-day period by the
Holders of a majority in principal amount of the outstanding
Securities.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over other Holders.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the Holder of
any Securities will have the right, which is absolute and unconditional, to
receive payment of the principal of and
-51-
<PAGE> 60
interest on such Securities on the stated maturity therefor and to institute
suit for the enforcement of any such payment, and such right may not be
impaired without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of interest or principal specified
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any Subsidiary Guarantor for the whole amount of principal of and interest
on the Securities remaining unpaid and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation and expenses of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
(a) The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Holders allowed in any judicial proceedings relative to the
Company, the Subsidiary Guarantors, their creditors or their property and may
collect and receive any money or other property payable or deliverable on any
such claims and to distribute the same.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article Six, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders of Senior Indebtedness to the extent
required by Article Ten;
Third: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
Fourth: To the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10.
-52-
<PAGE> 61
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in principal
amount of the then outstanding Securities.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such rights and powers vested in it by this Indenture
and use the same degree of care and skill in such exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth (or incorporated by reference) in this
Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine such
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph (c) does not limit the effect of
paragraph (b) of this Section.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by an officer of the Trustee, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(3) The Trustee shall not be liable with respect to
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 or any other
direction permitted by this Indenture, and the Trustee shall be
entitled from time to time to request such a direction.
-53-
<PAGE> 62
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall be under no obligation and may refuse to
perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely on and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper person. The Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney, to the extent reasonably required by such inquiry or
investigation.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) For all purposes under this Indenture, the Trustee shall not
be deemed to have notice or knowledge of any Event of Default (other than under
Section 6.01(1) or (2)) unless a Trust Officer knows of such Event of Default
or unless written notice of any Event of Default (other than under Section
6.01(1) or (2)) is received by the Trustee at its address in Section 13.02
hereof and such notice references the Securities generally, the Company or this
Indenture.
-54-
<PAGE> 63
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or its
Subsidiaries or Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement in the Securities other than its certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Holder pursuant to Section 13.02 a
notice of the Default within 90 days after it occurs. Except in the case of a
Default in any payment on any Security, the Trustee may withhold the notice if
and so long as the board of directors, executive committee or a trust committee
of its directors and/or officers in good faith determines that withholding the
notice is in the interests of Holders.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each March 15, beginning with March 15, 1997, the
Trustee shall mail to each Holder a brief report dated as of such May 15 that
complies with TIA Section 313(a), but only if such report is required in any
year under TIA Section 313(a). The Trustee also shall comply with TIA
Sections 313(b) and 313(c).
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange on which the Securities are listed.
The Company shall notify the Trustee in writing if the Securities become listed
on any national securities exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay the Trustee from time to time reasonable
compensation (including compensation for extraordinary services relating to
default administration) for its services (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust). The Company shall reimburse the Trustee upon request for
all reasonable out-of-pocket expenses, disbursements and advances incurred by
it. Such expenses may include the reasonable compensation and expenses of the
Trustee's agents and counsel.
The Trustee shall not be under any obligation to institute any suit,
or take any remedial action under this Indenture, or to enter any appearance or
in any way defend any suit in which it may be a defendant, or to take any steps
in the execution of the trusts created hereby or
-55-
<PAGE> 64
thereby or in the enforcement of any rights and powers under this Indenture,
until it shall be indemnified to its satisfaction against any and all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture, including compensation for
services, costs, expenses, outlays, counsel fees and other disbursements, and
against all liability not due to its negligence or willful misconduct. The
Company shall indemnify the Trustee against any loss or liability incurred by
it in connection with the acceptance and administration of the trust and its
duties hereunder as Trustee, Registrar and/or Paying Agent, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company of any claim for which it may seek indemnity;
however, unless the position of the Company is prejudiced by such failure, the
failure of the Trustee to promptly notify the Company shall not limit its right
to indemnification. The Company shall defend each such claim and the Trustee
shall cooperate in the defense. The Trustee may retain separate counsel and
the Company shall reimburse the Trustee for the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through the Trustee's negligence or
willful misconduct.
To satisfy the Company's payment obligations in this Section, the
Trustee shall have a claim prior to that of the Holders of the Securities on
all money or property held or collected by the Trustee, except that held in
trust to pay principal of and interest on particular Securities.
When the Trustee incurs expenses or renders services after the
occurrence of any Event of Default specified in Sections 6.01(7) or (8), the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee, in writing. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting as Trustee
hereunder.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
-56-
<PAGE> 65
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee to
the successor Trustee, subject to the claim provided for in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Holder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in principal amount of the Securities may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee. Any successor Trustee shall comply
with TIA Section 310(a)(5).
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust assets to, another corporation, the
successor corporation without any further act shall be the successor Trustee;
provided such corporation or association shall be otherwise eligible and
qualified under this Article.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a). The Trustee shall always have a combined
capital and surplus of at least $100,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall also comply with TIA
Section 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.
(a) This Indenture shall cease to be of further effect (subject to
Section 8.05) when all outstanding Securities theretofore authenticated and
issued hereunder have been delivered (other than any Securities which shall
have been destroyed, lost or stolen and which shall have been replaced or paid
as provided in Section 2.07) to the Trustee for cancellation and the Company
has paid all sums payable hereunder and under the Securities.
-57-
<PAGE> 66
(b) In addition to the provisions of Section 8.01(a), at the
Company's option, either (i) the Company and the Subsidiary Guarantors shall be
deemed to have been discharged from their obligations with respect to the
Securities and the provisions of this Indenture (subject to Section 8.05) on
the 91st day after the applicable conditions set forth below have been
satisfied or (ii) the Company and the Subsidiary Guarantors shall cease to be
under any obligation to comply with any term, provision or condition set forth
in Sections 4.02, 4.03, 4.07 through 4.18, 5.01 and the last paragraph of
Section 11.01 with respect to the Securities at any time after the applicable
conditions set forth below have been satisfied:
(1) the Company or any Subsidiary Guarantor shall have
deposited or caused to be deposited irrevocably with the Trustee as
trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders (i) money, or (ii)
U.S. Government Obligations, which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide (without any reinvestment of such interest or principal), not
later than one day before the due date of any payment, money or (iii)
a combination of (i) and (ii), in an amount sufficient, in the opinion
(with respect to (ii) and (iii)) of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee at or prior to the time of such
deposit, to pay and discharge each installment of principal of and
interest on the outstanding Securities on the dates such installments
are due;
(2) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or
violation of, or constitute a default under, any other instrument to
which the Company or a Subsidiary Guarantor or any Subsidiary is a
party or by which any of them is bound, as evidenced to the Trustee in
an Officers' Certificate delivered to the Trustee concurrently with
such deposit;
(3) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that Holders will not recognize
income, gain or loss for federal income tax purposes as a result of
the Company's exercise of its option under this Section 8.01 and will
be subject to federal income tax on the same amount and in the same
manner and at the same time as would have been the case if such option
had not been exercised, and, in the case of the Securities being
discharged pursuant to clause (i) of this Section 8.01(b), accompanied
by a ruling to that effect received from or published by the Internal
Revenue Service (it being understood that (A) such Opinion of Counsel
shall also state, if applicable, that such ruling is consistent with
the conclusions reached in such Opinion of Counsel and (B) the Trustee
shall be under no obligation to investigate the basis of correctness
of such ruling);
(4) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Company's exercise of its
option under this Section 8.01 will not result in any of the Company,
the Trustee or the trust created by the Company's deposit of funds
hereunder becoming or being deemed to be an "investment company" under
the Investment Company Act of 1940, as amended;
-58-
<PAGE> 67
(5) the Company or any Subsidiary Guarantor shall have
paid or duly provided for payment of all amounts then due to the
Trustee pursuant to Section 7.07; and
(6) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with.
(c) The Company or any Subsidiary Guarantor may make an
irrevocable deposit pursuant to this Section 8.01 only if at such time it is
not prohibited from doing so under the provisions of Articles Ten and Twelve of
this Indenture and the Company shall have delivered to the Trustee and any
Paying Agent an Officers' Certificate to that effect.
SECTION 8.02. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with the provisions of the Securities and this Indenture to the
payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to the subordination provisions of Articles
Ten or Twelve and need not be segregated from other funds except to the extent
required by law.
