<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 1994
REGISTRATION NO. 33-52807
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
SNYDER OIL CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 75-2306158
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
777 MAIN STREET
FORT WORTH, TEXAS 76102
(817) 338-4043
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
PETER E. LORENZEN
SNYDER OIL CORPORATION
777 MAIN STREET
FORT WORTH, TEXAS 76102
(817) 882-5905
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
THOMAS W. BRIGGS KERRY C. L. NORTH
KELLY, HART & HALLMAN, P.C. BAKER & BOTTS, L.L.P.
201 MAIN STREET 2001 ROSS AVENUE
FORT WORTH, TEXAS 76102 DALLAS, TEXAS 75201
(817) 332-2500 (214) 953-6500
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) PRICE(1) FEE(2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Convertible Subordinated Notes
Due 2001............................... $115,000,000(3) 100% $115,000,000 $39,656(5)
- ------------------------------------------------------------------------------------------------------
Common Stock (par value $.01 per
share)................................. (4) -- -- --
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Pursuant to Rule 457, the registration fee has been calculated solely on
the basis of the proposed maximum aggregate offering price of the %
Convertible Subordinated Notes Due 2001 (the "Notes").
(3) Includes $15,000,000 principal amount of Notes subject to the Underwriters'
over-allotment option.
(4) Such indeterminate number of shares as may be issuable on conversion of the
Notes, including such additional shares as may be issuable as a result of
adjustments to the conversion rate.
(5) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED MAY 5, 1994
<TABLE>
<S> <C> <C>
(SOCO LOGO) $100,000,000
Snyder Oil Corporation
</TABLE>
% Convertible Subordinated Notes Due 2001
Interest Payable March 31 and September 30 Due March 31, 2001
------------------
The Notes are convertible into Common Stock of Snyder Oil Corporation (the
"Company") at any time on or prior to maturity, unless previously redeemed,
at a conversion price of $ per share, subject to adjustment in certain
events. On May 4, 1994, the last reported sale price for the Common
Stock on the New York Stock Exchange
(Symbol: SNY) was $19 7/8 per share.
The Notes are redeemable, in whole or in part, at the option of the Company at
any time on or after March 31, 1997, at the redemption prices set forth herein
plus accrued interest to the date of redemption. Upon a Change of Control
(as defined) which constitutes a Repurchase Event (as defined), each
holder of Notes will have the right, subject to certain conditions
and restrictions, to require the Company to repurchase outstanding
Notes owned by such holder at their principal amount plus accrued
interest. The Notes are subordinated to all Senior Indebtedness
(as defined) of the Company.
The Notes have been approved for listing on the New York Stock Exchange, subject
to official notice of issuance.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Company(1)(2)
--------------- ---------------- ----------------
<S> <C> <C> <C>
Per Note...........................................
Total(3)...........................................
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from May , 1994.
(2) Before deduction of expenses payable by the Company estimated at $500,000.
(3) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to an additional
$15,000,000 principal amount of Notes in order to cover over-allotments of
Notes. If the option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ ,
$ , and $ , respectively.
------------------
The Notes are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Notes, in temporary or definitive fully registered form, will be made on or
about May , 1994. If temporary Notes are delivered, definitive Notes will be
available for exchange as soon as practicable after such date.
CS First Boston
PaineWebber Incorporated
Petrie Parkman & Co.
Smith Barney Shearson Inc.
The date of this Prospectus is May , 1994.
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES OFFERED
HEREBY AND THE COMPANY'S COMMON STOCK AND PREFERRED STOCK AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
(MAP OF THE UNITED STATES SHOWING THE LOCATIONS OF THE COMPANY'S
MAJOR GAS FACILITIES, CORPORATE OFFICES, FIELD OFFICES
AND MAJOR PRODUCING PROPERTIES)
Unless otherwise indicated in this Prospectus, as used herein, the term
"Btu" means British Thermal Unit, the term "MMBtu" means million Btus, the term
"Mcf " means thousand cubic feet, the term "MMcf " means million cubic feet, the
term "Bcf " means billion cubic feet, the term "Bbl" means barrel, the term
"MBbl" means thousand barrels, the term "MMBbl" means million barrels, the term
"BOE" means barrel of oil equivalent, the term "MBOE" means thousand barrels of
oil equivalent and the term "MMBOE" means million barrels of oil equivalent. Gas
is converted into a barrel of oil equivalent based on six Mcf of gas to one Bbl
of oil, except as otherwise described herein. A "gross acre" or "gross well" is
an acre or well in which an interest is owned. "Net acres" or "net wells" are
obtained by multiplying gross acres or wells by the Company's working interest
in the applicable properties.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Prospectus.
All information giving effect to this Offering assumes that the Underwriters'
over-allotment option is not exercised unless otherwise noted.
THE COMPANY
Snyder Oil Corporation (the "Company") is engaged in the development and
acquisition of oil and gas properties primarily in the Rocky Mountain region of
the United States. The Company also gathers, transports, processes and markets
natural gas generally in proximity to its principal producing properties. Over
the five year period from 1988 to 1993, revenues increased from $14.7 million to
$229.9 million, net income increased from $5.1 million to $25.7 million and net
cash provided by operations increased from $8.1 million to $68.3 million. At
December 31, 1993, the Company's net proved reserves totaled 103.6 MMBOE, having
a pretax present value at constant prices of $390.4 million. Approximately 69%
of its proved reserves are natural gas.
Approximately 90% of the present value of the Company's proved reserves is
concentrated in five major producing areas located in Colorado, Wyoming and
Texas. In total, the Company's properties are located in 15 states and the Gulf
of Mexico and include 5,122 gross (2,187 net) producing wells and nine gas
transportation and processing facilities. The Company operates more than 2,100
wells which account for over 90% of its developed reserves. In addition to its
domestic operations, the Company is also participating in several international
exploration and development projects through its wholly owned subsidiary, SOCO
International, Inc., and through its 36% owned affiliate, Command Petroleum
Holdings NL. At December 31, 1993, the Company held undeveloped acreage totaling
539,000 gross acres (326,000 net) domestically and 4.3 million gross acres (3.3
million net) internationally.
The Company has pursued a balanced strategy of development drilling and
acquisitions, focusing on operating efficiency and enhanced profitability
through the concentration of assets in selected geographic areas or "hubs."
Currently, the primary emphasis of the Company's growth strategy is development
drilling in the Rockies, mainly the Wattenberg Field in the Denver-Julesburg
Basin ("DJ Basin") of Colorado where the Company drilled 323 wells in 1993. In
implementing this strategy in the Wattenberg Field over the past three years,
the Company has achieved the following: (i) drilled approximately 667 wells, 660
of which are currently producing; (ii) increased production more than five
times, from an average of 2.6 MBOE per day in 1991 to an average of 13.3 MBOE
per day in 1993; (iii) increased proved reserves nearly 50% from 37.9 MMBOE at
yearend 1991 to 55.2 MMBOE at yearend 1993; and (iv) generally reduced drilling
and completion costs by approximately 30% through a combination of aggressive
cost cutting, economies of scale and technological improvements. Through a major
joint venture with Union Pacific Resources Company, as well as acquisitions and
leasing, the Company has accumulated a substantial inventory of potential
drilling locations, including 1,102 locations that were classified as proved
undeveloped at December 31, 1993.
In 1993, the Company embarked on a program to apply the experience gained
in the Wattenberg Field to two other large scale gas developments in the
Rockies. In the Washakie Basin of southern Wyoming (the "East Washakie
Project"), the Company currently operates 128 wells and holds a significant
inventory of potential drilling locations, including 98 locations that were
classified as proved undeveloped at December 31, 1993. The Company has also
initiated the development of a third hub in the Rockies through three purchase
transactions, as well as farmouts and leasing. As a result, the Company
currently holds a significant inventory of potential drilling locations in the
Piceance and Uinta Basins of Colorado and Utah (collectively, the "Western Slope
Project"), including 101 locations that were classified as proved undeveloped at
December 31, 1993.
During 1994, the Company intends to continue development in the DJ Basin
and to increase activity in the East Washakie and Western Slope Projects. The
Company expects to spend $175 to $200 million for development drilling and
expansion of gas facilities in 1994, including the drilling of over 650 wells,
500 of which are planned for the Wattenberg Field and up to 90 for the East
Washakie and Western Slope Projects. As part of this program, the Company will
emphasize the improvement of well economics through the use of technological
improvements and cost saving drilling techniques, as well as the capture of
downstream margins via the Company's gas facilities. In addition to development
drilling in the Rockies, the Company intends to pursue acquisitions to
strengthen its existing asset base and secure a foothold in new geographic areas
and to continue progress in bringing its international projects to fruition.
3
<PAGE> 5
THE OFFERING
Securities Offered......... $100,000,000 aggregate principal amount of %
Convertible Subordinated Notes Due 2001 (the
"Notes").
Interest Payment Dates..... March 31 and September 30, commencing September 30,
1994.
Conversion................. Convertible at the option of the holder into shares
of Common Stock at any time prior to maturity,
unless previously redeemed, at a conversion price
of $ per share, subject to adjustment
under certain conditions.
Redemption at Option of
Company.................. Redeemable at the option of the Company, in whole
or in part, at any time on or after March 31, 1997,
initially at % of the principal amount and at
prices declining to 100% at maturity, in each case
together with accrued interest to the date of
redemption.
Repurchase at Option of
Holders.................. Upon a Change of Control (as defined) which
constitutes a Repurchase Event (as defined), each
holder of Notes will have the right, subject to
certain conditions and restrictions, to require the
Company to repurchase outstanding Notes owned by
such holder at 100% of the principal amount of such
Notes, plus accrued and unpaid interest to the date
of repurchase. Before repurchasing the Notes, the
Company is required, with respect to any Senior
Indebtedness (as defined) that would prohibit the
repurchase of Notes in the event of a Change of
Control, either to repay all such Senior
Indebtedness in full or obtain the requisite
consents under such Senior Indebtedness to permit
the repurchase of the Notes. The Company's existing
bank credit facility contains covenants that may
prohibit the Company from repurchasing the Notes
upon the occurrence of a Change of Control.
Furthermore, the Company's ability to repurchase
the Notes may be limited by its financial resources
at the time a Change of Control occurs.
Ranking.................... Subordinated to all existing and future Senior
Indebtedness of the Company. The indenture (the
"Indenture") with respect to the Notes will not
restrict the incurrence of Senior Indebtedness or
other indebtedness by the Company or any subsidiary
of the Company. The Notes are effectively
subordinated to all existing and future liabilities
of the Company's subsidiaries to the extent of the
assets of such subsidiaries. Immediately following
the sale of the Notes offered hereby and
application of the net proceeds therefrom, the
Company estimates that the sum of its Senior
Indebtedness and the indebtedness of its
subsidiaries will total approximately $46 million.
By reason of the subordination of the Notes, in the
event of insolvency of the Company, the holders of
Senior Indebtedness and of indebtedness of the
Company's subsidiaries may recover more, ratably,
than the holders of the Notes.
Sinking Fund............... None.
Use of Proceeds............ To repay a portion of the borrowings outstanding
under the Company's bank credit facility. The
Company intends to use the resulting borrowing
capacity under its credit facility to fund
development drilling, expansion of its gas
facilities and potential acquisitions.
Listing.................... The Notes have been approved for listing on the New
York Stock Exchange (the "NYSE"), subject to
official notice of issuance.
NYSE Common Stock
Symbol................... SNY
4
<PAGE> 6
SUMMARY FINANCIAL AND OPERATING INFORMATION
The following table presents summary financial and operating information
for each of the three years ended December 31, 1993. The following information
should be read in conjunction with the consolidated financial statements
incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1991 1992 1993
------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
FINANCIAL DATA
Revenues.......................................... $92,501 $120,172 $229,885
Income before accounting change and extraordinary
item........................................... 8,811 16,875 27,608
Net income........................................ 8,811 20,638 25,664
Net income available to common.................... 8,358 15,838 16,564
Weighted average shares outstanding............... 22,839 22,722 23,096
Ratio of earnings to fixed charges(a)............. 2.4x 4.5x 7.6x(b)
Ratio of EBITDA to fixed charges(c)............... 5.4x 10.9x 17.2x(b)
Net cash provided by operations................... $37,738 $ 47,911 $ 68,293
Capital expenditures.............................. 48,385 130,375(d) 166,726
Per share data
Income before accounting change and
extraordinary item........................... $ .37 $ .53 $ .80
Net income..................................... .37 .70 .72
Dividends...................................... .20 .25(e) .22
OPERATING DATA
Average daily production
Oil (Bbl)...................................... 4,074 4,851 9,455
Gas (Mcf)...................................... 50,363 63,088 96,107
BOE(f)......................................... 13,525 16,365 25,472
Average sales price
Oil (per Bbl).................................. $ 20.62 $ 18.87 $ 15.41
Gas (per Mcf)(f)............................... 1.68 1.74 1.94
BOE(f)......................................... 13.24 12.92 13.41
Average operating expense per BOE(g).............. 5.04 4.68 4.83
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------------
ACTUAL AS ADJUSTED(H)
--------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA
Working capital............................................. $ 1,291 $ 1,291
Oil and gas properties and facilities, net.................. 388,361 388,361
Total assets................................................ 479,536 479,536
Senior debt................................................. 114,952 18,052
Convertible subordinated notes.............................. -- 100,000
Stockholders' equity........................................ 297,241 297,241
</TABLE>
- -------------
(a) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of income before taxes, accounting change,
extraordinary item and "fixed charges." "Fixed charges" include interest
on indebtedness and the portion of rental expense, excluding rent on
capitalized leases, estimated to be representative of the interest factor
in rental expense.
(b) The ratio of earnings to fixed charges and the ratio of EBITDA to fixed
charges, pro forma for the issuance of $100 million principal amount of
Notes offered hereby, would be 4.6x and 10.4x, respectively.
(c) EBITDA is income before (i) accounting change and extraordinary item,
(ii) taxes, (iii) depletion, depreciation and amortization and (iv)
interest.
(d) Includes $56.1 million incurred in connection with properties acquired
in December 1992, $49.8 million of which was paid in February 1993.
(e) Due to revised payment timing, five payments were made at the $.05
quarterly rate in 1992.
(f) Gas production is converted to oil equivalents at the rate of 6 Mcf per
barrel except for Thomasville production which, through 1992, was
converted based on its price equivalency to the Company's other gas.
Average gas prices exclude Thomasville production.
(g) Includes production and severance taxes.
(h) Adjusted to give effect to the application of the estimated net proceeds
of this Offering. See "Use of Proceeds."
5
<PAGE> 7
SUMMARY RESERVE DATA
The following table sets forth information on estimated proved oil and gas
reserves, future net cash flow before taxes from such reserves and the pretax
present value of such cash flow, using unescalated prices and costs and a 10%
per annum discount rate ("Pretax PW10% Value"). The prices used in the yearend
reserve estimates averaged $11.49 per barrel of oil and $2.11 per Mcf of gas
over the life of the reserves.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
--------------------------------------
DEVELOPED UNDEVELOPED TOTAL
--------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Estimated proved reserves:
Crude oil and liquids (Bbl)..................... 18,032 13,898 31,930
Natural gas (Mcf)............................... 268,349 161,740 430,089
BOE(a).......................................... 62,757 40,855 103,612
Future net cash flow from estimated production.... $ 474,480 $ 213,792 $688,272
Pretax PW10% Value(b)............................. $ 297,638 $ 92,771 $390,409
-------------
</TABLE>
(a) Natural gas reserves are converted to oil equivalents at the rate of 6
Mcf per Bbl.
(b) The after-tax present value of proved reserves totalled $340.5 million
at December 31, 1993.
The revenues generated by the Company are highly dependent upon the prices
of crude oil and gas. The volatility of energy prices makes it particularly
difficult to estimate future prices of oil and gas. Price fluctuations change
reserve values by altering the quantities of reserves that are recoverable on an
economic basis as well as the future net revenues attributable to the reserves.
Any significant decline in prices of oil or gas could have a material adverse
effect on the Company's financial condition and results of operations.
6
<PAGE> 8
RECENT DEVELOPMENTS
For the three months ended March 31, 1994, the Company's revenues increased
38% to $61.8 million from $44.9 million for the three months ended March 31,
1993. This increase is attributable to a 26% increase in production volumes and
increases in gas processing and transportation revenues, which were partially
offset by a 16% drop in the price realized per equivalent barrel of production.
Income before taxes and extraordinary item rose 33% to $8.6 million from $6.5
million in the 1993 period. Net income remained at $6 million despite a $2.6
million deferred tax provision in the 1994 period. For the three months ended
March 31, 1993, income taxes were reduced from the statutory rate by $2.1
million as a result of the Company's adoption of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," as of January 1,
1992. Net income per share before extraordinary item fell to $.14 from $.23 in
the prior year period due to the $2.6 million deferred tax provision and $1.5
million of additional preferred stock dividends relating to the April 1993
offering of convertible preferred stock.
Production in the first quarter reached an average of 30,405 BOE per day.
The production increase was primarily due to continued development drilling in
the Wattenberg Field. The Company's average wellhead price for oil in the
quarter fell to $12.02 per barrel from $16.62 for the 1993 period. The net
wellhead price for gas decreased 3% to $1.98 per Mcf from $2.05 per Mcf in the
1993 period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1993 1994
------- -------
<S> <C> <C>
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
FINANCIAL DATA
Revenues............................................................. $44,873 $61,815
Income before taxes and extraordinary item........................... 6,457 8,595
Income before extraordinary item..................................... 6,367 6,003
Net income........................................................... 5,983 6,003
Net income available to common....................................... 4,783 3,264
Weighted average shares outstanding.................................. 22,895 23,307
Per share data
Income before extraordinary item.................................. $ .23 $ .14
Net income........................................................ .21 .14
OPERATING DATA
Average daily production
Oil (Bbl)......................................................... 9,178 11,656
Gas (Mcf)......................................................... 90,033 112,467
BOE............................................................... 24,189 30,405
Average sales price
Oil (per Bbl)..................................................... $ 16.62 $ 12.02
Gas (per Mcf)..................................................... 2.05 1.98
BOE............................................................... 14.25 11.93
Average operating expense per BOE.................................... 5.22 4.37
</TABLE>
7
<PAGE> 9
USE OF PROCEEDS
The net proceeds from the sale of the Notes are estimated to be
approximately $ million ($ million if the Underwriters' over-allotment
option is exercised in full). The Company intends to use the net proceeds to
repay a portion of the borrowings outstanding under its bank credit facility.
The Company intends to use the resulting borrowing capacity under its credit
facility to fund development drilling, expansion of its gas facilities and
potential acquisitions. The Company estimates that it will expend $175 to $200
million for development drilling and expansion of gas facilities during 1994,
assuming no material changes in oil and gas prices. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
On May 4, 1994 approximately $137.9 million was outstanding under the
Company's revolving bank credit facility. The rate of interest on this debt
fluctuates based on various rates, as selected by the Company. The weighted
average interest rate on bank borrowings at such date was 5.29%. The facility
expires on December 31, 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
CAPITALIZATION
The following table sets forth the Company's capitalization at December 31,
1993, and as adjusted to give effect to the issuance of the Notes offered hereby
and the application of the estimated net proceeds therefrom.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
--------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current portion of debt............................................. $ 15 $ 15
-------- -----------
-------- -----------
Long-term debt(a)
Senior debt....................................................... $114,952 $ 18,052
% Convertible Subordinated Notes Due 2001...................... -- 100,000
-------- -----------
Total long-term debt...................................... 114,952 118,052
Stockholders' equity
Preferred Stock, $.01 par value; 10 million shares authorized:
$4.00 Convertible Exchangeable Preferred Stock; 1,186,005
shares issued and outstanding ($50.00 liquidation preference
per share).................................................... 12 12
$6.00 Convertible Exchangeable Preferred Stock; 1,035,000
shares issued and outstanding ($100.00 liquidation preference
per share).................................................... 10 10
Common Stock, $.01 par value; 75 million shares authorized and
23,259,658 shares issued and outstanding (b)................... 233 233
Capital in excess of par value.................................... 250,574 250,574
Retained earnings................................................. 46,954 46,954
Foreign currency translation...................................... (542) (542)
-------- -----------
Total stockholders' equity................................ 297,241 297,241
-------- -----------
Total capitalization...................................... $412,193 $ 415,293
-------- -----------
-------- -----------
</TABLE>
- -------------
(a) See Note 3 to the consolidated financial statements incorporated by
reference herein for a description of long-term debt.
(b) Excludes an aggregate of 15,199,568 shares of Common Stock reserved for
issuance as of April 1, 1994 upon conversion or exercise of outstanding
securities, consisting of (i) 11,463,558 shares reserved for issuance upon
conversion of preferred stock, (ii) 1,736,010 shares reserved for issuance
upon exercise of management stock options and (iii) 2,000,000 shares
reserved for issuance upon exercise of warrants held by Union Pacific
Resources Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
8
<PAGE> 10
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the NYSE under the symbol "SNY." The
following table sets forth, for the periods indicated, the high and low sales
prices for the Common Stock for NYSE composite transactions, as reported by The
Wall Street Journal, and the cash dividends declared per share of Common Stock.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- ---- ---------
<S> <C> <C> <C>
1992
First Quarter........................................... $ 6 7/8 $ 5 7/8 $ .05
Second Quarter.......................................... 7 3/8 6 1/8 .10(a)
Third Quarter........................................... 10 1/2 6 3/8 .05
Fourth Quarter.......................................... 10 1/8 8 5/8 .05
1993
First Quarter........................................... 16 1/8 10 .05
Second Quarter.......................................... 20 1/4 15 .05
Third Quarter........................................... 23 16 5/8 .06
Fourth Quarter.......................................... 23 14 3/4 .06
1994
First Quarter........................................... 21 3/8 17 1/2 .06
Second Quarter (through May 4).......................... 20 1/8 17 1/2 --
<FN>
-------------
(a) Due to revised payment timing, two payments were made at the $.05 quarterly rate in
the second quarter of 1992.
</TABLE>
On May 4, 1994, the last reported sale price of the Common Stock on the
NYSE was $19 7/8 per share. As of December 31, 1993, there were approximately
3,500 holders of record of the Common Stock and 23.3 million shares outstanding.
Shares of Common Stock receive dividends if, as and when declared by the
Board of Directors. The amount of future dividends will depend on debt service
requirements, dividend requirements on preferred stock, capital expenditures and
other factors. The Company's debt agreements contain restrictions on its ability
to declare and pay dividends on the Common Stock in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
9
<PAGE> 11
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table presents selected financial information for each of the
five years ended December 31, 1993. The following information should be read in
conjunction with the consolidated financial statements incorporated by reference
herein.
<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1989 1990 1991 1992 1993
------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATIONS
Revenues
Oil and gas sales............................... $12,479 $ 49,803 $ 65,344 $ 77,363 $124,641
Gas processing and transportation............... 10,885 29,442 21,459 38,611 94,839
Other........................................... 3,179 2,928 5,698 4,198 10,405
------- -------- -------- -------- --------
26,543 82,173 92,501 120,172 229,885
------- -------- -------- -------- --------
Expenses
Direct operating................................ 4,930 18,088 24,882 28,057 44,901
Cost of gas and transportation.................. 9,168 24,103 14,202 30,469 84,840
General and administrative...................... 1,047 5,649 7,259 6,704 6,780
Interest and other.............................. 761 7,125 9,327 5,693 7,271
Depreciation, depletion and amortization........ 3,316 17,351 25,392 31,944 51,184
Income before taxes, accounting change and
extraordinary item.............................. 7,321 9,857 11,439 17,305 34,909
Provision for income taxes
Current......................................... 400 977 230 430 --
Deferred........................................ 2,089 1,365 2,398 -- 7,301
------- -------- -------- -------- --------
2,489 2,342 2,628 430 7,301
------- -------- -------- -------- --------
Income before accounting change and extraordinary
item............................................ 4,832 7,515 8,811 16,875 27,608
Cumulative effect of change in accounting for
income taxes.................................... -- -- -- 3,763 --
Extraordinary item -- use of net operating loss
carryforward.................................... 2,089 -- -- -- --
Extraordinary item -- early extinguishment of
debt, net of taxes.............................. -- -- -- -- (1,944)
------- -------- -------- -------- --------
Net income........................................ 6,921 7,515 8,811 20,638 25,664
Dividends on preferred stock...................... -- -- 453 4,800 9,100
------- -------- -------- -------- --------
Net income available to common.................... $ 6,921 $ 7,515 $ 8,358 $ 15,838 $ 16,564
------- -------- -------- -------- --------
------- -------- -------- -------- --------
Weighted average shares outstanding............... 11,135 20,620 22,839 22,722 23,096
Per share data
Income before accounting change and
extraordinary item............................ $ .43 $ .36 $ .37 $ .53 $ .80
Net income...................................... .62 .36 .37 .70 .72
Dividends....................................... .11 .16 .20 .25(a) .22
Ratio of earnings to fixed charges(b)............. 10.6x 2.6x 2.4x 4.5x 7.6x(c)
Ratio of EBITDA to fixed charges(d)............... 15.0x 5.3x 5.4x 10.9x 17.2x(c)
CASH FLOW
Net cash provided by operations................... $11,129 $ 22,512 $ 37,738 $ 47,911 $ 68,293
Capital expenditures.............................. 14,216 171,767(e) 48,385 130,375(f) 166,726
BALANCE SHEET
Working capital................................... $ 3,499 $ 12,087 $ 17,259 $ 7,619 $ 1,291
Oil and gas properties and facilities, net........ 29,904 179,902 196,206 287,094 388,361
Total assets...................................... 56,669 227,198 252,241 346,737 479,536
Senior debt....................................... 2,325 56,172 17,108 96,568 114,952
Subordinated notes, net........................... 2,477 25,000 25,000 18,750 --
Stockholders' equity.............................. 31,149 115,187 174,696 184,393 297,241
</TABLE>
- ---------------
(a) Due to revised payment timing, five payments were made at the $.05 quarterly
rate in 1992.
