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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant To Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 25, 1996
________________
KCS Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11698 22-2889587
________________________________________________________________________________
State or other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
379 Thornall Street, Edison, New Jersey 08837
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(908) 632-1770
________________________________________________________________________________
Registrant's telephone number, including area code
NOT APPLICABLE
________________________________________________________________________________
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Sale of Securities. On January 25, 1996, KJS Energy, Inc. (the
"Company") consummated the sale of $150,000,000 aggregate principal amount of
its 11% Senior Notes due 2003 (the "Notes"), which Notes are unconditionally
guaranteed on a senior unsecured basis by each of the Company's subsidiaries
(the "Subsidiary Guarantors").
Use of Proceeds. The net proceeds to the Company from the sale of the
Notes are estimated to be approximately $145,000,000 after deducting discounts
to the initial purchasers and estimated offering expenses. These proceeds will
be utilized by the Company to repay in full a note recently sold to a third
party and to reduce the outstanding indebtedness under its bank credit
facilities.
The Notes. The Notes were issued pursuant to an Indenture dated
January 15, 1996 ("Indenture") between the Company, the Subsidiary Guarantors
and Fleet National Bank of Connecticut as trustee (the "Trustee"). The Notes
will mature on January 15, 2003 and will bear interest at the rate of 11% per
annum, payable semiannually on January 15 and July 15 of each year, commencing
July 15, 1996. The Notes will be redeemable at the option of the Company, in
whole or in part, at any time on or after January 15, 2000, at the following
redemption prices, together with accrued interest to the date of redemption:
during the 12 months beginning January 15, 2000 at 105.50%; during the 12
months beginning January 15, 2001 at 102.75%; and from January 15, 2002 and
thereafter at 100.00%. In the event the Company consummates a Public Equity
Offering (as defined in the Indenture) on or prior to January 15, 1999, the
Company may at its option use all or a portion of the proceeds from such
offering to redeem up to $35 million principal amount of the Notes at a
redemption price equal to 111% of the aggregate principal amount thereof,
together with accrued interest to the date of redemption, provided that at least
$115 million aggregate principal amount of the Notes remain outstanding
immediately after such redemption. In addition, upon a Change of Control (as
defined in the Indenture), each holder of Notes will have the right to require
the Company to purchase all or a portion of such holder's Notes at a price
equal to 101% of the aggregate principal amount thereof, together with accrued
interest to the date of purchase. The Notes will be senior unsecured
obligations of the Company ranking pari passu in right of payment with all
existing and future senior indebtedness of the Company and senior to all future
subordinated indebtedness of the Company.
Guarantee by Subsidiaries. The Notes will be unconditionally
guaranteed on a senior unsecured basis by each of the Subsidiary Guarantors, and
these subsidiary guarantees will rank pari passu in right of payment with all
existing and future unsecured indebtedness of the Subsidiary Guarantors.
Placement of Notes. Subject to the terms and conditions set forth in
the Purchase Agreement dated January 19, 1995, the Company sold the Notes to the
initial purchasers: Smith Barney Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Nomura Securities International, Inc. and PaineWebber Incorporated.
Registration Rights Agreement. The Company has also entered into an
agreement pursuant to which the Company will file a registration statement with
the SEC with respect to an offer to exchange the Notes for senior debt
securities of the Company with terms substantially identical to the Notes
and will use its commercially reasonable best efforts to cause such
registration statement to become effective within a specified time.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) None.
(b) None.
(c) Exhibits.
1. Purchase Agreement dated January 19, 1996 between the Company, the
Subsidiary Guarantors named therein and Smith Barney Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation, Nomura
Securities International, Inc. and PaineWebber Incorporated.
4. Indenture dated as of January 15, 1996 between the Company, the
Subsidiary Guarantors named therein and Fleet National Bank of
Connecticut, as Trustee.
10. Registration Rights Agreement dated as of January 25, 1996 among
the Company, the Subsidiary Guarantors named therein, and
Smith Barney Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Nomura Securities International, Inc. and
PaineWebber Incorporated.
99. Press Release dated January 25, 1996 announcing the Company's
completion of its private placement of an aggregate of
$150,000,000 in Senior Notes due 2003.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KCS ENERGY, INC.
By: /s/ HENRY A. JURAND
-----------------------------------------
Henry A. Jurand
Vice President, Chief Financial Officer
and Secretary
DATED: January 25, 1996
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EXHIBIT INDEX
1. Purchase Agreement dated January 19, 1996 between the Company, the
Subsidiary Guarantors named therein and Smith Barney Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation, Nomura
Securities International, Inc. and PaineWebber Incorporated.
4. Indenture dated as of January 15, 1996 between the Company, the
Subsidiary Guarantors named therein and Fleet National Bank of
Connecticut, as Trustee.
10. Registration Rights Agreement dated as of January 25, 1996 among
the Company, the Subsidiary Guarantors named therein, and
Smith Barney Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Nomura Securities International, Inc. and
PaineWebber Incorporated.
99. Press Release dated January 25, 1996 announcing the Company's
completion of its private placement of an aggregate of
$150,000,000 in Senior Notes due 2003.
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EXHIBIT 1
$150,000,000
KCS ENERGY, INC.
11% SENIOR NOTES DUE 2003, SERIES A
PURCHASE AGREEMENT
January 19, 1996
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NOMURA SECURITIES INTERNATIONAL, INC.
PAINEWEBBER INCORPORATED
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
KCS Energy Corporation, a Delaware corporation (the "Company"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
the initial purchasers listed on Schedule I hereto (the "Initial Purchasers"),
$150,000,000 aggregate principal amount of its 11% Senior Notes due 2003,
Series A (the "Notes"). The Notes will be issued pursuant to the provisions
of an Indenture, to be dated as of January 15, 1996 (the "Indenture"), among
the Company, the Guarantors (as defined herein) and Fleet National Bank of
Connecticut, as Trustee (the "Trustee").
Initially, the Notes will be guaranteed (the "Guarantees" and,
together with the Notes, the "Securities") on a senior unsecured basis by
Enercorp Gas Marketing, Inc., KCS Resources, Inc., KCS Michigan Resources,
Inc., KCS Pipeline Systems, Inc., KCS Energy Marketing, Inc., KCS Power
Marketing, Inc., KCS Energy Risk Management, Inc., National Enerdrill
Corporation and Proliq, Inc. (collectively, the "Guarantors" and, together with
the Company, the "Issuers").
The Issuers wish to confirm as follows their agreement with the
Initial Purchasers in connection with the purchase and resale of the
Securities.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Securities will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company
has prepared a preliminary offering memorandum, dated December 20, 1995 (the
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"Preliminary Offering Memorandum"), and an offering memorandum, dated January
19, 1996 (the "Offering Memorandum"), setting forth information regarding the
Issuers and the Securities. Any references herein to the Preliminary Offering
Memorandum and the Offering Memorandum shall be deemed to include all
amendments and supplements thereto. The Issuers hereby confirm that they have
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers.
The Issuers understand that the Initial Purchasers propose to make
offers and sales (the "Exempt Resales") of the Securities purchased by the
Initial Purchasers hereunder only on the terms and in the manner set forth in
the Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons whom the Initial Purchaser reasonably believes to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
under the Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A and (ii) to a limited number of other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under Regulation D of the Act) ("Accredited Investors") in private sales
exempt from registration under the Act (such persons specified in clauses (i)
and (ii) being referred to herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Notes (and each security issued in exchange
therefor or in substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED
STATES TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS
MEETING THE REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Securities will have the registration rights set
forth in the registration rights agreement (the
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"Registration Rights Agreement") substantially in the form attached hereto as
Exhibit A, to be dated the date hereof by and among the Issuers and the Initial
Purchasers.
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or in the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Issuers
hereby agree, subject to the terms and conditions set forth herein, to issue
and sell to the Initial Purchasers and, upon the basis of the representations,
warranties and agreements of the Issuers herein contained and subject to the
terms and conditions set forth herein, each Initial Purchaser agrees to
purchase from the Issuers severally and not jointly, at a purchase price of
97.25% of the principal amount thereof, the principal amount of Notes (together
with the Guarantees) set forth opposite the name of such Initial Purchaser in
Schedule I hereto.
(b) The Initial Purchasers have advised the Issuers that
they propose to offer the Securities for sale upon the terms and conditions set
forth in this Agreement and in the Offering Memorandum. The Initial Purchasers
hereby represent and warrant to, and agree with, the Issuers that the Initial
Purchasers (i) are purchasing the Securities pursuant to a private sale exempt
from registration under the Act, (ii) have not solicited and will not solicit
offers for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising or in any manner involving a public
offering within the meaning of Section 4(2) of the Act, and (iii) will solicit
offers for the Securities only from, and will offer, sell or deliver the
Securities as part of their initial offering, only to (A) persons whom the
Initial Purchaser reasonably believes to be Qualified Institutional Buyers, or
if any such person is buying for one or more institutional accounts for which
such person is acting as fiduciary or agent, only when such person has
represented to the Initial Purchasers that each such account is a Qualified
Institutional Buyer, to whom notice has been given that such sale or delivery
is being made in reliance on Rule 144A, in each case, in transactions under
Rule 144A and (B) to a limited number of Accredited Investors that make the
representations to and agreements with the Company specified in Annex A to the
Offering Memorandum in private sales exempt from registration under the Act.
The Initial Purchasers have advised the Issuers that they will offer the
Securities to Eligible Purchasers at a price initially equal to 100% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance of the Securities. Such price may be changed by the Initial
Purchasers at any time thereafter without notice.
The Initial Purchasers understand that the Issuers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Sections
7(d)(xiv) and 7(e) hereof, counsel to the Issuers and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchasers hereby consent to
such reliance.
3. Delivery of the Securities and Payment Therefor. Delivery to
the Initial Purchasers of and payment for the Securities shall be made at the
office of Smith Barney Inc., 388 Greenwich Street, New York, New York 10013, at
10:00 a.m., New York City time, on January 25, 1996 (the "Closing Date"). The
place of closing for the Securities and the Closing Date may be varied by
agreement between the Initial Purchasers and the Issuers.
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The Securities will be delivered to the Initial Purchasers against
payment of the purchase price therefor by certified or official bank check
payable in New York Clearinghouse (next day) funds (or, if the Initial
Purchasers and the Issuers agree, by means of a wire transfer of same day funds
in accordance with written instructions from the Company pursuant to which the
Issuers will reimburse the Initial Purchasers for their costs of obtaining such
same day funds). The Securities will be evidenced by a single global security
in definitive form (the "Global Security") and/or by additional certificated
securities, and will be registered, in the case of a Global Security, in the
name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), and in
the other cases, in such names and in such denominations as the Initial
Purchasers shall request prior to 9:30 a.m., New York City time, on the second
business day preceding the Closing Date. The Securities to be delivered to the
Initial Purchasers shall be made available to the Initial Purchasers in New
York City for inspection and packaging not later than 9:30 a.m., New York City
time, on the business day next preceding the Closing Date.
4. Agreements of the Issuers. The Issuers agree with the Initial
Purchasers as follows:
(a) Until the completion of the distribution of the
Securities by the Initial Purchasers to Eligible Purchasers, the
Issuers will advise each of the Initial Purchasers promptly and, if
requested by any of them, will confirm such advice in writing, within
the period of time referred to in paragraph (e) below, of any change
in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries (as defined herein), taken as a whole, or of the
happening of any event or the existence of any condition which
requires any amendment or supplement to the Offering Memorandum so
that the Offering Memorandum (x) will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
or (y) will comply with applicable law.
(b) The Issuers will furnish to the Initial Purchasers,
without charge, as of the date of the Offering Memorandum, such number
of copies of the Offering Memorandum as it may then be amended or
supplemented as they may reasonably request.
(c) The Issuers will not make any amendment or supplement
to the Preliminary Offering Memorandum or to the Offering Memorandum
of which each of the Initial Purchasers shall not previously have been
advised or to which any of them shall reasonably object after being so
advised.
(d) Prior to the execution and delivery of this
Agreement, the Issuers have delivered or will deliver to the Initial
Purchasers, without charge, in such quantities as the Initial
Purchasers shall have requested or may hereafter reasonably request,
copies of the Preliminary Offering Memorandum. The Issuers consent to
the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Securities are offered by the Initial
Purchasers and by dealers, prior to the date of the Offering
Memorandum, of each Preliminary Offering Memorandum so furnished by
the Issuers. The Issuers consent to the use of the Offering
Memorandum in accordance with the securities or Blue Sky laws of the
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jurisdictions in which the Securities are offered by the Initial
Purchasers and by all dealers to whom Securities may be sold, in
connection with the offering and sale of the Securities.
(e) If, at any time prior to completion of the
distribution of the Securities by the Initial Purchasers to Eligible
Purchasers, any event shall occur or another shall exist that in the
judgment of the Issuers or in the reasonable opinion of the Initial
Purchasers should be set forth in the Offering Memorandum so that the
Offering Memorandum (x) will not contain any untrue statement of a
material fact required to be stated thereunder necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or (y) will comply with applicable law, the
Issuers will forthwith prepare an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Initial Purchasers and
dealers that number of copies thereof as they shall reasonably
request.
(f) The Issuers will cooperate with the Initial
Purchasers and with the Initial Purchasers' counsel in connection with
the qualification of the Securities for offering and sale by the
Initial Purchasers and by dealers under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may designate and
will file such consents to service of process or other documents
necessary or appropriate in order to effect such qualification;
provided that in no event shall any of the Issuers be obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale
of the Securities, in any jurisdiction where they are not now so
subject.
(g) So long as any of the Securities are outstanding, the
Issuers will furnish to the Initial Purchasers (i) as soon as
available, a copy of each report of the Issuers mailed to stockholders
or filed with the Securities and Exchange Commission (the
"Commission") and (ii) from time to time such other information
concerning the Issuers as the Initial Purchasers may reasonably
request.
(h) The Issuers will apply the net proceeds from the sale
of the Securities substantially in accordance with the description set
forth under "Use of Proceeds" in the Offering Memorandum.
(i) Without the prior consent of the Initial Purchasers,
prior to the expiration of 180 days after the date of the Offering
Memorandum the Company will not offer, sell, contract to sell or
otherwise dispose of any fixed income obligation having a maturity of
more than one year.
(j) Except as stated in this Agreement and in the
Offering Memorandum, the Issuers have not taken, nor will they take,
directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Securities to facilitate the sale or
resale of the Securities. Except as permitted by the Act, the Issuers
will not distribute any offering material in connection with the
Exempt Resales. The Issuers will not solicit any offers to buy and
will not offer to sell the Securities
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by means of any form of general solicitation or general advertising
(within the meaning of Regulation D).
(k) The Issuers will use their commercially reasonable
best efforts to cause the Securities to be eligible for trading on The
PORTAL Market.
(l) From and after the Closing Date, so long as any of
the Securities are outstanding and are "Restricted Securities" within
the meaning of the Rule 144(a)(3) under the Act or, if earlier, until
three years after the Closing Date, and during any period in which the
Company is not subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Company
will furnish to holders of the Securities and prospective purchasers
of Securities designated by such holders, upon request of such holders
or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Act to permit
compliance with Rule 144A in connection with resales of the
Securities.
(m) The Issuers have complied and will comply with all
provisions of Florida Statutes Section 517.075 relating to issuers
doing business with Cuba.
(n) The Issuers agree not to sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Act) that would be integrated with the
sale of the Securities in a manner that would require the registration
under the Act of the sale by the Issuers to the Initial Purchasers or
by the Initial Purchasers to the Eligible Purchasers of the
Securities.
(o) The Issuers agree to comply with all of the terms and
conditions of the Registration Rights Agreement, and all agreements
set forth in the representation letters of the Issuers to DTC relating
to the approval of the Securities by DTC for "book entry" transfer.
(p) The Issuers agree that prior to the effective date of
any registration of the Securities pursuant to the Registration Rights
Agreement, or at such earlier time as may be so required, the
Indenture shall be qualified under the Trust Indenture Act of 1939
(the "1939 Act") and will cause to be entered into any necessary
supplemental indentures in connection therewith.
5. Representations and Warranties of the Issuers. The Issuers,
jointly and severally, represent and warrant to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering
Memorandum with respect to the Securities have been prepared by the
Issuers for use by the Initial Purchasers in connection with the
Exempt Resales. No order or decree preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any
order asserting that the transactions contemplated by this Agreement
are subject to the registration requirements
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of the Act, has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Issuers, is
contemplated.
(b) The Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates and the Offering Memorandum as
of the Closing Date, did not or will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not
apply to statements in or omissions from the Preliminary Offering
Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to any Initial Purchaser
furnished to the Issuers in writing by or on behalf of an Initial
Purchaser expressly for use therein.
(c) The Indenture has been duly and validly authorized by
each of the Issuers and, upon its execution, delivery and performance
by the each of the Issuers and assuming due authorization, execution,
delivery and performance by the Trustee, will be a valid and binding
agreement of each of the Issuers, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors'
rights generally and subject to the applicability of general
principles of equity; the Indenture conforms in all material respects
to the description thereof in the Offering Memorandum; no
qualification of the Indenture under the 1939 Act is required in
connection with the offer and sale of the Securities contemplated
hereby or in connection with the Exempt Resales.
(d) The Notes and Guarantees have been duly authorized by
the Company and each of the Guarantors, respectively, and, when
executed by the Company and each of the Guarantors, respectively, and,
in the case of the Notes, authenticated by the Trustee in accordance
with the Indenture and delivered to the Initial Purchasers against
payment therefor in accordance with the terms hereof, will have been
validly issued and delivered, and will constitute valid and binding
obligations of the Company and each of the Guarantors, respectively,
entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity; and the
Securities conform in all material respects to the description thereof
in the Offering Memorandum.
(e) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(f) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum, and is duly qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such qualification,
except where the failure so to qualify does not have a material
adverse
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effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "Material
Adverse Effect").
(g) All the Company's subsidiaries (as defined in the
Act) are referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries." Each Subsidiary is a corporation
duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such qualification, except where the
failure so to qualify or be in good standing does not have a Material
Adverse Effect. All of the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and are wholly owned by the Company
directly or indirectly through one of the other Subsidiaries, free and
clear of any lien, adverse claim, security interest, equity or other
encumbrance, except as described in the Offering Memorandum and except
for restrictions on transferability imposed by the Act or applicable
state securities or Blue Sky laws.
(h) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the
Company or any of the Subsidiaries or to which the Company or any of
the Subsidiaries or to which any of their respective properties, is
subject, that are not disclosed in the Offering Memorandum and which,
if adversely decided, are reasonably likely to cause a Material
Adverse Effect or to materially affect the issuance of the Securities
or the consummation of the transactions contemplated by this
Agreement. There are no agreements, contracts, indentures, leases or
other instruments of the Company or any of the Subsidiaries that are
material to the Company and the Subsidiaries, taken as a whole, that
are not described in the Offering Memorandum. Neither the Company nor
any Subsidiary is involved in any strike, job action or labor dispute
with any group of employees except any action or dispute that would
not have a Material Adverse Effect, and, to the knowledge of the
Issuers, no such action or dispute is threatened.
(i) Neither the Company nor any of the Subsidiaries is
(1) in violation of its certificate or articles of incorporation or
by-laws or other organizational documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries except where any such violation or violations
in the aggregate would not have a Material Adverse Effect or (2) in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound, except
as may be disclosed in the Offering Memorandum or except where such
default would not have a Material Adverse Effect.
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<PAGE> 9
(j) Neither the issuance, offer, sale or delivery of the
Securities, the execution, delivery or performance of this Agreement
or the Indenture by the Issuers or the consummation by the Issuers of
the transactions contemplated hereby or thereby (i) requires any
consent, approval, authorization or other order of, or registration or
filing with, any court, regulatory body, administrative agency or
other governmental body, agency or official (except such as may have
been obtained or may be required in connection with the Registration
under the Act of the Securities in accordance with the Registration
Rights Agreement, the qualification of the Indenture under the 1939
Act and except for compliance with the securities or Blue Sky laws of
various jurisdictions), or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries or
(ii) conflicts or will conflict with or constitutes or will constitute
a breach of, or a default under, any material agreement, indenture,
lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or (iii) violates or will violate
in any material respect any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Company or any
of the Subsidiaries or any of their respective properties, or (iv)
will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to
which any of them is a party or by which any of them may be bound or
to which any of the property or assets of any of them is subject.
(k) The accountants, Arthur Andersen LLP and KPMG Peat
Marwick LLP, who have certified or shall certify the consolidated
financial statements included as part of the Offering Memorandum (or
any amendment or supplement thereto), each are independent public
accountants under Rule 101 of the AICPA's Code of Professional
Conduct, and its interpretation and rulings.
(l) The consolidated financial statements, together with
related schedules and notes forming part of the Offering Memorandum,
present fairly the consolidated financial position, results of
operations and changes in stockholders' equity and cash flows of the
Company and the Subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to
which they apply and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved. The pro forma financial statements and other pro
forma financial information (including the notes thereto) included in
the Offering Memorandum (A) present fairly in all material respects
the information shown therein, (B) have been prepared in accordance
with the applicable requirements of Rule 11-02 of Regulations S-X
promulgated under the Act, (C) have been properly computed on the
basis described therein, and (D) the assumptions used in preparing the
pro forma financial statements and other pro forma financial data
included in the Offering Memorandum are reasonable; and the other
financial and statistical information and data set forth in the
Offering Memorandum is accurately presented and, to the extent such
information and data is derived from the financial books and records
of the Company, is prepared on a basis consistent with such financial
statements and the books and records of the Company.
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<PAGE> 10
(m) The statements of revenues and direct operating
expenses for the Oil & Gas Properties of Natural Gas Processing Co.
(the "NGP Properties") sold to the Company, and the notes thereto,
forming part of the Offering Memorandum present fairly the revenues
and direct operating expenses of the NGP Properties on the basis
stated in the Offering Memorandum at the respective dates or for the
respective periods to which they apply and have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved.
(n) Each of the Issuers has all requisite corporate power
and authority to execute, deliver and perform its obligations under
this Agreement and the Registration Rights Agreement; the execution
and delivery of, and the performance by each of the Company and the
Guarantors of its obligations under this Agreement and the
Registration Rights Agreement have been duly and validly authorized by
each of the Company and the Guarantors, and each of this Agreement and
the Registration Rights Agreement has been duly executed and delivered
by the Company and the Guarantors, and constitutes the valid and
legally binding agreement of the Company and the Guarantors,
enforceable against each of the Company and the Guarantors in
accordance with its terms, except as the enforcement hereof and
thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general principles of
equity, and except as rights to indemnity and contribution hereunder
and thereunder may be limited by Federal or state securities laws or
principles of public policy.
(o) Except as disclosed in the Offering Memorandum,
subsequent to the date as of which such information is given in the
Offering Memorandum, neither the Company nor any of the Subsidiaries
has incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business,
that is material to the Company and the Subsidiaries taken as a whole,
and there has not been any material change in the capital stock, or
material increase in the short-term or long-term debt, of the Company
or any of the Subsidiaries or any material adverse change, or any
development involving or which could reasonably be expected to involve
a prospective material adverse change, in the condition (financial or
other), business, properties, net worth or results of operations of
the Company and the Subsidiaries taken as a whole.
(p) Each of the Company and the Subsidiaries has good and
indefeasible title to all real property (and good and marketable title
to all personal property) described in the Offering Memorandum as
being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the
Offering Memorandum, and all the property described in the Offering
Memorandum as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable
leases, with only such exceptions in the matters described herein that
in the aggregate are not materially burdensome and do not interfere in
any material respect with the conduct of the business of the Company
and the Subsidiaries taken as a whole.
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<PAGE> 11
(q) Except as permitted by the Act, the Issuers have not
distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the
Securities other than the Preliminary Offering Memorandum and the
Offering Memorandum.
(r) Each of the Company and the Subsidiaries have such
permits, licenses, franchises, certificates of need and other
approvals or authorizations of governmental or regulatory authorities
("Permits") as are necessary under applicable law to own their
respective properties and to conduct their respective businesses in
the manner described in the Offering Memorandum, except to the extent
that the failure to have such Permits would not have a Material
Adverse Effect; the Company and each of the Subsidiaries have
fulfilled and performed, all their respective obligations with respect
to the Permits, except where the failure to fulfill or perform such
obligations would not have a Material Adverse Effect, and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit, subject in
each case to such qualification as may be set forth in the Offering
Memorandum and except to the extent that any such revocation or
termination would not have a Material Adverse Effect; and, except as
described in the Offering Memorandum, none of the Permits contains any
restriction that is materially burdensome to the conduct of the
business of the Company and the Subsidiaries taken as a whole.
(s) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions of the Company and the Subsidiaries are executed in
accordance with management's general or specific authorization; (ii)
transactions of the Company and the Subsidiaries are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets of the Company and
the Subsidiaries is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded
accountability for assets of the Company and the Subsidiaries is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(t) Neither the Company nor any of the Subsidiaries, nor
to the knowledge of the Issuers, any employee or agent of the Company
or any Subsidiary has made any payment of funds of the Company or any
Subsidiary or received or retained any funds in violation of any law,
rule or regulation, which violation would have a Material Adverse
Effect.
(u) Except as disclosed in the Offering Memorandum, the
Company and each of the Subsidiaries have filed all tax returns
required to be filed, which returns are true and correct in all
material respects, and neither the Company nor any Subsidiary is in
default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto, except where the
failure to file such returns and make such payments would not have a
Material Adverse Effect.
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<PAGE> 12
(v) Except for holders of the Securities, no holder of any
security of the Company has any right to request or demand
registration of shares of Common Stock or any other security of the
Company because of the consummation of the transactions contemplated
by this Agreement. Except as described in the Offering Memorandum and
except for options granted after September 30, 1995 pursuant to plans
or arrangements described in the Offering Memorandum, there are no
outstanding options, warrants or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of the Company or any of the Subsidiaries or
any security convertible into or exchangeable or exercisable for
capital stock of the Company or any of the Subsidiaries.
(w) The Issuers are not and, upon sale of the Securities
to be issued and sold thereby in accordance herewith and the
application of the net proceeds to the Issuers of such sale as
described in the Offering Memorandum under the caption "Use of
Proceeds," will not be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
(x) When the Securities are issued and delivered pursuant
to this Agreement, such Securities will not be of the same class
(within the meaning of Rule 144A(d)(3) under the Act) as any security
of the Issuers that is listed on a national securities exchange
registered under Section 6 of the Exchange Act or that is quoted in a
United States automated interdealer quotation system.
(y) Neither the Issuers nor any of their respective
affiliates (as defined in Rule 501(b) of Regulation D ("Regulation D")
under the Act) has directly, or through any agent (provided that no
representation is made as to the Initial Purchasers or any person
acting on any of their behalf), (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering
and sale of the Securities in a manner that would require the
registration of the Securities under the Act or (ii) engaged in any
form of general solicitation or general advertising (within the
meaning of Regulation D under the Act) in connection with the offering
of the Securities.
(z) The Issuers are not required to deliver the
information specified in Rule 144A(d)(4) in connection with the
offering and resale of the Securities by the Initial Purchasers.
(aa) Assuming (i) that the representations and warranties
of the Initial Purchasers in Section 2 hereof are true and correct,
(ii) the Initial Purchasers comply with the covenants set forth in
Section 2 hereof, (iii) compliance by the Initial Purchasers with the
offering and transfer procedures and restrictions described in the
Offering Memorandum, (iv) the accuracy of the representations and
warranties made in accordance with this Agreement and the Offering
Memorandum by Eligible Purchasers to whom the Initial Purchasers
initially resells Securities and (v) Eligible Purchasers to whom the
Initial Purchasers initially resell Securities receive a copy of the
Offering Memorandum prior to such sale, the purchase and sale of the
Securities pursuant hereto (including the Initial Purchasers' proposed
offering of
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<PAGE> 13
the Securities on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof) do not require registration
under the Act.
(bb) The Company and the Subsidiaries are in compliance
with, and not subject to any liability under, the common law and all
applicable federal, state, local and foreign laws, regulations, rules,
codes, ordinances, directives, and orders relating to pollution or to
protection of public or employee health or safety or to the
environment, including, without limitation, those that relate to any
Hazardous Material (as defined herein) ("Environmental Laws"), except,
in each case, where noncompliance or liability, individually or in the
aggregate, would not have a Material Adverse Effect. The term
"Hazardous Material" means any pollutant, contaminant or waste, or any
hazardous, dangerous, or toxic chemical, material, waste, substance or
constituent subject to regulation under any Environmental Law.
(cc) Neither the Company nor any of its Subsidiaries is a
"holding company" or a "subsidiary company" of a "holding company" or
an "affiliate" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended ("PUHCA").
6. Indemnification and Contribution. (a) Each of the Issuers,
jointly and severally, agrees to indemnify and hold harmless the Initial
Purchasers and each person, if any, who controls any of the Initial Purchasers
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
such Initial Purchaser furnished in writing to the Company by or on behalf of
such Initial Purchaser expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to the Preliminary Offering Memorandum shall not inure to the benefit of an
Initial Purchaser (or to the benefit of any person controlling such Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Securities by such Initial Purchaser to any person
if the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in the Preliminary Offering Memorandum
was corrected in the Offering Memorandum and such Initial Purchaser sold
Securities to that person without sending or giving at or prior to the written
confirmation of such sale, a copy of the Offering Memorandum if the Company has
previously furnished sufficient copies thereof to the Initial Purchaser on a
timely basis to permit such sending or giving. The foregoing indemnity
agreement shall be in addition to any liability which the Issuers may otherwise
have.
(b) If any action, suit or proceeding shall be brought
against any of the Initial Purchasers or any person controlling any of the
Initial Purchasers in respect of which indemnity may be sought against the
Issuers, any such Initial Purchaser or any such person who controls an Initial
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<PAGE> 14
Purchaser shall promptly notify the parties against whom indemnification is
being sought (the "indemnifying parties"), and such indemnifying parties shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Any of the Initial Purchasers or any such person who
controls an Initial Purchaser shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Initial Purchaser or any such person who controls an Initial Purchaser
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Initial
Purchaser or any such person who controls an Initial Purchaser and any of the
indemnifying parties and such Initial Purchaser or any such person who controls
an Initial Purchaser shall have been advised by its counsel that representation
of such indemnified party and any indemnifying party by the same counsel would
be inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Initial Purchaser or any such person who controls
an Initial Purchaser). It is understood, however, that the indemnifying
parties shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
any Initial Purchaser and any such person who controls an Initial Purchaser not
having actual or potential differing interests with such indemnifying parties
or another Initial Purchaser, which firm shall be designated in writing by
Smith Barney Inc., and that all such fees and expenses shall be reimbursed on a
monthly basis as provided in paragraph (a) hereof. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless the Initial Purchasers, to the extent provided in paragraph (a), and
any person who controls an Initial Purchaser from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each of the Initial Purchasers, severally and not
jointly, agree to indemnify and hold harmless the Issuers, and their respective
directors and officers, and any person who controls an Issuer within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act to the same
extent as the indemnity from an Issuer to the Initial Purchasers set forth in
paragraph (a) hereof, but only with respect to information relating to such
Initial Purchaser furnished in writing by or on behalf of such Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum. If any action, suit or proceeding shall be brought
against any of the Issuers, any of their respective directors or officers, or
any such controlling person based on the Preliminary Offering Memorandum or
Offering Memorandum, and in respect of which indemnity may be sought against an
Initial Purchaser pursuant to this paragraph (c), such Initial Purchaser shall
have the rights and duties given to the Issuers by paragraph (b) above (except
that if the Issuers shall have assumed the defense thereof such Initial
Purchaser shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
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<PAGE> 15
such counsel shall be at the Initial Purchaser's expense), and the Issuers,
their respective directors and officers, and any such controlling person shall
have the rights and duties given to the Initial Purchasers by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any liability
which the Initial Purchasers may otherwise have.