The term "U.S. Government Obligations" means direct obligations of the
United States for the payment of which the full faith and credit of the United
States is pledged.
SECTION 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company
upon request any money or securities held by them at any time in excess of
amounts required to pay principal of or interest on the Securities. The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal or interest that remains unclaimed
for one year; provided, however, that the Trustee or such Paying Agent before
being required to make any such repayment, may at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each such Holder notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing any unclaimed balance of such
money then remaining will be paid to the Company. After repayment to the
Company, any Holder entitled to such money shall thereafter, as an unsecured
general creditor, look (unless an applicable law designates another Person)
only to the Company for payment, 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.
-59-
<PAGE> 68
SECTION 8.04. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and the Subsidiary Guarantors' obligations under this Indenture and
the Securities shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.01; provided, however, that if the Company or any
Subsidiary Guarantor has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Company or such
Subsidiary Guarantor shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
SECTION 8.05. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture and
of the Securities referred to in Section 8.01(a) and (b)(i), the respective
obligations of the Company, the Subsidiary Guarantors and the Trustee under
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 4.01 (with respect to
Section 8.01(a)), 4.04, 6.07, 7.07, 7.08, 8.02, 8.03, 8.04, 11.03, and 11.04
shall survive until the Securities are no longer outstanding, and thereafter
the obligations of the Company and the Trustee under Sections 7.07, 8.02, 8.03
and 8.04 shall survive. Nothing contained in this Article Eight shall abrogate
any of the obligations or duties of the Trustee under this Indenture.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Sections 5.01 or 11.02;
(3) to provide for uncertificated Securities in addition
to certificated Securities;
(4) to comply with any requirements of the SEC in order
to effect or maintain the qualification of this Indenture under the
TIA; or
(5) to make any change that would provide any additional
benefit or rights to the Holders or that does not adversely affect the
rights of any Holder.
-60-
<PAGE> 69
Notwithstanding the above, the Trustee and the Company may not make
any change that adversely affects the legal rights of any Holders hereunder.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee may amend or supplement this Indenture or the
Securities with the written consent of the Subsidiary Guarantors and the
Holders of at least a majority of the principal amount of the Securities then
outstanding, and the Holders of a majority in principal amount of the
Securities, together with the Subsidiary Guarantors, may waive compliance by
the Company with any provision of this Indenture or the Securities. However,
without the consent of each Holder affected, an amendment, supplement or
waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of interest on the Securities;
(3) reduce the principal amount of the Securities or
extend the maturity schedule of the Securities or modify the
redemption or repurchase provisions of the Securities;
(4) waive a default in the payment of the principal or
interest on the Securities;
(5) make any Security payable in money other than that
stated in the Security;
(6) make any change in the subordination of the
Securities in a manner that is adverse to the Holders; or
(7) make any change in Section 6.04 or Section 6.07
hereof or in this sentence of this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof. Any amendment, waiver or consent shall be deemed effective
upon receipt by the Trustee of the necessary consents and shall not require
execution of any supplemental indenture to be effective.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of each Security
affected thereby, with a copy to the Trustee, 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 amendment, waiver, consent or supplemental indenture.
Except as otherwise provided in Section 6.04 and this Section 9.02, the Holders
of a majority in aggregate principal amount of the Securities then outstanding
may waive compliance in a
-61-
<PAGE> 70
particular instance by the Company or the Subsidiary Guarantors with any
provisions of this Indenture or the Securities.
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
A consent to an amendment, supplement or waiver by a Holder of a
Security shall bind the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security.
However, until an amendment, supplement or waiver becomes effective, any such
Holder or subsequent Holder may revoke the consent as to his Security or
portion of a Security. For such revocation to be effective, the Trustee must
receive the notice of revocation before the date the amendment, supplement or
waiver becomes effective.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it makes a change described in any of clauses (1)
through (7) of Section 9.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company
or the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
SECTION 9.06. Trustee Protected.
The Trustee shall sign any amendment or supplement or waiver
authorized pursuant to this Article if the amendment or supplement or waiver
does not adversely affect the rights of the Trustee. If it does adversely
affect the rights of the Trustee, the Trustee may but need not sign it. In
signing such amendment or supplement or waiver the Trustee shall be entitled to
receive, and (subject to Article Seven) shall be fully protected in relying
upon, an Opinion of Counsel stating that such amendment or supplement or waiver
is authorized or permitted by and complies with this Indenture. The Company
may not sign an amendment or supplement until the Board of Directors of the
Company approves it.
-62-
<PAGE> 71
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Securities Subordinated to Senior Indebtedness.
The Company agrees, and each Holder by its acceptance thereof likewise
agrees, that the payment of principal of and interest on the Securities is
subordinated in right of payment, to the extent and in the manner provided in
this Article, to the prior payment in full of all Senior Indebtedness, whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed or guaranteed. No payment on any Guarantee shall constitute payment
"on behalf of " the Company within the meaning of this Article Ten; provided
that a payment by a Subsidiary Guarantor on a Guarantee shall constitute a
payment "on behalf of" the Company within the meaning of this Article Ten in
the event that any guarantee by such Subsidiary of Indebtedness under the Bank
Credit Agreement shall have been determined by a court of competent
jurisdiction to be invalid or unenforceable, in whole or in part.
This Article Ten shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the
holders of Senior Indebtedness, and such holders and/or each of them may
enforce such provisions. No amendment of any provision of this Article Ten
shall be effective as against any holder of Senior Indebtedness who has not
consented thereto.
SECTION 10.02. Company Not To Make Payments with Respect to Securities in
Certain Circumstances.
(a) No payment may be made by the Company or on behalf of the
Company on account of principal of or interest on the Securities or to acquire
or repurchase any of the Securities or on account of the redemption provisions
of the Securities (i) upon the maturity of any Senior Indebtedness by lapse of
time, acceleration or otherwise, unless and until all such Senior Indebtedness
is first paid in full or (ii) upon the happening of any default in payment of
any principal of or interest on any Senior Indebtedness when the same becomes
due and payable (a "Payment Default"), unless and until such Payment Default
shall have been cured or waived or shall have ceased to exist.
(b) Upon the happening of a default or event of default (other
than a Payment Default) with respect to any Senior Indebtedness, as such
default or event of default is defined therein or in the instrument under which
it is outstanding, and, upon written notice thereof given to the Company and
the Trustee by any holders of such Senior Indebtedness or their Representative
(a "Payment Notice"), then, unless and until such default or event of default
shall have been cured or waived or shall have ceased to exist or the
Representative gives its written approval, no payment shall be made by or on
behalf of the Company on account of principal of or interest on the Securities
or to acquire or repurchase any of the Securities or on account of the
redemption provisions of the Securities; provided, however, that these
provisions will not prevent the making of any payment for more than 179 days
after the due date of the first principal or interest payment on the Securities
after a Payment Notice shall have been given.
-63-
<PAGE> 72
Notwithstanding the foregoing, (i) not more than one Payment Notice shall be
given within a period of 360 consecutive days and (ii) a Payment Notice may
only be given (A) if more than $5 million of Senior Indebtedness is outstanding
under the Bank Credit Agreement at the time of such notice, by the
Representative or (B) if $5 million or less of Senior Indebtedness is
outstanding under the Bank Credit Agreement at the time of such notice, by a
holder or holders (or the Representative of holders) of at least $5 million
principal amount of Senior Indebtedness.
(c) In the event that, notwithstanding the provisions of this
Section 10.02, the Company shall make any payment to the Trustee or the Holders
on account of any principal of or interest on the Securities, or to acquire or
repurchase any of the Securities or on account of the redemption provisions of
the Securities, after the happening of a Payment Default or after receipt by
the Company and the Trustee of a Payment Notice as provided in this Section
10.02, then, unless and until such default or event of default shall have been
cured or waived or shall have ceased to exist, such payment (subject to the
provisions of Sections 10.06 and 10.07) shall be held by the Trustee or
Holders, as the case may be, in trust for the benefit of, and shall be paid
over and delivered to, the holders of Senior Indebtedness (pro rata as to each
of such holders on the basis of the respective amounts of Senior Indebtedness
held by them) or their Representative as their respective interests may appear,
for application to the payment of all Senior Indebtedness remaining unpaid to
the extent necessary to pay all Senior Indebtedness in full in accordance with
its terms, after giving effect to any concurrent payment or distribution or
provision therefor to the holders of Senior Indebtedness. The Company shall
give prompt written notice to the Trustee of any default under any Senior
Indebtedness or under any agreement pursuant to which Senior Indebtedness may
have been issued.
