SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported)
July 30, 1999
Swift Energy Company
(Exact Name of Registrant)
Texas
(State of Incorporation)
01-8754 74-2073055
(Commission File No.) (IRS Employer Identification No.)
16825 Northchase Drive, Suite 400, Houston Texas 77060
(Address of Principal Executive Offices) (Zip Code)
(281) 874-2700
(Registrant's Telephone Number)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
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Items 1 through 4, Item 6 and Item 8 are not included because they are not
applicable.
On July 30, 1999, Swift Energy Company entered into an Underwriting
Agreement with Salomon Smith Barney, Inc., CIBC World Markets Corp., Morgan
Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, Banc One
Capital Markets, Inc., ABN AMRO Incorporated, and SG Cowen Securities
Corporation, pursuant to which Swift issued $125 million aggregate principal
amount of 10.25% Senior Subordinated Notes Due 2009 (the "Notes"). The net
proceeds from the sale of the Notes were approximately $120.3 million.
Concurrently with this debt offering, the Company entered into an Underwriting
Agreement with Salomon Smith Barney, Inc., CIBC World Markets Corp., Credit
Suisse First Boston Corporation, Dain Rauscher Wessels, a division of Dain
Rauscher Incorporated, and Jeffries & Company, Inc. pursuant to which Swift
issued 4,000,000 shares of its Common Stock at $9.75 per share. The net proceeds
from the sale of the Common Stock were approximately $36.7 million and, together
with the net proceeds from the debt offering, will be used by Swift to repay the
outstanding debt under our credit facility. We intend to use any excess net
proceeds together with funds then made available under our credit facility for
capital expenditures, acquisitions and general corporate purposes.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements - Not Applicable
(b) Pro Forma Financial Information - Not Applicable
(c) Exhibits
Exhibit No. Exhibit
1.1 Underwriting Agreement dated July 30, 1999
relating to 10.25% Senior Subordinated Notes due
2009
1.2 Underwriting Agreement dated July 30, 1999
relating to Common Stock
4.1 Form of First Supplemental Indenture dated as of
August 4, 1999 between the Company and Bank One,
N.A., including the form of 10.25% Senior
Subordinated Notes Due 2009
5.1 Opinion of Jenkens & Gilchrist, A Professional
Corporation, as to the legality of the Notes
5.2 Opinion of Jenkens & Gilchrist, a Professional
Corporation, as to the legality of the offering
of the Common Stock
10.1 Third Amendment to Credit Agreement among Swift
and Bank One, Texas, National Association, Bank
of Montreal and Nationsbank, N.A., effective
July 19, 1999
10.2 Letter agreement dated July 15, 1999, among Swift
and Bank One, Texas, N.A. and other Lenders party
to the Credit Agreement dated August 18, 1999
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August , 1999
SWIFT ENERGY COMPANY
By: /s/ Alton D. Heckaman, Jr.
-----------------------------------
Alton D. Heckaman, Jr.
Vice President and Controller
Exhibit 1.1
EXECUTION COPY
Swift Energy Company
10.25% Senior Subordinated Notes due 2009
Underwriting Agreement
New York, New York
July 30, 1999
To the Representatives named in Schedule I hereto of the Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
Swift Energy Company, a corporation organized under the laws of the State
of Texas (the "Company"), proposes to sell to the several underwriters named in
Schedule II hereto (the "Underwriters"), for whom you (the "Representatives")
are acting as representatives, the principal amount of its securities identified
in Schedule I hereto (the "Securities"), to be issued under an indenture (the
"Original Indenture") to be dated as of July 29, 1999, as amended and
supplemented by the First Supplemental Indenture thereto to be dated as of
August 4, 1999 (the Original Indenture, as so amended and supplemented, the
"Indenture") between the Company and Bank One N.A., as trustee (the "Trustee").
To the extent there are no additional Underwriters listed on Schedule I other
than you, the term Representatives as used herein shall mean you, as
Underwriters, and the terms Representatives and Underwriters shall mean either
the singular or plural as the context requires. Any reference herein to the
Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus, as the case may be; and any reference herein
to the terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus, as the case may be, deemed to be
incorporated therein by reference. Certain terms used herein are defined in
Section 17 hereof.
1. Representations and Warranties. The Company represents and warrants to,
and agrees with, each Underwriter as set forth below in this Section 1.
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(a) The Company meets the requirements for use of Form S-3 under the
Act and has prepared and filed with the Commission a registration statement
(the file number of which is set forth in Schedule I hereto) on Form S-3,
including a related basic prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or more
amendments thereto and a Preliminary Final Prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: (1) after the Effective Date of such
registration statement, a final prospectus supplement relating to the
Securities in accordance with Rules 430A and 424(b), (2) prior to the
Effective Date of such registration statement, an amendment to such
registration statement (including the form of final prospectus supplement)
or (3) a final prospectus in accordance with Rules 415 and 424(b). In the
case of clause (1), the Company has included all information (other than
Rule 430A Information) required by the Act and the rules thereunder to be
included in such registration statement and the Final Prospectus. As filed,
such final prospectus supplement or such amendment and form of final
prospectus supplement shall contain all Rule 430A Information, together
with all other such required information, and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final Prospectus) as
the Company has advised you, prior to the Execution Time, will be included
or made therein. The Registration Statement, at the Execution Time, is in
compliance with Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or will, and
when the Final Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date on
which Option Securities are purchased, if such date is not the Closing Date
(a "settlement date"), the Final Prospectus (and any supplement thereto)
will, comply in all material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective Date,
the Final Prospectus, if not filed pursuant to Rule 424(b), will not, and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date
and any settlement date, the Final Prospectus (together with any supplement
thereto) will not, include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement or the Final Prospectus (or any supplement thereto)
in reliance upon and in conformity with information furnished to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Final
Prospectus (or any supplement thereto).
(c) The Company and its subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
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3
("Environmental Laws"), (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have
not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability would not, individually
or in the aggregate, have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated in the Final Prospectus (exclusive of any supplement
thereto). Except as set forth in the Prospectus, neither the Company nor
any of the subsidiaries has been named as a "potentially responsible party"
under the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended.
(d) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws, or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(e) Each of the Company and its Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described in
the Final Prospects Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification.
(f) All the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final Prospectus,
all outstanding shares of capital stock of the Subsidiaries are owned by
the Company either directly or through wholly owned subsidiaries free and
clear of any perfected security interest or any other security interests,
claims, liens or encumbrances.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
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2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto the principal amount of the Securities set forth opposite such
Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the Securities shall
be made on the date and at the time specified in Schedule I hereto or at such
time on such later date not more than three Business Days after the foregoing
date as the Representatives shall designate, which date and time may be
postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Securities shall be made through the facilities of
The Depository Trust Company unless the Representatives shall otherwise instruct
in writing.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Securities for sale to the public as set forth in the Final
Prospectus.
5. Agreements. The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the Registration
Statement or supplement (including the Final Prospectus or any Preliminary
Final Prospectus) to the Basic Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or supplement to
which you reasonably object on a timely basis. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Final Prospectus is otherwise
required under Rule 424(b), the Company will cause the Final Prospectus,
properly completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed and if requested, will provide evidence satisfactory
to the Representatives of such timely filing. The Company will promptly
advise the Representatives (1) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when the
Final Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(3) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (4) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Final Prospectus or for any
additional information, (5) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
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5
institution or threatening of any proceeding for that purpose and (6) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Final Prospectus to comply
with the Act or the Exchange Act, the Company promptly will (1) notify the
Representatives of such event, (2) prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or omission or
effect such compliance and (3) supply any supplemented Final Prospectus to
you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, copies of the signed Registration
Statement (including exhibits thereto) and to each other Underwriter a copy
of the Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by the
Act, as many copies of each Preliminary Final Prospectus and the Final
Prospectus and any supplement thereto as the Representatives may reasonably
request. The Company will be responsible for the expenses of printing or
other production of all documents relating to the offering.
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the Securities and will pay any
fee of the National Association of Securities Dealers, Inc., in connection
with its review of the offering; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the offering
or sale of the Securities, in any jurisdiction where it is not now so
subject.
(f) The Company will not, without the prior written consent of Salomon
Smith Barney Inc., offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
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6
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any debt securities issued or guaranteed by the Company (other than the
Securities) or publicly announce an intention to effect any such
transaction until the Business Day set forth on Schedule I hereto provided,
however, this paragraph (f) shall not apply to issuances of any commercial
paper by the Company.
(g) The Company will not take, directly or indirectly, any action
designed to or which will constitute or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
6. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Securities shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time and the Closing Date, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time, on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
will be filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) The Company shall have requested and caused Jenkens & Gilchrist, A
Professional Corporation, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) each of the Company and SWENCO-Western, Inc., Swift Energy
Marketing Company and Swift Energy International, Inc. is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its
business as described in the Final Prospectus, and is duly qualified
to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification
wherein it owns or leases material properties or conducts material
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business and where the failure to be so qualified would have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Final Prospectus;
(ii) the Company's authorized equity capitalization is as set
forth in the Final Prospectus; the Securities conform in all material
respects to the description thereof contained in the Final Prospectus;
and, except as set forth in the Final Prospectus, or designated in
such opinion, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding;
(iii) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding instrument enforceable against
the Company in accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance or other laws affecting creditors'
rights generally from time to time in effect and to general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether
considered in a proceeding in equity or at law); and the Securities
have been duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Underwriters pursuant to this Agreement, will
constitute legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Final Prospectus, and to the
knowledge of such counsel, there is no contract or other document of a
character required to be described in the Registration Statement or
Final Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements included in the
Final Prospectus under the headings "Risk Factors--We may not finalize
our pending litigation settlement", "Risk Factors--Governmental
regulations are costly and complex, especially regulations relating to
environmental protection" and "Business and Properties--Litigation"
and incorporated by reference under the heading "Legal Proceedings"
from the Company's report on Form 10-K for the year ended December 31,
1998 each fairly summarize the matters therein described;
(v) the Registration Statement has become effective under the
Act; any required filing of the Basic Prospectus, any Preliminary
Final Prospectus and the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
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8
within the time period required by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Final Prospectus (other than the financial
statements and other financial or reserve information contained
therein and the Statement of Eligibility and Qualification on Form T-1
of the Trustee, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the Exchange Act; they have participated
in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company
reserve engineers and the Underwriters at which the contents of the
Registration Statement and the Registration Statement and Final
Prospectus and related matters were discussed, and although such
counsel is not passing upon and does not assume any responsibility for
and have not verified the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
except for such statements under the heading "Description of Debt
Securities" in the Basic Prospectus and "Description of Notes" in the
Final Prospectus and such statements referred to in subsection (iv)
hereof, and have not made any independent check or verification
thereof, on the basis of the foregoing (relying as to materiality to a
large extent upon facts provided by officers and other representatives
of the Company) no facts have come to the attention of such counsel
that lead such counsel to believe that either the Registration
Statement at the time it became effective (including the information
deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b), if applicable), or any
amendment thereof made prior to the Closing Date as of the date of
such amendment, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Final Prospectus as of its date (or any amendment thereof or
supplement thereto made prior to the Closing Date as of the date of
such amendment or supplement) and as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel
need express no belief or opinion with respect to the exhibits, the
Statement of Eligibility (Form T-1), and the financial statements and
other financial reserve and statistical data included therein).
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Final Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
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obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Final Prospectus and such
other approvals (specified in such opinion) as have been obtained;
(ix) neither the execution and delivery of the Indenture, the
issue and sale of the Securities, nor the consummation of any other of
the transactions herein contemplated nor the fulfillment of the terms
hereof will conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or its subsidiaries pursuant to, (i) the charter
or by-laws of the Company or its subsidiaries, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or its subsidiaries is a party or
bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable
to the Company or its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or its subsidiaries or
any of its or their properties; and
(x) to the knowledge of such counsel, no holders of securities of
the Company have rights to the registration of such securities under
the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States of
New York and Texas or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters, provided that such counsel may assume that the
applicable law in New York is similar to the applicable law in the State of
Texas, and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
References to the Final Prospectus in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Representatives shall have received from Cravath, Swaine &
Moore, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Indenture, the Registration
Statement, the Final Prospectus (together with any supplement thereto) and
other related matters as the Representatives may reasonably require, and
the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
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have reviewed the Registration Statement, the Final Prospectus, any
supplements to the Final Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus
(exclusive of any supplement thereto), there has been no material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Final Prospectus (exclusive of any supplement thereto).
(e) The Company shall have requested and caused Arthur Andersen LLP to
have furnished to the Representatives, at the Execution Time and at the
Closing Date, letters, (which may refer to letters previously delivered to
one or more of the Representatives), dated respectively as of the Execution
Time and as of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within
the meaning of the Act and the Exchange Act and the respective applicable
rules and regulations adopted by the Commission thereunder and that they
have performed a review of the unaudited interim financial information of
the Company for the six-month period ended June 30, 1999, and as at June
30, 1999, in accordance with Statement on Auditing Standards No. 71, and
stating in effect, except as provided in Schedule I hereto, that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and the Final Prospectus and reported on by
them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related rules and regulations adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review, in accordance with standards established under
Statement on Auditing Standards No. 71, of the unaudited interim
financial information for the six- month period ended June 30, 1999
and as at June 30, 1999; carrying out certain specified procedures
(but not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of
<PAGE>
11
the minutes of the meetings of the stockholders, directors and the
committees of the Company and the Subsidiaries; and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1998, nothing came
to their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated by reference in the Registration Statement and the
Final Prospectus do not comply as to form in all material
respects with applicable accounting requirements of the Act and
with the related rules and regulations adopted by the Commission
with respect to financial statements included or incorporated by
reference in quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements included or incorporated by reference in the
Registration Statement and the Final Prospectus;
(2) with respect to the period subsequent to June 30, 1999,
there were any changes, at a specified date not more than five
Business Days prior to the date of the letter, in the long-term
debt of the Company and its subsidiaries or capital stock of the
Company or decreases in the stockholders' equity of the Company
as compared with the amounts shown on the June 30, 1999
consolidated balance sheet included or incorporated by reference
in the Registration Statement and the Final Prospectus, or for
the period from July 1, 1999 to such specified date there were
any decreases, as compared with the corresponding period in the
preceding quarter in net revenues or income before income taxes
or in total or per share amounts of net income of the Company and
its subsidiaries except in all instances for changes or decreases
set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives;
(3) the information included or incorporated by reference in
the Registration Statement and Final Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data), Item 302
(Supplementary Financial Information), Item 402 (Executive
Compensation) and Item 503(d) (Ratio of Earnings to Fixed
Charges) is not in conformity with the applicable disclosure
requirements of Regulation S-K; and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Final Prospectus and in
Exhibit 12 to the Registration Statement, including the information
<PAGE>
12
set forth under the caption "Capitalization" in the Final Prospectus,
the information included or incorporated by reference in the Company's
Annual Report on Form 10-K, incorporated by reference in the
Registration Statement and the Final Prospectus, and the information
included in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q,
incorporated by reference in the Registration Statement and the Final
Prospectus and any information of an accounting or financial nature
appearing in a Current Report on Form 8-K incorporated by reference in
the Registration Statement and the Final Prospectus, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
References to the Final Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (e) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Final Prospectus (exclusive of any
supplement thereto) the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole reasonable judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Final Prospectus (exclusive of any supplement thereto).
(g) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(h) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancelation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
<PAGE>
13
The documents required to be delivered by this Section 6 shall be delivered
at the offices of Cravath, Swaine & Moore, counsel for the Underwriters, at 825
Eighth Avenue, New York, New York 10019, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Underwriters, the Company will reimburse the Underwriters severally through
Salomon Smith Barney Inc. on demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or other wise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, subject to the
procedures set forth in paragraph (c) of this Section 8, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
(i) that the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein and (ii) with respect to any
untrue statement or omission of a material fact made in any Preliminary Final
Prospectus, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any Underwriter (or any of the directors, officers,
employees and agents of such Underwriter or any controlling person or such
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased the Securities concerned, to the extent that any such loss,
claim, damage or liability of such Underwriter occurs under the circumstance
where it shall have been determined by a court of competent jurisdiction by
final and nonappealable judgment that (x) the Company had previously furnished
copies of the Final Prospectus to the Representatives, (y) the untrue statement
or omission of a material fact contained in the Preliminary Final Prospectus was
corrected in the Final Prospectus and (z) there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the Final Prospectus. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
<PAGE>
14
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but
only with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to
any liability which any Underwriter may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the
cover page regarding delivery of the Securities and, under the heading
"Underwriting" or "Plan of Distribution", (i) the list of Underwriters and
their respective participation in the sale of the Securities, (ii) the
sentences related to concessions and reallowances and (iii) the paragraph
related to stabilization, syndicate covering transactions and penalty bids
in any Preliminary Final Prospectus and the Final Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Final Prospectus or the Final
Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have been
advised in writing by such counsel that there may be legal defenses
available to it and/or other indemnified parties which are different from,
in conflict with, or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. The indemnifying
party shall not be liable for any settlement of any such action effected
without its written consent, which shall not be unreasonably withheld or
delayed, but if settled with the written consent of the indemnifying party,
the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement. An indemnifying party will not, without the prior written
consent of the indemnified parties, which consent shall not be unreasonably
withheld or delayed, settle or compromise or consent to the entry of any
<PAGE>
15
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or
proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters
severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and by the Underwriters on the other from
the offering of the Securities; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for
any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company and the Underwriters severally shall contribute
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and of
the Underwriters on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed
to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriters shall
be deemed to be equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of the Final Prospectus.
Relative fault shall be determined by reference to, among other things,
whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information provided by the Company on the one hand or the Underwriters on
the other, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such untrue statement
or omission. The Company and the Underwriters agree that it would not be
just and equitable if contribution were determined by pro rata allocation
or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls
an Underwriter within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms
and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
<PAGE>
16
Securities set forth opposite their names in Schedule II hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate principal amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate principal amount of Securities set forth in Schedule II hereto,
the remaining Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by written notice given to the
Company prior to delivery of and payment for the Securities, if at any time
prior to such time (i) trading in the Company's Common Stock shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole reasonable judgment of the Representatives, impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors, employees, agents or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telefaxed to the Salomon Smith Barney Inc. General Counsel (fax no.: (212)
816-7912) and confirmed to the General Counsel, Salomon Smith Barney Inc., at
388 Greenwich Street, New York, New York, 10013, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telefaxed to (281) 874-2701
and confirmed to it at 16825 Northchase Drive, Suite 400, Houston, Texas 77060,
Attention: Chief Financial Officer.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers,
<PAGE>
17
directors, employees, agents and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only and
shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement, shall
have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended and the rules and
regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in paragraph 1(a)
above contained in the Registration Statement at the Effective Date including
any Preliminary Final Prospectus.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the final prospectus supplement relating to
the Securities that was first filed pursuant to Rule 424(b) after the Execution
Time, together with the Basic Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Securities and the
offering thereof and is used prior to filing of the Final Prospectus, together
with the Basic Prospectus.
<PAGE>
18
"Registration Statement" shall mean the registration statement referred to
in paragraph 1(a) above, including exhibits and financial statements, as amended
at the Execution Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any post-effective
amendment thereto or any Rule 462(b) Registration Statement becomes effective
prior to the Closing Date, shall also mean such registration statement as so
amended or such Rule 462(b) Registration Statement, as the case may be. Such
term shall include any Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A.
" Rule 415", "Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the
offering covered by the registration statement referred to in Section 1(a)
hereof.
"Subsidiary" shall mean SWENCO-Western, Inc., Swift Energy Marketing
Company and Swift Energy International, Inc. and any other subsidiary of the
Company that is a "significant subsidiary" of the Company within the meaning of
Rule 1-02 under Regulation S-X promulgated by the Commission, substituting five
percent for 10 percent in the conditions specified therein and substituting
"proportionate share of the total net revenue (after intercompany eliminations)"
for "equity in the income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in accounting principle"
and "such revenue" for "such income" in clause (3) of such definition; provided,
however, this definition shall not include any limited partnerships of which the
Company is the managing general partner.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended and the rules and regulations of the Commission promulgated thereunder.
<PAGE>
19
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
SWIFT ENERGY COMPANY
By: /s/ John R. Alden
---------------------------------
John R. Alden
Senior Vice President-Finance
The foregoing Agreement is hereby confirmed and accepted as of the date
specified in Schedule I hereto.
SALOMON SMITH BARNEY INC.
CIBC WORLD MARKETS CORP.
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC ONE CAPITAL MARKETS, INC.
ABN AMRO INCORPORATED
SG COWEN SECURITIES CORPORATION
By: SALOMON SMITH BARNEY INC.
By: /s/ Angela M. Reiton
-----------------------
Angela M. Reiton
Vice President
Title:
For themselves and the other several Underwriters, if any, named in Schedule II
to the foregoing Agreement.
<PAGE>
SCHEDULE I
Underwriting Agreement dated July 30, 1999
Registration Statement No. 333-81651
Representative(s): Salomon Smith Barney Inc.
CIBC World Markets Corp.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
Banc One Capital Markets, Inc.
ABN AMRO Incorporated
SG Cowen Securities Corporation
Title, Purchase Price and Description of Securities:
Title: 10.25% Senior Subordinated Notes due 2009
Principal amount: $125,000,000
Purchase price (include accrued
interest or amortization, if
any):
Sinking fund provisions: None
Redemption provisions: Redeemable at the Company's option at the times
and prices specified in the Final Prospectus
Other provisions: As provided in the Indenture
Closing Date, Time and Location: August 4, 1999 at 10:00 a.m. at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019
Type of Offering: Non-delayed
Date referred to in Section 5(f) after which the Company may offer or sell debt
securities issued or guaranteed by the Company without the consent of the
Representative(s): 90 days after the Execution Time
Modification of items to be covered by the letter from Arthur Andersen LLP
delivered pursuant to Section 6(e) at the Execution Time: None
<PAGE>
SCHEDULE II
Principal Amount
of Securities to
Underwriters be Purchased
============ ================
Salomon Smith Barney Inc. $ 62,500,000
CIBC World Markets Corp. $ 25,000,000
Morgan Stanley & Co. Incorporated $ 25,000,000
Credit Suisse First Boston Corporation $ 3,125,000
Banc One Capital Markets, Inc. $ 3,125,000
ABN AMRO Incorporated $ 3,125,000
SG Cowen Securities Corporation $ 3,125,000
Total $125,000,000
============
Exhibit 1.2
EXECUTION COPY
Swift Energy Company
Common Stock
Underwriting Agreement
New York, New York
July 30, 1999
To the Representatives named in Schedule I hereto of the Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
Swift Energy Company, a corporation organized under the laws of the State
of Texas (the "Company"), proposes to sell to the several underwriters named in
Schedule II hereto (the "Underwriters"), for whom you (the "Representatives")
are acting as representatives, the number of shares of Common Stock, $.01 par
value ("Common Stock"), of the Company set forth in Schedule I hereto (the
"Securities") (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). The Company also proposes to
grant to the Underwriters an option to purchase up to the number of additional
shares of Common Stock set forth in Schedule II hereto to cover over-allotments
(the "Option Securities"; the Option Securities, together with the Underwritten
Securities, being hereinafter called the "Securities"). To the extent there are
no additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue date of the
Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be, deemed to be incorporated therein by reference. Certain terms used
herein are defined in Section 17 hereof.
1. Representations and Warranties. The Company represents and warrants to,
and agrees with, each Underwriter as set forth below in this Section 1.
<PAGE>
2
(a) The Company meets the requirements for use of Form S-3 under the
Act and has prepared and filed with the Commission a registration statement
(the file number of which is set forth in Schedule I hereto) on Form S-3,
including a related basic prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or more
amendments thereto and a Preliminary Final Prospectus, each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: (1) after the Effective Date of such
registration statement, a final prospectus supplement relating to the
Securities in accordance with Rules 430A and 424(b), (2) prior to the
Effective Date of such registration statement, an amendment to such
registration statement (including the form of final prospectus supplement)
or (3) a final prospectus in accordance with Rules 415 and 424(b). In the
case of clause (1), the Company has included all information (other than
Rule 430A Information) required by the Act and the rules thereunder to be
included in such registration statement and the Final Prospectus. As filed,
such final prospectus supplement or such amendment and form of final
prospectus supplement shall contain all Rule 430A Information, together
with all other such required information, and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final Prospectus) as
the Company has advised you, prior to the Execution Time, will be included
or made therein. The Registration Statement, at the Execution Time, is in
compliance with Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or will, and
when the Final Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date on
which Option Securities are purchased, if such date is not the Closing Date
(a "settlement date"), the Final Prospectus (and any supplement thereto)
will, comply in all material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement did
not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective Date,
the Final Prospectus, if not filed pursuant to Rule 424(b), will not, and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date
and any settlement date, the Final Prospectus (together with any supplement
thereto) will not, include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement or the Final Prospectus (or any supplement thereto)
in reliance upon and in conformity with information furnished to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Final
Prospectus (or any supplement thereto).
(c) The Company and its subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
<PAGE>
3
("Environmental Laws"), (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have
not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability would not, individually
or in the aggregate, have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth
in or contemplated in the Final Prospectus (exclusive of any supplement
thereto). Except as set forth in the Prospectus, neither the Company nor
any of the subsidiaries has been named as a "potentially responsible party"
under the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended.
(d) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws, or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto).
(e) Each of the Company and its Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described in
the Final Prospects Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification.