(d) If the indemnification provided for in this Section 6
is unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuers on the one hand and an Initial Purchaser on the other hand from the
offering of the Securities, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Issuers on the one hand and such Initial
Purchaser on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Issuers on the one hand and an Initial Purchaser on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Issuers bear to the total
underwriting discounts and commissions received by such Initial Purchaser, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Issuers on the one hand and an Initial
Purchaser on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Issuers on the one hand or by such Initial
Purchaser on the other hand and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
(e) The Issuers and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities and expenses referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 6, no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total price of the Securities underwritten by it and
distributed to the public exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 6 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses
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<PAGE> 16
are incurred. The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Issuers set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of an Initial Purchaser or any
person who controls an Initial Purchaser, the Issuers, their respective
directors or officers or any person controlling the Issuers, (ii) acceptance of
any Securities and payment therefor hereunder, and (iii) any termination of
this Agreement. A successor to an Initial Purchaser or any person who controls
an Initial Purchaser, or to an Issuer, their respective directors or officers
or any person controlling an Issuer, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
6.
(g) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
7. Conditions of the Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase the Securities on the Closing
Date hereunder is subject to the fulfillment, in the Initial Purchasers' sole
discretion, of the following conditions:
(a) At the time of execution of this Agreement and on the
Closing Date, no order or decree preventing the use of the Offering
Memorandum or any amendment or supplement thereto, or any order
asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act shall have been
issued and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Issuers, be
contemplated. No order suspending the sale of the Securities in any
jurisdiction designated by the Initial Purchasers shall have been
issued and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Issuers, shall be
contemplated.
(b) Subsequent to the date hereof, there shall not have
occurred any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
prospects, properties, net worth, or results of operations of the
Company or the Subsidiaries, which in the opinion of the Initial
Purchasers, would materially adversely affect the market for the
Securities.
(c) The Initial Purchasers shall not have been advised by
the Issuers or shall not have concluded and disclosed to the Company
that the Offering Memorandum contains an untrue statement of a fact
which in the opinion of the Initial Purchasers or their counsel is
material or omits to state a fact which in the opinion of the Initial
Purchasers or their counsel, is material and is required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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<PAGE> 17
(d) The Initial Purchasers shall have received on the
Closing Date an opinion of Mayor, Day, Caldwell & Keeton, L.L.P.,
counsel for the Company, dated the Closing Date and addressed to the
Initial Purchasers, to the effect that:
(i) the Company is a corporation duly
incorporated and validly existing in good standing under the
laws of Delaware with full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum;
(ii) each Guarantor is a corporation duly
incorporated and validly existing and in good standing under
the laws of the jurisdiction of its organization, with full
corporate power and authority to own, lease, and operate its
properties and to conduct its business as described in the
Offering Memorandum; and all the outstanding shares of capital
stock of each of the Guarantors has been duly authorized and
validly issued, are fully paid and nonassessable, and to the
knowledge of such counsel, are wholly owned by the Company
directly, or indirectly through one of the other Subsidiaries,
free and clear of any security interest, lien, adverse claim,
equity or other encumbrance other than restrictions on
transferability imposed by the Act or applicable state
securities or Blue Sky laws;
(iii) the authorized capital stock of the Company
is as set forth under the caption "Capitalization" in the
Offering Memorandum;
(iv) the Company and the Guarantors each has the
corporate power and authority to enter into this Agreement and
to issue, sell and deliver the Notes and the Guaranties, as
the case may be, and each of this Agreement and the
Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and each of the
Guarantors and is the valid, legal and binding agreement of
the Company and the Guarantors, enforceable against the
Company and the Guarantors in accordance with its terms,
except (A) as enforcement of rights to indemnity and
contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public
policy and (B) subject to the qualification that the
enforceability of the Company's and the Guarantors'
obligations hereunder and thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles and the
discretion of any court before which any proceedings therefor
may be brought;
(v) the Indenture has been duly and validly
authorized, executed and delivered by the Issuers and,
assuming due authorization, execution and delivery by the
Trustee, is a valid and binding agreement of the Issuers,
enforceable in accordance with its terms, subject to the
qualification that the enforceability of the Issuers'
obligations thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or
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<PAGE> 18
affecting creditors' rights generally and by general equitable
principles and the discretion of any court before which any
proceedings therefor may be brought;
(vi) the Notes have been duly and validly
authorized by the Company and when executed by the Company in
accordance with the Indenture and, assuming due authentication
of the Notes by the Trustee, upon delivery to the Initial
Purchasers against payment therefor in accordance with the
terms hereof, will have been validly issued and delivered, and
will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture, subject to the
qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors' rights
generally and by general equitable principles and the
discretion of any court before which any proceedings therefor
may be brought;
(vii) the Guaranties have been duly and validly
authorized by each of the Guarantors and when executed by the
Guarantors in accordance with the Indenture and upon delivery
to the Initial Purchasers against payment therefor in
accordance of the terms hereof, will have been validly issued
and delivered, and will constitute valid and binding
obligations of each of the Guarantors entitled to the benefits
of the Indenture, subject to the qualification that the
enforceability of each of the Guarantors' obligations
thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditor's rights generally and
by general equitable principles and the discretion of any
court before which any proceedings therefor may be brought;
(viii) neither the offer, sale or delivery of the
Securities, the execution, delivery or performance by the
Issuers of this Agreement, the Registration Rights Agreement
and the Indenture, compliance by the Issuers with the
provisions hereof or thereof nor consummation by the Issuers
of the transactions contemplated hereby or thereby conflicts
or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of
incorporation or bylaws or other organizational documents of
the Issuers or, to such counsel's knowledge, any material
agreement, indenture, lease or other instrument to which any
of the Issuers is a party or by which any of them or any of
their respective properties is bound, or will result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of any of the Issuers pursuant to the
terms of any material agreement or instrument known to such
counsel to which any of them is a party or by which any of
them may be bound or to which any of the property or assets of
any of them is subject, nor (assuming compliance with all
applicable securities laws, rules and regulations) will any
such action result in any violation in any material respect of
any existing law, or any regulation, ruling judgment,
injunction, order or decree known to such counsel to be
applicable to the Issuers or any of their respective
properties;
-18-
<PAGE> 19
(ix) no consent, approval, authorization or other
order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental
body, agency, or official is required on the part of the
Issuers for the valid issuance and sale of the Securities to
the Initial Purchasers as contemplated by this Agreement
(except with respect to state securities or Blue Sky laws as
to which such counsel need not opine and except those that
have been previously obtained);
(x) to the knowledge of such counsel, other than
as described or contemplated in the Offering Memorandum (or
any supplement thereto), there are no legal or governmental
proceedings pending or threatened against the Issuers or to
which the Issuers or any of their properties, are subject,
which are not disclosed in the Offering Memorandum and which,
if adversely decided, are reasonably likely to cause a
Material Adverse Effect or materially affect the issuance of
the Securities or the transactions contemplated hereby;
(xi) the statements under "Business and Properties
-- Regulation," "Description of Existing Indebtedness,"
"Description of the Notes," "Certain Federal Income Tax
Considerations" and "Exchange Offer; Registration Rights
Agreement" in the Offering Memorandum, insofar as they are
descriptions of contracts, agreements or other legal
documents, or refer to statements of law or legal conclusions,
are accurate in all material respects;
(xii) except as described in the Offering
Memorandum, such counsel does not know of any person who has
the right, contractual or otherwise, to cause the Company to
sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Securities or the right, as
a result of the consummation of the transactions contemplated
by this Agreement, to require registration under the Act of
any shares of Common Stock or other securities of the Company;
(xiii) when the Securities are issued and delivered
pursuant to this Agreement, such Securities will not be of the
same class (within the meaning of Rule 144A(d)(3) under the
Act) as any security of the Issuers that is listed on a
national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated
interdealer quotation system;
(xiv) no registration of the Securities under the
Act or qualification of the Indenture under the 1939 Act is
required for the sale of the Securities to the Initial
Purchasers as contemplated in this Agreement or for the Exempt
Resales (assuming (A) that any Eligible Purchaser who buys the
Notes in the Exempt Resales is a Qualified Institutional Buyer
or an Accredited Investor, (B) the accuracy of the Initial
Purchasers' representations contained in Section 2 of this
Agreement and those of the Issuers in this Agreement regarding
the absence of general solicitation in connection with the
sales to the Initial Purchasers and the Exempt Resales and (C)
the accuracy of the representations made by each Accredited
Investor who purchases Notes
-19-
<PAGE> 20
pursuant to an Exempt Resale as set forth in the letter of
representation executed by such Accredited Investor in the form of
Annex A to the Offering Memorandum);
(xv) the Issuers are not required to deliver the
information specified in Rule 144A(d)(4) in connection with
the offering and resale of the Securities by the Initial
Purchasers;
(xvi) neither the Company nor any of its
Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of
the 1940 Act;
(xvii) neither the Company nor any of its
Subsidiaries is a "holding company" or a "subsidiary company"
of a "holding company" or an "affiliate" of a "holding
company," within the meaning of PUHCA; and
(xviii) although such counsel have not undertaken,
except as otherwise indicated in their opinion, to determine
independently, and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements in the
Offering Memorandum, such counsel have participated in
conferences with officers and other representatives of the
Company, representatives of the Initial Purchasers,
representatives of the independent public accountants and
reservoir engineers of the Company and other outside counsel
to the Company, at which conferences the contents of the
Offering Memorandum and related matters were discussed and
relying as to materiality to a large extent upon the analyses,
judgments and opinion of officers and other representatives of
the Company, nothing has come to the attention of such counsel
that has caused them to believe that the Offering Memorandum,
as of its date and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading or that any amendment or
supplement to the Offering Memorandum, as of its respective
date, and as of the Closing Date, contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading (it being
understood that such counsel need express no opinion with
respect to the financial statements and the notes thereto and
the schedules and other financial and statistical data or
reserve information included or incorporated by reference in
the Offering Memorandum and information furnished by or on
behalf of the Initial Purchasers).
In rendering the foregoing opinion, Mayor, Day, Caldwell &
Keeton, L.L.P. may state that such opinion is limited to the Federal
laws of the United States, the laws of the State of New York (but only
with respect to paragraphs (iv) through (vii) above), the laws of the
State of Texas and the General Corporation Law of the State of
Delaware, and that they are expressing no opinion as to the effect of
the laws of any other jurisdiction. In addition, such counsel may
state that they have relied (i) as to certain matters on information
-20-
<PAGE> 21
obtained from public officials, officers of the Issuers and other
sources believed by them to be responsible and (ii) as to matters of
New Jersey law and as to New York law in relation to clause (iv) above
on the opinion of Orloff, Lowenbach, Stifelman & Siegel.
(e) The Initial Purchasers shall have received on the
Closing Date an opinion of Vinson & Elkins L.L.P., counsel for the
Initial Purchasers, dated the Closing Date, and addressed to the
Initial Purchasers, with respect to such matters as the Initial
Purchasers may request.
(f) The Initial Purchaser shall have received letters
addressed to the Initial Purchasers, and dated the date hereof and the
Closing Date from Arthur Andersen LLP and KPMG Peat Marwick LLP, each
independent public accountants, substantially in the forms heretofore
approved by the Initial Purchasers.
(g) (i) There shall not have been any change in the
capital stock of the Company (other than options exercised pursuant to
plans or arrangements described in the Offering Memorandum) nor any
material increase in the short-term or long-term debt of the Company
(other than in the ordinary course of business) from that set forth or
contemplated in the Offering Memorandum (or any amendment or
supplement thereto); (ii) there shall not have been, since the
respective dates as of which information is given in the Offering
Memorandum, except as may otherwise be stated in the Offering
Memorandum, any material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole; (iii)
the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary
course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the
Offering Memorandum (or any amendment or supplement thereto); and (iv)
all the representations and warranties of the Issuers contained in
this Agreement shall be true and correct in all material respects on
and as of the date hereof and on and as of the Closing Date as if made
on and as of the Closing Date, and the Initial Purchasers shall have
received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief accounting officer of each of the
Issuers (or such other officers as are acceptable to the Initial
Purchasers), to the effect set forth in this Section 7(g) and in
Section 7(h) hereof.
(h) The Issuers shall not have failed at or prior to the
Closing Date to have performed or complied with any of their
respective agreements herein contained and required to be performed or
complied with by them hereunder at or prior to the Closing Date.
(i) The Securities shall have been approved for trading
on PORTAL.
(j) The Issuers shall have furnished or caused to be
furnished to the Initial Purchasers such further certificates and
documents as the Initial Purchasers shall have reasonably requested.
-21-
<PAGE> 22
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for
the Initial Purchasers.
Any certificate or document signed by any officer of an Issuer and
delivered to the Initial Purchasers, or to counsel for the Initial Purchasers,
shall be deemed a representation and warranty by the Issuers to the Initial
Purchasers as to the statements made therein.
8. Expenses. (a) Whether or not the purchase and sale of the
Securities hereunder is consummated or this Agreement is terminated pursuant to
Section 9 hereof, the Issuers agree, jointly and severally, to pay the
following costs and expenses and all other costs and expenses incident to the
performance by it of its obligations hereunder: (i) the preparation, printing
or reproduction of the Preliminary Offering Memorandum and the Offering
Memorandum (including financial statements thereto), this Agreement, the
Registration Rights Agreement and the Indenture; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Offering Memorandum and the
Preliminary Offering Memorandum as may be reasonably requested for use in
connection with the offering and sale of the Securities; (iii) the preparation,
printing (or reproduction), authentication, issuance and delivery of
certificates for the Securities, including any stamp taxes in connection with
the original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Securities;
(v) the application for quotation of the Securities on PORTAL; (vi) the
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states as provided in Section 4(f) hereof (including
the reasonable fees, expenses and disbursements of counsel for the Initial
Purchasers relating to the preparation, printing or reproduction, and delivery
of the preliminary and supplemental Blue Sky Memoranda and such qualification);
(vii) the performance by the Issuers of their obligations under the
Registration Rights Agreement, and (viii) the fees and expenses of the Issuers'
accountants and the fees and expenses of counsel (including local and special
counsel) for the Issuers. The Issuers hereby agree that they will pay in full
on the Closing Date the fees and expenses referred to in clause (vi) of this
Section 8 by delivering to counsel for the Initial Purchasers on such date a
check payable to such counsel in the requisite amount.
(b) If the purchase and sale of the Securities hereunder
is not consummated because any condition to the obligations of the Initial
Purchasers set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 9 hereof or because of any failure,
refusal or inability on the part of the Issuers to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder
other than by reason of a default by the Initial Purchasers in payment for the
Securities on the Closing Date or a breach by the Initial Purchasers of any of
the representations in Section 2 hereof, the Issuers shall reimburse the
Initial Purchasers promptly upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities and
the other transactions contemplated hereby.
-22-
<PAGE> 23
9. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Issuers, by notice to
the Issuers, if prior to the Closing Date (i) trading in securities generally
on the New York Stock Exchange, American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been
declared by either Federal or state authorities, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other U.S. or
international calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in the judgment of the Initial Purchasers, impracticable
or inadvisable to commence or continue the offering of the Securities on the
terms set forth on the cover page of the Offering Memorandum or to enforce
contracts for the resale of the Securities by the Initial Purchasers. Notice
of such termination may be given to the Issuers by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
10. Information Furnished by the Initial Purchasers. The
statements set forth in the stabilization legend on page 3 in the last
paragraph on the cover page and the last two sentences of the third paragraph
under the caption "Private Placement" in the Preliminary Offering Memorandum
and Offering Memorandum, constitute the only information furnished by or on
behalf of the Initial Purchasers as such information is referred to in Sections
5(b) and 6 hereof.
11. Miscellaneous. Except as otherwise provided in Sections 4 and
9 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Issuers, at the office of the
Company at 379 Thornall Street, Edison, New Jersey 08837, Attention: Henry A.
Jurand, Vice President, Treasurer and Secretary, or (ii) if to the Initial
Purchasers, to Smith Barney Inc., 388 Greenwich Street, New York, New York
10013, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Initial Purchasers, and the Issuers and their respective directors, officers
and controlling persons referred to in Section 6 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from the Initial Purchasers of any of the
Securities in his status as such purchaser.
12. Applicable Law; Counterparts . This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York
and without regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
-23-
<PAGE> 24
Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and the Initial Purchasers.
Very truly yours,
KCS ENERGY, INC.
ENERCORP GAS MARKETING, INC.
KCS RESOURCES, INC.
KCS MICHIGAN RESOURCES, INC.
KCS PIPELINE SYSTEMS, INC.
KCS ENERGY MARKETING, INC.
-24-
<PAGE> 25
KCS POWER MARKETING, INC.
KCS ENERGY RISK MANAGEMENT, INC.
NATIONAL ENERDRILL CORPORATION
PROLIQ, INC.
By /s/ HENRY A. JURAND
----------------------------
Henry A. Jurand
Vice President
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NOMURA SECURITIES INTERNATIONAL, INC.
PAINEWEBBER INCORPORATED
By: SMITH BARNEY INC.
By /s/ JOSEPH P. McGRATH, JR.
----------------------------------
Joseph P. McGrath, Jr.
Vice President
-25-
<PAGE> 26
SCHEDULE I
KCS ENERGY, INC.
<TABLE>
<CAPTION> PRINCIPAL
AMOUNT
INITIAL PURCHASER OF NOTES
----------------- --------------
<S> <C>
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 67,500,000
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . . . . . . . . . 37,500,000
Nomura Securities International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,000,000
==============
</TABLE>
<PAGE> 1
EXHIBIT 4
- --------------------------------------------------------------------------------
KCS ENERGY, INC.,
SUBSIDIARY GUARANTORS
NAMED HEREIN
and
FLEET NATIONAL
BANK OF CONNECTICUT
Trustee
--------------------
INDENTURE
Dated as of January 15, 1996
--------------------
$150,000,000
11% Senior Notes due 2003, Series A
11% Senior Notes due 2003, Series B
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 1.3 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . 25
Section 1.4 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE II
SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.2 Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.3 Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.4 Form of Notation Relating to Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . 34
Section 2.5 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE III
THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.1 Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.2 Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.3 Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.4 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.5 Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.6 Book-Entry Provisions for Global Securities . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.7 Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 45
Section 3.8 Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.9 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 3.10 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 3.11 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IV
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.2 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.2 Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . 51
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . 53
Section 5.4 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.5 Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . 54
Section 5.6 Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.7 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.8 Unconditional Right of Holders to Receive Principal, Premium
and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.9 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.10 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.11 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.12 Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.13 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 5.14 Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VI
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.2 Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.3 Trustee Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . 59
Section 6.4 May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.5 Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.6 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.7 Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.9 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 61
Section 6.10 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.11 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . 63
Section 6.12 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 63
Section 6.13 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.1 Holders' Lists; Holder Communications; Disclosures
Respecting Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.2 Reports By Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.3 Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.1 Company May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . 65
Section 8.2 Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IX
SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.1 Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . 67
Section 9.2 Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . 68
Section 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 9.4 Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 9.5 Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 9.6 Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 69
Section 9.7 Notice of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE X
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.1 Payment of Principal, Premium, if any, and Interest . . . . . . . . . . . . . . . . . . . . 70
Section 10.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.3 Money for Security Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.4 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 10.5 Payment of Taxes; Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . 72
Section 10.6 Limitation on Sale-Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.7 Limitation on Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.8 Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.9 Provision of Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.10 Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.11 Limitation on Guarantees by Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . 77
Section 10.12 Limitation on Indebtedness and Disqualified Capital Stock . . . . . . . . . . . . . . . . . 77
Section 10.13 Additional Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 10.14 Limitation on Issuances and Sales of Capital Stock by
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.15 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.16 Purchase of Securities Upon Change of Control . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.17 Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.18 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.19 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.20 Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XI
REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.1 Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.2 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.3 Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.4 Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . 85
Section 11.5 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.6 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.7 Securities Payable on Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.8 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.1 Company's Option to Effect Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . 87
Section 12.2 Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.3 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 12.4 Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 88
Section 12.5 Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 12.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE XIII
SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.1 Unconditional Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.2 Subsidiary Guarantors May Consolidate, etc., on Certain Terms . . . . . . . . . . . . . . . 92
Section 13.3 Release of Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 13.4 Limitation of Subsidiary Guarantors' Liability . . . . . . . . . . . . . . . . . . . . . . 93
Section 13.5 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 13.6 Execution and Delivery of Notations of Subsidiary Guarantees . . . . . . . . . . . . . . . 94
Section 13.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE XIV
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 14.1 Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 14.2 Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 14.3 Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 14.4 Notices, etc. to Trustee, Company and Subsidiary Guarantors . . . . . . . . . . . . . . . . 97
Section 14.5 Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 14.6 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 14.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 14.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 14.9 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 14.10 Governing Law; Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 14.11 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 14.12 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 14.13 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 14.14 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 100
Exhibit A - Form of Legend for Global Securities
Exhibit B - Transfer or Exchange Certificate
Exhibit C - Transferee Certificate for Institutional Accredited Investors
Exhibit D - Transferee Certificate for Regulation S Transfers
</TABLE>
v
<PAGE> 7
Reconciliation and Tie between Trust Indenture Act
of 1939 and Indenture, dated as of January 15, 1996
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7,6.8, 6.9
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
Section 312 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
Section 313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8(a)
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
Section 316 (a) (last
sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1("Outstanding")
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2,5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3(d)
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.10(b)
</TABLE>
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE> 8
THIS INDENTURE, dated as of January 15, 1996, is between KCS ENERGY,
INC., a Delaware corporation (hereinafter called the "Company"), the SUBSIDIARY
GUARANTORS (as defined hereinafter) and FLEET NATIONAL BANK OF CONNECTICUT, a
national banking association (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 11% Senior
Notes due 2003, Series A and an issue of 11% Senior Notes due 2003, Series B
(such two issues, as amended or supplemented from time to time in accordance
with the terms hereof, being herein collectively called the "Securities"), of
substantially the tenor and in the aggregate principal amount hereinafter set
forth, and to provide therefor the Company has duly authorized the execution
and delivery of this Indenture.
The 11% Senior Notes due 2003, Series A are to be issued and sold in
transactions exempt from registration under the Securities Act, pursuant to the
Purchase Agreement, and the 11% Senior Notes due 2003, Series B are to be
issued in exchange for the 11% Senior Notes due 2003, Series A, pursuant to the
Registration Rights Agreement.
The Company owns, directly or indirectly, all of the equity ownership
of the outstanding Voting Stock of each initial Subsidiary Guarantor, and each
initial Subsidiary Guarantor is a member of the Company's consolidated group of
companies that are engaged in related businesses. Each initial Subsidiary
Guarantor will derive direct and indirect benefit from the issuance of the
Securities; accordingly, each initial Subsidiary Guarantor has authorized its
guarantee of the Company's obligations under this Indenture and the Securities,
and to provide therefor the initial Subsidiary Guarantors have duly authorized
the execution and delivery of this Indenture.
All things necessary have been done on the part of the Company and the
initial Subsidiary Guarantors to make the Securities, when issued and executed
by the Company and authenticated and delivered by the Trustee as herein
provided, the valid obligations of the Company, to make the Subsidiary
Guarantees, when the notations thereof on the Securities are executed by the
initial Subsidiary Guarantors, the valid obligation of the initial Subsidiary
Guarantors and to make this Indenture a valid agreement of the Company, the
initial Subsidiary Guarantors and the Trustee, in accordance with their
respective terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities (together with the related Subsidiary Guarantees) by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities (together with the related Subsidiary
Guarantees), without preference of one series of Securities over the other, as
follows:
1
<PAGE> 9
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at
the time such Person becomes a Restricted Subsidiary or (b) assumed in
connection with acquisitions of Properties from such Person (other than any
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary or such acquisition). Acquired Indebtedness
shall be deemed to be incurred on the date the acquired Person becomes a
Restricted Subsidiary or the date of the related acquisition of Properties from
such Person.
"Act," when used with respect to any Holder, has the meaning specified
in Section 14.3.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, (a) the sum of (i) discounted
future net revenue from proved oil and gas reserves of the Company and its
Restricted Subsidiaries calculated in accordance with Commission guidelines
(but utilizing the price then being paid under the Tennessee Gas Contract, in
lieu of the price specified therein, when calculating revenue from such
reserves attributable to the Tennessee Gas Contract) before any state or
federal income taxes, as estimated by independent petroleum engineers in a
reserve report prepared as of the end of the Company's most recently completed
fiscal year, as increased by, as of the date of determination, the estimated
discounted future net revenue from (A) estimated proved oil and gas reserves of
the Company and its Restricted Subsidiaries attributable to any acquisition
consummated since the date of such year-end reserve report and (B) estimated
oil and gas reserves of the Company and its Restricted Subsidiaries
attributable to extensions, discoveries and other additions and upward
revisions of estimates of proved oil and gas reserves due to exploration,
development or exploitation, production or other activities conducted or
otherwise occurring since the date of such year-end reserve report which would,
in accordance with standard industry practice, result in such additions or
revisions, in each case calculated in accordance with Commission guidelines
(utilizing the prices utilized in such year-end reserve report), and decreased
by, as of the date of determination, the discounted future net revenue from (C)
estimated proved oil and gas reserves of the Company and its Restricted
Subsidiaries produced or disposed of since the date of such year-end reserve
report and (D) reductions in the estimated oil and gas reserves of the Company
and its Restricted Subsidiaries since the date of such year-end reserve report
attributable to downward revisions of estimates of proved oil and gas reserves
due to exploration, development or exploitation, production or other activities
conducted or otherwise occurring since the date of such year-end reserve report
which would, in accordance with standard industry practice, result in such
revisions, in each case calculated in accordance with Commission guidelines
(utilizing the prices utilized in such year-end reserve report); provided that,
in the case of each of the determinations made pursuant to clauses (A) through
(D), such increases and decreases shall be as estimated by the Company's
engineers, except that such increases and decreases in the discounted future
net revenue shall be confirmed in writing by independent petroleum engineers in
the event of a Material Change; (ii) 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
2
<PAGE> 10
Company's books and records as of a date no earlier than the date of the
Company's latest annual or quarterly financial statements; (iii) the Net
Working Capital (exclusive of any account receivable arising under the
Tennessee Gas Contract in excess of that portion thereof that the purchaser is
then paying) on a date no earlier than the date of the Company's latest annual
or quarterly financial statements; and (iv) to the extent not included in
clause (iii) above, the greater of (I) the net book value on a date no earlier
than the date of the Company's latest annual or quarterly financial statements
or (II) the appraised value, as estimated by independent appraisers, of other
tangible assets (exclusive of any account receivable arising under the
Tennessee Gas Contract in excess of that portion thereof that the purchaser is
then paying) of the Company and its Restricted Subsidiaries, as of a date no
earlier than the date of the Company's latest audited financial statements,
minus (b) the sum of (i) minority interests, (ii) any gas balancing liabilities
of the Company and its Restricted Subsidiaries reflected in the Company's
latest audited financial statements, (iii) the discounted future net revenue,
calculated in accordance with Commission guidelines (utilizing the prices
utilized in the Company's year-end reserve report), attributable to reserves
which are required to be delivered to third parties to fully satisfy the
obligations of the Company and its Restricted Subsidiaries with respect to
Volumetric Production Payments on the schedules specified with respect thereto,
(iv) the discounted future net revenue, calculated in accordance with
Commission guidelines, attributable to reserves subject to Dollar-Denominated
Production Payments which, based on the estimates of production included in
determining the discounted future net revenue specified in clause (a)(i) above
(utilizing the same prices utilized in the Company's year-end reserve report),
would be necessary to fully satisfy the payment obligations of the Company and
its Restricted Subsidiaries with respect to Dollar-Denominated Production
Payments on the schedules specified with respect thereto, and (v) the
discounted future net revenue, calculated in accordance with Commission
guidelines (utilizing the same prices utilized in the Company's year-end
reserve report), attributable to reserves subject to participation interests,
overriding royalty interests or other interests of third parties, pursuant to
participation, partnership, vendor financing or other agreements then in
effect, or which otherwise are required to be delivered to third parties. 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 shall continue to be calculated as if the
Company was still using the full cost method of accounting.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean
the amount by which the fair value of the Properties of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at
such date.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of this definition, beneficial ownership of 10% or
more of the voting common equity (on a fully diluted basis) or options or
warrants to purchase such equity (but only if exercisable at the date
3
<PAGE> 11
of determination or within 60 days thereof) of a Person shall be deemed to
constitute control of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by way of merger or consolidation)
(collectively, for purposes of this definition, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital
Stock of any Restricted Subsidiary held by the Company or any Restricted
Subsidiary, (b) all or substantially all of the Properties of any division or
line of business of the Company or any of its Restricted Subsidiaries or (c)
any other Properties of the Company or any of its Restricted Subsidiaries other
than (i) a transfer of cash, Cash Equivalents, hydrocarbons or other mineral
products in the ordinary course of business or (ii) any lease, abandonment,
disposition, relinquishment or farm-out of any oil and gas Property in the
ordinary course of business. For the purposes of this definition, the term
"Asset Sale" also shall not include (i) any transfer of Properties (including
Capital Stock) which is governed by, and made in accordance with, the
provisions of Article VIII hereof; (ii) any transfer of Properties to an
Unrestricted Subsidiary, if permitted under Section 10.10 hereof; or (iii) any
transfer of Properties (including Capital Stock) having a Fair Market Value of
less than $2,000,000.
"Attributable Indebtedness" means, with respect to any particular
lease under which any Person is at the time liable and at any date as of which
the amount thereof is to be determined, the present value of the total net
amount of rent required to be paid by such Person under the lease during the
primary term thereof, without giving effect to any renewals at the option of
the lessee, discounted from the respective due dates thereof to such date of
determination at a rate of interest per annum equal to the discount rate which
would be applicable to a Capitalized Lease Obligation with a like term in
accordance with GAAP. As used in the preceding sentence, the "net amount of
rent" under any lease for any such period shall mean the sum of rental and
other payments required to be paid with respect to such period by the lessee
thereunder, excluding any amounts required to be paid by such lessee on account
of maintenance and repairs, insurance, taxes, assessments, water rates or
similar charges. In the case of any lease which is terminable by the lessee
upon payment of a penalty, such net amount of rent shall also include the
amount of such penalty, but no rent shall be considered as required to be paid
under such lease subsequent to the first date upon which it may be so
terminated.
"Average Life" means, with respect to any Indebtedness, as at any date
of determination, the quotient obtained by dividing (a) the sum of the products
of (i) the number of years (and any portion thereof) from the date of
determination to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund or mandatory
redemption payment requirements) of such Indebtedness multiplied by (ii) the
amount of each such principal payment by (b) the sum of all such principal
payments.
"Bank Credit Facilities" means (i) that certain Amended and Restated
Credit Agreement dated effective as of March 15, 1994, as amended, among KCS
Resources, Inc., KCS Pipeline Systems, Inc., Bank One, Texas, National
Association, as Agent, and Bank One, Texas, National Association, CIBC, Inc., a
Canadian Chartered Bank and Den norske Bank, (ii) that certain Loan
4
<PAGE> 12
Agreement dated as of January 11, 1995, as amended, among KCS Energy Marketing,
Inc., as borrower, KCS Energy Inc. and Proliq, Inc., as guarantors, and
Canadian Imperial Bank of Commerce, and (iii) that certain Amended and Restated
Credit Agreement, dated as of November 28, 1995 between KCS Energy Marketing,
Inc., KCS Michigan Resources, Inc., Comerica Bank-Texas, as Agent, and Comerica
Bank-Texas and Den norske Bank, in each case as the same may be amended,
modified, supplemented, extended, restated, replaced, renewed or refinanced
from time to time in one or more credit agreements, loan agreements,
instruments or similar agreements, as such may be further amended, modified,
supplemented, extended, restated, replaced, renewed or refinanced.