SECTION 10.03. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of
Company.
Upon any distribution of assets of the Company or payment on behalf of
the Company with respect to the Securities in the event of any Insolvency or
Liquidation Proceeding with respect to the Company:
(a) the holders of Senior Indebtedness shall be entitled
to receive payment in full of such Senior Indebtedness before the
Holders are entitled to receive any direct or indirect payment or
distribution of any cash, property or security on account of the
principal of or interest on or any other payment with respect to the
Securities;
(b) any direct or indirect payment or distribution of
assets of or on behalf of the Company of any kind or character,
whether in cash, property or securities, to which the Holders or the
Trustee on behalf of the Holders would be entitled except for the
provisions of this Article Ten (including specifically, without
limitation, any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities, which may
be payable or deliverable in respect of the Securities in any such
Insolvency or Liquidation Proceeding), shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution directly to the holders of Senior Indebtedness or their
Representative, to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid, whether or not due, including
specifically, without
-64-
<PAGE> 73
limitation, all Post-Commencement Amounts, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that notwithstanding the foregoing
provisions of this Section 10.03, any direct or indirect payment or
distribution of assets of or on behalf of the Company of any kind or
character, whether in cash, property or securities, shall be received
by the Trustee or the Holders on account of any principal of or
interest on the Securities (including specifically, without
limitation, any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities, which may
be payable or deliverable in respect of the Securities in any such
Insolvency or Liquidation Proceeding) before all Senior Indebtedness
is paid in full, whether or not due, including specifically, without
limitation, all Post-Commencement Amounts, such payment or
distribution (subject, with regard to the Trustee, to the provisions
of Sections 10.06 and 10.07) shall be received and held in trust for
and shall be paid over to the holders of the Senior Indebtedness
remaining unpaid or their Representative, for application to the
payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full whether or not due, including
specifically, without limitation, all Post- Commencement Amounts,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company.
SECTION 10.04. Holders To Be Subrogated to Rights of Holders of Senior
Indebtedness.
After the payment in full of all Senior Indebtedness, the Holders
shall be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Company applicable to the
Senior Indebtedness (equally and ratably with the holders of all other
Indebtedness of the Company which by its express terms is subordinate and
subject in right of payment to Senior Indebtedness of the Company to
substantially the same extent as the Securities are so subordinate and subject
in right of payment and which is entitled to like rights and subrogation as a
result of payments made to the holders of such Senior Indebtedness), until all
amounts owing on the Securities shall be paid in full, and for the purpose of
such subrogation no payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the Holders
by virtue of this Article which otherwise would have been made to the Holders
shall, as between the Company and the Holders, be deemed to be payment by the
Company to or on account of the Senior Indebtedness, it being understood that
the provisions of this Article Ten are and are intended solely for the purpose
of defining the relative rights of the Holders, on the one hand, and the
holders of the Senior Indebtedness, on the other hand. Nothing in this Section
10.04 shall be deemed to give the Holders the benefits of any rights to any
collateral securing such Senior Indebtedness as to which such Holders may
become subrogated pursuant to this Section 10.04.
-65-
<PAGE> 74
SECTION 10.05. Obligations of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture
or in any Security is intended to or shall impair, as between the Company and
the Holders, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
Default under this Indenture, subject to the rights, if any, under this Article
Ten of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in this Article Ten, the
Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
the Holders, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness 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 Ten.
SECTION 10.06. Trustee Entitled To Assume Payments Not Prohibited in Absence
of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee or the taking of any other action by the Trustee, unless, subject
to Section 10.07 hereof, it shall have received at its corporate trust
department written notice thereof from the Company or from one or more holders
of Senior Indebtedness or from any Representative thereof; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Article Seven and Section 10.07 below, shall be entitled to assume conclusively
that no such facts exist. The Trustee shall be entitled to rely on the
delivery to it of a written notice by a person representing himself to be a
holder of Senior Indebtedness (or a Representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a Representative on behalf of any such holder or holders.
SECTION 10.07. Application by Trustee of Monies Deposited with It.
Except as provided in Section 8.02, any deposit of monies by the
Company with the Trustee or any Paying Agent (whether or not in trust) for the
payment of the principal of or interest on any Securities shall be subject to
the provisions of Sections 10.01, 10.02, 10.03 and 10.04 except that, if prior
to 12:00 noon, New York City time, on the first Business Day prior to the date
on which by the terms of this Indenture any such monies may become payable for
any purpose (including, without limitation, the payment of either the principal
or the interest on any Security) the Trustee or, in the case of any such
deposit of monies with a Paying Agent, the Paying Agent shall not have received
with respect to such monies the notice provided for in Section 10.06, then the
Trustee or such Paying Agent, as the case may be, shall have full power
-66-
<PAGE> 75
and authority to receive such monies and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such first Business Day. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article Ten, and if such evidence is not furnished the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness but shall have only such obligations to such
holders as are expressly set forth in this Article Ten.
SECTION 10.08. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act by any such holder, or by any noncompliance by
the Company with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. Without
limiting the foregoing, the holders of Senior Indebtedness of the Company may
extend, renew, modify or amend the terms of the Senior Indebtedness of the
Company or any security therefor or guaranty thereof and release, sell or
exchange such security and release such guaranty and otherwise deal freely with
the Company, all without affecting the provisions of this Article Ten.
SECTION 10.09. Holders Authorize Trustee To Effectuate Subordination of
Securities.
Each Holder by his acceptance thereof authorizes and expressly directs
the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Ten and
appoints the Trustee his attorney-in-fact for such purpose, including, in the
event of any Insolvency or Liquidation Proceeding with respect to the Company,
the immediate filing of a claim for the unpaid balance of its or his Securities
in the form required in said proceedings and the causing of said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claims, then the holders of Senior Indebtedness are hereby
authorized to have the right to file and are hereby authorized to file an
appropriate claim for and on behalf of such Holder.
-67-
<PAGE> 76
SECTION 10.10. Right of Trustee To Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article Ten in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
SECTION 10.11. Article Ten Not To Prevent Events of Default.
The failure to make a payment on account of principal or interest by
reason of any provision in this Article Ten shall not be construed as
preventing the occurrence of an Event of Default under Section 6.01.
SECTION 10.12. Payment.
For purposes of this Article Ten, a payment with respect to any
Security or with respect to principal of or interest on any Security shall
include, without limitation, payment of principal of and interest on any
Security, any depositing of funds under Article Eight, any payment on account
of any mandatory or optional repurchase or redemption of any Security
(including payments pursuant to Article Three or Section 4.01, 4.12 or 4.17)
and any payment or recovery on any claim (whether for rescission or damages and
whether based on contract, tort, duty imposed by law, or any other theory of
liability) relating to or arising out of the offer, sale or purchase of any
Security.
ARTICLE ELEVEN
GUARANTEES
SECTION 11.01. Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally, jointly and
severally, guarantees (such guarantee to be referred to herein as the
"Guarantee") to each Holder of Securities authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, the full and prompt
performance of the Company's obligations under this Indenture and the
Securities and that:
(1) the principal of and interest on the Securities will
be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Securities, if any, to the extent
lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and
(2) in case of any extension of time of payment or
renewal of any Securities or of any 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,
-68-
<PAGE> 77
subject, however, in the case of clauses (1) and (2) above, to the
limitations set forth in Section 11.04.
Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Subsidiary Guarantors will
be jointly and severally obligated to pay the same immediately. Each
Subsidiary Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Each
Subsidiary Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest,
notice, notice of intent to accelerate, notice of acceleration, and all other
notices and all demands whatsoever and covenants that this Guarantee will not
be discharged except by complete performance of the obligations contained in
the Securities, this Indenture and in this Guarantee. If any Holder or the
Trustee is required by any court or otherwise to return to the Company, any
Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to the Company or any Subsidiary Guarantor, any
amount paid by the Company or any Subsidiary Guarantor to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Subsidiary Guarantor agrees it shall
not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that,
as between each Subsidiary Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall forthwith become due
and payable by each Subsidiary Guarantor for the purpose of this Guarantee.