(b) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of income before taxes, accounting change, extraordinary
item and "fixed charges." "Fixed charges" include interest on indebtedness
and the portion of rental expense, excluding rent on capitalized leases,
estimated to be representative of the interest factor in rental expense.
(c) The ratio of earnings to fixed charges and the ratio of EBITDA to fixed
charges, pro forma for the issuance of $100 million principal amount of
Notes offered hereby, would be 4.6x and 10.4x, respectively.
(d) EBITDA is income before (i) accounting change and extraordinary item, (ii)
taxes, (iii) depletion, depreciation and amortization and (iv) interest.
(e) Includes $130.7 million related to the acquisition of a publicly traded
limited partnership managed by the Company.
(f) Includes $49.8 million paid in February 1993 for properties acquired in
December 1992.
10
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS(A)
Comparison of 1993 results to 1992. Total revenues rose 91% in 1993 to
$229.9 million. Net income before taxes and extraordinary items more than
doubled to reach $34.9 million in 1993. The increase was led by a rapid rise in
production and assisted by an increase in gas processing and transportation
margins. Before the effect of a favorable $3.8 million income tax accounting
change in 1992 and a $1.9 million 1993 extraordinary charge on early retirement
of debt, earnings per common share were $.80 in 1993 compared to $.53 in 1992, a
51% increase.
The gross margin from production operations for 1993 increased 62% to $79.7
million, which was primarily related to a 65% growth in oil and gas production.
The price received per equivalent barrel decreased by 3% to $13.41. Total
operating expenses including production taxes increased 60% during 1993 although
operating cost per BOE decreased to $4.83 from $4.99 in 1992. Expense reductions
gained from wells added in the DJ Basin, where operating costs averaged $2.76
per BOE, were partially offset by the late 1992 acquisition of Wyoming wells
from a major oil company where 1993 operating costs averaged $7.45 per BOE.
For the year ended December 31, 1993, average daily production was 25,472
BOE, a 65% increase from 1992. Average daily production in the fourth quarter of
1993 climbed to 10,314 Bbls and 105.6 MMcf (27,917 BOE). The production
increases resulted primarily from acquisitions and continuing development
drilling in the DJ Basin. Domestically, $51.0 million in properties were
acquired in 1993, primarily in and around existing hubs in Colorado and Wyoming.
The acquisitions included a significant number of development locations and
should continue to add to production in 1994. In 1993, 311 wells were placed on
production in the DJ Basin, with 51 wells in various stages of drilling and
completion at yearend. Because the majority of the wells were added in the
latter part of the year, production will not be fully impacted until 1994.
Additionally, significant downtime was experienced in the fourth quarter at the
major processing plant in the DJ Basin, which increased line pressures and
hampered production. To a lesser extent, this situation continued into early
1994.
The gross margin from gas processing, transportation and marketing
activities for 1993 increased 23% to $10.0 million from $8.1 million in 1992.
The increase was primarily attributable to a $3.0 million (49%) rise in
transportation and processing margins as a result of additional DJ Basin
production and the recent expansion of the related facilities. Gas marketing
margins for 1993 decreased by $1.1 million due to reduced margins on the
Company's Oklahoma cogeneration supply contract, which declined as a result of
an imposed limitation of the contract sales price and rising gas purchase costs.
In 1993 the net contract margin was a loss of $267,000, which was $1.8 million
less than 1992. At present gas price levels, the Company foresees continued
negative or breakeven margins for the cogeneration contract through July 1994.
At that time, a change in the pricing formula should result in improved margins.
The cogeneration margin reduction was partially offset by a $667,000 (126%) rise
in other gas marketing margins in 1993 resulting from increased third party
marketing.
Other income was $10.4 million during 1993, compared to $4.2 million in
1992. The $6.2 million increase resulted from a $3.5 million gas contract
settlement received in April 1993, collection of a $1.7 million litigation
judgment and greater gains on the sales of securities.
General and administrative expenses, net of reimbursements, for 1993
represented 3% of revenues compared to 5.6% in 1992 as expenses were held
essentially flat while revenues grew 91%. Interest and other expenses increased
28% primarily as a result of a rise in outstanding debt balances. Senior debt
was substantially reduced in April 1993 with proceeds from a preferred offering,
but increased through yearend as
- ---------------
(a) Prior to 1993, production from the Thomasville Field, which was sold at
prices that were significantly above market, was converted to equivalent
barrels based on its price relative to the Company's other gas production.
Beginning in 1993, Thomasville production was converted to oil equivalents
at the rate of 6 Mcf per barrel. In order to provide comparability between
periods, equivalent barrel information, other than depletion rates, for 1992
and 1991 has been restated in this section to reflect Thomasville production
at the conversion rate of 6 Mcf per barrel. All equivalent barrel
information presented elsewhere in this Prospectus reflects the historical
method of conversion of Thomasville production used by the Company in the
applicable year.
11
<PAGE> 13
a result of development expenditures, acquisitions, the investment in Command
Petroleum Holdings NL and the retirement of $25.0 million in subordinated debt.
Depletion, depreciation and amortization during 1993 increased 60% from the
prior year. The increase was the direct result of the 65% rise in equivalent
production between years. The producing depletion rate per BOE for 1993 was
reduced to $4.75 from $4.79 in 1992. The rate was reduced by an ongoing drilling
cost reduction program, partially offset by an increase from the discontinuation
of converting Thomasville production to equivalent quantities based on relative
gas prices.
The Company adopted FASB Statement No. 109, "Accounting for Income Taxes,"
effective January 1, 1992. Net income for 1992 was increased by $3.8 million for
the cumulative effect of the change in method of accounting for income taxes. In
1992 the income tax provision was reduced from the statutory rate of 34% by $5.5
million due to the elimination of deferred taxes as a result of tax basis in
excess of financial basis. In 1993 the income tax provision was reduced from the
newly enacted rate of 35% to an effective rate of approximately 20% as a result
of full realization of the excess basis benefit. The Company anticipates
deferred taxes will be provided in 1994 and beyond based on the full statutory
rate and accordingly will increase substantially.
Comparison of 1992 results to 1991. Revenues rose 30% in 1992 to $120.2
million, compared to $92.5 million in 1991. Net income for 1992 was $20.6
million, a 134% increase from the $8.8 million in 1991. The increases resulted
from greater oil and gas production volumes, lower interest expense, reduced
general and administrative expenses and a $3.8 million reversal of the
cumulative effect of prior year deferred taxes with the adoption of a change in
the method of accounting for income taxes.
Average daily production for 1992 rose 24% to 15,408 BOE due mostly to
development drilling in the DJ Basin of Colorado as 189 wells were placed on
production there. As a result, the gross margin from production increased 22% to
$49.3 million in 1992. The price per BOE decreased 4% during 1992.
The gross margin from gas processing, transportation and marketing
activities for 1992 increased 12% to $8.1 million from $7.3 million in 1991. The
growth was primarily the result of increased marketing of third party gas in New
Mexico, Colorado and Wyoming. Gas processing and transportation margins
increased moderately as volumes were increased late in the year by expansions of
pipeline and plant facilities to take advantage of increasing DJ Basin
production. Other income for 1992 decreased 26% to $4.2 million from a reduction
in gains on sales of securities and lower interest on notes receivable.
Direct operating expenses including production taxes increased only 13%
during 1992 as the operating cost per BOE decreased to $4.99 from $5.47 in 1991,
due to increased DJ Basin production where operating costs have been
significantly lower than average. General and administrative expenses, net of
reimbursements, for 1992 represented less than 6% of revenues compared to 8% in
1991, as revenues rose 30%. Interest and other expenses dropped 39% in 1992 due
to lower average outstanding senior debt after the application of proceeds from
a preferred stock offering in late 1991.
DEVELOPMENT, ACQUISITION AND EXPLORATION
During 1993 the Company expended $93.1 million for oil and gas property
development and exploration, $51.0 million for acquisitions and $22.6 million
for gas facility expansion and other assets, for a total of $166.7 million in
property and equipment expenditures. Additionally, the Company made an $18.2
million investment in an Australian based exploration and production company.
The Company has concentrated a significant portion of its development
activities in the DJ Basin. Capital expenditures for DJ Basin development
totalled $75.4 million during 1993. A total of 311 newly drilled wells were
placed on production there in 1993 and 51 were in progress at yearend.
Additionally, 42 recompletions were performed in 1993, with seven in process at
yearend. In December 1993, 16 drilling rigs were in operation in the DJ Basin.
The Company anticipates putting 500 or more wells per year on production in the
DJ Basin for the next few years. With additional leasing activity and through
drilling cost reductions that add proved undeveloped locations as they become
economic, the Company has increased the inventory of available drillsites. In
December 1993, the Company entered into a letter of intent with Union Pacific
Resources Company ("UPRC") whereby the Company will gain the right to drill
wells on UPRC's previously uncommitted acreage throughout the Wattenberg area.
This transaction significantly increased the Company's undeveloped Wattenberg
inventory. UPRC will retain a royalty and the right to participate as a 50%
working
12
<PAGE> 14
interest owner in each well, and received warrants to purchase two million
shares of Company stock. Of the warrants, one million expire three years from
the date of grant, and are exercisable at $25 per share, while the other one
million expire in four years and are exercisable at $27 per share. On February
8, 1995, the exercise prices may be reduced to 120% of the average closing price
of the Company stock for the preceding 20 consecutive trading days, but not
below $21.60 per share. The expiration date of the warrants will be extended one
year if the average closing price over such 20 day trading period is less than
$16.50 per share.
The Company expended $14.8 million for other development and recompletion
projects and $2.9 million for exploration during 1993. In Nebraska, 29 wells
were added to production in 1993 as an extension of a drilling program initiated
in 1992. An additional 20 wells are planned in Nebraska for 1994. In southern
Wyoming, 11 wells in the East Washakie Basin development program were
successfully drilled and completed during the last half of 1993 with three in
process at yearend. In this program, significant cost-cutting measures were
applied based on the experience gained in the DJ Basin. In central Wyoming on
the properties acquired from a major oil company in late 1992, efforts have been
focused on increasing operating efficiency with limited development drilling and
workover activity. In 1993, three successful wells were drilled in the fourth
quarter and selected development and recompletion activity is scheduled for
1994. In the Piceance Basin of western Colorado, a three well test program was
started in December of 1993 on acreage acquired there during the year, with one
well undergoing completion, the second in progress and a third scheduled for
early 1994. Current plans include a minimum of 25 wells in the basin during
1994. In South Texas, a combined operated and non-operated program was
initiated, with nine wells completed in 1993 and one well abandoned. A total of
25 additional horizontal locations have been identified and drilling should
continue with as many as 15 wells planned in 1994. In its domestic exploration
efforts, the Company initiated a seismic program in Louisiana and began drilling
early in the fourth quarter. Advanced seismic techniques are being used to
identify further prospects in Louisiana and expectations are to drill up to 20
wells in 1994.
A total of $51.0 million in domestic acquisitions were completed in 1993.
In May 1993, the Company purchased an interest in 121 producing wells and over
70 drilling locations in the DJ Basin area for $3.3 million. In July, an
incremental 25% interest in the Company's Barrel Springs and Duck Lake Fields in
Wyoming was purchased for $6.1 million. The properties are 90% gas and include
44 producing wells and 46 undeveloped locations. In August, the Company acquired
interests in 225 producing wells and 272 proved undeveloped locations in the DJ
Basin for $19.7 million. The proved reserves are 70% gas with more than two-
thirds requiring future development to produce. Late in the year, two
acquisitions were completed in the Piceance and Uinta Basins of Western Colorado
for a total of $12.5 million. The majority of the value was in undeveloped
locations as only 128 wells were currently producing. Numerous other producing
and undeveloped acquisitions totalling $9.4 million were completed, mostly in or
close to the Company's principal operating areas.
The Company's gas gathering and processing facilities have been undergoing
significant transformation since late 1992. In 1993, the Company expended $20.1
million to develop further its gas related assets. The Company spent $9.4
million toward the second phase of its DJ Basin gathering expansion to construct
a high pressure line to deliver gas directly to the major gas processing plant
in the area and expand its gathering network for the increased drilling
activity. An additional $2.6 million was expended to expand the Roggen Plant for
the production increases. A total of $5.6 million in additional transportation
and gathering facilities were constructed in the DJ Basin including a nine mile
16" interconnect line completed in October to relieve high line pressures, a 20"
western gathering extension and numerous other extensions and connections. A
gathering system that delivers third party gas to the Roggen Plant was purchased
for $703,000. The Company expended $1.4 million to complete construction of a
system to gather gas from its Nebraska drilling project. These projects are
intended to take advantage of the significant increase in drilling activity in
these areas.
In May 1993, the Company acquired 42.8% (currently 35.7%) of the
outstanding shares of Command Petroleum Holdings NL ("Command"), a Sydney based
Australian exploration and production company listed on the Australian Stock
Exchange, for $18.2 million. Command holds interests in more than 20 exploration
permits and licenses and a 28.7% interest in a Netherlands exploration and
production company whose assets are located primarily in the North Sea. Permtex,
the Company's Russian joint venture, received central government approval in
August and the Company executed a finance and insurance protocol with the
13
<PAGE> 15
Overseas Private Investment Corporation ("OPIC"), a United States government
agency. Current plans call for 25 of the existing 45 shut-in wells to be placed
on production in 1994, and that 400 development wells will be drilled over the
next ten years. Extensive seismic work began in the fourth quarter of 1993 for
400 kilometers of data in Tunisia and 500 kilometers in Mongolia.
The Company from time to time acquires securities of publicly traded and
private oil and gas companies. In addition to its investment in Command, the
Company owns, among other investments, more than 5% of the common stock of Lomak
Petroleum, Inc. and, as the result of purchases beginning in the third quarter
of 1993, American Exploration Company. The Company is currently evaluating a
range of possible alternatives with respect to its investment in American
Exploration Company, including the possibility of actions to enhance the value
of its common stock.
FINANCIAL CONDITION AND CAPITAL RESOURCES
At December 31, 1993, the Company had total assets of $480 million and
working capital of $1.3 million. Total capitalization was $412 million, of which
28% was represented by senior debt and the remainder by stockholders' equity.
During 1993, the Company fully retired its $25 million of 13.5% subordinated
notes and the related cumulative participating interests. During 1993, cash
provided by operations was $68.3 million, an increase of 43% over 1992. As of
December 31, 1993, commitments for capital expenditures totalled $7.5 million,
primarily for DJ Basin drilling. The Company anticipates that it will expend
$175 to $200 million for development drilling and expansion of gas facilities in
1994. The level of these and other future expenditures is largely discretionary,
and the amount of funds devoted to any particular activity may increase or
decrease significantly, depending on available opportunities and market
conditions. The Company plans to finance its ongoing development, acquisition
and exploration expenditures using internally generated cash flow, proceeds from
property dispositions and existing credit facilities. In addition, joint
ventures or future public and private offerings of securities may be utilized.
In 1992, an institutional investor agreed to contribute $7 million to a
partnership formed to monetize Section 29 tax credits to be realized from the
Company's properties, mainly in the DJ Basin. The initial $3 million was
contributed in October 1992, and at first payout in June 1993 the second
contribution of $1.5 million was received. An additional $1.5 million was
received in October 1993. This transaction should increase the Company's cash
flow and net income through 1994. A revenue increase of more than $.40 per Mcf
is realized on production generated from qualified Section 29 properties in this
partnership. The Company recognized $3.8 million of this revenue during 1993.
Discussions are in progress to expand the scope of this transaction so that the
benefits would be continued through at least 1996.
In April 1993, the Company sold 4.1 million depositary shares (each
representing a one quarter interest in one share of $100 liquidation value
stock) of convertible preferred stock through an underwritten offering for
$103.5 million. A portion of the net proceeds of $99.3 million was used to
retire the entire outstanding balance under the revolving credit facility at
that time. The preferred stock pays a 6% dividend and is convertible into common
stock at $21.00 per share. At the Company's option, the preferred stock is
exchangeable into 6% convertible debentures on any dividend payment date on or
after March 31, 1994. The preferred stock is redeemable at the option of the
Company on or after March 31, 1996.
Effective July 1, 1993, the Company renegotiated its bank credit facility
with a syndicate of banks for whom NationsBank of Texas, N.A. acts as agent and
increased it from $150 million to $300 million. The new facility is divided into
a $50 million short-term portion and a $250 million long-term portion that
expires on December 31, 1997. However, management's policy is to request renewal
of the facility annually. Credit availability is adjusted semiannually to
reflect changes in reserves and asset values. At December 31, 1993, the elected
borrowing base was $150 million. The majority of the borrowings currently bear
interest at LIBOR plus 1.25% with the remainder at prime. The Company also has
the option to select the CD rate plus 1.375%. The Company's bank credit facility
contains certain restrictive covenants (including restrictions on mergers and
asset sales, the payment of dividends, the incurrence of additional indebtedness
and the creation of liens) and requires that the Company meet certain financial
ratios and tests. Among other things, such facility generally limits the amount
of dividends and other restricted payments (including payments of principal on
the Notes prior to their stated maturity) by the Company to an amount equal to
the sum of (i) $10,000,000,
14
<PAGE> 16
(ii) the net cash proceeds to the Company from all equity offerings completed
after March 31, 1993 and (iii) 50% of the Company's consolidated cash flow after
March 31, 1993. Based on such limitations, $86.5 million would have been
available for the payment of dividends and other restricted payments as of
December 31, 1993. The Company does not currently plan to make, and is not
committed to make, any advances or contributions to unrestricted subsidiaries
that would materially affect its ability to pay dividends under this limitation.
The Company maintains a program to divest marginal properties and assets
that do not fit its long range plans. For 1992 and 1993, proceeds from these
sales were $3.0 million and $5.5 million, respectively. Included in the 1993
proceeds were $4.0 million of cash receipts previously accrued for late 1992
sales. The Company intends to continue to evaluate and dispose of nonstrategic
assets.
The Company believes that its capital resources are more than adequate to
meet the requirements of its business. However, future cash flows are subject to
a number of variables including the level of production and oil and gas prices,
and there can be no assurance that operations and other capital resources will
provide cash in sufficient amounts to satisfy debt service requirements and to
maintain planned levels of capital expenditures or that increased capital
expenditures will not be undertaken.
INFLATION AND CHANGES IN PRICES
While certain of its costs are affected by the general level of inflation,
factors unique to the petroleum industry result in independent price
fluctuations. Over the past five years, significant fluctuations have occurred
in oil and gas prices. Although it is particularly difficult to estimate future
prices of oil and gas, price fluctuations have had, and will continue to have, a
material effect on the Company.
BUSINESS AND PROPERTIES
GENERAL
Snyder Oil Corporation is engaged in the development and acquisition of oil
and gas properties primarily in the Rocky Mountain region of the United States.
The Company also gathers, transports, processes and markets natural gas
generally in proximity to its principal producing properties. Over the five year
period from 1988 to 1993, revenues increased from $14.7 million to $229.9
million, net income increased from $5.0 million to $25.7 million and net cash
provided by operations increased from $8.1 million to $68.3 million. At December
31, 1993, the Company's net proved reserves totaled 103.6 MMBOE, having a pretax
present value at constant prices of $390.4 million. Approximately 69% of its
proved reserves are natural gas.
The Company is headquartered at 777 Main Street, Fort Worth, Texas 76102
(telephone 817-338-4043). The Company also maintains administrative offices in
Denver and New York and has eight field offices in Colorado, Wyoming, Texas, New
Mexico and Nebraska.
DEVELOPMENT
GENERAL. Since 1990, development drilling has become the primary focus of
the Company's growth strategy. The Company believes that its existing properties
have extensive development drilling and enhancement potential, primarily in the
DJ Basin of Colorado, the Washakie Basin in southern Wyoming, the Piceance and
Uinta Basins in western Colorado and Utah and in the Giddings Field in southern
Texas. The Company designs its major drilling programs to reduce risk, create
synergies with its gas management operations and exploit the potential for
continuous cost improvement. In 1994, the Company expects to drill over 650
wells, including approximately 500 wells in the Wattenberg Field, where the size
of its operations enables it to continue to refine the application of new
drilling, completion and operating techniques, and to apply the experience
gained there to establish other large scale development projects in the Rockies.
In its large scale development projects, the Company also attempts to
acquire and maintain a sizeable inventory of potential drilling locations, many
of which may not be economic at current cost and price levels, but which the
Company believes may ultimately prove attractive to develop if reservoir
assumptions are validated and well economics improve over the life of the
project through cost reductions or price increases.
15
<PAGE> 17
No assurances can be given that such conditions will be satisfied and,
accordingly, that such locations will be drilled.
Assuming no material changes in product prices and capital availability,
the Company estimates that it will expend from $150 to $200 million per year for
development drilling and gas facilities over the next three to five years. Such
expenditures totalled $64.8 million in 1992 and $112.8 million in 1993,
primarily in the Wattenberg Field.
DJ BASIN
WATTENBERG FIELD. The Wattenberg Field is the Company's largest base of
operations, representing over 55% of total proved reserves. Between 1991 and
1993, the Company drilled a total of 667 wells in Wattenberg, of which 323 were
drilled during 1993. At yearend, the Company had interests in more than 1,400
producing wells, of which the Company operated over 1,100. Through a major joint
venture with UPRC, complementary acquisitions and an extensive leasing program,
the Company has accumulated up to 6,000 potential drilling locations in the
Wattenberg Field. The Company expects that over half of these sites will
ultimately prove attractive to develop. The Company expects to drill
approximately 500 wells per year in the Wattenberg Field for at least the next
several years.
At yearend 1993, the net proved reserves attributed to the Wattenberg
properties were 16.9 million barrels of oil and 229.9 Bcf of gas. The reserves
were attributable to 1,437 producing wells, 51 wells in progress, 1,102 proved
undeveloped locations and approximately 387 proved behind pipe zones. The
Company expects proved reserves to be assigned to other locations as drilling
progresses.
The Company acquired its first properties in Wattenberg during 1986. In
1990, it substantially increased its acreage position by acquiring rights to the
Codell and Niobrara formations underlying 32,985 net acres from Amoco Production
Company ("Amoco") for $14.4 million. Several farm-ins from Amoco in 1992,
financed primarily through a transfer of Section 29 tax credits, resulted in
earning additional Codell/Niobrara rights as well as rights to the Sussex,
J-Sand and Dakota formations in a number of locations. During 1993, a series of
purchases added nearly 9 MMBOE at a net cost of under $3.50 per barrel as well
as several pipeline and processing facilities that complement existing
facilities. See "-- Acquisition Program."
In early 1994, the Company finalized an agreement with UPRC under which the
Company has the right for up to six years to drill wells on locations of its
choosing on UPRC's previously uncommitted undeveloped acreage throughout the
Wattenberg area. This transaction substantially increased the Company's
Wattenberg undeveloped acreage inventory. Many of the locations have the
potential for improved economics through completion in one or more of the
Shannon, Sussex, J-Sand or Dakota formations, as well as the Codell and
Niobrara. During the venture's initial three-year term, the Company is required
to drill a minimum of 120, 120 and 60 wells per year. After the initial period,
the Company can, at its option, extend the venture annually for up to three
additional years by drilling at least 150 wells per year. There is no limit on
the maximum number of wells that can be drilled, and wells in excess of the
required minimum in any year will reduce the number of wells required in the
following year by up to 50%. If the Company drills less than the minimum number
of wells, it is required to pay UPRC $20,000 per well for the shortfall. On each
well that is drilled on UPRC's mineral acreage under the venture, UPRC retains a
15% mineral owner royalty and has the option either to receive an additional 10%
royalty interest after pay-out or to participate in the well as a 50% working
interest owner. On leasehold acreage, UPRC does not have the right to
participate in the well but will retain a royalty interest that will result in a
total royalty burden of 25%. As compensation for committing its acreage position
to the Company, UPRC was granted warrants to purchase two million shares of the
Company's Common Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Development, Acquisition and
Exploration."