"Board of Directors" means, with respect to the Company, either the
board of directors of the Company or any duly authorized committee of such
board of directors, and, with respect to any Subsidiary, either the board of
directors of such Subsidiary or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
its Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee, and with respect to a Subsidiary,
a copy of a resolution certified by the Secretary or an Assistant Secretary of
such Subsidiary to have been duly adopted by its Board of Directors and to be
in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
or Hartford, Connecticut are authorized or obligated by law or executive order
to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options
exercisable for, exchangeable for or convertible into such an equity interest
in such Person.
"Capitalized Lease Obligation" means any obligation to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
any Property that is required to be classified and accounted for as a capital
lease obligation under GAAP, and, for the purpose of this Indenture, the amount
of such obligation at any date shall be the capitalized amount thereof at such
date, determined in accordance with GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with a
maturity of 180 days or less issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) demand and time deposits and certificates of
deposit or acceptances with a maturity of 180 days or less of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000; (iii)
commercial paper with a maturity of 180 days or less issued by a
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<PAGE> 13
corporation that is not an Affiliate of the Company and is organized under the
laws of any state of the United States or the District of Columbia and rated at
least A-l by S&P or at least P-l by Moody's; (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any commercial bank meeting the
specifications of clause (ii) above; (v) overnight bank deposits and bankers'
acceptances at any commercial bank meeting the qualifications specified in
clause (ii) above; (vi) deposits available for withdrawal on demand with any
commercial bank not meeting the qualifications specified in clause (ii) above
but which is a lending bank under any of the Bank Credit Facilities, provided
all such deposits do not exceed $5,000,000 in the aggregate at any one time;
(vii) demand and time deposits and certificates of deposit with any commercial
bank organized in the United States not meeting the qualifications specified in
clause (ii) above, provided that such deposits and certificates support bond,
letter of credit and other similar types of obligations incurred in the
ordinary course of business; and (viii) investments in money market or other
mutual funds substantially all of whose assets comprise securities of the types
described in clauses (i) through (v) above.
"Change of Control" means the occurrence of any event or series of
events by which (a) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50% of the total Voting Stock of the Company; (b) the Company consolidates
with or merges into another Person or any Person consolidates with, or merges
into, the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is changed into or exchanged for cash,
securities or other Property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is changed into or exchanged for Voting
Stock of the surviving or resulting Person that is Qualified Capital Stock and
(ii) the holders of the Voting Stock of the Company immediately prior to such
transaction own, directly or indirectly, not less than a majority of the Voting
Stock of the surviving or resulting Person immediately after such transaction;
(c) the Company, either individually or in conjunction with one or more
Restricted Subsidiaries, sells, assigns, conveys, transfers, leases or
otherwise disposes of, or the Restricted Subsidiaries sell, assign, convey,
transfer, lease or otherwise dispose of, all or substantially all of the
Properties of the Company and the Restricted Subsidiaries, taken as a whole
(either in one transaction or a series of related transactions), including
Capital Stock of the Restricted Subsidiaries, to any Person (other than the
Company or a Restricted Subsidiary); (d) during any consecutive two-year
period, individuals who at the beginning of such period constituted the Board
of Directors of the Company (together with any new directors whose election by
such Board of Directors or whose nomination for election by the stockholders of
the Company was approved by a vote of a two-thirds of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then
in office; or (e) the liquidation or dissolution of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as
now or hereafter in effect, together with all regulations thereunder issued by
the Internal Revenue Service.
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<PAGE> 14
"Commission" or "SEC" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution
of assets upon any voluntary or involuntary liquidation, dissolution or
winding-up of such Person, to shares of Capital Stock of any other class of
such Person.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated EBITDA Coverage Ratio" means, for any period, the ratio
on a pro forma basis of (a) the sum of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-cash
Charges deducted in computing Consolidated Net Income, in each case, for such
period, of the Company and its Restricted Subsidiaries on a consolidated basis,
all determined in accordance with GAAP, decreased (to the extent included in
determining Consolidated Net Income) by the sum of (x) the amount of deferred
revenues that are amortized during such period and are attributable to reserves
that are subject to Volumetric Production Payments and (y) amounts recorded in
accordance with GAAP as repayments of principal and interest pursuant to
Dollar-Denominated Production Payments, to (b) the sum of such Consolidated
Interest Expense for such period; provided, however, that (i) the Consolidated
EBITDA Coverage Ratio shall be calculated on a pro forma basis on the
assumptions that (A) the Indebtedness to be incurred (and all other
Indebtedness incurred after the first day of such period of four full fiscal
quarters referred to in Section 10.12(a) hereof through and including the date
of determination), and (if applicable) the application of the net proceeds
therefrom (and from any other such Indebtedness), including to refinance other
Indebtedness, had been incurred on the first day of such four-quarter period
and, in the case of Acquired Indebtedness, on the assumption that the related
transaction (whether by means of purchase, merger or otherwise) also had
occurred on such date with the appropriate adjustments with respect to such
acquisition being included in such pro forma calculation and (B) any
acquisition or disposition by the Company or any Restricted Subsidiary of any
Properties outside the ordinary course of business, or any repayment of any
principal amount of any Indebtedness of the Company or any Restricted
Subsidiary prior to the Stated Maturity thereof, in either case since the first
day of such period of four full fiscal quarters through and including the date
of determination, had been consummated on such first day of such four-quarter
period, (ii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness required to be computed on a pro
forma basis in accordance with Section 10.12(a) hereof and (A) bearing a
floating interest rate shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period
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<PAGE> 15
and (B) which was not outstanding during the period for which the computation
is being made but which bears, at the option of the Company, a fixed or
floating rate of interest, shall be computed by applying, at the option of the
Company, either the fixed or floating rate, (iii) in making such computation,
the Consolidated Interest Expense attributable to interest on any Indebtedness
under a revolving credit facility required to be computed on a pro forma basis
in accordance with Section 10.12(a) hereof shall be computed based upon the
average daily balance of such Indebtedness during the applicable period,
provided that such average daily balance shall be reduced by the amount of any
repayment of Indebtedness under a revolving credit facility during the
applicable period, which repayment permanently reduced the commitments or
amounts available to be reborrowed under such facility, (iv) notwithstanding
clauses (ii) and (iii) of this proviso, interest on Indebtedness determined on
a fluctuating basis, to the extent such interest is covered by agreements
relating to Interest Rate Protection Obligations, shall be deemed to have
accrued at the rate per annum resulting after giving effect to the operation of
such agreements, (v) in making such calculation, Consolidated Interest Expense
shall exclude interest attributable to Dollar-Denominated Production Payments,
and (vi) if after the first day of the period referred to in clause (a) of this
definition the Company has permanently retired any Indebtedness out of the Net
Cash Proceeds of the issuance and sale of shares of Qualified Capital Stock of
the Company within 30 days of such issuance and sale, Consolidated Interest
Expense shall be calculated on a pro forma basis as if such Indebtedness had
been retired on the first day of such period.
"Consolidated Income Tax Expense" means, for any period, the provision
for federal, state, local and foreign income taxes (including state franchise
taxes accounted for as income taxes in accordance with GAAP) of the Company and
its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, but adjusted to give effect to the exclusion
from revenues during such period under the Tennessee Gas Contract in excess of
that portion of such revenues the purchaser has been paying during such period.
"Consolidated Interest Expense" means, for any period, without
duplication, (i) the sum of (a) the interest expense of the Company and its
Restricted Subsidiaries for such period as determined on a consolidated basis
in accordance with GAAP, including, without limitation, (A) any amortization of
debt discount, (B) the net cost under Interest Rate Protection Obligations
(including any amortization of discounts), (C) the interest portion of any
deferred payment obligation constituting Indebtedness, (D) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and (E) all accrued interest, in each case to the
extent attributable to such period, (b) to the extent any Indebtedness of any
Person (other than the Company or a Restricted Subsidiary) is guaranteed by the
Company or any Restricted Subsidiary, the aggregate amount of interest paid (to
the extent not accrued in a prior period) or accrued by such other Person
during such period attributable to any such Indebtedness, in each case to the
extent attributable to that period, (c) the aggregate amount of the interest
component of Capitalized Lease Obligations paid (to the extent not accrued in a
prior period), accrued or scheduled to be paid or accrued by the Company and
its Restricted Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP and (d) the aggregate amount of dividends paid
(to the extent not accrued in a prior period) or accrued on Disqualified
Capital Stock or Preferred Stock of the Company and its Restricted
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<PAGE> 16
Subsidiaries, to the extent such Disqualified Capital Stock or Preferred Stock
is owned by Persons other than the Company or its Restricted Subsidiaries, less
(ii) to the extent included in clause (i), amortization of capitalized debt
issuance costs of the Company and its Restricted Subsidiaries during such
period.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto),
(b) net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to Asset Sales, (c) the net income (or net loss) of any Person
(other than the Company or any of its Restricted Subsidiaries), in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions actually paid
to the Company or any of its Restricted Subsidiaries in cash by such other
Person during such period (regardless of whether such cash dividends or
distributions is attributable to net income (or net loss) of such Person during
such period or during any prior period), (d) net income (or net loss) of any
Person combined with the Company or any of its Restricted Subsidiaries on a
"pooling of interests" basis attributable to any period prior to the date of
combination, (e) the net income of any Restricted Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary is not at the date of determination permitted, directly
or indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, (f) income
resulting from transfers of assets received by the Company or any Restricted
Subsidiary from an Unrestricted Subsidiary, (g) any write-downs of non-current
assets, provided, however, that any ceiling limitation writedowns under
Commission guidelines shall be treated as capitalized costs, as if such
writedowns had not occurred and (h) net income resulting from the recognition
of revenues during such period under the Tennessee Gas Contract in excess of
that portion of such revenues the purchaser has been paying during such period.
"Consolidated Net Worth" means, at any date, the consolidated
stockholders' equity of the Company less the amount of such stockholders'
equity attributable to Disqualified Capital Stock or treasury stock of the
Company and its Restricted Subsidiaries, as determined in accordance with GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization and other non-cash expenses of the
Company and its Restricted Subsidiaries reducing Consolidated Net Income for
such period, determined on a consolidated basis in accordance with GAAP
(excluding any such non-cash charge for which an accrual of or reserve for cash
charges for any future period is required and adjusted to give effect to the
exclusion from revenues during such period under the Tennessee Gas Contract in
excess of that portion of such revenues the purchaser has been paying during
such period.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this Indenture is
located at 777 Main Street, Hartford, Connecticut 06115.
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<PAGE> 17
"Default" means any event, act or condition that is, or after notice
or passage of time or both would become, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.8 hereof.
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Disinterested Director" means, with respect to any transaction or
series of transactions in respect of which the Board of Directors of the
Company is required to deliver a Board Resolution hereunder, a member of the
Board of Directors of the Company who does not have any material direct or
indirect financial interest (other than an interest arising solely from the
beneficial ownership of Capital Stock of the Company) in or with respect to
such transaction or series of transactions.
"Disqualified Capital Stock" means any Capital Stock that, either by
its terms, by the terms of any security into which it is convertible or
exchangeable or by contract or otherwise, is, or upon the happening of an event
or passage of time would be, required to be redeemed or repurchased prior to
the final Stated Maturity of the Securities or is redeemable at the option of
the holder thereof at any time prior to such final Stated Maturity, or is
convertible into or exchangeable for debt securities at any time prior to such
final Stated Maturity. For purposes of Section 10.12(a) hereof, Disqualified
Capital Stock shall be valued at the greater of its voluntary or involuntary
maximum fixed redemption or repurchase price plus accrued and unpaid dividends.
For such purposes, the "maximum fixed redemption or repurchase price" of any
Disqualified Capital Stock which does not have a fixed redemption or repurchase
price shall be calculated in accordance with the terms of such Disqualified
Capital Stock as if such Disqualified Capital Stock were redeemed or
repurchased on the date of determination, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such
fair market value shall be determined in good faith by the board of directors
of the issuer of such Disqualified Capital Stock; provided, however, that if
such Disqualified Capital Stock is not at the date of determination permitted
or required to be redeemed or repurchased, the "maximum fixed redemption or
repurchase price" shall be the book value of such Disqualified Capital Stock.
"Dollar-Denominated Production Payments" means production payment
obligations of the Company or any Restricted Subsidiary recorded as liabilities
in accordance with GAAP, together with all undertakings and obligations in
connection therewith.
"Event of Default" has the meaning specified in Section 5.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor act thereto.
"Exchange Offer" means the offer by the Company, pursuant to an
effective registration statement filed with the SEC, to exchange all of the
Series B Securities for all of the Outstanding
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<PAGE> 18
Series A Securities in accordance with the terms and provisions of the
Registration Rights Agreement.
"Exchange Offer Consummation Date" means the date on which the
Exchange Offer is consummated in accordance with the terms and provisions of
the Registration Rights Agreement.
"Fair Market Value" means the fair market value of a Property
(including shares of Capital Stock) as determined in good faith by the Board of
Directors of the Company and evidenced by a Board Resolution, which
determination shall be conclusive for purposes of this Indenture; provided,
however, that unless otherwise specified herein, the Board of Directors shall
be under no obligation to obtain any valuation or assessment from any
investment banker, appraiser or other third party.
"Federal Bankruptcy Code" means the United States Bankruptcy Code of
Title 11 of the United States Code, as amended from time to time.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States of America, which are applicable as of the date of this Indenture.
The term "guarantee" means, as applied to any obligation, (i) a
guarantee (other than by endorsement of negotiable instruments or documents for
collection in the ordinary course of business), direct or indirect, in any
manner, of any part or all of such obligation and (ii) an agreement, direct or
indirect, contingent or otherwise, the practical effect of which is to assure
in any way the payment or performance (or payment of damages in the event of
non-performance) of all or any part of such obligation, including, without
limiting the foregoing, the payment of amounts drawn down under letters of
credit. When used as a verb, "guarantee" has a corresponding meaning.
"Holder" means a Person in whose name a Security is registered in a
Security Register.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all liabilities of such Person, contingent or otherwise, for borrowed money
or for the deferred purchase price of Property or services (excluding any trade
accounts payable and other accrued current liabilities incurred in the ordinary
course of business) and all liabilities of such Person incurred in connection
with any agreement to purchase, redeem, exchange, convert or otherwise acquire
for value any Capital Stock of such Person, or any warrants, rights or options
to acquire such Capital Stock outstanding on the date of this Indenture or
thereafter, if, and to the extent, any of the foregoing would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
(b) all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments, if, and to the extent, any of the foregoing would
appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (c) all Indebtedness of such
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<PAGE> 19
Person created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person (even if the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such Property), but excluding
trade accounts payable arising in the ordinary course of business, (d) all
Capitalized Lease Obligations of such Person, (e) all Indebtedness referred to
in the preceding clauses of other Persons and all dividends of other Persons,
the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon Property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness (the amount of such obligation
being deemed to be the lesser of the value of such Property or the amount of
the obligation so secured), (f) all guarantees by such Person of Indebtedness
referred to in this definition (including, with respect to any Production
Payment, any warranties or guaranties of production or payment by such Person
with respect to such Production Payment but excluding other contractual
obligations of such Person with respect to such Production Payment), and (g)
all obligations of such Person under or in respect of currency exchange
contracts, oil and natural gas price hedging arrangements and Interest Rate
Protection Obligations. Subject to clause (f) of the first sentence of this
definition, neither Dollar-Denominated Production Payments nor Volumetric
Production Payments shall be deemed to be Indebtedness. In addition,
Disqualified Capital Stock shall not be deemed to be Indebtedness.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, (a) an insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or similar case or proceeding in
connection therewith, relative to such Person or its creditors, as such, or its
assets or (b) any liquidation, dissolution or other winding-up proceeding of
such Person, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of such Person.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements or
12
<PAGE> 20
arrangements designed to protect against or manage such Person's and any of its
Subsidiaries' exposure to fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or
capital contribution to (by means of any transfer of cash or other Property to
others or any payment for Property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the Fair
Market Value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary shall be
deemed to be an "Investment" made by the Company in such Unrestricted
Subsidiary at such time. "Investments" shall exclude (a) extensions of trade
credit or other advances to customers on commercially reasonable terms in
accordance with normal trade practices or otherwise in the ordinary course of
business, (b) Interest Rate Protection Obligations entered into in the ordinary
course of business or as required by any Permitted Indebtedness or any other
Indebtedness incurred in compliance with Section 10.12 hereof, but only to the
extent that the stated aggregate notional amounts of such Interest Rate
Protection Obligations do not exceed 105% of the aggregate principal amount of
such Indebtedness to which such Interest Rate Protection Obligations relate and
(c) endorsements of negotiable instruments and documents in the ordinary course
of business.
"Issue Date" means the date of first issuance of the Series A
Securities under this Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim or similar
type of encumbrance (including, without limitation, any agreement to give or
grant any lease, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing) upon or with
respect to any Property of any kind. A Person shall be deemed to own subject to
a Lien any Property which such Person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Material Change" means an increase or decrease (excluding changes
that result solely from changes in prices) of more than 10% during a fiscal
quarter in the estimated discounted future net cash flows from proved oil and
gas reserves of the Company and its Restricted Subsidiaries, calculated in
accordance with clause (a) (i) of the definition of Adjusted Consolidated Net
Tangible Assets; provided, however, that the following shall be excluded from
the calculation of Material Change: (i) any acquisitions during the quarter of
oil and gas reserves that have been estimated by a nationally recognized firm
of independent petroleum engineers and on which a report or reports exist and
(ii) any disposition of Properties existing at the beginning of such quarter
that have been disposed of as provided in Section 10.17 hereof.
"Maturity" means, with respect to any Security, the date on which any
principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity
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<PAGE> 21
with respect to such principal or by declaration of acceleration, call for
redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary), net of (i)
brokerage commissions and other fees and expenses (including fees and expenses
of legal counsel, accountants and investment banks) related to such Asset Sale,
(ii) provisions for all taxes payable as a result of such Asset Sale, (iii)
amounts required to be paid to any Person (other than the Company or any
Restricted Subsidiary) owning a beneficial interest in the Property subject to
the Asset Sale or having a Lien thereon and (iv) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the case may be, as a
reserve required in accordance with GAAP consistently applied against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected
in an Officers' Certificate delivered to the Trustee; provided, however, that
any amounts remaining after adjustments, revaluations or liquidations of such
reserves shall constitute Net Available Proceeds.
"Net Cash Proceeds," with respect to any issuance or sale of Qualified
Capital Stock or other securities, means the cash proceeds of such issuance or
sale net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
and expenses actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"Net Working Capital" means (i) all current assets of the Company and
its Restricted Subsidiaries, minus (ii) all current liabilities of the Company
and its Restricted Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in financial statements of the Company
and its Restricted Subsidiaries prepared on a consolidated basis in accordance
with GAAP.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or any Restricted Subsidiary incurred in connection
with the acquisition by the Company or such Restricted Subsidiary of any
Property and as to which (a) the holders of such Indebtedness agree that they
will look solely to the Property so acquired and securing such Indebtedness for
payment on or in respect of such Indebtedness, and neither the Company nor any
Subsidiary (other than an Unrestricted Subsidiary) (i) provides credit support,
including any undertaking, agreement or instrument which would constitute
Indebtedness or (ii) is directly or indirectly liable for such Indebtedness,
and (b) no default with respect to such Indebtedness would permit (after notice
or passage of time or both), according to the terms thereof, any holder of any
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<PAGE> 22
Indebtedness of the Company or a Restricted Subsidiary to declare a default on
such Indebtedness or cause the payment thereof to be accelerated or payable
prior to its Stated Maturity.
"Officers" means, with respect to any Person, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer and the
Treasurer of such Person.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee.
"Oil and Gas Business" means (i) the acquisition, exploration,
development, operation and disposition of interests in oil, gas and other
hydrocarbon Properties, (ii) the gathering, marketing, treating, processing,
storage, refining, selling and transporting of any production from such
interests or Properties, (iii) any business relating to or arising from
exploration for or development, production, treatment, processing, storage,
refining, transportation or marketing of oil, gas and other minerals and
products produced in association therewith and (iv) any activity necessary,
appropriate or incidental to the activities described in the foregoing clauses
(i) through (iii) of this definition.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company (or any Subsidiary Guarantor), including an employee of
the Company (or any Subsidiary Guarantor), and who shall be reasonably
acceptable to the Trustee.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of
such Securities, provided that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made;
(iii) Securities, except to the extent provided in Sections
12.2 and 12.3 hereof, with respect to which the Company has effected
legal defeasance or covenant defeasance as provided in Article XII
hereof; and
(iv) Securities which have been paid pursuant to Section
3.7 hereof or in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there shall
15
<PAGE> 23
have been presented to the Trustee proof satisfactory to it that such
securities are held by a bona fide purchaser in whose hands the
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities
owned by the Company, any Subsidiary Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, any Subsidiary Guarantor or such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, consent, notice or waiver, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company, any Subsidiary
Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Subsidiary Guarantor or such other obligor.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (and premium,
if any, on) or interest on any Securities on behalf of the Company.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness under the Bank Credit Facilities in an
aggregate principal amount at any one time outstanding not to exceed
the greater of $75 million or 15% of Adjusted Consolidated Net
Tangible Assets (the "Maximum Credit Amount"), plus all interest and
fees under such facilities and any guarantee of any such Indebtedness;
(ii) Indebtedness under the Series A Securities and any
Series B Securities issued in exchange for Series A Securities of an
equal principal amount;
(iii) Indebtedness outstanding or in effect on the date of
this Indenture (and not repaid or defeased with the proceeds of the
offering of the Securities);
(iv) obligations pursuant to Interest Rate Protection
Obligations, but only to the extent such obligations do not exceed
105% of the aggregate principal amount of the Indebtedness covered by
such Interest Rate Protection Obligations; obligations under currency
exchange contracts entered into in the ordinary course of business;
hedging arrangements entered into in the ordinary course of business
for the purpose of protecting production, purchases and resales
against fluctuations in oil or natural gas prices; and any guarantee
of any of the foregoing;
(v) the Subsidiary Guarantees of the Securities (and any
assumption of the obligations guarantees thereby);
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<PAGE> 24
(vi) Indebtedness of the Company to any Restricted
Subsidiary, and Indebtedness of any Restricted Subsidiary to the
Company or any other Restricted Subsidiary;
(vii) Permitted Refinancing Indebtedness and any guarantee
thereof;
(viii) Non-Recourse Indebtedness;
(ix) Indebtedness in respect of bid, performance or surety
bonds issued for the account of the Company or any Restricted
Subsidiary in the ordinary course of business, including guaranties
and letters of credit supporting such bid, performance or surety
obligations (in each case other than for an obligation for money
borrowed); and
(x) any additional Indebtedness in an aggregate principal
amount not in excess of $15,000,000 at any one time outstanding and
any guarantee thereof.
"Permitted Investments" means any of the following: (i) Investments
in Cash Equivalents; (ii) Investments in the Company or any of its Restricted
Subsidiaries; (iii) Investments in an amount not to exceed $3,000,000 at any
one time outstanding; (iv) Investments by the Company or any of its Restricted
Subsidiaries in another Person, if as a result of such Investment (A) such
other Person becomes a Restricted Subsidiary or (B) such other Person is merged
or consolidated with or into, or transfers or conveys all or substantially all
of its Properties to, the Company or a Restricted Subsidiary; (v) entry into
operating agreements, joint ventures, partnership agreements, working
interests, royalty interests, mineral leases, processing agreements, farm-out
agreements, contracts for the sale, transportation or exchange of oil and
natural gas, unitization agreements, pooling arrangements, area of mutual
interest agreements or other similar or customary agreements, transactions,
Properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the Oil and Gas Business, excluding, however,
Investments in corporations; (vi) entry into any hedging arrangements in the
ordinary course of business for the purpose of protecting the Company's or any
Restricted Subsidiary's production, purchases and resales against fluctuations
in oil or natural gas prices; (vii) Investments permitted under Section 10.17
or 10.18 hereof; (viii) entry into any currency exchange contract in the
ordinary course of business; or (ix) Investments in stock, obligations or
securities received in settlement of debts owing to the Company or any
Restricted Subsidiary as a result of bankruptcy or insolvency proceedings or
upon the foreclosure, perfection or enforcement of any Lien in favor of the
Company or a Restricted Subsidiary, in each case as to debt owing to the
Company or a Restricted Subsidiary that arose in the ordinary course of
business of the Company or any such Restricted Subsidiary.
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the date of this Indenture
(except to the extent such Liens secure Indebtedness that is repaid or
defeased with proceeds of the offering of the Securities);
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<PAGE> 25
(b) Liens securing the Securities or the Subsidiary
Guarantees;
(c) Liens in favor of the Company;
(d) Liens securing Indebtedness under Bank Credit
Facilities that constitutes Permitted Indebtedness pursuant to clause
(i) of the definition of "Permitted Indebtedness";
(e) Liens for taxes, assessments and governmental charges
or claims either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which the Company or its Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(f) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not delinquent or being contested in good faith, if such reserve
or other appropriate provision, if any, as shall be required by GAAP
shall have been made in respect thereof;
(g) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the payment or performance of tenders, statutory or regulatory
obligations, surety and appeal bonds, bids, government contracts and
leases, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money but including lessee or operator obligations under statutes,
governmental regulations or instruments related to the ownership,
exploration and production of oil, gas and minerals on state, federal
or foreign lands or waters);
(h) judgment Liens not giving rise to an Event of Default
so long as any appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated
shall not have expired;
(i) easements, rights-of-way, restrictions and other
similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of the Company or
any of its Restricted Subsidiaries;
(j) any interest or title of a lessor under any
Capitalized Lease Obligation or operating lease;
(k) purchase money Liens; provided, however, that (i) the
related purchase money Indebtedness shall not be secured by any
Property of the Company or any Restricted Subsidiary other than the
Property so acquired and the proceeds thereof and (ii) the Lien
securing such Indebtedness shall be created within 90 days of such
acquisition;
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<PAGE> 26
(l) Liens securing obligations under hedging agreements
that the Company or any Restricted Subsidiary enters into in the
ordinary course of business for the purpose of protecting its
production, purchases and resales against fluctuations in oil or
natural gas prices;
(m) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(n) Liens securing reimbursement obligations with respect
to commercial letters of credit which encumber documents and other
Property relating to such letters of credit and products and proceeds
thereof;
(o) Liens encumbering Property under construction arising
from progress or partial payments by a customer of the Company or its
Restricted Subsidiaries relating to such Property;
(p) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty
requirements of the Company or any of its Restricted Subsidiaries,
including rights of offset and set-off;
(q) Liens securing Interest Rate Protection Obligations
which Interest Rate Protection Obligations relate to Indebtedness that
is secured by Liens otherwise permitted under this Indenture;
(r) Liens on, or related to, Properties to secure all or
part of the costs incurred in the ordinary course of business for the
exploration, drilling, development or operation thereof;
(s) Liens on pipeline or pipeline facilities which arise
by operation of law;
(t) Liens arising under operating agreements, joint
venture agreements, partnership agreements, oil and gas leases,
farm-out agreements, division orders, contracts for the sale,
transportation or exchange of oil and natural gas, unitization and
pooling declarations and agreements, area of mutual interest
agreements and other agreements which are customary in the Oil and Gas
Business;
(u) Liens reserved in oil and gas mineral leases for
bonus or rental payments or for compliance with the terms of such
leases;
(v) Liens constituting survey exceptions, encumbrances,
easements or reservations of, or rights to others for, rights-of-way,
zoning or other restrictions as to the use of real properties, and
minor defects of title which, in the case of any of the foregoing,
were not incurred or created to secure the payment of borrowed money
or the deferred
19
<PAGE> 27
purchase price of Property or services, and in the aggregate do not
materially adversely affect the value of the Properties of the Company
and the Restricted Subsidiaries, taken as a whole, or materially
impair the use of such Properties for the purposes of which such
Properties are held by the Company or any Restricted Subsidiaries; and
(w) Liens securing Non-Recourse Indebtedness; provided,
however, that the related Non-Recourse Indebtedness shall not be
secured by any Property of the Company or any Restricted Subsidiary
other than the Property acquired by the Company with the proceeds of
such Non-Recourse Indebtedness.
Notwithstanding anything in clauses (a) through (w) of this definition, the
term "Permitted Liens" shall not include any Liens resulting from the creation,
incurrence, issuance, assumption or guarantee of any Production Payments other
than Production Payments that are created, incurred, issued, assumed or
guaranteed in connection with the financing of, and within 30 days after, the
acquisition of the Properties that are subject thereto.
"Permitted Refinancing Indebtedness" means Indebtedness of the Company
or a Restricted Subsidiary, the net proceeds of which are used to renew,
extend, refinance, refund or repurchase (including, without limitation,
pursuant to a Change of Control Offer or Net Proceeds Offer) outstanding
Indebtedness of the Company or any Restricted Subsidiary, provided that (a) if
the Indebtedness (including the Securities) being renewed, extended,
refinanced, refunded or repurchased is pari passu with or subordinated in right
of payment to either the Securities or the Subsidiary Guarantees, then such
Indebtedness is pari passu with or subordinated in right of payment to the
Securities or the Subsidiary Guarantees, as the case may be, at least to the
same extent as the Indebtedness being renewed, extended, refinanced, refunded
or repurchased, (b) such Indebtedness has a Stated Maturity for its final
scheduled principal payment that is no earlier than the Stated Maturity for the
final scheduled principal payment of the Indebtedness being renewed, extended,
refinanced, refunded or repurchased and (c) such Indebtedness has an Average
Life at the time such Indebtedness is incurred that is equal to or greater than
the Average Life of the Indebtedness being renewed, extended, refinanced,
refunded or repurchased; provided, further, that such Indebtedness is in an
aggregate principal amount (or, if such Indebtedness is issued at a price less
than the principal amount thereof, the aggregate amount of gross proceeds
therefrom is) not in excess of the aggregate principal amount then outstanding
of the Indebtedness being renewed, extended, refinanced, refunded or
repurchased (or if the Indebtedness being renewed, extended, refinanced,
refunded or repurchased was issued at a price less than the principal amount
thereof, then not in excess of the amount of liability in respect thereof
determined in accordance with GAAP) plus the amount of reasonable fees and
expenses incurred by the Company or such Restricted Subsidiary in connection
therewith.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security, including any Security of a different series, evidencing all or a
portion of the same debt as that evidenced
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<PAGE> 28
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.7 hereof in exchange for a
mutilated security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, whether now outstanding or issued
after the date of this Indenture, including, without limitation, all classes
and series of preferred or preference stock of such Person.
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth in Section 2.2 hereof.
"Production Payments" means, collectively, Dollar-Denominated
Production Payments and Volumetric Production Payments.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including, without limitation, Capital Stock in any
other Person.
"Public Equity Offering" means an offer and sale of Common Stock of
the Company pursuant to a registration statement that has been declared
effective by the Commission pursuant to the Securities Act (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of the Company).
"Purchase Agreement" means the Purchase Agreement dated January 19,
1996 among the Company, the Subsidiary Guarantors and the Purchasers.
"Purchaser" means an initial purchaser of Series A Securities named in
Schedule I attached to the Purchase Agreement.
"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Disqualified Capital Stock.
"Qualified Institutional Buyer" has the meaning attributed thereto in
Rule 144A under the Securities Act.
"Record Date" means a Regular Record Date or an Additional Record
Date.