(f) All the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final Prospectus,
all outstanding shares of capital stock of the Subsidiaries are owned by
the Company either directly or through wholly owned subsidiaries free and
clear of any perfected security interest or any other security interests,
claims, liens or encumbrances.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
<PAGE>
4
not jointly, to purchase from the Company, at a purchase price of $9.75 per
share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule II hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not
jointly, up to 600,000 Option Securities at the same purchase price per
share as the Underwriters shall pay for the Underwritten Securities. Said
option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised
in whole or in part at any time (but not more than once) on or before the
30th day after the date of the Prospectus upon written or telegraphic
notice by the Representatives to the Company setting forth the number of
shares of the Option Securities as to which the several Underwriters are
exercising the option and the settlement date. The number of shares of the
Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of
the Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made on the date and at the time specified in
Schedule I hereto or at such time on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Delivery of the Underwritten Securities and
the Option Securities shall be made through the facilities of The Depository
Trust Company unless the Representatives shall otherwise instruct in writing.
If the option provided for in Section 2(b) hereof is exercised after the
third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 388
Greenwich Street, New York, New York, on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Securities for sale to the public as set forth in the Final
Prospectus.
<PAGE>
5
5. Agreements. The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the Registration
Statement or supplement (including the Final Prospectus or any Preliminary
Final Prospectus) to the Basic Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment or supplement to
which you reasonably object on a timely basis. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Final Prospectus is otherwise
required under Rule 424(b), the Company will cause the Final Prospectus,
properly completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed and if requested, will provide evidence satisfactory
to the Representatives of such timely filing. The Company will promptly
advise the Representatives (1) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when the
Final Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(3) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (4) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Final Prospectus or for any
additional information, (5) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Final Prospectus to comply
with the Act or the Exchange Act, the Company promptly will (1) notify the
Representatives of such event, (2) prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or omission or
effect such compliance and (3) supply any supplemented Final Prospectus to
you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
<PAGE>
6
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, copies of the signed Registration
Statement (including exhibits thereto) and to each other Underwriter a copy
of the Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by the
Act, as many copies of each Preliminary Final Prospectus and the Final
Prospectus and any supplement thereto as the Representatives may reasonably
request. The Company will be responsible for the expenses of printing or
other production of all documents relating to the offering.
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the Securities and will pay any
fee of the National Association of Securities Dealers, Inc., in connection
with its review of the offering; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the offering
or sale of the Securities, in any jurisdiction where it is not now so
subject.
(f) The Company will not, without the prior written consent of Salomon
Smith Barney Inc., offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any other shares of Common Stock or any securities convertible into, or
exercisable, or exchangeable for, shares of Common Stock; or publicly
announce an intention to effect any such transaction, until the Business
Day set forth on Schedule I hereto, provided, however, that the Company may
issue and sell Common Stock pursuant to any employee stock option plan,
stock ownership plan or dividend reinvestment plan of the Company in effect
at the Execution Time and the Company may issue Common Stock issuable upon
the conversion of securities or the exercise of warrants outstanding at the
Execution Time.
(g) The Company will not take, directly or indirectly, any action
designed to or which will constitute or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
6. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
<PAGE>
7
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
will be filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) The Company shall have requested and caused Jenkens & Gilchrist, A
Professional Corporation, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) each of the Company and SWENCO-Western, Inc., Swift Energy
Marketing Company and Swift Energy International, Inc. is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its
business as described in the Final Prospectus, and is duly qualified
to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification
wherein it owns or leases material properties or conducts material
business and where the failure to be so qualified would have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Final Prospectus;
(ii) the Company's authorized equity capitalization is as set
forth in the Final Prospectus; the capital stock of the Company
conforms in all material respects to the description thereof contained
in the Final Prospectus; the outstanding shares of Common Stock have
been duly and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly authorized,
and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the
Securities are duly listed and admitted and authorized for trading,
subject to official notice of issuance on the New York Stock Exchange;
the certificates for the Securities are in valid and sufficient form;
and the holders of outstanding shares of capital stock of the Company
are not entitled to preemptive or other rights to subscribe for the
Securities; and, except as set forth in the Final Prospectus, or
designated in such opinion, no options, warrants or other rights to
<PAGE>
8
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
capital stock of or ownership interests in the Company are
outstanding;
(iii) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Final Prospectus, and to the
knowledge of such counsel, there is no contract or other document of a
character required to be described in the Registration Statement or
Final Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements included in the
Final Prospectus under the headings "Risk Factors--We may not finalize
our pending litigation settlement", "Risk Factors--Governmental
regulations are costly and complex, especially regulations relating to
environmental protection" and "Business and Properties--Litigation"
and incorporated by reference under the heading "Legal Proceedings"
from the Company's report on Form 10-K for the year ended December 31,
1998 each fairly summarize the matters therein described;
(iv) the Registration Statement has become effective under the
Act; any required filing of the Basic Prospectus, any Preliminary
Final Prospectus and the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Final Prospectus (other than the financial
statements and other financial or reserve information contained
therein and the Statement of Eligibility and Qualification on Form T-1
of the Trustee, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the Exchange Act; they have participated
in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company
reserve engineers and the Underwriters at which the contents of the
Registration Statement and the Registration Statement and Final
Prospectus and related matters were discussed, and although such
counsel is not passing upon and does not assume any responsibility for
and have not verified the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
except for such statements under the heading "Description of Capital
Stock" in the Basic Prospectus and such statements referred to in
subsection (iii) hereof, and have not made any independent check or
verification thereof, on the basis of the foregoing (relying as to
materiality to a large extent upon facts provided by officers and
other representatives of the Company) no facts have come to the
attention of such counsel that lead such counsel to believe that
either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable), or any amendment thereof made prior to the Closing Date
as of the date of such amendment, contained an untrue statement of a
material fact or omitted to state any material fact required to be
<PAGE>
9
stated therein or necessary to make the statements therein not
misleading or that the Final Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date
as of the date of such amendment or supplement) and as of the Closing
Date contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief or opinion with
respect to the exhibits, the Statement of Eligibility (Form T-1), and
the financial statements and other financial, reserve and statistical
data included therein).
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Final Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(vii) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Final Prospectus and such
other approvals (specified in such opinion) as have been obtained;
(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or
its subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or its subsidiaries is a party or bound or to which its or
their property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or its
subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or its subsidiaries or any of its or their
properties; and
(ix) to the knowledge of such counsel, no holders of securities
of the Company have rights to the registration of such securities
under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States of
New York and Texas or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other counsel of
<PAGE>
10
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters, provided that such counsel may assume that the
applicable law in New York is similar to the applicable law in the State of
Texas, and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
References to the Final Prospectus in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Representatives shall have received from Cravath, Swaine &
Moore, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Registration Statement, the Final
Prospectus (together with any supplement thereto) and other related matters
as the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have reviewed the Registration Statement, the Final Prospectus, any
supplements to the Final Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus
(exclusive of any supplement thereto), there has been no material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in
the Final Prospectus (exclusive of any supplement thereto).
(e) The Company shall have requested and caused Arthur Andersen LLP to
have furnished to the Representatives, at the Execution Time and at the
Closing Date, letters (which may refer to letters previously delivered to
one or more of the Representatives), dated respectively as of the Execution
Time and as of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within
<PAGE>
11
the meaning of the Act and the Exchange Act and the respective applicable
rules and regulations adopted by the Commission thereunder and that they
have performed a review of the unaudited interim financial information of
the Company for the six-month period ended June 30, 1999, and as at June
30, 1999, in accordance with Statement on Auditing Standards No. 71, and
stating in effect, except as provided in Schedule I hereto, that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and the Final Prospectus and reported on by
them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related rules and regulations adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review, in accordance with standards established under
Statement on Auditing Standards No. 71, of the unaudited interim
financial information for the six-month period ended June 30, 1999,
and as at June 30, 1999; carrying out certain specified procedures
(but not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders, directors and the
committees of the Company and the Subsidiaries; and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1998, nothing came
to their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated by reference in the Registration Statement and the
Final Prospectus do not comply as to form in all material
respects with applicable accounting requirements of the Act and
with the related rules and regulations adopted by the Commission
with respect to financial statements included or incorporated by
reference in quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements included or incorporated by reference in the
Registration Statement and the Final Prospectus;
(2) with respect to the period subsequent to June 30, 1999,
there were any changes, at a specified date not more than five
Business Days prior to the date of the letter, in the long-term
debt of the Company and its subsidiaries or capital stock of the
Company or decreases in the stockholders' equity of the Company
as compared with the amounts shown on the June 30, 1999
consolidated balance sheet included or incorporated by reference
in the Registration Statement and the Final Prospectus, or for
the period from July 1, 1999, to such specified date there were
any decreases, as compared with the corresponding period in the
preceding quarter in net revenues or income before income taxes
<PAGE>
12
or in total or per share amounts of net income of the Company and
its subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives;
(3) the information included or incorporated by reference in
the Registration Statement and Final Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data), Item 302
(Supplementary Financial Information), Item 402 (Executive
Compensation) and Item 503(d) (Ratio of Earnings to Fixed
Charges) is not in conformity with the applicable disclosure
requirements of Regulation S-K; and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Final Prospectus and in
Exhibit 12 to the Registration Statement, including the information
set forth under the caption "Capitalization" in the Final Prospectus,
the information included or incorporated by reference in the Company's
Annual Report on Form 10-K, incorporated by reference in the
Registration Statement and the Final Prospectus, and the information
included in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q,
incorporated by reference in the Registration Statement and the Final
Prospectus and any information of an accounting or financial nature
appearing in a Current Report on Form 8-K incorporated by reference in
the Registration Statement and the Final Prospectus, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
References to the Final Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (e) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Final Prospectus (exclusive of any
supplement thereto) the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole reasonable judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Final Prospectus (exclusive of any supplement thereto).
<PAGE>
13
(g) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(h) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(i) The Securities shall have been listed and admitted and
authorized for trading on the New York Stock Exchange, and
satisfactory evidence of such actions shall have been provided to the
Representatives.
(j) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each person listed in Schedule I hereto addressed to the
Representatives.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancelation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the offices of Cravath, Swaine & Moore, counsel for the Underwriters, at 825
Eighth Avenue, New York, New York 10019, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Underwriters, the Company will reimburse the Underwriters severally through
Salomon Smith Barney Inc. on demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or other wise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
<PAGE>
14
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, subject to the
procedures set forth in paragraph (c) of this Section 8, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
(i) that the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein and (ii) with respect to any
untrue statement or omission of a material fact made in any Preliminary Final
Prospectus, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any Underwriter (or any of the directors, officers,
employees and agents of such Underwriter or any controlling person or such
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased the Securities concerned, to the extent that any such loss,
claim, damage or liability of such Underwriter occurs under the circumstance
where it shall have been determined by a court of competent jurisdiction by
final and nonappealable judgment that (x) the Company had previously furnished
copies of the Final Prospectus to the Representatives, (y) the untrue statement
or omission of a material fact contained in the Preliminary Final Prospectus was
corrected in the Final Prospectus and (z) there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the Final Prospectus. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but
only with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to
any liability which any Underwriter may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the
cover page regarding delivery of the Securities and, under the heading
"Underwriting" or "Plan of Distribution", (i) the list of Underwriters and
their respective participation in the sale of the Securities, (ii) the
sentences related to concessions and reallowances and (iii) the paragraph
related to stabilization, syndicate covering transactions and penalty bids
in any Preliminary Final Prospectus and the Final Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Final Prospectus or the Final
Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
<PAGE>
15
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have been
advised in writing by such counsel that there may be legal defenses
available to it and/or other indemnified parties which are different from,
in conflict with, or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. The indemnifying
party shall not be liable for any settlement of any such action effected
without its written consent, which shall not be unreasonably withheld or
delayed, but if settled with the written consent of the indemnifying party,
the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement. An indemnifying party will not, without the prior written
consent of the indemnified parties, which consent shall not be unreasonably
withheld or delayed, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or
proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters
severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and by the Underwriters on the other from
the offering of the Securities; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for
any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company and the Underwriters severally shall contribute
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and of
the Underwriters on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed
to be equal to the total net proceeds from the offering (before deducting
<PAGE>
16
expenses) received by it, and benefits received by the Underwriters shall
be deemed to be equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of the Final Prospectus.
Relative fault shall be determined by reference to, among other things,
whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information provided by the Company on the one hand or the Underwriters on
the other, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such untrue statement
or omission. The Company and the Underwriters agree that it would not be
just and equitable if contribution were determined by pro rata allocation
or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls
an Underwriter within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms
and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule II hereto bears to the aggregate amount
of Securities set forth opposite the names of all the remaining Underwriters)
the Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Securities set
forth in Schedule II hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any nondefaulting
Underwriter or the Company. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date shall be postponed for such period,
not exceeding five Business Days, as the Representatives shall determine in
order that the required changes in the Registration Statement and the Final
Prospectus or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by written notice given to the
Company prior to delivery of and payment for the Securities, if at any time
prior to such time (i) trading in the Company's Common Stock shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
<PAGE>
17
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole reasonable judgment of the Representatives, impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors, employees, agents or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telefaxed to the Salomon Smith Barney Inc. General Counsel (fax no.: (212)
816-7912) and confirmed to the General Counsel, Salomon Smith Barney Inc., at
388 Greenwich Street, New York, New York, 10013, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telefaxed to (281) 874-2701
and confirmed to it at 16825 Northchase Drive, Suite 400, Houston, Texas 77060,
Attention: Chief Financial Officer.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers,
directors, employees, agents and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience only and
shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement, shall
have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in paragraph 1(a)
above contained in the Registration Statement at the Effective Date including
any Preliminary Final Prospectus.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
<PAGE>
18
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the final prospectus supplement relating to
the Securities that was first filed pursuant to Rule 424(b) after the Execution
Time, together with the Basic Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Securities and the
offering thereof and is used prior to filing of the Final Prospectus, together
with the Basic Prospectus.
"Registration Statement" shall mean the registration statement referred to
in paragraph 1(a) above, including exhibits and financial statements, as amended
at the Execution Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any post-effective
amendment thereto or any Rule 462(b) Registration Statement becomes effective
prior to the Closing Date, shall also mean such registration statement as so
amended or such Rule 462(b) Registration Statement, as the case may be. Such
term shall include any Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the
offering covered by the registration statement referred to in Section 1(a)
hereof.
"Subsidiary" shall mean SWENCO-Western, Inc., Swift Energy Marketing
Company and Swift Energy International, Inc. and any other subsidiary of the
Company that is a "significant subsidiary" of the Company within the meaning of
Rule 1-02 under Regulation S-X promulgated by the Commission, substituting five
percent for 10 percent in the conditions specified therein and substituting
"proportionate share of the total net revenue (after intercompany eliminations)"
for "equity in the income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in accounting principle"
and "such revenue" for "such income" in clause (3) of such definition; provided,
<PAGE>
19
however, this definition shall not include any limited partnerships of which the
Company is the managing general partner.
<PAGE>
20
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
SWIFT ENERGY COMPANY
By: /s/ John R. Alden
-----------------------------------------
John R. Alden
Senior Vice President-Finance
The foregoing Agreement is hereby confirmed and accepted as of the date
specified in Schedule I hereto.
SALOMON SMITH BARNEY INC.
CIBC WORLD MARKETS, CORP.
CREDIT SUISSE FIRST BOSTON CORPORATION
DAIN RAUSCHER WESSELS, A DIVISION OF DAIN RAUSCHER INCORPORATED
JEFFERIES & COMPANY, INC.
By: SALOMON SMITH BARNEY INC.
By: /s/ Angela M. Reiton
-------------------------
Angela M. Reiton
Vice President
Title:
For themselves and the other several Underwriters, if any, named in Schedule II
to the foregoing Agreement.
<PAGE>
21
SCHEDULE I
Underwriting Agreement dated July 30, 1999
Registration Statement No. 333-81651
Representative(s): Salomon Smith Barney Inc.
CIBC World Markets Corp.
Credit Suisse First Boston Corporation
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated
Jefferies & Company, Inc.
Title, Purchase Price and Description of Securities:
Title: Common Stock, $.01 par value
Number of Shares to be sold by the Company: 4,000,000
Price to Public per Share (include accrued dividends, if any): $9.75
Price to Public -- total: $39,000,000
Underwriting Discount per Share: $0.53625
Underwriting Discount -- total: $2,145,000
Proceeds to Company per Share: $9.21375
Proceeds to Company -- total: $36,855,000
Other provisions:
Closing Date, Time and Location: August 4, 1999 at 10:00 a.m. at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019
Type of Offering: Non-Delayed
Date referred to in Section 5(f) after which the Company may offer or sell
securities issued or guaranteed by the Company without the consent of the
Representative(s): 180 days after the Execution Time
Modification of items to be covered by the letter from Arthur Andersen LLP
delivered pursuant to Section 6(e) at the Execution Time: None
<PAGE>
22
Persons to deliver letters pursuant to 6(j):
A. Earl Swift
Virgil N. Swift
G. Robert Evans
Raymond O. Loen
Henry C. Montgomery
Clyde W. Smith
Harold J. Withrow
Terry E. Swift
John R. Alden
James M. Kitterman
<PAGE>
23
SCHEDULE II
Number of
Underwritten Number of
Securities Option Securities
Underwriters to be Purchased To Be Purchased
--------------- -----------------
Salomon Smith Barney Inc. 1,600,000 240,000
CIBC World Markets Corp. 1,000,000 150,000
Credit Suisse First Boston 1,000,000 150,000
Corporation
Dain Rauscher Wessels, a division of 200,000 30,000
Dain Rauscher Incorporated
Jefferies & Company, Inc. 200,000 30,000
------------ ------------
Total 4,000,000 600,000
============ ============
<PAGE>
1
[Form of Lock-Up Agreement] EXHIBIT A
[Letterhead of officer, director or major shareholder]
Swift Energy Company
Public Offering of Common Stock
, 1999
Salomon Smith Barney Inc.
CIBC World Markets Corp.
Credit Suisse First Boston Corporation
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated
Jefferies & Company, Inc.
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between Swift Energy
Company a Texas corporation (the "Company"), and [each of] you as
representative[s] of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, $.01 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Salomon Smith Barney Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing of) a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of the Underwriting Agreement, other than shares of Common Stock disposed of as
bona fide gifts approved by Salomon Smith Barney Inc..
<PAGE>
2
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
Yours very truly,
[Signature of officer, director or major stockholder]
[Name and address of officer, director or major stockholder]
Exhibit 4.1
SWIFT ENERGY COMPANY,
as Issuer
and
BANK ONE, N.A.
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 4, 1999
To Indenture Dated as of July 29, 1999
Providing for Issuance of
10.25% Senior Subordinated Notes due 2009
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
RECITALS OF
THE COMPANY ................................................................... 1
SECTION 1 Creation of 10.25% Notes.......................................... 2
SECTION 2 Definitions........................................................ 3
SECTION 3 Amendments to Article III of the Original Indenture................ 32
Section 3.02 Notice of Redemption; Selection of
Debt Securities
Section 3.03 Payment of Debt Securities Called
for Redemption
Section 3.06 Optional Redemption
Section 3.07 No Mandatory Sinking Fund
SECTION 4 Amendments to Article IV of Original Indenture..................... 33
Section 4.08 Maintenance of Properties
Section 4.09 Payment of Taxes and Other Claims
Section 4.10 Limitation on Liens
Section 4.11 Limitation on Indebtedness
Section 4.12 Limitation on Restricted Payments
Section 4.13 Limitation on Issuance or Sale of
Capital Stock of Restricted Subsidiaries
Section 4.14 Limitation on Asset Sales
Section 4.15 Incurrence of Layered Indebtedness
Section 4.16 Limitation on Transactions with affiliates
Section 4.17 Limitation on Restrictions on Distributions
from Restricted Subsidiaries
Section 4.18 Future Subsidiary Guarantors
Section 4.19 Restricted and Unrestricted Subsidiaries
Section 4.20 Change of Control
SECTION 5 Amendments to Article VI of the Original Indenture................. 46
Section 6.01 Events of Default
Section 6.09 Waiver of Stay or Extension Laws
SECTION 6 Amendments to Article VII of the Original Indenture................ 47
i
<PAGE>
SECTION 7 Amendments to Article IX of the Original Indenture................. 47
SECTION 8 Amendments to Article X of the Original Indenture...............
48
SECTION 9 Applicability of and Amendments to Article XI of the
Original Indenture.................................................
49
SECTION 10 Applicability of and Amendments to Article XII of the
Original Indenture...................................................50
SECTION 11 Subsidiary Guarantees.............................................. 51
SECTION 12 Governing Law...................................................... 57
SECTION 13 Counterparts....................................................... 58
EXHIBIT A
EXHIBIT B
</TABLE>
ii
<PAGE>
1
FIRST SUPPLEMENTAL INDENTURE, dated as of August 4, 1999 (this "First
Supplemental Indenture"), to the Indenture dated as of July 29, 1999 (the
"Original Indenture") between SWIFT ENERGY COMPANY, a Texas corporation, as
issuer (the "Company"), and BANK ONE, N.A., as trustee (the "Trustee").
WHEREAS, the Company and the Trustee have heretofore executed and delivered
the Original Indenture to provide for the issuance of its securities to be
issued in one or more registered series;
WHEREAS, Section 9.01 of the Original Indenture provides, among other
things, that the Company and the Trustee may without the consent of Holders
enter into Indentures supplemental to the Original Indenture to, among other
things, (a) add to, change or eliminate any of the provisions of the Original
Indenture in respect of one or more series of Debt Securities; provided,
however, that any such addition, change or elimination not otherwise permitted
under Section 9.01 shall (i) neither (A) apply to any Debt Security of any
series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (B) modify the rights of the
Holder of any such previously issued Debt Security with respect to such
provision or (ii) shall become effective only when there is no such Debt
Security Outstanding and (b) establish the form or terms of Debt Securities of
any series as permitted by Sections 2.01 and 2.03.;
WHEREAS, the Company desires to provide for the issuance of a new series of
Debt Securities to be designated as the "10.25% Senior Subordinated Notes due
2009" (the "10.25% Notes"), and to set forth the terms that will be applicable
thereto.
WHEREAS, all action on the part of the Company necessary to authorize the
issuance of the 10.25% Notes under the Original Indenture and this First
Supplemental Indenture (the Original Indenture, as amended and supplemented by
this First Supplemental Indenture, being hereinafter called the "Indenture") has
been duly taken; and
WHEREAS, all acts and things necessary to make the 10.25% Notes, when
executed by the Company and authenticated and delivered by the Trustee as
provided in the Original Indenture, the legal, valid and binding obligations of
the Company, and to constitute these presents a valid and binding supplemental
indenture according to its terms binding on the Company, have been done and
performed, and the execution of this First Supplemental Indenture and the
creation and issuance under the Indenture of the 10.25% Notes have in all
respects been duly authorized, and the Company in the exercise of the legal
right and power vested in it, executes this First Supplemental Indenture and
proposes to create, execute, issue and deliver the 10.25% Notes.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That, in order to establish the designation, form, terms and provisions of,
and to authorize the authentication and delivery of the 10.25% Notes and in
consideration of the acceptance of the 10.25% Notes by the Holders thereof and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
2
SECTION 1. Creation of 10.25% Notes. Pursuant to Sections 2.01 and 2.03 of
the Original Indenture, there is hereby created a new series of Debt Securities
designated as the "10.25% Senior Subordinated Notes due 2009", limited in
aggregate principal amount to $225,000,000 (which are hereinafter defined as the
"10.25% Notes" for purposes this First Supplemental Indenture). The Trustee
shall authenticate 10.25% Notes for original issue in the aggregate principal
amount of $125,000,000 (the "Original 10.25% Notes"). The Original 10.25% Notes
shall be in the form specified in Exhibit A to this First Supplemental
Indenture, shall have the terms set forth therein and shall be entitled to the
benefits of the other provisions of the Original Indenture as modified by this
First Supplemental Indenture and specified herein.
With respect to any 10.25% Notes issued after the Issue Date (except for
10.25% Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other 10.25% Notes pursuant to Section 2.07, 2.08,
2.09, 2.15 or 3.03) (the "Additional 10.25% Notes"), there shall be established
in or pursuant to a resolution of the Board of Directors of the Company:
(a) that such Additional 10.25% Notes shall be issued as part of the
same series as the Original 10.25% Notes;
(b) the aggregate principal amount of such Additional 10.25% Notes
which may be authenticated and delivered under the Indenture, which shall
be in an aggregate principal amount not to exceed $100,000,000 (except for
Additional 10.25% Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other 10.25% Notes pursuant
to Section 2.07, 2.08, 2.09, 2.15 or 3.03 and except for Additional 10.25%
Notes which, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder);
(c) the issue price and issuance date of such Additional 10.25% Notes,
including the date from which interest on such Additional 10.25% Notes
shall accrue;
(d) if applicable, that such Additional 10.25% Notes shall be issuable
in whole or in part in the form of one or more Global Securities and, in
such case, the respective depositories for such Global Securities, the form
of any legend or legends that shall be borne by any such Global Security in
addition to or in lieu of that set forth in Section 2.15 or Exhibit A and
any circumstances in addition to or in lieu of those set forth in the
Indenture in which any such Global Security may be exchanged in whole or in
part for 10.25% Notes registered, and any transfer of such Global Security
in whole or in part may be registered, in the name or names of Persons
other than the depository for such Global Security or a nominee thereof;
and
(e) if applicable, that such Additional 10.25% Notes shall not be
registered under the Securities Act, but shall be issued pursuant to an
exemption from registration under the Securities Act bearing additional
appropriate legends and shall have the benefit of registration rights.