Drilling. The Company began drilling operations in Wattenberg in early
1991. From 1991 to December 1993, the Company expended $151.1 million to drill
667 wells, of which 323 were drilled in 1993. At yearend, 609 of these wells
were producing, 51 were in various stages of drilling and completion and seven
were dry holes.
16
<PAGE> 18
The size of the Wattenberg drilling program has resulted in numerous
advantages. The Company acts as operator on all its development sites in the
Wattenberg Field and much of the acreage is held by production. As a result, the
Company has significant operational control over the timing of the development
program. The actual drilling locations and schedule are selected to minimize
costs associated with rig moves, surface facilities, location preparation and
gathering system and pipeline connections and to evaluate and quantify
incremental reserve potential across the acreage position.
The Company's success in continuing to reduce its costs of drilling and
operations, as well as applying new technology, will be important to the full
development of its undeveloped acreage in Wattenberg. The Company has selected
procedures for drilling and completing wells that it believes maximize
recoverable reserves and economics. The Company has also been able to reduce its
costs of drilling, completing and operating wells significantly by negotiating
favorable prices with suppliers of drilling and completion services because of
the size of its drilling program. These cost reductions often allow the Company
to earn an attractive rate of return even on lower reserve wells. The reductions
have been achieved by several methods. One of the most significant is the
formation of alliances with selected vendors who work with Company personnel to
improve coordination and reduce both parties' costs. The resultant reductions
are credited wholly or in large part to the Company while vendors' margins are
maintained or increased.
In addition to cost reduction, the Company seeks to employ new technology
or to creatively apply existing technology to reduce costs or to produce
reserves that would otherwise remain unrecovered. One example is the drilling of
four or more wells from a single drilling pad in residential areas, under
reservoirs and on inaccessible acreage.
The Codell formation, which is the primary objective of the drilling, is a
blanket siltstone formation that exists under much of the Wattenberg acreage at
depths of 6,700 to 7,500 feet. Codell reserves have a high degree of
predictability due to uniform deposition and gradual transition from high to low
gas/oil ratio areas. The Company generally dually completes the Niobrara chalk
formation, which lies immediately above the Codell, to enhance drilling
economics. The Codell/Niobrara wells produce most prolifically in the first six
to twelve months, after which production declines to a fraction of initial
rates. More than half of a typical well's reserves are recovered in the first
three years of production. As a result, each well contributes significantly more
production in its first year than in subsequent years. However, the declining
production of individual wells is expected to be offset by continuing
development drilling.
During 1992 and 1993, the Company expanded its drilling targets to include
both deeper and shallower formations. The J sand lies approximately 400 feet
below the Codell. It is a low permeability sandstone generally found to be
productive throughout the DJ Basin with performance varying proportionately with
porosity and thickness. The Dakota formation lies approximately 150 feet below
the J sand. It is a low permeability sand occasionally naturally fractured with
less predictable commercial accumulations and varied performance results. The
Sussex formation is at average depths of 4,500 feet. The Sussex sands were
deposited as bars and exhibit variable reservoir quality with a moderate degree
of predictability.
Because the Codell, Niobrara and J formations are continuous reservoirs
over a large portion of the DJ Basin, the Company believes that drilling in the
Wattenberg Field is relatively low risk. In addition, the Company has compiled a
comprehensive geologic and production database for approximately 12,000 wells
within a 4,350 square mile area between Denver and the Wyoming border and has
had considerable success in predicting variations in thickness, porosity,
gas/oil ratios and productivity. Of the 667 wells drilled between 1991 and 1993,
only seven have been dry holes. Dry holes in the Codell/Niobrara formations cost
an average of only $65,000 per well. The average net cost of a completed well in
these formations approximated $193,000 during 1993 with only 30 days usually
elapsing between spud date and initial production.
CHEYENNE. During 1993, 29 wells were placed on stream in a shallow gas
producing area on the northeast flank of the DJ Basin. This project, known as
the Cheyenne Project, began with the acquisition of five shut-in gas wells in
1990 when the Company determined that it could capitalize on new open access
rules of the Federal Energy Regulatory Commission ("FERC") by constructing a
gathering system to transport gas to a nearby interstate pipeline. After
acquiring almost 50,000 acres of leases in the area and selling an approximate
27.5% interest to other parties on a promoted basis, the Company has drilled 54
successful wells and six dry
17
<PAGE> 19
holes in the area and constructed a gathering system having a capacity of 10
MMcf per day to transport the gas to the interstate pipeline. The Company
currently operates 61 wells in this area that produce from the Niobrara
formation and plans to drill approximately 20 additional wells during 1994.
EAST WASHAKIE
During 1993, the Company initiated a major project to apply the
cost-cutting and improved drilling and completion techniques learned in the
Wattenberg Field to develop fluvial Mesaverde sands in the eastern Washakie
Basin. An eleven well pilot project was completed in 1993 to test drilling and
completion techniques and confirm cost estimates. A second drilling program is
currently being initiated. After final evaluation of the drilling, the Company
may initiate a large scale drilling program in this area upon completion of a
required environmental impact statement. The environmental impact statement was
filed in October 1993, and clearance is currently expected in the second half of
1994. Depending on the timing of environmental clearance and continued
evaluation of drilling results, the Company expects to drill up to 60 wells in
East Washakie during 1994.
Since the mid-1980's, the Company's properties in the Barrel Springs Unit
and the Blue Gap Field of southern Wyoming, together with its gas gathering and
transportation facilities there, have been one of its most significant assets.
See "-- Properties" and "-- Gas Management." The Company currently operates 128
wells in this area and holds up to 1,200 potential drilling locations, 98 of
which were classified as proved undeveloped at yearend 1993. The Company
believes that more than half of the potential locations may ultimately prove
attractive to develop. The Company currently holds interests in 95,000 gross
(76,000 net) undeveloped acres in the Washakie Basin. This includes 36,000 gross
(32,000 net) undeveloped acres added during 1993.
WESTERN SLOPE
During 1993, the Company initiated the Western Slope Project by
establishing a sizable position in the Piceance Basin on the western slope of
Colorado and in the Uinta Basin in northeastern Utah. The Company formed the
53,000 acre Hunter Mesa Unit in the southeast corner of the Piceance Basin.
Through purchases and farmouts, the Company obtained a majority interest and
acts as unit operator. Immediately adjacent to the Hunter Mesa Unit, a 100%
working interest was purchased in the 26,000 acre Divide Creek Unit for $6.2
million. The acquisition of this Unit, which has six wells producing from the
Mesaverde and Cameo Coal formations, added 17.6 Bcf of proved gas reserves as
well as an established operating base. Near yearend, the Company also purchased
interests in 122 producing wells, 29 non-producing wells and 69 proved
undeveloped locations. In total, this purchase included 55,000 net acres in
various fields in the Piceance and Uinta Basins.
Through these purchases, farmouts and a leasing program, the Company
currently holds acreage with up to 1,000 potential drilling locations, of which
the Company believes 40% could ultimately prove to be attractive to develop. Of
these locations, 101 were classified as proved undeveloped at yearend 1993. The
development of the Mesaverde sands in the Piceance Basin began with the spudding
of the initial test well near the end of 1993. The development will continue
with a 10 well test program during 1994 to confirm cost estimates and improved
recovery techniques. If successful, the Company may drill up to 30 wells in 1994
and approximately 100 wells per year thereafter. The Company's ability to
continue to develop the Piceance Basin is in part dependent on arranging
gathering and transportation at a reasonable cost. The company is exploring
options for gathering and transporting future gas production, including the
possibility of constructing Company owned facilities.
OTHER DEVELOPMENT
At the end of 1992, the Company acquired interests in four large producing
fields in central Wyoming from a major oil company at a cost of $56.1 million.
Two of the fields, the Hamilton Dome and Riverton Dome Fields, are operated by
the Company. During 1993, the Company evaluated opportunities in the fields and
instituted programs to enhance production in the latter part of the year. In the
Hamilton Dome Field,
18
<PAGE> 20
improvement of the water injection system and completion of two new wells
increased daily production 8% above the levels projected at the time of the
acquisition. A third well should be completed in the second quarter of 1994. In
the Riverton Dome Field, workovers and recompletions increased daily production
over 10% above the levels projected at the time of the acquisition. Additional
workovers and development drilling are scheduled for both fields during 1994.
The Company is attempting to work with the major oil companies that operate the
other two fields purchased, both of which are producing slightly below
acquisition projections.
The Company operates the Adair waterflood property in Gaines County, Texas,
which it purchased in September 1991. Initial development of the Adair Unit in
1992 cost approximately $1.7 million net to the Company. Based on production
response from the initial phase of development, the Company spent an additional
$.4 million in 1993 to conduct a pilot program which reduced well spacing on a
portion of the Unit. This program increased the unit production from 150 barrels
per day to 260 barrels per day. The Company plans to spend an additional $1.1
million to implement an infill development program throughout the Unit.
In the Giddings Field in Southeast Texas, the Company has undertaken a
horizontal drilling program to further exploit existing properties in the area.
During 1993, the Company spent $2.2 million to re-enter or drill 10 wells, of
which nine were completed and one abandoned. The Company is encouraged by the
results to date and plans to increase its expenditures in the field during 1994.
At yearend, 25 locations were classified as having proved undeveloped reserves.
ACQUISITION PROGRAM
The Company believes that acquisitions continue to be an attractive method
of increasing its reserve base and cash flow. In its acquisition efforts, the
Company plans to focus on purchasing properties that strengthen its strategic
position and complement its large-scale gas development projects in the Rockies,
as well as provide opportunities to establish meaningful positions in new areas.
From 1983 through 1993 the Company, on behalf of itself, its affiliates and
other investors, purchased oil and gas properties and related assets with an
aggregate cost of nearly $650 million. The Company actively seeks to acquire
incremental interests in existing properties, acreage with development
potential, gas gathering, transportation and processing facilities and related
assets, particularly in proximity to existing properties. Purchases of
incremental interests or adjacent properties are generally small in size but in
aggregate represent a sizeable opportunity that is relatively easy to pursue.
Due to its rate of return requirements and the high cost of pursuing
potential acquisitions, the Company generally prefers negotiated transactions to
auctions. Complex transactions involving legal, financial or operational
difficulties have frequently permitted purchase of assets at favorable prices.
Past acquisitions of corporations laid the groundwork for the Wattenberg hub,
and may in the future provide opportunities to expand in other areas.
Acquisitions of incremental interests are being given particular emphasis to
take advantage of systems and operational knowledge already in place. The
Company has extensive experience in completing numerous types of acquisitions
using varied financing sources in addition to internal cash flow.
During 1993 domestic acquisitions having a total cost of $51.0 million were
completed, primarily to strengthen Wattenberg and establish two new hubs that
the Company believes have the potential to develop into large scale gas
development projects. In Wattenberg a series of purchases added nearly 9 million
BOE of proved reserves at a net cost of under $3.50 per barrel as well as
several pipeline and processing facilities that complement the Company's
existing gathering systems. In the largest of these acquisitions, the Company
paid $19.7 million and, after an exchange of interests with a third party,
acquired an approximate 80% working interest in 153 producing wells and 284
undeveloped locations having total proved reserves estimated to exceed 7 million
BOE. A portion of the value of the transaction lay in the large volume of
undedicated gas located in close proximity to the Company's gas lines.
In the Washakie Basin, the Company expended over $7.8 million to acquire a
25% incremental interest in its Barrel Springs properties and interests in 44
producing wells and 7 undeveloped locations, as well as a gathering system that
expands the existing gathering infrastructure in the area. These acquisitions
added approximately 3.6 million BOE of proved reserves and, together with an
active leasing program, formed the
19
<PAGE> 21
basis for the East Washakie Project, the Company's second operating hub in the
Rockies. See "-- Development -- East Washakie."
Through three purchase transactions, as well as farmouts and leasing, the
Company established a substantial position in the Piceance and Uinta Basins
during 1993, laying the foundation of the Western Slope Project, a third gas
development hub in the Rockies. A $6.2 million purchase gave the Company a 100%
working interest in the 26,000 acre Divide Creek Unit in the southeast Piceance
Basin. The Company also formed the adjacent 53,000 acre Hunter Mesa Unit and
through purchases and farmouts obtained a majority working interest position and
became unit operator. Near yearend the Company also acquired interests in 122
producing wells, 29 non-producing wells and 69 proved undeveloped locations in
various fields in the Uinta and Piceance Basins. See "-- Development -- Western
Slope."
The following table summarizes acquisition activity since 1983:
<TABLE>
<CAPTION>
PURCHASE PRICE
---------------------------------
YEAR MAJOR ASSETS ACQUIRED COMPANY AFFILIATES TOTAL
---- --------------------------------------------- ------- ---------- ------
(MILLIONS)
<S> <C> <C> <C> <C>
1983 Louisiana gas pipeline $ 3.5 $ -- $ 3.5
1984 Various producing properties 27.8 -- 27.8
1985 Utah, Texas and Oklahoma properties 56.1 -- 56.1
1986 Colorado and Wyoming properties 61.8 15.4 77.2
1987 Mississippi and Colorado properties, Roggen
gas plant, Wyoming gas facilities 71.0 -- 71.0
1988 Various producing properties 33.8 18.5 52.3
1989 Various producing properties 12.3 56.9 69.2
1990 Wattenberg properties, incremental interests 161.2 (a) -- 161.2
1991 Waterflood properties, incremental interests 9.9 -- 9.9
1992 Wyoming properties, incremental interests 63.6 -- 63.6
1993 Colorado and Wyoming properties, incremental
interests, acreage 51.0 -- 51.0
------- ---------- ------
Total $552.0 $ 90.8 $642.8
------- ---------- ------
------- ---------- ------
</TABLE>
- ---------------
(a) Includes the acquisition of a publicly traded limited partnership managed
by the Company.
GAS MANAGEMENT
General. The Company expanded its gas gathering and processing capacity
during 1993 with the construction of additional gathering facilities and
expansion of the Roggen plant in Wattenberg, as well as the acquisition of
additional gas facilities in Wattenberg and in Wyoming. By yearend, operated
processing capacity had increased to more than 80 MMcf per day and gathering
system capacity was increased to more than 200 MMcf per day, while marketed net
volumes reached 100 MMcf per day. The gas management unit complements the
Company's development and acquisition activities by providing additional cash
flow and enhancing returns. The segment is also increasingly profitable in its
own right. During 1993, gross margin increased by approximately 23% to $10
million. See "-- Customers and Marketing."
Colorado Facilities. The largest concentration of gas facilities is in the
Wattenberg area. These facilities include two major gathering systems, the
Enterprise system and Energy Pipeline, the Roggen processing plant, and a number
of minor facilities. By yearend 1993, the Roggen plant capacity had reached 60
MMcf per day. During the fourth quarter of 1993, average throughput had reached
54 MMcf per day. The plant is expected to process gas from currently undeveloped
locations, new third party sources and permanently released locations on acreage
acquired from Amoco, plus additional gas from current suppliers. Gas developed
through the UPRC joint venture is not dedicated to a processing plant and will
significantly increase future volumes of gas available to be processed in the
Company's facilities.
20
<PAGE> 22
The gas produced from the majority of the new Wattenberg wells drilled on
acreage acquired from Amoco is dedicated for the life of the lease to Amoco's
Wattenberg gas processing plant. If Amoco were unable to process Company
production at its plant for any reason, including a shut-down of the plant, it
would have a short-term adverse impact on the Company. The Company has expanded
its processing facilities in Wattenberg in order to process Company and third
party gas that is not dedicated to Amoco. The Company intends to continue to
expand its facilities during 1994 to handle additional gas developed through
continued drilling activity. These facilities will also enable the Company to
partially mitigate the effects of significant downtime at the Amoco plant.
At the Roggen plant, gas is processed to recover gas liquids, primarily
propane and a butane/gasoline mix, from gas supplied by the Company and third
parties. The liquids are then sold separately from the residue gas. The liquids
are marketed to local and regional distributors and the residue gas is sold to
utilities, independent marketers and end users through an intrastate system and
the Colorado Interstate Gas ("CIG") pipeline. A liquids line permits the direct
sale of Roggen's liquids products through an Amoco line to the major interchange
at Conway, Kansas. In addition, Phillips Petroleum began reactivation of an old
interconnect, which should be operational by the end of the second quarter of
1994, which will connect the Roggen plant to the Phillips Powder River liquids
pipeline.
The Company's Wattenberg gathering systems include over 600 miles of
pipeline that collect, compress and deliver gas from over 1,400 wells to the
Roggen plant. During 1993, the Company substantially increased the capacity of
its gathering systems through the expansion of existing facilities and the
acquisition of new facilities. The Company also completed the second phase of
the Enterprise system during 1993. Enterprise collects a portion of the
Company's gas produced from acreage acquired from Amoco and delivers it to the
Amoco Wattenberg plant. Enterprise includes 26 miles of 20" diameter trunk and
29 miles of associated lateral gathering lines connecting 20 of the Company's
existing central delivery points. As a result of the completion of the second
phase, the Enterprise system has the capacity to deliver 75 MMcf per day to the
Amoco Wattenberg plant.
During 1993, the Company also expanded its gathering system by constructing
a nine mile 16" pipeline loop on the western portion of its Energy Pipeline
system, which came on line in October 1993. This expansion provides pressure
relief and additional capacity for further development in the area. In addition,
the Company acquired a pipeline that expands its gathering capacity to the north
of the Roggen plant, which may be converted to a residue line allowing for the
delivery of residue gas from the tailgate of the Roggen plant to the Williams
Natural Gas System.
The Company has negotiated a transportation arrangement with CIG that, in
conjunction with the gathering fees to be charged on the Enterprise system,
allows the delivery of gas to the Amoco Wattenberg plant at a favorable rate. In
addition to reducing the Company's exposure to future escalation in gathering
costs applicable to the Company's production, Enterprise provides an enhanced
degree of operational control. Because the Enterprise system interconnects with
the Company's other Colorado facilities, the Roggen plant and other plants in
the area can serve as a backup for processing a portion of the Company's gas in
the event of any curtailment at the Amoco Wattenberg plant. While shut downs of
Amoco's plant reduce the Company's production, diversion of gas to the Roggen
plant and, to a lesser degree, two other plants in the area, enabled the Company
to produce significant volumes that would have otherwise been curtailed.
Given the continued expansion of the Company's drilling program in 1994 and
beyond and the potential for third party connections, the Company is continuing
to explore opportunities to expand its Wattenberg gas facilities. Subsequent to
yearend, the decision was made to double the Company's processing capacity
through the construction of a new plant on the west side of the field. The new
plant is scheduled to be operational in late 1994.
Wyoming Facilities. The Company operates two pipeline systems in Wyoming
that enhance its ability to market gas produced from its properties in the
Washakie Basin. Wyoming Gathering and Production Company ("WYGAP") gathers gas
produced from 53 operated wells in the Barrel Springs Unit. The system has a
capacity of 26 MMcf per day. Throughput averaged 10 MMcf and 14 MMcf per day
during 1992 and 1993, respectively. WYGAP delivers gas to Western Transmission
Corporation ("Westrans"), a Company-
21
<PAGE> 23
owned interstate pipeline system which operates under FERC jurisdiction. At the
beginning of 1993, the Company assumed operations of CIG's Carbon County Blue
Gap gathering system pursuant to a lease. The Company has exercised an option to
acquire the system subject to regulatory approval. The Company also purchased
Blue Gap gathering facilities formerly owned by Williams Field Services. Both
systems extend the Company's transportation capabilities to the south.
The Westrans system consists of a 26-mile main pipeline, a smaller 9.2-mile
line and related gathering facilities. The system gathers and transports gas
under open access transportation service agreements on an interruptible basis.
The main line extends from the Washakie Basin area of Carbon County, Wyoming to
connections with Williams' and CIG's interstate pipelines in Sweetwater County,
Wyoming. Gas transported on Westrans also has access to California markets
through the Kern River Pipeline which was completed in February 1992 via
interconnects with CIG and Williams. Westrans is located near several other
interstate pipelines, providing the potential for additional interconnects that
offer alternative transportation routes to end markets. In addition to the gas
from WYGAP, which accounts for over 90% of its volumes, Westrans transports
volumes from other operated wells and third parties. The capacity of Westrans is
65 MMcf per day. Throughput volumes generally vary from 13 to 20 MMcf per day.
Daily throughput averaged 15 MMcf during 1992 and 1993. If the planned
acceleration of drilling in East Washakie occurs, volumes of gas on the
Company's gas pipeline in the area may be substantially increased. As the East
Washakie Project progresses, the Company expects to further expand its gathering
network in the area.
Other Facilities. The Company expanded its gathering system in southern
Nebraska during 1993 to gather gas produced from newly developed Cheyenne County
properties for delivery to various markets accessible through an interstate
pipeline. The Cheyenne system includes 9.5 miles of 4" to 6" trunkline and 6
miles of 3" lateral gathering lines. During the fourth quarter of 1993,
throughput averaged 3 MMcf per day of gas from 60 producing wells. Included in
the December 1992 acquisition of Wyoming properties was a gas processing plant
in Fremont County, Wyoming. The plant has a 20 MMcf per day capacity with
current throughput of 6.5 MMcf per day from the 28 producing wells in the
Riverton Dome Field.
In conjunction with the growing level of acquisition and development
activity in the Western Slope Project, the Company is actively exploring
alternatives to gather and transport future gas production, including the
possible construction of a Company-owned gathering and transportation line.
Traditionally, the lack of sufficient pipeline capacity has been a major
deterrent to development in the Piceance Basin.
INTERNATIONAL ACTIVITIES
The Company's strategy internationally is to develop projects that have the
potential for a major impact in the future. The Company attempts to structure
the projects to limit its financial exposure and mitigate political risk by
minimizing financial commitments in the early phases of a project and seeking
industry partners and investors to fund the majority of the equity capital. A
wholly owned subsidiary of the Company, SOCO International, Inc., is the holding
company for all the Company's international operations. During 1993, the Company
purchased from Edward T. Story, President of SOCO International, the 10% of SOCO
International held by him and canceled Mr. Story's option to purchase an
additional 20% of the company. In connection with the purchase, the Company
granted Mr. Story an option to purchase 10% of the currently outstanding shares
of SOCO International, which is financed primarily by Company loans, through
April 1998 for $600,000. The option price is subject to adjustment in certain
circumstances.
Russian Joint Venture. In early 1993, the Company formed Permtex, a joint
drilling venture with Permneft, a Russian oil and gas company, to develop four
major proven oil fields located in the Volga-Urals Basin of the Perm Region of
Russia, approximately 800 miles east of Moscow. During 1993, Permtex was
registered by the Russian authorities, representing governmental approval of the
terms of the joint venture and authorization for Permtex to commence business.
In early 1994, the Company executed a finance and insurance protocol with OPIC,
an agency of the United States government that provides financing and political
risk insurance for American investment in developing countries, related to the
financing of Permtex.
Permtex holds exploration and development rights to over 300,000 acres in
the Volga-Urals Basin. The contract area contains four major fields and four
minor fields as well as a number of prospects. The Company
22
<PAGE> 24
estimates that the four major fields could ultimately produce 115 million
barrels of oil. The major fields have been delineated through 45 previously
drilled wells, none of which had been placed on production as of yearend 1993.
It is anticipated that 25 of the existing wells will be placed on production, of
which four should go on stream in the first half of 1994, and that 400
additional development wells will be drilled over the next five to ten years.
The joint venture will primarily utilize Russian personnel and equipment and
Western technology under joint Russian/American management.
As of March 1, 1994, the Company holds a 28.1% interest in Permtex, after
giving effect to the purchases by each of Command, the Company's Australian
affiliate, and Holland Sea Search NV ("HSSH"), a Dutch affiliate of Command, of
6.25% interests in Permtex. Recently, a major Japanese trading company has also
committed to purchase a 10 to 20% interest in Permtex, which would reduce the
Company's interest to 20.6% if the full amount is purchased.