The Company agrees to cause each Person (other than an Unrestricted
Subsidiary) that shall become a Material Subsidiary after the date of this
Indenture (other than PMCT Inc. and Plains Gulf Coast Limited Partnership) to
execute and deliver a supplement to this Indenture pursuant to which such
Person will guarantee the payment of the Securities on the same terms and
conditions as the Guarantees by the Subsidiary Guarantors.
SECTION 11.02. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.
(a) Except as set forth in Articles Four and Five, nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety, to the Company or another Subsidiary Guarantor.
-69-
<PAGE> 78
(b) Except as set forth in Articles Four and Five hereof, nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into a corporation or
corporations other than the Company or a Subsidiary Guarantor (whether or not
affiliated with the Subsidiary Guarantor), or successive consolidations or
mergers in which a Subsidiary Guarantor or its successor or successors shall be
a party or parties, or shall prevent any sale or conveyance of the property of
a Subsidiary Guarantor as an entirety or substantially as an entirety, to a
corporation other than the Company or another Subsidiary Guarantor (whether or
not affiliated with the Subsidiary Guarantor) authorized to acquire and operate
the same; provided, however, that, subject to Section 11.02(a) and 11.03, (i)
immediately after such transaction, and giving effect thereto, no Default or
Event of Default shall have occurred as a result of such transaction and be
continuing, (ii) such transaction shall not violate any of the covenants in
Sections 4.01 through 4.17, and (iii) each Subsidiary Guarantor hereby
covenants and agrees that, upon any such consolidation, merger, sale or
conveyance, such Subsidiary Guarantor's Guarantee set forth in this Article
Eleven, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by such Subsidiary
Guarantor, shall be expressly assumed (in the event that the Subsidiary
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Trustee, executed and delivered to the
Trustee, by the corporation formed by such consolidation, or into which the
Subsidiary Guarantor shall have merged, or by the corporation that shall have
acquired such property. In the case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation, by
supplemental indenture executed and delivered to the Trustee and satisfactory
in form to the Trustee of the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Subsidiary
Guarantor, such successor corporation shall succeed to and be substituted for
the Subsidiary Guarantor with the same effect as if it had been named herein as
a Subsidiary Guarantor.
SECTION 11.03. Release of a Subsidiary Guarantor.
Upon the sale or disposition of a Subsidiary Guarantor (or
substantially all of its assets), which is otherwise in compliance with the
terms of this Indenture, including but not limited to the provisions of Section
11.02, such Subsidiary Guarantor shall be deemed released from all of its
Guarantee and related obligations in this Indenture; provided that any such
termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, other Indebtedness
of the Company or any Subsidiary shall also terminate or be released upon such
sale or transfer. Each Subsidiary Guarantor that is designated as an
Unrestricted Subsidiary in accordance with this Indenture shall be released
from all of its Guarantee and related obligations set forth in this Indenture
for so long as it remains an Unrestricted Subsidiary. The Trustee shall
deliver an appropriate instrument evidencing such release upon receipt of a
request by the Company accompanied by an Officers' Certificate and an Opinion
of Counsel certifying that such sale or other disposition was made by the
Company in accordance with the provisions of this Indenture. Any Subsidiary
Guarantor not so released remains liable for the full amount of principal of
and interest on the Securities as provided in this Article Eleven.
-70-
<PAGE> 79
SECTION 11.04. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and by its acceptance hereof each Holder
hereby confirms that it is the intention of all such parties that the guarantee
by such Subsidiary Guarantor pursuant to its Guarantee not constitute a
fraudulent transfer or conveyance for purposes of any federal or state law. To
effectuate the foregoing intention, the Holders and each Subsidiary Guarantor
hereby irrevocably agree that the obligations of each Subsidiary Guarantor
under the Guarantee shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities (including, but not
limited to, Guarantor Senior Indebtedness of each Subsidiary Guarantor) of such
Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Guarantee or
pursuant to Section 11.05, result in the obligations of such Subsidiary
Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. This Section 11.04 is for the
benefit of the creditors of each Subsidiary Guarantor, and, for purposes of
applicable fraudulent transfer and fraudulent conveyance law, any Indebtedness
of a Subsidiary Guarantor pursuant to the Bank Credit Agreement shall be deemed
to have been incurred prior to the incurrence by such Subsidiary Guarantor of
its liability under the Guarantee.
SECTION 11.05. Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under the Guarantee, such Funding Guarantor shall be
entitled to a contribution from each other Subsidiary Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including
the Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company's obligations with respect to the
Securities or any other Subsidiary Guarantor's obligations with respect to the
Guarantee.
SECTION 11.06. Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 11.01, each Subsidiary
Guarantor hereby agrees to execute the Guarantee in substantially the form of
Exhibit A-1 to be endorsed on each Security ordered to be authenticated and
delivered by the Trustee and each Subsidiary Guarantor agrees that this
Indenture shall be executed on behalf of each Subsidiary Guarantor by its
President or one of its Vice Presidents and attested to by an Officer. Each
Subsidiary Guarantor hereby agrees that its Guarantee set forth in Section
11.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Security a notation of such Guarantee. Each such Guarantee
shall be signed on behalf of each Subsidiary Guarantor by one Officer, (who
shall have been duly authorized by all requisite corporate actions) prior to
the authentication of the Security on which it is endorsed, and the delivery of
such Security by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Guarantee set forth in this Indenture on behalf
of the Subsidiary Guarantors. Such signatures upon the Guarantee may be by
manual or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Guarantee, and in case any such officer who shall
have signed the Guarantee shall cease to be such officer before the Security on
which such Guarantee is endorsed shall have been
-71-
<PAGE> 80
authenticated and delivered by the Trustee or disposed of by the Company, such
Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed the Guarantee had not ceased to be such officer of
the Subsidiary Guarantor.
SECTION 11.07. Severability.
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, that portion of such provision that is not invalid, illegal or
unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEES
SECTION 12.01. Guarantees Subordinated to Guarantor Senior Indebtedness.
The Subsidiary Guarantors agree, and each Holder by its acceptance
thereof likewise agrees, that the payments by the Subsidiary Guarantors in
respect of the Guarantees are subordinated in right of payment, to the extent
and in the manner provided in this Article Twelve, to the prior payment in full
of all Guarantor Senior Indebtedness, whether outstanding on the date of this
Indenture or thereafter created, incurred, assumed or guaranteed.
This Article Twelve shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Guarantor Senior Indebtedness, and such provisions are made for the benefit of
the holders of Guarantor Senior Indebtedness, and such holders and/or each of
them may enforce such provisions. No amendment of any provision of this
Article Twelve shall be effective as against any holder of Guarantor Senior
Indebtedness who has not consented thereto.
SECTION 12.02. Subsidiary Guarantors Not To Make Payments with Respect to
Guarantees in Certain Circumstances.
(a) No payment may be made by the Subsidiary Guarantors in respect
of the Guarantees (i) upon the maturity of any Guarantor Senior Indebtedness by
lapse of time, acceleration or otherwise, unless and until all such Guarantor
Senior Indebtedness is first paid in full or (ii) upon the happening of any
default in respect of the payment of any Guarantor Senior Indebtedness when the
same becomes due and payable (a "Subsidiary Guarantor Payment Default"), unless
and until such Subsidiary Guarantor Payment Default shall have been cured or
waived or shall have ceased to exist.
(b) Upon the happening of a default or event of default (other
than a Subsidiary Guarantor Payment Default) with respect to any Guarantor
Senior Indebtedness, as such default or event of default is defined therein or
in the instrument under which it is outstanding, and, upon written notice
thereof given to the Subsidiary Guarantors and the Trustee by any holders of
such Guarantor Senior Indebtedness or their Representative (a "Subsidiary
Guarantor Payment Notice"), then, unless and until such default or event of
default shall have been cured or waived
-72-
<PAGE> 81
or shall have ceased to exist or the Representative gives its written approval,
no payment shall be made by the Subsidiary Guarantors in respect of the
Guarantees; provided, however, that these provisions will not prevent the
making of any payment for more than 179 days after the due date of payment on
the Guarantees after a Subsidiary Guarantor Payment Notice shall have been
given. Notwithstanding the foregoing, (i) not more than one Subsidiary
Guarantor Payment Notice shall be given within a period of 360 consecutive days
and (ii) a Subsidiary Guarantor Payment Notice may only be given (A) if more
than $5 million of Guarantor Senior Indebtedness is outstanding under the Bank
Credit Agreement at the time of such notice, by the Representative or (B) if $5
million or less of Guarantor Senior Indebtedness is outstanding under the Bank
Credit Agreement at the time of such notice, by a holder or holders (or the
Representative of holders) of at least $5 million principal amount of Guarantor
Senior Indebtedness.