Except as set forth above, such Additional 10.25% Notes shall have the
terms set forth in Exhibit A to this First Supplemental Indenture and shall
<PAGE>
3
be entitled to the benefits of the other provisions of the Original
Indenture as modified by the First Supplemental Indenture and specified
herein.
SECTION 2. Definitions.
(a) Capitalized terms used herein and not otherwise defined shall have
the respective meanings assigned thereto in the Original Indenture.
(b) Solely for purposes of this First Supplemental Indenture and the
10.25% Notes, the definitions of "Affiliate," "Bank Indebtedness,"
"Capitalized Lease Obligation," "Capital Stock," "Commodity Price
Protection Agreement," "Credit Agreement," "Currency Exchange Protection
Agreement," "Designated Senior Indebtedness," "Disqualified Stock,"
"Guarantee," "Hedging Obligations," "Incur," "Indebtedness," "Interest Rate
Protection Agreement," "Lien," "Permitted Liens," "Person," "Preferred
Stock," "Representative," "Restricted Subsidiary," "Senior Indebtedness,"
"Stated Maturity," "Subsidiary" and "U.S. Government Obligations" are
deleted in their entirety.
(c) Solely for purposes of this First Supplemental Indenture and the
10.25% Notes, except as otherwise expressly provided or unless the context
otherwise requires, the following terms shall have the indicated meanings
(such meanings shall apply equally to both the singular and plural forms of
the respective terms):
"Additional Assets" means:
(a) any Property (other than cash, Permitted Short-Term Investments or
securities) used in the Oil and Gas Business or any business ancillary
thereto;
(b) Investments in any other Person engaged in the Oil and Gas
Business or any business ancillary thereto (including the acquisition from
third parties of Capital Stock of such Person) as a result of which such
other Person becomes a Restricted Subsidiary in compliance with Section
4.19;
(c) the acquisition from third parties of Capital Stock of a
Restricted Subsidiary; or
(d) Permitted Business Investments.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, the remainder of:
(a) the sum of:
(1) discounted future net revenues from proved oil and gas
reserves of the Company and its Restricted Subsidiaries calculated in
accordance with SEC guidelines before any state, federal or foreign
income taxes, as estimated by the Company and confirmed by a
nationally recognized firm of independent petroleum engineers in a
reserve report prepared as of the end of the Company's most recently
completed fiscal year for which audited financial statements are
available, as increased by, as of the date of determination, the
estimated discounted future net revenues from:
<PAGE>
4
(A) estimated proved oil and gas reserves acquired since such
year-end, which reserves were not reflected in such year-end reserve
report, and
(B) estimated oil and gas reserves attributable to upward
revisions of estimates of proved oil and gas reserves since such
year-end due to exploration, development or exploitation activities,
in each case calculated in accordance with SEC guidelines (utilizing
the prices utilized in such year-end reserve report),
and decreased by, as of the date of determination, the estimated
discounted future net revenues from:
(C) estimated proved oil and gas reserves produced or disposed of
since such year-end, and
(D) estimated oil and gas reserves attributable to downward
revisions of estimates of proved oil and gas reserves since such
year-end due to changes in geological conditions or other factors that
would, in accordance with standard industry practice, cause such
revisions, in each case calculated in accordance with SEC guidelines
(utilizing the prices utilized in such year-end reserve report),
provided that, in the case of each of the determinations made pursuant
to clauses (A) through (D), such increases and decreases shall be as
estimated by the Company's petroleum engineers, unless there is a
Material Change as a result of such acquisitions, dispositions or
revisions, in which event the discounted future net revenues utilized
for purposes of this clause (a)(1) shall be confirmed in writing by a
nationally recognized firm of independent petroleum engineers, and
(2) the capitalized costs that are attributable to oil and gas
properties of the Company and its Restricted Subsidiaries to which no
proved oil and gas reserves are attributable, based on the Company's books
and records as of a date no earlier than the date of the Company's latest
annual or quarterly financial statements, and
(3) the Net Working Capital on a date no earlier than the date of the
Company's latest annual or quarterly financial statements, and
(4) the greater of the net book value or the appraised value as
estimated by independent appraisers of other tangible assets (including,
without duplication, Investments in unconsolidated Restricted Subsidiaries)
of the Company and its Restricted Subsidiaries, as of a date no earlier
than the date of the Company's latest audited financial statements. For
these purposes, net book value shall be determined as of a date no earlier
than the date of our latest annual or quarterly financial statements, and
on a date no earlier than the date of our latest annual or quarterly
financial statements;
<PAGE>
5
(b) minus the sum of:
(1) minority interests, and
(2) any net gas balancing liabilities of the Company and its
Restricted Subsidiaries reflected in the Company's latest audited financial
statements, and
(3) to the extent included in (a)(1) above, the discounted future net
revenues, calculated in accordance with SEC guidelines (utilizing the
prices utilized in the Company's year-end reserve report), attributable to
reserves that are required to be delivered to third parties to fully
satisfy the obligations of the Company and its Restricted Subsidiaries with
respect to Volumetric Production Payments (determined, if applicable, using
the schedules specified with respect thereto), and
(4) the discounted future net revenues, calculated in accordance with
SEC guidelines, attributable to reserves subject to Dollar- Denominated
Production Payments that, based on the estimates of production and price
assumptions included in determining the discounted future net revenues
specified in (a)(1) above, would be necessary to fully satisfy the payment
obligations of the Company and its Restricted Subsidiaries with respect to
Dollar-Denominated Production Payments (determined, if applicable, using
the schedules specified with respect thereto).
If the Company changes its method of accounting from the full cost
method to the successful efforts method or a similar method of accounting,
"Adjusted Consolidated Net Tangible Assets" will continue to be calculated
as if the Company were still using the full cost method of accounting.
"Affiliate" of any specified Person means any other Person:
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person; or
(b) that beneficially owns or holds directly or indirectly 10% or more
of any class of the Voting Stock of such specified Person or of any
Subsidiary of 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.
"Asset Sale" means, with respect to any Person, any transfer,
conveyance, sale, lease or other disposition (collectively, "dispositions,"
and including dispositions pursuant to any consolidation or merger) by such
Person or any of its Restricted Subsidiaries in any single transaction or
series of transactions of:
<PAGE>
6
(a) shares of Capital Stock or other ownership interests of another
Person (including Capital Stock of Restricted Subsidiaries and Unrestricted
Subsidiaries); or
(b) any other Property of such Person or any of its Restricted
Subsidiaries;
provided, however, that the term "Asset Sale" shall not include:
(a) the disposition of Permitted Short-Term Investments, inventory,
accounts receivable, surplus or obsolete equipment or other Property
(excluding the disposition of oil and gas in place and other interests in
real property unless made in connection with a Permitted Business
Investment) in the ordinary course of business;
(b) the abandonment, assignment, lease, sublease or farm-out of oil
and gas properties, or the forfeiture or other disposition of such
properties pursuant to standard form operating agreements, in each case in
the ordinary course of business in a manner that is customary in the Oil
and Gas Business;
(c) the disposition of Property received in settlement of debts owing
to the Company or any Restricted Subsidiary as a result of foreclosure,
perfection or enforcement of any Lien or debt, which debts were owing to
the Company or any Restricted Subsidiary in the ordinary course of business
of the Company or such Restricted Subsidiary;
(d) for purposes of Section 4.12 only, any disposition that
constitutes a Restricted Payment made in compliance with Section 4.12;
(e) when used with respect to the Company, any disposition of all or
substantially all of the Property of the Company permitted pursuant to
Article X;
(f) the disposition of any Property by the Company or a Restricted
Subsidiary to the Company or a Wholly Owned Subsidiary;
(g) the disposition of any asset with a Fair Market Value of less than
$2.0 million; or
(h) any Production Payments and Reserve Sales, provided that any such
Production Payments and Reserve Sales, other than incentive compensation
programs on terms that are reasonably customary in the Oil and Gas Business
for geologists, geophysicists and other providers of technical services to
the Company or a Restricted Subsidiary, shall have been created, Incurred,
issued, assumed or Guaranteed in connection with the financing of, and
within 60 days after the acquisition of, the Property that is subject
thereto.
"Average Life" means, with respect to any Indebtedness, at any date of
determination, the quotient obtained by dividing:
(a) the sum of the products of:
<PAGE>
7
(1) the number of years (and any portion thereof) from the date
of determination to the date or dates of each successive scheduled
principal payment (including any sinking fund or mandatory redemption
payment requirements) or such Indebtedness, multiplied by
(2) the amount of each such principal payment,
(b) by the sum of all such principal payments.
"Bank Credit Facilities" means, with respect to any Person, one or
more debt facilities or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables or inventory financing (including through the sale of
receivables or inventory financing to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables or
inventory) or trade letters of credit, in each case together with any
extensions, revisions, refinancings or replacements thereof by a lender or
syndicate of lenders.
"Capital Lease Obligations" means any obligation that is required to
be classified and accounted for as a capital lease obligation in accordance
with GAAP, and the amount of Indebtedness represented by such obligation
shall be the capitalized amount of such obligation determined in accordance
with GAAP, and the Stated Maturity thereof shall be the date of the last
payment date of rent or any other amount due in respect of such obligation.
"Capital Stock" means, with respect to any Person, any shares or other
equivalents (however designated) of any class of corporate stock or
partnership interests or any other participations, rights, warrants,
options or other interests in the nature of an equity interest in such
Person, including Preferred Stock, but excluding any debt security
convertible or exchangeable into such equity interest.
"Change of Control" means the occurrence of any of the following
events.
(a) any "person" or "group" (within the meaning of Section 13(d)(3)
and 14(d)(2) of the Exchange Act or any successor provision to either of
the foregoing, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act) becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person will be deemed
to have "beneficial ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time) of 40 percent or more of the total voting power
of all classes of the Voting Stock of the Company;
(b) the sale, lease, assignment, conveyance, transfer or other
disposition, directly or indirectly, of all or substantially all the assets
of the Company and the Restricted Subsidiaries taken as a whole (other than
a disposition of such assets as an entirety or virtually as an entirety to
any Wholly Owned Subsidiary) shall have occurred;
(c) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company;
<PAGE>
8
(d) the Company consolidates with or merges into another Person or any
Person consolidates with or merges into the Company in any such event
pursuant to a transaction in which the outstanding Voting Stock of the
Company is reclassified into or exchanged for cash, securities or other
property, other than any such transaction where the outstanding Voting
Stock of the Company is reclassified into or exchanged for Voting Stock of
the surviving corporation and the holders of the Voting Stock of the
Company immediately prior to such transaction own, directly or indirectly,
not less than a majority of the Voting Stock of the surviving corporation
immediately after such transaction in substantially the same proportion as
before the transaction; or
(e) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Company's Board of Directors
(together with any new directors whose election or appointment by such
Board of Directors or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously approved by
such vote) cease for any reason to constitute a majority of the Company's
Board of Directors then in office.
"Consolidated Interest Coverage Ratio" means, as of the date of the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio (the "Transaction Date"), the ratio of:
(a) the aggregate amount of EBITDA of the Company and its consolidated
Restricted Subsidiaries for the four full fiscal quarters immediately prior
to the Transaction Date for which financial statements are available; to
(b) the aggregate Consolidated Interest Expense of the Company and its
Restricted Subsidiaries that is anticipated to accrue during a period
consisting of the fiscal quarter in which the Transaction Date occurs and
the three fiscal quarters immediately subsequent thereto (based upon the
pro forma amount and maturity of, and interest payments in respect of,
Indebtedness of the Company and its Restricted Subsidiaries expected by the
Company to be outstanding on the Transaction Date), assuming for the
purposes of this measurement the continuation of market interest rates
prevailing on the Transaction Date and base interest rates in respect of
floating interest rate obligations equal to the base interest rates on such
obligations in effect as of the Transaction Date, provided that if the
Company or any of its Restricted Subsidiaries is a party to any Interest
Rate Protection Agreement that would have the effect of changing the
interest rate on any Indebtedness of the Company or any of its Restricted
Subsidiaries for such four quarter period (or a portion thereof), the
resulting rate shall be used for such four quarter period or portion
thereof; provided further that any Consolidated Interest Expense with
respect to Indebtedness Incurred or retired by the Company or any of its
Restricted Subsidiaries during the fiscal quarter in which the Transaction
Date occurs shall be calculated as if such Indebtedness was so Incurred or
retired on the first day of the fiscal quarter in which the Transaction
Date occurs.
In addition, if at any time since the beginning of the four full fiscal quarter
period preceding the Transaction Date through and including the Transaction
Date:
<PAGE>
9
(a) the Company or any of its Restricted Subsidiaries shall have
engaged in any Asset Sale, EBITDA for such period shall be reduced by an
amount equal to the EBITDA (if positive), or increased by an amount equal
to the EBITDA (if negative), directly attributable to the assets that are
the subject of such Asset Sale for such period calculated on a pro forma
basis as if such Asset Sale and any related retirement of Indebtedness had
occurred on the first day of such period; or
(b) (1) the Company or any of its Restricted Subsidiaries shall have
acquired or made any Investment in any material assets, or
(2) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is such an Investment or
acquisition,
EBITDA shall be calculated on a pro forma basis as if such Investments
or asset acquisitions had occurred on the first day of such four
fiscal quarter period.
"Consolidated Interest Expense" means, with respect to any Person for
any period, without duplication:
(a) the sum of:
(1) the aggregate amount of cash and noncash interest expense
(including capitalized interest) of such Person and its Restricted
Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP in respect of Indebtedness, including:
(A) any amortization of debt discount,
(B) net costs associated with Interest Rate Protection
Agreements (including any amortization of discounts),
(C) the interest portion of any deferred payment obligation,
(D) all accrued interest, and
(E) all commissions, discounts, commitment fees, origination
fees and other fees and charges owed with respect to Bank Credit
Facilities and other Indebtedness
paid , accrued or scheduled to be paid or accrued during such
period, and
(2) Disqualified Stock Dividends of such Person (and of its
Restricted Subsidiaries if paid to a Person other than such Person or
its Restricted Subsidiaries) and Preferred Stock Dividends of such
Person's Restricted Subsidiaries if paid to a Person other than such
Person or its other Restricted Subsidiaries, and
(3) the portion of any obligation of such Person or its
Restricted Subsidiaries in respect of any Capital Lease Obligation
allocable to interest expense in accordance with GAAP, and
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10
(4) the portion of any rental obligation of such Person or its
Restricted Subsidiaries in respect of any Sale and Leaseback
Transaction that is Indebtedness allocable to interest expense
(determined as if such obligation were treated as a Capital Lease
Obligation), and
(5) to the extent any Indebtedness of any other Person (other
than Restricted Subsidiaries) is Guaranteed by such Person or any of
its Restricted Subsidiaries, the aggregate amount of interest paid,
accrued or scheduled to be paid or accrued by such other Person during
such period attributable to any such Indebtedness; less
(b) to the extent included in (a) above, amortization or write-off of
deferred financing costs (other than debt discounts) of such Person and its
Restricted Subsidiaries during such period;
in the case of both (a) and (b) above, after elimination of
intercompany accounts among such Person and its Restricted Subsidiaries and
as determined in accordance with GAAP.
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or net loss, as the case may be) of such Person and
its Restricted Subsidiaries for such period on a consolidated basis,
determined in accordance with GAAP, provided that there shall be excluded
therefrom, without duplication:
(a) items classified as extraordinary gains or losses net of tax (less
all fees and expenses relating thereto);
(b) any gain or loss net of taxes (less all fees and expenses relating
thereto) realized on the sale or other disposition of Property, including
the Capital Stock of any other Person (but in no event shall this clause
(b) apply to any gains or losses on the sale in the ordinary course of
business of oil, gas or other hydrocarbons produced or manufactured);
(c) the net income of any Restricted Subsidiary of such specified
Person to the extent the transfer to that Person of that income is
restricted by contract or otherwise, except for any cash dividends or cash
distributions actually paid by such Restricted Subsidiary to such Person
during such period;
(d) the net income (or loss) of any other Person in which such
specified Person or any of its Restricted Subsidiaries has an interest
(which interest does not cause the net income of such other Person to be
consolidated with the net income of such specified Person in accordance
with GAAP or is an interest in a consolidated Unrestricted Subsidiary),
except to the extent of the amount of cash dividends or other cash
distributions actually paid to such Person or its consolidated Restricted
Subsidiaries by such other Person during such period;
(e) for the purposes of Section 4.12 only, the net income of any
Person acquired by such specified Person or any of its Restricted
Subsidiaries in a pooling- of-interest transaction for any period prior to
the date of such acquisition;
<PAGE>
11
(f) any gain or loss, net of taxes, realized on the termination of any
employee pension benefit plan;
(g) any adjustments of a deferred tax liability or asset pursuant to
Statement of Financial Accounting Standards No. 109 that result from
changes in enacted tax laws or rates;
(h) the cumulative effect of a change in accounting principles;
(i) any write-downs of non-current assets, provided that any ceiling
limitation write-downs under SEC guidelines shall be treated as capitalized
costs, as if such write-downs had not occurred; and
(j) any non-cash compensation expense realized upon issuance of stock
under an employee stock purchase plan or for grants of performance shares,
stock options or stock awards to officers, directors and employees of the
Company or any of its Restricted Subsidiaries.
"Consolidated Net Worth" of any Person means the stockholders' equity
of such Person and its Restricted Subsidiaries, as determined on a
consolidated basis in accordance with GAAP, less (to the extent included in
stockholders' equity) amounts attributable to Disqualified Stock of such
Person or its Restricted Subsidiaries.
"Designated Senior Indebtedness" means:
(a) the Bank Credit Facilities; and
(b) any other Senior Indebtedness of the Company that has, at the time
of determination, an aggregate principal amount outstanding of at least
$10.0 million that is specifically designated in the instrument evidencing
such Senior Indebtedness and is designated in a notice delivered by the
Company to the holders or a Representative of the holders of such Senior
Indebtedness and the Trustee as "Designated Senior Indebtedness" of the
Company.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in either case at the option
of the holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(b) is or may become redeemable or repurchasable at the option of the
holder thereof, in whole or in part; or
(c) is convertible or exchangeable at the option of the holder thereof
for Indebtedness or Disqualified Stock;
on or prior to, in the case of clause (a), (b) or (c), the first anniversary of
the Stated Maturity of the 10.25% Notes.
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12
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Subsidiary. The amount of any such dividend shall be equal to the quotient
of such dividend divided by the difference between one and the maximum
statutory federal income tax rate (expressed as a decimal number between 1
and 0) then applicable to the Company.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with
all undertakings and obligations in connection therewith.
"EBITDA" means with respect to any Person for any period, the
Consolidated Net Income of such Person for such period:
(a) plus the sum of, to the extent reflected in the consolidated
income statement of such Person and its Restricted Subsidiaries for such
period from which Consolidated Net Income is determined and deducted in the
determination of such Consolidated Net Income, without duplication:
(1) income tax expense (but excluding income tax expense relating
to sales or other dispositions of Property, including the Capital
Stock of any other Person, the gains from which are excluded in the
determination of such Consolidated Net Income), and
(2) Consolidated Interest Expense, and
(3) depreciation and depletion expense, and
(4) amortization expense, and
(5) exploration expense (if applicable to the Company after the
Issue Date), and
(6) any other noncash charges including unrealized foreign
exchange losses (excluding, however, any such other noncash charge
that requires an accrual of or reserve for cash charges for any future
period);
(b) less the sum of, to the extent reflected in the consolidated
income statement of such Person and its Restricted Subsidiaries for such
period from which Consolidated Net Income is determined and added in the
determination of such Consolidated Net Income, without duplication:
(1) income tax recovery (excluding, however, income tax recovery
relating to sales or other dispositions of Property, including the
Capital Stock of any other Person, the losses from which are excluded
in the determination of such Consolidated Net Income), and
(2) unrealized foreign exchange gains.
"Equity Offering" means a bona fide underwritten sale to the public of
common stock of the Company pursuant to a registration statement (other
than a Form S- 8 or any other form relating to securities issuable under
any employee benefit plan of the Company) that is declared effective by the
Commission following the Issue Date.
<PAGE>
13
"Exchange Properties" means properties or assets used or useful in the
Oil and Gas Business received by the Company or a Restricted Subsidiary in
trade or as a portion of the total consideration for other such properties
or assets.
"Exchange Rate Contract" means, with respect to any Person, any
currency swap agreements, forward exchange rate agreements, foreign
currency futures or options, exchange rate collar agreements, exchange rate
insurance and other agreements or arrangements, or any combination thereof,
entered into by such Person in the ordinary course of its business for the
purpose of limiting or managing exchange rate risks to which such Person is
subject.
"Fair Market Value" means, with respect to any assets to be
transferred pursuant to any Asset Sale or Sale and Leaseback Transaction or
any noncash consideration or property transferred or received by any
Person, the fair market value of such consideration or other property as
determined by:
(a) any officer of the Company if such fair market value is less than
$5.0 million; and
(b) the Board of Directors of the Company as evidenced by a certified
resolution delivered to the Trustee if such fair market value is equal to
or in excess of $5.0 million.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, and including any Lien on
the assets of such Person securing obligations to pay Indebtedness of the
primary obligor, and any obligation of such Person:
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or any security for the payment of such
Indebtedness;
(b) to purchase Property, securities or services for the purpose of
assuring the holder of such Indebtedness of the payment of such
Indebtedness; or
(c) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness (and "Guaranteed", "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing);
provided, however, that a Guarantee by any Person shall not include
(a) endorsements by such Person for collection or deposit, in either
case, in the ordinary course of business; or
<PAGE>
14
(b) a contractual commitment by one Person to invest in another Person
for so long as such Investment is reasonably expected to constitute a
Permitted Investment under clause (b) of the definition of Permitted
Investments.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or become liable (including by reason of a merger or
consolidation) in respect of such Indebtedness or other obligation or the
recording, as required pursuant to GAAP or otherwise, of any such
Indebtedness or obligation on the balance sheet of such Person (and
"Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in GAAP
that results in an obligation of such Person that exists at such time, and
is not theretofore classified as Indebtedness, becoming Indebtedness shall
not be deemed an Incurrence of such Indebtedness; provided further,
however, that solely for purposes of determining compliance with Section
4.11 amortization of debt discount shall not be deemed to be the Incurrence
of Indebtedness, provided that in the case of Indebtedness sold at a
discount, the amount of such Indebtedness shall at all times be the
aggregate principal amount at Stated Maturity. For purposes of this
definition, Indebtedness of the Company or a Restricted Subsidiary held by
a Wholly Owned Subsidiary shall be deemed to be Incurred by the Company or
such Restricted Subsidiary in the event such Indebtedness is transferred to
a Person other than the Company or a Wholly Owned Subsidiary.
"Indebtedness" means at any time (without duplication), with respect
to any Person, whether recourse is to all or a portion of the assets of
such Person, and whether or not contingent:
(a) any obligation of such Person for borrowed money;
(b) any obligation of such Person evidenced by bonds, debentures,
notes, Guarantees or other similar instruments, including any such
obligations Incurred in connection with the acquisition of Property, assets
or business;
(c) any reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person;
(d) any obligation of such Person issued or assumed as the deferred
purchase price of Property or services (other than Trade Accounts Payable);
(e) any Capital Lease Obligation of such Person;
(f) the maximum fixed redemption or repurchase price of Disqualified
Stock of such Person at the time of determination;
(g) any Preferred Stock of any Restricted Subsidiary, provided
that such Restricted Subsidiary is not a Subsidiary Guarantor;
(h) any payment obligation of such Person under Exchange Rate
Contracts, Interest Rate Protection Agreements, Oil and Gas Hedging
Contracts or under any similar agreements or instruments;
<PAGE>
15
(i) any obligation to pay rent or other payment amounts of such Person
with respect to any Sale and Leaseback Transaction to which such Person is
a party;
(j) any obligation of the type referred to in clauses (a) through (h)
of this definition of another Person and all dividends of another Person
the payment of which, in either case, such Person has Guaranteed or is
responsible or liable, directly or indirectly, as obligor, Guarantor or
otherwise; and
(k) all obligations of the type referred to in clauses (a) through (i)
of this definition of another Person secured by any Lien on any Property of
such Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such Property or the amount of the obligation so secured;
provided, however, that Indebtedness shall not include Production Payments and
Reserve Sales. For purposes of this definition, the maximum fixed repurchase
price of any Disqualified Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Stock as
if such Disqualified Stock were repurchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture; provided, however,
that if such Disqualified Stock is not then permitted to be repurchased, the
repurchase price shall be the book value of such Disqualified Stock. The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability at such date in respect of any contingent obligations described above.
"Interest Rate Protection Agreement" means, with respect to any
Person, any interest rate swap agreement, forward rate agreement, interest
rate cap or collar agreement or other financial agreement or arrangement
entered into by such Person in the ordinary course of its business for the
purpose of limiting or managing interest rate risks to which such Person is
subject.
"Investment" means, with respect to any Person:
(a) any amount paid by such Person, directly or indirectly, to any
other Person for Capital Stock of, or as a capital contribution to, any
other Person; or
(b) any direct or indirect loan or advance to any other Person (other
than accounts receivable of such Person arising in the ordinary course of
business);
provided, however, that Investments shall not include:
(1) in the case of clause (a) as used in the definition of
"Restricted Payments" only, any such amount paid through the issuance
of Capital Stock of the Company (other than Disqualified Stock); and
(2) in the case of clause (a) or (b), extensions of trade credit
on commercially reasonable terms in accordance with normal trade
practices and any increase in the equity ownership in any Person
resulting from retained earnings of such Person.