Command Petroleum Holdings NL. In May 1993, the Company purchased 42.8% of
the outstanding shares of Command for approximately $18.2 million. At the time
of the purchase, Thomas J. Edelman, President of the Company, Edward T. Story,
President of SOCO International, and two other designees were elected to
Command's eight-person board of directors. Command is an exploration and
production company based in Sydney, Australia and listed on the Australian Stock
Exchange. Following a private placement of equity securities in early 1994,
Command had working capital of $35 million and no debt. Its current market
capitalization approximates US$150 million. Command currently holds interests in
more than 20 exploration permits and production licenses primarily in the
Southwestern Pacific Rim including Australia and Papua New Guinea. Until
recently, Command held a 28.7% interest in HSSH, a publicly traded Dutch
exploration and production company whose primary asset is an interest in the
North Sea's Markham gas field. After yearend 1993, Command increased its
position in HSSH to nearly 48%. Recently, Command purchased a 6.25% interest in
Permtex, acquired an interest in an offshore Tunisian permit operated by
Marathon Oil Company and acquired an 11.4% interest in the East Shabwa Contract
Area in Yemen. Command funded the expenditures with a portion of a $16.4 million
privately placed equity offering which reduced the Company's ownership to 35.7%.
If as expected, all of Command's warrants expiring in November 1994 are
exercised, the Company's ownership would be decreased to 29.6%.
The Company believes that Command's exploration expertise, experienced
technical staff and inventory of prospects complement the Company's acquisition
and development expertise and position the Company to play a larger role in
overseas development of oil and gas reserves. In addition, Command and HSSH
provide access to international capital markets which could provide additional
sources of financing for international projects.
Mongolia. The Company further expanded its international efforts by
entering into a production sharing agreement with Mongol Petroleum Company, the
national oil company of Mongolia. The Company believes this agreement is the
first such contract ever awarded by Mongolia. The agreement covers 11,400 square
kilometers, or approximately 2.8 million gross acres, in the Tamstag Basin of
northeastern Mongolia. In addition, the Company received a right of first
refusal from Mongol Petroleum for the adjacent block which covers 11,130 square
kilometers. As a consequence, the Company controls over 5 million acres in this
basin which, although previously unexplored and remote from existing markets, is
highly prospective. These concessions offset the Hailar Basin of China, a
portion of which is included in the China National Petroleum Corporation's round
of invitations for bidding in 1994. During 1993, the Company initiated seismic
work to broadly define the subsurface and this work is expected to continue into
1995.
Tunisia. During 1993 the Company completed its 400 kilometer seismic
acquisition program in the Fejaj Permit area of central Tunisia. The permit area
encompasses approximately 1.2 million gross acres and is predominately onshore,
with a small portion extending into the Gulf of Gabes. After the Company
integrates the newly acquired seismic work with over 1,400 kilometers of
reprocessed data and extensive geological field information, the Company will
seek industry partners for a 1995 exploratory well.
23
<PAGE> 25
PRODUCTION, REVENUE AND PRICE HISTORY
The following table sets forth information regarding net production of
crude oil and liquids and natural gas, revenues and expenses attributable to
such production and to natural gas transportation, processing and marketing and
certain price and cost information for the five years ended December 31, 1993.
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1989 1990 1991 1992 1993
------- ------- ------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PRICE AND PER BARREL EXPENSES)
<S> <C> <C> <C> <C> <C>
PRODUCTION
Oil (MBbl)............................... 277 1,049 1,487 1,776 3,451
Gas (MMcf)............................... 4,027 12,769 18,382 23,090 35,080
MBOE(a).................................. 948 3,497 4,937 5,989 9,297
REVENUES
Oil production........................... $ 5,069 $24,806 $30,667 $ 33,512 $ 53,174
Gas production(b)........................ 7,410 24,997 34,677 43,851 71,467
------- ------- ------- -------- --------
Subtotal......................... 12,479 49,803 65,344 77,363 124,641
------- ------- ------- -------- --------
Transportation, processing and
marketing............................. 10,885 29,442 21,459 38,611 94,839
Interest and other....................... 3,179 2,928 5,698 4,198 10,405
------- ------- ------- -------- --------
Total............................ $26,543 $82,173 $92,501 $120,172 $229,885
------- ------- ------- -------- --------
------- ------- ------- -------- --------
OPERATING EXPENSES
Production............................... $ 4,930 $18,088 $24,882 $ 28,057 $ 44,901
Transportation, processing and
marketing............................. 9,168 24,103 14,202 30,469 84,840
------- ------- ------- -------- --------
$14,098 $42,191 $39,084 $ 58,526 $129,741
------- ------- ------- -------- --------
------- ------- ------- -------- --------
GROSS MARGIN............................... $12,445 $39,982 $53,417 $ 61,646 $100,144
------- ------- ------- -------- --------
------- ------- ------- -------- --------
PRODUCTION DATA
Average sales price(c)
Oil (Bbl)............................. $ 18.30 $ 23.65 $ 20.62 $ 18.87 $ 15.41
Gas (Mcf)(a)(b)....................... 1.65 1.69 1.68 1.74 1.94
BOE(a)................................ 12.97 14.18 13.24 12.92 13.41
Average operating expense/BOE............ $ 5.20 $ 5.17 $ 5.04 $ 4.68 $ 4.83
</TABLE>
- ---------------
(a) Gas production is converted to oil equivalents at the rate of 6 Mcf per
barrel except for Thomasville production which through 1992 was converted
based on its price equivalency to the Company's other gas. Average gas
prices exclude Thomasville production. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
(b) Sales of natural gas liquids are included in gas revenues. Gas revenues for
the year ended December 31, 1989 and 1990 include nonrecurring receipts of
$183,000 and $219,000, respectively, in settlement of contract claims, which
have been excluded from average sales price computations.
(c) The Company estimates that its composite net wellhead prices at December 31,
1993 were approximately $2.11 per Mcf of gas and $11.49 per barrel of oil.
24
<PAGE> 26
DRILLING RESULTS
The following table sets forth information with respect to wells drilled
during the past three years. The information should not be considered indicative
of future performance, nor should it be assumed that there is necessarily any
correlation between the number of productive wells drilled, quantities of
reserves found or economic value. Productive wells are those that produce
commercial quantities of hydrocarbons whether or not they produce a reasonable
rate of return.
<TABLE>
<CAPTION>
1991 1992 1993
----- ----- -----
<S> <C> <C> <C>
Development wells
Productive
Gross.................................................. 143.0 241.0 382.0
Net.................................................... 117.2 207.5 316.0
Dry
Gross.................................................. 3.0 6.0 10.0
Net.................................................... 2.8 2.7 5.5
Exploratory wells
Productive
Gross.................................................. 5.0 -- 2.0
Net.................................................... 1.8 -- 2.0
Dry
Gross.................................................. 5.0 -- 6.0
Net.................................................... 1.5 -- 3.3
</TABLE>
As of December 31, 1993, the Company had 61 gross (50.9 net) development
wells in progress. Between yearend and February 28, 1994, the Company spudded
118 wells. At that date 135 gross (116.7 net) wells, including wells in progress
at yearend, had been completed, two wells (1.5 net) had been abandoned and 42
gross (36.3 net) development wells were in progress.
FIELD OPERATIONS
In its capacity as operator, the Company supervises day-to-day field
activities, generally employing a combination of its personnel and contract
pumpers. The Company maintains eight district field offices and one division
office.
As operator, the Company charges overhead fees to all working interest
owners according to the applicable operating agreements. As of the end of 1991,
1992 and 1993, respectively, the Company operated 1,442, 1,745 and 2,176 wells.
The Company received overhead reimbursements for operations and drilling of
$10.1 million, $12.9 million and $15.5 million during 1991, 1992 and 1993,
respectively (including reimbursements attributable to the Company's interest).
The increase in reimbursements is attributable to the increase in operated
drilling and producing wells and contractual escalations. Based on the time
allocated to operations, these reimbursements in aggregate generally have
exceeded the costs of such activities.
PROPERTIES
The Company's reserves are concentrated in several major producing areas.
These include the Wattenberg Field in Colorado, central and southern Wyoming,
the Piceance and Uinta Basins in the Western Slope of Colorado and Utah, the
Giddings area in South Texas, the Spraberry Trend in West Texas, waterflood
units in Texas, and the Appalachian Basin in eastern Ohio and Pennsylvania.
At December 31, 1993, the Company had interests in 5,122 gross (2,187 net)
producing oil and gas wells located in 15 states and in the Gulf of Mexico. As
of December 31, 1993, estimated proved reserves totalled 31.9 million barrels of
oil and 430.1 Bcf of gas. In addition to its oil and gas reserves, the Company
holds interests in nine gas transportation and processing facilities. See
"-- Gas Management."
25
<PAGE> 27
Significant Properties. Although the Company's properties are widely
dispersed geographically, emphasis has been placed on establishing hubs in
certain producing basins. Interests in five producing areas accounted for
approximately 90% of Pretax PW10% Value at December 31, 1993. This concentration
of assets results in economic efficiencies in the management of assets and
permits identification of complementary acquisition candidates. Summary
information regarding the five most significant properties is set forth below.
<TABLE>
<CAPTION>
PROVED RESERVE
QUANTITIES PRETAX PW10% VALUE
------------------------ ------------------------
CRUDE OIL NATURAL AMOUNT PERCENT
AND LIQUIDS GAS -------------- -------
----------- -------- (IN THOUSANDS)
(MBBL) (MMCF)
<S> <C> <C> <C> <C>
DJ Basin (CO, NE).......................... 16,984 242,155 $245,617 62.9%
East Washakie (WYO)........................ 1,334 72,871 41,903 10.7
Central Wyoming (WYO)...................... 7,207 28,913 30,905 7.9
Western Slope (CO & UT).................... 439 41,070 22,113 5.7
Giddings Field (TX)........................ 752 7,987 10,960 2.8
----------- -------- -------------- -------
Subtotal......................... 26,716 392,996 351,498 90.0
Other...................................... 5,214 37,093 38,911 10.0
----------- -------- -------------- -------
Total............................ 31,930 430,089 $390,409 100.0%
----------- -------- -------------- -------
----------- -------- -------------- -------
</TABLE>
Proved Reserves. The following table sets forth estimated yearend proved
reserves for the three years ended December 31, 1993.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1991 1992 1993
------- ------- -------
<S> <C> <C> <C>
Crude oil and liquids (MBbl)
Developed........................................... 9,094 21,116 18,032
Undeveloped......................................... 10,584 11,086 13,898
------- ------- -------
Total....................................... 19,678 32,202 31,930
------- ------- -------
------- ------- -------
Natural gas (MMcf)
Developed........................................... 136,229 194,621 268,349
Undeveloped......................................... 110,940 93,037 161,740
------- ------- -------
Total....................................... 247,169 287,658 430,089
------- ------- -------
------- ------- -------
Total MBOE (a).............................. 66,641 84,393 103,612
------- ------- -------
------- ------- -------
</TABLE>
- ---------------
(a) Natural gas reserves are converted to oil equivalents at the rate of 6 Mcf
per barrel, except Thomasville gas reserves prior to 1993. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The following table sets forth pretax future net revenues from the
production of proved reserves and the Pretax PW10% Value of such revenues.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------------------------
DEVELOPED UNDEVELOPED(A) TOTAL
--------- -------------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
1994............................................ $ 81,401 $(24,109) $ 57,292
1995............................................ 59,421 1,220 60,641
1996............................................ 47,148 8,472 55,620
Remainder....................................... 286,510 228,209 514,719
--------- -------------- --------
Total................................. $ 474,480 $213,792 $688,272
--------- -------------- --------
--------- -------------- --------
Pretax PW10% Value.............................. $ 297,638 $ 92,771 $390,409(b)
--------- -------------- --------
--------- -------------- --------
</TABLE>
- ---------------
(a) Net of estimated capital costs, including estimated costs of $68.9 million
during 1994.
(b) The after tax PW10% value of proved reserves totalled $340.5 million at
yearend 1993.
26
<PAGE> 28
The quantities and values in the preceding tables are based on prices in
effect at December 31, 1993, averaging $11.49 per barrel of oil and $2.11 per
Mcf of gas. Price reductions decrease reserve values by lowering the future net
revenues attributable to the reserves and will reduce the quantities of reserves
that are recoverable on an economic basis. Price increases have the opposite
effect. Any significant decline in prices of oil or gas could have a material
adverse effect on the Company's financial condition and results of operations.
Proved developed reserves are proved reserves that are expected to be
recovered from existing wells with existing equipment and operating methods.
Proved undeveloped reserves are proved reserves that are expected to be
recovered from new wells drilled to known reservoirs on undrilled acreage for
which the existence and recoverability of such reserves can be estimated with
reasonable certainty, or from existing wells where a relatively major
expenditure is required to establish production.
Future prices received for production and future production costs may vary,
perhaps significantly, from the prices and costs assumed for purposes of these
estimates. There can be no assurance that the proved reserves will be developed
within the periods indicated or that prices and costs will remain constant. With
respect to certain properties that historically have experienced seasonal
curtailment, the reserve estimates assume that the seasonal pattern of such
curtailment will continue in the future. There can be no assurance that actual
production will equal the estimated amounts used in the preparation of reserve
projections.
The present values shown should not be construed as the current market
value of the reserves. The 10% discount factor used to calculate present value,
which is specified by the Securities and Exchange Commission ("SEC"), is not
necessarily the most appropriate discount rate, and present value, no matter
what discount rate is used, is materially affected by assumptions as to timing
of future production, which may prove to be inaccurate. For properties operated
by the Company, expenses exclude the Company's share of overhead charges. In
addition, the calculation of estimated future net revenues does not take into
account the effect of various cash outlays, including, among other things,
general and administrative costs and interest expense.
There are numerous uncertainties inherent in estimating quantities of
proved reserves and in projecting future rates of production and timing of
development expenditures. The data in the above tables represent estimates only.
Oil and gas reserve engineering must be recognized as a subjective process of
estimating underground accumulations of oil and gas that cannot be measured in
an exact way, and estimates of other engineers might differ materially from
those shown above. The accuracy of any reserve estimate is a function of the
quality of available data and engineering and geological interpretation and
judgment. Results of drilling, testing and production after the date of the
estimate may justify revisions. Accordingly, reserve estimates are often
materially different from the quantities of oil and gas that are ultimately
recovered.
Netherland, Sewell & Associates, Inc. ("NSAI"), independent petroleum
consultants, prepared estimates of or audited the Company's proved reserves
which collectively represent more than 80% of Pretax PW10% Value as of December
31, 1993. Approximately 38% of the yearend Pretax PW10% Value was estimated
internally by the Company and 62% was estimated independently by NSAI. No
estimates of the Company's reserves comparable to those included herein have
been included in reports to any federal agency other than the SEC.
Producing Wells. The following table sets forth certain information at
December 31, 1993 relating to the producing wells in which the Company owned a
working interest. The Company also held royalty interests in 240 producing
wells. Wells are classified as oil or gas wells according to their predominant
production stream.
<TABLE>
<CAPTION>
AVERAGE
PRINCIPAL GROSS NET WORKING
PRODUCT STREAM WELLS WELLS INTEREST
----------------------------------------------------- ----- ----- -------
<S> <C> <C> <C>
Crude oil and liquids................................ 3,026 1,297 43%
Natural gas.......................................... 2,096 890 42%
----- ----- -------
Total...................................... 5,122 2,187 43%
----- ----- -------
----- ----- -------
</TABLE>
27
<PAGE> 29
CUSTOMERS AND MARKETING
The Company's oil and gas production is principally sold to refiners and
others having pipeline facilities near its properties. Where there is no access
to gathering systems, crude oil is trucked to storage facilities. In 1992 and
1993, Amoco accounted for approximately 27% and 12% of revenues, respectively,
as the result of the contractual dedication, which terminated at the end of
1993, of a portion of the Company's natural gas and natural gas liquids produced
from certain of its Wattenberg acreage. Historically, this arrangement provided
for average prices in excess of spot due to participation in certain fixed price
contracts, many of which are expected to expire over the next two years. The
Company exercised its option to release its natural gas and natural gas liquids
and began marketing its production beginning January 1, 1994. The Company
believes, however, that it can obtain pricing comparable to that which would
have been obtainable through Amoco. The marketing of oil and gas by the Company
can be affected by a number of factors that are beyond its control and whose
future effect cannot be accurately predicted. The Company does not believe,
however, that the loss of any of its customers would have a material adverse
effect on its operations.
In addition to marketing a significant portion of its own gas, in 1992 the
Company initiated an effort to supplement its cash flow through the purchase and
resale of gas owned by third parties. Gross margins during 1992 and 1993 from
third party marketing activities was $.6 million and $1.2 million, respectively,
as average third party volumes increased from 58.7 to 89.9 MMcf per day. The
Company expects to continue increasing its role in third party gas marketing.
In June 1991, the Company entered into a contract to supply gas to a
cogeneration facility through August 2004. The contract calls for the Company to
supply 10,000 MMBtu per day. This plant, which requires up to 24,500 MMBtu per
day of gas, began operations in 1989 and is located at a manufacturing facility
in Oklahoma City. The facility has firm fifteen-year sales agreements with a
utility company for electricity and with a tire manufacturer for steam. The
effect of this contract depends on market prices for gas and its choice of
alternative sources of gas (including the spot market) to meet its supply
commitments. Gross margin generated from the contract was approximately $1.5
million for both 1991 and 1992. A contractual limitation of the contract sales
price and rising gas purchase costs resulted in a net loss of $267,000 on the
contract during 1993. At present gas price levels, the Company foresees
continued negative or breakeven margins for this contract through July 1994. At
that time, a change in the pricing formula should result in improved margins.
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture to be dated as of May 1, 1994
between the Company, as issuer, and Texas Commerce Bank National Association, as
trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The terms of the
Indenture are governed by certain provisions contained in the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). The following summaries of
certain provisions of the Indenture do not purport to be complete, and where
particular provisions of the Indenture are referred to, such provisions,
including the definitions of certain capitalized terms used in this Prospectus,
are incorporated by reference as a part of such summaries, which are qualified
in their entirety by reference to the provisions of the Indenture. The section
("Section") and article ("Article") references appearing below are to sections
and articles of the Indenture.
GENERAL
The Notes will be unsecured subordinated obligations of the Company, will
mature on March 31, 2001 and will be in the aggregate principal amount of
$100,000,000 ($115,000,000 aggregate principal amount if the Underwriters'
over-allotment option is exercised in full). The Notes will bear interest from
the date of issuance at the rate per annum shown on the cover page of this
Prospectus. Interest will be payable semi-annually on March 31 and September 30
of each year, commencing September 30, 1994, to the persons in whose names such
Notes (or any predecessor Notes) are registered at the close of business on the
March 15 or September 15 preceding such Interest Payment Date (Sections 301 and
307).
28
<PAGE> 30
Principal of and premium, if any, and interest on the Notes will be
payable, and the Notes will be convertible and may be presented for transfer and
exchange, at the office or agency maintained by the Company for such purposes,
which will initially be the office of the Trustee located at 80 Broad Street,
Fourth Floor, New York, New York 10004. However, at the option of the Company,
payment of interest on the Notes may be made by check mailed to the address of
persons entitled thereto as shown in the register of the Security Registrar. No
service charge will be made upon any registration of transfer or exchange of the
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
The Indenture does not limit the incurrence of additional indebtedness,
including Senior Indebtedness, by the Company.
CONVERSION RIGHTS
The Notes will be convertible, in whole or from time to time in part (in
denominations of $1,000 or integral multiples thereof), at the option of the
holder thereof, into Common Stock of the Company, initially at the conversion
price stated on the cover page hereof, at any time prior to maturity, unless
previously redeemed by the Company. In the case of Notes called for redemption,
conversion rights will terminate at the close of business on the fifth business
day preceding the Redemption Date, except that, with respect to any redemption
occurring on March 31, 1997 or within five business days thereafter, conversion
rights will terminate at the close of business on the Redemption Date such that
all holders of Notes to be redeemed will be entitled to receive the March 31,
1997 interest payment (assuming such holders held the Notes on March 15, 1997).
Notwithstanding anything to the contrary in the foregoing, the Notes will not be
convertible at any time when payments on the Notes are prohibited under the
subordination provisions of the Indenture as described under "-- Subordination
of Notes" (Section 1201).
If the Company, by dividend or otherwise, declares or makes a distribution
on its Common Stock of the type referred to in clause (iv) or (v) below, the
holder of each Note, upon the conversion thereof subsequent to the close of
business on the date fixed for the determination of stockholders entitled to
receive such distribution and prior to the effectiveness of the conversion price
adjustment in respect of such distribution pursuant to clause (iv) or (v) below,
will be entitled to receive for each share of Common Stock into which such Note
is converted the portion of the evidences of indebtedness, shares of capital
stock, cash and other assets so distributed applicable to one share of Common
Stock; provided, however, that the Company may, with respect to all holders so
converting, in lieu of distributing any portion of such distribution not
consisting of cash or securities of the Company, pay such holder cash in an
amount equal to the fair market value thereof, as determined in good faith by
the Board of Directors (Section 1201).
The conversion price will be subject to adjustment in certain events,
including: (i) dividends (and other distributions) payable in Common Stock on
any class of capital stock of the Company; (ii) the issuance to all holders of
Common Stock of rights, warrants or options entitling them to subscribe for or
purchase Common Stock at less than the current market price (as provided in the
Indenture); provided, however, that if such rights, warrants or options are only
exercisable upon the occurrence of certain triggering events, then the
conversion price will not be adjusted until such triggering events occur; (iii)
subdivisions and combinations of Common Stock; (iv) distributions to all holders
of Common Stock of evidences of indebtedness of the Company, shares of any class
of capital stock, cash or other assets (including securities, but excluding
those dividends, rights, warrants, options and distributions referred to in
clauses (i) and (ii) above and excluding dividends and distributions exclusively
paid in cash up to the greater of (x) retained earnings of the Company on the
date such distribution or dividend was declared or (y) Net Income (as defined
below) of the Company during the four full fiscal quarters preceding the date
such distribution or dividend was declared, and other than in connection with a
tender offer or other negotiated purchase made by the Company or any Subsidiary
for all or a portion of the Common Stock); provided, however, that if any
rights, warrants or options in respect of which an adjustment is provided for in
this clause (iv) are only exercisable upon the occurrence of certain triggering
events, then the conversion price will not be adjusted until such triggering
events occur; (v) distributions consisting exclusively of cash (specifically
including distributions paid in cash up to the greater of (x) retained earnings
of the Company on the date such distribution or dividend was declared or (y)
29
<PAGE> 31
Net Income of the Company during the four full fiscal quarters preceding the
date such distribution or dividend was declared, but excluding any cash
distributions for which an adjustment has been made pursuant to a preceding
clause of this paragraph) to all holders of Common Stock in an aggregate amount
that, together with (A) other all-cash distributions made within the preceding
12 months not triggering a conversion price adjustment and (B) all Excess Tender
Payments (as defined below) in respect of each tender or exchange offer by the
Company or any Subsidiary for Common Stock concluded within the preceding 12
months not triggering a conversion price adjustment, exceeds an amount equal to
20% of the Company's deemed market capitalization on the date fixed for the
determination of stockholders entitled to receive such distribution (calculated
as set forth in the Indenture); (vi) issuances of Common Stock to an Affiliate
for a net consideration per share less than the current market price per share
(other than issuances of Common Stock under certain management benefit plans);
and (vii) payment of an Excess Tender Payment in respect of a tender or exchange
offer by the Company or any Subsidiary for Common Stock, if the aggregate amount
of such Excess Tender Payment, together with (A) the aggregate amount of any
all-cash distributions made within the preceding 12 months not triggering a
conversion price adjustment and (B) all Excess Tender Payments in respect of
each tender or exchange offer by the Company or any Subsidiary for Common Stock
concluded within the preceding 12 months not triggering a conversion price
adjustment, exceeds an amount equal to 20% of the Company's deemed market
capitalization on the expiration of such tender offer (calculated as set forth
in the Indenture) (Section 1204). For purposes of these conversion price
adjustments, the term (i) "Excess Tender Payment" means the excess of (A) the
aggregate of the cash and value of other consideration paid by the Company with
respect to the shares acquired in the tender or exchange transaction over (B)
the market value of such acquired shares after the completion of the tender or
exchange offer (calculated as set forth in the Indenture) and (ii) "Net Income"
of any Person means the net income of such Person net of non-cash charges taken
as a result of accounting changes required to be made by the Financial
Accounting Standards Board after the date of the Indenture.
No adjustments in the conversion price are required for any dividend or
distribution referred to above if the holders may participate in the dividend or
distribution (on a basis determined in good faith to be fair by the Board of
Directors) and receive the same consideration they would have received if they
had converted the Notes (Section 1213).
No adjustment of the conversion price will be required to be made until
cumulative adjustments amount to 1% or more of the conversion price as last
adjusted. In addition to the foregoing adjustments, the Company will be
permitted to make such reductions in the conversion price as it considers to be
advisable in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the recipient (Section
1204).