"Redemption Date," when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
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"Registration Default" shall have the meaning ascribed thereto in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement to be dated January 25, 1996, among the Company, the Subsidiary
Guarantors and the Purchasers.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 1 or July 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer," when used with respect to the Trustee, means
any officer in the Corporate Trust Department of the Trustee, and also means,
with respect to a particular corporate trust matter, any other officer of the
Trustee to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Investment" means (without duplication) (i) the
designation of a Subsidiary as an Unrestricted Subsidiary in the manner
described in the definition of "Unrestricted Subsidiary" and (ii) any
Investment other than a Permitted Investment.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of this Indenture, unless such Subsidiary of the
Company is an Unrestricted Subsidiary or is designated as an Unrestricted
Subsidiary pursuant to the terms of this Indenture.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Sale/Leaseback Transaction" means any direct or indirect arrangement
pursuant to which Properties are sold or transferred by the Company or a
Restricted Subsidiary and are thereafter leased back from the purchaser or
transferee thereof by the Company or one of its Restricted Subsidiaries.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Series A Securities or any Series B
Securities authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor act thereto.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5 hereof.
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<PAGE> 30
"Series A Securities" means the 11% Senior Notes due 2003, Series A,
being issued and sold pursuant to the Purchase Agreement and this Indenture.
"Series B Securities" means the 11% Senior Notes due 2003, Series B,
to be issued in exchange for the Series A Securities pursuant to the
Registration Rights Agreement and this Indenture.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.8 hereof.
"Stated Maturity" means, when used with respect to any Indebtedness or
any installment of interest thereon, means the date specified in the instrument
evidencing or governing such Indebtedness as the fixed date an which the
principal of such Indebtedness or such installment of interest is due and
payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Subsidiary Guarantor which is expressly subordinated in right of payment to the
Securities or the Subsidiary Guarantees, as the case may be.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons
performing similar functions).
"Subsidiary Guarantee" has the meaning specified in Section 13.1
hereof.
"Subsidiary Guarantor" means (i) Enercorp Gas Marketing, Inc., a
Delaware corporation, (ii) KCS Resources, Inc., a Delaware corporation, (iii)
KCS Michigan Resources, Inc., a Delaware corporation, (iv) KCS Pipeline
Systems, Inc., a Delaware corporation, (v) KCS Energy Marketing, Inc., a New
Jersey corporation, (vi) KCS Power Marketing, Inc., a Delaware corporation,
(vii) KCS Energy Risk Management, Inc., a Delaware corporation, (viii) National
Enerdrill Corporation, a New Jersey corporation, (ix) Proliq, Inc., a New
Jersey corporation, (x) each of the Company's other Restricted Subsidiaries, if
any, executing a supplemental indenture in compliance with the provisions of
Section 10.13(a) hereof and (xi) any Person that becomes a successor guarantor
of the Securities in compliance with the provisions of Section 13.2 hereof.
"Tennessee Gas" means Tennessee Gas Pipeline Company, a Delaware
corporation, and its successors and assigns under the Tennessee Gas Contract.
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<PAGE> 31
"Tennessee Gas Contract" means that certain Gas Purchase and Sale
Agreement dated January 16, 1979 by and between Tennessee Gas as "Buyer," Gulf
Energy and Development Corp. as "Gatherer," and the Company, as the successor
in interest to National Exploration Company and Eton Partnership, and certain
other parties as "Sellers," as such may be amended, modified, supplemented,
extended, restated, replaced or renewed.
"Transfer Restricted Security" has the meaning attributed thereto in
the Registration Rights Agreement; provided, however, that the Trustee shall be
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether or not any Security is a Transfer Restricted Security.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended and in force at the date as of which this Indenture was executed
until such time as this Indenture is qualified under the TIA, and thereafter as
in effect on the date on which this Indenture is qualified under the TIA,
except as provided in Section 9.5 hereof.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination will be designated an Unrestricted Subsidiary by
the Board of Directors of the Company as provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors of the Company may
designate any Subsidiary of the Company as an Unrestricted Subsidiary so long
as (a) neither the Company nor any Restricted Subsidiary is directly or
indirectly liable pursuant to the terms of any Indebtedness of such Subsidiary;
(b) no default with respect to any Indebtedness of such Subsidiary would permit
(upon notice, lapse of time or otherwise) any holder of any other Indebtedness
of the Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity; (c) such designation as an Unrestricted Subsidiary would
be permitted under Section 10.10 hereof; and (d) such designation shall not
result in the creation or imposition of any Lien on any of the Properties of
the Company or any Restricted Subsidiary (other than any Permitted Lien or any
Lien the creation or imposition of which shall have been in compliance with
Section 10.15 hereof); provided, however, that with respect to clause (a), the
Company or a Restricted Subsidiary may be liable for Indebtedness of an
Unrestricted Subsidiary if (x) such liability constituted a Permitted
Investment or a Restricted Payment permitted by Section 10.10 hereof, in each
case at the time of incurrence, or (y) the liability would be a Permitted
Investment at the time of designation of such Subsidiary as an Unrestricted
Subsidiary. Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing a Board Resolution with the Trustee
giving effect to such designation. The Board of Directors of the Company may
designate any Unrestricted Subsidiary as a Restricted Subsidiary if,
immediately after giving effect to such designation, on a pro forma basis (i)
no Default or Event of Default shall have occurred and be continuing, (ii) the
Company could incur $1.00 of additional Indebtedness (not including the
incurrence of Permitted Indebtedness) under Section 10.12(a) hereof and (iii)
if any of the Properties of the Company or any of its Restricted
24
<PAGE> 32
Subsidiaries would upon such designation become subject to any Lien (other than
a Permitted Lien), the creation or imposition of such Lien shall have been in
compliance with Section 10.15 hereof.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Volumetric Production Payments" means production payment obligations
of the Company or a Restricted Subsidiary recorded as deferred revenue in
accordance with GAAP, together with all undertakings and obligations in
connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock
of any other class or classes shall have, or might have, voting power by reason
of the happening of any contingency).
Section 1.2 Other Definitions.
<TABLE>
<CAPTION>
Defined
Term in Section
---- ----------
<S> <C>
"Additional Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6
"Change of Control Notice" . . . . . . . . . . . . . . . . . . . . . . . . . 10.16(c)
"Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . 10.16(a)
"Change of Control Purchase Date" . . . . . . . . . . . . . . . . . . . . . . 10.16(c)
"Change of Control Purchase Price" . . . . . . . . . . . . . . . . . . . . . 10.16(a)
"Defaulted Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(b)
"Funding Guarantor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5
"Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Net Proceeds Deficiency" . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(c)
"Net Proceeds Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(c)
"Net Proceeds Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(c)
"Offered Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(c)
"Payment Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(c
"Payment Restriction" . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.19
"Physical Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Purchase Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(c)
"Restricted Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10(a)
"Surviving Entity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)
"Trigger Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17(c)
"U.S. Government Obligations" . . . . . . . . . . . . . . . . . . . . . . . . 12.4(a)
</TABLE>
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
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<PAGE> 33
"indenture securities" means the Securities,
"indenture security holder" means a Holder,
"indenture to be qualified" means this Indenture,
"indenture trustee" or "institutional trustee" means the
Trustee, and
"obligor" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein.
Section 1.4 Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP and all accounting
calculations will be determined in accordance with GAAP;
(c) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(d) the masculine gender includes the feminine and the neuter;
(e) a "day" means a calendar day;
(f) when used with reference to the Securities, the expression "of
like tenor" refers to Securities of the same series;
(g) provisions apply to successive events and transactions; and
(h) references to agreements and other instruments include
subsequent amendments and waivers but only to the extent not prohibited by this
Indenture.
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<PAGE> 34
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally.
The definitive Securities shall be printed, lithographed or engraved
on steel-engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities or notations of Subsidiary
Guarantees, as the case may be, as evidenced by their execution of such
Securities or notations of Subsidiary Guarantees, as the case may be.
Except as indicated in the next succeeding paragraph, Securities
(including the notations thereon relating to the Subsidiary Guarantees and the
Trustee's certificate of authentication) shall be issued initially in the form
of one or more permanent global Securities substantially in the form set forth
in Sections 2.2 through 2.5 hereof (each being herein called a "Global
Security") deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided, and each shall bear the legend set forth on Exhibit A hereto. Subject
to the limitation set forth in Section 3.1, the principal amounts of the Global
Securities may be increased or decreased from time to time by adjustments made
on the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities (including the notations thereon relating to the Subsidiary
Guarantees and the Trustee's certificate of authentication) originally issued
and sold in reliance on any exemption from registration under the Securities
Act other than Rule 144A shall be issued, and Securities originally offered and
sold in reliance on Rule 144A may be issued, in the form of permanent
certificated securities in registered form in substantially the form set forth
in Sections 2.2 through 2.5 hereto ("Physical Securities").
The Series A Securities and the Series B Securities, the notations
thereon relating to the Subsidiary Guarantees and the Trustee's certificate of
authentication shall be in substantially the respective forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, CUSIP or other numbers or other marks of identification and such
legends or endorsements placed thereon as may be required by this Section or
Section 3.12 or to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities
or notations of Subsidiary Guarantees, as the case may be, as evidenced by
their execution of the Securities or notations of Subsidiary Guarantees, as the
case may be. Any portion of the text of any Security may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the
Security. In addition to the requirements of Section 2.3, the Securities may
also have set forth on the reverse side thereof a form of assignment and forms
to elect purchase by the Company pursuant to Section 10.16 or 10.17 hereof.
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<PAGE> 35
Section 2.2 Form of Face of Security.
[If a Series A Security or a Series B Security constituting a Transfer
Restricted Security--THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL
NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED
STATES TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS MEETING THE
REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.]
KCS ENERGY, INC.
11% Senior Note due 2003, Series ____
No._____ $____________
CUSIP No. ___________
KCS Energy, Inc., a Delaware corporation (herein called the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to _________ or
registered assigns the principal sum of _________ Dollars on January 15, 2003,
at the office or agency of the Company referred to below, and to pay interest
thereon, commencing [if a Series A Security--on July 15, 1996 and continuing
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<PAGE> 36
semiannually thereafter, on January 15 and July 15 in each year, from January
25, 1996] [if a Series B Security--on the first January 15 or July 15 following
the original issuance of the Series B Securities and continuing semiannually
thereafter, on January 15 and July 15 in each year, from the date of original
issuance of the Series B Securities], or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, at the rate of 11%
per annum, until the principal hereof is paid or duly provided for, and (to the
extent lawful) to pay on demand interest on any overdue interest at the rate
borne by the Series ____ Securities from the date on which such overdue
interest becomes payable to the date payment of such interest has been made or
duly provided for. The Company also promises to pay any Additional Interest
required by Section 4 of the Registration Rights Agreement, upon the
conditions, at the rates and for the periods specified therein. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name
this Series ___ Security (or one or more Predecessor Securities) is registered
on the Security Register at the close of business on the Regular Record Date
for such interest, which shall be the January 1 or July 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date, and such
defaulted interest, and (to the extent lawful) interest on such defaulted
interest at the rate borne by the Series ____ Securities, may be paid to the
Person in whose name this Series ____ Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Series ____ Securities not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Series ____ Securities may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in said Indenture.
Accrued but unpaid interest on any Series A Security that is exchanged for a
Series B Security pursuant to the Registration Rights Agreement shall be paid
on or before the first Interest Payment Date on the Series B Securities.
Payment of the principal of (and premium, if any, on) and interest on
this Series ____ Security will be made at the office or agency of the Company
maintained for that purpose in The City of New York, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of
interest may be made at the option of the Company on or before the due date (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear on the Security Register or (ii) with respect to any Holder owning
Series ____ Securities in the principal amount of $500,000 or more, by wire
transfer to an account maintained by the Holder located in the United States,
as specified in a written notice to the Trustee by any such Holder requesting
payment by wire transfer and specifying the account to which transfer is
requested.
Reference is hereby made to the further provisions of this Series ____
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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<PAGE> 37
Unless the certificate of authentication hereon has been duly executed
by the trustee referred to on the reverse hereof by manual signature, this
Series ____ Security shall not be entitled to any benefit under the Indenture,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
KCS ENERGY, INC.
By:
-----------------------------------
President
Attest:
- -----------------------------------
Secretary
Section 2.3 Form of Reverse of Security.
This Series ____ Security is one of a duly authorized issue of
securities of the Company designated as its 11% Senior Notes due 2003, Series
____ (herein called the "Series ____ Securities"and, together with the Series
____ Securities, the "Securities"), limited (except as otherwise provided in
the Indenture referred to below) in aggregate principal amount to $150,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of January 15, 1996 between the Company, the initial Subsidiary Guarantors
named therein and Fleet National Bank of Connecticut (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Subsidiary
Guarantors, the Trustee and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption, at the option of the
Company, in whole or in part, at any time on or after January 15, 2000, upon
not less than 30 or more than 60 days' notice at the following Redemption
Prices (expressed as percentages of principal amount) set forth below if
redeemed during the 12-month period beginning January 15 of the years indicated
below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.50%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.75%
2002 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00%
</TABLE>
30
<PAGE> 38
together in the case of any such redemption with 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 an Interest Payment Date
that is on or prior to the Redemption Date), all as provided in the Indenture.
Notwithstanding the foregoing, at any time on or prior to January 15,
1999, up to $35,000,000 in aggregate principal amount of Securities may be
redeemed, at the option of the Company, upon not less than 30 or more than 60
days' notice, from the Net Cash Proceeds of a Public Equity Offering, at a
Redemption Price equal to 111% of the principal amount thereof, together with
accrued and unpaid interest to the Redemption Date, provided that at least
$115,000,000 in aggregate principal amount of Securities remains Outstanding
immediately after such redemption and that such redemption occurs within 60
days following the closing of such Public Equity Offering.
In the case of any redemption of Securities, interest installments
whose Stated Maturity is on or prior to the Redemption Date will be payable to
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. In the event of redemption or purchase of
this Series __ Security in part only, a new Series __ Security or Securities
for the unredeemed or unpurchased portion hereof shall be issued in the name of
the Holder hereof upon the cancellation hereof.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of a Change of Control of the Company, and subject to
certain conditions and limitations provided in the Indenture, the Company will
be obligated to make an offer to purchase, on a Business Day not more than 60
or less than 30 days following the occurrence of a Change of Control of the
Company, all of the then Outstanding Securities at a purchase price equal to
101% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the Change of Control Purchase Date, all as provided in
the Indenture.
In the event of Asset Sales, under certain circumstances, the Company
will be obligated to make a Net Proceeds Offer to purchase all or a specified
portion of each Holder's Securities at a purchase price equal to 100% of the
principal amount of the Securities, together with accrued and unpaid interest
to the Net Proceeds Payment Date.
As set forth in the Indenture, an Event of Default is generally (i)
failure to pay principal upon maturity, redemption or otherwise (including
pursuant to a Change of Control Offer or a Net Proceeds Offer); (ii) default
for 30 days in payment of interest on any of the Securities; (iii) default in
the performance of agreements relating to mergers, consolidations and sales of
all or substantially all assets or the failure to make or consummate a Change
of Control Offer or a Net Proceeds Offer; (iv) failure for 45 days after notice
to comply with any other covenants in the Indenture, any Subsidiary Guarantee
or the Securities; (v) certain payment defaults under, and the acceleration
prior to the maturity of, certain Indebtedness of the Company or any Restricted
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<PAGE> 39
Subsidiary in an aggregate principal amount in excess of $2,500,000; (vi) the
failure of any Subsidiary Guarantee to be in full force and effect (except as
permitted by the Indenture); (vii) certain final judgments or orders against
the Company or any Restricted Subsidiary in an aggregate amount of more than
$2,500,000 over the coverage under applicable insurance policies which remain
unsatisfied and either become subject to commencement of enforcement
proceedings or remain unstayed for a period of 60 days; and (viii) certain
events of bankruptcy, insolvency or reorganization of the Company or any
Restricted Subsidiary. If any Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in aggregate principal amount of the
Outstanding Securities may declare the principal amount of all the Securities
to be due and payable immediately, except that (i) in the case of an Event of
Default arising from certain events of bankruptcy, insolvency or reorganization
of the Company or any Restricted Subsidiary, the principal amount of the
Securities will become due and payable immediately without further action or
notice, and (ii) in the case of an Event of Default which relates to certain
payment defaults or the acceleration with respect to certain Indebtedness, any
such Event of Default and any consequential acceleration of the Securities will
be automatically rescinded if any such Indebtedness is repaid or if the default
relating to such Indebtedness is cured or waived and if the holders thereof
have accelerated such Indebtedness then such holders have rescinded their
declaration of acceleration. No Holder may pursue any remedy under the
Indenture unless the Trustee shall have failed to act after notice from such
Holder of an Event of Default and written request by Holders of at least 25% in
aggregate principal amount of the Outstanding Securities, and the offer to the
Trustee of indemnity reasonably satisfactory to it; however, such provision
does not affect the right to sue for enforcement of any overdue payment on a
Security by the Holder thereof. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Outstanding Securities may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders notice of any continuing default (except default in payment of
principal, premium or interest) if it determines in good faith that withholding
the notice is in the interest of the Holders. The Company is required to file
annual and quarterly reports with the Trustee as to the absence or existence of
defaults.
The Indenture contains provisions for (i) defeasance at any time of
the entire indebtedness of the Company on this Series ____ Security and (ii)
discharge from certain restrictive covenants and the related Defaults and
Events of Default, upon compliance by the Company with certain conditions set
forth therein, which provisions apply to this Series ____ Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, the Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the Holder of this Series ____
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Series ____ Security and of any Security issued upon the
registration of transfer hereof or in
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<PAGE> 40
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Series ____ Security. Without the consent of any
Holder, the Company, the Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, to qualify or maintain the qualification of the Indenture under
the Trust Indenture Act, to add or release any Subsidiary Guarantor pursuant to
the Indenture and to make certain other specified changes and other changes
that do not materially adversely affect the interests of any Holder in any
material respect.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any,
on) and interest on this Series ____ Security at the times, place, and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Series ____ Security is registerable on
the Security Register of the Company, upon surrender of this Series ____
Security for registration of transfer at the office or agency of the Company
maintained for such purpose duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Series ____ Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
The Series ____ Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, the Series ____ Securities are exchangeable for a like aggregate
principal amount of Series ____ Securities of a different authorized
denomination, as requested by the Holder surrendering the same.
[If a Series A Security--At the option of the Holders thereof, the
Series A Securities may be exchanged, pursuant to the Registration Rights
Agreement, for a like aggregate principal amount of Series B Securities.]
No service charge shall be made for any registration of transfer or
exchange of Series ____ Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
A director, officer, employee, incorporator, stockholder or Affiliate
of the Company or any Subsidiary Guarantor, as such, past, present or future
shall not have any personal liability under this Series ____ Security or any
other Security or the Indenture by reason of his or its status as such
director, officer, employee, incorporator, stockholder or Affiliate, or any
liability for any obligations of the Company or any Subsidiary Guarantor under
the Securities or the Indenture or for any claim based on, in respect of, or by
reason of such obligations or their creation. Each Holder, by accepting this
Series ____ Security with the notation of Subsidiary Guarantee endorsed hereon,
waives and releases all such liability. Such waiver and release are part of the
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<PAGE> 41
consideration for the issuance of this Series ____ Security with the notation
of Subsidiary Guarantee endorsed hereon.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Series
____ Security is registered as the owner hereof for all purposes, whether or
not this Security is overdue, and neither the Company, the Subsidiary
Guarantors, the Trustee nor any agent shall be affected by notice to the
contrary.
All terms used in this Series ____ Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The
Company will furnish to any Holder upon written request and without charge a
copy of the Indenture. Requests may be made to the Company at 379 Thornall
Street, Edison, New Jersey 08837, Attention: Treasurer (or such other address
as the Company may have furnished in writing to the Trustee).
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Series ____ Securities as a convenience to the Holders thereof.
No representation is made as to the accuracy of such numbers as printed on the
Series ____ Securities and reliance may be placed only on the other identifying
information printed hereon.
Interest on this Series ____ Security shall be computed on the basis
of a 360-day year comprised of twelve 30-day months.
This Series ____ Security shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts
of law principles.
Section 2.4 Form of Notation Relating to Subsidiary Guarantees.
The form of notation to be set forth on each Security relating to the
Subsidiary Guarantees shall be in substantially the following form:
SUBSIDIARY GUARANTEES
Subject to the limitations set forth in the Indenture, the initial
Subsidiary Guarantors and, if any, all additional Subsidiary Guarantors (as
defined in the Indenture referred to in the Series ____ Security upon which
this notation is endorsed and each being hereinafter referred to as a
"Subsidiary Guarantor," which term includes any additional or successor
Subsidiary Guarantor under the Indenture) have, jointly and severally,
unconditionally guaranteed (a) the due and punctual payment of the principal
(and premium, if any) of and interest on the Securities, whether at maturity,
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest on the Securities, if any, to
the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance
with the terms set forth in the Indenture, and (d) in case of any extension of
time of payment or renewal of any Securities or any of such other obligations,
the same will be
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<PAGE> 42
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor are limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor
under its Subsidiary Guarantee or pursuant to its contribution obligations
under the Indenture, result in the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Subsidiary Guarantor that
makes a payment or distribution under a Subsidiary Guarantee shall be entitled
to a contribution from each other Subsidiary Guarantor in a pro rata amount
based on the Adjusted Net Assets of each Subsidiary Guarantor.
No stockholder, officer, director, employee, incorporator or Affiliate
as such, past, present or future, of any Subsidiary Guarantor shall have any
personal liability under its Subsidiary Guarantee by reason of his or its
status as such stockholder, officer, director, employee, incorporator or
Affiliate, or any liability for any obligations of any Subsidiary Guarantor
under the Securities or the Indenture or for any claim based on, in respect of,
or by reason of such obligations or their creation.
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee
upon the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are
defined in the Indenture referred to in this Series ____ Security upon which
this notation of Subsidiary Guarantees is endorsed shall have the meanings
assigned to them in such Indenture.
The Subsidiary Guarantees shall be binding upon the Subsidiary
Guarantors and shall inure to the benefit of the Trustee and the Holders and,
in the event of any transfer or assignment of rights by any Holder or the
Trustee respecting the Series _____ Security upon which the foregoing
Subsidiary Guarantees are noted, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof and in the
Indenture.
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<PAGE> 43
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Series ____ Security
upon which the foregoing Subsidiary Guarantees are noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized signatories.
ENERCORP GAS MARKETING, INC.,
KCS RESOURCES, INC.,
KCS MICHIGAN RESOURCES, INC.,
KCS PIPELINE SYSTEMS, INC.,
KCS ENERGY MARKETING, INC.,
KCS POWER MARKETING, INC.,
KCS ENERGY RISK MANAGEMENT, INC.,
NATIONAL ENERDRILL CORPORATION and
PROLIQ, INC.
By:
-----------------------------------
Vice President
Section 2.5 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series ____ Securities referred to in the within
mentioned Indenture.
Authenticated:
Dated: Fleet National Bank of Connecticut,
-------------------------- Trustee
By:
-----------------------------------
Authorized Signatory
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<PAGE> 44
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms.
The aggregate principal amount of Series A Securities which may be
authenticated and delivered under this Indenture for original issue is limited
to $150,000,000, and the aggregate principal amount of Series B Securities
which may be authenticated and delivered under this Indenture for original
issue is limited to $150,000,000. The aggregate principal amount of Securities
Outstanding at any one time may not exceed $150,000,000 except as provided in
Section 3.7 hereof.
The Series A Securities shall be known and designated as the "11%
Senior Notes due 2003, Series A" of the Company. Their Stated Maturity shall be
January 15, 2003, and they shall bear interest at the rate of 11% per annum
from January 25, 1996, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, payable semiannually on January 15
and July 15 in each year, commencing July 15, 1996, and at said Stated
Maturity, until the principal thereof is paid or duly provided for.
The Series B Securities shall be known and designated as the "11%
Senior Notes due 2003, Series B" of the Company. Their Stated Maturity shall
be January 15, 2003, and they shall bear interest at the rate of 11% per annum
from the date of original issuance of the Series B Securities, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, payable semiannually on January 15 and July 15 in each year, commencing on
the first January 15 or July 15 following the original issuance of the Series B
Securities, and at said Stated Maturity, until the principal thereof is paid or
duly provided for.
Upon the occurrence of a Registration Default, the interest rate on
Transfer Restricted Securities shall increase ("Additional Interest"), with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, by 0.50% per annum and shall increase by an additional
0.50% per annum with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of 2.0% per annum
with respect to all Registration Defaults. Following the cure of a
Registration Default, the accrual of Additional Interest with respect to such
Registration Default shall cease and upon the cure of all Registration Defaults
the interest rate shall revert to the original rate. Any Additional Interest
due on any Security shall be payable on the appropriate Interest Payment Date
to the Holder entitled to receive the interest payment to be made on such date.
Each obligation to pay Additional Interest shall be deemed to accrue from and
including the applicable Registration Default.
Accrued but unpaid interest on any Series A Security that is exchanged
for a Series B Security pursuant to the Registration Rights Agreement shall be
paid on or before the first Interest Payment Date on the Series B Securities.
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<PAGE> 45
The Series A Securities and the Series B Securities shall be
considered collectively to be a single class for all purposes of this
Indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase.
The principal of (and premium, if any, on) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York; provided, however, that, at the
option of the Company, interest may be paid on or before the due date (i) on
Physical Securities by check mailed to addresses of the Persons entitled
thereto as such addresses shall appear on the Security Register, or (ii) with
respect to any Holder owning Securities in the principal amount of $500,000 or
more, by wire transfer to an account maintained by the Holder located in the
United States, as specified in a written notice to the Trustee by any such
Holder requesting payment by wire transfer and specifying the account to which
transfer is requested.
As provided in the Registration Rights Agreement and subject to the
limitations set forth therein, at the option of the Holders, the Series A
Securities shall be exchangeable for Series B Securities of like aggregate
principal amount pursuant to the Exchange Offer.
The Securities shall be redeemable as provided in Article XI hereof.
The Securities shall be subject to defeasance at the option of the
Company as provided in Article XII hereof.
The Securities shall be guaranteed by the Subsidiary Guarantors as
provided in Article XIII hereof.
Section 3.2 Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman, its President or a Vice President of the Company, under its corporate
seal reproduced thereon and attested by its Secretary or an Assistant Secretary
of the Company. The signature of any of these officers on the Securities may be
manual or facsimile signatures of the present or any future such authorized
officer and may be imprinted or otherwise reproduced on the Securities.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
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At any time after the execution and delivery of this Indenture, the
Company may deliver Series A Securities executed by the Company and having the
notations of Subsidiary Guarantees executed by the Subsidiary Guarantors to the
Trustee for authentication, together with a Company Order for the
authentication and delivery of such Series A Securities, and the Trustee in
accordance with such Company Order shall authenticate and deliver such Series A
Securities with the notations of Subsidiary Guarantees thereon as provided in
this Indenture. Such Company Order shall specify the principal amount of the
Series A Securities to be authenticated and the date on which the original
issue of Series A Securities is to be authenticated. In addition, on or prior
to the Exchange Offer Consummation Date, the Company may deliver Series B
Securities executed by the Company and having the notations of Subsidiary
Guarantees executed by the Subsidiary Guarantors to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Series B Securities, and the Trustee in accordance with such
Company Order shall authenticate and deliver such Series B Securities with the
notations of Subsidiary Guarantees thereon as provided in this Indenture. Such
Company Order shall specify the principal amount of the Series B Securities to
be authenticated and the date on which the Series B Securities are to be
exchanged for an equal principal amount of Series A Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
duly executed by the Trustee by manual signature of an authorized signatory,
and such certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
In case the Company, pursuant to and in compliance with Article VIII
hereof, shall be consolidated or merged with or into any other Person or shall
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of its Properties to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a sale, conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an
indenture supplemental hereto with the Trustee pursuant to Article VIII hereof,
any of the Securities authenticated or delivered prior to such sale,
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person be exchanged for
other Securities executed in the name of the successor Person with such changes
in phraseology and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of like
principal amount; and the Trustee, upon Company Request of the successor
Person, shall authenticate and deliver Securities as specified in such request
for the purpose of such exchange. If Securities shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer
of any Securities, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Securities at
the time Outstanding for Securities authenticated and delivered in such new
name.
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Section 3.4 Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and having
the notations of Subsidiary Guarantees thereon and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities and notations of Subsidiary Guarantees may determine,
as conclusively evidenced by their execution of such Securities and notations
of Subsidiary Guarantees.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 10.2
hereof, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of like tenor and of authorized denominations having the
notations of Subsidiary Guarantees thereon. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
Section 3.5 Registration of Transfer and Exchange.
The Company shall cause to be kept a register (the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. The Security Register shall be in written form or any
other form capable of being converted into written form within a reasonable
time. At all reasonable times and during normal business hours, the Security
Register shall be open to inspection by the Trustee. The Trustee is hereby
initially appointed as security registrar (the "Security Registrar") for the
purpose of registering Securities and transfers of Securities as herein
provided.
Subject to the provisions of this Section 3.5 and Section 3.6 hereof,
upon surrender for registration of transfer of any Security at the office or
agency of the Company designated pursuant to Section 10.2 hereof, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of like
tenor and of any authorized denomination and of a like aggregate principal
amount, each such Security having the notation of Subsidiary Guarantees
thereon.
Furthermore, any Holder of a Global Security shall, by acceptance of
such Global Security, be deemed to have agreed that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depository (or its agent),
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and that ownership of a beneficial interest in a Global Security shall be
required to be reflected in a book entry.
At the option of any Holder, Securities may be exchanged for other
Securities of like tenor and of any authorized denomination and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
the office or agency of the Company designated pursuant to Section 10.2 hereof.
Further, at the option of any Holder Series A Securities may be exchanged,
pursuant to the Exchange Offer, for Series B Securities of like aggregate
principal amount, upon surrender of the Series A Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, the Subsidiary Guarantors shall execute
notations of Subsidiary Guarantees on, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities and the Subsidiary Guarantees noted thereon issued upon
any registration of transfer or exchange of Securities shall be the valid
obligations of the Company and the respective Subsidiary Guarantors, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer, in
form satisfactory to the Company and the Security Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. As a special
condition to registration of transfer or exchange of any Transfer Restricted
Securities involving removal of a Private Placement Legend (other than pursuant
to an effective registration statement under the Securities Act), the Holder
requesting such registration of transfer or exchange shall furnish the Opinion
of Counsel called for by Section 3.12 hereof. The following additional special
conditions shall apply to the indicated types of transfers or exchanges:
(a) Respecting any requested registration of transfer or exchange
of Transfer Restricted Securities in the form of Physical Securities, such
Physical Securities shall be accompanied, in the sole discretion of the
Company, by the following additional information and documents, as applicable:
(1) if such Physical Security is being delivered to the
Security Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form of Exhibit B hereto); or
(2) if such Physical Security is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto); or
(3) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification to that
effect (in substantially the form of Exhibit B hereto), a Transferee
Certificate for Institutional Accredited Investors in the form of
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Exhibit C hereto and an Opinion of Counsel to the effect that such
transfer is in compliance with the Securities Act; or
(4) if such Physical Security is being transferred in
reliance on Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit B hereto), a Transferor
Certificate for Regulation S Transfers in the form of Exhibit D hereto
and an Opinion of Counsel to the effect that such transfer is in
compliance with the Securities Act; or
(5) if such Physical Security is being transferred in
reliance on Rule 144, delivery of a certification to that effect
(substantially in the form of Exhibit B hereto) and an Opinion of
Counsel to the effect that such transfer is in compliance with the
Securities Act; or
(6) if such Physical Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act.
(b) Respecting any requested exchange of a Physical Security for a
beneficial interest in a Global Security, such Physical Security shall be
accompanied, in the sole discretion of the Company, by the following additional
information and documents:
(1) a certification, substantially in the form of Exhibit
B hereto, that such Physical Security is being transferred to a
Qualified Institutional Buyer; and
(2) written instructions directing the Security Registrar
to make, or to direct the Depository to make, an endorsement on the
Global Security to reflect an increase in the aggregate amount of the
Securities represented by the Global Security;
whereupon the Security Registrar shall cancel such Physical Security and cause,
or direct the Depository to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Security Registrar, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Security is then outstanding, the
Company shall issue and the Trustee shall upon Company Order authenticate a new
Global Security in the appropriate amount.