(c) In the event that, notwithstanding the provisions of this
Section 12.02, the Subsidiary Guarantors shall make any payment in respect of
the Guarantees, after the happening of a Subsidiary Guarantor Payment Default
or after receipt by the Subsidiary Guarantors and the Trustee of a Subsidiary
Guarantor Payment Notice as provided in this Section 12.02, then, unless and
until such default or event of default shall have been cured or waived or shall
have ceased to exist, such payment (subject to the provisions of Sections 12.06
and 12.07) shall be held by the Trustee or Holders, as the case may be, in
trust for the benefit of, and shall be paid over and delivered to, the holders
of Guarantor Senior Indebtedness (pro rata as to each of such holders on the
basis of the respective amounts of Guarantor Senior Indebtedness held by them)
or their Representative, as their respective interests may appear, for
application to the payment of all Guarantor Senior Indebtedness remaining
unpaid to the extent necessary to pay all Guarantor Senior Indebtedness in full
in accordance with its terms, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of Guarantor Senior
Indebtedness. The Subsidiary Guarantors shall give prompt written notice to
the Trustee of any default under any Guarantor Senior Indebtedness or under any
agreement pursuant to which Guarantor Senior Indebtedness may have been issued.
SECTION 12.03. Guarantees Subordinated to Prior Payment of All Guarantor
Senior Indebtedness on Dissolution, Liquidation or
Reorganization of Subsidiary Guarantor.
Upon any distribution of assets of any Subsidiary Guarantor in the
event of any Insolvency or Liquidation Proceeding with respect to any
Subsidiary Guarantor:
(a) the holders of Guarantor Senior Indebtedness shall be
entitled to receive payment in full of such Guarantor Senior
Indebtedness before the Holders are entitled to receive any direct or
indirect payment or distribution of any cash, property or security on
account of any payment in respect of the Guarantees;
(b) any direct or indirect payment or distribution of
assets of the Subsidiary Guarantors of any kind or character, whether
in cash, property or securities, to which the Holders or the Trustee,
on behalf of the Holders, would be entitled except for the provisions
of this Article Twelve (including specifically, without limitation,
any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of such Subsidiary
Guarantor being subordinated to any payment in
-73-
<PAGE> 82
respect of the Guarantees, which may be payable or deliverable in
respect of the Guarantees in any such Insolvency or Liquidation
Proceeding), shall be paid by the liquidating trustee or agent or
other person making such payment or distribution directly to the
holders of Guarantor Senior Indebtedness or their Representative, to
the extent necessary to make payment in full of all Guarantor Senior
Indebtedness remaining unpaid whether or not due, including
specifically, without limitation, all Post-Commencement Amounts, after
giving effect to any concurrent payment or distribution to the holders
of such Guarantor Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 12.03, any direct or indirect payment or
distribution of assets of any Subsidiary Guarantor of any kind or
character, whether in cash, property or securities, shall be received
by the Trustee or the Holders (including specifically, without
limitation, any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of such
Subsidiary Guarantor being subordinated to the payment of the
Guarantees, which may be payable or deliverable in respect of the
Guarantees in any such Insolvency or Liquidation Proceeding) before
all Guarantor Senior Indebtedness is paid in full, whether or not due,
including specifically, without limitation, all Post-Commencement
Amounts, such payment or distribution (subject, with regard to the
Trustee, to the provisions of Sections 12.06 and 12.07) shall be
received and held in trust for and shall be paid over to the holders
of the Guarantor Senior Indebtedness remaining unpaid or their
Representative, for application to the payment of such Guarantor
Senior Indebtedness until all such Guarantor Senior Indebtedness shall
have been paid in full, whether or not due, including specifically,
without limitation, all Post-Commencement Amounts, after giving effect
to any concurrent payment or distribution to the holders of such
Guarantor Senior Indebtedness.
The Company or the Subsidiary Guarantors shall give prompt
written notice to the Trustee of any dissolution, winding up,
liquidation or reorganization of any Subsidiary Guarantor.
SECTION 12.04. Holders To Be Subrogated to Rights of Holders of Guarantor
Senior Indebtedness.
After the payment in full of all Guarantor Senior Indebtedness, the
Holders shall be subrogated, to the rights of the holders of Guarantor Senior
Indebtedness to receive payments or distributions of assets of the Subsidiary
Guarantors applicable to the Guarantor Senior Indebtedness (equally and ratably
with the holders of all other Indebtedness which by its express terms is
subordinate and subject in right of payment to Guarantor Senior Indebtedness to
substantially the same extent as the Guarantees are so subordinate and subject
in right of payment and which is entitled to like rights and subrogation as a
result of payments made to the holders of such Senior Indebtedness) until all
amounts owing on the Securities shall be paid in full, and for the purpose of
such subrogation no payments or distributions to the holders of the Guarantor
Senior Indebtedness by or on behalf of the Subsidiary Guarantors or by or on
behalf of the Holders by virtue of this Article Twelve which otherwise would
have been made to the Holders shall, as between the Subsidiary Guarantors and
the Holders, be deemed to be payment by the Subsidiary Guarantors to or on
account of the Guarantor Senior Indebtedness, it being
-74-
<PAGE> 83
understood that the provisions of this Article Twelve are and are intended
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of the Guarantor Senior Indebtedness, on the other
hand. Nothing in this Section 12.04 shall be deemed to give the Holders the
benefits of any rights to any collateral securing such Senior Indebtedness as
to which such Holders may become subrogated pursuant to this Section 12.04.
SECTION 12.05. Obligations of the Subsidiary Guarantors Unconditional.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in any Security is intended to or shall impair, as between the
Subsidiary Guarantors and the Holders, the obligation of the Subsidiary
Guarantors under the Guarantees, or is intended to or shall affect the relative
rights of the Holders and creditors of the Subsidiary Guarantors other than the
holders of the Guarantor Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon Default under this Indenture,
subject to the rights, if any, under this Article Twelve of the holders of
Guarantor Senior Indebtedness in respect of cash, property or securities of the
Subsidiary Guarantors received upon the exercise of any such remedy. Upon any
distribution of assets of the Subsidiary Guarantors referred to in this Article
Twelve, the Trustee, subject to the provisions of Sections 7.01 and 7.02, and
the Holders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of the
Guarantor Senior Indebtedness and other indebtedness of the Subsidiary
Guarantors, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Twelve.
SECTION 12.06. Trustee Entitled To Assume Payments Not Prohibited in Absence
of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee, unless, subject to Section 12.07 below, it shall have received at
its corporate trust department written notice thereof from the Subsidiary
Guarantors or from one or more holders of Guarantor Senior Indebtedness or from
any Representative thereof; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Article Seven and Section
12.07 below, shall be entitled to assume conclusively that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a written notice
by a person representing himself to be a holder of Guarantor Senior
Indebtedness (or a Representative on behalf of such holder) to establish that
such notice has been given by a holder of Guarantor Senior Indebtedness or a
Representative on behalf of any such holder or holders.
SECTION 12.07. Application by Trustee of Monies Deposited with It.
Except as provided in Section 8.02, any deposit of monies by the
Subsidiary Guarantor with the Trustee or any Paying Agent (whether or not in
trust) for any payment in respect of the Guarantees shall be subject to the
provisions of Sections 12.01, 12.02, 12.03 and 12.04 except that, if prior to
12:00 noon, New York City time, on the first Business Day prior to the date on
-75-
<PAGE> 84
which by the terms of this Indenture any such monies may become payable for any
purpose, the Trustee or, in the case of any such deposit of monies with a
Paying Agent, the Paying Agent shall not have received with respect to such
monies the notice provided for in Section 12.06, then the Trustee or such
Paying Agent, as the case may be, shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such first Business Day. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Guarantor Senior Indebtedness to
participate in any payment or distribution pursuant to this Article Twelve, the
Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Guarantor Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article Twelve, and if such evidence is not furnished
the Trustee may defer any payment to such person pending judicial determination
as to the right of such person to receive such payment.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Guarantor Senior Indebtedness but shall have only such obligations
to such holders as are expressly set forth in this Article Twelve.