Subject to any applicable right of the holders to receive the Change of
Control Purchase Price (as described below), in the case of certain
consolidations or mergers to which the Company is a party or the transfer or
lease of the Company's properties or assets substantially as an entirety, each
holder has the right to convert each Note only into the kind and amount of
securities, cash and other property receivable upon the consolidation, merger,
transfer or lease by a holder of the number of shares of Common Stock into which
such Note might have been converted immediately prior to such consolidation,
merger, transfer or lease (assuming such holder of Common Stock is not a
Constituent Person and such holder failed to exercise any rights of election and
received per share the kind and amount of consideration received per share by a
plurality of non-electing shares) (Section 1211).
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon the market
price of a share of Common Stock (Section 1203). Except as provided below, no
adjustment will be made upon a conversion of Notes for interest accrued thereon.
The Company's delivery to the holder of the fixed number of shares of Common
Stock into which the Note is convertible will be deemed to satisfy the Company's
obligation to pay the principal amount of the Note and all accrued interest that
has not previously been paid. If a Note is surrendered for conversion during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the close of business on any Interest Payment Date,
then notwithstanding such conversion, interest payable in respect of the Note so
surrendered will be paid in cash to the person in whose name such Note is
registered at the close
30
<PAGE> 32
of business on such Regular Record Date, and (except in the case of Notes with a
Maturity Date prior to such Interest Payment Date) when so surrendered for
conversion, such Note must be accompanied by payment of a amount equal to the
interest thereon which the registered holder as of the close of business on such
Regular Record Date is to receive (Sections 307 and 1202).
SUBORDINATION OF NOTES
The payment of the principal of and premium, if any, and interest on the
Notes is, to the extent set forth in the Indenture, subordinated in right of
payment to the prior payment in full of all Senior Indebtedness, whether now
outstanding or incurred in the future (Section 1301). Upon any payment or
distribution of assets of the Company to creditors upon any liquidation,
dissolution, winding up, assignment for the benefit of creditors or marshalling
of assets and liabilities or any bankruptcy, insolvency, receivership,
liquidation, reorganization or similar proceedings of the Company, the holders
of all Senior Indebtedness will first be entitled to receive payment in full of
all amounts due or to become due thereon before the holders of the Notes will be
entitled to receive any payment (other than any payment in the form of Permitted
Junior Securities) on account of the principal of or premium, if any, or
interest on the Notes, including payment of the Redemption Price and the Change
of Control Purchase Price of the Notes, and before the Notes may be converted
into Common Stock (Section 1302).
No payment (other than any payment in the form of Permitted Junior
Securities) on account of principal of and premium, if any, or interest on the
Notes, including payment of the Redemption Price and the Change of Control
Purchase Price on the Notes, may be made, and the Notes may not be converted
into Common Stock, if a Payment Event of Default shall have occurred and be
continuing. In addition, no payment (other than any payment in the form of
Permitted Junior Securities) on account of principal of or premium, if any, or
interest on the Notes, including payment of the Redemption Price and the Change
of Control Purchase Price on the Notes, may be made, and the Notes may not be
converted into Common Stock, if a Non-payment Event of Default shall have
occurred and be continuing, for the period (a "Payment Blockage Period")
commencing on receipt of notice of such event of default by the Trustee from
holders of at least a majority in principal amount of any Designated Senior
Indebtedness (or any trustee or other representative therefor) and ending on the
earlier of (i) the date such Non-payment Event of Default has been cured or
waived or has ceased to exist or any acceleration of such Designated Senior
Indebtedness has been rescinded or annulled or such Designated Senior
Indebtedness shall have been discharged and (ii) the date 176 days after such
receipt of notice. Any number of such notices may be given; provided, however,
that, during any 360-day period, the aggregate Payment Blockage Periods shall
not exceed 176 days and there shall be a period of at least 184 consecutive days
when no Payment Blockage Period is in effect. No default existing or continuing
when a Payment Blockage Period begins may be the basis for any subsequent
Payment Blockage Period unless such default has been cured for a period of at
least 90 consecutive days. In the event that, notwithstanding the restrictions
described in the preceding sentences, the Company makes any payment to the
Trustee or a holder of Notes prohibited by any such restriction, with such
Trustee or holder, as the case may be, knowing of such contravention before
receipt thereof, then such payment will be required to be paid over and
delivered forthwith to the Company to the extent necessary to pay in full all
such Senior Indebtedness (Section 1303).
The subordination rights of holders of Senior Indebtedness will not be
prejudiced or impaired by any acts or failures to act by the Company or by any
such holder (Section 1308). The subordination of the Notes set forth above will
not prevent the occurrence of any Event of Default under the Indenture.
Furthermore, the subordination of the Notes as set forth above will not impair,
as between the Company, the holders of the Notes and creditors of the Company
other than holders of Senior Indebtedness, the obligations of the Company to
make payments on the Notes in accordance with their terms. In certain
circumstances, as set forth in the Indenture, the holders of Notes will be
subrogated to certain rights of the holders of Senior Indebtedness upon payment
in full of all Senior Indebtedness (Section 1302).
By reason of such subordination, in the event of insolvency of the Company,
the holders of Senior Indebtedness (as well as other creditors of the Company
who are holders of indebtedness that is not subordinated to the Senior
Indebtedness) may recover more, ratably, than the holders of the Notes.
31
<PAGE> 33
The Notes will also be effectively subordinated to all liabilities,
including trade payables and capitalized lease obligations, if any, of the
Company's subsidiaries. Any right of the Company to receive the assets of any of
its subsidiaries upon their liquidation or reorganization (and the consequent
right of the holders of the Notes to participate in those assets) will be
subject to the prior payment of claims of that subsidiary's creditors (including
trade creditors), except to the extent that the Company is itself a creditor of
such subsidiary, in which case the claims of the Company would still be subject
to the prior payment of claims secured by security interests in the assets of
such subsidiary and any other indebtedness of such subsidiary senior to that
held by the Company.
Immediately following the sale of the Notes offered hereby and application
of the proceeds therefrom, the Company estimates that the sum of its Senior
Indebtedness and the indebtedness of its subsidiaries will total approximately
$46 million. There are no restrictions in the Indenture on the creation of
Senior Indebtedness (or any other indebtedness). The agreements under which
Senior Indebtedness may be outstanding in the future could contain provisions
which may require repayment of such respective Senior Indebtedness prior to
repayment of the Notes upon, among other things, a Change of Control. If the
Company is unable to obtain the requisite consents under its Senior Indebtedness
to enable it to repurchase the Notes or is unable to repay all Senior
Indebtedness, there would be both an Event of Default under the Notes and an
event of default under such Senior Indebtedness, as a result of which events the
Company would be prohibited by the subordination terms of the Indenture from
repurchasing Notes or making other payments in respect thereof. Furthermore, the
exercise by the holders of their right to require the Company to repurchase the
Notes could cause a default under the Designated Senior Indebtedness of the
Company, even if the Change of Control itself does not, due to the financial
effect of such repurchase on the Company. As a result, the repurchase of the
Notes could be blocked pursuant to the subordination terms of the Indenture.
Finally, the Company's ability to pay cash to the holders of Notes upon a
repurchase may be limited by the Company's then existing financial resources.
Failure of the Company to pay the Change of Control Purchase Price will create
an Event of Default with respect to the Notes, whether or not such repurchase is
permitted by the subordination terms of the Indenture. See " -- Repurchase of
Notes at the Option of the Holder Upon a Change of Control."
"Bank Credit Facility" means the Company's existing bank credit facility
and any renewals, amendments, extensions, supplements, modifications,
refinancings or replacements thereof (Section 101).
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Bank Credit Facility if the sum of the amounts outstanding under the Bank
Credit Facility and the amounts available for borrowing thereunder is equal to
or greater than $25,000,000 and (ii) all other Senior Indebtedness having an
outstanding principal amount equal to or greater than $25,000,000 (provided,
however, that the agreements, indentures or other instruments evidencing any
Senior Indebtedness referred to in this clause (ii) specifically state that such
Senior Indebtedness shall be classified as "Designated Senior Indebtedness" for
purposes of the Indenture) (Section 101).
"Indebtedness" of any Person means, without duplication, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or similar instruments, including
obligations incurred in connection with the acquisition of property, assets or
businesses; (iii) every obligation of such Person under conditional sale or
other title retention agreements relating to assets or property purchased by
such Person or issued or assumed as the deferred purchase price of property,
assets or services (but excluding trade accounts payable or accrued liabilities
arising in the ordinary course of business that are not overdue by more than 90
days or are being contested by such Person in good faith); (iv) every Capital
Lease Obligation of such Person; (v) every obligation of such Person with
respect to any Sale and Leaseback Transaction to which such Person is a party;
(vi) every obligation of such Person with respect to letters of credit, bankers
acceptances or similar facilities issued for the account of such Person; (vii)
the maximum fixed redemption or repurchase price of outstanding Redeemable Stock
of such Person; (viii) every obligation of such Person with respect to
performance, surety or similar bonds; (ix) every obligation of such Person under
interest rate, commodity or foreign currency swap, cap, hedge, exchange or
similar agreements; (x) every obligation of the type referred to in clauses (i)
through (ix) and clause (xi) of another Person the payment of which such Person
has Guaranteed or is otherwise responsible for or liable for, directly or
32
<PAGE> 34
indirectly, as obligor, Guarantor or otherwise; and (xi) every amendment,
modification, renewal and extension of an obligation of the type referred to in
clauses (i) through (x) (Section 101).
"Non-payment Event of Default" means any event (other than a Payment Event
of Default) the occurrence of which entitles any one or more persons to
accelerate the maturity of any Designated Senior Indebtedness (Section 101).
"Payment Event of Default" means any default in the payment of principal of
or premium, if any, or interest on any Designated Senior Indebtedness when due
(whether at maturity, upon acceleration or otherwise) (Section 101).
"Permitted Junior Securities" means subordinated debt securities of the
Company (or any successor obligor with respect to the Senior Indebtedness)
provided for by a plan of reorganization or readjustment that are subordinated
in right of payment to all Senior Indebtedness that may be outstanding to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated as provided in the Indenture (Section 101).
"Senior Indebtedness" means all obligations of the Company for Indebtedness
(other than Indebtedness described in clause (vii) of the definition of
Indebtedness), whether now existing or hereafter incurred or assumed; provided
that, Senior Indebtedness shall not include (A) any obligation owed to a
Subsidiary or an Affiliate or Related Person of the Company, (B) any obligation
that by its terms is not superior in right of payment to the Notes, (C) any
obligation in respect of the Company's 8% Convertible Subordinated Debentures
and 6% Convertible Subordinated Debentures, if and when issued, for which the
Company's existing preferred stock is exchangeable (the Notes not being senior
in right of payment to such debentures) or (D) any obligation constituting a
trade account payable (Section 101).
REDEMPTION
The Notes will be redeemable, at the Company's option, as a whole or from
time to time in part, at any time on or after March 31, 1997, upon not less than
20 nor more than 60 days notice mailed to the registered holders thereof, at the
redemption prices (expressed as a percentage of the principal amount thereof)
set forth below if redeemed during the 12-month period beginning March 31 of the
years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
--------------------------------------------- ----------------
<S> <C>
1997......................................... %
1998......................................... %
1999......................................... %
2000......................................... %
</TABLE>
together, in each case, with accrued interest 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)
(Sections 203, 1101, and 1107).
If less than all the Notes are to be redeemed, the Notes to be redeemed
shall be selected by the Trustee in such manner as the Trustee shall deem
appropriate and fair (Section 1104).
The Company's existing bank credit facility prohibits the Company from
redeeming any Notes unless (i) such redemption is permitted under the restricted
payment covenant contained in such bank credit facility and (ii) at the time of
such redemption and after giving effect thereto, no default shall have occurred
under such bank credit facility.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
In the event of any Change of Control (as defined below) with respect to
the Company which constitutes a Repurchase Event (as defined below), each holder
of Notes will have the right, at such holder's option, subject to the terms and
conditions of the Indenture, to require the Company to repurchase all or any
part (provided that the principal amount must be $1,000 or an integral multiple
thereof) of the holder's Notes on
33
<PAGE> 35
the date (the "Change of Control Purchase Date") that is 60 days after the date
the Company's Change of Control Notice (as defined below) is mailed (or such
later date as is required by law), at a cash price equal to 100% of the
principal amount plus accrued interest to the Change of Control Purchase Date
(the "Change of Control Purchase Price"). The Change of Control Purchase Price
may be less than the fair market value of the Notes on the Change of Control
Purchase Date. Promptly, but in any event within 29 days following any Change of
Control, the Company is required, with respect to any Senior Indebtedness that
would prohibit the repurchase of Notes by the Company in the event of such
Change of Control, either to repay all such Senior Indebtedness in full or
obtain the requisite consents under such Senior Indebtedness to permit the
repurchase of the Notes as provided below. The Company first is required to
comply with the covenants in the preceding sentence before it is required to
repurchase Notes pursuant to a Change of Control. The foregoing will in no way
limit the occurrence of an Event of Default, including an Event of Default
arising from a default under the covenants of the second sentence of this
paragraph (Section 1401 and 1402).
Within 29 days after a Change of Control which constitutes a Repurchase
Event, the Company is obligated to mail to the Trustee and to all holders of
Notes at their addresses shown in the register of the Security Registrar (and to
beneficial owners as required by applicable law) a notice (the "Change of
Control Notice") regarding the Change of Control. The Change of Control Notice
will describe: (i) the events causing the Change of Control; (ii) the Change of
Control Purchase Price; (iii) the Change of Control Purchase Date; (iv)
information regarding the conversion rights of the Notes; and (v) the procedures
for withdrawing a Change of Control Purchase Notice. The Change of Control
Notice will also state whether or not the Company has satisfied its obligations
regarding Senior Indebtedness referred to in the preceding paragraph (Section
1401).
To exercise the right to have Notes repurchased following a Change of
Control, a holder must deliver a Change of Control Purchase Notice to the Paying
Agent at its office maintained for such purpose, prior to the close of business
on the Change of Control Purchase Date. The Change of Control Purchase Notice
shall state: (i) the certificate numbers of the Notes to be delivered by the
holder thereof for purchase by the Company; (ii) the portion of the principal
amount of Notes to be repurchased, which portion must be $1,000 or an integral
multiple thereof; and (iii) that such Notes are to be repurchased by the Company
pursuant to the applicable provision of the Indenture (Section 1401). A holder
of record of Notes shall be entitled to deliver a Change of Control Purchase
Notice with respect to any or all Notes held by it; provided, however, that such
holder may be required to provide evidence satisfactory to the Company that,
with respect to each beneficial holder of the Notes to be delivered to the
Company, such beneficial holder is exercising the right to require the
repurchase of all of the Notes in which it has a beneficial interest.
Any Change of Control Purchase Notice may be withdrawn by the holder by a
written notice of withdrawal delivered to the Paying Agent prior to the close of
business on the Change of Control Purchase Date. The notice of withdrawal shall
state the principal amount and the certificate numbers of the Notes as to which
the withdrawal notice relates and the principal amount, if any, which remains
subject to a Change of Control Purchase Notice (Sections 1401 and 1402).
Payment of the Change of Control Purchase Price for Notes for which a
Change of Control Purchase Notice has been delivered and not withdrawn is
conditioned upon delivery of such Notes (together with necessary endorsements)
to the Paying Agent at its office maintained for such purpose, at any time
(whether prior to, on, or after the Change of Control Purchase Date) after the
delivery of such Change of Control Purchase Notice. Payment of the Change of
Control Purchase Price for such Notes will be made promptly following the later
of the Change of Control Purchase Date and the time of delivery of such Notes
(Sections 1401 and 1402).
"Change of Control" shall occur when: (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (A) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly-owned subsidiary of the
Company in which all shares of Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (B) pursuant to which the Common Stock would be converted into cash,
securities or other
34
<PAGE> 36
property, in each case other than a consolidation or merger of the Company in
which the holders of the Common Stock immediately prior to the consolidation or
merger have, directly or indirectly, at least a majority of the Common Stock of
the continuing or surviving corporation immediately after such consolidation or
merger; or (iii) any person or any persons acting together which would
constitute a "group" for purposes of Section 13(d) of the Exchange Act (other
than the Company, any Subsidiary, any employee stock purchase plan, stock option
plan or other stock incentive plan or program, retirement plan or automatic
dividend reinvestment plan or any substantially similar plan of the Company or
any Subsidiary or any person holding securities of the Company for or pursuant
to the terms of any such employee benefit plan), together with any affiliates
thereof, shall Beneficially Own, directly or indirectly, at least 50% of the
total Voting Stock of the Company (Section 1401). As noted above, one of the
events that constitutes a Change of Control is a sale of all or substantially
all of the assets of the Company as an entirety to any person or related group
of persons. The Indenture will be governed by New York law, and there is no
established quantitative definition under New York law of "substantially all" of
the assets of a corporation. This uncertainty may make it more difficult for a
holder of Notes to determine whether a Change of Control has occurred in the
event that the Company were to engage in a transaction in which it sold less
than all of its assets.
A Change of Control as described above shall constitute a Repurchase Event
unless (i) the closing price per share of the Common Stock on the five
consecutive Trading Days selected by the Company out of the 10 consecutive
Trading Days ending immediately after the later of the Change of Control or the
public announcement of the Change of Control (in the case of a Change of Control
under clauses (i) or (ii) of the definition of Change of Control) or ending
immediately before the Change of Control (in the case of a Change of Control
under clause (iii) of the definition of Change of Control) is at least equal to
105% of the conversion price of the Notes in effect immediately preceding the
time of such Change of Control, or (ii) all of the consideration (excluding cash
payments for fractional shares) in the transaction giving rise to such Change of
Control to the holders of Common Stock consists of shares of common stock that
are, or immediately upon issuance will be, listed on a national securities
exchange or quoted in the Nasdaq National Market, and as a result of such
transaction the Notes become convertible solely into such Common Stock and
neither Moody's Investors Service, Inc. nor Standard & Poor's, principally as a
result of the Change of Control, has downgraded the rating on the Notes by one
or more gradations below the rating of the Notes on the original issuance date
thereof within 90 days after the date of the public announcement of the Change
of Control (which period shall be extended so long as the rating of the Notes is
under publicly announced consideration for possible downgrade by any of the
rating agencies), or (iii) the consideration in the transaction giving rise to
such Change of Control to the holders of Common Stock consists of cash,
securities that are, or immediately upon issuance will be, listed on a national
securities exchange or quoted in the Nasdaq National Market, or a combination of
cash and such securities, and the aggregate fair market value of such
consideration (which, in the case of such securities, shall be equal to the
average of the daily closing prices of such securities on the five consecutive
Trading Days selected by the Company out of the 10 consecutive Trading Days
following consummation of such transaction) is at least 105% of the conversion
price of the Notes in effect on the date immediately preceding the closing date
of such transaction (Section 1401).
A Change of Control that is initiated or supported by the Company,
management of the Company or affiliates of such parties and which constitutes a
Repurchase Event will entitle holders of the Notes to the same rights to require
the Company to repurchase their Notes as any other Change of Control which
constitutes a Repurchase Event.
The Company, to the extent applicable and if required by law, will comply
with the provisions of Rule 13e-4 and any successor or similar provision under
the Exchange Act which may then be applicable and will file a Schedule 13E-4 or
any successor or similar schedule required thereunder in connection with any
offer by the Company to purchase Notes at the option of holders upon a Change of
Control (Section 1405). The Change of Control purchase feature of the Notes may
in certain circumstances make more difficult or discourage a takeover of the
Company and, thus, the removal of incumbent management. The Change of Control
purchase feature, however, is not the result of management's knowledge of any
specific effort to accumulate shares of Common Stock or to obtain control of the
Company by means of a merger, tender offer,
35
<PAGE> 37
solicitation or otherwise, or part of any plan by management to adopt a series
of anti-takeover provisions. Instead, the Change of Control purchase feature is
a result of negotiations between the Company and the Underwriters. Management
has no present intention to engage in a transaction involving a Change of
Control, although it is possible that the Company would decide to do so in
future. Subject to the limitation on mergers discussed below, the Company could,
in the future, enter into certain transactions, including certain
recapitalizations, sales of assets, or the liquidation of the Company, that
would not constitute a Change of Control under the Indenture, but that would
increase the amount of Senior Indebtedness (or any other indebtedness)
outstanding at such time or substantially reduce or eliminate the Company's
assets. There are no restrictions in the Indenture on the creation of additional
Senior Indebtedness (or any other indebtedness), and, under certain
circumstances, the incurrence of significant amounts of additional indebtedness
could have an adverse effect on the Company's ability to service its
indebtedness, including the Notes. If a Change of Control were to occur, there
can be no assurance that the Company would have sufficient funds to pay the
Change of Control Purchase Price for all Notes tendered by the holders thereof.
No Note may be purchased pursuant to the Change of Control provisions if
there has occurred and is continuing an Event of Default described under
" -- Events of Default" (Section 1402).
The Company's existing bank credit facility prohibits the Company from
repurchasing any Notes unless (i) such repurchase is permitted under the
restricted payment covenant contained in such bank credit facility and (ii) at
the time of such repurchase and after giving effect thereto, no default shall
have occurred under such bank credit facility. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financial Condition
and Capital Resources." In addition, the agreements under which Senior
Indebtedness may be outstanding in the future could contain provisions which may
require repayment of such respective Senior Indebtedness prior to repayment of
the Notes upon, among other things, a Change of Control. If the Company is
unable to obtain the requisite consents under its Senior Indebtedness to enable
it to repurchase the Notes or is unable to repay all Senior Indebtedness, there
would be both an Event of Default under the Notes and an event of default under
such Senior Indebtedness, as a result of which events the Company could be
prohibited by the subordination provisions of the Indenture from repurchasing
Notes or making other payments in respect thereof. Furthermore, the exercise by
the holders of their right to require the Company to repurchase the Notes could
cause a default under the Senior Indebtedness of the Company, even if the Change
of Control itself does not, due to the financial effect of such repurchase on
the Company. As a result, the repurchase of the Notes could be blocked pursuant
to the subordination terms of the Indenture. Finally, the Company's ability to
pay cash to the holders of Notes upon a repurchase may be limited by the
Company's then existing financial resources. Failure of the Company to pay the
Change of Control Purchase Price will be a default under the Indenture and could
result in an Event of Default with respect to the Notes, whether or not such
repurchase is permitted by the subordination provisions. See "-- Events of
Default."
LIMITATION ON MERGERS
The Company may, without the consent of the holders of the Notes,
consolidate with or merge into any other entity or convey, transfer or lease its
properties and assets substantially as an entirety to any person, provided that:
(1) the entity formed by such consolidation or into which the Company is merged
or the person that acquires by conveyance or transfer, or which leases the
properties and assets of the Company substantially as an entirety, must be a
corporation, partnership or trust organized and existing under the laws of the
United States, any state thereof or the District of Columbia; (2) the successor
entity expressly assumes, by a supplemental indenture executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and premium, if any, and interest on all Notes and the
performance of every covenant of the Indenture on the part of the Company to be
performed or observed and provides for conversion rights in accordance with the
Indenture; and (3) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing (Section 801).
Upon compliance with these provisions by a successor entity, the Company (except
in the case of a lease) would be relieved of its obligations under the Indenture
and the Notes (Section 802).
36
<PAGE> 38
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, and holders of
not less than a majority in aggregate principal amount of the Notes at the time
outstanding may waive compliance by the Company with certain provisions of the
Indenture; provided, however, that no such modification, amendment or waiver
may, without the consent of the holder of each outstanding Note affected
thereby, (i) change the Stated Maturity of the principal of or the due date of
any installment of interest on any Note, (ii) reduce the principal amount of, or
the rate of interest on, or any premium payable upon redemption of, any Note,
(iii) change the currency of payment of principal of, or premium, if any, or
interest on, any Note, (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note on or after the Stated
Maturity, or the Redemption Date in case of the redemption of any Note, (v)
adversely affect the right of a holder to convert Notes, (vi) modify the
provisions of the Indenture with respect to the subordination of the Notes in a
manner adverse to the holders, (vii) reduce the above-stated percentage of
outstanding Notes necessary to modify or amend the Indenture, or (viii) reduce
the percentage in aggregate principal amount of outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults (Sections 902 and 1009). The Indenture also contains provisions
permitting the Company and the Trustee to effect certain minor modifications of
the Indenture not adversely affecting the rights of holders of Notes in any
material respect. (Sections 901 and 902).