(c) Any Person having a beneficial interest in a Global Security
may upon request to the Security Registrar exchange such beneficial interest
for a Physical Security. Upon receipt by the Security Registrar of written
instructions (or such other form of instructions as is customary for the
Depository) from the Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Security and upon receipt by the Security
Registrar of a written order or such other form of instructions as is customary
for the Depository or the Person designated by the Depository as having such a
beneficial interest containing registration
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instructions and, in the case of any such transfer or exchange of a beneficial
interest in Transfer Restricted Securities, the following additional information
and documents:
(1) if such beneficial interest is being transferred to
the Person designated by the Depository as being the beneficial owner,
a certification from such Person to that effect (in substantially the
form of Exhibit B hereto); or
(2) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto); or
(3) if such beneficial interest is being transferred to
an Institutional Accredited Investor, delivery of a certification to
that effect (substantially in the form of Exhibit B hereto), a
Transferee Certificate for Institutional Accredited Investors in the
form of Exhibit C hereto and an Opinion of Counsel to the effect that
such transfer is in compliance with the Securities Act; or
(4) if such beneficial interest is being transferred in
reliance on Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit B hereto), a Transferor
Certificate for Regulation S Transfers in the form of Exhibit D hereto
and an Opinion of Counsel to the effect that such transfer is in
compliance with the Securities Act; or
(5) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act, delivery of a
certification to that effect (substantially in the form of Exhibit B
hereto) and an Opinion of Counsel to the effect that such transfer is
in compliance with the Securities Act; or
(6) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act,
then the Security Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository and the Security
Registrar, the aggregate principal amount of the Global Security to be reduced
and, following such reduction, the Company will execute and, upon receipt of a
Company Order, the Trustee will authenticate and deliver to the transferee a
Physical Security. Securities issued in exchange for a beneficial interest in
a Global Security pursuant to this Section 3.5(c) shall be registered in such
names and in such authorized denominations as the Depository, pursuant to
instructions from Agent Members or otherwise, shall instruct the Security
Registrar in writing. The Security Registrar shall deliver such Physical
Securities to the Persons in whose names such Physical Securities are so
registered.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other
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governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to the
Exchange Offer or Section 3.4, 9.6 or 11.8 hereof not involving any transfer.
Neither the Trustee, the Security Registrar nor the Company shall be
required (i) to issue, register the transfer of or exchange any Physical
Security during a period beginning at the opening of business 15 days before
the mailing of a notice of redemption of Securities selected for redemption
under Section 11.4 hereof and ending at the close of business on the day of
such mailing of the relevant notice of redemption, or (ii) to register the
transfer of or exchange any Physical Security so selected for redemption in
whole or in part, except the unredeemed portion of any such Security being
redeemed in part.
Section 3.6 Book-Entry Provisions for Global Securities.
Each Global Security shall be (i) registered in the name of the
Depository for such Global Security or the nominee of such Depository, (ii)
delivered to the Trustee as custodian for such Depository and (iii) bear the
legend set forth in Exhibit A hereto.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under such
Global Security, and the Depository may be treated by the Company, the
Subsidiary Guarantors, the Trustee and any agent of the Company, the Subsidiary
Guarantors or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Subsidiary Guarantors, the Trustee or any agent of the
Company, the Subsidiary Guarantors or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or shall impair, as between the Depository and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.
Transfers of a Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to the Depository, its successors or
their respective nominees. Interests of beneficial owners in a Global Security
may be transferred or exchanged for Physical Securities in accordance with the
rules and procedures of the Depository and the provisions of Section 3.5
hereof. In addition, Physical Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a Global
Security if, and only if, either (1) the Depository notifies the Company that
it is unwilling or unable to continue as depositary for the Global Security and
a successor depositary is not appointed by the Company within 90 days of such
notice, (2) an Event of Default has occurred and is continuing and the Security
Registrar has received a request from the Depository to issue Physical
Securities in lieu of all or a portion of the Global Security (in which case
the Company shall deliver Physical Securities within 30 days of such request)
or (3) the Company determines not to have the Securities represented by the
Global Security and notifies the Depository and the Security Registrar thereof.
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In connection with the transfer of an entire Global Security to
beneficial owners pursuant to this Section, the Global Security shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall upon Company Order authenticate and deliver, to
each beneficial owner identified by the Depository, in exchange for its
beneficial interest in the Global Security, an equal aggregate principal amount
of Physical Securities of authorized denominations.
The Holder of a Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
Section 3.7 Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee or (ii)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, the Subsidiary Guarantors and the Trustee such security or indemnity
as may be required by them to save each of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has been acquired by
a bona fide purchaser, the Company shall execute, the Subsidiary Guarantors
shall execute the notation of Subsidiary Guarantees, and upon Company Order the
Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount, having the notation of Subsidiary
Guarantees thereon, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and the respective Subsidiary
Guarantors, whether or not the mutilated, destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Securities of like tenor duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
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Section 3.8 Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose pursuant to Section
10.2 hereof.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease
to be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted Interest")
may be paid by the Company, at its election in each case, as provided in clause
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, and such money when deposited shall be held in trust for the benefit
of the Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date, and in the name
and at the expense of the Company, shall cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to be given in
the manner provided for in Section 14.5 hereof, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so given, such
Defaulted Interest shall be paid to the Persons in whose names the Securities
(or their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment shall
be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall
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carry the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
Section 3.9 Persons Deemed Owners.
Prior to the due presentment of a Security for registration of
transfer, the Company, the Subsidiary Guarantors, the Security Registrar, the
Trustee and any agent of the Company, the Subsidiary Guarantors or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and
premium, if any, on) and (subject to Section 3.8 hereof) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and none of the Company, the Subsidiary Guarantors, the Security
Registrar, the Trustee or any agent of the Company, the Subsidiary Guarantors
or the Trustee shall be affected by notice to the contrary.
Section 3.10 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities held
by the Trustee shall be disposed of as directed by a Company Order or in
accordance with the Trustee's usual practice; provided, however, that the
Trustee shall not be required to destroy cancelled Securities.
Section 3.11 Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Section 3.12 Private Placement Legend.
(a) All Series A Securities issued hereunder on the Issue Date
shall bear the Private Placement Legend. Upon the transfer, exchange or
replacement of Securities bearing the Private Placement Legend, the Security
Registrar shall deliver only Securities that bear the Private Placement Legend
unless, and the Trustee is hereby authorized to deliver Securities without the
Private Placement Legend if, (i) there is delivered to the Trustee an Opinion
of Counsel to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act or (ii) such Security has been sold pursuant to an effective
registration statement under the Securities Act. Upon the transfer, exchange
or replacement of Securities not bearing the Private Placement Legend, the
Security Registrar shall deliver Securities that do not bear the Private
Placement Legend.
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(b) By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange
of Securities, as expressly provided for in this Indenture) as to all
Outstanding Securities, and the Trustee, at the expense of the Company, shall,
upon payment of all amounts due the Trustee under Section 6.6 hereof, execute
proper instruments acknowledging satisfaction and discharge of this Indenture
when
(a) either
(1) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section
3.7 hereof and (ii) Securities for whose payment money or United
States governmental obligations of the type described in clause (i) of
the definition of Cash Equivalents have theretofore been deposited in
trust with the Trustee or any Paying Agent or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.3 hereof) have
been delivered to the Trustee for cancellation, or
(2) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Company,
and the Company, in the case of clause (2)(i), (2)(ii) or (2)(iii)
above, has irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be, together with instructions from the
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Company irrevocably directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be;
(b) the Company has paid or caused to be paid all other
sums then due and payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state
that all conditions precedent herein relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.6 hereof and, if
money shall have been deposited with the Trustee pursuant to this Section, the
obligations of the Trustee under Section 4.2 hereof and the last paragraph of
Section 10.3 hereof shall survive.
Section 4.2 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3
hereof, all money deposited with the Trustee pursuant to Section 4.1 hereof
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee.
ARTICLE V
REMEDIES
Section 5.1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of the principal of or premium, if any,
on any of the Securities when the same becomes due and payable, whether such
payment is due at Stated Maturity, upon redemption, upon repurchase pursuant to
a Change of Control Offer or a Net Proceeds Offer, upon acceleration or
otherwise; or
(b) default in the payment of any installment of interest on any
of the Securities, when it becomes due and payable, and the continuance of such
default for a period of 30 days; or
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(c) default in the performance or breach of the provisions of
Article VIII hereof, the failure to make or consummate a Change of Control
Offer in accordance with the provisions of Section 10.16 or the failure to make
or consummate a Net Proceeds Offer in accordance with the provisions of Section
10.17; or
(d) the Company or any Subsidiary Guarantor shall fail to perform
or observe any other term, covenant or agreement contained in the Securities,
any Subsidiary Guarantee or this Indenture (other than a default specified in
subparagraph (a), (b) or (c) above) for a period of 45 days after written
notice of such failure stating that it is a "notice of default" hereunder and
requiring the Company or such Subsidiary Guarantor, as the case may be, to
remedy the same shall have been given (x) to the Company by the Trustee or (y)
to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Securities then Outstanding; or
(e) the occurrence and continuation beyond any applicable grace
period of any default in the payment of the principal of (or premium, if any,
on) or interest on any Indebtedness of the Company (other than the Securities)
or any Subsidiary Guarantor or any other Restricted Subsidiary for money
borrowed when due, or any other default resulting in acceleration of any
Indebtedness of the Company or any Subsidiary Guarantor or any other Restricted
Subsidiary for money borrowed, provided that the aggregate principal amount of
such Indebtedness shall exceed $2,500,000; or
(f) any Subsidiary Guarantee shall for any reason cease to be, or
be asserted by the Company or any Subsidiary Guarantor, as applicable, not to
be, in full force and effect (except pursuant to the release of any such
Subsidiary Guarantee in accordance with this Indenture); or
(g) final judgments or orders rendered against the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary that are unsatisfied
and that require the payment in money, either individually or in an aggregate
amount, that is more than $2,500,000 over the coverage under applicable
insurance policies and either (A) commencement by any creditor of an
enforcement proceeding upon such judgment (other than a judgment that is stayed
by reason of pending appeal or otherwise) or (B) the occurrence of a 60-day
period during which a stay of such judgment or order, by reason of pending
appeal or otherwise, was not in effect: or
(h) the entry of a decree or order by a court having jurisdiction
in the premises (A) for relief in respect of the Company or any Subsidiary
Guarantor or any other Restricted Subsidiary in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or (B)
adjudging the Company or any Subsidiary Guarantor or any other Restricted
Subsidiary bankrupt or insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary under the Federal
Bankruptcy Code or any applicable federal or state law, or appointing under any
such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Subsidiary Guarantor or any other
Restricted Subsidiary or of a substantial part of its consolidated assets, or
ordering the winding up or liquidation of its affairs, and the
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continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(i) the commencement by the Company or any Subsidiary Guarantor or
any other Restricted Subsidiary of a voluntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary to the entry of a
decree or order for relief in respect thereof in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other applicable federal or
state bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
the filing by the Company or any Subsidiary Guarantor or any other Restricted
Subsidiary of a petition or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it under any such law to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or other
similar official) of the Company or any Subsidiary Guarantor or any other
Restricted Subsidiary or of any substantial part of its consolidated assets, or
the making by it of an assignment for the benefit of creditors under any such
law, or the admission by it in writing of its inability to pay its debts
generally as they become due or taking of corporate action by the Company or
any Subsidiary Guarantor or any other Restricted Subsidiary in furtherance of
any such action.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(h) or (i) hereof) occurs and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
then Outstanding, by written notice to the Company (and to the Trustee if such
notice is given by the Holders), may, and the Trustee upon the request of the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities shall, by a notice in writing to the Company, declare all unpaid
principal of, premium, if any, and accrued and unpaid interest on all the
Securities to be due and payable immediately, upon which declaration all
amounts payable in respect of the Securities shall be immediately due and
payable. If an Event of Default specified in Section 5.1(h) or (i) hereof
occurs and is continuing, the amounts described above shall become and be
immediately due and payable without any declaration, notice or other act on the
part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in aggregate principal amount of the Securities Outstanding, by written notice
to the Company, the Subsidiary Guarantors and the Trustee, may rescind and
annul such declaration and its consequences if
(a) the Company or any Subsidiary Guarantor has paid or deposited
with the Trustee a sum sufficient to pay,
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(1) all overdue interest on all Outstanding Securities,
(2) all unpaid principal of (and premium, if any, on) any
Outstanding Securities which have become due otherwise than by such
declaration of acceleration, including any Securities required to have
been purchased on a Change of Control Date or a Net Proceeds Payment
Date pursuant to a Change of Control Offer or a Net Proceeds Offer, as
applicable, and interest on such unpaid principal at the rate borne by
the Securities,
(3) to the extent that payment of such interest is
lawful, interest on overdue interest and overdue principal at the rate
borne by the Securities (without duplication of any amount paid or
deposited pursuant to clauses (1) and (2) above), and
(4) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel;
(b) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction as certified to the Trustee by the
Company; and
(c) all Events of Default, other than the non-payment of amounts
of principal of (or premium, if any, on) or interest on Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 5.13 hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the foregoing, if an Event of Default specified in
Section 5.1(e) hereof shall have occurred and be continuing, such Event of
Default and any consequential acceleration shall be automatically rescinded if
the Indebtedness that is the subject of such Event of Default has been repaid,
or if the default relating to such Indebtedness is waived or cured and if such
Indebtedness has been accelerated, then the holders thereof have rescinded
their declaration of acceleration in respect of such Indebtedness (provided, in
each case, that such repayment, waiver, cure or rescission is effected within a
period of 10 days from the continuation of such default beyond the applicable
grace period or the occurrence of such acceleration), and written notice of
such repayment, or cure or waiver and rescission, as the case may be, shall
have been given to the Trustee by the Company and countersigned by the holders
of such Indebtedness or a trustee, fiduciary or agent for such holders or other
evidence satisfactory to the Trustee of such events is provided to the Trustee,
within 30 days after any such acceleration in respect of the Securities, and so
long as such rescission of any such acceleration of the Securities does not
conflict with any judgment or decree as certified to the Trustee by the
Company.
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Section 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest
on any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or with respect to
any Security required to have been purchased by the Company on the Change of
Control Purchase Date or the Net Proceeds Payment Date pursuant to a Change of
Control Offer or Net Proceeds Offer, as applicable,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest,
and interest on any overdue principal (and premium, if any) and, to the extent
that payment of such interest shall be legally enforceable, upon any overdue
installment of interest, at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
money adjudged or decreed to be payable in the manner provided by law out of
the Property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, any Subsidiary Guarantor or any
other obligor upon the Securities, their creditors or the Property of the
Company, any Subsidiary Guarantor or of such other obligor, the Trustee
(irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company, the Subsidiary
Guarantors or such other obligor for the payment of overdue principal, premium,
if any, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
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(a) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents and take any other
actions including participation as a full member of any creditor or other
committee as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(b) to collect and receive any money or other Property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 6.6 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the Subsidiary Guarantees or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 5.5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
or the Subsidiary Guarantees may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name and as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
Section 5.6 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in the case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under
Section 6.6 hereof;
SECOND: to the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the Securities
in respect of which or for the benefit
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of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal (and premium, if any) and interest,
respectively; and
THIRD: the balance, if any, to the Company.
Section 5.7 Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority or
more in aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment, as provided herein (including, if applicable, Article XII
hereof) and in such Security of the principal of (and premium if any, on) and
(subject to Section 3.8 hereof) interest on, such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
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Section 5.9 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Subsidiary Guarantors, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereunder and all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 5.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.7 hereof, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12 Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any rule of law
or with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders not joining therein.
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Section 5.13 Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities may on behalf of the Holders of all the
Securities waive any existing Default or Event of Default hereunder and its
consequences, except a Default or Event of Default
(a) in respect of the payment of the principal of (or premium, if
any, on) or interest on any Security, or
(b) in respect of a covenant or provision hereof which under
Article IX hereof cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected thereby.
Upon any such waiver, such Default or Event of Default shall cease to
exist for every purpose under this Indenture, but no such waiver shall extend
to any subsequent or other fault or Event of Default or impair any right
consequent thereon.
Section 5.14 Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Subsidiary Guarantors covenants (to the
extent that each may lawfully do so) that it will not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension, or usury law or other law wherever enacted, now or at any
time hereafter in force, which would prohibit or forgive the Company or any
Subsidiary Guarantor from paying all or any portion of the principal of
(premium, if any, on) or interest on the Securities as contemplated herein, or
which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) each of the Company and the Subsidiary
Guarantors hereby expressly waives all benefit or advantage of any such law,
and covenant that they will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
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(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, and shall be fully protected in so relying, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; provided, however, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph shall not limit the effect of Section 6.1(b);
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 5.12.
Section 6.2 Certain Rights of Trustee.
Subject to the provisions of Section 6.1 hereof:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may reasonably see fit;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it in good faith to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture; and
(i) the Trustee shall not be deemed to have notice or knowledge of
any manner unless a Responsible Officer has actual knowledge thereof or unless
written notice thereof is received by the Trustee at its Corporate Trust Office
and such notice references the Securities generally, the Company or this
Indenture.
The Trustee shall not be required to advance, expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
Section 6.3 Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities and the notations
of Subsidiary Guarantees thereon, except for the Trustee's certificates of
authentication, shall be taken as the statements of the Company or the
Subsidiary Guarantors, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture, the Subsidiary Guarantees or
the Securities, except that the Trustee represents that it is duly authorized
to execute and deliver this Indenture, authenticate the Securities and perform
its obligations hereunder. The Trustee shall not be accountable for the use or
application by the Company of any Securities or the proceeds thereof.
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Section 6.4 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, the Subsidiary Guarantors or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to TIA Sections 310(b) and 311 in the case of the Trustee, may
otherwise deal with the Company and the Subsidiary Guarantors with the same
rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.
Section 6.5 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company or any Subsidiary Guarantor.
Section 6.6 Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to the Trustee's wilful misconduct,
negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without wilful misconduct, negligence
or bad faith on its part, (i) arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder or (ii) in connection
with enforcing this indemnification provision.
The obligations of the Company under this Section 6.6 to compensate
the Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture or any other termination under any Insolvency or
Liquidation Proceeding. As security for the performance of such obligations of
the Company, the Trustee shall have a claim and lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for payment of principal of (and premium, if any, on) or
interest on particular Securities. Such lien shall survive the satisfaction
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and discharge of this Indenture or any other termination under any Insolvency
or Liquidation Proceeding.
When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in paragraph (h) or (i) of Section
5.1 of this Indenture, such expenses and the compensation for such services are
intended to constitute expenses of administration under any Insolvency or
Liquidation Proceeding.
Section 6.7 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 6.7, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
Section 6.8 Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b) of the
Trust Indenture Act; provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
Section 6.9 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10 hereof.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 hereof shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders
of not less than a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
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(d) If at any time:
(1) the Trustee shall fail to comply with the provisions
of TIA Section 310(b) after written request therefor by the Company or
by any Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under Section
6.7 hereof and shall fail to resign after written request therefor by
the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee. The evidence of such successorship may, but need not be, evidenced by
a supplemental indenture.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Securities in the manner provided for in Section 14.5 hereof. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
Section 6.10 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor
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Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of all amounts due it under Section 6.6 hereof, execute and deliver
an instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all money and other Property held by such retiring
Trustee hereunder. Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 6.11 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Securities of like tenor or in this Indenture provided;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
Section 6.12 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor under the Securities), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 6.13 Notice of Defaults.
Within 60 days after the occurrence of any Default hereunder, the
Trustee shall transmit in the manner and to the extent provided in TIA Section
313(c), notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; provided, however, that, except in the
case of a Default in the payment of the principal of (or premium, if any, on)
or interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or
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Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Holders' Lists; Holder Communications; Disclosures
Respecting Holders.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. Neither the Company, any Subsidiary Guarantor nor the Trustee
shall be under any responsibility with regard to the accuracy of such list. If
the Trustee is not the Security Registrar, the Company shall furnish to the
Trustee semi-annually before each Regular Record Date, and at such other times
as the Trustee may reasonably request in writing, a list, in such form as the
Trustee may reasonably request, as of such date of the names and addresses of
the Holders then known to the Company. The Company and the Trustee shall also
satisfy any other requirements imposed upon each of them by TIA Section 312(a).
Holders may communicate pursuant to Section 312(b) of the TIA with
other Holders with respect to their rights under this Indenture or the
Securities. Every Holder of Securities, by receiving and holding the same,
agrees with the Company, the Subsidiary Guarantors, the Security Registrar and
the Trustee that none of the Company, the Subsidiary Guarantors, the Security
Registrar or the Trustee, or any agent of any of them, shall be held
accountable by reason of the disclosure of any information as to the names and
addresses of the Holders in accordance with TIA Section 312, regardless of the
source from which such information was derived, that each of such Persons shall
have the protection of TIA Section 312(c) and that the Trustee shall not be
held accountable by reason of mailing any material pursuant to a request made
under TIA Section 312(b).
Section 7.2 Reports By Trustee.
Within 60 days after May 15 of each year commencing with May 15, 1996,
the Trustee shall transmit by mail to the Holders, as their names and addresses
appear in the Security Register, a brief report dated as of such May 15 in
accordance with and to the extent required under TIA Section 313(a). The
Trustee shall also comply with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
Commencing at the time this Indenture is qualified under the Trust
Indenture Act, a copy of each Trustee's report, at the time of its mailing to
Holders of Securities, shall be mailed to the
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Company and filed with the Commission and each stock exchange, if any, on which
the Securities are listed.
Section 7.3 Reports by Company.
The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports pursuant
to either of said Sections, then the Company shall file with the Trustee such
information, documents or reports as required pursuant to Section 10.9 hereof;
(b) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(c) transmit by mail to all Holders, in the manner and to the
extent provided in TIA Section 313(c), such summaries of any information,
documents and reports (without exhibits except to the extent required by TIA
Section 313(c)) required to be filed by the Company pursuant to paragraph (a)
or (b) of this Section as may be required by rules and regulations prescribed
from time to time by the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company May Consolidate, etc., Only on Certain Terms.
The Company shall not, in any single transaction or a series of
related transactions, merge or consolidate with or into any other Person, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all the Properties of the Company and its Restricted Subsidiaries
on a consolidated basis to any Person or group of Affiliated Persons, and the
Company shall not permit any of its Restricted Subsidiaries to enter into any
such transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any other Person or group of Affiliated Persons, unless at the time
and after giving affect thereto:
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(a) either (i) if the transaction is a merger or consolidation,
the Company shall be the surviving Person of such merger or consolidation, or
(ii) the Person (if other than the Company) formed by such consolidation or
into which the Company is merged or to which the Properties of the Company or
its Restricted Subsidiaries, as the case may be, are sold, assigned, conveyed,
transferred, leased or otherwise disposed of (any such surviving Person or
transferee Person being called the "Surviving Entity") shall be a corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia and shall, in either case, expressly
assume by a supplemental indenture to this Indenture executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture, and, in each case, this
Indenture shall remain in full force and effect;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
Indebtedness not previously an obligation of the Company or any of its
Restricted Subsidiaries which becomes the obligation of the Company or any of
its Restricted Subsidiaries in connection with or as a result of such
transaction or transactions as having been incurred at the time of such
transaction or transactions), no Default or Event of Default shall have
occurred and be continuing;
(c) except in the case of the consolidation or merger of any
Restricted Subsidiary with or into the Company, immediately after giving effect
to such transaction or transactions on a pro forma basis, the Consolidated Net
Worth of the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) is at least equal to the Consolidated
Net Worth of the Company immediately before such transaction or transactions;
(d) except in the case of the consolidation or merger of the
Company with or into a Restricted Subsidiary or any Restricted Subsidiary with
or into the Company or another Restricted Subsidiary, immediately before and
immediately after giving effect to such transaction or transactions on a pro
forma basis (assuming that the transaction or transactions occurred on the
first day of the period of four full fiscal quarters ending immediately prior
to the consummation of such transaction or transactions, with the appropriate
adjustments with respect to the transaction or transactions being included in
such pro forma calculation), the Company (or the Surviving Entity if the
Company is not the continuing obligor under this Indenture) could incur $1.00
of additional Indebtedness (excluding Permitted Indebtedness) under Section
10.12(a) hereof;
(e) if the Company is not the continuing obligor under this
Indenture, then each Subsidiary Guarantor, unless it is the Surviving Entity,
shall have by supplemental indenture confirmed that its Subsidiary Guarantee of
the Securities shall apply to the Surviving Entity's obligations under this
Indenture and the Securities:
(f) if any of the Properties of the Company or any of its
Restricted Subsidiaries would upon such transaction or series of related
transactions become subject to any Lien (other than a Permitted Lien), the
creation or imposition of such Lien shall have been in compliance with Section
10.15 hereof; and
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(g) the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) shall have delivered to the Trustee,
in form and substance reasonably satisfactory to the Trustee, (i) an Officers'
Certificate stating that such consolidation, merger, conveyance, transfer,
lease or other disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with this
Indenture and (ii) an Opinion of Counsel stating that the requirements of
Section 8.1(a) have been satisfied.
Section 8.2 Successor Substituted.
Upon any consolidation of the Company with or merger of the Company
into any other corporation or any sale, assignment, lease, conveyance, transfer
or other disposition of all or substantially all of the Properties of the
Company and its Restricted Subsidiaries on a consolidated basis in accordance
with Section 8.1 hereof, the Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such Surviving Entity had been named
as the Company herein, and in the event of any such sale, assignment, lease,
conveyance, transfer or other disposition, the Company (which term shall for
this purpose mean the Person named as the "Company" in the first paragraph of
this Indenture or any successor Person which shall theretofore become such in
the manner described in Section 8.1 hereof), except in the case of a lease,
shall be discharged of all obligations and covenants under this Indenture and
the Securities, and the Company may be dissolved and liquidated and such
dissolution and liquidation shall not cause a Change of Control under clause
(e) of the definition thereof to occur unless the merger, or the sale,
assignment, lease, conveyance, transfer or other disposition of all or
substantially all of the Properties of the Company and its Restricted
Subsidiaries on a consolidated basis to any Person otherwise results in a
Change of Control.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, each of the Subsidiary Guarantors, when authorized by a Board
Resolution, and the Trustee upon Company Request, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
contained herein and in the Securities; or
(b) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;
or
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(c) to comply with any requirement of the SEC in connection with
qualifying this Indenture under the TIA or maintaining such qualification
thereafter; or
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Sections 6.9
and 6.10 hereof; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture provided that such action shall not adversely affect the
interests of the Holders in any material respect; or
(f) to secure the Securities or the Subsidiary Guarantees pursuant
to the requirements of Section 10.15 hereof or otherwise; or
(g) to add any Restricted Subsidiary as an additional Subsidiary
Guarantor as provided in Section 10.13(a) hereof or to evidence the succession
of another Person to any Subsidiary Guarantor pursuant to Section 13.2(b)
hereof and the assumption by any such successor of the covenants and agreements
of such Subsidiary Guarantor contained herein, in the Securities and in the
Subsidiary Guarantee of such Subsidiary Guarantor; or
(h) to release a Subsidiary Guarantor from its Subsidiary
Guarantee pursuant to Section 13.3 hereof; or
(i) to provide for uncertificated Securities in addition to or in
place of certificated Securities.
Section 9.2 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, each of the Subsidiary Guarantors, when authorized by a
Board Resolution, and the Trustee upon Company Request may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium thereon, or change the
coin or currency in which principal of any Security or any premium or the
interest on any Security is payable, or impair the right to institute suit for
the enforcement of any such payment after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date); or
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(b) reduce the percentage of aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder or the consequences of a default provided for in this
Indenture; or
(c) modify any of the provisions of this Section or Sections 5.13
and 10.20 hereof, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby;
(d) change the ranking of the Securities or the Subsidiary
Guarantees in a manner adverse to the Holders or expressly subordinate in right
of payment the Securities or the Subsidiary Guarantees to any other
Indebtedness; or
(e) amend, change or modify the obligation of the Company to make
and consummate a Change of Control Offer in the event of a Change of Control,
or to make and consummate a Net Proceeds Offer with respect to any Asset Sale,
or modify any of the provisions or definitions with respect thereto.
It shall not be necessary for any Act of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 9.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the
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Company shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company, with the notations of Subsidiary
Guarantees thereon executed by the Subsidiary Guarantors, and authenticated and
delivered by the Trustee in exchange for Outstanding Securities of like tenor.
Section 9.7 Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 9.2 hereof, the
Company shall give notice thereof to the Holders of each Outstanding Security
affected, in the manner provided for in Section 14.5 hereof, setting forth in
general terms the substance of such supplemental indenture.
ARTICLE X
COVENANTS
Section 10.1 Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any, on) and
interest (including Additional Interest) on the Securities in accordance with
the terms of the Securities and this Indenture. The Company shall notify the
Trustee and any Paying Agent immediately upon the occurrence of any
Registration Default and, with respect to Additional Interest payments pursuant
to Section 4 of the Registration Rights Agreement, the Company shall notify the
Trustee and any Paying Agent prior to any Interest Payment Date of the amount
of Additional Interest payable to each Holder.
Section 10.2 Maintenance of Office or Agency.
The Company shall maintain an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities, the Subsidiary Guarantees and this
Indenture may be served. The Corporate Trust Office shall be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the aforementioned office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind any such
designation. Further, if at any time there shall be no such office
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or agency in The City of New York where the Securities may be presented or
surrendered for payment, the Company shall forthwith designate and maintain
such an office or agency in The City of New York, in order that the Securities
shall at all times be payable in The City of New York. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
any change in the location of any such other office or agency.
Section 10.3 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
shall, on or before 11:00 a.m., Eastern time, on each due date of the principal
of (and premium, if any, on) or interest on any of the Securities, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sum shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will on or before 11:00 a.m., Eastern time, on each due date of
the principal of (and premium, if any, on), or interest on, any Securities,
deposit with a Paying Agent immediately available funds sufficient to pay the
principal (and premium, if any) or interest so becoming due, such funds to be
held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of such action or any failure so to act.
The Company shall cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of
(and premium, if any, on) or interest on Securities in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal
(and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
Subject to applicable escheat and abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
on any Security and remaining unclaimed for
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two years after such principal (and premium, if any) or interest has become due
and payable shall be paid to the Company on Company Request, or (if then held
by the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
Section 10.4 Corporate Existence.
Except as expressly permitted by Article VIII hereof, Section 10.17
hereof or other provisions of this Indenture, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect the
corporate existence, rights (charter and statutory) and franchises of the
Company and each Restricted Subsidiary; provided, however, that the Company
shall not be required to preserve any such existence of its Restricted
Subsidiaries, rights or franchises, if the Board of Directors of the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Restricted Subsidiaries, taken
as a whole, and that the loss thereof is not disadvantageous in any material
respect to the Holders.
Section 10.5 Payment of Taxes; Maintenance of Properties;
Insurance.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments
and governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or Property of the Company or any
Restricted Subsidiary and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the Property of the
Company or any Restricted Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which
appropriate provision has been made in accordance with GAAP.
The Company shall cause all material Properties owned by the Company
or any Restricted Subsidiary and used or held for use in the conduct of its
business or the business of any Restricted Subsidiary to be maintained and kept
in good condition, repair and working order (ordinary wear and tear excepted),
all as in the judgment of the Company or such Restricted Subsidiary may be
necessary so that its business may be properly and advantageously conducted at
all times; provided, however, that nothing in this Section shall prevent the
Company or any Restricted Subsidiary from discontinuing the maintenance of any
of such Properties if such discontinuance is, in the judgment of the Company or
such Restricted Subsidiary, as the case may be, desirable
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in the conduct of the business of the Company or such Restricted Subsidiary and
not disadvantageous in any material respect to the Holders. Notwithstanding the
foregoing, nothing contained in this Section 10.5 shall limit or impair in any
way the right of the Company and its Restricted Subsidiaries to sell, divest
and otherwise to engage in transactions that are otherwise permitted by this
Indenture.