<PAGE>
16
"Issue Date" means the date on which the Original 10.25% Notes first
were issued under the Indenture.
"Lien" means, with respect to any Property, any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien (statutory or other), charge, easement, encumbrance,
preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to such
Property (including any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing). For
purposes of Section 4.10, a Capital Lease Obligation shall be deemed to be
secured by a Lien on the property being leased.
"Liquid Securities" means securities:
(a) of an issuer that is not an Affiliate of the Company;
(b) that are publicly traded on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market; and
(c) as to which the Company is not subject to any restrictions on sale
or transfer (including any volume restrictions under Rule 144 under the
Securities Act or any other restrictions imposed by the Securities Act) or
as to which a registration statement under the Securities Act covering the
resale thereof is in effect for as long as the securities are held;
provided that securities meeting the requirements or clauses (a), (b) and (c)
above shall be treated as Liquid Securities from the date of receipt thereof
until and only until the earlier of:
(1) the date on which such securities are sold or exchanged for
cash or Permitted Short-Term Investments, and
(2) 150 days following the date of receipt of such securities. If
such securities are not sold or exchanged for cash or Permitted
Short-Term Investments within 150 days of receipt thereof, for
purposes of determining whether the transaction pursuant to which the
Company or the Restricted Subsidiary received the securities was in
compliance with Section 4.14 such securities shall be deemed not to
have been Liquid Securities at any time.
"Material Change" means an increase or decrease (except to the extent
resulting from changes in prices) of more than 30% during a fiscal quarter
in the estimated discounted future net revenues from proved oil and gas
reserves of the Company and its Restricted Subsidiaries, calculated in
accordance with clause (a)(1) of the definition of Adjusted Consolidated
Net Tangible Assets; provided, however, that the following will be excluded
from the calculation of Material Change:
(a) any acquisitions during the quarter of oil and gas reserves with
respect to which the Company's estimate of the discounted future net
revenues from proved oil and gas reserves has been confirmed by independent
petroleum engineers; and
<PAGE>
17
(b) any dispositions of Properties during such quarter that were
disposed of in compliance with Section 4.14.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Sale means cash proceeds received
therefrom, including:
(a) 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
(b) the Fair Market Value of Liquid Securities and Permitted
Short-Term Investments,
and excluding:
(1) any other consideration received in the form of assumption by
the acquiring Person of Indebtedness or other obligations relating to
the Property that is the subject of such Asset Sale, and
(2) except to the extent converted within 240 days after such
Asset Sale to cash, Liquid Securities or Permitted Short-Term
Investments, consideration constituting Exchange Properties or
consideration other than as identified in the immediately preceding
clauses (a) and (b),
in each case net of:
(a) all legal, title and recording expenses, commissions and other
fees and expenses Incurred, and all federal, state, foreign and local taxes
required to be paid or accrued as a liability under GAAP as a consequence
of such Asset Sale;
(b) all payments made on any Indebtedness (but specifically excluding
Indebtedness of the Company and its Restricted Subsidiaries assumed in
connection with or in anticipation of such Asset Sale) that is secured by
any assets subject to such Asset Sale, in accordance with the terms of any
Lien upon such assets, or that must by its terms, or in order to obtain a
necessary consent to such Asset Sale or by applicable law, be repaid out of
the proceeds from such Asset Sale, provided that such payments are made in
a manner that results in the permanent reduction in the balance of such
Indebtedness and, if applicable, a permanent reduction in any outstanding
commitment for future Incurrences of Indebtedness thereunder;
(c) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Sale; and
(d) the deduction of appropriate amounts to be provided by the seller
as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Sale and retained by the Company
or any Restricted Subsidiary after such Asset Sale;
<PAGE>
18
provided, however, that if any consideration for an Asset Sale (which would
otherwise constitute Net Available Cash) is required to be held in escrow
pending determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Available Cash only at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow.
"Net Working Capital" means:
(a) all current assets of the Company and its Restricted Subsidiaries;
less
(b) all current liabilities of the Company and its Restricted
Subsidiaries, except current liabilities included in Indebtedness,
in each case as set forth in consolidated financial statements of the Company
prepared in accordance with GAAP.
"Non-recourse Purchase Money Indebtedness" means Indebtedness (other
than Capital Lease Obligations) of the Company or any Restricted Subsidiary
Incurred in connection with the acquisition by the Company or such
Restricted Subsidiary in the ordinary course of business of fixed assets
used in the Oil and Gas Business (including office buildings and other real
property used by the Company or such Restricted Subsidiary in conducting
its operations) with respect to which:
(a) the holders of such Indebtedness agree that they will look solely
to the fixed assets so acquired that secure such Indebtedness, and neither
the Company nor any Restricted Subsidiary:
(1) is directly or indirectly liable for such Indebtedness, or
(2) provides credit support, including any undertaking,
Guarantee, agreement or instrument that would constitute Indebtedness
(other than the grant of a Lien on such acquired fixed assets); and
(b) no default or event of default with respect to such Indebtedness
would cause, or permit (after notice or passage of time or otherwise), any
holder of any other Indebtedness of the Company or a Restricted Subsidiary
to declare a default on such other Indebtedness or cause the payment,
repurchase, redemption, defeasance or other acquisition or retirement for
value thereof to be accelerated or payable prior to any scheduled principal
payment, scheduled sinking fund payment or maturity.
"Oil and Gas Business" means the business of exploiting, exploring
for, developing, acquiring, operating, producing, processing, gathering,
marketing, storing, selling, hedging, treating, swapping, refining and
transporting hydrocarbons and other related energy businesses.
"Oil and Gas Hedging Contract" means, with respect to any Person, any
agreement or arrangement, or any combination thereof, relating to oil and
gas or other hydrocarbon prices, transportation or basis costs or
differentials or other similar financial factors, that is customary in the
<PAGE>
19
Oil and Gas Business and is entered into by such Person in the ordinary
course of its business for the purpose of limiting or managing risks
associated with fluctuations in such prices, costs, differentials or
similar factors.
"Oil and Gas Liens" means:
(a) Liens on any specific property or any interest therein,
construction thereon or improvement thereto to secure all or any part of
the costs incurred for surveying, exploration, drilling, extraction,
development, operation, production, construction, alteration, repair or
improvement of, in, under or on such property and the plugging and
abandonment of wells located thereon (it being understood that, in the case
of oil and gas producing properties, or any interest therein, costs
incurred for "development" shall include costs incurred for all facilities
relating to such properties or to projects, ventures or other arrangements
of which such properties form a part or which relate to such properties or
interests);
(b) Liens on an oil or gas producing property to secure obligations
incurred or guarantees of obligations incurred in connection with or
necessarily incidental to commitments for the purchase or sale of, or the
transportation or distribution of, the products derived from such property;
(c) Liens arising under partnership agreements, oil and gas leases,
overriding royalty agreements, net profits agreements, production payment
agreements, royalty trust agreements, incentive compensation programs for
geologists, geophysicists and other providers of technical services to the
Company or a Restricted Subsidiary, master limited partnership agreements,
farm-out agreements, farm-in agreements, division orders, contracts for the
sale, purchase, exchange, transportation, gathering or processing of oil,
gas or other hydrocarbons, unitizations and pooling designations,
declarations, orders and agreements, development agreements, operating
agreements, production sales contracts, area of mutual interest agreements,
gas balancing or deferred production agreements, injection, repressuring
and recycling agreements, salt water or other disposal agreements, seismic
or geophysical permits or agreements, and other agreements that are
customary in the Oil and Gas Business; provided, however, in all instances
that such Liens are limited to the assets that are the subject of the
relevant agreement, program, order or contract;
(d) Liens arising in connection with Production Payments and Reserve
Sales; and
(e) Liens on pipelines or pipeline facilities that arise by operation
of law.
"Pari Passu Indebtedness" means any Indebtedness of the Company (or a
Subsidiary Guarantor) that is pari passu in right of payment to the 10.25%
Notes (or a Subsidiary Guaranty, as appropriate).
"Pari Passu Offer" means an offer by the Company or a Subsidiary
Guarantor to purchase all or a portion of Pari Passu Indebtedness to the
extent required by the Indenture or other agreement or instrument pursuant
to which such Pari Passu Indebtedness was issued.
<PAGE>
20
"Permitted Business Investments" means Investments and expenditures
made in the ordinary course of, and of a nature that is or shall have
become customary in, the Oil and Gas Business as a means of actively
engaging therein through agreements, transactions, interests or
arrangements that permit one to share risks or costs, comply with
regulatory requirements regarding local ownership or satisfy other
objectives customarily achieved through the conduct of Oil and Gas Business
jointly with third parties, including:
(a) ownership interests in oil and gas properties or gathering,
transportation, processing, storage or related systems; and
(b) Investments and expenditures in the form of or pursuant to
operating agreements, processing agreements, farm-in agreements, farm-out
agreements, development agreements, area of mutual interest agreements,
unitization agreements, pooling arrangements, joint bidding agreements,
service contracts, joint venture agreements, partnership agreements
(whether general or limited) and other similar agreements (including for
limited liability companies) with third parties, excluding, however,
Investments in corporations other than Restricted Subsidiaries.
"Permitted Hedging Agreements" means:
(a) Exchange Rate Contracts and Oil and Gas Hedging Contracts; and
(b) Interest Rate Protection Agreements but only to the extent that
the stated aggregate notional amount thereunder does not exceed 100% of the
aggregate principal amount of the Indebtedness of the Company or a
Restricted Subsidiary covered by such Interest Rate Protection Agreements
at the time such agreements were entered into.
"Permitted Indebtedness" means any and all of the following:
(a) Indebtedness arising under the Indenture with respect to the
Original 10.25% Notes and any Subsidiary Guaranties relating thereto;
(b) Indebtedness under Bank Credit Facilities, provided that the
aggregate principal amount of all Indebtedness under Bank Credit
Facilities, at any one time outstanding does not exceed the greater of:
(1) $250.0 million, which amount shall be permanently reduced by
the amount of Net Available Cash used to permanently repay
Indebtedness under Bank Credit Facilities and not subsequently
reinvested in Additional Assets or used to permanently reduce other
Indebtedness pursuant Section 4.14, and
(2) an amount equal to the sum of:
(A) $150.0 million, and
(B) 25% of Adjusted Consolidated Net Tangible Assets
determined as of the date of Incurrence of such Indebtedness,
<PAGE>
21
and, in the case of either (1) or (2), plus all interest and
fees and other obligations thereunder and any Guaranty of such
Indebtedness;
(c) Indebtedness of the Company owing to and held by any Wholly Owned
Subsidiary and Indebtedness of a Restricted Subsidiary owing to and held by
the Company or any Wholly Owned Subsidiary; provided, however, that any
subsequent issue or transfer of Capital Stock or other event that results
in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary
or any subsequent transfer of any such Indebtedness (except to the Company
or a Wholly Owned Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the issuer thereof;
(d) Indebtedness in respect of bid, performance, reimbursement or
surety obligations issued by or for the account of the Company or any
Restricted Subsidiary in the ordinary course of business, including
Guaranties and letters of credit functioning as or supporting such bid,
performance, reimbursement or surety obligations (in each case other than
for an obligation for money borrowed);
(e) Indebtedness under Permitted Hedging Agreements;
(f) in-kind obligations relating to oil or gas balancing positions
arising in the ordinary course of business;
(g) Indebtedness outstanding on the Issue Date not otherwise permitted
in clauses (a) through (f) above;
(h) Non-recourse Purchase Money Indebtedness;
(i) Indebtedness not otherwise permitted to be Incurred pursuant to
this definition (excluding any Indebtedness Incurred pursuant to clause (a)
of Section 4.11), provided that the aggregate principal amount of all
Indebtedness Incurred pursuant to this clause (i), together with all
Indebtedness Incurred pursuant to clause (j) of this definition in respect
of Indebtedness previously Incurred pursuant to this clause (i), at any one
time outstanding does not exceed $30.0 million;
(j) Indebtedness Incurred in exchange for, or the proceeds of which
are used to refinance,
(1) Indebtedness referred to in clauses (a), (g), (h) and (i) of
this definition (including Indebtedness previously Incurred pursuant
to this clause (j)), and
(2) Indebtedness Incurred pursuant to clause (a) of Section 4.11,
provided that, in the case of each of the foregoing clauses (1) and
(2), such Indebtedness is Permitted Refinancing Indebtedness; and
(k) Indebtedness consisting of obligations in respect of purchase
price adjustments, indemnities or Guarantees of the same or similar matters
in connection with the acquisition or disposition of Property.
<PAGE>
22
"Permitted Investments" means any and all of the following:
(a) Permitted Short-Term Investments;
(b) Investments in property, plant and equipment used in the ordinary
course of business and Permitted Business Investments;
(c) Investments by any Restricted Subsidiary in the Company;
(d) Investments by the Company or any Restricted Subsidiary in any
Restricted Subsidiary;
(e) Investments by the Company or any Restricted Subsidiary:
(1) in any Person that will, upon the making of such Investment,
become a Restricted Subsidiary, or
(2) if as a result of such Investment such Person is merged or
consolidated with or into, or transfers or conveys all or
substantially all its Property to, the Company or a Restricted
Subsidiary;
(f) Investments in the form of securities received from Asset Sales,
provided that such Asset Sales are made in compliance with Section 4.14;
(g) Investments in negotiable instruments held for collection; lease,
utility and other similar deposits; and stock, obligations or other
securities received in settlement of debts (including under any bankruptcy
or other similar proceeding) owing to the Company or any of its Restricted
Subsidiaries as a result of foreclosure, perfection or enforcement of any
Liens or Indebtedness, in each of the foregoing cases in the ordinary
course of business of the Company or such Restricted Subsidiary;
(h) relocation allowances for, and advances and loans to, officers,
directors and employees of the Company or any of its Restricted
Subsidiaries made in the ordinary course of business, provided such items
do not exceed in the aggregate $2.0 million at any one time outstanding;
(i) Investments intended to promote the Company's strategic objectives
in the Oil and Gas Business in an amount not to exceed 5% of Adjusted
Consolidated Net Tangible Assets (determined as of the date of the making
of any such Investment) at any one time outstanding, which Investments
shall be deemed to be no longer outstanding only to the extent of
dividends, repayments of loans or advances or other transfers of Property
or returns of capital received by the Company or any Restricted Subsidiary
from such Persons, provided that, for purposes of Section 4.12 the
receiving of such amounts by the Company or its Restricted Subsidiaries
does not increase the amount of Restricted Payments that the Company and
its Restricted Subsidiaries may make pursuant to Section 4.12(c)(5)(A);
(j) Investments made pursuant to Permitted Hedging Agreements of the
Company and its Restricted Subsidiaries; and
<PAGE>
23
(k) Investments pursuant to any agreement or obligation of the Company
or any of its Restricted Subsidiaries as in effect on the Issue Date (other
than Investments described in clauses (a) through (j) above), provided,
that Investments made pursuant to this clause (k) shall be included in the
calculation of Restricted Payments.
"Permitted Liens" means any and all of the following:
(a) Liens existing as of the Issue Date;
(b) Liens securing the 10.25% Notes, any Subsidiary Guaranties
and other obligations arising under the Indenture;
(c) any Lien existing on any Property of a Person at the time such
Person is merged or consolidated with or into the Company or a Restricted
Subsidiary or becomes a Restricted Subsidiary (and not incurred in
anticipation of or in connection with such transaction), provided that such
Liens are not extended to other Property of the Company or the Restricted
Subsidiaries;
(d) any Lien existing on any Property at the time of the acquisition
thereof (and not incurred in anticipation of or in connection with such
transaction), provided that such Liens are not extended to other Property
of the Company or the Restricted Subsidiaries;
(e) any Lien incurred in the ordinary course of business incidental to
the conduct of the business of the Company or the Restricted Subsidiaries
or the ownership of their Property, including:
(1) easements, rights of way and similar encumbrances,
(2) rights or title of lessors under leases (other than Capital
Lease Obligations),
(3) rights of collecting banks having rights of setoff,
revocation, refund or chargeback with respect to money or instruments
of the Company or the Restricted Subsidiaries on deposit with or in
the possession of such banks,
(4) Liens imposed by law, including Liens under workers'
compensation or similar legislation and mechanics', carriers',
warehousemen's, materialmen's, suppliers' and vendors' Liens,
(5) Liens incurred to secure performance of obligations with
respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety bonds or other obligations of a like
nature and incurred in a manner consistent with industry practice, and
(6) Oil and Gas Liens,
<PAGE>
24
in each case that are not incurred in connection with the
borrowing of money, the obtaining of advances or credit or the
payment of the deferred purchase price of Property (other than
Trade Accounts Payable);
(f) Liens for taxes, assessments and governmental charges not yet due
or the validity of which are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted, and for which
adequate reserves have been established to the extent required by GAAP as
in effect at such time;
(g) Liens incurred to secure appeal bonds and judgment and attachment
Liens, in each case in connection with litigation or legal proceedings that
are being contested in good faith by appropriate proceedings so long as
reserves have been established to the extent required by GAAP as in effect
at such time and so long as such Liens do not encumber assets by an
aggregate amount (together with the amount of any unstayed judgments
against the Company or any Restricted Subsidiary but excluding any such
Liens to the extent securing insured or indemnified judgments or orders) in
excess of $20.0 million;
(h) Liens securing Permitted Hedging Agreements of the Company and its
Restricted Subsidiaries so long as such Permitted Hedging Agreements are
permitted under Section 4.11;
(i) Liens securing Capital Lease Obligations, provided that such
Capital Lease Obligations are permitted under Section 4.11 and the Liens
attach only to the Property acquired with the proceeds of such Capital
Lease Obligations;
(j) Liens securing Non-recourse Purchase Money Indebtedness granted in
connection with the acquisition by the Company or any Restricted Subsidiary
in the ordinary course of business of fixed assets used in the Oil and Gas
Business (including office buildings and other real property used by the
Company or such Subsidiary Guarantor in conducting its operations),
provided that:
(1) such Liens attach only to the fixed assets acquired with the
proceeds of such Non-recourse Purchase Money Indebtedness, and
(2) such Non-recourse Purchase Money Indebtedness is not in
excess of the purchase price of such fixed assets;
(k) Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of decreasing or legally defeasing
Indebtedness of the Company or any of its Subsidiaries so long as such
deposit of funds is permitted under Section 4.12;
(l) Liens resulting from a pledge of Capital Stock of a Person that is
not a Restricted Subsidiary to secure obligations of such Person and any
refinancings thereof;
(m) Liens to secure any permitted extension, renewal, refinancing,
refunding or exchange (or successive extensions, renewals, refinancings,
refundings or exchanges), in whole or in part, of or for any Indebtedness
<PAGE>
25
secured by Liens referred to in clauses (a), (b), (c), (d), (i) and
(j) above; provided, however, that:
(1) such new Lien shall be limited to all or part of the same
Property (including future improvements thereon and accessions
thereto) subject to the original Lien, and
(2) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of:
(A) the outstanding principal amount or, if greater, the
committed amount of the Indebtedness secured by such original
Lien immediately prior to such extension, renewal, refinancing,
refunding or exchange, and
(B) an amount necessary to pay any fees and expenses,
including premiums, related to such refinancing, refunding,
extension, renewal or replacement;
(n) Liens in favor of the Company or a Restricted Subsidiary; and
(o) Liens not otherwise permitted by clauses (a) through (m) above
incurred in the ordinary course of business of the Company and its
Restricted Subsidiaries and encumbering Property having an aggregate Fair
Market Value not in excess of $5.0 million at any one time.
Notwithstanding anything in this definition to the contrary, the term
"Permitted Liens" does not include Liens resulting from the creation,
incurrence, issuance, assumption or Guarantee of any Production Payments
and Reserve Sales other than:
(a) any such Liens existing as of the Issue Date;
(b) Production Payments and Reserve Sales in connection with the
acquisition of any Property after the Issue Date, provided that any such
Lien created in connection therewith is created, incurred, issued, assumed
or guaranteed in connection with the financing of, and within 60 days after
the acquisition of, such Property;
(c) Production Payments and Reserve Sales, other than those described
in clauses (a) and (b) of this sentence, to the extent such Production
Payments and Reserve Sales constitute Asset Sales made pursuant to and in
compliance with Section 4.14; and
(d) incentive compensation programs for geologists, geophysicists and
other providers of technical services to the Company or a Restricted
Subsidiary;
provided, however, that, in the case of the immediately foregoing
clauses (a), (b), (c) and (d), any Lien created in connection with any
such Production Payments and Reserve Sales shall be limited to the
Property that is the subject of such Product Payments and Reserve
Sales.
<PAGE>
26
"Permitted Refinancing Indebtedness" means Indebtedness ("New
Indebtedness") Incurred in exchange for, or proceeds of which are used to
refinance, other Indebtedness ("Old Indebtedness"); provided, however,
that:
(a) such New Indebtedness is in an aggregate principal amount not in
excess of the sum of:
(1) the aggregate principal amount then outstanding of the Old
Indebtedness (or, if such Old Indebtedness provides for an amount less
than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of the date
of determination), and
(2) an amount necessary to pay any fees and expenses, including
premiums, related to such exchange or refinancing;
(b) such New Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Old Indebtedness;
(c) such New Indebtedness has an Average Life at the time such New
Indebtedness is Incurred that is equal to or greater than the Average Life
of the Old Indebtedness at such time;
(d) such New Indebtedness is subordinated in right of payment to the
10.25% Notes (or, if applicable, the Subsidiary Guaranties) to at least the
same extent, if any, as the Old Indebtedness; and
(e) if such Old Indebtedness is Non-recourse Purchase Money
Indebtedness or Indebtedness that refinanced Non-recourse Purchase Money
Indebtedness, such New Indebtedness satisfies clauses (a) and (b) of the
definition of "Non-recourse Purchase Money Indebtedness."
"Permitted Short-Term Investments" means:
(a) Investments in U.S. Government Obligations maturing within one
year of the date of acquisition thereof;
(b) Investments in demand accounts, time deposit accounts,
certificates of deposit, bankers' acceptances and money market deposits
maturing within one year of the date of acquisition thereof issued by a
bank or trust company that is organized under the laws of the United States
of America or any State thereof or the District of Columbia that is a
member of the Federal Reserve System having capital, surplus and undivided
profits aggregating in excess of $500.0 million and whose long-term
Indebtedness is rated "A" (or higher) according to Moody's;
(c) Investments in deposits available for withdrawal on demand with
any commercial bank that is organized under the laws of any country in
which the Company or any Restricted Subsidiary maintains an office or is
engaged in the Oil and Gas Business, provided that:
<PAGE>
27
(1) all such deposits have been made in such accounts in the
ordinary course of business, and
(2) such deposits do not at any one time exceed $15.0 million in
the aggregate;
(d) repurchase and reverse repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clause (a) entered into with a bank meeting the qualifications described in
clause (b);
(e) Investments in commercial paper or notes, maturing not more than
one year after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws of
the United States of America or any State thereof or the District of
Columbia with a short-term rating at the time as of which any Investment
therein is made of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P or a long-term rating at the time as of which any
Investment is made of "A3" (or higher) according to Moody's or "A-" (or
higher) according to S&P;
(f) Investments in any money market mutual fund having assets in
excess of $250.0 million all of which consist of other obligations of the
types described in clauses (a), (b), (d) and (e) hereof; and
(g) Investments in asset-backed securities maturing within one year of
the date of acquisition thereof with a long-term rating at the time as of
which any Investment therein is made of "A3" (or higher) according to
Moody's or "A-" (or higher) according to S&P.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, unlimited liability company, trust,
estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary
or involuntary liquidation, dissolution or winding up of such Person, to
shares of Capital Stock of any other class of such Person.
"Preferred Stock Dividends" means all dividends with respect to
Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Wholly Owned Subsidiary. The amount of any such dividend shall
be equal to the quotient of such dividend divided by the difference between
one and the maximum statutory federal income rate (expressed as a decimal
number between 1 and 0) then applicable to the issuer of such Preferred
Stock.
"Principal" of any Indebtedness (including the 10.25% Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Production Payments and Reserve Sales" means the grant or transfer by
the Company or a Restricted Subsidiary to any Person of a royalty,
overriding royalty, net profits interest, production payment (whether
<PAGE>
28
volumetric or dollar denominated), partnership or other interest in oil and
gas properties, reserves or the right to receive all or a portion of the
production or the proceeds from the sale of production attributable to such
properties where the holder of such interest has recourse solely to such
production or proceeds of production, subject to the obligation of the
grantor or transferor to operate and maintain, or cause the subject
interests to be operated and maintained, in a reasonably prudent manner or
other customary standard or subject to the obligation of the grantor or
transferor to indemnify for environmental, title or other matters customary
in the Oil and Gas Business, including any such grants or transfers
pursuant to incentive compensation programs on terms that are reasonably
customary in the Oil and Gas Business for geologists, geophysicists and
other providers of technical services to the Company or a Restricted
Subsidiary.
"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 Capital Stock and other securities
issued by any other Person (but excluding Capital Stock or other securities
issued by such first mentioned Person).
"Representative" means the trustee, agent or representative expressly
authorized to act in such capacity, if any, for an issue of Senior
Indebtedness.