The holders of a majority in aggregate principal amount of the outstanding
Notes may waive any past default under the Indenture except, among other things,
a default in the payment of principal of or premium, if any, or interest on any
Note, including the Redemption Price, or a default with respect to right of
holders to convert the Notes (Section 513).
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (i) failure to
pay principal of, premium, if any, or Redemption Price when due on any Note,
whether or not such payment is prohibited by the subordination provisions of the
indenture; (ii) failure to pay any interest on any Note 30 days after payment is
due, whether or not such payment is prohibited by the subordination provisions
of the Indenture; (iii) failure to perform any other covenant of the Company in
the Indenture, and such failure continues for 60 days after written notice by
the Trustee or the holders of at least 25% in principal amount of the
outstanding Notes as provided in the Indenture; (iv) default under any mortgage,
indenture or instrument under which there may be issued, or by which there may
be secured or evidenced, any indebtedness of the Company in excess of an
aggregate of $10,000,000 either for borrowed money or representing any Senior
Indebtedness (other than indebtedness which is nonrecourse to the Company beyond
the property securing such indebtedness) resulting in the acceleration of such
indebtedness prior to its express maturity (provided however, that the Event of
Default under this clause (iv) shall be automatically deemed remedied and cured
if the default under such accelerated indebtedness is remedied or cured by the
Company or waived by the holder of such indebtedness); and (v) certain events of
bankruptcy, insolvency or reorganization of the Company (Section 501).
Notwithstanding the 60-day period and notice requirement referred to in
clause (iii) above, with respect to a default under the Change of Control
provisions, (1) the 60-day period referred to in clause (iii) above will be
deemed to have begun as of the date the Change of Control Notice is required to
be sent in the event the Change of Control Notice indicates (or would, if sent,
indicate) that the Company has not complied with its obligation to either repay
or obtain the requisite consents under any Senior Indebtedness that would
prohibit the repurchase of the Notes, and either (a) the holders duly elect to
have at least 25% in principal amount of outstanding Notes repurchased or (b)
the holders of at least 25% in principal amount of the outstanding Notes or the
Trustee thereafter gives the Notice of Default to the Company and, if
applicable, the Trustee, and (2) if the breach or default is a result of a
default in the payment when due of the Change of Control Purchase Price on the
Change of Control Purchase Date, such default shall arise on the Change of
Control Purchase Date, provided that either the holders of at least 25% in
principal amount of the Notes or the Trustee thereafter gives the Notice of
Default to the Company and, if applicable, the Trustee (Section 501).
37
<PAGE> 39
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such holders
shall have offered to the Trustee reasonable indemnity (Sections 601 and 603).
Subject to such provisions for the indemnification of the Trustee, the holders
of a majority in aggregate principal amount of the outstanding Notes will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee (Section 512).
If an Event of Default shall occur and be continuing, other than an event
of bankruptcy, insolvency or reorganization of the Company, either the Trustee
or the holders of at least 25% of the principal amount of the outstanding Notes
may accelerate the maturity of all Notes upon the earlier of (1) five business
days after notice of such acceleration is received by the Company (and the
Trustee if given by holders) and (2) a payment default under or acceleration of
any Senior Indebtedness or such other earlier time as the final maturity date
for such Senior Indebtedness occurs. If an Event of Default shall occur and be
continuing which is an event of bankruptcy, insolvency or reorganization of the
Company, the maturity of all Notes shall immediately accelerate without any act
on the part of the Trustee or any holder. If an Event of Default shall occur and
be continuing as a result of an acceleration of indebtedness of the type
described in clause (iv) above, a declaration of acceleration under the
Indenture shall automatically be annulled if the holders of the accelerated
indebtedness described in clause (iv) above have rescinded their declaration of
acceleration within 90 days thereof and no other Event of Default has occurred
during such 90-day period which has not been cured or waived. After acceleration
upon the Event of Default, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of
outstanding Notes may, under certain circumstances, rescind and annul such
acceleration if, among other things, all Events of Default, other than the
non-payment of accelerated principal, have been cured or waived as provided in
the Indenture (Section 502). For information as to waiver of defaults, see
" -- Modification and Waiver."
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default, the holders of at least 25% in aggregate principal amount of the
outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, the Trustee
shall not have received from the holders of a majority in aggregate principal
amount of the outstanding Notes a direction inconsistent with such request and
the Trustee shall have failed to institute such proceeding within 60 days after
such notice (Section 507). However, such limitations do not apply to a suit
instituted by a holder of a Note for the enforcement of payment of the principal
of or premium, if any, or interest on such Note or the Redemption Price on or
after the respective due dates expressed in such Note or of the right to convert
such Note in accordance with the Indenture (Section 508).
The Company will be required annually to furnish to the Trustee a statement
as to any default in its performance of certain of its obligations under the
Indenture (Section 1004).
DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate substantially all obligations under the Indenture
at any time by delivering all outstanding Notes to the Trustee for cancellation
and paying any other sums payable under the Indenture (Article IV).
The Indenture also provides that the Company may elect:
(a) to defease and be discharged from any and all obligations with
respect to the Notes and that the provisions of the Indenture (including
the provisions described under " -- Subordination of Notes") will no longer
be in effect with respect to the Notes (except for the obligations to
register the transfer or exchange of the Notes, to replace temporary or
mutilated, destroyed, lost or stolen Notes, to maintain an office or agency
in respect of Notes and to hold monies for payment in trust)
("Defeasance"); or
(b) to be released from its obligations with respect to the Notes
under certain restrictive covenants of the Indenture, and that the event of
the type described under the clause (iv) under " -- Events of
38
<PAGE> 40
Default" will not be deemed to be an Event of Default under the indenture
and that the provisions described under " -- Subordination of Notes" will
not apply ("Covenant Defeasance").
Such Defeasance or Covenant Defeasance will take effect only upon the
deposit with the Trustee (or other qualifying trustee), in trust for such
purpose, of money or U.S. Government Obligations that, through the payment of
principal and interest in accordance with their terms, will provide money, in an
amount sufficient to pay the principal of and premium, if any, and interest on
the Notes on the dates such payments are due, which may include one or more
Redemption Dates designated by the Company (other than in connection with a
Change of Control occurring after such Defeasance or Covenant Defeasance), in
accordance with the terms of the Notes (Article XV).
Such a trust may be established with respect to the Notes only if, among
other things: (i) such Defeasance or Covenant Defeasance will not result
(whether immediately or with notice or lapse of time or both) in an Event of
Default under the Indenture; (ii) such deposit will not be prohibited by the
provisions of any agreement or instrument to which the Company is a party or is
bound; (iii) such deposit will not cause the Trustee to have any conflicting
interest with respect to other securities of the Company; (iv) the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the holders of
the Notes will not recognize income, gain or loss for federal income tax purpose
as a result of such Defeasance or 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 Defeasance or Covenant Defeasance had not
occurred; and (v) the Company has delivered an Officers' Certificate and an
Opinion of Counsel, each to the effect that all conditions precedent relating to
such Defeasance or Covenant Defeasance have been satisfied. Such Opinion of
Counsel, in the case of Defeasance, must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable federal income tax law
occurring after the issue date (Article XV).
If the Company omits to comply with its remaining obligations under the
Indenture after Covenant Defeasance in respect of the Notes issued thereunder
and the Notes are declared due and payable because of the occurrence of an Event
of Default, the amount of money or U.S. Government Obligations on deposit with
the Trustee may be insufficient to pay amounts due on the Notes at the time any
acceleration of the maturity thereof resulting from such Event of Default.
However, the Company will remain liable in respect of such payments (Article
XV).
GOVERNING LAW
The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York.
THE TRUSTEE
Texas Commerce Bank National Association is the Trustee under the
Indenture. In the ordinary course of business the Company maintains other
commercial relationships with the Trustee and its affiliates. If the Trustee
shall acquire any conflicting interest (as defined in Section 301(b) of the
Trust Indenture Act) after a default under the Indenture, the Trustee either
shall eliminate such conflicting interest or resign as Trustee.
39
<PAGE> 41
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The Company's authorized capital stock consists of 75,000,000 shares of
common stock, par value $.01 per share (the "Common Stock"), of which 23,259,658
were issued and outstanding at December 31, 1993, and 10,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"), of which
2,221,005 were issued and outstanding as of December 31, 1993.
COMMON STOCK
All shares of Common Stock have equal rights to participate in dividends
and, in the event of liquidation, assets available for distribution to
stockholders, subject to any preference established with respect to Preferred
Stock. Each holder of Common Stock is entitled to one vote for each share held
on all matters submitted to a vote of stockholders, and voting rights for the
election of directors are noncumulative. Shares of Common Stock carry no
conversion, preemptive or subscription rights, and are not subject to
redemption. All outstanding shares of Common Stock are, and any shares of Common
Stock issued upon conversion of convertible securities will be, validly issued,
fully paid and nonassessable. The Company pays dividends on Common Stock when,
as and if declared by the Board of Directors. Dividends may be declared in the
discretion of the Board of Directors from funds legally available therefor,
subject to restrictions under agreements related to Company indebtedness.
The transfer agent for the Common Stock is Society National Bank, 3200
Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270.
PREFERRED STOCK
The Preferred Stock is issuable in one or more series or classes, any or
all of which may have such voting powers, full or limited, or no voting powers,
and such designations, preferences and related, participating, optional or other
special rights and qualifications, limitations or restrictions thereof, as are
set forth in the Company's Certificate of Incorporation, as amended, or in the
resolution or resolutions providing for the issue of such stock adopted by the
Board, which is expressly authorized to set such terms for any such issue.
In November 1991, the Company issued 1,200,000 shares of $4.00 Exchangeable
Convertible Preferred Stock, of which 1,186,005 shares were outstanding on
December 31, 1993. Holders of such Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available therefor, cash dividends at an annual rate of $4.00 per share, payable
quarterly in arrears. Upon liquidation, such holders are entitled to receive a
preference of $50.00 per share, plus accrued and unpaid dividends to the payment
date. Each share of such Preferred Stock is convertible into 5.51 shares of
Common Stock at any time prior to redemption (subject to adjustment), equivalent
to a conversion price of $9.07 for each share of Common Stock. The Company has
the right to exchange the shares of such Preferred Stock for the Company's 8%
Convertible Subordinated Debentures due 2006 on any dividend payment date and,
subject to certain restrictions, the right to redeem such Preferred Stock
beginning January 1, 1995.
In April 1993, the Company issued 1,035,000 shares (represented by
4,140,000 depositary shares) of $6.00 Exchangeable Convertible Preferred Stock,
all of which were outstanding on December 31, 1993. Holders of such Preferred
Stock are entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, cash dividends at an annual
rate of $6.00 per share ($1.50 per depositary share), payable quarterly in
arrears. Upon liquidation, such holders are entitled to receive a preference of
$100.00 per share ($25.00 per depositary share), plus accrued and unpaid
dividends to the payment date. Each share of such Preferred Stock is convertible
into 4.762 shares of Common Stock at any time prior to redemption (subject to
adjustment), equivalent to a conversion price of $21.00 for each share of Common
Stock. The Company has the right to exchange the shares of such Preferred Stock
for the Company's 6% Convertible Subordinated Debentures due 2008 on any
dividend date payment on or after March 31, 1994 and the right to redeem such
Preferred Stock beginning March 31, 1996.
40
<PAGE> 42
The existing series of Preferred Stock rank prior to the Common Stock, and
on a parity with each other, as to dividends and upon liquidation, dissolution
or winding up.
FACTORS AFFECTING ACQUISITIONS OF CONTROL
The Company's Certificate of Incorporation, as amended, provides that the
Board of Directors, in its discretion, may establish one or more class or series
of Preferred Stock having such number of shares, designations, relative voting
rights, dividend rates, liquidation and other rights, preferences and
limitations as may be fixed by the Board of Directors without any further
stockholder approval. Such rights, preferences, privileges and limitations could
have the effect of impeding or discouraging the acquisition of control of the
Company.
The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law (the "DGCL"). In general, Section 203 prevents
an "interested stockholder" (defined generally as a person owning 15% or more of
a corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with a Delaware corporation for three years following
the date such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder became
an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the interested stockholder's
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the corporation and by employee stock plans that do not provide employees
with the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (iii) following the
transaction in which such person became an interested stockholder, the business
combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of the holders
of two-thirds of the outstanding voting stock of the corporation not owned by
the interested stockholder. Under Section 203, the restrictions described above
also do not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of one of certain
extraordinary transactions involving the corporation and a person who had not
been an interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors, if such extraordinary transaction is approved or not opposed by a
majority of the directors who were directors prior to any person's becoming an
interested stockholder during the previous three years or who were recommended
for election or elected to succeed such directors by a majority of such
directors.
DIRECTORS' LIABILITY
The Company's Certificate of Incorporation, as amended, also provides for
the elimination of directors' liability for monetary damages for a breach of
certain fiduciary duties and for the indemnification of directors, officers,
employees or agents as permitted by the DGCL. These provisions cannot be amended
without the affirmative vote of the holders of at least a majority in interest
of the outstanding shares entitled to vote.
The Company has entered into indemnification agreements with all directors
and executive officers and may, in the future, enter into such agreements with
employees and agents. Such indemnification agreements provide generally that
such persons will be indemnified, to the extent permitted by applicable law, for
expenses (including attorneys' fees), judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by such persons in
connection with any proceeding (including, to the extent permitted by law, any
derivative action) to which such persons are, or are threatened to be made, a
party by reason of their status in such positions. Such indemnification
agreements do not change the basic legal standards for indemnity under
applicable law or as set forth in the Certificate of Incorporation.
41
<PAGE> 43
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") between the Company and CS First Boston
Corporation, PaineWebber Incorporated, Petrie Parkman & Co., Inc. and Smith
Barney Shearson Inc., as underwriters (the "Underwriters"), the Company has
agreed to sell to each of the Underwriters, and each of the Underwriters has
severally agreed to purchase, the principal amount of Notes set forth opposite
its name below.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------------------------------------------------------------------- ------------
<S> <C>
CS First Boston Corporation............................................ $
PaineWebber Incorporated...............................................
Petrie Parkman & Co., Inc..............................................
Smith Barney Shearson Inc..............................................
------------
Total........................................................ $100,000,000
------------
------------
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Notes offered hereby, if
any are purchased.
The Company has been advised by the Underwriters that they propose to offer
the Notes to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of % of the principal amount of the Notes; that
the Underwriters and such dealers may allow a discount not in excess of %
of such principal amount on sales to certain other dealers; and that after the
initial public offering, the public offering price, concession and discount may
be changed.
The Company has granted to the Underwriters an option, expiring at the
close of business on the 30th day after the date of this Prospectus, to purchase
up to an additional $15,000,000 aggregate principal amount of the Notes at the
public offering price less the underwriting discount, all as set forth on the
cover page of this Prospectus. The Underwriters may only exercise such option to
cover over-allotments, if any, in the sale of the initial $100,000,000 aggregate
principal amount of Notes offered hereby.
The Company and each of John C. Snyder, Thomas J. Edelman and John A.
Fanning, the Chairman, President and Executive Vice President, respectively, of
the Company, have agreed that, for a period of 90 days after the date of this
Prospectus, they will not, without the prior written consent of CS First Boston
Corporation, directly or indirectly, sell, agree to sell, contract to sell, or
otherwise dispose of any shares of the Company's Common Stock or Preferred Stock
or any other security convertible into or exchangeable for Common Stock, other
than, in the case of the Company, upon conversion of convertible securities
outstanding on the date hereof or pursuant to employee benefit plans (including,
but not limited to, stock option plans).
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments which the Underwriters may be required to make in
respect thereof.
Each of the Underwriters has provided during the past 12 months and may
provide in the future investment banking services to the Company for which they
have received or may receive customary fees.
The Notes have been approved for listing on the NYSE, subject to official
notice of issuance.
LEGAL OPINIONS
The validity of the Notes and the Common Stock issuable upon conversion of
the Notes will be passed upon by Peter E. Lorenzen, Vice President -- General
Counsel of the Company. Mr. Lorenzen owns 7,000 shares of Common Stock and holds
options to purchase 67,800 shares of Common Stock. Certain legal
42
<PAGE> 44
matters in connection with this Offering will be passed upon for the
Underwriters by Baker & Botts, L.L.P., Dallas, Texas.
EXPERTS
The audited financial statements and schedules incorporated in this
Prospectus by reference have been audited by Arthur Andersen & Co., independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing.
The information appearing in this Prospectus and incorporated herein by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 regarding proved reserves and related future net revenues and
the present value thereof is derived, as and to the extent described herein and
therein, from reserve reports and reserve report audits prepared by NSAI,
independent oil and gas consultants, and, to such extent, are included and
incorporated by reference herein in reliance upon the authority of such firm as
experts with respect to the matters contained in such reports and audits.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). Such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549; at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661; and at 7 World Trade
Center, New York, New York 10048. Copies of such material may also be obtained
by mail at prescribed rates from the Public Reference Section of the SEC,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
the Common Stock is traded on the NYSE, and such reports, proxy statements and
other information may be inspected at the NYSE, 20 Broad Street, New York, New
York 10005.
The Company has filed with the SEC a Registration Statement on Form S-3
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended, with respect to the Notes offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits thereto. For further information
with respect to the Company and the Notes, reference is made to the Registration
Statement and the exhibits thereto. Copies of the Registration Statement are
available from the SEC in the manner provided above. Statements contained in
this Prospectus concerning the provisions of documents filed with the
Registration Statement as exhibits are necessarily summaries of such documents,
and each such statement is qualified in its entirety by reference to the copy of
the applicable document filed with the SEC.
43
<PAGE> 45
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document heretofore filed by the Company with the SEC
pursuant to Section 13 of the Exchange Act is incorporated herein by reference:
The Company's Annual Report on Form 10-K for the year ended December
31, 1993, as amended by Form 10-K/A1 dated April 22, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Notes shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY A
REFERENCE HEREIN, EXCEPT FOR THE EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS).
REQUESTS SHOULD BE ADDRESSED TO SNYDER OIL CORPORATION, 1625 BROADWAY, SUITE
2200, DENVER, COLORADO 80202, ATTENTION: INVESTOR RELATIONS, (303) 592-8638.
44
<PAGE> 46
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 3
Recent Developments..................... 7
Use of Proceeds......................... 8
Capitalization.......................... 8
Price Range of Common Stock and
Dividends............................. 9
Selected Historical Financial
Information........................... 10
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 11
Business and Properties................. 15
Description of Notes.................... 28
Description of Capital Stock............ 40
Underwriting............................ 42
Legal Opinions.......................... 42
Experts................................. 43
Available Information................... 43
Incorporation of Certain Documents by
Reference............................. 44
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SOCO LOGO)
Snyder Oil Corporation
$100,000,000
% Convertible Subordinated
Notes Due 2001
PROSPECTUS
CS First Boston
PaineWebber Incorporated
Petrie Parkman & Co.
Smith Barney Shearson Inc.
- --------------------------------------------------------------------------------
<PAGE> 47
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meanings assigned to them in the Prospectus which forms
a part of this Registration Statement.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Except for the Registration Fee and the NASD Filing Fee, the following
itemized table sets forth estimates of those expenses payable by the Company in
connection with the offer and sale or exchange of the securities offered hereby:
<TABLE>
<S> <C>
Registration Fee........................................................ $ 39,656
NASD Filing Fee......................................................... 12,000
Printing and Engraving Expenses......................................... 195,000
Legal Fees and Expenses................................................. 90,000
Blue Sky Fees and Expenses.............................................. 5,000
Trustee's Fees and Expenses............................................. 20,000
Accountants' Fees and Expenses.......................................... 50,000
Engineers' Fees and Expenses............................................ 4,000
Rating Agency Fees...................................................... 50,000
Miscellaneous Fees and Expenses......................................... 34,344
--------
Total......................................................... $500,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated in Delaware. Under Section 145 of the DGCL,
a Delaware corporation has the power, under specified circumstances, to
indemnify its directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by a third party or in the
right of the corporation, by reason of the fact that they were or are such
directors, officers, employees or agents, against expenses and liabilities
incurred in any such action, suit or proceeding so long as they acted in good
faith and in a manner that they reasonably believed to be in, or not opposed to,
the best interests of such corporation, and with respect to any criminal action,
that they had no reasonable cause to believe their conduct was unlawful. With
respect to suits by or in the right of such corporation, however,
indemnification is generally limited to attorneys' fees and other expenses and
is not available if such person is adjudged to be liable to such corporation
unless the court determines that indemnification is appropriate. A Delaware
corporation also has the power to purchase and maintain insurance for such
persons. Article Ninth of the Certificate of Incorporation of the Registrant
provides for mandatory indemnification of directors and officers to the fullest
extent permitted by Section 145 of the DGCL. Reference is made to the
Certificate of Incorporation of the Registrant.
Reference is also made to the indemnification provisions of Section 7 of
the Underwriting Agreement, the form of which has been filed as Exhibit 1.1
hereto, under which the Underwriters have agreed to indemnify the Registrant,
its directors and officers and certain other persons against liabilities,
including liabilities under the Securities Act of 1933, with respect to
information furnished in writing to the Registrant for use in this Registration
Statement.
The Registrant has entered into indemnification agreements with each of its
officers and directors and may in the future enter into such indemnification
agreements with its directors, officers, employees and agents. Such
indemnification agreements are intended to provide a contractual right to
indemnification, to the extent permitted by law, for costs, expenses (including
attorneys' fees and disbursements), judgments, penalties, fines and amounts paid
in settlement actually and reasonably incurred by the person to be indemnified
in connection with any proceeding (including, to the extent permitted by law,
any derivative action) to which they are, or are threatened to be made, a party
by reason of their status or decisions or actions in such positions. Such
indemnification agreements do not change the basic legal standards for
indemnification set forth in DGCL or
II-1
<PAGE> 48
the Certificate of Incorporation of the Registrant. Such provisions are intended
to be in furtherance, and not in limitation of, the general right to
indemnification provided in the certificate of incorporation and Bylaws of the
Registrant.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision may not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) of the DGCL or
(iv) for any transaction from which the director derived an improper personal
benefit. Article Tenth of the Registrant's Certificate of Incorporation contains
such a provision.
The above discussion of the Registrant's Certificate of Incorporation and
Sections 102(b)(7) and 145 of the DGCL is not intended to be exhaustive and is
qualified in its entirety by such Certificate of Incorporation and statutes.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
1.1 -- Form of Underwriting Agreement.*
4.1.1 -- Certificate of Incorporation of Registrant -- incorporated by
reference from Exhibit 3.1 to the Registrant's Registration Statement
on Form S-4 (Registration No. 33-33455).
4.1.2 -- Certificate of Amendment to Certificate of Incorporation of
Registrant filed February 9, 1990 -- incorporated by reference from
Exhibit 3.1.1 to the Registrant's Registration Statement on Form S-4
(Registration No. 33-33455).
4.1.3 -- Certificate of Amendment to Certificate of Incorporation of
Registrant filed May 22, 1991 -- incorporated by reference from
Exhibit 3.1.2 to the Registrant's Registration Statement on Form S-1
(Registration No. 33-43106).
4.1.4 -- Certificate of Amendment to Certificate of Incorporation of
Registrant filed May 24, 1993 -- incorporated by reference from
Exhibit 3.1.5 to the Registrant's Form 10-Q for the quarter ended
June 30, 1993 (File No. 1-10509).
4.1.5 -- Certificate of Designations, Powers, Preferences and Rights of the
Registrant's $4.00 Convertible Exchangeable Preferred
Stock -- incorporated by reference from Exhibit 3.1.3 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991 (File No. 1-10509).
4.1.6 -- Certificate of Designations of the Registrant's $6.00 Convertible
Exchangeable Preferred Stock -- incorporated by reference from
Exhibit 3.1.4 to the Registrant's Form 10-Q for the quarter ended
June 30, 1993 (File No. 1-10509).
4.2 -- By-Laws of Registrant -- incorporated by reference from Exhibit 3.2
to the Registrant's Registration Statement on Form S-4 (Registration
No. 33-33455).
4.3 -- Form of Indenture.*
4.4 -- Form of Note (included in Exhibit 4.3).
4.5 -- Fourth Restated Credit Agreement dated July 1, 1993 among Registrant,
the Banks listed therein and NationsBank of Texas, N.A. as the
Agent -- incorporated by reference from Exhibit 4.1.4 to the
Registrant's Form 10-Q for the quarter ended June 30, 1993 (File No.
1-10509).
4.6 -- First Amendment to Fourth Restated Credit Agreement.*
5.1 -- Opinion of Peter E. Lorenzen, Vice President and General Counsel of
the Registrant, as to legality of the securities registered hereby.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges.**
23.1 -- (Intentionally left blank.)