The Company shall at all times keep all of its, and cause its
Restricted Subsidiaries to keep their, Properties which are of an insurable
nature insured with insurers, believed by the Company to be responsible,
against loss or damage to the extent that property of similar character and in
a similar location is usually so insured by corporations similarly situated and
owning like Properties.
The Company or any Restricted Subsidiary may adopt such other plan or
method of protection, in lieu of or supplemental to insurance with insurers,
whether by the establishment of an insurance fund or reserve to be held and
applied to make good losses from casualties, or otherwise, conforming to the
systems of self-insurance maintained by corporations similarly situated and in
a similar location and owning like Properties, as may be determined by the
Board of Directors of the Company or such Restricted Subsidiary.
Section 10.6 Limitation on Sale-Leaseback Transactions.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into, assume, guarantee or otherwise become
liable with respect to any Sale/Leaseback Transaction unless (a) the Company or
such Restricted Subsidiary, as the case may be, would be able to incur
Indebtedness (not including the incurrence of Permitted Indebtedness) in an
amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction pursuant to Section 10.12(a) hereof, (b) the Company
or such Restricted Subsidiary receives proceeds from such Sale/Leaseback
Transaction at least equal to the Fair Market Value of the Property subject
thereto and (c) the Company applies an amount in cash equal to the Net
Available Proceeds of the Sales/Leaseback Transaction in accordance with the
provisions of Section 10.17 hereof as if such Sales/Leaseback Transaction were
an Asset Sale.
Section 10.7 Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the Oil and
Gas Business.
Section 10.8 Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 100 days
after the end of each fiscal year of the Company and within 45 days of the end
of each of the first, second and third quarters of each fiscal year of the
Company, an Officers' Certificate stating that a review of the activities of
the Company and its Restricted Subsidiaries during the preceding fiscal quarter
or fiscal year, as applicable, has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations
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under this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of such Officer's knowledge the Company has kept,
observed, performed and fulfilled each and every condition and covenant
contained in this Indenture and no Default or Event of Default has occurred and
is continuing (or, if a Default or Event of Default shall have occurred to
either such Officer's knowledge, describing all such Defaults or Events of
Default of which such Officer may have knowledge and what action the Company is
taking or proposes to take with respect thereto). Such Officers' Certificate
shall comply with TIA Section 314(a)(4). For purposes of this Section 10.8(a),
such compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.
(b) The Company shall, so long as any of the Securities is
outstanding, deliver to the Trustee, upon any of its Officers becoming aware of
any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company proposes to take with
respect thereto, within 10 days of its occurrence.
Section 10.9 Provision of Financial Information.
The Company shall file on a timely basis with the SEC, to the extent
such filings are accepted by the Commission and whether or not the Company has
a class of securities registered under the Exchange Act, the annual reports,
quarterly reports and other documents that the Company would be required to
file if it were subject to Section 13 or 15 of the Exchange Act. The Company
shall also file with the Trustee (with exhibits), and provide to each Holder of
Securities (without exhibits), without cost to such Holder, copies of such
reports and documents within 15 days after the date on which the Company files
such reports and documents with the Commission or the date on which the Company
would be required to file such reports and documents if the Company were so
required and, if filing such reports and documents with the Commission is not
accepted by the Commission or is prohibited under the Exchange Act, the Company
shall supply at its cost copies of such reports and documents (including any
exhibits thereto) to any Holder of Securities promptly upon written request
given in accordance with Section 14.4 hereof.
Section 10.10 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, take the following actions:
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of Capital Stock of the Company
(other than dividends or distributions payable solely in shares of
Qualified Capital Stock of the Company or in options, warrants or
other rights to purchase Qualified Capital Stock of the Company);
(ii) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company or any Affiliate thereof (other
than any Restricted Subsidiary) or any options, warrants or other
rights to acquire such Capital Stock;
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(iii) make any principal payment on or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to any
scheduled principal payment, scheduled sinking fund payment or
maturity, any Subordinated Indebtedness, except in any case out of the
proceeds of Permitted Refinancing Indebtedness, or
(iv) make any Restricted Investment;
(such payments or other actions described in clauses (i) through (iv) being
collectively referred to as "Restricted Payments"), unless at the time of and
after giving effect to the proposed Restricted Payment (the amount of any such
Restricted Payment, if other than cash, shall be the amount determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), (A) no Default or Event of Default shall have
occurred and be continuing, (B) the Company could incur $1.00 of additional
Indebtedness (excluding Permitted Indebtedness) in accordance with Section
10.12(a) hereof and (C) the aggregate amount of all Restricted Payments
declared or made after the date of this Indenture shall not exceed the sum
(without duplication) of the following:
(1) 50% of the Consolidated Net Income of the Company accrued on
a cumulative basis during the period beginning on October 1, 1995 and
ending on the last day of the Company's last fiscal quarter ending
prior to the date of such proposed Restricted Payment (or, if such
Consolidated Net Income shall be a loss, minus 100% of such loss),
without giving effect to any reduction in such Consolidated Net Income
resulting from a write-off of any account receivable, or similar
non-cash charge, arising under the Tennessee Gas Contract, plus
(2) the aggregate Net Cash Proceeds received after the date of
this Indenture by the Company from the issuance or sale (other than to
any of its Restricted Subsidiaries) of shares of Qualified Capital
Stock of the Company or any options, warrants or rights to purchase
such shares of Qualified Capital Stock of the Company, plus
(3) the aggregate Net Cash Proceeds received after the date of
this Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options, warrants or rights to
purchase shares of Qualified Capital Stock of the Company, plus
(4) the aggregate Net Cash Proceeds received after the date of
this Indenture by the Company from the issuance or sale (other than to
any of its Restricted Subsidiaries) of Indebtedness or shares of
Disqualified Capital Stock that have been converted into or exchanged
for Qualified Capital Stock of the Company, together with the
aggregate cash received by the Company at the time of such conversion
or exchange, plus
(5) to the extent not otherwise included in Consolidated Net
Income, the net reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or a Restricted
Subsidiary after the date of this Indenture from any Unrestricted
Subsidiary or from the
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redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary
(valued in each case as provided in the definition of Investment), not
to exceed in the case of any Unrestricted Subsidiary the total amount
of Investments (other than Permitted Investments) in such Unrestricted
Subsidiary made by the Company and its Restricted Subsidiaries in such
Unrestricted Subsidiary after the date of this Indenture, plus
(6) $10,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its
Restricted Subsidiaries may take the following actions so long as (in the case
of clauses (ii) and (iii) below) no Default or Event of Default shall have
occurred and be continuing:
(i) the payment of any dividend on any Capital Stock of
the Company within 60 days after the date of declaration thereof, if
at such declaration date such declaration complied with the provisions
of paragraph (a) above (and such payment shall be deemed to have been
paid on such date of declaration for purposes of any calculation
required by the provisions of paragraph (a) above);
(ii) the repurchase, redemption or other acquisition or
retirement of any shares of any class of Capital Stock of the Company
or any Restricted Subsidiary, in exchange for, or out of the aggregate
Net Cash Proceeds of, a substantially concurrent issue and sale (other
than to a Restricted Subsidiary) of shares of Qualified Capital Stock
of the Company; and
(iii) the repurchase, redemption, repayment, defeasance or
other acquisition or retirement for value of any Subordinated
Indebtedness in exchange for, or out of the aggregate Net Cash
Proceeds from, a substantially concurrent issue and sale (other than
to a Restricted Subsidiary) of shares of Qualified Capital Stock of
the Company.
The actions described in clauses (i), (ii) and (iii) of this paragraph (b)
shall be Restricted Payments that shall be permitted to be made in accordance
with this paragraph (b) but shall reduce the amount that would otherwise be
available for Restricted Payments under clause (C) of paragraph (a), provided
that any dividend paid pursuant to clause (i) of this paragraph (b) shall
reduce the amount that would otherwise be available under clause (C) of
paragraph (a) when declared, but not also when subsequently paid pursuant to
such clause (i).
(c) In computing Consolidated Net Income under paragraph (a)
above, (1) the Company shall use audited financial statements for the portions
of the relevant period for which audited financial statements are available on
the date of determination and unaudited financial statements and other current
financial data based on the books and records of the Company for the remaining
portion of such period and (2) the Company shall be permitted to rely in good
faith on the financial statements and other financial data derived from the
books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment would in the good faith determination of
the Company be permitted under the requirements of this Indenture, such
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Restricted Payment shall be deemed to have been made in compliance with this
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the Company
for any period.
Section 10.11 Limitation on Guarantees by Subsidiary Guarantors.
The Company shall not permit any Subsidiary Guarantor to guarantee the
payment of any Subordinated Indebtedness of the Company unless such guarantee
shall be subordinated to such Subsidiary Guarantor's Subsidiary Guarantee at
least to the same extent as such Subordinated Indebtedness is subordinated to
the Securities; provided, however, that this Section 10.11 shall not be
applicable to any guarantee of any Subsidiary Guarantor that (i) existed at the
time such Person became a Subsidiary of the Company and (ii) was not incurred
in connection with, or in contemplation of, such Person's becoming a Subsidiary
of the Company.
Section 10.12 Limitation on Indebtedness and Disqualified Capital
Stock.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, assume, guarantee or in any manner
become directly or indirectly liable for the payment of (collectively, "incur")
any Indebtedness (including any Acquired Indebtedness but excluding any
Permitted Indebtedness), or any Disqualified Common Stock, unless, on a pro
forma basis after giving effect to such incurrence and the application of the
proceeds therefrom, the Consolidated EBITDA Coverage Ratio for the four full
fiscal quarters immediately preceding such event, taken as one period, would
have been equal to or greater than 2.5 to 1.0.
(b) The Company shall not incur any Indebtedness that is expressly
subordinated to any other Indebtedness of the Company unless such Indebtedness,
by its terms or the terms of any agreement or instrument pursuant to which such
Indebtedness is issued or outstanding, is also expressly made subordinate to
the Securities at least to the extent it is subordinated to such other
Indebtedness.
(c) The amount of any guarantee by the Company or any Restricted
Subsidiary of any Indebtedness of the Company or one or more Restricted
Subsidiaries shall not be deemed to be outstanding or incurred for purposes of
this Section 10.12 hereof in addition to the amount of Indebtedness which it
guarantees.
(d) For purposes of this Section 10.12, Indebtedness of any Person
that becomes a Restricted Subsidiary by merger, consolidation or other
acquisition shall be deemed to have been incurred by the Company and the
Restricted Subsidiary at the time such Person becomes a Restricted Subsidiary.
Section 10.13 Additional Subsidiary Guarantors.
(a) The Company shall cause each Restricted Subsidiary that
becomes, or comes into existence as, a Restricted Subsidiary after the date of
this Indenture and has assets, businesses, divisions, real property or
equipment with a Fair Market Value in excess of $1,000,000 to execute
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and deliver a supplemental indenture to this Indenture agreeing to be bound by
its terms applicable to a Subsidiary Guarantor and providing for a Subsidiary
Guarantee of the Securities by such Restricted Subsidiary.
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary
pursuant to this Section 10.13 shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon the terms and
conditions set forth in Section 13.3 hereof.
Section 10.14 Limitation on Issuances and Sales of Capital Stock by
Restricted Subsidiaries.
The Company (a) shall not permit any Restricted Subsidiary to issue or
sell any Capital Stock to any Person other than to the Company or another
Restricted Subsidiary and (b) shall not permit any Person other than the
Company or another Restricted Subsidiary to own any Capital Stock of any
Restricted Subsidiary.
Section 10.15 Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume, affirm or suffer to exist or
become effective any Lien of any kind, except for Permitted Liens, upon any of
their respective Properties, whether now owned or acquired after the date of
this Indenture, or any income or profits therefrom, to secure (a) any
Indebtedness of the Company or such Restricted Subsidiary (if it is not also a
Subsidiary Guarantor), unless prior to, or contemporaneously therewith, the
Securities are equally and ratably secured or (b) any Indebtedness of any
Subsidiary Guarantor, unless prior to, or contemporan-eously therewith, the
Subsidiary Guarantees are equally and ratably secured; provided, however, that
if such Indebtedness is expressly subordinated to the Securities or the
Subsidiary Guarantees, the Lien securing such Indebtedness shall be
subordinated and junior to the Lien securing the Securities or the Subsidiary
Guarantees, as the case may be, with the same relative priority as such
Indebtedness has with respect to the Securities or the Subsidiary Guarantees.
The foregoing covenant shall not apply to any Lien securing Acquired
Indebtedness, provided that any such Lien extends only to the Properties that
were subject to such Lien prior to the related acquisition by the Company or
such Restricted Subsidiary and was not created, incurred or assumed in
contemplation of such transaction.
Section 10.16 Purchase of Securities Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
be obligated to make an offer to purchase (a "Change of Control Offer") all of
the then Outstanding Securities, in whole or in part, from the Holders of such
Securities in integral multiples of $1,000, at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the aggregate principal amount of
such Securities, plus accrued and unpaid interest, if any, to the Change of
Control Purchase Date (as defined below), in accordance with the procedures set
forth in paragraphs (b), (c) and (d) of this Section. The Company shall,
subject to the provisions described below, be
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required to purchase all Securities properly tendered into the Change of
Control Offer and not withdrawn. The Company will not be required to make a
Change of Control Offer upon a Change of Control if another Person makes the
Change of Control Offer at the same purchase price, at the same times and
otherwise in substantial compliance with the requirements applicable to a
Change of Control Offer to be made by the Company and purchases all Securities
validly tendered and not withdrawn under such Change of Control Offer.
(b) The Change of Control Offer is required to remain open for at
least 20 Business Days and until the close of business on the fifth Business
Day prior to the Change of Control Purchase Date (as defined below).
(c) Not later than the 30th day following any Change of Control,
the Company shall give to the Trustee in the manner provided in Section 14.4
and each Holder of the Securities in the manner provided in Section 14.5, a
notice (the "Change of Control Notice") stating:
(1) that a Change in Control has occurred and that such
Holder has the right to require the Company to repurchase such
Holder's Securities, or portion thereof, at the Change of Control
Purchase Price;
(2) any information regarding such Change of Control
required to be furnished pursuant to Rule 13e-1 under the Exchange Act
and any other securities laws and regulations thereunder;
(3) a purchase date (the "Change of Control Purchase
Date") which shall be on a Business Day and no earlier than 30 days
nor later than 60 days from the date the Change of Control occurred;
(4) that any Security, or portion thereof, not tendered
or accepted for payment will continue to accrue interest:
(5) that unless the Company defaults in depositing money
with the Paying Agent in accordance with the last paragraph of clause
(d) of this Section 10.16, or payment is otherwise prevented, any
Security, or portion thereof, accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control Purchase Date; and
(6) the instructions a Holder must follow in order to
have his Securities repurchased in accordance with paragraph (d) of
this Section.
(d) Holders electing to have Securities purchased will be required
to surrender such Securities to the Company at the address specified in the
Change of Control Notice at least five Business Days prior to the Change of
Control Purchase Date. Holders will be entitled to withdraw their election if
the Company receives, not later than three Business Days prior to the Change of
Control Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the certificate number(s) (in the case of
Physical Securities) and principal amount
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of the Securities delivered for purchase by the Holder as to which his election
is to be withdrawn and a statement that such Holder is withdrawing his election
to have such Securities purchased. Holders whose Securities are purchased only
in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
On the Change of Control Purchase Date, the Company shall (i) accept
for payment Securities or portions thereof validly tendered pursuant to a
Change of Control Offer, (ii) deposit with the Paying Agent money sufficient to
pay the purchase price of all Securities or portions thereof so tendered, and
(iii) deliver or cause to be delivered to the Trustee the Securities so
accepted. The Paying Agent shall promptly mail or deliver to Holders of the
Securities so tendered payment in an amount equal to the purchase price for the
Securities, and the Company shall execute and the Trustee shall authenticate
and mail or make available for delivery to such Holders a new Security having
the notation of Subsidiary Guarantees thereon executed by the Subsidiary
Guarantors and equal in principal amount to any unpurchased portion of the
Security which any such Holder did not surrender for purchase. The Company
shall announce the results of a Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date. For purposes of this
Section 10.16, the Trustee will act as the Paying Agent.
(e) The Company shall comply with Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable, in the event that a Change of Control
occurs and the Company is required to purchase Securities as described in this
Section 10.16.
Section 10.17 Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the Properties
sold or otherwise disposed of pursuant to the Asset Sale, (ii) at least 85% of
the consideration received by the Company or the Restricted Subsidiary, as the
case may be, in respect of such Asset Sale consists of cash, Cash Equivalents
or properties used in the Oil and Gas Business of the Company or its Restricted
Subsidiaries and (iii) the Company delivers to the Trustee an Officers'
Certificate certifying that such Asset Sale complies with clauses (i) and (ii)
of this Section 10.17(a). The amount (without duplication) of any Indebtedness
(other than Subordinated Indebtedness) of the Company or such Restricted
Subsidiary that is expressly assumed by the transferee in such Asset Sale and
with respect to which the Company or such Restricted Subsidiary, as the case
may be, is unconditionally released by the holder of such Indebtedness, shall
be deemed to be cash or Cash Equivalents for purposes of clause (ii) and shall
also be deemed to constitute a repayment of, and a permanent reduction in, the
amount of such Indebtedness for purposes of the following paragraph.
(b) If the Company or any Restricted Subsidiary engages in an
Asset Sale, the Company or such Restricted Subsidiary may either, no later than
360 days after such Asset Sale, (i) apply all or any of the Net Available
Proceeds therefrom to repay Indebtedness (other than Subordinated
Indebtedness) of the Company or any Restricted Subsidiary, provided in each
case
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that the related loan commitment (if any) is thereby permanently reduced by the
amount of such Indebtedness so repaid, or (ii) invest all or any part of the
Net Available Proceeds thereof in Properties that will be used in the Oil and
Gas Business of the Company or its Restricted Subsidiaries, as the case may be.
The amount of such Net Available Proceeds not applied or invested as provided
in this paragraph shall constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$10,000,000 (the "Trigger Date"), the Company shall make an offer to purchase,
from all Holders of the Securities, an aggregate principal amount of Securities
equal to such Excess Proceeds as follows:
(1) Not later than the 30th day following the Trigger
Date, the Company shall give to the Trustee in the manner provided in
Section 14.4 hereof and each Holder of the Securities in the manner
provided in Section 14.5 hereof, a notice (a "Purchase Notice")
offering to purchase (a "Net Proceeds Offer") from all Holders of the
Securities the maximum principal amount (expressed as a multiple of
$1,000) of Securities that may be purchased out of an amount (the
"Payment Amount") equal to such Excess Proceeds.
(2) The offer price for the Securities shall be payable
in cash in an amount equal to 100% of the aggregate principal amount
of the Securities tendered pursuant to a Net Proceeds Offer, plus
accrued and unpaid interest, if any, to the date such Net Proceeds
Offer is consummated (the "Offered Price"), in accordance with
paragraph (d) of this Section. To the extent that the aggregate
Offered Price of the Securities tendered pursuant to a Net Proceeds
Offer is less than the Payment Amount relating thereto (such shortfall
constituting a "Net Proceeds Deficiency"), the Company may use such
Net Proceeds Deficiency, or a portion thereof, for general corporate
purposes, subject to the limitations of Section 10.10 hereof.
(3) If the aggregate Offered Price of Securities validly
tendered and not withdrawn by Holders thereof exceeds the Payment
Amount, Securities to be purchased will be selected on a pro rata
basis by the Trustee based on the aggregate principal amount of
Securities so tendered. Upon completion of a Net Proceeds Offer, the
amount of Excess Proceeds shall be reset to zero.
(4) The Purchase Notice shall set forth a purchase date
(the "Net Proceeds Payment Date"), which shall be on a Business Day no
earlier than 30 days nor later than 60 days from the Trigger Date. The
Purchase Notice shall also state (i) that a Trigger Date with respect
to one or more Asset Sales has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Securities at
the Offered Price, subject to the limitations described in the
forgoing paragraph (3), (ii) any information regarding such Net
Proceeds Offer required to be furnished pursuant to Rule 14e-1 under
the Exchange Act and any other securities laws and regulations
thereunder, (iii) that any Security, or portion thereof, not tendered
or accepted for payment will continue to accrue interest, (iv) that,
unless the Company defaults in depositing money with the Paying Agent
in accordance with the last paragraph of clause (d) of this Section
10.17, or payment is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to
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the Net Proceeds Offer shall cease to accrue interest after the Net
Proceeds Payment Date, and (v) the instructions a Holder must follow
in order to have his Securities repurchased in accordance with
paragraph (d) of this Section.
(d) Holders electing to have Securities purchased will be required
to surrender such Securities to the Company at the address specified in the
Purchase Notice at least five Business Days prior to the Net Proceeds Payment
Date. Holders will be entitled to withdraw their election if the Company
receives, not later than three Business Days prior to the Net Proceeds Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the certificate number(s) (in the case of Physical
Securities) and principal amount of the Securities delivered for purchase by
the Holder as to which his election is to be withdrawn and a statement that
such Holder is withdrawing his election to have such Securities purchased.
Holders whose Securities are purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
On the Net Proceeds Payment Date, the Company shall (i) accept for
payment Securities or portions thereof validly tendered pursuant to a Net
Proceeds Offer in an aggregate principal amount equal to the Payment Amount or
such lesser amount of Securities as has been tendered, (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so tendered in an aggregate principal amount equal to the
Payment Amount or such lesser amount and (iii) deliver or cause to be delivered
to the Trustee the Securities so accepted. The Paying Agent shall promptly mail
or deliver to Holders of the Securities so accepted payment in an amount equal
to the purchase price, and the Company shall execute and the Trustee shall
authenticate and mail or make available for delivery to such Holders a new
Security having the notation of Subsidiary Guarantees thereon executed by the
Subsidiary Guarantors and equal in principal amount to any unpurchased portion
of the Security which any such Holder did not surrender for purchase. Any
Securities not so accepted will be promptly mailed or delivered to the Holder
thereof. The Company shall announce the results of a Net Proceeds Offer on or
as soon as practicable after the Net Proceeds Payment Date. For purposes of
this Section 10.17, the Trustee will act as the Paying Agent.
(e) The Company shall not permit any Restricted Subsidiary to
enter into or suffer to exist any agreement that would place any restriction of
any kind (other than pursuant to law or regulation) on the ability of the
Company to make a Net Proceeds Offer following any Asset Sale. The Company
shall comply with Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder, if applicable, in the event that an Asset Sale
occurs and the Company is required to purchase Securities as described in this
Section 10.17.
Section 10.18 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of Property or the rendering of any
services) with, or for the benefit of, any Affiliate of the Company (other than
the Company or a Restricted Subsidiary), unless (i) such transaction or series
of related transactions is on terms
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that are no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than would be available in a comparable transaction in
arm's-length dealings with an unrelated third party, (ii) with respect to a
transaction or series of related transactions involving aggregate payments in
excess of $1,000,000, the Company delivers an Officers' Certificate to the
Trustee certifying that such transaction or series of transactions complies
with clause (i) above and that such transaction or series of transactions has
been approved by a majority of the Disinterested Directors of the Company, and
(iii) with respect to any one transaction or series of transactions involving
aggregate payments in excess of $10,000,000, the Officers' Certificate referred
to in clause (ii) above also certifies that the Company has obtained a written
opinion from an independent nationally recognized investment banking firm or
appraisal firm specializing or having a speciality in the type and subject
matter of the transaction or series of transactions at issue, which opinion
shall be to the effect set forth in clause (i) above or shall state that such
transaction or series of transactions is fair from a financial point of view to
the Company or such Restricted Subsidiary; provided, however, that the
foregoing restriction shall not apply to (w) loans or advances to officers,
directors and employees of the Company or any Restricted Subsidiary made in the
ordinary course of business and consistent with past practices of the Company
and its Restricted Subsidiaries in an aggregate amount not to exceed $1,000,000
outstanding at any one time, (x) indemnities of officers, directors and
employees of the Company or any Restricted Subsidiary permitted by bylaw or
statutory provisions, (y) 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 Affiliate and (z) the Company's employee
compensation and other benefit arrangements.
Section 10.19 Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or suffer to exist or allow to become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or
make any other distributions on or in respect of its Capital Stock, or make
payments on any Indebtedness owed, to the Company or any other Restricted
Subsidiary, (b) to make loans or advances to the Company or any other
Restricted Subsidiary or (c) to transfer any of its Property to the Company or
any other Restricted Subsidiary (any such restrictions being collectively
referred to herein as a "Payment Restriction"), except for such encumbrances or
restrictions existing under or by reason of (i) customary provisions
restricting subletting or assignment of any lease governing a leasehold
interest of the Company or any Restricted Subsidiary, or customary restrictions
in licenses relating to the Property covered thereby and entered into in the
ordinary course of business, (ii) any instrument governing Indebtedness of a
Person acquired by the Company or any Restricted Subsidiary at the time of such
acquisition, which encumbrance or restriction is not applicable to any other
Person, other than the Person, or the Property of the Person, so acquired,
provided that such Indebtedness was not incurred in anticipation of such
acquisition or (iii) the Bank Credit Facilities as in effect on the date of
this Indenture or any agreement that amends, modifies, supplements, restates,
extends, renews or refinances the Bank Credit Facilities, provided that the
terms and conditions of any Payment
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Restriction thereunder are not materially less favorable to the Holders of the
Securities than those under the Bank Credit Facilities as in effect on the date
of this Indenture.
Section 10.20 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 10.5 through 10.12, Sections
10.14 and 10.15 and Sections 10.18 through 10.19 hereof if, before or after the
time for such compliance, the Holders of at least a majority in aggregate
principal amount of the Outstanding Securities and the Subsidiary Guarantors,
by Act of such Holders and written agreement of the Subsidiary Guarantors,
waive such compliance in such instance with such term, provision or condition,
but no such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force and
effect.
Section 10.21 Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the Registration Rights Agreement and shall
pay all costs and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith. In connection with any such
qualification of this Indenture under the TIA, the Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel
or other documentation as it may reasonably request.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Right of Redemption.
The Securities may be redeemed, at the election of the Company, as a
whole or from time to time in part, at any time on or after January 15, 2000,
upon not less than 30 or more than 60 days' notice to each Holder of Securities
to be redeemed, subject to the conditions and at the Redemption Prices
(expressed as percentages of principal amount) specified in the form of
Security, together with accrued and unpaid interest, if any, to the Redemption
Date.
In addition, at any time on or prior to January 15, 1999, up to
$35,000,000 in aggregate principal amount of Securities may be redeemed, at the
election of the Company, upon not less than 30 or more than 60 days' notice to
each Holder of Securities to be redeemed, from the Net Cash Proceeds of a
Public Equity Offering, at the Redemption Price (expressed as a percentage of
principal amount) specified in the form of Security, together with accrued and
unpaid interest, if any, to the Redemption Date, provided that at least
$115,000,000 in aggregate principal amount of Securities remains Outstanding
immediately after such redemption and that such redemption occurs within 60
days following the closing of such Public Equity Offering.
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Section 11.2 Applicability of Article.
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 11.3 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 11.1 hereof shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities to be redeemed and shall deliver
to the Trustee such documentation and records as shall enable the Trustee to
select the Securities to be redeemed pursuant to Section 11.4 hereof. Any
election to redeem Securities shall be revocable until the Company gives a
notice of redemption pursuant to Section 11.5 hereof to the Holders of
Securities to be redeemed.
Section 11.4 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not less than 30 days nor more than
60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, pro rata, by lot or by any
other method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions of the principal of
Securities; provided, however, that any such partial redemption shall be in
integral multiples of $1,000.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
Section 11.5 Notice of Redemption.
Notice of redemption shall be given in the manner provided for in
Section 14.5 hereof not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
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(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed,
the identification (and, in the case of a partial redemption, the principal
amounts) of the particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price (together
with accrued interest, if any, to the Redemption Date payable as provided in
Section 11.7 hereof) will become due and payable upon each such Security, or
the portion thereof, to be redeemed, and that, unless the Company shall default
in the payment of the Redemption Price and any applicable accrued interest,
interest thereon will cease to accrue on and after said date; and
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. Failure to give such
notice by mailing to any Holder of Securities or any defect therein shall not
affect the validity of any proceedings for the redemption of other Securities.
Section 11.6 Deposit of Redemption Price.
On or before 11:00 a.m., Eastern time, on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3 hereof) an amount of money sufficient to pay the
Redemption Price of, and accrued and unpaid interest on, all the Securities
which are to be redeemed on such Redemption Date.
Section 11.7 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued and unpaid interest,
if any, to the Redemption Date), and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued and unpaid interest, if any, to the Redemption Date; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.8 hereof.
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If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.
Section 11.8 Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at the office or agency of the Company maintained for such purpose pursuant to
Section 10.2 hereof (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal amount of the Security so
surrendered.
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE
Section 12.1 Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 12.2 or Section 12.3
hereof be applied to all Outstanding Securities upon compliance with the
conditions set forth below in this Article XII.
Section 12.2 Defeasance and Discharge.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.2, the Company and the Subsidiary Guarantors
shall be deemed to have been discharged from their respective obligations with
respect to all Outstanding Securities on the date the conditions set forth in
Section 12.4 hereof are satisfied (hereinafter, "legal defeasance"). For this
purpose, such legal defeasance means that the Company and the Subsidiary
Guarantors shall be deemed (i) to have paid and discharged their respective
obligations under the Outstanding Securities; provided, however, that the
Securities shall continue to be deemed to be "Outstanding" for purposes of
Section 12.5 hereof and the other Sections of this Indenture referred to in
clauses (A) and (B) below, and (ii) to have satisfied all their other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense and direction of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Securities to receive,
solely from the trust fund described in Section 12.4 hereof and as more fully
set forth in such Section, payments in respect of the principal of (and premium
if any, on) and interest on such Securities when such payments are due (or at
such time as the Securities would be subject to redemption at the option of the
Company in
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accordance with this Indenture), (B) the respective obligations of the Company
and the Subsidiary Guarantors under Sections 3.3, 3.4, 3.5, 3.6, 3.7, 5.8,
5.14, 6.6, 6.9, 6.10, 10.2, 10.3, 10.21, 13.1 (to the extent it relates to the
foregoing Sections and this Article XII), 13.4 and 13.5 hereof, (C) the rights,
powers, trusts, duties and immunities of the Trustee hereunder, and (D) the
obligations of the Company and the Subsidiary Guarantors under this Article
XII. Subject to compliance with this Article XII, the Company may exercise its
option under this Section 12.2 notwithstanding the prior exercise of its option
under Section 12.3 hereof with respect to the Securities.
Section 12.3 Covenant Defeasance.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.3, the Company and each Subsidiary Guarantor
shall be released from their respective obligations under any covenant
contained in Article VIII, in Sections 10.5 through 10.19 and in Sections 10.21
and 13.2 hereof with respect to the Outstanding Securities on and after the
date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Securities shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the Outstanding Securities, the Company and each Subsidiary Guarantor may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 5.1(c) or 5.1(d) hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby.
Section 12.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
12.2 or Section 12.3 hereof to the Outstanding Securities:
(a) The Company or any Subsidiary Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 6.7 hereof who shall agree to comply
with the provisions of this Article XII applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of such
Securities, (A) cash in United States dollars in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(C) a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and which
shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge, the principal of (and premium, if any, on) and interest on the
Outstanding Securities
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on the Stated Maturity thereof (or Redemption Date, if applicable), provided
that the Trustee shall have been irrevocably instructed in writing by the
Company to apply such money or the proceeds of such U.S. Government Obligations
to said payments with respect to the Securities. Before such a deposit, the
Company may give to the Trustee, in accordance with Section 11.3 hereof, a
notice of its election to redeem all of the Outstanding Securities at a future
date in accordance with Article XI hereof, which notice shall be irrevocable.