"Restricted Payment" means:
(a) a dividend or other distribution declared or paid on the Capital
Stock of the Company or to the Company's shareholders (other than
dividends, distributions or payments made solely in Capital Stock (other
than Disqualified Stock of the Company) of the Company or in options,
warrants or other rights to purchase or acquire Capital Stock (other than
Disqualified Stock)), or declared and paid to any Person other than the
Company or any of its Restricted Subsidiaries (and, if such Restricted
Subsidiary is not a Wholly Owned Subsidiary, to the other shareholders of
such Restricted Subsidiary on a pro rata basis or on a basis that results
in the receipt by the Company or a Restricted Subsidiary of dividends or
distributions of greater value than it would receive on a pro rata basis)
on the Capital Stock of any Restricted Subsidiary;
(b) a payment made by the Company or any of its Restricted
Subsidiaries (other than to the Company or any Restricted Subsidiary) to
purchase, redeem, acquire or retire any Capital Stock, or any options,
warrants or other rights to acquire Capital Stock, of the Company or of a
Restricted Subsidiary;
(c) a payment made by the Company or any of its Restricted
Subsidiaries to redeem, repurchase, legally defease or otherwise acquire or
retire for value (including pursuant to mandatory repurchase covenants),
prior to any scheduled maturity, scheduled sinking fund or scheduled
mandatory redemption, any Indebtedness of the Company or a Restricted
Subsidiary that is subordinate (whether pursuant to its terms or by
operation of law) in right of payment to the 10.25% Notes or the relevant
Subsidiary Guaranty, as the case may be, provided that this clause (c)
shall not include any such payment with respect to:
(1) any such subordinated Indebtedness to the extent of Excess
Proceeds (as defined in Section 4.14) remaining after compliance with
<PAGE>
29
Section 4.14 and to the extent required by the Indenture or other
agreement or instrument pursuant to which such subordinated
Indebtedness was issued, or
(2) the purchase, repurchase or other acquisition of any such
subordinated Indebtedness purchased in anticipation of satisfying a
scheduled maturity, scheduled sinking fund or scheduled mandatory
redemption, in each case due within one year of the date of
acquisition; or
(d) an Investment (other than a Permitted Investment) by the Company
or a Restricted Subsidiary in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated an Unrestricted Subsidiary pursuant Section 4.19.
"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Sale and Leaseback Transaction" means, with respect to any Person,
any direct or indirect arrangement (excluding, however, any such
arrangement between such Person and a Wholly Owned Subsidiary of such
Person or between one or more Wholly Owned Subsidiaries of such Person)
pursuant to which Property is sold or transferred by such Person or a
Restricted Subsidiary of such Person and is thereafter leased back from the
purchaser or transferee thereof by such Person or one of its Restricted
Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Senior Indebtedness" when used with respect to the Company means the
obligations of the Company with respect to Indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created,
Incurred or assumed, and any renewal, refunding, refinancing, replacement
or extension thereof, unless, in the case of any particular Indebtedness,
the instrument creating or evidencing the same or pursuant to which the
same is outstanding expressly provides that such Indebtedness shall not be
senior in right of payment to the 10.25% Notes; provided, however, that
Senior Indebtedness of the Company shall not include:
(a) Indebtedness of the Company to a Subsidiary of the Company;
(b) amounts owed for goods, materials or services purchased in the
ordinary course of business;
(c) Indebtedness Incurred in violation of the Indenture;
(d) amounts payable or any other Indebtedness to employees of the
Company or any Subsidiary of the Company;
(e) any liability for federal, state, local or other taxes owed or
owing by the Company;
(f) any Indebtedness of the Company that, when Incurred and without
regard to any election under Section 1111(b) of the United States
Bankruptcy Code, was without recourse to the Company;
<PAGE>
30
(g) Pari Passu Indebtedness or Subordinated Indebtedness of the
Company;
(h) obligations with respect to any Capital Stock of the Company;
(i) Indebtedness evidenced by the 10.25% Notes; and
(j) in-kind obligations relating to net oil and gas balancing
positions.
"Senior Indebtedness" of any Subsidiary Guarantor has a correlative
meaning.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that would be a "Significant Subsidiary" of the
Company within the meaning of Rule 1-02 under Regulation S-X promulgated by
the SEC.
"Stated Maturity" when used with respect to any security or any
installment of principal thereof or interest thereon, means the date
specified in such security as the fixed date on which the principal of such
security or such installment of principal or interest is due and payable,
including pursuant to any mandatory redemption provision (but excluding any
provision providing for the repurchase of such security at the option of
the holder thereof upon the happening of any contingency unless such
contingency has occurred).
"Subordinated Indebtedness" means Indebtedness of the Company (or a
Subsidiary Guarantor) that is subordinated or junior in right of payment to
the 10.25% Notes (or a Subsidiary Guaranty, as appropriate) pursuant to a
written agreement to that effect, and shall include, without limitation,
the $115.0 million aggregate principal amount of 6.25% Convertible
Subordinated Notes due November 15, 2006, of the Company.
"Subsidiary" of a Person means:
(a) another Person that is a corporation a majority of whose Voting
Stock is at the time, directly or indirectly, owned or controlled by:
(1) the first Person,
(2) the first Person and one or more of its Subsidiaries, or
(3) one or more of the first Person's Subsidiaries; or
(b) another Person that is not a corporation (x) at least 50% of the
ownership interest of which, and (y) the power to elect or direct the
election of a majority of the directors or other governing body of which
are controlled by Persons referred to in clause (1), (2) or (3) above.
"Subsidiary Guarantors" means, unless released from their Subsidiary
Guaranties as permitted by the Indenture, any Restricted Subsidiary that
becomes a guarantor of the 10.25% Notes in compliance with the provisions
of the Indenture and executes a supplemental indenture agreeing to be bound
by the terms of the Indenture.
<PAGE>
31
"Subsidiary Guaranty" means an unconditional unsecured senior
subordinated Guaranty of the 10.25% Notes given by any Restricted
Subsidiary pursuant to the terms of the Indenture.
"Trade Accounts Payable" means accounts payable or other obligations
of the Company or any Restricted Subsidiary to trade creditors created or
assumed by the Company or such Restricted Subsidiary in the ordinary course
of business in connection with the obtaining of goods or services.
"Unrestricted Subsidiary" means:
(a) each Subsidiary of the Company that the Company has designated
pursuant to Section 4.19 as an Unrestricted Subsidiary; and
(b) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means securities that are:
(a) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged; or
(b) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America, the timely
payment of which is unconditionally Guaranteed as a full faith and credit
obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian, with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account
of the holder of such depository receipt; provided, however, that (except
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment or principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" of any Person means Capital Stock of such Person that
ordinarily has voting power for the election of directors (or persons
performing similar functions ) of such Person whether at all times or only
so long as no senior class of securities has such voting power by reason of
any contingency.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary
of the Company all the Voting Stock of which (other than directors'
qualifying shares) is at such time owned, directly or indirectly, by the
Company and its other Wholly Owned Subsidiaries.
SECTION 3. Amendments to I Article II of the Original Indenture.
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32
(a) The fourth paragraph of Section 3.02 of the Original Indenture is
amended in its entirety to read as follows:
On or prior to the redemption date for any Registered Securities,
the Company shall deposit with the Trustee or with a paying agent (or,
if the Company is acting as its own paying agent, segregate and hold
in trust) an amount of money in the Currency in which such Debt
Securities are denominated (except as provided pursuant to
Section2.03) sufficient to pay the redemption price of and accrued
interest on (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment
date that is on or prior to the redemption date) such Registered
Securities or any portions thereof that are to be redeemed on that
date.
(b) The first sentence of the fifth paragraph of Section 3.02 of the
Original Indenture is amended in its entirety with respect to the 10.25%
Notes to read as follows:
If less than all the 10.25% Notes are to be redeemed at any time,
selection of 10.25% Notes for redemption will be made by the Trustee
in compliance with the requirements of the principal national
securities exchange, if any, on which the 10.25% Notes are listed, or,
if the 10.25% Notes are not so listed, on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate and in
accordance with methods generally used at the time of selection by
fiduciaries in similar circumstances.
(c) The first paragraph of Section 3.03 of the Original Indenture is
amended in its entirety to read as follows:
If notice of redemption has been given as provided in Section
3.02, the Debt Securities or portions of Debt Securities of the series
with respect to which such notice has been given shall become due and
payable on the date and at the Place or Places of Payment stated in
such notice at the applicable redemption price, together with any
interest accrued to the date fixed for redemption (subject to the
right of Holders of record on the relevant record date to receive
interest due on the related interest payment date that is on or prior
to the date of redemption), and on and after said date (unless the
Company shall default in the payment of such Debt Securities at the
applicable redemption price, together with any interest accrued to
said date) the interest on the Debt Securities or portions of Debt
Securities of any series so called for redemption shall cease to
accrue and any original issue discount in the case of Original Issue
Discount Debt Securities shall cease to accrue. On presentation and
surrender of such Debt Securities at the Place or Places of Payment in
said notice specified, the said Debt Securities or the specified
portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with any interest accrued
thereon to the date fixed for redemption.
(d) Article III of the Original Indenture is amended with respect to
the 10.25% Notes by adding Section 3.06 and Section 3.07 as follows:
SECTION 3.06. Optional Redemption. Except as set forth in the
following paragraph, the 10.25% Notes will not be redeemable at the option
of the Company prior to August 1, 2004. Starting on that date, the Company
<PAGE>
33
may redeem all or any portion of the 10.25% Notes, upon no less than 30 nor
more than 60 days prior notice, at the redemption prices set forth below,
plus accrued and unpaid interest, if any, to the redemption date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date). The following prices
are for 10.25% Notes redeemed during the 12-month period commencing on
August 1 of the years set forth below, and are expressed as percentages of
principal amount:
Redemption
Year Price
---- -------
2004 105.125%
2005 103.417%
2006 101.708%
2007 and
thereafter 100.000%
The Company may on any one or more occasions prior to August 1, 2002,
redeem up to 33 1/3% of the aggregate principal amount of the 10.25% Notes
originally issued with the net proceeds of one or more Equity Offerings of
the Company at a redemption price of 110.25% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of
redemption, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date,
provided that at least 66 2/3% of the aggregate principal amount of the
10.25% Notes originally issued remains Outstanding after the occurrence of
such redemption. Any such redemption shall occur not later than 90 days
after the date of the closing of any such Equity Offering upon not less
than 30 nor more than 60 days' prior notice. The redemption shall be made
in accordance with procedures set forth in the Indenture.
SECTION 3.07. No Mandatory Sinking Fund. There will be no mandatory
sinking fund payments for the 10.25% Notes.
SECTION 4. Amendments to Article IV of the Original Indenture.
(a) Sections 4.07, 4.08 and 4.09 of the Original Indenture shall not
be applicable to the 10.25% Notes.
(b) Section 4.10 of the Original Indenture is amended in its entirety
with respect to the 10.25% Notes to read as follows:
SECTION 4.10. Limitation on Liens. The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, enter into,
create, incur, assume or suffer to exist any Lien on or with respect to any
Property of the Company or such Restricted Subsidiary, whether owned on the
Issue Date or acquired after the Issue Date, or any interest therein or any
income or profits therefrom, unless the 10.25% Notes or any Subsidiary
Guaranty of such Restricted Subsidiary are secured equally and ratably
with, or prior to, any and all other obligations secured by such Lien,
except that the Company and its Restricted Subsidiaries may enter into,
create, incur, assume or suffer to exist Liens securing Senior Indebtedness
and Permitted Liens.
(c) Article IV of the Original Indenture is amended with respect to
the 10.25% Notes by adding Sections 4.11 through 4.20, inclusive, as
follows:
SECTION 4.11. Limitation on Indebtedness. The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or
indirectly, Incur any Indebtedness unless, after giving pro forma effect to
<PAGE>
34
the Incurrence of such Indebtedness and the receipt and application of the
proceeds thereof, no Default or Event of Default would occur as a
consequence of, or be continuing following, such Incurrence and application
and either:
(a) after giving pro forma effect to such Incurrence and application,
the Consolidated Interest Coverage Ratio would exceed 2.5 to 1.0; or
(b) such Indebtedness is Permitted Indebtedness.
SECTION 4.12. Limitation on Restricted Payments. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment if, at the time of and after giving
effect to the proposed Restricted Payment:
(a) any Default or Event of Default would have occurred and be
continuing;
(b) the Company could not Incur at least $1.00 of additional
Indebtedness pursuant to clause (a) of Section 4.11; or
(c) the aggregate amount expended or declared for all Restricted
Payments from the Issue Date would exceed the sum of (without duplication)
of:
(1) 50% of the aggregate Consolidated Net Income of the Company
accrued during the period (treated as one accounting period)
commencing on the first day of the fiscal quarter during which the
Issue Date occurs, and ending on the last day of the fiscal quarter
immediately preceding the date of such proposed Restricted Payment
(or, if such aggregate Consolidated Net Income shall be a loss, minus
100% of such loss), and
(2) the aggregate net cash proceeds, or the Fair Market Value of
Property other than cash (provided that, in the case of Property that
is Capital Stock, such Capital Stock falls within the meaning of
clause (b) of the definition of "Additional Assets"), received by the
Company from the issuance or sale (other than to a Subsidiary of the
Company or an employee stock ownership plan or trust established by
the Company or any such Subsidiary for the benefit of their employees)
by the Company of its Capital Stock (other than Disqualified Stock)
after the Issue Date, net of attorneys' fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees actually Incurred in connection
with such issuance or sale and net of taxes paid or payable as a
result thereof, and
(3) the aggregate net cash proceeds, or the Fair Market Value of
Property other than cash, received by the Company as capital
contributions to the Company (other than from a Subsidiary of the
Company) on or after the Issue Date, and
(4) the aggregate net cash proceeds received by the Company from
the issuance or sale (other than to any Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company
<PAGE>
35
or any such Subsidiary for the benefit of their employees) on or after
the Issue Date of convertible Indebtedness that has been converted
into or exchanged for Capital Stock (other than Disqualified Stock) of
the Company, together with the aggregate cash received by the Company
at the time of such conversion or exchange or received by the Company
from any conversion or exchange of convertible Senior Indebtedness or
convertible Pari Passu Indebtedness issued or sold (other than to any
Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of
their employees) prior to the Issue Date, excluding:
(A) any such Indebtedness issued or sold to the Company or a
Subsidiary of the Company or an employee stock ownership plan or
trust established by the Company or any such Subsidiary for the
benefit of their employees, and
(B) the aggregate amount of any cash or other Property
distributed by the Company or any Restricted Subsidiary upon any
such conversion or exchange,
and
(5) to the extent not otherwise included in the Company's
Consolidated Net Income, an amount equal to the net reduction in
Investments made by the Company and its Restricted Subsidiaries
subsequent to the Issue Date in any Person resulting from:
(A) payments of interest on debt, dividends, repayments of
loans or advances or other transfers or distributions of
Property, in each case to the Company or any Restricted
Subsidiary from any Person other than the Company or a Restricted
Subsidiary, and in an amount not to exceed the book value of such
Investments previously made in such Person that were treated as
Restricted Payments, or
(B) the designation of any Unrestricted Subsidiary as a
Restricted Subsidiary, and in an amount not to exceed the lesser
of:
(x) the book value of all Investments previously made
in such Unrestricted Subsidiary that were treated as
Restricted Payments, and
(y) the Fair Market Value of the Company's and its
Restricted Subsidiaries interest in such Unrestricted
Subsidiary,
and
(6) $15.0 million.
<PAGE>
36
The limitations set forth in the preceding paragraph will not
prevent the Company or any Restricted Subsidiary from making the
following Restricted Payments so long as, at the time thereof, no
Default or Event of Default shall have occurred and be continuing:
(a) the payment of any dividend on Capital Stock of the Company or any
Restricted Subsidiary within 60 days after the declaration thereof, if at
such declaration date such dividend could have been paid in compliance with
the preceding paragraph;
(b) the repurchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company or any of its Subsidiaries
pursuant to the terms of agreements (including employment agreements) or
plans (including employee stock ownership plans but excluding other plans
to purchase such Capital Stock in open market transactions, together with,
in the case of employee stock ownership plans, loans to or Investments
therein in an amount sufficient to fund such repurchase, redemption or
other acquisition or retirement by such plan) approved by the Company's
Board of Directors, including any such repurchase, redemption, acquisition
or retirement of shares of such Capital Stock that is deemed to occur upon
the exercise of stock options or similar rights if such shares represent
all or a portion of the exercise price or are surrendered in connection
with satisfying Federal income tax obligations; provided, however, that the
aggregate amount of such repurchase, redemptions, acquisitions and
retirements shall not exceed the sum of:
(1) $2.0 million in any twelve-month period, and
(2) the aggregate net proceeds, if any, received by the Company
during such twelve-month period from any issuance of such Capital
Stock pursuant to such agreements or plans;
(c) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company or any Restricted Subsidiary, in
exchange for, or out of the aggregate net cash proceeds of, a substantially
concurrent issuance and sale (other than to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any
of its Subsidiaries, for the benefit of their employees) of Capital Stock
of the Company (other than Disqualified Stock);
(d) the purchase, redemption, legal defeasance, acquisition or
retirement for value of any Subordinated Indebtedness in exchange for, or
out of the proceeds of the substantially concurrent sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or trust established by the Company or any such Subsidiary
for the benefit of their employees);
(e) the making of any principal payment on or the repurchase,
redemption, legal defeasance or other acquisition or retirement for value
of Subordinated Indebtedness in exchange for, or out of the aggregate net
cash proceeds of a substantially concurrent Incurrence (other than a sale
<PAGE>
37
to a Subsidiary of the Company) of Subordinated Indebtedness so long as
such new Indebtedness is Permitted Refinancing Indebtedness;
(f) loans in an aggregate principal amount at any one time outstanding
of not more than $2.0 million made to officers, directors or employees of
the Company or any Restricted Subsidiary approved by the Board of Directors
(or by a duly authorized officer), the net cash proceeds of which are used
solely:
(1) to purchase common stock of the Company in connection with a
restricted stock or employee stock purchase plan, or to exercise stock
options received pursuant to an employee or director stock option plan
or other incentive plan, in a principal amount not to exceed the
purchase price of such common stock or the exercise price of such
stock options, or
(2) to refinance loans, together with accrued interest thereon,
made pursuant to item (1) of this clause (f).
The actions described in clauses (a) and (b) of this paragraph shall be included
in the calculation of the amount of Restricted Payments. The actions described
in clauses (c), (d), (e) and (f) of this paragraph shall be excluded in the
calculation of the amount of Restricted Payments, provided that the net cash
proceeds from any issuance or sale of Capital Stock of the Company pursuant to
such clause (c), (d) or (e) shall be excluded from any calculations pursuant to
clause (2), (3) or (4) under the immediately preceding paragraph.
SECTION 4.13. Limitation on Issuance or Sale of Capital Stock of
Restricted Subsidiaries. The Company will not:
(a) permit any Restricted Subsidiary to sell or otherwise issue any
Capital Stock other than to the Company or one of its Wholly Owned
Subsidiaries; or
(b) sell, pledge, hypothecate or otherwise dispose of any shares of
Capital Stock of any Restricted Subsidiary, or permit any Restricted
Subsidiary to do so,
except, in each case, for:
(1) directors' qualifying shares,
(2) the Capital Stock of a Restricted Subsidiary owned by a
Person at the time such Restricted Subsidiary became a Restricted
Subsidiary or acquired by such Person in connection with the formation
of such Restricted Subsidiary, or transfers thereof, or
(3) a sale of all the Capital Stock of a Restricted Subsidiary
owned by the Company or its Subsidiaries effected in accordance with
Section 4.14.
In the event of the consummation of a sale of all the Capital Stock of a
Restricted Subsidiary pursuant to the foregoing clause (3) and the execution and
delivery of a supplemental indenture in form satisfactory to the Trustee, any
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38
such Restricted Subsidiary that is also a Subsidiary Guarantor shall be released
from all its obligations under its Subsidiary Guaranty.
SECTION 4.14. Limitation on Asset Sales. The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale
unless:
(a) the Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the Property subject to such Asset Sale; and
(b) all of the consideration paid to the Company or such Restricted
Subsidiary in connection with such Asset Sale is in the form of cash, cash
equivalents, Liquid Securities, Exchange Properties or the assumption by
the purchaser of liabilities of the Company (other than liabilities of the
Company that are by their terms subordinated to the 10.25% Notes) or
liabilities of any Subsidiary Guarantor that made such Asset Sale (other
than liabilities of a Subsidiary Guarantor that are by their terms
subordinated to such Subsidiary Guarantor's Subsidiary Guaranty), in each
case as a result of which the Company and its remaining Restricted
Subsidiaries are no longer liable for such liabilities ("Permitted
Consideration"); provided, however, that the Company and its Restricted
Subsidiaries shall be permitted to receive Property other than Permitted
Consideration, so long as the aggregate Fair Market Value of all such
Property other than Permitted Consideration received from Asset Sales and
held by the Company or any Restricted Subsidiary at any one time shall not
exceed 10.0% of Adjusted Consolidated Net Tangible Assets.
The Net Available Cash from Asset Sales by the Company or a Restricted
Subsidiary may be applied by the Company or such Restricted Subsidiary, to
the extent the Company or such Restricted Subsidiary elects (or is required
by the terms of any Senior Indebtedness of the Company or a Subsidiary
Guarantor), to:
(a) prepay, repay or purchase Senior Indebtedness of the Company or a
Subsidiary Guarantor (in each case excluding Indebtedness owed to the
Company or an Affiliate of the Company);
(b) to reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by the Company or another Restricted Subsidiary);
or
(c) purchase 10.25% Notes or purchase both 10.25% Notes and one or
more series or issues of other Pari Passu Indebtedness on a pro rata basis
(excluding 10.25% Notes and Pari Passu Indebtedness owed by the Company or
an Affiliate of the Company).
Any Net Available Cash from an Asset Sale not applied in accordance
with the preceding paragraph within 365 days from the date of such Asset
Sale shall constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $10.0 million, the Company will be required to make
an offer to purchase 10.25% Notes having an aggregate principal amount
equal to the aggregate amount of Excess Proceeds (the "Prepayment Offer")
at a purchase price equal to 100% of the principal amount of such 10.25%
Notes plus accrued and unpaid interest, if any, to the Purchase Date (as
<PAGE>
39
defined) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in the Indenture, but, if the terms of
any Pari Passu Indebtedness require that a Pari Passu Offer be made
contemporaneously with the Prepayment Offer, then the Excess Proceeds shall
be prorated between the Prepayment Offer and such Pari Passu Offer in
accordance with the aggregate Outstanding principal amounts of the 10.25%
Notes and such Pari Passu Indebtedness, and the aggregate principal amount
of 10.25% Notes for which the Prepayment Offer is made shall be reduced
accordingly. If the aggregate principal amount of 10.25% Notes tendered by
Holders thereof exceeds the amount of available Excess Proceeds, then such
Excess Proceeds will be allocated pro rata according to the principal
amount of the 10.25% Notes tendered and the Trustee will select the 10.25%
Notes to be purchased in accordance with the Indenture. To the extent that
any portion of the amount of Excess Proceeds remains after compliance with
the second sentence of this paragraph and provided that all Holders of
10.25% Notes have been given the opportunity to tender their 10.25% Notes
for purchase as described in the following paragraph in accordance with the
Indenture, the Company and its Restricted Subsidiaries may use such
remaining amount for purposes permitted by the Indenture and the amount of
Excess Proceeds will be reset to zero.
Within 30 days after the 365th day following the date of an Asset
Sale, the Company shall, if it is obligated to make an offer to purchase
the 10.25% Notes pursuant to the preceding paragraph, send a written
Prepayment Offer notice, by first-class mail, to the Holders of the 10.25%
Notes (the "Prepayment Offer Notice"), accompanied by such information
regarding the Company and its Subsidiaries as the Company believes will
enable such Holders of the 10.25% Notes to make an informed decision with
respect to the Prepayment Offer. The Prepayment Offer Notice will state,
among other things:
(a) that the Company is offering to purchase 10.25% Notes pursuant to
the provisions of the Indenture;
(b) that any 10.25% Note (or any portion thereof) accepted for payment
(and duly paid on the Purchase Date) pursuant to the Prepayment Offer shall
cease to accrue interest on the Purchase Date;
(c) that any 10.25% Notes (or portions thereof) not properly tendered
will continue to accrue interest;
(d) the purchase price and purchase date, which shall be, subject to
any contrary requirements of applicable law, no less than 30 days nor more
than 60 days after the date the Prepayment Offer Notice is mailed (the
"Purchase Date");
(e) the aggregate principal amount of 10.25% Notes to be purchased;
(f) a description of the procedure that Holders of 10.25% Notes must
follow in order to tender their 10.25% Notes for payment; and
(g) all other instructions and materials necessary to enable Holders
to tender 10.25% Notes pursuant to the Prepayment Offer.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) under the Exchange Act and any other securities laws or
regulations thereunder to the extent such laws and regulations are
<PAGE>
40
applicable in connection with the purchase of 10.25% Notes as described
above. To the extent that the provisions of any securities laws or
regulations conflict with the provisions relating to the Prepayment Offer,
the Company will comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations described above by
virtue thereof.