</TABLE>
II-2
<PAGE> 49
<TABLE>
<S> <C>
23.2 -- Consent of Arthur Andersen & Co.**
23.3 -- Consent of Netherland, Sewell, & Associates, Inc.**
23.4 -- Consent of Peter E. Lorenzen, Esq., Vice President and General
Counsel, to the use of his opinion filed as Exhibit 5.1 (set forth in
his opinion filed as Exhibit 5.1).
24.1 -- Powers of attorney (set forth on the signature page hereof).
25.1 -- Statement of Eligibility of Trustee on Form T-1.**
99.1 -- Report of Netherland, Sewell & Associates, Inc. dated February 10,
1994 relating to certain of the Registrant's property
interests -- incorporated by reference from Exhibit 28.1 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1993 (File No. 1-10509).
99.2 -- Report of Netherland, Sewell & Associates, Inc. dated February 11,
1994 relating to their audit of reserve estimates -- incorporated by
reference from Exhibit 28.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993 (File No. 1-10509).
</TABLE>
- ---------------
* Filed herewith
** Previously filed
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each posteffective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned Registrant hereby further undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling persons of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Worth, State of Texas, on May 4, 1994.
SNYDER OIL CORPORATION
By /s/ PETER E. LORENZEN
Peter E. Lorenzen, Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ----------------
<S> <C> <C>
* Director and Chairman May 4, 1994
John C. Snyder (Principal Executive Officer
of Registrant)
* Director and President May 4, 1994
Thomas J. Edelman (Principal Financial Officer
of Registrant)
* Director and Executive Vice May 4, 1994
John A. Fanning President
* Director May 4, 1994
Roger W. Brittain
* Director May 4, 1994
John A. Hill
* Director May 4, 1994
B. J. Kellenberger
* Director May 4, 1994
John H. Lichtblau
* Director May 4, 1994
James E. McCormick
* Director May 4, 1994
Alfred M. Micallef
* Vice President and Controller May 4, 1994
James H. Shonsey (Principal Accounting
Officer)
*By /s/ PETER E. LORENZEN
Peter E. Lorenzen, Attorney-in-Fact
</TABLE>
II-4
<PAGE> 51
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- --------- -------------------------------------------------------------------------- ------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.*
4.1.1 -- Certificate of Incorporation of Registrant -- incorporated by reference
from Exhibit 3.1 to the Registrant's Registration Statement on Form S-4
(Registration No. 33-33455).
4.1.2 -- Certificate of Amendment to Certificate of Incorporation of Registrant
filed February 9, 1990 -- incorporated by reference from Exhibit 3.1.1
to the Registrant's Registration Statement on Form S-4 (Registration
No. 33-33455).
4.1.3 -- Certificate of Amendment to Certificate of Incorporation of Registrant
filed May 22, 1991 -- incorporated by reference from Exhibit 3.1.2 to
the Registrant's Registration Statement on Form S-1 (Registration No.
33-43106).
4.1.4 -- Certificate of Amendment to Certificate of Incorporation of Registrant
filed May 24, 1993 -- incorporated by reference from Exhibit 3.1.5 to
the Registrant's Form 10-Q for the quarter ended June 30, 1993 (File
No. 1-10509).
4.1.5 -- Certificate of Designations, Powers, Preferences and Rights of the
Registrant's $4.00 Convertible Exchangeable Preferred
Stock -- incorporated by reference from Exhibit 3.1.3 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1991 (File No. 1-10509).
4.1.6 -- Certificate of Designations of the Registrant's $6.00 Convertible
Exchangeable Preferred Stock -- incorporated by reference from Exhibit
3.1.4 to the Registrant's Form 10-Q for the quarter ended June 30, 1993
(File No. 1-10509).
4.2 -- By-Laws of Registrant -- incorporated by reference from Exhibit 3.2 to
the Registrant's Registration Statement on Form S-4 (Registration No.
33-33455).
4.3 -- Form of Indenture.*
4.4 -- Form of Note (included in Exhibit 4.3).
4.5 -- Fourth Restated Credit Agreement dated July 1, 1993 among Registrant,
the Banks listed therein and NationsBank of Texas, N.A. as the
Agent -- incorporated by reference from Exhibit 4.1.4 to the
Registrant's Form 10-Q for the quarter ended June 30, 1993 (File No.
1-10509).
4.6 -- First Amendment to Fourth Restated Credit Agreement.*
5.1 -- Opinion of Peter E. Lorenzen, Vice President and General Counsel of the
Registrant, as to legality of the securities registered hereby.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges.**
23.1 -- [Intentionally left blank.]
23.2 -- Consent of Arthur Andersen & Co.**
23.3 -- Consent of Netherland, Sewell, & Associates, Inc.**
23.4 -- Consent of Peter E. Lorenzen, Esq., Vice President and General Counsel,
to the use of his opinion filed as Exhibit 5.1 (set forth in his
opinion filed as Exhibit 5.1).
24.1 -- Powers of attorney (set forth on the signature page hereof).
25.1 -- Statement of Eligibility of Trustee on Form T-1.**
99.1 -- Report of Netherland, Sewell & Associates, Inc. dated February 10, 1994
relating to certain of the Registrant's property
interests -- incorporated by reference from Exhibit 28.1 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1993 (File No. 1-10509).
99.2 -- Report of Netherland, Sewell & Associates, Inc. dated February 11, 1994
relating to their audit of reserve estimates -- incorporated by
reference from Exhibit 28.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993 (File No. 1-10509).
</TABLE>
- ---------------
* Filed herewith
** Previously filed
<PAGE> 1
$100,000,000 PRINCIPAL AMOUNT
SNYDER OIL CORPORATION
____% CONVERTIBLE SUBORDINATED NOTES DUE 2001
UNDERWRITING AGREEMENT
May __, 1994
CS FIRST BOSTON CORPORATION
PAINEWEBBER INCORPORATED
PETRIE PARKMAN & CO., INC.
SMITH BARNEY, SHEARSON INC.
c/o CS First Boston Corporation
Park Avenue Plaza
New York, N.Y. 10055
Dear Sirs:
1. Introductory. Snyder Oil Corporation, a Delaware corporation
("Company"), proposes to issue and sell $100,000,000 aggregate principal amount
of its ___% Convertible Subordinated Notes Due 2001 (the "Firm Securities") to
be issued under an indenture, dated as of April 1, 1994 ("Indenture"), between
the Company and Texas Commerce Bank National Association, as trustee (the
"Trustee"). The Company also proposes to issue and sell not more than
$15,000,000 aggregate principal amount of such securities (the "Optional
Securities"), if and to the extent that the right to purchase such Optional
Securities is exercised as herein described. The Firm Securities and the
Optional Securities are hereinafter collectively referred to as the
"Securities." The Securities are convertible into shares of the Company's
common stock, par value $.01 per share ("Common Stock"), at any time prior to
the maturity of the Securities, unless the Securities have been previously
redeemed or otherwise acquired by the Company, upon the terms and subject to
the conditions set forth in the Indenture. The shares of Common Stock issuable
upon conversion of the Securities are hereinafter
<PAGE> 2
referred to as the "Shares." The Company hereby agrees with the several
Underwriters named in Schedule A hereto (the "Underwriters") as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"), and a
registration statement (No. 33-52807) on such Form, including a form of
prospectus relating to the Securities and the Shares, has been filed with
the Securities and Exchange Commission ("Commission") and either (i) has
been declared effective under the Act and is not proposed to be amended or
(ii) is proposed to be amended by amendment or post-effective amendment.
If the Company does not propose to amend such registration statement and
if any post-effective amendment to such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent such amendment has been declared effective by
the Commission. For purposes of this Agreement, "Effective Time" means
(i) if the Company has advised you that it does not propose to amend such
registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any)
filed prior to the execution and delivery of this Agreement, was declared
effective by the Commission, or (ii) if the Company has advised you that
it proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as
the case may be, is declared effective by the Commission. The term
"Effective Date" means the date of the Effective Time. Such registration
statement, as amended at the Effective Time, including all material
incorporated by reference therein and information (if any) deemed to be a
part of such registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, is hereinafter referred to as the
"Registration Statement," and the form of prospectus relating to the
Securities and the Shares, as first filed with the Commission pursuant to
and in accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no
such filing is required) as included in the Registration Statement,
including all material incorporated by reference in such prospectus, is
hereinafter referred to as the "Prospectus."
(b) If the Effective Time is prior to the execution and
delivery of this Agreement: (i) on the Effective Date, the Registration
Statement conformed in all material respects to the requirements of the
Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the rules and regulations of the
-2-
<PAGE> 3
Commission ("Rules and Regulations") and did not include 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, (ii) on the date of this Agreement and at the time of filing
of the Prospectus pursuant to Rule 424(b), the Registration Statement
conforms, and will conform, in all material respects to the requirements
of the Act, the Trust Indenture Act and the Rules and Regulations, and
does not include, and will not include, any untrue statement of a material
fact and does not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) at the time of filing of the Prospectus pursuant
to Rule 424(b), the Prospectus will conform in all material respects to
the requirements of the Act and the Rules and Regulations and will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. If the
Effective Time is subsequent to the execution and delivery of this
Agreement: on the Effective Date, the Registration Statement and the
Prospectus will conform in all material respects to the requirements of
the Act, the Trust Indenture Act and the Rules and Regulations, the
Registration Statement will not include 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 the
Prospectus will not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The two preceding sentences do not apply to statements in or
omissions from the Registration Statement or Prospectus based upon written
information furnished to the Company by any Underwriter through you
specifically for use therein or contained in the Statement of Eligibility
and Qualification on Form T-1 furnished by the Trustee and filed as an
exhibit to the Registration Statement.
(c) The documents which are incorporated by reference in the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, when they were filed with the Commission or were or
hereafter are last amended, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Rules and Regulations promulgated under the
Exchange Act, and when read together with the information in the
Prospectus, no such document, when it was filed with the Commission or was
or hereafter is last amended, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
-3-
<PAGE> 4
(d) All the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights. The
Shares have been duly authorized and reserved for issuance upon the
conversion of the Securities and, if and when issued upon such conversion
in accordance with the provisions of the Indenture, will be validly
issued, fully paid, nonassessable and free of any preemptive or other
similar rights. The capital stock of the Company conforms to the
description thereof contained in the Registration Statement and the
Prospectus in all material respects. There are no outstanding options,
warrants or other rights to acquire from the Company any capital stock
except pursuant to the stock option plans and agreements referred to and
otherwise described in the Registration Statement or the Prospectus.
(e) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware,
and is duly registered and 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 registration or
qualification, except where the failure so to register or qualify will not
have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company
and the Subsidiaries (as hereinafter defined) taken as a whole.
(f) All the Company's subsidiaries that are required to be
listed in an exhibit to the Registration Statement or to any document
incorporated by reference therein are so listed (collectively, the
"Subsidiaries"). Each Subsidiary is a corporation or limited partnership
duly organized, validly existing and in good standing in the jurisdiction
of its organization, and is duly registered and 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
registration or qualification, except where the failure to so register or
qualify will not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole. All the
outstanding shares of capital stock of, or other equity interests in, each
of the Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are 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 for the lien granted pursuant to the bank credit facility
referenced in the Registration Statement.
-4-
<PAGE> 5
(g) The Company and the Subsidiaries have all requisite
corporate power and authority, and have obtained all necessary
authorizations, approvals, orders, licenses, franchises, certificates and
permits of and from all governmental regulatory officials and bodies
("Permits"), to own, lease and operate their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus, except where the failure to obtain such
Permits will not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole. Each of
the Company and the Subsidiaries has fulfilled and performed all its
current material obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time, or both, would
allow, revocation or termination thereof or result 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 Registration
Statement and the Prospectus and except where the failure to do so will
not have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company
and the Subsidiaries taken as a whole. Except as described in the
Registration Statement and the Prospectus and as is customary in the oil
and gas industry or in the areas where the properties of the Company or
the Subsidiaries are located, such Permits contain no restrictions that
are materially burdensome to the Company and the Subsidiaries taken as a
whole. The Company and the Subsidiaries own, or possess adequate rights
to use, all trademarks, service marks and other rights necessary for the
conduct of their business as presently conducted and described in the
Registration Statement and the Prospectus, and neither the Company nor any
of the Subsidiaries has received any notice of conflict with the asserted
rights of others in any such respect that would materially adversely
affect their business and neither the Company nor any Subsidiary knows of
any basis therefor. The property and business of the Company and the
Subsidiaries taken as a whole conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus.
(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 required to be described in the Registration Statement or the
Prospectus but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement that are not described or
filed as required by the Act.
-5-
<PAGE> 6
(i) Neither the Company nor any of the Subsidiaries is (i)
in violation of any term or provision of its certificate or articles of
incorporation or bylaws, 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 franchise, license,
permit, judgment or any decree of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries or (ii) in
default (and no event has occurred that with notice or lapse of time, or
both, would constitute a default) in any respect in the due 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, which default would have a material adverse effect on the
condition (financial or other) business, properties, net worth or results
of operations of the Company and the Subsidiaries taken as a whole.
(j) Neither the execution, delivery or performance of this
Agreement or the Indenture by the Company, the issuance, offer, sale or
delivery of the Securities, or the issuance of the Shares, nor the
consummation by the Company of the transactions contemplated by this
Agreement or the Indenture (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 (other than (A) the registration of the Securities and
the Shares under the Act, (B) qualification of the Indenture under the
Trust Indenture Act and (C) compliance with the securities or Blue Sky
laws of various jurisdictions, all of which will be, or have been,
effected in accordance with this Agreement) 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 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 violates or will violate 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 (iii) results or
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.
-6-
<PAGE> 7
(k) Arthur Andersen & Co., the accountants for the Company
who have certified the financial statements and the related financial
statement schedules included in the Company's most recent Annual Report on
Form 10-K, which is incorporated by reference in the Prospectus, are
independent public accountants with respect to the Company and the
Subsidiaries as required by the Act.
(l) Netherland, Sewell & Associates, Inc. ("Netherland
Sewell"), whose reserve reports and audits are filed as exhibits to the
Company's most recent Annual Report on Form 10-K, are independent
petroleum engineers with respect to the Company and the Subsidiaries.
(m) The consolidated financial statements, together with
related schedules and notes, included in or incorporated by reference in
the Registration Statement and the Prospectus present fairly the
consolidated financial position, results of operations and cash flows of
the Company and the Subsidiaries on the basis stated in the Company's most
recent Annual Report on Form 10-K at the respective dates or for the
respective periods to which they apply. Such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein. The reserve reports and audits of
Netherland Sewell present the proved reserves, future net revenues
therefrom and discounted present value thereof in compliance with the
applicable Rules and Regulations, and all of the information furnished by
the Company to Netherland Sewell and used in connection with the
preparation of such reports and audits (including, but not limited to,
information regarding working interests, net revenue interests and
pricing) was true and correct in all material respects as of the
applicable effective date of such reports and audits and conformed with
the applicable Rules and Regulations. The other financial and statistical
information and data set forth in the Registration Statement and the
Prospectus are accurately presented and prepared on a basis consistent
with such financial statements or reserve reports or audits and the books
and records of the Company.
(n) The Company has all corporate power and authority
necessary to execute and deliver this Agreement and the Indenture to
perform its obligations under this Agreement and the Indenture. The
execution and delivery of, and the performance by the Company of its
obligations under, this Agreement has been duly and validly authorized by
the Company, and this Agreement has been duly executed and delivered by
the Company and constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may be limited
-7-
<PAGE> 8
by federal or state securities laws and except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, or other
laws relating to or affecting creditors' rights generally and by general
equitable principles. The Indenture and the Securities, the execution and
delivery by the Company of the Indenture and the Securities and the
consummation of the transactions contemplated by the Indenture and the
Securities have been duly authorized by the Company. If the Securities
are issued in accordance with the provisions of the Indenture (when the
Indenture has been executed and delivered by the Company and assuming due
authorization, execution and delivery by the Trustee), the Securities and
the Indenture will be valid and legally binding obligations of the Company
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles.
(o) The respective forms of the Indenture and the
Securities filed as exhibits to the Registration Statement conform, and,
if and when executed by the Company, the Indenture and the Securities so
executed will conform, to the respective descriptions thereof contained in
the Prospectus in all material respects.
(p) Except as disclosed in the Registration Statement and
the Prospectus, subsequent to the respective dates as of which such
information is given in the Registration Statement and the Prospectus,
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 debt
or long-term debt, of the Company or any of the Subsidiaries, or any
material adverse change, or any development involving or which may
reasonably be expected to involve a prospective material adverse change,
in the condition (financial or other), business, net worth or results of
operations of the Company and the Subsidiaries taken as a whole.
(q) Each of the Company and the Subsidiaries, except with
respect to its respective interests in oil and gas leases, has good and
marketable title in fee simple to all material real property owned by it,
valid and defensible title to all material personal property owned by it
and valid and enforceable interests in leases of all material real and
personal property leased by it, in each case free and clear of all
security interests, mortgages, pledges, liens, encumbrances, charges and
defects (collectively, "encumbrances"), except for those encumbrances
granted to
-8-
<PAGE> 9
secure indebtedness specified in the Registration Statement and those that
do not materially and adversely affect the value of such property or
materially interfere with the intended use of such property by it. Each
of the Company and the Subsidiaries has good and defensible title to all
of its respective interests in oil and gas leases, free and clear of any
encumbrances, except encumbrances granted to secure the indebtedness
specified in the Registration Statement, subject only to liens for taxes
or charges of mechanics or materialmen not yet due and to encumbrances
under gas sales contracts, operating agreements, unitization and pooling
agreements and other similar agreements customarily found in connection
with comparable drilling and producing operations and to title defects
that are, singly and in the aggregate, not material in amount and do not
interfere with its use or enjoyment of its oil and gas properties. Each
of the Company and the Subsidiaries has conducted such title
investigations and has acquired its respective interests in oil and gas
leases in such manner as is customary in the oil and gas industry. Each
of the Company and the Subsidiaries has complied in all material respects
with the terms of the oil and gas leases in which it purports to own an
interest, and all of such leases are in full force and effect (except
where the failure so to comply or to be in full force and effect would not
have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company
and its Subsidiaries taken as a whole).
(r) The Company has not distributed and, prior to the
latest to occur of (i) the First Closing Date (as defined below), (ii) the
Second Closing Date (as defined below) and (iii) the completion of the
Company's distribution of the Securities, will not distribute any offering
material in connection with the offering and sale of the Securities other
than the Registration Statement, the Prospectus or other materials
permitted by the Act.
(s) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(t) To the Company's knowledge, neither the Company nor
any of the Subsidiaries nor 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 payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(u) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company
-9-
<PAGE> 10
to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company under the Act.
(v) Neither the Company nor any of the Subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is any
such dispute threatened.
(w) Each of the Company and the Subsidiaries has filed all
federal, state and local tax returns that are required to be filed or has
obtained extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same have become
due or is contesting such taxes in good faith by appropriate proceedings.
(x) Except for the shares of capital stock of each of the
Subsidiaries, neither the Company nor any of the Subsidiaries owns any
share of stock or any other securities of any corporation or has any
equity interest in any firm, partnership, association or other entity
material in amount in relation to the net assets of the Company and the
Subsidiaries taken as a whole, other than as disclosed in the Prospectus
or as reflected in the consolidated financial statements included or
incorporated by reference in the Registration Statement and the
Prospectus.
(y) The Company has complied with all of the provisions of
Florida H.B. 1771, codified as Section 517.075 of the Florida statutes,
and all regulations promulgated thereunder relating to issuers doing
business with the Government of Cuba or with any person or any affiliate
located in Cuba.
(z) The Company has caused each of John C. Snyder, Thomas
J. Edelman and John A. Fanning to enter into an agreement with the
Underwriters providing that for a period of 90 days after the effective
date of the Registration Statement they will not without the prior written
consent of CS First Boston Corporation sell, contract to sell, cause or in
any way permit to be sold, or otherwise dispose of any shares of Common
Stock or any shares of preferred stock, par value $.01 per share
("Preferred Stock"), of the Company or any depositary shares representing
an interest in Preferred Stock (or any securities convertible into or
exercisable for any such shares of Common Stock or Preferred Stock or
depositary shares), except that each such person may dispose of Common
Stock
-10-
<PAGE> 11
with a value not to exceed in the aggregate $100,000 owned by such person
on the date hereof as a gift.
3. Purchase, Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements contained herein, but subject to the
terms and conditions set forth herein, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of 100% of the principal amount
thereof, plus accrued interest, if any, from May ___, 1994 to the First Closing
Date (as defined below), the respective principal amounts of Firm Securities
set forth opposite the name of such Underwriter in Schedule A hereto.
The Company will deliver the Firm Securities to you at the office of
CS First Boston Corporation, Park Avenue Plaza, 55 East 52nd Street, New York,
New York, 10055 or such other place as you and the Company determine, against
payment of the purchase price, by certified or official bank check or checks
payable in New York Clearing House (next day) funds drawn to the order of the
Company, at the above office of CS First Boston Corporation, at 10:00 A.M., New
York time, on May ___, 1994, or at such other place and at such other time not
later than seven full business days thereafter as you and the Company
determine, such time being hereinafter referred to as the "First Closing Date."
The certificates evidencing the Firm Securities to be so delivered will be in
definitive form, in such denominations and registered in such names as you
request, and will be made available for checking and packaging at the above
office of CS First Boston Corporation at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from you given to the Company not
more than 30 days subsequent to the date of the initial public offering of the
Firm Securities, the Underwriters may purchase all or less than all of the
Optional Securities at a purchase price of 100% of the principal amount
thereof, plus accrued interest, if any, from May __, 1994 to the Second Closing
Date (as defined below). The Company agrees to sell to the Underwriters the
principal amount of Optional Securities specified in such notice and the
Underwriters agree, severally and not jointly, to purchase such Optional
Securities. Such Optional Securities shall be purchased from the Company for
the account of each Underwriter in the same proportion as the principal amount
of Firm Securities set forth opposite such Underwriter's name in Schedule A
hereto bears to the total principal amount of Firm Securities (subject to
adjustment by you to round purchases to the nearest $1,000 principal amount)
and may be purchased by the Underwriters only for the purpose of covering
over-allotments made in connection with the sale of the Firm Securities. No
Optional Securities shall be sold or delivered unless
-11-
<PAGE> 12
the Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Securities, or any portion
thereof, may be surrendered and terminated at any time upon notice by you to
the Company.
The time for the delivery of and payment for the Optional Securities,
being hereinafter referred to as the "Second Closing Date" (which may be the
First Closing Date), shall be determined by you but shall not be later than 10
days after written notice of election to purchase the Optional Securities is
given. The Company will deliver the Optional Securities to you at the above
office of CS First Boston Corporation or such other place as you and the
Company determine, against payment of the purchase price therefor by certified
or official bank check or checks in New York Clearing House (next day) funds
drawn to the order of the Company at the above office of CS First Boston
Corporation or such other place you and the Company determine. The
certificates evidencing the Optional Securities will be in definitive form, in
such denominations and registered in such names as you request, and will be
made available for checking and packaging at the above office of CS First
Boston Corporation at least 24 hours prior to the Second Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set
forth in the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Company will file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by you, subparagraph (3) or (4)) of Rule
424(b) not later than the earlier of (i) the second business day following
the execution and delivery of this Agreement or (ii) the fifth business
day after the Effective Date. The Company will advise you promptly of any
such filing pursuant to Rule 424(b).
(b) The Company will advise you promptly of any proposal
to amend or supplement the registration statement as filed or the related
prospectus or the Registration Statement or the Prospectus and will not
effect any such amendment or supplementation to which you shall reasonably
object after being so advised or which is not in compliance with the Rules
and Regulations. So long as a prospectus relating to the Securities is
required to be delivered under the Act, the Company will not file any
information, documents or reports pursuant to the Exchange Act without
delivering a copy of such information, documents or reports
-12-
<PAGE> 13
to you prior to or concurrently with such filings. The Company will also
advise you promptly of the effectiveness of the Registration Statement (if
the Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of the Registration
Statement or the Prospectus and of the institution by the Commission of
any stop order proceedings in respect of the Registration Statement and
will make every reasonable effort to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither your consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its security holders an earnings statement covering a period
of at least 12 months beginning after the Effective Date which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act. For the purpose of the preceding sentence, "Availability Date" means
the 45th day after the end of the fourth fiscal quarter following the
fiscal quarter that includes the Effective Date, except that, if such
fourth fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to you copies of the
Registration Statement (five of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents (including any document filed
under the Exchange Act and deemed to be incorporated by reference
therein), in each case as soon as available and in such quantities as you
reasonably request.
(f) The Company will arrange for the registration and
qualification of the Securities for sale and the determination of their
eligibility for investment
-13-
<PAGE> 14
under the laws of such jurisdictions as you may reasonably designate and
will continue such qualifications in effect so long as required for the
distribution.