Such irrevocable redemption notice, if given, shall be given effect in applying
the foregoing. For this purpose, "U.S. Government Obligations" means securities
that are (x) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
(b) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or, insofar
as Sections 5.1(h) and 5.1(i) are concerned, at any time during the period
ending on the 91st day after the date of such deposit.
(c) Such legal defeasance or covenant defeasance shall not cause
the Trustee to have a conflicting interest under this Indenture or the Trust
Indenture Act with respect to any securities of the Company or any Subsidiary
Guarantor.
(d) Such legal defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, any other material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound, as evidenced to the Trustee in an Officers'
Certificate delivered to the Trustee concurrently with such deposit.
(e) In the case of an election under Section 12.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there has
been a change in the applicable federal income tax laws, in either case
providing that the Holders of the Outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such legal
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such legal
defeasance had not occurred (it being understood that (x) such Opinion of
Counsel shall also state that such ruling or applicable law is consistent with
the conclusions reached in such Opinion of Counsel and (y) the Trustee shall be
under no obligation to investigate the basis or correctness of such ruling).
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(f) In the case of an election under Section 12.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such covenant defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that all
conditions precedent provided for relating to either the legal defeasance under
Section 12.2 hereof or the covenant defeasance under Section 12.3 (as the case
may be) have been complied with.
Section 12.5 Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3
hereof, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee--collectively
for purposes of this Section 12.5, the "Trustee") pursuant to Section 12.4
hereof in respect of the Outstanding Securities shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against all taxes,
fees or other charges imposed on or assessed against the U.S. Governmental
Obligations deposited pursuant to Section 12.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding
Securities.
Anything in this Article XII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 12.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal defeasance or
covenant defeasance, as applicable, in accordance with this Article.
Section 12.6 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 12.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and the Subsidiary Guarantors' obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 12.2 or 12.3 hereof, as the
case
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may be, until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 12.5 hereof; provided, however, that
if the Company or any Subsidiary Guarantor makes any payment of principal of
(or premium, if any, on) or interest on any Security following the
reinstatement of its obligations, the Company or such Subsidiary Guarantor
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money held by the Trustee or Paying Agent.
ARTICLE XIII
SUBSIDIARY GUARANTEES
Section 13.1 Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally, jointly and
severally, guarantees (each such guarantee being referred to herein as this
"Subsidiary Guarantee," with all such guarantees being referred to herein as
the "Subsidiary Guarantees") to each Holder of Securities authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns, the
full and prompt performance of the Company's obligations under this Indenture
and the Securities and that:
(a) the principal of (and premium, if any, on) and interest on the
Securities will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the Securities, if any, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise;
subject, however, in the case of clauses (a) and (b) above, to the limitations
set forth in Section 13.4 hereof.
Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Subsidiary Guarantors will
be jointly and severally obligated to pay the same immediately. Each Subsidiary
Guarantor hereby agrees that its obligations hereunder shall, to the extent
permitted by law, be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Subsidiary Guarantor hereby waives, to the extent permitted by
law, diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or
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bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Subsidiary Guarantee will not be discharged except by complete performance of
the obligations contained in the Securities, this Indenture and in this
Subsidiary Guarantee. If any Holder or the Trustee is required by any court or
otherwise to return to the Company, any Subsidiary Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or any Subsidiary Guarantor, any amount paid by the Company or any Subsidiary
Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees it shall not be entitled to enforce any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between each Subsidiary
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article V hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article V hereof,
such obligations (whether or not due and payable) shall forthwith become due
and payable by each Subsidiary Guarantor for the purpose of this Subsidiary
Guarantee.
Section 13.2 Subsidiary Guarantors May Consolidate, etc., on
Certain Terms.
(a) Except as set forth in Article VIII hereof, nothing contained
in this Indenture or in any of the Securities shall prevent any consolidation
or merger of a Subsidiary Guarantor with or into the Company or another
Subsidiary Guarantor or shall prevent any sale, conveyance or other disposition
of all or substantially all the Properties of a Subsidiary Guarantor to the
Company or another Subsidiary Guarantor.
(b) Except as set forth in Article VIII hereof, nothing contained
in this Indenture or in any of the Securities shall prevent any consolidation
or merger of a Subsidiary Guarantor with or into a Person other than the
Company or another Subsidiary Guarantor (whether or not Affiliated with the
Subsidiary Guarantor), or successive consolidations or mergers in which a
Subsidiary Guarantor or its successor or successors shall be a party or
parties, or shall prevent any sale, conveyance or other disposition of all or
substantially all the Properties of a Subsidiary Guarantor to a Person other
than the Company or another Subsidiary Guarantor (whether or not Affiliated
with the Subsidiary Guarantor) authorized to acquire and operate the same;
provided, however, that (i) immediately after such transaction, and giving
effect thereto, no Default or Event of Default shall have occurred as a result
of such transaction and be continuing, (ii) such transaction shall not violate
any of the covenants of Sections 10.1 through 10.19 hereof, and (iii) each
Subsidiary Guarantor hereby covenants and agrees that, upon any such
consolidation, merger, sale, conveyance or other disposition, such Subsidiary
Guarantor's Subsidiary Guarantee set forth in this Article XIII and in a
notation to the Securities, and the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be performed by
such Subsidiary Guarantor, shall be expressly assumed (in the event that the
Subsidiary Guarantor is not the surviving corporation in a merger), by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by such Person formed
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by such consolidation, or into which the Subsidiary Guarantor shall have
merged, or by the Person that shall have acquired such Property (except to the
extent the following Section 13.3 would result in the release of such
Subsidiary Guarantee, in which case such surviving Person or transferee of such
Property shall not have to execute any such supplemental indenture and shall
not have to assume such Subsidiary Guarantor's Subsidiary Guarantee). In the
case of any such consolidation, merger, sale, conveyance or other disposition
and upon the assumption by the successor Person, by supplemental indenture
executed and delivered to the Trustee and satisfactory in form to the Trustee
of the due and punctual performance of all of the covenants and conditions of
this Indenture to be performed by the Subsidiary Guarantor, such successor
Person shall succeed to and be substituted for the Subsidiary Guarantor with
the same effect as if it had been named herein as the initial Subsidiary
Guarantor.
Section 13.3 Release of Subsidiary Guarantors.
Upon the sale or disposition (by merger or otherwise) of a Subsidiary
Guarantor (or all or substantially all of its Properties) to a Person other
than the Company or another Subsidiary Guarantor and pursuant to a transaction
that is otherwise in compliance with the terms of this Indenture, including but
not limited to the provisions of Section 13.2 hereof or pursuant to Article
VIII hereof, such Subsidiary Guarantor shall be deemed released from its
Subsidiary Guarantee and all related obligations under this Indenture;
provided, however, that any such termination shall occur only to the extent
that all obligations of such Subsidiary Guarantor under all of its guarantees
of, and under all of its pledges of assets or other security interests which
secure, other Indebtedness of the Company or any other Restricted Subsidiary
shall also terminate upon such sale or other disposition. The Trustee shall
deliver an appropriate instrument evidencing such release upon receipt of a
Company Request accompanied by an Officers' Certificate and an Opinion of
Counsel certifying that such sale or other disposition was made by the Company
in accordance with the provisions of this Indenture. Each Subsidiary Guarantor
that is designated as an Unrestricted Subsidiary in accordance with the
provisions of this Indenture shall be released from its Subsidiary Guarantee
and all related obligations under this Indenture for so long as it remains an
Unrestricted Subsidiary. The Trustee shall deliver an appropriate instrument
evidencing such release upon its receipt of the Board Resolution designating
such Unrestricted Subsidiary. Any Subsidiary Guarantor not released in
accordance with this Section 13.3 shall remain liable for the full amount of
principal of (and premium, if any, on) and interest on the Securities as
provided in this Article XIII.
Section 13.4 Limitation of Subsidiary Guarantors' Liability.
Each Subsidiary Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that the guarantee
by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Federal
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law. To effectuate the foregoing
intention, the Holders and each Subsidiary Guarantor hereby irrevocably agree
that the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee shall be limited to the maximum amount as will, after giving effect
to all other contingent and fixed liabilities of such Subsidiary Guarantor and
after
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giving effect to any collections from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to Section 13.5
hereof, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting such a fraudulent conveyance or
fraudulent transfer. This Section 13.4 is for the benefit of the creditors of
each Subsidiary Guarantor.
Section 13.5 Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (if
any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to its Subsidiary Guarantee.
Section 13.6 Execution and Delivery of Notations of Subsidiary
Guarantees.
To evidence its Subsidiary Guarantee set forth in Section 13.1 hereof,
each Subsidiary Guarantor hereby agrees to execute the notations of Subsidiary
Guarantees in substantially the form set forth in Section 2.4 hereof to be
endorsed on all Securities ordered to be authenticated and delivered by the
Trustee, and each Subsidiary Guarantor agrees that this Indenture shall be
executed on behalf of such Subsidiary Guarantor by its President or one of its
Vice Presidents. Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 13.1 hereof shall remain in full force and
effect notwithstanding any failure to endorse on each Security a notation of
such Subsidiary Guarantee. Each such notation of Subsidiary Guarantee shall be
signed on behalf of each Subsidiary Guarantor by its President or one of its
Vice Presidents (each of whom shall, in each case, have been duly authorized by
all requisite corporate action) prior to the authentication of the Security on
which it is endorsed, and the delivery of such Security by the Trustee, after
the authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of such Subsidiary
Guarantor. Such signatures upon the notation of Subsidiary Guarantee may be by
manual or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Subsidiary Guarantee, and in case any such officer
who shall have signed the notation of Subsidiary Guarantee shall cease to be
such officer before the Security on which such notation of Subsidiary Guarantee
is endorsed shall have been authenticated and delivered by the Trustee or
disposed of by the Company, such Security nevertheless may be authenticated and
delivered or disposed of as though the person who signed the notation of
Subsidiary Guarantee had not ceased to be such officer of the Subsidiary
Guarantor.
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Section 13.7 Severability.
In case any provision of this Subsidiary Guarantee shall be invalid,
illegal or unenforceable, that portion of such provision that is not invalid,
illegal or unenforceable shall remain in effect, and the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Compliance Certificates and Opinions.
Upon any application or request by the Company or any Subsidiary
Guarantor to the Trustee to take any action under any provision of this
Indenture, the Company or such Subsidiary Guarantor, as the case may be, shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act or this Indenture. Each such certificate and each such
legal opinion shall be in the form of an Officers' Certificate or an Opinion of
Counsel, as applicable, and shall comply with the requirements of this
Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each Person signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person,
such Person has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such Person, such condition or covenant has been complied with.
The certificates and opinions provided pursuant to this Section 14.1
and the statements required by this Section 14.1 shall comply in all respects
with TIA Sections 314(c) and (e).
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Section 14.2 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such Opinion of Counsel may be based, insofar as it relates to factual matters,
upon an officers' certificate, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate with respect to such matters
is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 14.3 Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
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(c) The ownership, principal amount and serial numbers of
Securities held by any Person, and the date of holding the same, shall be
proved by the Security Register.
(d) If the Company shall solicit from the Holders of Securities
any request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, by or pursuant to a Board Resolution, fix
in advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act, but the Company shall have no obligation to do so. Notwithstanding TIA
Section 316(c), such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not earlier than the
date 30 days prior to the first solicitation of Holders generally in connection
therewith and not later than the date such solicitation is completed. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record date, but
only the Holders of record at the close of business on such record date shall
be deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of Outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date, provided that no such authorization, agreement
or consent by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not
later than eleven months after the record date.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof, including, without limitation, any Series B Security exchanged for a
Series A Security, in respect of anything done, omitted or suffered to be done
by the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
Section 14.4 Notices, etc. to Trustee, Company and Subsidiary
Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to or filed with,
(1) the Trustee by any Holder or by the Company or any Subsidiary
Guarantor shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing (in the English language) and
delivered in person or mailed by certified or registered mail (return
receipt requested) to the Trustee at its Corporate Trust Office; or
(2) the Company or any Subsidiary Guarantor by the Trustee or by
any Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing (in the English
language) and delivered in person or mailed by certified or registered
mail (return receipt requested) to the Company or such Subsidiary
Guarantor, as applicable, addressed to it at the Company's offices
located at 379 Thornall Street,
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Edison, New Jersey 08837, Attention: Treasurer, or at any other
address otherwise furnished in writing to the Trustee by the Company.
Section 14.5 Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by
the Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing (in the English language)
and mailed, first-class postage prepaid, to each Holder affected by such event,
at his address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice for every purpose hereunder.
Section 14.6 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 14.7 Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Subsidiary Guarantors shall bind their respective successors and assigns,
whether so expressed or not. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 14.8 Severability.
In case any provision in this Indenture or in the Securities or the
Subsidiary Guarantees shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, and a Holder shall have no claim therefor against
any party hereto.
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Section 14.9 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person (other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder, the Holders and, to the
extent set forth in Section 13.4 hereof, creditors of Subsidiary Guarantors)
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 14.10 Governing Law; Trust Indenture Act Controls.
(a) THIS INDENTURE, THE SUBSIDIARY GUARANTEES AND THE SECURITIES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. THE COMPANY AND
EACH SUBSIDIARY GUARANTOR IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN, THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE, THE SECURITIES OR THE SUBSIDIARY GUARANTEES, AND
THE COMPANY AND EACH SUBSIDIARY GUARANTOR IRREVOCABLY AGREE THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED BY ANY SUCH
COURT.
(b) Effective upon and subject to the qualification of this
Indenture pursuant to the provisions of the Trust Indenture Act, if and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of Section 318(c) of the Trust Indenture Act,
or conflicts with any provision (an "incorporated provision") required by or
deemed to be included in this Indenture by operation of such Trust Indenture
Act section, such imposed duties or incorporated provision shall control.
Section 14.11 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities or
the Subsidiary Guarantee) payment of interest or principal (and premium, if
any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date or at the Stated Maturity or Maturity; provided, however,
that no interest shall accrue for the period from and after such Interest
Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may be.
Section 14.12 No Recourse Against Others.
A director, officer, employee, stockholder, incorporator or Affiliate,
as such, past, present or future, of the Company or any Subsidiary Guarantor
shall not have any personal liability under
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the Securities or this Indenture by reason of his or its status as a director,
officer, employee, stockholder, incorporator or Affiliate or any liability for
any obligations of the Company or any Subsidiary Guarantor under the Securities
or this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder, by accepting any of the Securities,
waives and releases all such liability to the extent permitted by applicable
law.
Section 14.13 Duplicate Originals.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 14.14 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
ISSUER:
KCS ENERGY, INC.
By: /s/ JAMES W. CHRISTMAS
Name: James W. Christmas
Title: President
SUBSIDIARY GUARANTORS:
ENERCORP GAS MARKETING, INC.,
KCS RESOURCES, INC.,
KCS MICHIGAN RESOURCES, INC.,
KCS PIPELINE SYSTEMS, INC.,
KCS ENERGY MARKETINC, INC.,
KCS POWER MARKETING, INC.,
KCS ENERGY RISK MANAGEMENT, INC.,
NATIONAL ENERDRILL CORPORATION AND
PROLIQ, INC.
By: /s/ HENRY JURAND
Name: Henry Jurand
Title: Vice President and
Chief Financial Officer
TRUSTEE:
FLEET NATIONAL BANK OF CONNECTICUT
By: /s/ SUSAN C. MERKER
Name: Susan C. Merker
Title: Assistant Vice President
<PAGE> 109
EXHIBIT A
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend in addition to the Private Placement Legend, if required by Section 3.12
hereof, in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITORY OF ITS NOMINEE EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
A-1
<PAGE> 110
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 11% Senior Notes due 2003, Series A, and
11% Senior Notes due 2003, Series B
(the "Securities"), of KCS Energy, Inc.
This Certificate relates to $_________ principal amount of Securities
held in the form of *[ ] a beneficial interest in a Global Security or *[ ]
Physical Securities by _________________ (the "Transferor").
The Transferor:*
[ ] has requested by written order that the Security Registrar
deliver in exchange for its beneficial interest in the Global Security held by
the Depository a Physical Security or Physical Securities in definitive,
registered form of authorized denominations and in an aggregate principal
amount equal to its beneficial interest in such Global Security (or the portion
thereof indicated above); or
[ ] has requested that the Security Registrar by written order
exchange or register the transfer of a Physical Security or Physical
Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 3.5 of such Indenture,
and that the transfer of these Securities does not require registration under
the Securities Act of 1933, as amended (the "Act") because *:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of subparagraph (a)(1) or (c)(1) of Section
3.5 of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[ ] Such Security is being transferred to an institutional
"accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3) or
(7) of Rule 501 under the Act).
[ ] Such Security is being transferred in reliance on Regulation S
under the Act.
[ ] Such Security is being transferred in reliance on Rule 144 under
the Act.
[ ] Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act
other than Rule 144A or Rule 144 or Regulation S under the Act to a person
other than an institutional "accredited investor."
--------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------
[Authorized Signatory]
Date:
-----------------------------------
*Check applicable box.
B-1
<PAGE> 111
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
__________, _____
Fleet National
Bank of Connecticut, Trustee
777 Main Street
Hartford, Connecticut 06115
Re: KCS Energy, Inc. Indenture (the "Indenture")
relating to 11% Senior Notes due 2003,
Series A, or 11% Senior Notes due 2003, Series B
Ladies and Gentlemen:
In connection with our proposed purchase of 11% Senior Notes due 2003,
Series A, or 11% Series Notes due 2003, Series B (the "Securities"), of KCS
Energy, Inc. (the "Company"), we confirm that:
1. We have received such information as we deem necessary in
order to make our investment decision.
2. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the Indenture
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell any Securities, we will do so
only (A) to the Company or any subsidiary thereof, (B) inside the United States
in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
the Trustee a signed letter substantially in the form hereof, (D) outside the
United States in accordance with Regulation S under the Securities Act, (E)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if available), or (F) pursuant to an effective registration
statement under the
C-1
<PAGE> 112
Securities Act, and we further agree to provide to any person purchasing
Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
4. We understand that, on any proposed resale of Securities, we
will be required to furnish to you and the Company, such certification, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Securities purchased by us will bear a legend to
the foregoing effect.
5. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be, for an indefinite
period.
6. We are acquiring the Securities purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion, for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act.
You and the Company and yours and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters covered
hereby.
Very truly yours,
[Name of Transferee]
By:
-----------------------------------
[Authorized Signatory]
C-2
<PAGE> 113
EXHIBIT D
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
__________, _____
Fleet National
Bank of Connecticut, Trustee
777 Main Street
Hartford, Connecticut 06115
Re: KCS Energy, Inc. ("the Company") 11%
Senior Notes due 2003, Series A, and 11%
Senior Notes due 2003, Series B (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $______________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knew that the
transaction had been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
D-1
<PAGE> 114
You and the Company and yours and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters covered
hereby. Defined terms used herein without definition have the respective
meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------
[Authorized Signature]
D-2
<PAGE> 1
EXHIBIT 10
- -------------------------------------------------------------------------------
11% SENIOR NOTES DUE 2003
REGISTRATION RIGHTS AGREEMENT
dated January 25, 1996
by and among
KCS ENERGY, INC.,
ENERCORP GAS MARKETING, INC.,
KCS RESOURCES, INC.,
KCS MICHIGAN RESOURCES, INC.,
KCS PIPELINE SYSTEMS, INC.,
KCS ENERGY MARKETING, INC.,
KCS POWER MARKETING, INC.,
KCS ENERGY RISK MANAGEMENT, INC.,
NATIONAL ENERDRILL CORPORATION,
and PROLIQ, INC.
and
SMITH BARNEY INC.,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
NOMURA SECURITIES INTERNATIONAL, INC.
and
PAINEWEBBER INCORPORATED
- -------------------------------------------------------------------------------
<PAGE> 2
This Registration Rights Agreement is made and entered into this 25th
day of January, 1996, by and among KCS Energy, Inc., a Delaware corporation
(the "Company"), Enercorp Gas Marketing, Inc., a Delaware corporation, KCS
Resources, Inc., a Delaware corporation, KCS Michigan Resources, Inc., a
Delaware corporation, KCS Pipeline Systems, Inc., a Delaware corporation, KCS
Energy Marketing, Inc., a New Jersey corporation, KCS Power Marketing, Inc., a
Delaware corporation, KCS Energy Risk Management, Inc., a Delaware corporation,
National Enerdrill Corporation, a New Jersey corporation, Proliq, Inc., a New
Jersey corporation (the "Guarantors" and, together with the Company, the
"Issuers"), Smith Barney Inc. ("Smith Barney"), Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), Nomura Securities International, Inc.
("Nomura") and PaineWebber Incorporated ("PaineWebber" and, together with Smith
Barney, DLJ and Nomura, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
January 19, 1996, among the Company, the Guarantors and Initial Purchasers (the
"Purchase Agreement"). In order to induce the Initial Purchasers to enter into
the Purchase Agreement, the Issuers have agreed to provide the registration
rights provided for in this Agreement to the Initial Purchasers and their
respective direct and indirect transferees. The execution and delivery of this
Agreement is a condition to the closing of the transactions contemplated by the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: As defined in Section 4(a) hereof.
Advice: As defined in the last paragraph of Section 5 hereof.
Affiliate: With respect to any specified person, "Affiliate"
shall mean any other person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified person. For the
purposes of this definition, "control," when used with respect to any person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same
may be amended, supplemented or modified from time to time in accordance with
the terms hereof.
Business Day: Any day except a Saturday, a Sunday or a day on
which banking institutions in New York, New York generally are required or
authorized by law or other government action to be closed.
<PAGE> 3
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Company: As defined in the preamble hereof.
Consummate or consummate: When used to qualify the term
"Exchange Offer" shall mean validly and lawfully to issue and deliver the
Exchange Notes pursuant to the Exchange Offer for all Notes validly tendered
and not validly withdrawn pursuant thereto in accordance with the terms of this
Agreement.
Consummation Date: The date that is 30 Business Days
immediately following the date that the Exchange Registration Statement shall
have been declared effective by the SEC.
Effectiveness Period: As defined in Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC pursuant thereto.
Exchange Date: As defined in Section 2(d) hereof.
Exchange Notes: The 11% Senior Notes due 2003, Series B, of
the Company, guaranteed on a senior unsecured basis by each of the Guarantors,
that are identical to the Notes in all material respects, except that the
provisions regarding restrictions on transfer shall be modified, as
appropriate, and the issuance thereof pursuant to the Exchange Offer shall have
been registered pursuant to an effective Registration Statement in compliance
with the Securities Act.
Exchange Offer: An offer to issue, in exchange for any and
all of the Notes, a like aggregate principal amount of Exchange Notes, which
offer shall be made by the Company pursuant to Section 2 hereof.
Exchange Registration Statement: As defined in Section 2(a)
hereof.
Guarantors: As defined in the preamble hereof.
Indemnified Person: As defined in Section 7(a) hereof.
Indenture: The Indenture, dated as of January 15, 1996, among
the Issuers and Fleet National Bank of Connecticut, as trustee thereunder,
pursuant to which the Notes are issued, as amended or supplemented from time to
time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereof.
Issue Date: As defined in Section 2(a).
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Issuers: As defined in the preamble hereof.
Notes: The 11% Senior Notes due 2003, Series A, of the
Company, guaranteed on a senior unsecured basis by each of the Guarantors,
issued pursuant to the Indenture.
Participating Broker-Dealer: As defined in Section 2(e)
hereof.
Private Exchange: As defined in Section 2(c) hereof.
Private Exchange Notes: As defined in Section 2(c) hereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated pursuant to the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Notes, Exchange
Notes or Private Exchange Notes covered by such Registration Statement, and all
other amendments and supplements to any such prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference, if any, in such prospectus.
Registration Default: As defined in Section 4(a) hereof.
Registration Statement: Any registration statement of the
Company and the Guarantors that covers any of the Notes, Exchange Notes or
Private Exchange Notes pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
<PAGE> 5
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Rule 174: Rule 174 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated by the SEC thereunder.
Shelf Registration: As defined in Section 3 hereof.
Shelf Registration Statement: As defined in Section 3 hereof.
Special Counsel: Vinson & Elkins L.L.P., special counsel to
the holders of Transfer Restricted Securities, or such other counsel as shall
be agreed upon by the Issuers and holders of a majority in aggregate principal
amount of Transfer Restricted Securities, the expenses of which holders of
Transfer Restricted Securities will be reimbursed by the Issuers pursuant to
Section 6.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Notes, upon original
issuance thereof and at all times subsequent thereto, each Exchange Note as to
which Section 3(a)(ii) hereof is applicable upon original issuance and at all
times subsequent thereto and each Private Exchange Note upon original issuance
thereof and at all times subsequent thereto, until in the case of any such
Note, Exchange Note or Private Exchange Note, as the case may be, the earliest
to occur of (i) the date on which any such Note has been exchanged by a person
other than a Participating Broker-Dealer for an Exchange Note (other than with
respect to an Exchange Note as to which Section 3(a)(ii) hereof applies)
pursuant to the Exchange Offer, (ii) with respect to Exchange Notes received by
Participating Broker-Dealers in the Exchange Offer, the earlier of (x) the date
on which such Exchange Note has been sold by such Participating Broker-Dealer
by means of the Prospectus contained in the Exchange Registration Statement and
(y) the date on which the Exchange Registration Statement has been effective
under the Securities Act for a period of 6 months after the Consummation Date,
(iii) a Shelf
<PAGE> 6
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Registration Statement covering such Note, Exchange Note or Private Exchange
Note has been declared effective by the SEC and such Note, Exchange Note or
Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Shelf Registration Statement, (iv) the date on which such
Note, Exchange Note or Private Exchange Note, as the case may be, is
distributed to the public pursuant to Rule 144 (or any similar provisions then
in effect) or is saleable pursuant to Rule 144(k) promulgated by the SEC
pursuant to the Securities Act or (v) the date on which such Note, Exchange
Note or Private Exchange Note, as the case may be, ceases to be outstanding for
purposes of the Indenture or any other indenture under which such Exchange Note
or Private Exchange Note was issued.
Trustee: The trustee under the Indenture.
Underwritten Registration or Underwritten Offering: A
registration in connection with which securities are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
2. Exchange Offer
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the staff of the SEC, the Issuers shall (A)
prepare and, on or prior to 90 days after the date of original issuance of the
Notes (the "Issue Date"), file with the SEC a Registration Statement under the
Securities Act with respect to an offer by the Company to the holders of the
Notes to issue and deliver to such holders, in exchange for Notes, a like
principal amount of Exchange Notes, (B) use their commercially reasonable best
efforts to cause the Registration Statement relating to the Exchange Offer to
be declared effective by the SEC under the Securities Act on or prior to 120
days after the Issue Date, and (C) commence the Exchange Offer and use
commercially reasonable best efforts to issue, on or prior to the Consummation
Date, the Exchange Notes. The offer and sale of the Exchange Notes pursuant to
the Exchange Offer shall be registered pursuant to the Securities Act on the
appropriate form (the "Exchange Registration Statement") and duly registered or
qualified under all applicable state securities or Blue Sky laws and will
comply with all applicable tender offer rules and regulations under the
Exchange Act and state securities or Blue Sky laws. The Exchange Offer shall
not be subject to any condition, other than that the Exchange Offer does not
violate any applicable law or interpretation of the staff of the SEC. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
Issuers shall have no further registration obligations other than with respect
to (i) Private Exchange Notes, (ii) Exchange Notes held by Participating
Broker-Dealers and (iii) Notes or Exchange Notes as to which Section 3(a)(ii)
hereof applies. No securities shall be included in the Exchange Registration
Statement other than the Exchange Notes.
(b) The Issuers may require each holder of Notes as a
condition to its participation in the Exchange Offer to represent to the
Issuers and their counsel in writing (which may be
<PAGE> 7
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contained in the applicable letter of transmittal) that at the time of the
consummation of the Exchange Offer (i) any Exchange Notes received by such
holder will be acquired in the ordinary course of its business, (ii) such
holder will have no arrangement or understanding with any person to participate
in the distribution (within the meaning of the Securities Act) of the Exchange
Notes and (iii) such holder is not an Affiliate of an Issuer, or if it is an
Affiliate of an Issuer, it will comply with the registration and prospectus
delivery requirements of the Securities Act, to the extent applicable.
(c) If, prior to consummation of the Exchange Offer, any of
the Initial Purchasers holds any Notes acquired by it and having, or which are
reasonably likely to be determined to have, the status of an unsold allotment
in the initial distribution, or any other holder of Notes is not entitled to
participate in the Exchange Offer, the Company upon the request of an Initial
Purchaser or any such holder shall, simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to such Initial
Purchaser and any such holder, in exchange (the "Private Exchange") for such
Notes held by such Initial Purchaser and any such holder, a like principal
amount of debt securities of the Company, guaranteed by each of the Guarantors
on a senior unsecured basis, that are identical in all material respects to the
Exchange Notes except as to restrictions on transferability under applicable
securities laws (the "Private Exchange Notes") (and which are issued pursuant
to the same indenture as the Exchange Notes); provided, however, that the
Issuers shall not be required to effect a Private Exchange if in the written
opinion of counsel for the Issuers (a copy of which is delivered to the Initial
Purchasers and any holder of Notes whose request is the subject of such
opinion) such Private Exchange cannot be effected without registration under
the Securities Act. The Private Exchange Notes shall bear the same CUSIP
number as the Exchange Notes.
(d) Unless the Exchange Offer would not be permitted by any
applicable law or interpretation of the staff of the SEC, the Company shall
mail the Exchange Offer Prospectus and appropriate accompanying documents,
including appropriate letters of transmittal, to each holder of Notes
providing, in addition to such other disclosures as are required by applicable
law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Notes validly tendered will be accepted for
exchange;
(ii) the date of acceptance for exchange (the "Exchange
Date"), which date shall in no event be later than the Consummation
Date (unless otherwise required by applicable law);
(iii) that holders of Notes electing to have a Note exchanged
pursuant to the Exchange Offer will be required to surrender such
Note, together with the enclosed letters of transmittal, to the
institution and at the address (located in New York, New York)
specified in the notice prior to the close of business on the Exchange
Date; and
<PAGE> 8
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(iv) that holders of Notes that do not tender all such
securities pursuant to the Exchange Offer may no longer have any
registration rights hereunder with respect to Notes not tendered.
As soon as practicable after the Exchange Date, the Company
shall:
(i) accept for exchange all Notes validly tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private
Exchange; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes so accepted for exchange by the Company, and
issue, cause the Trustee under the Indenture (or the indenture
pursuant to which the Exchange Notes are issued) to authenticate, and
mail to each holder of Notes, Exchange Notes equal in principal amount
to the principal amount of the Notes surrendered by such holder.
(e) The Issuers and each Initial Purchaser acknowledge that
the staff of the SEC has taken the position that any broker-dealer that owns
Exchange Notes that were received by such broker-dealer for its own account in
the Exchange Offer (a "Participating Broker-Dealer") may be deemed to be an
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).
The Issuers and each Initial Purchaser also acknowledge that
it is the SEC staff's position that if the Prospectus contained in the Exchange
Registration Statement includes a plan of distribution containing a statement
to the above effect and the means by which Participating Broker-Dealers may
resell the Exchange Notes, without naming the Participating Broker Dealers or
specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery
obligations under the Securities Act in connection with resales of Exchange
Notes for their own accounts, so long as the Prospectus otherwise meets the
requirements of the Securities Act.