SECTION 4.15. Incurrence of Layered Indebtedness. The Indenture
provides that:
(a) the Company will not Incur any Indebtedness that is subordinated
or junior in right of payment to any Senior Indebtedness of the Company
unless such Indebtedness constitutes Indebtedness that is junior to, or
pari passu with, the 10.25% Notes in right of payment; and
(b) no Subsidiary Guarantor will Incur any Indebtedness that is
subordinated or junior in right of payment to any Senior Indebtedness of
such Subsidiary Guarantor unless such Indebtedness constitutes Indebtedness
that in right of payment is junior to, or pari passu with, such Subsidiary
Guarantor's Subsidiary Guaranty.
SECTION 4.16. Limitation on Transactions with Affiliates. The Company
will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, conduct any business or enter into any transaction
or series of transactions (including the sale, transfer, disposition,
purchase, exchange or lease of Property, the making of any Investment, the
giving of any Guarantee or the rendering of any service) with or for the
benefit of any Affiliate of the Company (other than the Company or a Wholly
Owned Subsidiary), unless:
(a) such transaction is set forth in writing;
(b) such transaction or series of transactions is on terms no less
favorable to the Company or such Restricted Subsidiary than those that
could be obtained in a comparable arm's-length transaction with a Person
that is not an Affiliate of the Company or such Restricted Subsidiary; and
(c) with respect to a transaction or series of transactions involving
aggregate payments by or to the Company or such Restricted Subsidiary
having a Fair Market Value equal to or in excess of:
(1) $1.0 million but less than $5.0 million, an officer of the
Company certifies that such transaction or series of transactions
complies with clause (b) of this paragraph, as evidenced by an
Officer's Certificate delivered to the Trustee,
(2) $5.0 million but less than $20.0 million, the Board of
Directors of the Company (including a majority of the disinterested
members of such Board of Directors) approves such transaction or
series of transactions and certifies that such transaction or series
of transactions complies with clause (b) of this paragraph, as
evidenced by a certified resolution delivered to the Trustee, or
(3) $20.0 million,
<PAGE>
41
(A) the Company receives from an independent, nationally
recognized investment banking firm or appraisal firm, in either
case specializing or having a specialty in the type and subject
matter of the transaction (or series of transactions) at issue, a
written opinion that such transaction (or series of transactions)
is fair, from a financial point of view, to the Company or such
Restricted Subsidiary, and
(B) such Board of Directors (including a majority of the
disinterested members of the Board of Directors of the Company)
approves such transaction or series of transactions and certifies
that such transaction or series of transactions complies with
clause (b) of this paragraph, as evidenced by a certified
resolution delivered to the Trustee.
The preceding limitations of this Section 4.16 do not apply to:
(a) the payment of reasonable and customary regular fees to directors
of the Company or any of its Restricted Subsidiaries who are not employees
of the Company or any of its Restricted Subsidiaries;
(b) indemnities of officers and directors of the Company or any
Subsidiary consistent with such Person's charter, bylaws and applicable
statutory provisions;
(c) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and employee stock purchase and ownership plans
approved by the Board of Directors of the Company;
(d) loans made to:
(1) officers, directors or employees of the Company or any
Restricted Subsidiary approved by the Board of Directors of the
Company, the net proceeds of which are used solely to purchase common
stock of the Company in connection with a restricted stock or employee
stock purchase plan, or to exercise stock options received pursuant to
an employee or director stock option plan or other incentive plan, in
a principal amount not to exceed the purchase price of such common
stock or the exercise price of such stock options, or
(2) refinance loans, together with accrued interest thereon, made
pursuant to this clause (d);
(e) advances and loans to officers, directors and employees of the
Company or any Subsidiary in the ordinary course of business (including,
without limitation, non-cash loans for the purchase of joint interests in
exploratory and developmental oil and gas prospects or other similar
ventures offered by the Company), provided such loans and advances
(excluding loans or advances made pursuant to the preceding clause (d)) do
not exceed $2.0 million at any one time outstanding;
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42
(f) any Restricted Payment permitted to be paid pursuant to Section
4.12.
(g) any transaction or series of transactions between the Company and
one or more Restricted Subsidiaries or between two or more Restricted
Subsidiaries in the ordinary course of business, provided that no more than
10% of the total voting power of the Voting Stock of any such Restricted
Subsidiary is owned by an Affiliate of the Company (other than a Restricted
Subsidiary); and
(h) any transaction or series of transactions pursuant to any
agreement or obligation of the Company or any of its Restricted
Subsidiaries in effect on the Issue Date.
SECTION 4.17. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or
restriction on the legal right of any Restricted Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any
Indebtedness or other obligation owed, to the Company or any other
Restricted Subsidiary;
(b) make loans or advances to the Company or any other Restricted
Subsidiary; or
(c) transfer any of its Property to the Company or any other
Restricted Subsidiary.
Such limitation will not apply:
(1) with respect to clauses (a), (b) and (c), to encumbrances and
restrictions:
(A) in agreements and instruments as in effect on the Issue
Date,
(B) relating to Indebtedness of a Restricted Subsidiary and
existing at the time it became a Restricted Subsidiary if such
encumbrance or restriction was not created in anticipation of or
in connection with the transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary, or
(C) that result from the renewal, refinancing, extension or
amendment of an agreement that is the subject of clause (c)(1)(A)
or (B) above or clause (c)(2)(A) or (B) below, provided that such
encumbrance or restriction is not materially less favorable to
the Holders of 10.25% Notes than those under or pursuant to the
agreement so renewed, refinanced, extended or amended, and,
(2) with respect to clause (c) only, to:
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43
(A) restrictions relating to Indebtedness that is permitted
to be Incurred and secured without also securing the 10.25% Notes
under Sections 4.10 and 4.11 and that limit the right the right
of the debtor to dispose of the Property securing such
Indebtedness,
(B) any encumbrance or restriction applicable to Property at
the time it is acquired by the Company or a Restricted
Subsidiary, so long as such encumbrance or restriction relates
solely to the Property so acquired and was not created in
anticipation of or in connection with such acquisition,
(C) customary provisions restricting subletting or
assignment of leases and customary provisions in other agreements
that restrict assignment of such agreements or rights thereunder,
and
(D) customary restrictions contained in asset sale
agreements limiting the transfer of such assets pending the
closing of such sale.
SECTION 4.18. Future Subsidiary Guarantors. The Company shall cause
each Restricted Subsidiary that:
(a) Incurs Indebtedness or issues Preferred Stock following the Issue
Date; or
(b) has Indebtedness or Preferred Stock outstanding on the date on
which such Restricted Subsidiary becomes a Restricted Subsidiary,
to execute and deliver to the Trustee a Subsidiary Guaranty at the time
such Restricted Subsidiary Incurs such Indebtedness or becomes a Restricted
Subsidiary; provided, however, that such Restricted Subsidiary shall not be
required to deliver a Subsidiary Guaranty if the aggregate amount of such
Indebtedness or Preferred Stock, together with all other Indebtedness and
Preferred Stock then outstanding among Restricted Subsidiaries that are not
Subsidiary Guarantors, is less than $10.0 million.
SECTION 4.19. Restricted and Unrestricted Subsidiaries. Unless defined
or designated as an Unrestricted Subsidiary, any Person that becomes a
Subsidiary of the Company or any of its Restricted Subsidiaries shall be
classified as a Restricted Subsidiary subject to the provisions of the next
paragraph. The Company may designate a Subsidiary (including a newly formed
or newly acquired Subsidiary) of the Company or any of its Restricted
Subsidiaries as an Unrestricted Subsidiary if:
(a) such Subsidiary does not at such time own any Capital Stock or
Indebtedness of, or own or hold any Lien on any Property of, the Company or
any other Restricted Subsidiary;
(b) such Subsidiary does not at such time have any Indebtedness or
other obligations that, if in default, would result (with the passage of
time or notice or otherwise) in a default on any Indebtedness of the
Company or any Restricted Subsidiary; and
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44
(c) (1) such designation is effective immediately upon such Subsidiary
becoming a Subsidiary of the Company or of a Restricted Subsidiary,
(2) the Subsidiary to be so designated has total assets of $1,000
or less, or
(3) if such Subsidiary has assets greater than $1,000, then such
redesignation as an Unrestricted Subsidiary is deemed to constitute a
Restricted Payment in an amount equal to the Fair Market Value of the
Company's direct and indirect ownership interest in such Subsidiary,
and such Restricted Payment would be permitted to be made at the time
of such designation under Section 4.12. Except as provided in the
immediately preceding sentence, no Restricted Subsidiary may be
redesignated as an Unrestricted Subsidiary. The designation of an
Unrestricted Subsidiary or removal of such designation shall be made
by the Board of Directors of the Company or a committee thereof
pursuant to a certified resolution delivered to the Trustee and shall
be effective as of the date specified in the applicable certified
resolution, which shall not be prior to the date such certified
resolution is delivered to the Trustees.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, take any action or enter into any transaction or series of
transactions that would result in a Person becoming a Restricted Subsidiary
(whether through an acquisition or otherwise) unless, after giving effect
to such action, transaction or series of transactions, on a pro forma
basis:
(a) the Company could Incur at least $1.00 of additional Indebtedness
pursuant to clause (a) of the first paragraph of Section 4.11 and
(b) no Default or Event of Default would occur or be continuing.
SECTION 4.20. Change of Control. Upon the occurrence of a Change of
Control, each Holder of 10.25% Notes shall have the right to require the
Company to repurchase all or any part (equal to $1,000 in principal amount
or an integral multiple thereof) of such Holder's 10.25% Notes pursuant to
the offer described below (the "Change of Control Offer") at a purchase
price in cash equal to 101% of the principal amount of the 10.25% Notes
repurchased, plus accrued and unpaid interest, if any, to the date of
purchase, subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date (the
"Change of Control Payment").
Within 30 days following any Change of Control, the Company shall:
(a) cause a notice of the Change of Control Offer to be sent at least
once to the Dow Jones News Service or similar business news service in the
United States; and
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45
(b) send, by first-class mail, with a copy to the Trustee, to each
Holder of 10.25% Notes, at such Holder's address appearing in the Debt
Security Register, a notice stating, among other things:
(1) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to the Indenture and that all 10.25%
Notes (or portions thereof) properly tendered will be accepted for
payment,
(2) the Change of Control Purchase Price and the purchase date,
which shall be, subject to any contrary requirements of applicable
law, a business day no earlier than 30 days nor later than 60 days
from the date the Company mails such notice (the "Change of Control
Payment Date"),
(3) that any 10.25% Note (or portion thereof) accepted for
payment (and duly paid on the Change of Control Payment Date) pursuant
to the Change of Control Offer shall cease to accrue interest on the
Change of Control Payment Date,
(4) that any 10.25% Notes (or portions thereof) not properly
tendered will continue to accrue interest,
(5) a description of the transaction or transactions constituting
the Change of Control,
(6) the procedures that the Holders of the 10.25% Notes must
follow in order to tender their 10.25% Notes (or portions thereof) for
payment and the procedures that Holders of 10.25% Notes must follow in
order to withdraw an election to tender 10.25% Notes (or portions
thereof) for payment, and
(7) all other instructions and materials necessary to enable
Holders to tender 10.25% Notes pursuant to the Change of Control
Offer.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of 10.25% Notes
pursuant to a Change of Control Offer. To the extent that the provisions of
any securities laws or regulations conflict with the provisions relating to
the Change of Control Offer, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations described above by virtue of such compliance.
The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer
in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control
Offer made by the Company and purchases all 10.25% Notes validly tendered
and not withdrawn under such Change of Control Offer.
SECTION 5. Amendments to Article VI the Original Indenture.
(a) Section 6.01(e) of the Original Indenture is amended with respect
to the 10.25% Notes by deleting the number "60" and substituting the number
"30" in its place.
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46
(b) Section 6.01(f) of the Original Indenture is amended in its
entirety with respect to the 10.25% Notes to read as follows:
(f) a default by the Company or any Restricted Subsidiary under
any Indebtedness for borrowed money (other than Non-recourse Purchase
Money Indebtedness) that results in acceleration of the maturity of
such Indebtedness, or failure to pay any such Indebtedness at
maturity, in an amount greater than $5.0 million if such Indebtedness
is not discharged or such acceleration is not rescinded or annulled
within 60 days after written notice as provided in the Indenture;
(c) Sections 6.01(g) and 6.01(h) are amended with respect to the
10.25% Notes by deleting each reference to "Restricted Subsidiary" and
"Restricted Subsidiaries" therein and substituting "Significant Subsidiary"
or "Significant Subsidiaries", respectively, in its place.
(d) Section 6.01 of the 0riginal Indenture is amended with respect to
the 10.25% Notes by deleting the word "or" from the end of clause (h) of
the first paragraph thereof and by adding the following provisions after
clause (i) of the first paragraph thereof:
(j) one or more final judgments or orders by a court of competent
jurisdiction are entered against the Company or any Restricted
Subsidiary in an uninsured or unindemnified aggregate amount
outstanding at any time in excess of $5.0 million and such judgments
or orders are not discharged, waived, stayed, satisfied or bonded for
a period of 60 consecutive days; or
(k) a Subsidiary Guaranty ceases to be in full force and effect
(other than in accordance with the terms of the Indenture and such
Subsidiary Guaranty) or a Subsidiary Guarantor denies or disaffirms
its obligations under its Subsidiary Guaranty.
(e) Section 6.01 of the Original Indenture is amended by adding the
following sentence to the end of the first paragraph thereof:
Notwithstanding anything to the contrary herein, if an Event of Default
described under clauses (g) or (h) of this paragraph shall occur, the
principal amount of all Debt Securities of any series then Outstanding
will automatically, and without any action by the Trustee or any
Holder, become immediately due and payable.
(f) Article VI of the Original Indenture is amended by adding Section
6.09 as follows:
SECTION 6.09. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of the Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and shall not hinder,
delay or impede the execution of any power herein granted to the Trustee,
but shall suffer and permit the execution of every such power as though no
such law had been enacted.
SECTION 6. Amendments to Article VII of the Original Indenture.
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47
(a) Section 7.08 of the Original Indenture is amended by deleting the
number "25%" in the fourth paragraph thereof and substituting "10%" in its
place.
SECTION 7. Amendments to Article IX of the Original Indenture.
(a) Section 9.01 of the Original Indenture is amended with respect to
the 10.25% Notes by deleting the word "and" from the end of clause (j) of
the first paragraph thereof, deleting the "." at the end of clause (k) of
the first paragraph thereof and by adding the following provisions to the
end of the first paragraph thereof:
(l) to provide for uncertificated 10.25% Notes in addition to or
in place of certificated 10.25% Notes;
(m) to make any change that does not adversely affect the rights
of any Holder of 10.25% Notes in any material respect;
(n) to add or remove Subsidiary Guarantors pursuant to the
procedure set forth herein;
(o) to provide for the issuance pursuant to an exemption from
registration under the Securities Act of additional Debt Securities of
a series after the original date of issuance of such series; provided
that such additional Debt Securities bear appropriate legends and have
the benefit of registration rights; provided, further, that the
supplemental indenture pursuant to which such series was established
provides for the issuance of additional Debt Securities of such series
pursuant to an exemption from registration under the Securities Act.
(b) Section 9.01 of the Original Indenture is further amended by
adding the word "adversely" immediately after the word "which" and
immediately before the words "affects the Trustee's own rights" in the
first sentence of the second paragraph of Section 9.01.
(c) Section 9.02 of the Original Indenture is amended with respect to
the 10.25% Notes by deleting the word "or" from the end of clause (vii) of
the first paragraph thereof, deleting the "." at the end of clause (viii)
of the first paragraph thereof and by adding the following provisions to
the end of the first paragraph thereof:
, (ix) at any time after a Change of Control has occurred, change
the time at which the Change of Control Offer relating thereto must be
made or at which the 10.25% Notes must be repurchased pursuant to such
Change of Control Offer or (x) impair the right of any Holder to
receive payment of principal of and interest on such Holder's Debt
Securities on or after the due dates therefor or to institute suit for
the enforcement of any payment on or with respect to such Holder's
Debt Securities or any Subsidiary Guaranty.
(d) Section 9.02 of the Original Indenture is further amended by
adding the word "adversely" immediately after the third occurrence of the
word "Indenture" and immediately before the words "affects the Trustee's
own rights" in the first sentence of the third paragraph of Section 9.02.
(e) Article IX of the Original Indenture is amended by adding Section
9.05 as follows:
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48
SECTION 9.05. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to
any Holder of Debt Securities of a series for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Debt Securities of such series unless such consideration
is offered to be paid to all Holders of such series that so consent, waive
or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
SECTION 8. Amendments to Article X of the Original Indenture.
(a) Section 10.01 of the Original Indenture is amended in its entirety
with respect to the 10.25% Notes to read as follows:
SECTION 10.01. Consolidations and Mergers of the Company. The Company
shall not consolidate with or merge with or into any Person, or convey,
transfer or lease all or substantially all of its Property, unless:
(a) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized or existing under the laws of
the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall
expressly assume, by a supplemental indenture, executed and delivered
to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the 10.25% Notes and the Indenture;
(b) in the case of a conveyance, transfer or lease of all or
substantially all the Company's Property, such Property shall have
been so conveyed, transferred or leased as an entirety or virtually as
an entirety to one Person;
(c) immediately after giving effect to such transaction (and
treating, for purposes of this clause (c) and clauses (d) and (e)
below, any Indebtedness that becomes or is anticipated to become an
obligation of the Successor Company or any Restricted Subsidiary as a
result of such transaction as having been Incurred by such Successor
Company or such Restricted Subsidiary at the time of such
transaction), no Default or Event of Default shall have occurred and
be continuing;
(d) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to clause (a) of the first paragraph under
Section 4.11;
(e) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount that
is not less than the Consolidated Net Worth of the Company immediately
prior to such transaction; and
(f) the Company shall have delivered to the Trustee an Officer's
Certificate, stating that such consolidation, merger or transfer and
such supplemental indenture (if any) comply with the Indenture.
<PAGE>
49
(b) Section 10.02 of the Original Indenture is amended by deleting the
period at the end of the first sentence of the first paragraph thereof and
by substituting the following in its place:
"; provided, however, that in the case of a lease of all or
substantially all of the Company's Property, the Company shall not be
released from any of the obligations or covenants under the Indenture,
including the obligation to pay the principal of and interest on the
Debt Securities."
SECTION 9. Applicability of and Amendments to Article XI of the
Original Indenture.
(a) Article XI of the Original Indenture shall be applicable to the
10.25% Notes.
(b) Section 11.02(b) of the Original Indenture is superseded with
respect to the 10.25% Notes by the following provisions:
(b) Subject to Sections 11.02(c) and 11.03, the Company at any
time may terminate (i) all its obligations under the 10.25% Notes and
the Indenture with respect to the 10.25% Notes ("legal defeasance
option") or (ii) its obligations under Sections 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 10.01(d) and 10.01(e),
the operation of Sections 6.01(d) (to the extent relating to Sections
10.01(d) and 10.01(e)), 6.01(e) (to the extent relating to Sections
4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20),
6.01(f), 6.01(g) (to the extent relating to Significant Subsidiaries),
6.01(h) (to the extent relating to Significant Subsidiaries), 6.01(j)
and 6.01(k) ("covenant defeasance option"). The Company may exercise
its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment of
the 10.25% Notes may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option,
payment of the 10.25% Notes may not be accelerated because of an Event
of Default specified in Sections 6.01(d) and 6.01(e) (with respect to
the provisions of Articles 4 and 10 referred to in the immediately
preceding paragraph) and Sections 6.01(f), 6.01(g) and 6.01(h) (in
each case to the extent relating to Significant Subsidiaries), 6.01(j)
and 6.01(k). If the Company exercises its legal defeasance option or
its covenant defeasance option, each Subsidiary Guarantor, if any,
shall be released from all its obligations under its Subsidiary
Guarantee.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(c) Section 11.02(c) of the Original Indenture is amended in its
entirety with respect to the 10.25% Notes to read as follows:
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.08,
7.10, 11.05, 11.06 and 11.07 shall survive until the 10.25% Notes have
been paid in full. Thereafter, the Company's obligations in Sections
7.06, 11.05 and 11.06 shall survive.
<PAGE>
50
(d) Section 11.03(3) of the Original Indenture is amended by
deleting each instance of the number "91" and substituting "123" in
its place.
(e) Section 11.07 of the Original Indenture is amended by
deleting the "." at the end thereof and by substituting the following
in its place:
; provided, however, that, if the Company has made any payment of
interest on or principal of any Debt Securities because of the
reinstatement of its obligations, the Company shall be subrogated to
the rights of the Holders of such Debt Securities to receive such
payment from the money or U.S. Government Obligations held by the
Trustee or paying agent.
SECTION 10. Applicability of and Amendments to Article XII of the
Original Indenture.
(a) Article XII of the Original Indenture shall be applicable to the
10.25% Notes.
(b) Section 12.03 of the Original Indenture is amended in its entirety
to read as follows:
SECTION 12.03. Default on Senior Indebtedness. The Company may not pay
the principal of, or premium, if any, or interest on, the Subordinated Debt
Securities or make any deposit pursuant to Article XI and may not
repurchase, redeem or otherwise retire (except, in the case of Subordinated
Debt Securities that provide for a mandatory sinking fund pursuant to
Section 3.04, by the delivery of Subordinated Debt Securities by the
Company to the Trustee pursuant to the first paragraph of Section 3.05) any
Subordinated Debt Securities (collectively, "pay the Subordinated Debt
Securities") if (i) any principal, premium or interest in respect of Senior
Indebtedness is not paid within any applicable grace period (including at
maturity) or (ii) any other default on Senior Indebtedness occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its
terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded or (y) such Senior Indebtedness
has been paid in full in cash; provided, however, that the Company may pay
the Subordinated Debt Securities without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from
the Representative of each issue of Designated Senior Indebtedness. During
the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required
to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Subordinated Debt Securities for a
period (a "Payment Blockage period") commencing upon the receipt by the
Company and the Trustee of written notice of such default from the
Representative of any Designated Senior Indebtedness specifying an election
to effect a Payment Blockage Period (a "Blockage Notice") and ending 179
days thereafter (or earlier if such Payment Blockage Period is terminated
(i) by written notice to the Trustee and the Company from the Person or
Persons who gave such Blockage Notice, (ii) by repayment in full in cash of
such Designated Senior Indebtedness or (iii) because the default giving
rise to such Blockage Notice is no longer continuing). Notwithstanding the
provisions described in the immediately preceding sentence (but subject to
the provisions contained in the first sentence of this Section 12.03),
unless the holders of such Designated Senior Indebtedness or the
Representative of such holders shall have accelerated the maturity of such
<PAGE>
51
Designated Senior Indebtedness and not rescinded such acceleration, the
Company may resume payments on the Subordinated Debt Securities after the
end of such Payment Blockage Period. Not more than one Blockage Notice may
be given in any consecutive 360-day period, irrespective of the number of
defaults with respect to any number of issues of Senior Indebtedness during
such period.
(c) Section 12.04 of the Original Indenture is amended in its entirety
to read as follows:
SECTION 12.04. Acceleration of Payment of Debt Securities. If payment
of the Subordinated Debt Securities is accelerated when any Designated
Senior Indebtedness is outstanding, the Company may not pay the
Subordinated Debt Securities until three Business Days after the
Representatives of all issues of Designated Senior Indebtedness receive
notice of such acceleration and, thereafter, may pay the Subordinated Debt
Securities only if the Indenture otherwise permits payment at that time.
SECTION 11. Subsidiary Guarantees.
(a) The Original Indenture is amended with respect to the 10.25% Notes
by adding Article XIV and Article XV as follows:
ARTICLE XIV
Subsidiary Guarantees
SECTION 14.01. Subsidiary Guarantees. Each Subsidiary Guarantor hereby
unconditionally Guarantees, jointly and severally, to each Holder and to
the Trustee and its successors and assigns (a) the full and punctual
payment of principal of and interest on the 10.25% Notes when due, whether
at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under the Indenture and the 10.25%
Notes and (b) the full and punctual performance within applicable grace
periods of all other obligations of the Company under the Indenture and
the 10.25% Notes (all the foregoing being hereinafter collectively called
the "Obligations"). Each Subsidiary Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice
or further assent from such Subsidiary Guarantor, and that such Subsidiary
Guarantor will remain bound under this Article XIV notwithstanding any
extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of the Obligations and also waives
notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any Default under the 10.25% Notes or the Obligations. The obligations
of each Subsidiary Guarantor hereunder shall not be affected by (a) the
failure of any Holder or the Trustee to assert any claim or demand or to
enforce any right or remedy against the Company or any other Person under
the Indenture, the 10.25% Notes or any other agreement or otherwise; (b)
any extension or renewal of any thereof; (c) any rescission, waiver,
amendment or modification of any of the terms or provisions of the
Indenture, the 10.25% Notes or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of
them; (e) the failure of any Holder or the Trustee to exercise any right or
remedy against any other Guarantor of the Obligations; or (f) any change in
the ownership of such Subsidiary Guarantor.
<PAGE>
52
Each Subsidiary Guarantor further agrees that its Subsidiary Guaranty
herein constitutes a Guarantee of payment, performance and compliance when
due (and not a Guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held
for payment of the Obligations.
Each Subsidiary Guaranty is, to the extent and in the manner set forth
in Article XV, subordinated and subject in right of payment to the prior
payment in full of all Senior Indebtedness of the Subsidiary Guarantor
giving such Subsidiary Guaranty and each Subsidiary Guarantor and is made
subject to such provisions of the Indenture.