SECTION 12.08. Subordination Rights Not Impaired by Acts or Omissions of
Subsidiary Guarantors or Holders of Guarantor Senior
Indebtedness.
No right of any present or future holders of any Guarantor Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Subsidiary Guarantor or by any act or failure to act by any such holder, or
by any noncompliance by any Subsidiary Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have
or be otherwise charged with. Without limiting the foregoing, the holders of
Guarantor Senior Indebtedness may extend, renew, modify or amend the terms of
the Guarantor Senior Indebtedness or any security therefor or guaranty thereof
and release, sell or exchange such security and release such guaranty and
otherwise deal freely with any Subsidiary Guarantor, all without affecting the
provisions of this Article Twelve.
SECTION 12.09. Holders Authorize Trustee To Effectuate Subordination of
Guarantee.
Each Holder by his acceptance thereof authorizes and expressly directs
the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Twelve and
appoints the Trustee his attorney-in-fact for such purpose, including, in the
event of any Insolvency or Liquidation Proceeding with respect to any
Subsidiary Guarantor, the immediate filing of a claim for the unpaid balance of
its or his Securities pursuant to the Guarantee in the form required in said
proceedings and the causing of said claim to be approved. If the Trustee does
not file a proper claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the time to file such
claims, then the holders of Guarantor Senior Indebtedness are hereby authorized
to have the right to file and are hereby authorized to file an appropriate
claim for and on behalf of such Holder.
-76-
<PAGE> 85
SECTION 12.10. Right of Trustee To Hold Guarantor Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article Twelve in respect of any Guarantor Senior Indebtedness at any time held
by it to the same extent as any other holder of Guarantor Senior Indebtedness,
and nothing in this Indenture shall be construed to deprive the Trustee of any
of its rights as such holder.
SECTION 12.11. Article Twelve Not To Prevent Events of Default.
The failure to make a payment on account of the Guarantees by reason
of any provision in this Article Twelve shall not be construed as preventing
the occurrence of an Event of Default under Section 6.01.
SECTION 12.12. Payment.
For purposes of this Article Twelve, a payment with respect to any
Guarantee or with respect to principal of or interest on any Security or any
Guarantee shall include, without limitation, payment of principal of and
interest on any Security, any depositing of funds under Article Eight, any
payment on account of any mandatory or optional repurchase or redemption of any
Security (including payments pursuant to Article Three or Section 4.01, 4.12 or
4.17) and any payment or recovery on any claim (whether for rescission or
damages and whether based on contract, tort, duty imposed by law, or any other
theory of liability) relating to or arising out of the offer, sale or purchase
of any Security.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of TIA Section 318(c), the imposed duties
shall control.
-77-
<PAGE> 86
SECTION 13.02. Notices.
Any notice or communication shall be sufficiently given if in writing
and delivered in person or mailed by certified or registered mail (return
receipt requested) addressed as follows or by facsimile transmission:
If to the Company or any Subsidiary Guarantor:
Plains Resources Inc.
1600 Smith Street
Suite 1500
Houston, Texas 77002
Telecopy No.: (713) 654-1523
Attention: Secretary and Chief Financial Officer
If to the Trustee:
Texas Commerce Bank National Association
600 Travis Street, 8th Floor
Houston, Texas 77002
Telecopy No.: (713) 216-4880
Attention: Vice President, Corporate Trust Department
For purposes of the Company's obligation hereunder to maintain an
office or agency in the City of New York for purposes of surrendering
Securities, the address of the Trustee's agent is:
Texas Commerce Trust Company of New York
55 Water Street, Room 234
Windows 20 and 21
New York, New York 10041
The Company or any Subsidiary Guarantor or the Trustee by notice to
the other may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Holder shall be mailed to him
by first-class mail at his address as it appears on the registration books of
the Registrar and shall be sufficiently given to him if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it. If the Company mails notice or
communications to Holders it shall mail a copy to the Trustee and each Agent at
the same time. All notices or communications shall be in writing.
-78-
<PAGE> 87
SECTION 13.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Subsidiary Guarantors, the Trustee, the Registrar and anyone
else shall have the protection of TIA Section 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company and/or any Subsidiary
Guarantor to the Trustee to take any action under this Indenture, the Company
and/or such Subsidiary Guarantor, as the case may be, shall furnish to the
Trustee:
(1) an Officers' Certificate stating that, in the opinion
of the signers, the conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such person,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
each such person, such covenant or condition has been complied with.
SECTION 13.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules for its
functions.
-79-
<PAGE> 88
SECTION 13.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday, or a day on which banks and
trust companies in The City of New York are not required by law or executive
order to be open. If a payment date is a Legal Holiday at a place of payment,
payment may be made at the place on the next succeeding day that is not a Legal
Holiday, without additional interest.
SECTION 13.08. Governing Law.
THIS INDENTURE AND THE SECURITIES AND THE GUARANTEES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT
THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
All liability described in paragraph 19 of the Securities of any
director, officer, employee or stockholder, as such, of the Company, the
Subsidiary Guarantors or the Trustee is waived and released.
SECTION 13.11. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture
shall bind its successor.
SECTION 13.12. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
instrument.
SECTION 13.13. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
-80-
<PAGE> 89
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date first written above.
Dated: March 15, 1996
PLAINS RESOURCES INC.
By
------------------------------------
Name:
Title:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Trustee
By
------------------------------------
Name:
Title:
SUBSIDIARY GUARANTORS:
CALUMET FLORIDA, INC.,
a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
PLAINS ILLINOIS INC.,
a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
-81-
<PAGE> 90
PLAINS MARKETING & TRANSPORTATION
INC. a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
PLAINS RESOURCES INTERNATIONAL INC.,
a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
PRI PRODUCING INC.,
a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
PLX CRUDE LINES INC.,
a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
PLX INGLESIDE INC.,
a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
-82-
<PAGE> 91
STOCKER RESOURCES, INC.,
a California corporation
By
------------------------------------
Phillip D. Kramer
Vice President
PLAINS TERMINAL & TRANSFER CORPORATION,
a Delaware corporation
By
------------------------------------
Phillip D. Kramer
Vice President
STOCKER RESOURCES, L.P.,
a California limited partnership
BY: STOCKER RESOURCES, INC.,
a California corporation,
General Partner
By
------------------------------------
Phillip D. Kramer
Vice President
-83-
<PAGE> 92
EXHIBIT A
[Form of Security]
[If a Series A Security or a Series B Security constituting a Transfer
Restricted Security --
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTES EVIDENCED HEREBY RESELL OR
OTHERWISE TRANSFER THE NOTES EVIDENCED HEREBY, EXCEPT (A) TO PLAINS RESOURCES
INC. (THE "COMPANY"), (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AS TRUSTEE, A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTES EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES TO
FOREIGN PURCHASERS IN OFFSHORE TRANSACTIONS MEETING THE REQUIREMENTS OF RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTES EVIDENCED
HEREBY ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE NOTES EVIDENCED HEREBY WITHIN THREE YEARS
AFTER THE ORIGINAL ISSUANCE OF SUCH NOTES, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, AS REGISTRAR. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
COMPANY AND TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AS TRANSFER AGENT, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE
YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTES EVIDENCED HEREBY IF THE
PROVISIONS OF SECTION 2.14(a)(1) OF THE INDENTURE ARE SATISFIED. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON"
HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES
ACT.
A-1
<PAGE> 93
REGISTERED
10 1/4% SENIOR SUBORDINATED NOTE DUE 2006
No. R- $
PLAINS RESOURCES INC.
(a Delaware corporation)
promises to pay to ______________________________
or registered assigns
the principal sum of ____________________ Dollars on March 15, 2006
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: PLAINS RESOURCES INC.
Attest: By:
Secretary President
[Seal]
Authenticated:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By
Authorized Signatory
OR
as Authenticating Agent
By
Authorized Signatory
[Seal]
A-2
<PAGE> 94
[Reverse Side of Security]
PLAINS RESOURCES INC.