In light of the foregoing, if requested by a Participating
Broker-Dealer, the Issuers agree (x) to use their commercially reasonable best
efforts to keep the Exchange Registration Statement continuously effective for
a period of up to 6 months or such earlier date as each Participating
Broker-Dealer shall have notified the Company in writing that such
Participating Broker-Dealer has resold all Exchange Notes acquired in the
Exchange Offer, (y) to comply with the provisions of Section 5 of this
Agreement, as they relate to the Exchange Offer and the Exchange Registration
Statement, and (z) to deliver to such Participating Broker-Dealer a "cold
comfort" letter of the independent public accountants of the Issuers and a
legal opinion as to matters reasonably
<PAGE> 9
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requested by such Participating Broker-Dealer relating to the Exchange
Registration Statement and the related Prospectus and any amendments or
supplements thereto.
(f) The Initial Purchasers shall have no liability to any
Participating Broker-Dealer with respect to any request made pursuant to
Section 2(e).
(g) Accrued but unpaid interest on any Note that is exchanged
for an Exchange Note or a Private Exchange Note pursuant to this Agreement
shall be paid on or before the first interest payment date on the Exchange
Notes and the Private Exchange Notes, as the case may be.
(h) The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture, except in any case where an Exchange Note constitutes a Transfer
Restricted Security. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent
together on all matters as one class and that neither the Exchange Notes, the
Private Exchange Notes nor the Notes will have the right to vote or consent as
a separate class on any matter.
3. Shelf Registration
(a) If (i) the Company is not permitted to file the Exchange
Offer Registration Statement or to consummate the Exchange Offer because the
Exchange Offer is not permitted by any applicable law or applicable
interpretation of the staff of the SEC or (ii) any holder of a Note notifies
the Company on or prior to the Exchange Date that (A) due to a change in law or
policy it is not entitled to participate in the Exchange Offer, (B) due to a
change in law or policy it may not resell the Exchange Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Registration Statement is not appropriate
or available for such resales by such holder or (C) it is a broker-dealer that
owns Notes (including any Initial Purchaser that holds Notes as part of an
unsold allotment from the original offering of the Notes) acquired directly
from an Issuer or an Affiliate of an Issuer or (iii) any holder of Private
Exchange Notes so requests within 120 days after the consummation of the
Private Exchange (each such event referred to in clauses (i) through (iii), a
"Shelf Filing Event"), the Issuers shall cause to be filed with the SEC
pursuant to Rule 415 a shelf registration statement (the "Shelf Registration
Statement") prior to the later of (x) 90 days after the Issue Date and (y) 30
days after the occurrence of such Shelf Filing Event, relating to all Transfer
Restricted Securities (the "Shelf Registration") the holders of which have
provided the information required pursuant to Section 3(b) hereof, and shall
use their commercially reasonable best efforts to have the Shelf Registration
Statement declared effective by the SEC on or prior to 90 days after the
occurrence of such Shelf Filing Event, provided that if the Company has not
consummated the Exchange Offer within 180 days of the Issue Date,
<PAGE> 10
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then the Issuers shall cause the Shelf Registration Statement to be filed with
the SEC on or prior to the 181st day after the Issue Date and shall use their
commercially reasonable best efforts to have the Shelf Registration Statement
declared effective by the SEC within 60 days of the date of filing thereof. In
such circumstances, the Issuers shall use their commercially reasonable best
efforts to keep the Shelf Registration Statement continuously effective under
the Securities Act, until (A) the third anniversary of the Issue Date (subject
to extension pursuant to the last paragraph of Section 5 hereof) or (B) if
sooner, the date immediately following the date that all Transfer Restricted
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto (the "Effectiveness Period"); provided, however, that the Effectiveness
Period shall be extended to the extent required to permit dealers to comply
with the applicable prospectus delivery requirements of Rule 174 and as
otherwise provided herein.
(b) No holder of Transfer Restricted Securities may include
any of its Transfer Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such holder furnishes to the
Company in writing, within 20 days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with
any Shelf Registration Statement or Prospectus or preliminary prospectus
included therein. No holder of Transfer Restricted Securities shall be entitled
to Additional Interest pursuant to Section 4 hereof unless and until such
holder shall have provided all such reasonably requested information. Each
holder of Transfer Restricted Securities as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information
previously furnished to the Company by such holder not materially misleading.
4. Additional Interest
(a) The parties hereto agree that the holders of Transfer
Restricted Securities will suffer damages if the Issuers fail to fulfill their
obligations pursuant to Section 2 or Section 3, as applicable, and that it
would not be feasible to ascertain the extent of such damages. Accordingly, in
the event that (i) the applicable Registration Statement is not filed with the
SEC on or prior to the date specified herein for such filing, (ii) the
applicable Registration Statement has not been declared effective by the SEC on
or prior to the date specified herein for such effectiveness after such
obligation arises, (iii) if the Exchange Offer is required to be Consummated
hereunder, the Company has not exchanged Exchange Notes for all Notes validly
tendered and not validly withdrawn in accordance with the terms of the Exchange
Offer by the Consummation Date or (iv) the applicable Registration Statement is
filed and declared effective but shall thereafter cease to be effective without
being succeeded immediately by any additional Registration Statement covering
the Notes, the Exchange Notes or the Private Exchange Notes, as the case may
be, which has been filed and declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default"), then the interest rate on
Transfer Restricted Securities will increase ("Additional Interest"), with
<PAGE> 11
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respect to the first 90-day period immediately following the occurrence of such
Registration Default, by 0.50% per annum and will increase by an additional
0.50% per annum with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of 2% per annum
with respect to all Registration Defaults. Following the cure of a Registration
Default, the accrual of Additional Interest with respect to such Registration
Default will cease and upon the cure of all Registration Defaults the interest
rate will revert to the original rate.
(b) The Company shall notify the Trustee and paying agent
under the Indenture (or the trustee and paying agent under such other indenture
under which the Transfer Restricted Securities are issued) immediately upon the
happening of each and every Registration Default. The Company shall pay the
Additional Interest due on the Transfer Restricted Securities by depositing
with the paying agent (which shall not be the Company for these purposes) for
the Transfer Restricted Securities, in trust, for the benefit of the holders
thereof, prior to 11:00 A.M. on the next interest payment date specified by the
Indenture (or such other indenture), sums sufficient to pay the Additional
Interest then due. The Additional Interest due shall be payable on each
interest payment date specified by the Indenture (or such other indenture) to
the record holder entitled to receive the interest payment to be made on such
date. Each obligation to pay Additional Interest shall be deemed to accrue from
and including the applicable Registration Default.
(c) The parties hereto agree that the Additional Interest
provided for in this Section 4 constitutes a reasonable estimate of the damages
that will be suffered by holders of Transfer Restricted Securities by reason of
the happening of any Registration Default.
5. Registration Procedures
In connection with the Issuers' registration obligations
hereunder, the Issuers shall effect such registrations on the appropriate form
available for the sale of the Notes, the Exchange Notes or Private Exchange
Notes, as applicable, to (i) in the case of the Exchange Offer, permit the
exchange of Exchange Notes for Notes in the Exchange Offer and, if applicable,
resales of Exchange Notes by Participating Broker-Dealers and (ii) in the case
of a Shelf Registration, permit the sale of the applicable Transfer Restricted
Securities in accordance with the method or methods of disposition thereof
specified by the holders of such Transfer Restricted Securities, and pursuant
thereto the Issuers shall as expeditiously as practicable:
(a) In the case of a Shelf Registration, a reasonable period
of time prior to the initial filing of a Shelf Registration Statement
or Prospectus and a reasonable period of time prior to the filing of
any amendment or supplement thereto (including any document that would
be incorporated or deemed to be incorporated therein by reference),
furnish to the holders of the Transfer Restricted Securities included
in such Shelf Registration Statement, their Special
<PAGE> 12
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Counsel and the managing underwriters, if any, copies of all such
documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be
subject to the review of such holders, their Special Counsel and such
underwriters, if any, and cause the officers and directors of the
Issuers, counsel to the Issuers and independent certified public
accountants to the Issuers to respond to such reasonable inquiries as
shall be necessary, in the opinion of respective counsel to such
holders and such underwriters, to conduct a reasonable investigation
within the meaning of the Securities Act; provided, however, that the
foregoing inspection and information gathering shall be coordinated on
behalf of the Initial Purchasers by Smith Barney, and on behalf of any
other persons by one counsel designated by and on behalf of such other
persons; and provided, further, that the Issuers shall not be deemed
to have kept a Shelf Registration Statement effective during the
applicable period if any of them voluntarily takes or fails to take
any reasonable action that results in holders of the Transfer
Restricted Securities covered thereby not being able to sell such
Transfer Restricted Securities pursuant to Federal securities laws
during that period (and the time period during which such Shelf
Registration Statement is required to remain effective hereunder shall
be extended by the number of days during which such holders of
Transfer Restricted Securities are not able to sell such Transfer
Restricted Securities). The Issuers shall not file any such Shelf
Registration Statement or related Prospectus or any amendments or
supplements thereto which the holders of a majority in aggregate
principal amount of the Transfer Restricted Securities included in
such Shelf Registration Statement shall reasonably object on a timely
basis;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective
for the applicable time period required hereunder; cause the related
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424; and comply
with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such Registration Statement as so amended or in such Prospectus as so
supplemented;
(c) Notify the holders of Transfer Restricted Securities to
be sold or, in the case of an Exchange Offer, tendered for, their
Special Counsel and the managing underwriters, if any, promptly, and
(if requested by any such person), confirm such notice in writing,
(i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment is proposed to be filed, and (B) with respect
to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements
to a Registration Statement or related Prospectus or for additional
information, (iii) of the issuance by the
<PAGE> 13
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SEC, any state securities commission, any other governmental agency or
any court of any stop order, order or injunction suspending or
enjoining the use of a Prospectus or the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Notes, Exchange Notes or Private Exchange
Notes for sale in any jurisdiction, or the initiation or threatening
of any proceeding for such purpose, and (v) of the happening of any
event or information becoming known that makes any statement made in a
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in
such Registration Statement, Prospectus or documents so that it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that, in the case of a
Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(d) Use their commercially reasonable best efforts to avoid
the issuance of or, if issued, obtain the withdrawal of any order
enjoining or suspending the use of a Prospectus or the effectiveness
of a Registration Statement or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Notes,
Exchange Notes or Private Exchange Notes for sale in any jurisdiction,
at the earliest practicable moment;
(e) If a Shelf Registration Statement is filed pursuant to
Section 3 hereof and if requested by the managing underwriters, if
any, or the holders of a majority in aggregate principal amount of the
Transfer Restricted Securities being sold pursuant to such Shelf
Registration Statement, (i) as soon as practicable incorporate in a
Prospectus supplement or post-effective amendment such information as
the managing underwriters, if any, and such holders reasonably believe
should be included therein, and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment under the
Securities Act as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that the
Issuers shall not be required to take any action pursuant to this
Section 5(e) that would, in the opinion of counsel for the Issuers,
violate applicable law;
(f) Upon written request to the Company, furnish to each
holder of Notes, Exchange Notes or Private Exchange Notes to be
exchanged or sold pursuant to a Registration Statement, their Special
Counsel and each managing underwriter, if any, without charge, at
least one conformed copy of such Registration Statement and each
amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be
<PAGE> 14
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incorporated therein by reference, and all exhibits to the extent
requested (including those previously furnished or incorporated by
reference) as soon as practicable after the filing of such documents
with the SEC;
(g) Deliver to each holder of Notes, Exchange Notes or
Private Exchange Notes to be exchanged or sold pursuant to a
Registration Statement, their Special Counsel, and the underwriters,
if any, without charge, as many copies of the Prospectus (including
each form of prospectus) and each amendment or supplement thereto as
such persons reasonably request; and, subject to the provisions of the
last paragraph of this Section 5, the Issuers hereby consent to the
use of such Prospectus and each amendment or supplement thereto by
each of the selling holders of Transfer Restricted Securities and the
underwriters, if any, in connection with the offering and sale of the
Transfer Restricted Securities covered by such Prospectus and any
amendment or supplement thereto;
(h) Prior to any public offering of Notes, Exchange Notes or
Private Exchange Notes, use their commercially reasonable best efforts
to register or qualify or cooperate with the holders of Notes,
Exchange Notes or Private Exchange Notes to be sold or tendered for,
the underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such
registration or qualification) of such Notes, Exchange Notes or
Private Exchange Notes for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as any such
holder or underwriter reasonably requests in writing; keep each such
registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept
effective hereunder and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the
Notes, Exchange Notes or Private Exchange Notes covered by the
applicable Registration Statement; provided, however, that the Issuers
shall not be required to (i) qualify generally to do business in any
jurisdiction where they are not then so qualified or (ii) take any
action which would subject them to general service of process or to
taxation in any jurisdiction where they are not so subject;
(i) In connection with any sale or transfer of Transfer
Restricted Securities that will result in such securities no longer
being Transfer Restricted Securities, cooperate with the holders
thereof and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold, which certificates shall not bear
any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company and to enable such Transfer
Restricted Securities to be in such authorized denominations and
registered in such names as the managing underwriters, if any, or such
holders may request at least two Business Days prior to any sale of
Transfer Restricted Securities;
<PAGE> 15
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(j) Upon the occurrence of any event contemplated by Section
5(c)(v), as promptly as practicable, prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to
each Registration Statement or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(k) Prior to the effective date of the Exchange Registration
Statement, to provide a CUSIP number for the Exchange Notes (and
Private Exchange Notes if applicable);
(l) If a Shelf Registration Statement is filed pursuant to
Section 3 hereof, enter into such agreements (including an
underwriting agreement in form, scope and substance as is customary in
underwritten offerings) and take all such other reasonable actions in
connection therewith (including those reasonably requested by the
managing underwriters, if any, or the holders of a majority in
aggregate principal amount of the Transfer Restricted Securities being
sold) in order to expedite or facilitate the disposition of such
Transfer Restricted Securities, and, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration, (i) make such representations and
warranties to the holders of such Transfer Restricted Securities and
the underwriters, if any, with respect to the business of the Company
and its subsidiaries (including with respect to businesses or assets
acquired or to be acquired by any of them), and the Shelf Registration
Statement, Prospectus and documents, if any, incorporated or deemed to
be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Issuers and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and
Special Counsel to the holders of the Transfer Restricted Securities
being sold), addressed to each selling holder of Transfer Restricted
Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such Special
Counsel and underwriters; (iii) use their commercially reasonable best
efforts to obtain customary "cold comfort" letters and updates thereof
from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of
any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is
required to be, included in the Shelf Registration Statement),
addressed (where reasonably possible) to each selling holder of
Transfer Restricted Securities and each of the underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort"
<PAGE> 16
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letters in connection with underwritten offerings; (iv) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the
selling holders and the underwriters, if any, than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable
to holders of a majority in aggregate principal amount of Transfer
Restricted Securities covered by such Shelf Registration Statement and
the managing underwriters, if any); and (v) deliver such documents and
certificates as may be reasonably requested by the holders of a
majority in aggregate principal amount of the Transfer Restricted
Securities being sold, their Special Counsel and the managing
underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above and
to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Issuers;
(m) In the case of a Shelf Registration, make available for
inspection by a representative of the holders of Transfer Restricted
Securities being sold, any underwriter participating in any such
disposition of Transfer Restricted Securities, and any attorney,
consultant or accountant retained by such selling holders or
underwriter, at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries
(including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the
Company), and cause the officers, directors, agents and employees of
the Company and its subsidiaries (including with respect to businesses
and assets acquired or to be acquired to the extent that such
information is available to the Company) to supply all information in
each case reasonably requested by any such representative,
underwriter, attorney, consultant or accountant in connection with
such Shelf Registration; provided,however, that such persons shall
first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such
information is required by court or administrative order or is
necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any
disclosure requirements pursuant to Federal securities laws in
connection with the filing of the Shelf Registration Statement or the
use of any Prospectus), (iii) such information becomes generally
available to the public other than as a result of a disclosure or
failure to safeguard such information by such person or (iv) such
information becomes available to such person from a source other than
the Company and its subsidiaries and such source is not bound by a
confidentiality agreement; and provided, further, that, before
disclosing such information pursuant to clause (i) or (ii) of this
Section 5(m), such person shall notify the Company as soon as
practicable so that the Company may seek a protective order or other
remedy and the foregoing inspection and information gathering shall be
coordinated on behalf of the Initial Purchasers by Smith
<PAGE> 17
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Barney and on behalf of any other persons, by one counsel designated
by and on behalf of such other persons;
(n) Provide an indenture trustee for the Notes and/or the
Exchange Notes and Private Exchange Notes, as the case may be, and
cause an indenture to be qualified under the TIA not later than the
effective date of the first Registration Statement relating to the
Notes and/or the Exchange Notes and Private Exchange Notes, as the
case may be; and if such indenture shall be the Indenture, in
connection therewith, cooperate with the Trustee and the holders of
the Notes and/or the Exchange Notes and Private Exchange Notes, to
effect such changes to the Indenture as may be required for the
Indenture to be (or to remain) so qualified in accordance with the
terms of the TIA; and execute, and use its commercially reasonable
best efforts to cause the Trustee to execute, all customary documents
as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to
be (or to remain) so qualified in a timely manner; and
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to their security holders earning
statements satisfying the provisions of Section ll(a) of the
Securities Act and Rule 158, no later than 45 days after the end of
any 12-month period (or 90 days after the end of any 12-month period
if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or reasonable efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter after the
effective date of a Registration Statement, which statement shall
cover said period, consistent with the requirements of Rule 158;
(p) Cooperate with each seller of Transfer Restricted
Securities covered by any Registration Statement and each underwriter,
if any, participating in the disposition of such Transfer Restricted
Securities and their respective counsel in connection with any filings
required to be made with the National Association of Securities
Dealers, Inc.
The Issuers may require a holder of Transfer Restricted
Securities to be included in a Registration Statement to furnish to the Issuers
such information as is required by law to be disclosed by such holder in such
Registration Statement, and the Issuers may exclude from such Registration
Statement the Transfer Restricted Securities of any holder who unreasonably
fails to furnish such information within a reasonable time after receiving such
request.
If any such Registration Statement refers to any holder by
name or otherwise as the holder of any securities of an Issuer, then such
holder shall have the right to require (i) the insertion therein of language,
in form and substance reasonably satisfactory to such holder, to the effect
that the holding by such holder of such securities is not to be construed as a
recommendation by such
<PAGE> 18
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holder of the investment quality of the Issuers' securities covered thereby and
that such holding does not imply that such holder will assist in meeting any
future financial requirements of the Issuers, or (ii) in the event that such
reference to such holder by name or otherwise is not required by the Securities
Act, the deletion of the reference to such holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
In the case of a Shelf Registration pursuant to Section 3
hereof, each holder of Transfer Restricted Securities agrees by acquisition of
such Transfer Restricted Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
5(c)(ii), 5(c)(iii), 5(c)(iv) or 5(c)(v) hereof, such holder will forthwith
discontinue (i) disposition of such Transfer Restricted Securities covered by
such Registration Statement or Prospectus and (ii) use of such Prospectus until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. If the Company shall give any such notice, the
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each holder of Transfer Restricted Securities covered by such
Registration Statement shall have received (x) the copies of the supplemented
or amended Prospectus contemplated by Section 5(j) hereof or (y) the Advice,
and, in either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus.
6. Registration Expenses
All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the Issuers
whether or not any Registration Statement is filed or becomes effective and
whether or not any Notes, Exchange Notes or Private Exchange Notes are issued
or sold pursuant to any Registration Statement. The fees and expenses referred
to in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the National Association
of Securities Dealers, Inc. and (B) in compliance with securities or Blue Sky
laws), (ii) printing expenses (including, without limitation, expenses of
printing Prospectuses), (iii) reasonable fees and disbursements of counsel for
the Issuers and the Special Counsel, (iv) reasonable fees and disbursements of
all independent certified public accountants referred to in Section 2(e) and
Section 5(1)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (v) if required, the reasonable fees and expenses of any
"qualified independent underwriter" and its counsel, and (vi) reasonable fees
and expenses of all other persons retained by the Issuers. In addition, the
Issuers
<PAGE> 19
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shall pay their internal expenses (including, without limitation, all salaries
and expenses of their respective officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the Notes, Exchange Notes or Private
Exchange Notes to be registered on any securities exchange. Notwithstanding the
foregoing or anything in this Agreement to the contrary, each holder of
Transfer Restricted Securities shall pay all underwriting discounts and
commissions of any underwriters with respect to any Notes, Exchange Notes or
Private Exchange Notes sold by it.
7. Indemnification
(a) The Issuers agree, jointly and severally, to indemnify
and hold harmless (i) each of the Initial Purchasers, each holder of Notes,
Exchange Notes and Private Exchange Notes and each Participating Broker-Dealer,
(ii) each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) any of the foregoing (any of the persons
referred to in this clause (ii) being hereinafter referred to as a
("controlling person"), and (iii) the respective officers, directors, partners,
employees, representatives and agents of the Initial Purchasers, each holder of
Notes, Exchange Notes and Private Exchange Notes, each Participating
Broker-Dealer and any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Person"), from
and against any and all losses, claims, damages, liabilities and judgments
arising out of or relating to any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or in any amendment or supplement thereto, or arising
out of or relating to any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or preliminary prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any Indemnified Person
furnished in writing to the Issuers by or on behalf of such Indemnified Person
expressly for use therein, provided that the foregoing indemnity with respect
to any preliminary prospectus shall not inure to the benefit of any Indemnified
Person from whom the person asserting such losses, claims, damages, liabilities
and judgments purchased securities if such untrue statement or omission or
alleged untrue statement or omission made in such preliminary prospectus is
eliminated or remedied in the Prospectus and a copy of the Prospectus shall not
have been furnished to such person despite the Issuers' having previously
furnished sufficient copies of the Prospectus on a timely basis to permit such
furnishing.
(b) In case any action shall be brought against any
Indemnified Person, based upon any Registration Statement or any such
Prospectus or preliminary prospectus or any amendment or supplement thereto and
with respect to which indemnity may be sought against the Issuers hereunder,
such Indemnified Person shall promptly notify the Issuers in writing and the
Company
<PAGE> 20
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shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Person and payment of all fees and
expenses. Any Indemnified Person shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified
Person, unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Issuers, (ii) the Company shall have failed to
assume the defense and employ counsel or pay all such fees and expenses or
(iii) the named parties to any such action (including any impleaded parties)
include both such Indemnified Person and an Issuer and such Indemnified Person
shall have been advised by its counsel that representation of such Indemnified
Person and such Issuer by the same counsel would be inappropriate because there
may be one or more legal defenses available to it which are different from or
additional to those available to any such Issuer (in which case the Company
shall not have the right to assume the defense of such action on behalf of such
Indemnified Person, it being understood, however, that the Issuers shall not,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Indemnified Persons, which firm shall be designated in writing by such
Indemnified Persons, and that all such reasonable fees and expenses shall be
reimbursed as they are incurred). The Issuers shall not be liable for any
settlement of any such action effected without their written consent but if
settled with the written consent of the Issuers, the Issuers agree, jointly and
severally, to indemnify and hold harmless each Indemnified Person from and
against any loss or liability by reason of such settlement. No Issuer shall,
without the prior written consent of each Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
(c) In connection with any Registration Statement pursuant to
which a holder of Transfer Restricted Securities offers or sells Transfer
Restricted Securities, such holder agrees, severally and not jointly, to
indemnify and hold harmless the Issuers, their respective directors and
officers and any person controlling an Issuer within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Issuers to each Indemnified Person but only
with respect to information relating to such holder furnished in writing by or
on behalf of such holder expressly for use in such Registration Statement. In
any such case in which any action shall be brought against an Issuer, any
director or officer of an Issuer or any person controlling an Issuer based on
such Registration Statement and in respect of which indemnity may be sought
against a holder of Transfer Restricted Securities, such holder shall have the
rights and duties given to the Issuers (except that if an Issuer shall have
assumed the defense thereof, such holder shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense
<PAGE> 21
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of such holder), and the Issuers, their respective directors and officers and
any person controlling an Issuer shall have the rights and duties given to the
Indemnified Persons by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by each indemnifying party on the one
hand and the indemnified party on the other hand from the offering of the
Notes, the Exchange Notes or the Private Exchange Notes, as the case may be (it
being expressly understood and agreed that the relative benefits received by
the Issuers from the offering of the Notes, Exchange Notes or Private Exchange
Notes, as the case may be, shall be the amount of the net proceeds received by
the Company from the sale of the Notes to the Initial Purchasers), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each
indemnifying party on the one hand and the indemnified party on the other hand
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of each indemnifying party on the
one hand and the indemnified party on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by an indemnifying party or such indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Issuers and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Indemnified Persons were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Indemnified Person shall be required to contribute any amount in excess of the
amount by which the proceeds received by it in connection with the sale of the
Notes, Exchange Notes or Private Exchange Notes contemplated by this Agreement
exceeds the amount of any damages which such Indemnified Person has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section ll(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Indemnified Person's obligations to contribute pursuant
to this
<PAGE> 22
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Section 7(d) are several in proportion to the respective amount of Notes,
Exchange Notes or Private Exchange Notes included in any such Registration
Statement by each Indemnified Person and not joint.
8. Rules 144 and 144A
Each of Issuers shall use its commercially reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time it is not required
to file such reports but in the past had been required to or did file such
reports, it will, upon the request of any holder of Transfer Restricted
Securities, make available other information as required by, and so long as
necessary to permit, sales of its Transfer Restricted Securities pursuant to
Rule 144A. Notwithstanding the foregoing, nothing in this Section 8 shall be
deemed to require an Issuer to register any of its securities pursuant to the
Exchange Act.
9. Underwritten Registrations
If any of the Transfer Restricted Securities covered by any
Shelf Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the holders of a majority in aggregate principal
amount of such Transfer Restricted Securities included in such offering,
subject to the consent of the Company (which will not be unreasonably withheld
or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by an Issuer or
by a holder of Notes, Exchange Notes or Private Exchange Notes of any of its
obligations under this Agreement, each holder of Notes, Exchange Notes or
Private Exchange Notes and each Issuer, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. Subject to
Section 4 hereof, the Issuers and each holder of Notes, Exchange Notes and
Private Exchange Notes agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach of any of the
provisions of this Agreement and each hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
<PAGE> 23
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(b) No Inconsistent Agreements. The Issuers will not
enter into any agreement with respect to their securities that is inconsistent
with the rights granted to the holders of Notes, Exchange Notes and Private
Exchange Notes and Indemnified Persons in this Agreement or otherwise conflicts
with the provisions hereof. Without the written consent of the holders of a
majority in aggregate principal amount of the outstanding Transfer Restricted
Securities, the Issuers shall not grant to any person any rights which conflict
with or are inconsistent with the provisions of this Agreement.
(c) No Piggyback on Registrations. The Issuers shall not
grant to any of their security holders (other than the holders of Transfer
Restricted Securities in such capacity) the right to include any of their
securities in any Registration Statement other than Transfer Restricted
Securities.
(d) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, otherwise than with the prior written
consent of the holders of not less than a majority of the then outstanding
aggregate principal amount of Transfer Restricted Securities; provided,
however, that, for the purposes of this Agreement, Transfer Restricted
Securities that are owned, directly or indirectly, by the Issuers or any of
their Affiliates are not deemed outstanding. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of holders of Transfer Restricted
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect the rights of other holders of
Transfer Restricted Securities may be given by holders of a majority in
aggregate principal amount of the Transfer Restricted Securities being sold by
such holders pursuant to such Registration Statement; and provided, further,
that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence. Notwithstanding the foregoing, no amendment, modification,
supplement, waiver or consent with respect to Section 7 shall be made or given
otherwise than with the prior written consent of each Indemnified Person
affected thereby.
(e) Notices. All notices and other communications
provided for herein shall be made in writing by hand-delivery, next-day air
courier, certified first-class mail, return receipt requested, telex or
telecopier:
(i) if to the Issuers, as provided in the Purchase
Agreement,
(ii) if to the Initial Purchasers, as provided in the
Purchase Agreement, or
<PAGE> 24
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(iii) if to any other person who is then the registered
holder of Notes, Exchange Notes or Private Exchange Notes, to the
address of such holder as it appears in the register therefor of the
Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each holder of Notes, Exchange
Notes and Private Exchange Notes. The Issuers may not assign any of their
rights or obligations hereunder without the prior written consent of each
holder of Transfer Restricted Securities and each Indemnified Person.
Notwithstanding the foregoing, no successor or assignee of an Issuer shall have
any of the rights granted under this Agreement until such person shall
acknowledge its rights and obligations hereunder by a signed written statement
of such person's acceptance of such rights and obligations.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement.
(h) Governing Law; Submission to Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YOUR. THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF ANY COMPETENT NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the
<PAGE> 25
-24-
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement, unless
expressly stated otherwise.
<PAGE> 26
-25-
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
KCS ENERGY, INC.
By: /s/ JAMES W. CHRISTMAS
Name: James W. Christmas
Title: President
ENERCORP GAS MARKETING, INC.,
KCS RESOURCES, INC.,
KCS MICHIGAN RESOURCES, INC.,
KCS PIPELINE SYSTEMS, INC.,
KCS ENERGY MARKETING, INC.,
KCS POWER MARKETING, INC.,
KCS ENERGY RISK MANAGEMENT, INC.,
NATIONAL ENERDRILL CORPORATION AND
PROLIQ, INC.
By: /s/ HENRY A. JURAND
---------------------------
Henry A. Jurand
Vice President
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NOMURA INTERNATIONAL SECURITIES, INC.
PAINEWEBBER INCORPORATED
BY: SMITH BARNEY INC.
By: /s/ JOSEPH P. MCGRATH, JR.
-------------------------------
Joseph P. McGrath, Jr.
Vice President
<PAGE> 1
EXHIBIT 99
NEWS RELEASE [KCS ENERGY, INC. LOGO]
- --------------------------------------------------------------------------------
AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD
Henry Jurand Marianne Stewart (General Info.) 212-661-8030
Chief Financial Officer Judith Sylk-Siegel (Media) 212-661-8030
(908) 632-1770 Brendan Fitzpatrick (Analyst) 312-266-7800
FOR IMMEDIATE RELEASE
THURSDAY, JANUARY 25, 1996
KCS ENERGY, INC. COMPLETES PRIVATE OFFERING
$150,000,000 OF SENIOR NOTES, DUE JANUARY 15, 2003
EDISON, NJ, JANUARY 25, 1996 -- KCS Energy, Inc. (NYSE: KCS) today announced it
completed a Rule 144A private offering of $150,000,000 aggregate principal
amount of senior notes at an interest rate of 11% due January 15, 2003 (the
"Notes"). The Notes are noncallable for four years and are unsecured
obligations of KCS Energy, Inc., ranking pari passu in right of payment with
all future senior indebtedness of the Company. The Notes are guaranteed on a
senior unsecured basis by each of the Company's subsidiaries. The estimated
net proceeds of the offering of $145,000,000 will be used to reduce the amounts
outstanding under the Company's bank credit facilities to approximately
$25,000,000. The credit facilities had been increased to reflect the Company's
recently completed $33,000,000 Rocky Mountain and $31,000,000 Michigan
acquisitions. The Notes are rated B1 by Moody's Investor Service and B- with a
positive outlook by Standard and Poor's.
KCS Energy's President and Chief Executive Officer James W. Christmas
commented, "The successful completion of this offering allows us to repay
existing bank indebtedness and consolidate our remaining debt. The financing
will strengthen our balance sheet and secure a foundation for KCS' continued
long-term growth."
Smith Barney Inc. was the lead underwriter for the placement.
Co-managers were Donaldson, Lufkin & Jenrette, Nomura Securities and
PaineWebber Securities.
KCS is an independent energy company primarily engaged in the
acquisition, exploration, development and production of natural gas and crude
oil. The Company also operates a natural gas transportation business and an
energy marketing and service business.