Except as expressly set forth in Sections 4.13, 4.18, and 11.02, the
obligations of each Subsidiary Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense of setoff,
counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Guaranteed Obligations or
otherwise. Without limiting the generality of the foregoing, the
obligations of each Subsidiary Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee
to assert any claim or demand or to enforce any remedy under the Indenture,
the 10.25% Notes or any other agreement, by any waiver or modification of
any thereof, by any Default, failure or delay, willful or otherwise, in the
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to
any extent vary the risk of such Subsidiary Guarantor or would otherwise
operate as a discharge of such Subsidiary Guarantor as a matter of law or
equity.
Each Subsidiary Guarantor further agrees that its Subsidiary Guaranty
herein shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of principal of or interest on
any Obligation is rescinded or must otherwise be restored by any Holder or
the Trustee upon the bankruptcy or reorganization of the Company or
otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to
pay the principal of or interest on any Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Obligation, each
Subsidiary Guarantor hereby promises to and will, upon receipt of written
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee an amount equal to the sum of (i) the unpaid amount
of such Obligations, (ii) accrued and unpaid interest on such Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
Obligations of the Company to the Holders and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in respect of any Obligations Guaranteed hereby until
payment in full in cash of all Obligations and all obligations to which the
Obligations are subordinated as provided in Article XV. Each Subsidiary
Guarantor further agrees that, as between it, 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 VI
for the purposes of such Subsidiary Guarantor's Subsidiary Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
<PAGE>
53
acceleration in respect of the Obligations Guaranteed hereby, and (y) in
the event of any declaration of acceleration of such Obligations as
provided in Article VI, such Obligations (whether or not due and payable)
shall forthwith become due and payable by such Subsidiary Guarantor for the
purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section 14.01.
SECTION 14.02. Contribution. Each of the Company and any Subsidiary
Guarantor (a "Contributing Party") agrees (subject to Articles XII and XV)
that, in the event a payment shall be made by any other Subsidiary
Guarantor under any Subsidiary Guaranty (the "Claiming Guarantor"), the
Contributing Party shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment multiplied by a fraction, the numerator
of which shall be the net worth of the Contributing Party on the date
hereof and the denominator of which shall be the aggregate net worth of the
Company and all the Subsidiary Guarantors on the date hereof (or, in the
case of any Subsidiary Guarantor becoming a party hereto pursuant to
Section 9.01(n), the determination of indemnification amounts shall be
based upon net worth on the date of the supplemental indenture executed and
delivered by such Subsidiary Guarantor.)
SECTION 14.03. Successors and Assigns. This Article XIV 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 conferred upon that
party in the Indenture and in the 10.25% Notes shall automatically extend
to and be vested in such transferee or assignee, all subject to the terms
and conditions of the Indenture.
SECTION 14.04. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or
privilege under this Article XIV shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. The rights, remedies and
benefits of the Trustee and the Holders herein expressly specified are
cumulative and not exclusive of any other rights, remedies or benefits
which either may have under this Article XIV at law, in equity, by statute
or otherwise.
SECTION 14.05. Modification. No modification, amendment or waiver of
any provision of this Article XIV, nor the consent to any departure by any
Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Subsidiary Guarantor
in any case shall entitle such Subsidiary Guarantor to any other or further
notice or demand in the same, similar or other circumstances.
SECTION 14.06. Execution of Supplemental Indenture for Future Subsidiary
Guarantors. Each Subsidiary which is required to become a Subsidiary
Guarantor pursuant to Section 4.18 shall promptly execute and deliver to
the Trustee a supplemental indenture in the form of Exhibit B hereto
pursuant to which such Subsidiary shall become a Subsidiary Guarantor under
this Article XIV and shall Guarantee the Obligations. Concurrently with the
execution and delivery of such supplemental indenture, the Company shall
<PAGE>
54
deliver to the Trustee an Opinion of Counsel to the effect that such
supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy,
insolvency, moratorium, fraudulent conveyance or transfer and other similar
laws relating to creditors' rights generally and to the principles of
equity, whether considered in a proceeding at law or in equity, the
Subsidiary Guaranty of such Subsidiary Guarantor is a legal, valid and
binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms.
ARTICLE XV
Subordination of Subsidiary Guarantees
SECTION 15.01. Agreement To Subordinate. Each Subsidiary Guarantor
agrees, and each Holder by accepting a 10.25% Note agrees, that the
Obligations of such Subsidiary Guarantor are subordinated in right of
payment, to the extent and in the manner provided in this Article XV, to
the payment when due of all Senior Indebtedness of such Subsidiary
Guarantor and that the subordination is for the benefit of and enforceable
by the holders of such Senior Indebtedness. The Obligations of a Subsidiary
Guarantor shall in all respects rank pari passu with any future Senior
Subordinated Indebtedness of such Subsidiary Guarantor and senior to all
existing and future junior subordinated Indebtedness of such Subsidiary
Guarantor, and only Senior Indebtedness shall rank senior to the
Obligations of such Subsidiary Guarantor in accordance with the provisions
set forth herein.
SECTION 15.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of any Subsidiary Guarantor to creditors upon
a total or partial liquidation or a total or partial dissolution of such
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Subsidiary Guarantor or
its property:
(1) holders of Senior Indebtedness of such Subsidiary
Guarantor shall be entitled to receive payment in full of such Senior
Indebtedness before holders shall be entitled to receive any payment
pursuant to any Obligations of such Subsidiary Guarantor; and
(2) until the Senior Indebtedness of any Subsidiary Guarantor
is paid in full, any distribution made by or on behalf of such
Subsidiary Guarantor to which Holders would be entitled but for this
Article XV shall be made to holders of the Senior Debt as their
interests may appear, except that all Holders may receive and retain
shares of stock and any debt securities of such Subsidiary Guarantor
that are subordinated to Senior Indebtedness of such Subsidiary
Guarantor to at least the same extent as the Obligations of such
Subsidiary Guarantor are subordinated to Senior Indebtedness of such
Subsidiary Guarantor.
SECTION 15.03. Default on Senior Indebtedness of Subsidiary Guarantor.
No Subsidiary Guarantor may make any payment pursuant to any of its
Obligations or repurchase, redeem or otherwise retire or defease any 10.25%
Notes or other Obligations (collectively, "pay its Subsidiary Guaranty") if
(i) any Senior Indebtedness of such Subsidiary Guarantor is not paid within
any applicable grace period (including at maturity) or (ii) any other
<PAGE>
55
default on Senior Indebtedness of such Subsidiary Guarantor occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its
terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded or (y) such Senior Indebtedness
has been paid in full; provided, however, that any Subsidiary Guarantor may
pay its Subsidiary Guaranty without regard to the foregoing if such
Subsidiary Guarantor and the Trustee receive written notice approving such
payment from the Representatives of each issue of Senior Indebtedness of
such Subsidiary Guarantor. No Subsidiary Guarantor may pay its Subsidiary
Guaranty during the continuance of any Payment Blockage Period after
receipt by the Company and the Trustee of a Payment Blockage Notice under
Section 12.03. Notwithstanding the provisions described in the immediately
preceding sentence, unless the holders of Senior Indebtedness of such
Subsidiary Guarantor giving such Payment Blockage Notice or the
Representative of such holders shall have accelerated the maturity of such
Senior Indebtedness and not rescinded such acceleration, any Subsidiary
Guarantor may resume (unless otherwise prohibited as described in the first
sentence of this paragraph) payments pursuant to its Subsidiary Guaranty
after such Payment Blockage Period.
SECTION 15.04. Demand for Payment. If a demand for payment is made on
a Subsidiary Guarantor pursuant to Article XIV, such Subsidiary Guarantor
may not pay its Subsidiary Guaranty until three Business Days after the
Representatives of all issues of Senior Indebtedness of such Subsidiary
Guarantor receive notice of such acceleration and, thereafter, may pay its
Subsidiary Guaranty only if the Indenture otherwise permits payment at that
time.
SECTION 15.05. When Distribution Must Be Paid Over. If a distribution
is made to Holders that because of this Article XV should not have been
made to them, the Holders who receive the distribution shall hold it in
trust for holders of the relevant Senior Indebtedness and pay it over to
them or their Representatives as their interests may appear.
SECTION 15.06. Subrogation. After all Senior Indebtedness of a
Subsidiary Guarantor is paid in full and until the 10.25% Notes are paid in
full, Holders shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
distribution made under this Article XV to holders of such Senior
Indebtedness that otherwise would have been made to Holders is not, as
between the relevant Subsidiary Guarantor and Holders, a payment by such
Subsidiary Guarantor on such Senior Indebtedness.
SECTION 15.07. Relative Rights. This Article XV defines the relative
rights of Holders and holders of Senior Indebtedness of a Subsidiary
Guarantor. Nothing in the Indenture shall:
(1) impair, as between a Subsidiary Guarantor and Holders, the
obligation of such Subsidiary Guarantor, which is absolute and
unconditional, to pay the Obligations to the extent set forth in
Article XIV or the relevant Subsidiary Guaranty; or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a default by such Subsidiary Guarantor under
the Obligations, subject to the rights of holders of Senior
Indebtedness of such Subsidiary Guarantor to receive distributions
otherwise payable to Holders.
<PAGE>
56
SECTION 15.08. Subordination May Not Be Impaired by Subsidiary
Guarantor. No right of any holder of Senior Indebtedness of any Subsidiary
Guarantor to enforce the subordination of the Obligation of such Subsidiary
Guarantor shall be impaired by any act or failure to act by such Subsidiary
Guarantor or by its failure to comply with the Indenture.
SECTION 15.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 15.03, the Trustee or paying agent may continue to make payments on
any Subsidiary Guaranty and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment,
a responsible trust officer receives written notice satisfactory to it that
payments may not be made under this Article XV. The Company, the relevant
Subsidiary Guarantor, the Registrar, any paying agent, a Representative or
a holder of Senior Indebtedness of any Subsidiary Guarantor may give the
notice; provided, however, that, if an issue of Senior Indebtedness of any
Subsidiary Guarantor has a Representative, only the Representative may give
the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and any paying agent may do the same with like rights. The
Trustee shall be entitled to all the rights set forth in this Article XV
with respect to any Senior Indebtedness of any Subsidiary Guarantor that
may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness; and nothing in Article XV shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article XV shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.06.
SECTION 15.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior
Indebtedness of any Subsidiary Guarantor, the distribution may be made and
the notice given to their Representative (if any).
SECTION 15.11. Article XV Not To Prevent Events of Default Under a
Subsidiary Guaranty or Limit Right To Demand Payment. The failure to make a
payment pursuant to a Subsidiary Guaranty by reason of any provision in
this Article XV shall not be construed as preventing the occurrence of a
Default under such Subsidiary Guaranty. Nothing in this Article XV shall
have any effect on the right of the Holders or the Trustee to make a demand
for payment on any Subsidiary Guarantor pursuant to Article XIV or the
relevant Subsidiary Guaranty.
SECTION 15.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XV, the Trustee and the Holders shall
be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
15.02 are pending, (ii) upon a certificate of the liquidating trustee or
agent or other Person making such payment or distribution to the Trustee or
to the Holders or (iii) upon the Representatives for the holders of Senior
Indebtedness of any Subsidiary Guarantor for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of Senior Indebtedness and other Indebtedness of such Subsidiary
Guarantor, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to
this Article XV. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a
<PAGE>
57
holder of Senior Indebtedness of any Subsidiary Guarantor to participate in
any payment or distribution pursuant to this Article XV, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Indebtedness of such Subsidiary
Guarantor held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and other facts pertinent to
the rights of such Person under this Article XV, 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 provisions of Sections 7.01 and 7.02 shall be applicable to
all actions or omissions of actions by the Trustee pursuant to this Article
XV.
SECTION 15.13. Trustee To Effectuate Subordination. Each Holder by
accepting a 10.25% Note authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of any Subsidiary Guarantor as provided in this Article XV and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 15.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Subsidiary Guarantor. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness of any
Subsidiary Guarantor and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or the Company or any
other Person, money or assets to which any holders of such Senior
Indebtedness shall be entitled by virtue of this Article XV or otherwise.
SECTION 15.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a 10.25% Note
acknowledges and agrees that the foregoing subordination provisions are,
and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness of any Subsidiary Guarantor, whether such Senior
Indebtedness was created or acquired before or after the issuance of the
10.25% Notes, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Indebtedness.
SECTION 12. Governing Law. This First Supplemental Indenture and the
10.25% Notes shall be governed by and construed in accordance with the
internal laws of the State of New York but without giving effect to the
applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby.
The Trustee, the Company, each of the Guarantors and the Holders agree to
submit to the jurisdiction of the courts of the State of New York in any
action or proceeding arising out of or relating to the Indenture or the
10.25% Notes.
SECTION 13. Counterparts. This First Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the day and year first above written.
<PAGE>
SWIFT ENERGY COMPANY,
By: /s/ John R. Alden
---------------------------------
John R. Alden
Senior Vice President-Finance
BANK ONE, N.A., as Trustee,
By: /s/ Jeffrey L. Eubank
---------------------------------
Jeffrey L. Eubank
Authorized Signatory
<PAGE>
Exhibit A
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as 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 since the registered owner hereof,
Cede & Co., has an interest herein.
THIS SECURITY IS A GLOBAL SECURITY AS REFERRED TO IN THE INDENTURE HEREINAFTER
REFERENCED. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT 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 OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
[FORM OF THE FACE OF 10.25% NOTES]
SWIFT ENERGY COMPANY
10.25% Senior Subordinated Notes due 2009
CUSIP No. 870738AC5
REGISTERED
No. 1 $125,000,000
Swift Energy Company, a Texas corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to Cede & Co., or its registered assigns, the
principal sum of One-Hundred Twenty-Five Million United States Dollars
($125,000,000) on August 1, 2009.
Interest Payment Dates: February 1, and August 1, commencing February 1,
2000.
Regular Record Dates: January 16 and July 16.
Reference is hereby made to the further provisions of this 10.25% Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
<PAGE>
2
IN WITNESS WHEREOF, the Company has caused this 10.25% Note to be signed
manually or by facsimile by its duly authorized officers.
Date: August 4, 1999
SWIFT ENERGY COMPANY
By:
---------------------------------------
John R. Alden
Senior Vice President-Finance
Attest:
- --------------------------
Vice President-Controller
This is one of the 10.25% Senior Subordinated Notes due 2009 described in
the within-mentioned Indenture.
BANK ONE, N.A.,
as Trustee
By:
------------------------------------------
Authorized Signatory
<PAGE>
3
[FORM OF THE REVERSE OF 10.25% NOTES]
SWIFT ENERGY COMPANY
10.25% Senior Subordinated Notes due 2009
1. Indenture; Limitations.
The Company issued the 10.25% Notes under an Indenture dated as of July 29,
1999 (the "Original Indenture") and a First Supplemental Indenture dated as of
August 4, 1999 (the "Supplemental Indenture") (the Original Indenture, as
supplemented by the Supplemental Indenture being hereinafter referred to as the
"Indenture"), between the Company and Bank One, N.A., as trustee (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture unless
otherwise indicated. The terms of the 10.25% Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The 10.25% Notes are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of all
such terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this 10.25% Note and the terms of the
Indenture, the terms of the Indenture shall control.
The 10.25% Notes are unsecured senior subordinated obligations of the
Company limited to $225,000,000 aggregate principal amount at any one time
outstanding (subject to Sections 2.03 and 2.10 of the Indenture). The Company
may, subject to Article IV of the Indenture, issue Additional 10.25% Notes under
the Indenture. This 10.25% Note is one of the Original 10.25% Notes referred to
in the Indenture issued in an aggregate principal amount of $125,000,000. The
10.25% Notes include the Original 10.25% Notes and up to an aggregate principal
amount of $100,000,000 Additional 10.25% Notes that may be issued under the
Indenture. The Original 10.25% Notes and the Additional 10.25% Notes are treated
as a single class of Debt Securities under the Indenture.
2. Principal and Interest.
The Company will pay the principal of this 10.25% Note on August 1, 2009.
The Company promises to pay interest on the principal amount of this 10.25%
Note on each February 1 and August 1 (each an "Interest Payment Date"), as set
forth below, at the rate per annum shown above.
Interest will be payable semiannually (to the holders of record of the
10.25% Notes at the close of business on the January 16 or July 16 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
February 1, 2000.
Interest on the 10.25% Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from August 4, 1999,
provided that, if there is no existing Default in the payment of interest and
this 10.25% Note is authenticated between a Regular Record Date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
<PAGE>
4
accrue from such Interest Payment Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal at the rate borne by
the 10.25% Notes plus 1% per annum, and it shall pay interest on overdue
installments of interest, to the extent lawful, at the rate borne by the 10.25%
Notes.
3. Method of Payment.
The Company will pay interest (except defaulted interest) on the principal
amount of the 10.25% Notes as provided above on each Interest Payment Date to
the persons who are Holders (as reflected in the Debt Security Register at the
close of business on the January 16 and July 16 immediately preceding the
relevant Interest Payment Date), in each case, even if the 10.25% Note is
canceled on registration of transfer, registration of exchange, redemption or
repurchase after such record date and on or before the Interest Payment Date,
provided that, with respect to the payment of principal, the Company will make
payment to the Holder that surrenders this 10.25% Note to a paying agent on or
after August 1, 2009.
The Company will pay principal, premium, if any, and as provided above,
interest 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, at its
option, may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Debt Security Register). Payments in respect of 10.25% Notes
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. If a payment date is a date other
than a Business Day at a place of payment, payment may be made at that place on
the next succeeding day that is a Business Day and no interest shall accrue for
the intervening period.
4. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent, paying agent and
Registrar. The Company may change any authenticating agent, paying agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any of
them may act as paying agent, Registrar or co-Registrar.
5. Optional Redemption.
Except as set forth in the following paragraph, the 10.25% Notes will not
be redeemable at the option of the Company prior to August 1, 2004. Starting on
that date, the Company may redeem all or any portion of the 10.25% Notes upon
not less than 30 nor more than 60 days' prior notice, at the redemption prices
set forth below, plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant Interest Payment Date). The following
prices are for 10.25% Notes redeemed during the 12-month period commencing on
August 1 of the years set forth below, and are expressed as percentages of
principal amount:
<PAGE>
5
Redemption
Year Price
------------------ ---------
2004 105.125%
2005 103.417%
2006 101.708%
2007 and thereafter 100.000%
The Company may on any one or more occasions prior to August 1, 2002,
redeem up to 33 1/3% of the aggregate principal amount of the 10.25% Notes
originally issued with the net proceeds of one or more Equity Offerings of the
Company at a redemption price of 110.25% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of redemption (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date), provided that at least 66 2/3% of the
aggregate principal amount of the 10.25% Notes originally issued remains
Outstanding after the occurrence of such redemption. Any such redemption shall
occur not later than 90 days after the date of the closing of any such Equity
Offering upon not less than 30 or more than 60 days' prior notice. The
redemption shall be made in accordance with procedures set forth in the
Indenture.
If less than all the 10.25% Notes are to be redeemed at any time, selection
of 10.25% Notes for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on which
the 10.25% Notes are listed, or, if the 10.25% Notes are not so listed, on a pro
rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate.
6. Sinking Fund
The 10.25% Notes are not subject to any sinking fund.
7. Subordination
The 10.25% Notes are subordinated to Senior Indebtedness of the Company. To
the extent provided in the Indenture, Senior Indebtedness of the Company must be
paid before the 10.25% Notes may be paid. The Company and each Subsidiary
Guarantor agrees, and each Holder by accepting a 10.25% Note agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
8. Repurchase upon a Change of Control.
Upon the occurrence of a Change of Control, each Holder of 10.25% Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 in principal amount or an integral multiple thereof) of such Holder's
10.25% Notes pursuant to the Change of Control Offer as provided in, and subject
to the terms of, the Indenture at a purchase price in cash equal to 101% of the
principal amount of the 10.25% Notes repurchased, plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date).
<PAGE>
6
9. Denominations; Transfer; Exchange.
The 10.25% Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of 10.25% Notes 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 register
the transfer or exchange of any 10.25% Notes selected for redemption (except in
the case of a 10.25% Note redeemed in part, the portion of the 10.25% Note not
to be redeemed). Also, it need not register the transfer or exchange of any
10.25% Notes for a period of 15 days before the day of the mailing of a notice
of redemption of 10.25% Notes selected for redemption or 15 days before an
Interest Payment Date.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a 10.25% Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest remains
unclaimed for two years, the Trustee and the paying agent will pay the money
back to the Company at its written request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such paying
agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
Subject to certain conditions, if the Company deposits with the Trustee
money or U.S. Government Obligations sufficient to pay the then outstanding
principal of, premium, if any, and accrued interest on the 10.25% Notes to
redemption or maturity, as applicable, the Company and the Subsidiary
Guarantors, if any, may terminate some of or all of their obligations under the
Indenture and the 10.25% Notes, except in certain circumstances for certain
sections thereof.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the 10.25% Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the 10.25% Notes then Outstanding, and any existing
Default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the 10.25% Notes then
Outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the 10.25% Notes to, among other
things, cure any ambiguity, defect or inconsistency and make any change that
does not adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company and
its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
<PAGE>
7
suffer to exist restrictions on the ability of Restricted Subsidiaries to make
certain payments to the Company, issue Capital Stock of Restricted Subsidiaries,
engage in transactions with Affiliates, suffer to exist or incur Liens,
Guarantee Indebtedness of the Company, Incur layered Indebtedness or merge,
consolidate or transfer substantially all of its assets. Within 120 days after
the end of each fiscal year, the Company shall deliver to the Trustee an
Officers' Certificate stating whether or not the signers know of any Default or
Event of Default under such restrictive covenants.
15. Successor Persons.
Subject to certain exceptions, when a successor Person or other entity
assumes all the obligations of its predecessor under the 10.25% Notes and the
Indenture, the predecessor Person will be released from those obligations.
16. Defaults and Remedies.
The following are summaries of Events of Default under the Indenture with
respect to the 10.25% Notes:
(a) failure to pay any interest on the 10.25% Notes when due,
continued for 30 days;
(b) failure to pay principal of (or premium, if any, on) the 10.25%
Notes when due;
(c) failure to comply with Article X;
(d) failure to perform any other covenant of the Company or any
Subsidiary Guarantor in the Indenture, continued for 30 days after written
notice to the Company from the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding 10.25% Notes;
(e) a default by the Company or any Restricted Subsidiary under any
Indebtedness for borrowed money in an aggregate amount greater than $5.0
million (other than Non-recourse Purchase Money Indebtedness) that results
in acceleration of the maturity of such Indebtedness, or failure to pay any
such Indebtedness at maturity, if such Indebtedness is not discharged or
such acceleration is not rescinded or annulled within 10 days after written
notice as provided in the Indenture;
(f) one or more final judgments or orders by a court of competent
jurisdiction are entered against the Company or any Restricted Subsidiary
in an uninsured or unindemnified aggregate amount outstanding at any time
in excess of $5.0 million and such judgments or orders are not discharged,
waived, stayed, satisfied or bonded for a period of 30 consecutive days;
(g) certain events of bankruptcy, insolvency or reorganization with
respect to the Company or any Significant Subsidiary; or
(h) a Subsidiary Guaranty ceases to be in full force and effect (other
than in accordance with the terms of the Indenture and such Subsidiary
<PAGE>
8
Guaranty) or a Subsidiary Guarantor denies or disaffirms its obligations
under its Subsidiary Guaranty.
The Indenture provides that if an Event of Default (other than an Event of
Default described in clause (g) above) with respect to the 10.25% Notes at the
time Outstanding shall occur and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding 10.25%
Notes by notice as provided in the Indenture may declare the principal amount of
the 10.25% Notes to be due and payable immediately. If an Event of Default
described in clause (g) above with respect to the 10.25% Notes at the time
Outstanding shall occur, the principal amount of all the 10.25% Notes will
automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. After any such acceleration, but before a judgment
or decree based on acceleration, the Holders of at least a majority in aggregate
principal amount of the Outstanding 10.25% Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal (or other specified amount),
have been cured or waived as provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case of an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders of the
10.25% Notes, unless such Holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the Holders of at least a majority in aggregate principal amount of the
Outstanding 10.25% Notes 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 the Trustee with respect to the
10.25% Notes.
No Holder of 10.25% Notes will have any right to institute any proceeding
with respect to the Indenture, or for the appointment of a receiver or a
trustee, or for any other remedy thereunder, unless:
(a) such Holder has previously given to the Trustee written notice of
a continuing Event of Default with respect to the 10.25% Notes;
(b) the Holders of at least 25% in aggregate principal amount of the
Outstanding 10.25% Notes have made written request, and such Holder or
Holders have offered reasonable indemnity, to the Trustees to institute
such proceeding as trustee; and
(c) the Trustee has failed to institute such proceeding and has not
received from the Holders of at least a majority in aggregate principal
amount of the Outstanding 10.25% Notes a direction inconsistent with such
request, within 60 days after such notice, request and offer.
However, such limitations do not apply to a suit instituted by a Holder of
10.25% Notes for the enforcement of payment of the principal of or any
premium or interest on such 10.25% Notes on or after the applicable due
date specified in such 10.25% Notes.
<PAGE>
9
17. Trustee Dealings with the Company or the Guarantors.
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from and perform services for the Subsidiary
Guarantors, if any, or the Company or their Affiliates and may otherwise deal
with the Subsidiary Guarantors, if any, or the Company or their Affiliates as if
it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, shareholder, other
equity holder, officer, director, employee or controlling Person as such, of the
Company or the Guarantors or of any successor Person shall have any liability
for any obligations of the Company or the Guarantors under the 10.25% Notes 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 10.25% Note expressly
waives and releases all such liability. The waiver and release are a condition
of, and part of the consideration for the issuance of the 10.25% Notes.