10 1/4% Senior Subordinated Note Due 2006
1. Interest.
Plains Resources Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semiannually on March 15
and September 15 of each year, commencing [if a Series A Security - on
September 15, 1996 and continuing semiannually thereafter, on March 15 and
September 15 in each year] [if a Series B Security - on the first March 15 or
September 15 following the original issuance of the Series B Securities and
continuing semiannually thereafter, on March 15 and September 15 in each year,
from the date of the original issuance of the Series B Securities], or from the
most recent date to which interest has been paid or duly provided for, until
the principal hereof is paid or duly provided for. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. Accrued but unpaid
interest on any Series A Security that is exchanged for a Series B Security
pursuant to the Registration Rights Agreement shall be paid on or before the
first interest payment date on the Series B Securities.
The interest rate on the Securities is subject to increase under
certain circumstances described in the Registration Rights Agreement.
The Company shall pay interest on overdue principal of and interest on
overdue installments of interest, to the extent lawful, at a rate equal to the
rate of interest otherwise payable on the Securities.
2. Method of Payment.
The Company will pay interest on the Securities to the persons who are
registered holders of Securities at the close of business on the March 1 or
September 1 immediately preceding the interest payment date even though
Securities are cancelled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal of and interest on the
Securities in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
interest by check payable in such money or by wire transfer of immediately
available funds. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
A-3
<PAGE> 95
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture dated as of March
15, 1996 (the "Indenture") among the Company, the Subsidiary Guarantors, and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in
effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Securities
are general unsecured subordinated obligations of the Company limited to
$150,000,000 aggregate principal amount, except as otherwise provided in the
Indenture. Payment on each Security is guaranteed on a senior subordinated
basis, jointly and severally, by the Subsidiary Guarantors pursuant to Articles
Eleven and Twelve of the Indenture.
5. Optional Redemption.
At any time on or after March 15, 2001, the Company may, at its
option, redeem all or any portion of the Securities at the redemption prices
(expressed as percentages of the principal amount of the Securities) set forth
below, plus, in each case, accrued interest thereon to the applicable
redemption date, if redeemed during the 12-month period beginning March 15, of
the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2001 . . . . . . . . 105.1250%
2002 . . . . . . . . 103.4167%
2003 . . . . . . . . 101.7083%
2004 and thereafter 100.0000%
</TABLE>
In addition, at any time on or prior to March 15, 1999, up to $45,000,000 in
aggregate principal amount of Securities may be redeemed, at the option of the
Company, upon not less than 30 or more than 60 days' notice, from the Net
Proceeds of a Public Equity Offering, at a price equal to 110.25% of the
principal amount thereof, together with accrued and unpaid interest to the date
of redemption, provided that at least $105,000,000 in aggregate principal
amount of Securities remains Outstanding immediately after such redemption and
that such redemption occurs within 60 days following the closing of such Public
Equity Offering.
In the case of any redemption of Securities, interest installments due
and payable on or prior to the date of redemption will be payable to Holders of
such Securities of record at the close of business on the relevant Record Date
referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the date of redemption. In the event of
redemption or purchase of this Series __ Security in part only, a new Series __
Security or Securities for the unredeemed or unpurchased portion hereof shall
be issued in the name of the Holder hereof upon the cancellation hereof.
The Securities do not have the benefit of any sinking fund
obligations.
A-4
<PAGE> 96
6. Notice of Redemption.
Notice of redemption will be mailed to the Holder's registered address
at least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed. If less than all Securities are to be
redeemed, the Trustee shall select pro rata the Securities to be redeemed in
multiples of $1,000. Securities in denominations larger than $1,000 may be
redeemed in part.
7. Subordination.
The Securities are subordinated to Senior Indebtedness. To the extent
provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid. The Company agrees, and each Holder by accepting a
Security agrees, to such subordination and authorizes the Trustee to give it
effect.
8. Change of Control.
Upon the occurrence of a Change of Control and a corresponding Rating
Decline, the Company shall be obligated to make an offer to purchase all of the
then outstanding Securities (a "Change of Control Offer"), and shall purchase,
on a Business Day (the "Change of Control Purchase Date") not more than 60 nor
less than 30 days following the occurrence of a Rating Decline following a
Change of Control (or, in the event the Rating Decline occurs prior to the
corresponding Change of Control not more than 60 nor less than 30 days
following the occurrence of the Change of Control), all of the then outstanding
Notes validly tendered pursuant to such Change of Control Offer, at a purchase
price (the "Change of Control Purchase Price) equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the Change of
Control Purchase Date. The Change of Control Offer is required to remain open
for at least 20 Business Days and until the close of business on the fifth
Business Day prior to the Change of Control Purchase Date.
In order to effect such Change of Control Offer, the Company shall,
not later than the 30th day after the occurrence of the Rating Decline
corresponding to such Change of Control (or, in the event the Rating Decline
occurs prior to the corresponding Change of Control, not later than the 30th
day following the occurrence of the Change of Control), mail to the Trustee and
to each Holder of the Notes notice of the Change of Control Offer, which notice
shall govern the terms of the Change of Control Offer and shall state, among
other things, the procedures that Holders of the Notes must follow to accept
the Change of Control Offer.
9. Net Proceeds Offer.
In the event of certain Asset Dispositions, the Company may be
required to make a Net Proceeds Offer to purchase all or any portion of each
Holder's Securities, at 100% of the principal amount of the Securities plus
accrued interest to the Net Proceeds Payment Date.
A-5
<PAGE> 97
10. Restrictive Covenants.
The Indenture imposes certain limitations on, among other things, the
ability of the Company to merge or consolidate with any other Person or sell,
lease or otherwise transfer all or substantially all of its properties or
assets, the ability of the Company or the Subsidiaries to dispose of certain
assets, to pay dividends and make certain other distributions and payments, to
make certain investments or redeem, retire, repurchase or acquire for value
shares of capital stock, to incur additional Indebtedness or incur encumbrances
against certain property, to engage in other business activities, and to enter
into certain transactions with Related Persons, all subject to certain
limitations described in the Indenture.
11. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Securities selected
for redemption. Also, it need not transfer or exchange any Securities for a
period of 30 days before a selection of Securities to be redeemed.
12. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it
for all purposes and neither the Company, the Trustee nor any Agent shall be
affected by notice to the contrary.
13. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for one year, the Trustee or Paying Agent will pay the money back to the
Company at its request. After that, all liability of the Trustee and such
Paying Agents with respect to such money shall cease.
14. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Securities, and any past default or noncompliance
with any provision may be waived with the consent of the Holders of a majority
in principal amount of the Securities. Without the consent of any Holder, the
Company may amend or supplement the Indenture or the Securities to, among other
things, cure any ambiguity, defect or inconsistency or to provide for
uncertificated Securities in addition to certificated Securities or to make any
change that does not adversely affect the rights of any Holder.
A-6
<PAGE> 98
15. Successor Corporation.
When a successor corporation assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor corporation
will be released from those obligations.
16. Defaults and Remedies.
An event of default generally is: default in payment of principal on
the Securities; default for 30 days in payment of interest on the Securities;
failure by the Company or any Subsidiary Guarantor for 60 days after notice to
comply with any of its other agreements in the Indenture; certain defaults
under or acceleration prior to maturity of other indebtedness; certain final
judgments against the Company or Subsidiaries; a failure of any Guarantee of a
Material Subsidiary to be in full force and effect or denial by any Subsidiary
Guarantor of its obligations with respect thereto; and certain events of
bankruptcy or insolvency. Subject to certain limitations in the Indenture, if
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Securities may declare
all the Securities to be due and payable immediately, except that in the case
of an Event of Default arising from certain events of bankruptcy, insolvency or
reorganization relating to the Company, all outstanding Securities shall become
due and payable immediately without further action or notice. Holders may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the Securities may direct the Trustee in its
exercise of any trust or power. The Company must furnish an annual compliance
certificate to the Trustee.
17. Trustee Dealings with Company.
Texas Commerce Bank National Association, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company or its
Subsidiaries or Affiliates with the same rights it would have if it were not
Trustee.
18. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company,
any Subsidiary Guarantor or the Trustee, shall not have any liability for any
obligations of the Company, any Subsidiary Guarantor or the Trustee, under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
19. Authentication.
This Security shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Security.
A-7
<PAGE> 99
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to Holders. No representation is
made as to the accuracy of such numbers as printed on the Securities and
reliance may be placed only on the other identification numbers printed hereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to: Secretary,
Plains Resources Inc., 1600 Smith Street, Houston, Texas 77002.
22. Exchange Option.
[If a Series A Security -- At the option of the Holders hereof, the
Series A Securities may be exchanged, pursuant to the Registration Rights
Agreement, for a like aggregate principal amount of Series B Securities.]
A-8
<PAGE> 100
[Form of Assignment]
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax ID no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Your Signature:
- --------------------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Security)
Date:
----------------------------
Signature Guarantee:
----------------------------
A-9
<PAGE> 101
[Form of Option of Holder to Elect Purchase]
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.12 or Section 4.17 of the Indenture, check the
appropriate box:
Section 4.12 [ ]
Section 4.17 [ ]
If you want to have only part of this Security purchased by the
Company pursuant to Section 4.12 or 4.17 of the Indenture, state the amount (in
integral multiples of $1,000):
$
--------------------------------
Date: Signature:
----------------------------- ------------------------------
(Sign exactly as your name
appears on the other side
of this Security)
Signature Guarantee:
-------------------------------------------------------
A-10
<PAGE> 102
EXHIBIT A-1
[Form of Notation on Security
Relating to Guarantee]
GUARANTEE
Subject to the limitations set forth in the Indenture, the Subsidiary
Guarantors (as defined in the Indenture referred to in the Security upon which
this notation is endorsed and each hereinafter referred to as a "Subsidiary
Guarantor," which term includes any successor or additional Subsidiary
Guarantor under the Indenture) have unconditionally guaranteed (a) the due and
punctual payment of the principal of and interest on the Securities, whether at
maturity, acceleration, redemption or otherwise, (b) the due and punctual
payment of interest on the overdue principal of and interest on the Securities,
if any, to the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance
with the terms set forth in the Indenture, and (d) in case of any extension of
time of payment or renewal of any Securities or any of such other obligations,
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Capitalized terms used herein have the meanings
assigned to them in the Indenture unless otherwise indicated.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Subsidiary Guarantors shall have any personal
liability under this Guarantee by reason of his or its status as such
stockholder, officer, director or incorporator.
This Guaranty shall be binding upon each Subsidiary Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof and
in the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Security upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized signatories.
A-1 - 1
<PAGE> 103
The obligations of the Subsidiary Guarantors to the Holders and to the
Trustee pursuant to the Guarantee and the Indenture are expressly subordinated
to all Guarantor Senior Indebtedness to the extent set forth in Article Twelve
of the Indenture and reference is hereby made to such Indenture for the precise
terms of such subordination.
Subsidiary Guarantors:
PLAINS MARKETING & TRANSPORTATION
INC., a Delaware corporation
By
-------------------------------------
Vice President
PLX INGLESIDE INC.,
a Delaware corporation
By
-------------------------------------
Vice President
PLAINS RESOURCES INTERNATIONAL INC.,
a Delaware corporation
By
-------------------------------------
Vice President
PRI PRODUCING INC.,
a Delaware corporation
By
-------------------------------------
Vice President
STOCKER RESOURCES, INC., a California
corporation
By
-------------------------------------
Vice President
A-1 - 2
<PAGE> 104
PLAINS TERMINAL & TRANSFER CORPORATION,
a Delaware corporation
By
-------------------------------------
Vice President
STOCKER RESOURCES, L.P.,
a California limited partnership
By: STOCKER RESOURCES, INC.,
a California corporation,
General Partner
By
-------------------------------------
Vice President
CALUMET FLORIDA, INC.,
a Delaware corporation
By
-------------------------------------
Vice President
PLAINS ILLINOIS INC.,
a Delaware corporation
By
-------------------------------------
Vice President
PLX CRUDE LINES INC.,
a Delaware corporation
By
-------------------------------------
Vice President
A-1 - 3
<PAGE> 105
EXHIBIT A-2
[Form of Legend For Global Securities]
Any Global Security authenticated and delivered hereunder shall bear a
legend in addition to the Private Placement Legend, if required pursuant to
Section 2.14, in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
A-2 - 1
<PAGE> 106
EXHIBIT A-3
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 10 1/4% Senior Notes due 2006, Series A, and
10 1/4% Senior Notes due 2006, Series B
(the "Securities"), of Plains Resources Inc.
This Certificate relates to $_______ principal amount of Securities
held in the form of *[ ] a beneficial interest in a Global Security or *[ ]
Physical Securities by _______________ (the "Transferor").
The Transferor:*
[ ] has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Security held by DTC a
Physical Security or Physical Securities in definitive, registered form of
authorized denominations and in an aggregate principal amount equal to its
beneficial interest in such Global Security (or the portion thereof indicated
above); or
[ ] has requested that the Registrar by written order exchange or
register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.06 of such Indenture, and that the
transfer of these Securities does not require registration under the Securities
Act of 1933, as amended (the "Act") because *:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of subparagraph (a)(1) or (c)(1) of Section
2.06 of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[ ] Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act).
[ ] Such Security is being transferred in reliance on Regulation S
under the Act.
[ ] Such Security is being transferred in reliance on Rule 144 under
the Act.
A-3 - 1
<PAGE> 107
[ ] Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act
other than Rule 144A or Rule 144 or Regulation S under the Act to a person
other than an institutional "accredited investor."
[INSERT NAME OF TRANSFEROR]
By:
----------------------------------
[Authorized Signatory]
Date:
--------------------------------
- ------------
* Check applicable box.
A-3 - 2
<PAGE> 108
EXHIBIT A-4
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO
INSTITUTIONAL ACCREDITED INVESTORS
,
---------------------------------- ------
Texas Commerce Bank National Association
600 Travis Street, 8th Floor
Houston, Texas 77002
Re: Plains Resources Inc. Indenture (the "Indenture")
relating to 10 1/4% Senior Notes due 2006, Series A,
or 10 1/4% Senior Notes due 2006, Series B
Ladies and Gentlemen:
In connection with our proposed purchase of 10 1/4% Senior Notes due
2006, Series A, or 10 1/4% Series Notes due 2006, Series B (the "Securities"),
of Plains Resources Inc. (the "Company"), we confirm that:
1. We have received such information as we deem necessary in
order to make our investment decision.
2. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the Indenture
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell any Securities, we will do so
only (A) to the Company or any subsidiary thereof, (B) inside the United States
in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
the Trustee a signed letter substantially in the form hereof, (D) outside the
United States in accordance with Regulation S under the Securities Act, (E)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing Securities from us a notice advising such purchaser that
resales of the Securities are restricted as stated herein.
A-4 - 1
<PAGE> 109
4. We understand that, on any proposed resale of Securities, we
will be required to furnish to you and the Company, such certification, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Securities purchased by us will bear a legend to
the foregoing effect.
5. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be, for an indefinite
period.
6. We are acquiring the Securities purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion, for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act.
You and the Company and your and their respective counsel are entitled
to rely upon this letter and are irrevocably authorized to produce this letter
or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
----------------------------------
[Authorized Signatory]
A-4 - 2
<PAGE> 110
EXHIBIT A-5
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION
WITH REGULATION S TRANSFERS
,
---------------------------------- ------
Texas Commerce Bank National Association
600 Travis
Houston, Texas 77002
Re: Plains Resources Inc. ("the Company")
10 1/4% Senior Notes due 2006, Series A, and
10 1/4% Senior Notes due 2006, Series B (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $__________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knew that the
transaction had been pre- arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
A-5 - 1
<PAGE> 111
You and the Company and your and their respective counsel are entitled
to rely upon this letter and are irrevocably authorized to produce this letter
or a copy thereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Defined terms used herein without definition have the respective meanings
provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------
[Authorized Signature]
A-5 - 2
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Amendment No. 1 to Form
S-3 of our report dated February 22, 1996, which appears on page F-2 of
Plains Resources Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995. We also consent to the incorporation by reference of our
report dated February 20, 1996, which appears on page F-1 of Amendment No. 1
on Form 8-K/A dated February 21, 1996. We also consent to the references to
us under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Houston, Texas
April 23, 1996