19. Authentication.
This 10.25% Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this 10.25%
Note.
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. Governing Law.
THIS 10.25% NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
22. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the 10.25% Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the 10.25% Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
<PAGE>
10
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to Swift Energy Company,
16825 Northchase Drive, Suite 400, Houston, Texas 77060, Attention: Chief
Financial Officer.
<PAGE>
11
ASSIGNMENT FORM
To assign this 10.25% Note, fill in the form below:
I or we assign and transfer this 10.25% Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint [ ] agent to transfer this 10.25% Note on the books
of the Company. The agent may substitute another to act for him.
- ------------------------------------------------------------
Date: Your Signature:
---------------- ----------------------
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this 10.25% Note.
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this 10.25% Note purchased by the Company
pursuant to Section 4.14 (Asset Sale) or Section 4.20 (Change of Control) of the
Indenture, check the Box: |_|
If you wish to have a portion of this 10.25% Note purchased by the Company
pursuant to Section 4.14 or Section 4.20 of the Indenture, state the amount:
$
-------.
Date:
----------
Your Signature:
----------------------------------------------------------------
(Sign exactly as your name appears on the other side of this 10.25% Note)
Signature Guarantee:(1)
-----------------------------------------------------------
(1) The Holder's signature must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" as
defined by Rule 17Ad-15 under the Exchange Act.
<PAGE>
EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of, among
[GUARANTOR] (the "New Subsidiary Guarantor"), a subsidiary of Swift Energy
Company (or its successor), a Texas corporation (the "Company"), SWIFT ENERGY
COMPANY[, on behalf of itself and the Subsidiary Guarantors (the "Existing
Subsidiary Guarantors") under the indenture referred to below,] and BANK ONE,
N.A., a [ ] banking association, as trustee under the indenture referred to
below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company [and the Existing Subsidiary Guarantors] has heretofore
executed and delivered to the Trustee an Indenture dated as of July 29, 1999
(such Indenture, as amended or supplemented to date, including by the First
Supplemental Indenture dated as of August 4, 1999, between the Company and the
Trustee, is hereinafter called the "Indenture"), providing for the issuance of
an aggregate principal amount of up to $225,000,000 of 10.25% Senior
Subordinated Notes due 2009 (the "Securities");
WHEREAS Section 4.18 of the Indenture provides that under certain
circumstances the Company is required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally Guarantee all the Company's
obligations under the Securities pursuant to a Subsidiary Guaranty on the terms
and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company
and the Existing Subsidiary Guarantors are authorized to execute and deliver
this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees,
jointly and severally with all other Subsidiary Guarantors, to unconditionally
Guarantee the Company's obligations under the Securities on the terms and
subject to the conditions set forth in Article XIV of the Indenture and to be
bound by all other applicable provisions of the Indenture.
2. Ratification of Indenture; Supplemental Indentures Part of Indenture.
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and all the terms, conditions and provisions thereof shall remain
<PAGE>
in full force and effect. This Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered shall be bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no representation as
to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for convenience only
and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
By:
Name:
Title:
SWIFT ENERGY COMPANY, [on behalf of itself
and the Existing Subsidiary Guarantors,]
By:
Name:
Title:
[[EXISTING SUBSIDIARY GUARANTORS],
By:
Name:
Title:
<PAGE>
BANK ONE, N.A., as Trustee,
By:
Name:
Title:
Exhibit 5.1
[LETTERHEAD OF JENKENS & GILCHRIST, a Professional Corporation]
August 4, 1999
Swift Energy Company
16825 Northchase Drive
Suite 400
Houston, Texas 77060
Ladies and Gentlemen:
We have acted as securities counsel for Swift Energy Company, a Texas
corporation ("Swift"), in connection with (i) the preparation and filing with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), of Registration Statement No. 333-81651 on
Form S-3 filed by the Company with the Commission on June 28, 1999, and amended
and declared effective on July 9, 1999 (the "Registration Statement"), for the
purpose of registering under the Act, among other securities, debt securities of
Swift; and (ii) the preparation of a final prospectus supplement dated July 30,
1999 (the "Prospectus Supplement"), in connection with the issuance of
$125,000,000 aggregate principal amount of 10.25% Senior Subordinated Notes Due
2009 of Swift (the "Notes").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement, including the form of prospectus included therein and the documents
incorporated by reference therein, and the Prospectus Supplement, (ii) Swift's
Restated Certificate of Incorporation and By-laws, each as amended to date, and
(iii) the Indenture relating to Swift debt securities, dated as of July 29,
1999, and the form of First Supplemental Indenture thereto, to be dated as of
August 4, 1999 (as so amended and supplemented, the "Indenture"), both between
Swift and Bank One, N.A., as trustee. We have also examined originals or copies,
certified or otherwise identified to our satisfaction, of such other documents,
certificates and records as we have deemed necessary or appropriate, and we have
made such investigations of law as we have deemed appropriate, as a basis for
the opinions expressed below.
In rendering the opinions expressed below, we have assumed and have not
verified (i) the genuineness of the signatures on all documents that we have
examined, (ii) the conformity to the originals of all documents supplied to us
as certified or photostatic or faxed copies, (iii) the authenticity of the
originals of such documents and (iv) as to the forms of all documents in respect
of which forms were filed with the Commission or incorporated by reference as
<PAGE>
exhibits to the Registration Statement, the conformity in all material respects
of such documents to the forms thereof that we have examined. In conducting our
examination of documents executed by parties other than Swift, we have assumed
that such parties had the power, corporate or other, to enter into and perform
all obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such parties
of such document and that such documents constitute valid and binding
obligations of such parties. We have assumed that the Notes and the Indenture,
when executed, will be executed in substantially the forms reviewed by us. In
addition, we have assumed the receipt by each person to whom a Note is to be
issued (collectively, the "Note Holders") of a certificate for such Note or of a
global certificate by the Depository Trust Company, acting as agent, and the
payment for the Note so acquired, in accordance with the Registration Statement,
and that the Notes are issued and sold to the Note Holders in accordance with
the Registration Statement. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied upon
oral or written statements and representations of officers, trustees and other
representatives of the Company and others. We have further assumed that the
Registration Statement and any amendments thereto have become effective.
Based upon the foregoing, and having regard for such legal considerations
as we deem relevant, we are of the opinion that:
1. the Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas;
2. when the Indenture has been duly executed and delivered by the
officers authorized by the Board of Directors of the Company to
execute and deliver the same, it will constitute a legal, valid and
binding instrument of the Company, enforceable against the Company in
accordance with its terms; and
3. the Notes are duly authorized, and when executed and authenticated in
the manner set forth in the Indenture and when sold, issued to and
paid for by the Underwriters, will be legal, valid and binding
obligations of the Company, entitled to the benefits provided by the
Indenture, and enforceable in accordance with its terms.
The opinions expressed above with respect to the legally binding effect of
the Indenture and the Notes are subject, as to enforceability, to applicable
bankruptcy, reorganization, insolvency, fraudulent transfer, moratorium and
other laws affecting creditors' rights generally from time to time and to
general principles of equity (regardless of whether considered in a proceeding
in equity or at law); commercial reasonableness and unconscionability and an
<PAGE>
implied covenant of good faith and fair dealing; the power of the courts to
award damages in lieu of equitable remedies; and the limitations imposed by
rights to indemnification and contribution thereunder may be limited by Federal
or state securities laws or public policy underlying such laws on any right to
indemnification or contribution contained in the Indenture and the Notes.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to reference being made to our firm under the caption
"Legal Opinions" in the Prospectus dated July 9, 1999 and under the caption
"Legal Opinions" in the Prospectus Supplement dated July 30, 1999, which form a
part of the Registration Statement. In giving this consent, this firm does not
thereby admit that it comes into the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission promulgated thereunder.
We are members of the Bar of the State of Texas and do not hold ourselves
out as being experts on laws other than the laws of the State of Texas and the
laws of the United States of America.
Respectfully submitted,
Jenkens & Gilchrist, a Professional Corporation
By: /s/ Donald W. Brodsky
--------------------------------------------
Donald W. Brodsky
Authorized Signatory
Exhibit 5.2
[LETTERHEAD OF JENKENS & GILCHRIST,
a Professional Corporation]
August 4, 1999
Swift Energy Company
16825 Northchase Drive
Suite 400
Houston, Texas 77060
Ladies and Gentlemen:
We have acted as securities counsel for Swift Energy Company, a Texas
corporation ("Swift"), in connection with (i) the preparation and filing with
the Securities and Exchange Commission (the "Commission") of Registration
Statement No. 333-81651 on Form S-3 filed by the Company with the Commission on
June 28, 1999, and amended and declared effective on July 9, 1999 (the
"Registration Statement") for the purpose of registering under the Act, among
other securities, common stock of Swift; and (ii) the preparation of a final
prospectus supplement dated July 30, 1999 (the "Prospectus Supplement"), in
connection with an underwritten public offering (the "Offering") of an aggregate
of up to 4,600,000 shares of common stock, par value $.01 per share (the
"Shares").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement, including the form of prospectus included therein and the documents
incorporated by reference therein, and the Prospectus Supplement, (ii) Swift's
Restated Articles of Incorporation and the Bylaws, each as amended to date;
(iii) copies of resolutions of the Board of Directors of the Company authorizing
the issuance of the Shares and related matters; and (iv) such other documents
and instruments as we have deemed necessary for the expression of opinions
herein contained. In making the foregoing examinations, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, and the conformity to original photostatic copies. As to
various questions of fact material to this opinion, we have relied, to the
extent we deem reasonably appropriate, upon representations or certificates of
officers of Swift and upon documents, records and instruments furnished to us by
Swift, without independent check or verification of their accuracy.
<PAGE>
Based upon the foregoing examination, we are of the opinion that:
1. the Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas; and
2. the Shares to be sold in the Offering, as described in the Prospectus
Supplement, have been duly authorized for issuance and, when such
shares are issued and delivered by Swift to the Underwriters in the
manner and for the consideration stated in the Prospectus Supplement,
they will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to reference being made to our firm under the caption
"Legal Opinions" in the Prospectus dated July 9, 1999 and under the caption
"Legal Opinions" in the Prospectus Supplement dated July 30, 1999, which form a
part of the Registration Statement. In giving this consent, this firm does not
thereby admit that it comes into the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission promulgated thereunder.
We are members of the Bar of the State of Texas and do not hold ourselves
out as being experts on laws other than laws of the State of Texas and the laws
of the United States of America.
Respectfully submitted,
Jenkens & Gilchrist, a Professional Corporation
By: /s/ Donald W. Brodsky
---------------------------------------------
Authorized Signatory
Exhibit 10.1
THIRD AMENDMENT TO
CREDIT AGREEMENT
AMONG
SWIFT ENERGY COMPANY,
AS BORROWER,
BANK ONE, TEXAS, NATIONAL ASSOCIATION
AS ADMINISTRATIVE AGENT,
BANK OF MONTREAL
AS SYNDICATION AGENT, AND
NATIONSBANK, N.A.
AS DOCUMENTATION AGENT
AND
THE LENDERS SIGNATORY HERETO
Effective July 19, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................................1
1.01 Terms Defined Above.........................................1
1.02 Terms Defined in Agreement..................................1
1.03 References..................................................1
1.04 Articles and Sections.......................................2
1.05 Number and Gender...........................................2
ARTICLE II AMENDMENTS........................................................2
2.01 Amendment of Section 1.2.................................2
2.02 Amendment of Section 6.20................................3
ARTICLE III CONDITIONS........................................................3
3.01 Receipt of Documents.....................................3
3.02 Accuracy of Representations and Warranties...............3
3.03 Matters Satisfactory to Lender...........................3
ARTICLE IV REPRESENTATIONS AND WARRANTIES....................................4
ARTICLE V RATIFICATION......................................................4
ARTICLE VI MISCELLANEOUS.....................................................4
6.01 Scope of Amendment.......................................4
6.02 Agreement as Amended.....................................4
6.03 Parties in Interest......................................4
6.04 Rights of Third Parties..................................4
6.05 ENTIRE AGREEMENT.........................................4
6.06 GOVERNING LAW............................................5
6.07 JURISDICTION AND VENUE...................................5
<PAGE>
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made and
entered into effective as of July 19, 1999, by and among SWIFT ENERGY COMPANY, a
Texas corporation (the "Borrower"), each lender that is a signatory hereto or
becomes a signatory hereto as provided in Section 9.1 (individually, together
with its successors and assigns, a Lender and, collectively, together with their
respective successors and assigns, the Lenders), and BANK ONE, TEXAS, NATIONAL
ASSOCIATION, a national banking association, as Administrative Agent for the
Lenders (in such capacity, together with its successors in such capacity
pursuant to the terms hereof, the Administrative Agent), BANK OF MONTREAL, a
Canadian chartered bank as Syndication Agent, and NATIONSBANK, N.A., a national
banking association as Documentation Agent.
W I T N E S S E T H:
WHEREAS, the above named parties did execute and exchange counterparts of
that certain Credit Agreement dated August 18, 1998, as amended by First
Amendment to Credit Agreement dated September 30, 1998, and as further amended
by Second Amendment to Credit Agreement dated December 31, 1998 (the
"Agreement"), to which reference is here made for all purposes;
WHEREAS, the parties subject to and bound by the Agreement are desirous of
amending the Agreement in the particulars hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties to the Agreement, as set forth therein, and the mutual covenants and
agreements of the parties hereto, as set forth in this Third Amendment, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Terms Defined Above. As used herein, each of the terms
"Agreement," "Borrower," "Amendment," and "Lender" shall have the meaning
assigned to such term hereinabove.
1.02 Terms Defined in Agreement. As used herein, each term defined in the
Agreement shall have the meaning assigned thereto in the Agreement, unless
expressly provided herein to the contrary.
1.03 References. References in this Third Amendment to Article or Section
numbers shall be to Articles and Sections of this Third Amendment, unless
expressly stated herein to the contrary. References in this Third Amendment to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof," and
"hereunder" shall be to this Third Amendment in its entirety and not only to the
particular Article or Section in which such reference appears.
<PAGE>
1.04 Articles and Sections. This Third Amendment, for convenience only, has
been divided into Articles and Sections and it is understood that the rights,
powers, privileges, duties, and other legal relations of the parties hereto
shall be determined from this Third Amendment as an entirety and without regard
to such division into Articles and Sections and without regard to headings
prefixed to such Articles and Sections.
1.05 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural and likewise
the plural shall be understood to include the singular. Words denoting sex shall
be construed to include the masculine, feminine, and neuter, when such
construction is appropriate, and specific enumeration shall not exclude the
general, but shall be construed as cumulative. Definitions of terms defined in
the singular and plural shall be equally applicable to the plural or singular,
as the case may be.
ARTICLE II.
AMENDMENTS
The Borrower and the Lender hereby amend the Agreement in the following
particulars:
2.01 Amendment of Section 1.2 Section 1.2 of the Agreement is hereby
amended in part to read as follows:
The following definition is amended to read as follows:
Senior Subordinated Debt shall mean the Indebtedness of Borrower under the
Senior Subordinated Notes in the amount up to $150,000,000 due 2009, issued
or to be issued in accordance with the terms of the Prospectus Supplement
draft dated July 6, 1999, relating thereto.
2.02 Amendment of Section 6.20. Section 6.20 of the Agreement is hereby
amended to read as follows:
6.20 Senior Subordinated Debt. The terms of the Senior Subordinated Debt
shall not deviate materially from the Prospectus Supplement draft dated
July 6, 1999.
<PAGE>
ARTICLE III.
CONDITIONS
The obligation of the Lender to amend the Agreement as provided herein is
subject to the fulfillment of the following conditions precedent:
3.01 Receipt of Documents. The Lender shall have received, reviewed, and
approved the following documents and other items, appropriately executed when
necessary and in form and substance satisfactory to the Lender:
(a) multiple counterparts of this Third Amendment, as requested by the
Lender;
(b) receipt of executed signature pages from the Required Lenders; and
(c) such other agreements, documents, items, instruments, opinions,
certificates, waivers, consents, and evidence as the Lender may
reasonably request.
3.02 Accuracy of Representations and Warranties. The representations and
warranties contained in Article IV of the Agreement and this Third Amendment
shall be true and correct.
3.03 Matters Satisfactory to Lender. All matters incident to the
consummation of the transactions contemplated hereby shall be satisfactory to
the Lender.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby expressly re-makes, in favor of the Lender, all of the
representations and warranties set forth in Article IV of the Agreement, and
represents and warrants that all such representations and warranties remain true
and unbreached.
ARTICLE V.
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and confirm the
Agreement and the other Loan Documents, in all things in accordance with the
terms and provisions thereof, as amended by this Third Amendment.
<PAGE>
ARTICLE VI.
MISCELLANEOUS
6.01 Scope of Amendment. The scope of this Third Amendment is expressly
limited to the matters addressed herein and this Third Amendment shall not
operate as a waiver of any past, present, or future breach, Default, or Event of
Default under the Agreement, except to the extent, if any, that any such breach,
Default, or Event of Default is remedied by the effect of this Third Amendment.
6.02 Agreement as Amended. All references to the Agreement in any document
heretofore or hereafter executed in connection with the transactions
contemplated in the Agreement shall be deemed to refer to the Agreement as
amended by this Third Amendment.
6.03 Parties in Interest. All provisions of this Third Amendment shall be
binding upon and shall inure to the benefit of the Borrower, the Lender and
their respective successors and assigns.
6.04 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the Lender and the Borrower, and no other Person
shall have standing to require satisfaction of such provisions in accordance
with their terms and any or all of such provisions may be freely waived in whole
or in part by the Lender at any time if in its sole discretion it deems it
advisable to do so.
6.05 ENTIRE AGREEMENT. THIS THIRD AMENDMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, BETWEEN SUCH PARTIES
REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS THIRD AMENDMENT,
THE AGREEMENT, THE NOTE, THE SECURITY INSTRUMENTS, AND THE OTHER WRITTEN
DOCUMENTS REFERRED TO IN THE AGREEMENT OR EXECUTED IN CONNECTION WITH OR AS
SECURITY FOR THE NOTE REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
6.06 GOVERNING LAW. THIS THIRD AMENDMENT, THE AGREEMENT AND THE NOTE SHALL
BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. THE PARTIES ACKNOWLEDGE AND
AGREE THAT THIS AGREEMENT AND THE NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY
BEAR A NORMAL, REASONABLE, AND SUBSTANTIAL RELATIONSHIP TO THE STATE OF TEXAS.
<PAGE>
6.07 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS THIRD AMENDMENT, THE AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED
IN COURTS HAVING SITUS IN HARRIS COUNTY, TEXAS. EACH OF THE BORROWER AND THE
LENDER HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT
LOCATED IN HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO
TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST
IT BY THE BORROWER OR THE LENDER IN ACCORDANCE WITH THIS SECTION.
IN WITNESS WHEREOF, this Third Amendment to Credit Agreement is executed
effective the date first hereinabove written.
BORROWER:
SWIFT ENERGY COMPANY
By: /s/ John R. Alden
------------------------------------
John R. Alden
Senior Vice President
Address for Notices:
Swift Energy Corporation
16825 Northchase Drive, Suite 400
Houston, Texas 77060
Attention: John R. Alden
Telecopy: (281) 874-2701
(Signatures Continued on Next Page)
<PAGE>
ADMINISTRATIVE AGENT AND LENDER:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ Jeff Dalton
----------------------------------------
Jeff Dalton
Vice President
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
910 Travis
Houston, Texas 77002
Address for Notices:
Bank One, Texas, National Association
910 Travis
Houston, Texas 77002
Attention: Charles Kingswell-Smith
Telecopy: (713) 751-3544
(Signatures Continued on Next Page)
<PAGE>
LENDER:
BANK OF MONTREAL
By: /s/ J. R. Whitmore
-------------------------------------
J. R. Whitmore
Director
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
115 S. LaSalle
11th Floor
Chicago, Illinois 60603
Attention: Charlo Chase
Address for Notices:
Bank of Montreal
700 Louisiana, Suite 4400
Houston, Texas 77002
Attention: Christa Hash
Telecopy: (713) 223-4007
(Signatures Continued on Next Page)
<PAGE>
LENDER:
BANK OF SCOTLAND
By: /s/ Annie Chin Tat
------------------------------------
Annie Chin Tat
Senior Vice President
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
565 Fifth Avenue
New York, New York 10017
Attention: Karen Workman
Address for Notices:
1200 Smith Street
Suite 1750
Houston, Texas 77002
Attention: Richard Butler
Telecopy: 713-651-5714
With a copy to:
Annie Chin Tat
565 Fifth Avenue
New York, New York 10017
(Signatures Continued on Next Page)
<PAGE>
LENDER:
BANK OF AMERICA, N.A. formerly known
as NATIONSBANK, N.A.)
By: /s/ Ronald E. McKaig
----------------------------------
Ronald E. McKaig
Managing Director
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
901 Main Street, 14th Floor
Dallas, Texas 70202
Attention: Terri Smith
Address for Notices:
333 Clay Street, Suite 4550
Houston, Texas 77002-4103
Attention: Ron McKaig
Telecopy: 713-651-4888
(Signatures Continued on Next Page)
<PAGE>
LENDER:
THE SANWA BANK, LIMITED
By: /s/ Clyde L. Redford
------------------------------------
Clyde L. Redford
Vice President
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Wai Mei (Sandy) Lew
Address for Notices:
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Attention: Ko Oshima
Telecopy: 212-754-2360
Copy to:
1200 Smith Street, Suite 2670
Houston, Texas 77002
Attention: Clyde Redford
Telecopy: 713-654-1462
(Signatures Continued on Next Page)
<PAGE>
LENDER:
CIBC INC.
By: /s/ Roger Colden
-----------------------------------
Roger Colden
Authorized Signatory
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
2727 Paces Ferry Road
Suite 1200
2 Paces West, Bldg. 2
Atlanta, Georgia 30339
Attention: Kathryn McGovern
Senior Associate
Address for Notices:
1600 Smith Street
Suite 3000
Houston, TX 77002
Attention: Mark H. Wolf
Telecopy: 713-650-2588
(Signatures Continued on Next Page)
<PAGE>
LENDER:
FIRST UNION NATIONAL BANK
By: /s/ Paul N. Riddle
------------------------------------
Senior Vice President
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
1001 Fannin Street
Suite 2255
Houston, Texas 77002
Attention: Debbie Blank
Portfolio Administrator
Address for Notices:
1001 Fannin Street, Suite 2255
Attention: Paul N. Riddle
Telecopy: 713-650-6354
(Signatures Continued on Next Page)
<PAGE>
LENDER:
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Elizabeth W. Hunter
----------------------------------
Elizabeth W. Hunter
Director
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Stacie Row
Address for Notices:
1111 Bagby, Suite 2020
Houston, TX 77002
Attention: Elizabeth W. Hunter
Telecopy: 713-650-0824
(Signatures Continued on Next Page)
<PAGE>
LENDER:
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
----------------------------------
Pascal Poupelle
President and Chief Operating
Officer
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
1301 Avenue of the Americas, 15th Floor
New York, New York 10019
Attn: Loan Administration Department
with a copy to:
1100 Louisiana, Suite 5360
Houston, Texas 77002
Attention: Bernadette Archie
Address for Notices:
1301 Avenue of the Americas, 15th Floor
New York, New York 10019
Attn: Loan Administration Department
with a copy to:
1000 Louisiana, Suite 5360
Houston, TX 77002
Attention: Jeff Baker
Telecopy: 713-751-0307
(Signatures Continued on Next Page)
<PAGE>
LENDER:
ABN-AMRO BANK N.V.
By: /s/ Jamie A. Conn
---------------------------------
Jamie A. Conn
Vice President
By: /s/ Stuart Murray
---------------------------------
Stuart Murray
Vice President
Applicable Lending Office
for Floating Rate Loans and
LIBO Rate Loans:
208 South LaSalle Street, Suite 1500
Chicago, Illinois 60604
Attention: Loan Administration
Address for Notices:
208 South LaSalle Street, Suite 1500
Chicago, Illinois 60604
Attention: Karen MacAllister
Telecopy: 312-904-8840
with copy to:
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Jamie Conn
July 15, 1999
To the Lenders party to the Swift Energy Company
Credit Agreement dated August 18, 1998
Re: Borrowing Base Determination effective with palcement of Senior Subordinated
Debt
Ladies and Gentlemen:
The Required Lenders have requested a (non-engineered) Borrowing Base
Determination effective with the palcement of Senior Subordinated Debt.
Bank one, as Administrative Agent, recommends that the Borrowing Base be
set at $140,000,000 effective from the date of placement of the Senior
Subordinated Debt, as amended by the Third Amendment, until the next
scheduled Borrowing Base Determination date. Borrowing Base Determinations
are governed by Section 2.11 of the Credit Agreement.
Kindly indicate your approval by signing in the space indicated below
and returning to my attention, by Monday, July 19, 1999
We recommend your approval and prompt response to this request. Please
let me know if you have any questions.
Sincerely,
Executed by the following:
Bank One, Texas, N.A
Bank of Montreal
Bank of America, N.A.
Sanwa Bank Limited
CIBC Inc.
First Union National Bank
Societe Generale
Credit Lyonnais
ABN Amro Bank, N.V.