(g) During the period of three years hereafter, the
Company will furnish to you, as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such year;
and the Company will furnish to you (i) as soon as available, a copy of
each report or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders, and (ii) from
time to time, such other information concerning the Company as you may
reasonably request.
(h) The Company agrees 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 and filing
with the Commission of the Registration Statement (including financial
statements and schedules and exhibits thereto) and the Prospectus, and
each amendment or supplement to either of them, (ii) the printing and
delivery (including postage, air freight charges and charges for counting
and packaging) of such copies of the Registration Statement, the
Prospectus, and all amendments or supplements to either of them as may be
reasonably requested for use in connection with the offering and sale of
the Securities, (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, and, if and when issued,
the Shares, including any stamp taxes and any transfer agent's, trustee's
or registrar's fees and expenses payable in connection with the original
issuance of any of the foregoing, (iv) the printing and delivery of the
Indenture, the preliminary and supplemental Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents printed
and delivered in connection with the offering of the Securities, (v) the
registration or qualification of the Securities for offer and sale under
the securities or Blue Sky laws of the several states as provided in
Section 5(f) (including the reasonable fees, expenses and disbursements of
Baker & Botts, L.L.P. relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification), (vi) the filing fees
and the fees and expenses of Baker & Botts, L.L.P. in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc. in connection with the offering, (vii) the fees and expenses
of the Company's accountants and petroleum engineers and the fees and
expenses of counsel (including local and special counsel) for the Company,
(viii) any fees charged by any rating agency in connection with a rating
of the Securities, (ix) the registration of the Securities under the
Exchange Act, (x)
-14-
<PAGE> 15
the fees and expenses of listing the Securities and the Shares on the New
York Stock Exchange and (xi) the performance by the Company of its other
obligations under this Agreement, including the fees of the Trustee.
(i) The Company has not taken, nor will it 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 its
capital stock or debt securities to facilitate the sale or resale of the
Securities.
(j) The Company will reserve and keep available at all
times, free of any preemptive or other similar rights, a sufficient number
of shares of Common Stock to provide for the issuance of such shares upon
conversion of the Securities.
(k) The Company will use its best efforts to effect and
maintain the listing of the Securities and the Shares on the New York
Stock Exchange as promptly as possible and to cause the Securities to be
registered under the Exchange Act at the Effective Time.
(l) For a period of 90 days after the date of the
commencement of the public offering of the Securities by you, the Company
will not issue, sell, contract to sell, grant any option for the sale of
or otherwise dispose of, directly or indirectly, any capital stock,
including, but not limited to, any Common Stock or Preferred Stock or any
depositary shares representing an interest in Preferred Stock (or any
securities convertible into or exercisable for any such shares of Common
Stock or Preferred Stock or depositary shares), other than the Securities
or the Shares (if any are issued upon conversion of the Securities),
without the prior written consent of CS First Boston Corporation, except
that the Company may sell or issue, or grant options with respect to,
shares of the Common Stock in connection with the Company's stock option
plans or other outstanding options or with the conversion of its
outstanding convertible instruments.
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities on the First Closing Date and the Optional Securities on the Second
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of the Company's officers made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
-15-
<PAGE> 16
(a) You shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to the Effective Time), of Arthur Andersen & Co. confirming
that they are independent public accountants with respect to the Company
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating in effect that:
(i) in their opinion the financial statements
and schedules examined by them and incorporated by reference in the
Registration Statement comply in form in all material respects with
the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) on the basis of a reading of the latest
available interim financial statements of the Company, inquiries of
officials of the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that:
(A) at the date of the latest available balance
sheet read by such accountants, or at a subsequent specified
date not more than five days prior to the date of this
Agreement, there was any change greater than five percent in
the consolidated capital stock or the consolidated long-term
debt of the Company or any decrease greater than five percent
in consolidated working capital or net long-term assets, as
compared with amounts shown on the latest balance sheet
included in the Prospectus; or
(B) for the period from the closing date of the
latest income statement included in the Prospectus to the
closing date of the latest available income statement read by
such accountants, or to the subsequent specified date referred
to in clause (A), there were any decreases greater than five
percent, as compared with the period of corresponding length
ended the date of the latest income statement included in the
Prospectus, in consolidated oil and gas sales revenues or
increases greater than five percent in consolidated direct
operating expenses;
-16-
<PAGE> 17
except in all cases set forth in clauses (A) and (B) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iii) they have compared specified dollar amounts
(or percentages derived from such dollar amounts) and other financial
information contained in the Registration Statement (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries,
a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, if the Effective Time is subsequent to
the execution and delivery of this Agreement, "Registration Statement"
shall mean the registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to the
Effective Time, and "Prospectus" shall mean the prospectus included in the
Registration Statement. All financial statements and schedules included
in material incorporated by reference into the Prospectus shall be deemed
included in the Registration Statement for purposes of this subsection.
(b) If the Effective Time is not prior to the execution
and delivery of this Agreement, the Effective Time shall have occurred not
later than 10:00 P.M., New York time, on the date of this Agreement or
such later date as shall have been consented to by you. If the Effective
Time is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with
the Rules and Regulations and Section 5(a) of this Agreement. Prior to
such Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company or
you, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development involving a prospective change, in or affecting particularly
the business or properties of the Company or its subsidiaries which, in
the judgment of a majority in interest of the
-17-
<PAGE> 18
Underwriters, materially impairs the investment quality of the Securities;
(ii) any downgrading in the rating of any debt securities or Preferred
Stock of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance
or review its rating of any debt securities or Preferred Stock of the
Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (iv) any banking moratorium declared by Federal or New York
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity or emergency if,
in the judgment of a majority in interest of the Underwriters, the effect
of any such outbreak, escalation, declaration, calamity or emergency makes
it impractical or inadvisable to proceed with completion of the sale of
and payment for the Securities.
(d) You shall have received an opinion, dated such Closing
Date, of Peter E. Lorenzen, General Counsel for the Company, to the effect
that:
(i) The Company is a corporation duly
incorporated and validly existing 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 Registration Statement and the Prospectus, and is
duly registered and 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 registration
or qualification, except where the failure so to register or qualify
will not have a material adverse effect on the condition (financial
or other), business, properties, net worth or results of operations
of the Company and the Subsidiaries taken as whole;
(ii) Each of the Subsidiaries is a corporation
or limited partnership duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization, with
full corporate or partnership power and authority to own, lease and
operate its properties and to conduct its business as described in
the Registration Statement and the Prospectus, and is duly registered
and 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
-18-
<PAGE> 19
its business requires such registration or qualification, except
where the failure so to register or qualify will not have a material
adverse effect upon the Company and the Subsidiaries taken as a
whole; and all of the outstanding shares of capital stock of, or
other equity securities in, each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and
are owned by the Company directly, or indirectly through one of the
other Subsidiaries, free and clear of any perfected security
interest, or, to the best knowledge of such counsel, any other
security interest, lien, adverse claim, equity or other encumbrance
except for the lien granted pursuant to the bank credit facility
referenced in the Registration Statement;
(iii) The authorized and outstanding capital
stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus; the authorized capital stock of
the Company conforms in all material respects as to legal matters to
the description thereof contained in the Prospectus under the caption
"Description of Capital Stock;" and the Securities, the Shares and
the Indenture conform in all material respects to the respective
descriptions thereof contained in the Prospectus under the captions
"Description of Notes" and "Description of Capital Stock;"
(iv) All the outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are
fully paid and nonassessable;
(v) The Securities have been duly authorized
and executed by the Company and, when certificates for the Securities
are issued and delivered to you against payment therefor in
accordance with the terms hereof, will be valid and legally binding
obligations of the Company, enforceable in accordance with the
provisions thereof (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general
equitable principles), and will entitle the holders thereof to the
rights specified therein and in the Indenture; and, to the best
knowledge of such counsel, there are no preemptive or similar rights
that entitle any person to acquire any Securities upon the issuance
thereof by the Company;
(vi) The Indenture has been duly authorized,
executed and delivered by the Company and is a valid and legally
binding obligation of the Company, enforceable in accordance with the
provisions thereof (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization,
-19-
<PAGE> 20
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles);
(vii) The Shares have been duly authorized by the
Company and reserved for issuance upon conversion of the Securities
and, if and when issued upon such conversion, will be validly issued,
fully paid and nonassessable; and, to the best knowledge of such
counsel, there are no preemptive or similar rights that will entitle
any person to acquire any Shares upon the issuance thereof by the
Company.
(viii) The form of certificate for the Securities
contemplated by the Indenture conforms to the requirements of New
York law; and the form of certificate for the Shares conforms to the
requirements of the Delaware General Corporation Law;
(ix) The Registration Statement and all
post-effective amendments, if any, have become effective under the
Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose are pending before or
contemplated by the Commission;
(x) The Indenture (A) conforms in all material
respects to the applicable requirements of the Trust Indenture Act
and (B) has been duly qualified under the Trust Indenture Act;
(xi) The Company has full corporate power and
authority to enter into this Agreement and to perform its obligations
(including the sale and delivery of the Securities) hereunder, and
this Agreement has been duly authorized, executed and delivered by
the Company and is a valid, legal and binding agreement of the
Company, enforceable in accordance with its terms, except as rights
to indemnification and contribution hereunder may be limited by
applicable securities laws and except as the enforceability of the
Company's obligations hereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable
principles;
(xii) To the best knowledge of such counsel,
neither the Company nor any of the Subsidiaries (A) is in violation
of its certificate or articles of incorporation or bylaws, or other
organizational documents, (B) is in breach of, or in default (nor has
an event occurred that with notice, lapse
-20-
<PAGE> 21
of time or both would constitute such a default) under, any
indenture, mortgage, deed of trust, note, bond, debenture, bank loan
or credit agreement, or any other evidence of indebtedness, agreement
or instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their property is or may be
bound or affected, (C) is in violation 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 or (D) has received any notice of conflict
with the asserted rights of others in respect of trademarks, service
marks or other rights necessary for the conduct of their business, in
each case in which such breach, default, violation or conflict would
have a material adverse effect on the business, properties or
operations of the Company and the Subsidiaries taken as a whole;
(xiii) None of the execution, delivery or
performance of this Agreement or the Indenture, the offer, sale or
delivery of the Securities, the issuance of the Shares upon
conversion of the Securities, compliance by the Company with all
provisions hereof or consummation by the Company of the transactions
contemplated hereby (A) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default (or an event
that with notice or lapse of time, or both, would constitute a
default) under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any of
the Subsidiaries or, to the best knowledge of such counsel, 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 is bound, or any of the documents or
agreements that are included or incorporated by reference as exhibits
to the Registration Statement; (B) will, to the best knowledge of
such counsel, 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; or (C) will result in any violation of any
existing law, statute, regulation, ruling (assuming compliance with
all applicable state securities and Blue Sky laws) or, to the best
knowledge of such counsel, any existing judgment, injunction, order
or decree of any court or of any federal, state or other regulatory
authority or other governmental body having jurisdiction over the
Company, any of the Subsidiaries or any of their respective
properties;
(xiv) No consent, approval, authorization or
other order of, or registration or filing with, any court, regulatory
body, administrative agency
-21-
<PAGE> 22
or other governmental body, agency, or official is required on the
part of the Company for the valid issuance and delivery of the
Securities to you pursuant to this Agreement or the issuance of the
Shares upon conversion of the Securities, other than (A) the
registration of the Securities and the Shares, under the Act, (B)
qualification of the Indenture under the Trust Indenture Act, and (C)
compliance with the securities or Blue Sky laws of various
jurisdictions;
(xv) Under conflicts of law principles observed
by the courts of the State of Texas, the courts of the State of Texas
and the federal courts of the United States applying Texas law, if
called upon to do so, will give effect to the choice of laws of the
State of New York contained in the Securities and the Indenture,
including insofar as the same applies to the provisions of the
Securities and the Indenture relating to the amount or rate of
interest contracted for, charged or received in respect of the
Securities.
(xvi) The Registration Statement and the
Prospectus (except for the financial statements and the notes thereto
and the schedules and other financial and statistical data contained
therein, as to which such counsel need not express any opinion)
comply as to form in all material respects with the requirements of
the Act;
(xvii) To the best knowledge of such counsel, (A)
other than as described in the Registration Statement and the
Prospectus there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or to
which the Company or any of the Subsidiaries or any of their
respective properties is subject, that are required to be described
in the Registration Statement or Prospectus and (B) there are no
agreements, contracts, indentures, leases or other documents or
instruments, that are required to be described in the Registration
Statement or the Prospectus, or filed as an exhibit to the
Registration Statement, that are not described or filed as required;
(xviii) To the best knowledge of such counsel, each
of the Company and the Subsidiaries holds all necessary governmental
authorizations, approvals, orders, licenses, certificates, franchises
and permits of and from all governmental regulatory officials and
bodies for the conduct of the material businesses in which it is
engaged and owns, or possesses adequate rights to use, all material
rights necessary for the conduct of such businesses, and to such
counsel's knowledge, none of the Company or the Subsidiaries has
-22-
<PAGE> 23
received any notice of conflict with the asserted rights of others in
respect thereto, except where the failure to hold, or the conflict
with the asserted rights of others with respect to, such
authorizations, approvals, orders, licenses, certificates, franchises
or permits, would not have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole;
(xix) To the best knowledge of such counsel,
there are no statutes or regulations relating to the exploration for,
development, production and marketing of oil and gas that are
required to be described in the Registration Statement or Prospectus
that are not described as required;
(xx) The statements in the Registration
Statement and Prospectus, insofar as they are descriptions of
contracts, agreements or other legal documents, are accurate in all
material respects and present fairly the information required to be
shown;
(xxi) Except as described in the Prospectus, such
counsel knows of no outstanding option, warrant or other right
calling for the issuance of, and such counsel knows of no commitment,
plan or arrangement to issue, any share of capital stock of the
Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company; and except as described
in the Prospectus, such counsel does not know of any holder of any
securities of the Company or any other person who has the right,
contractual or otherwise, to cause the Company to issue to such
holder or such person, or permit such holder or such person to
underwrite the sale of, any shares of capital stock of the Company
upon and as the result of the issuance and sale of the Securities to
you hereunder or the right to require registration under the Act of
an offering of shares of capital stock of the Company as a result of
the filing of the Registration Statement; and
(xxii) Although such counsel is not passing upon
and does not assume any responsibility for the accuracy or
completeness of the statements contained in the Registration
Statement and Prospectus (except with respect to paragraphs (iii),
(xvi) and (xx) above), such counsel advises you that, on the basis of
his participation in conferences with other officers and employees of
the Company, representatives of the independent accountants and
independent petroleum consultants of the Company and representatives
of the Underwriters at which the contents of the Registration
Statement and the Prospectus and related matters were discussed
(relying as to materiality to a large extent upon
-23-
<PAGE> 24
other officers and representatives of the Company), no facts have
come to his attention that lead him to believe that the Registration
Statement or any amendment thereof (other than the financial
statements and the notes thereto and the schedules and other
financial, statistical and engineering data or information included
therein and the exhibits thereto), at the time it became effective,
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus or any
supplement thereto (other than the financial statements and the notes
thereto and the schedules and other financial, statistical and
engineering data or information included therein), as of its date,
the First Closing Date or Second Closing Date, as the case may be,
contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not
misleading.
In rendering his opinion as aforesaid, such counsel may rely upon an
opinion or opinions, each dated such Closing Date, of other counsel retained by
him or the Company as to federal energy regulatory matters or as to laws of any
jurisdiction other than the United States, the State of Texas, the State of New
York and the corporate laws of the State of Delaware, provided that (1) each
such local counsel is acceptable to you, (2) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to you and is in form and substance satisfactory to you, and (3) such
counsel shall state in his opinion that he believes that he and you are
justified in relying thereon.
(e) You shall have received from Baker & Botts, L.L.P.,
counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the validity of
the Securities, the Registration Statement, the Prospectus and other
related matters as you may require, and the Company shall have furnished
to such counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(f) You shall have received a certificate on behalf of the
Company, dated such Closing Date, of the President or any Vice President
and a principal financial or accounting officer of the Company in which
such officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of the
Company in this Agreement are true and correct, that the Company has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to such Closing Date, that
no stop order suspending the effectiveness of the Registration Statement
has been
-24-
<PAGE> 25
issued and, to the best of such officer's knowledge, no proceedings for
that purpose have been instituted or are contemplated by the Commission
and that, subsequent to the date of the most recent financial statements
in the Prospectus, there has been no material adverse change in the
financial position or results of operations of the Company and the
Subsidiaries except as set forth in or contemplated by the Prospectus or
as described in such certificate.
(g) You shall have received a letter, dated such Closing
Date, of Arthur Andersen & Co. which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than five days prior to such Closing
Date for the purposes of this subsection.
(h) You shall have received a letter addressed to you and
dated the date hereof from Netherland Sewell, independent petroleum
consultants, substantially in the form heretofore approved by you.
(i) The Securities and the Shares shall have been
qualified or registered for offering and sale by you or dealers under the
securities or Blue Sky laws of such jurisdictions as you shall have
requested prior to the date hereof, and no order suspending the sale of
the Securities in any such jurisdiction shall have been issued as of or on
the Closing Date, and no proceedings for that purpose shall have been
instituted or, to your knowledge or to the knowledge of the Company, shall
be contemplated.
(j) At such Closing Date, the Securities and the Shares
shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
(k) You shall have received copies of the agreements
between the Underwriters and each of John C. Snyder, Thomas J. Edelman and
John A. Fanning specified in Section 2(z).
The Company will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you reasonably request.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise
-25-
<PAGE> 26
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through you specifically for use therein; and
provided, further, that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Underwriter (or any person who controls such Underwriter) from
whom the person asserting any such losses, claims, damages or liabilities
purchased the Securities concerned, to the extent that any such loss, claim,
damage or liability of such Underwriter results from the fact that there was
not sent or given to such person, at or prior to the written confirmation of
the sale of such Securities to such person, a copy of the Prospectus if the
Company had previously furnished copies thereof to such Underwriter and such
untrue statement or omission or alleged untrue statement or omission made in a
preliminary prospectus was corrected in the Prospectus.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus,
or any amendment or supplement thereto, or any related preliminary prospectus,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through you
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred.
-26-
<PAGE> 27
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation unless (i) the
employment of separate counsel has been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party has failed to assume the
defense and employ counsel reasonably satisfactory to the indemnified party
within a reasonable time after commencement of such action or (iii) the named
parties to any such action (including any impleaded parties) include an
indemnified and an indemnifying party and the indemnified party has been
advised in writing by separate counsel that there may be one or more legal
defenses available to such indemnified party that are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such
action or proceeding on behalf of the indemnified party). In no event shall
the indemnifying party be liable for fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
(d) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action 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 any claims that are the subject matter of such action.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such
-27-
<PAGE> 28
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other 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 Company on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
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 Company
bear to the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (e) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of
this subsection (e). Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public was offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act or the Exchange Act; and
the obligations of the Underwriters under this Section shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Company, to
each officer of the Company who has signed the Registration
-28-
<PAGE> 29
Statement and to each person, if any, who controls the Company within the
meaning of the Act or the Exchange Act.
8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Securities hereunder on either the
First Closing Date or Second Closing Date and the aggregate principal amount of
Securities that such defaulting Underwriter or Underwriters agreed but failed
to purchase does not exceed 10% of the total principal amount of Securities
that the Underwriters are obligated to purchase on such Closing Date, you may
make arrangements satisfactory to the Company for the purchase of such
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Securities that such defaulting Underwriters agreed
but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate principal amount of Securities with
respect to which such default or defaults occurs exceeds 10% of the total
principal amount of Securities that the Underwriters are obligated to purchase
on such Closing Date, and arrangements satisfactory to you and the Company for
the purchase of such Securities by other persons are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company, except as provided in Section
9 (provided that if such default occurs with respect to Optional Securities
after the First Closing Date, this Agreement will not terminate as to the Firm
Securities). As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of any Underwriter, the Company or any of their
respective representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Securities. If this Agreement
is terminated pursuant to Section 8 or if for any reason the purchase of the
Securities by the Underwriters is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
5 and the respective obligations of the Company and the Underwriters pursuant
to Section 7 shall remain in effect, and if any Securities have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 shall also remain in effect. If the purchase of the Securities
by the Underwriters is not
-29-
<PAGE> 30
consummated for any reason other than solely because of the termination of this
Agreement pursuant to Section 8 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 6(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements
of counsel) reasonably incurred by them in connection with the offering of the
Securities.
10. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to you, c/o CS First Boston Corporation, Park Avenue Plaza, 55 East
52nd Street, New York, N.Y. 10055, Attention: Investment Banking Department --
New Issue Processing Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 777 Main Street, Suite 2500,
Fort Worth, Texas 76102, Attention: Peter E. Lorenzen, General Counsel;
provided, however, that any notice to an Underwriter pursuant to Section 7 will
be mailed, delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
* * * * *
-30-
<PAGE> 31
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
SNYDER OIL CORPORATION
By:_______________________
President
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first
above written.
CS FIRST BOSTON CORPORATION
PAINEWEBBER INCORPORATED
PETRIE PARKMAN & CO., INC.
SMITH BARNEY SHEARSON INC.
BY: CS FIRST BOSTON CORPORATION
By:_________________________
Vice President
-31-
<PAGE> 32
SCHEDULE A
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
CS First Boston Corporation . . . . . . . . . . . . . . . . . .
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . .
Petrie Parkman & Co., Inc. . . . . . . . . . . . . . . . . . .
Smith Barney Shearson Inc. . . . . . . . . . . . . . . . . . .
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000
============
</TABLE>
A-1
<PAGE> 1
Draft of
May 4, 1994
================================================================================
SNYDER OIL CORPORATION,
ISSUER
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
TRUSTEE
__________
INDENTURE
DATED AS OF APRIL 1, 1994
__________
$100,000,000*
____% CONVERTIBLE SUBORDINATED NOTES DUE 2001
================================================================================
* Subject to increase to up to $115,000,000 as provided herein.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I -- DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . 13
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . 13
SECTION 104. Acts of Holders; Record Date . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . 15
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . 16
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . 16
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 110. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 114. Incorporators, Stockholders, Officers and Directors of
the Company Exempt from Individual Liability . . . . . . . . . . . . . . 18
ARTICLE II -- FORMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 204. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . 23
SECTION 205. Form of Election to Convert . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 206. Form of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 207. Form of Option of Holder to Elect to Require Purchase . . . . . . . . . . 26
ARTICLE III -- THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 301. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . 27
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . 29
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . 30
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . 31
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 311. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV -- SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . 33
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V -- REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 502. Acceleration of Maturity Date; Rescission and Annulment . . . . . . . . . 37
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . 38
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . 39
SECTION 505. Trustee May Enforce Claims Without Possession of Securities . . . . . . . 39
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . 39
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert . . . . . . . . . . . . . . . . . . . 41
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . 41
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 41
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 513. Waiver of Past Default . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI -- THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . 43
SECTION 602. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . 44
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . 45
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . 46
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . 46
SECTION 610. Resignation and Removal, Appointment of Successor . . . . . . . . . . . . 46
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . 48
SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . 48
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . 48
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII -- HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . 50
SECTION 702. Preservation of Information; Communications to Holders . . . . . . . . . 51
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII -- CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . . . . . . . . . 52
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . 52
SECTION 802. Successor Substituted for Company . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX -- SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . 53
SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . 54
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . 55
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 55
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . 55
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . 55
ARTICLE X -- COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . 56
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . 56
SECTION 1003. Money for Security Payments to Be Held in Trust . . . . . . . . . . . . . 56
SECTION 1004. Statements of Officers of Company as to Default; Notice of Default . . . 58
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
SECTION 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1007. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . 59
SECTION 1008. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1009. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XI -- REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1101. Right Of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1102. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1103. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . 60
SECTION 1104. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . 60
SECTION 1105. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1106. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1107. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . 61
SECTION 1108. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XII -- CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1201. Conversion Privilege and Conversion Price . . . . . . . . . . . . . . . . 62
SECTION 1202. Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . 63
SECTION 1203. Fractions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1204. Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1205. Notice of Adjustments of Conversion Price . . . . . . . . . . . . . . . . 72
SECTION 1206. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . 72
SECTION 1207. Company to Reserve Common Stock . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1208. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1209. Covenant as to Common Stock . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1210. Cancellation of Converted Securities . . . . . . . . . . . . . . . . . . 74
SECTION 1211. Provisions in Case of Consolidations, Merger or Sale
of Assets; Special Distributions . . . . . . . . . . . . . . . . . . . . 74
SECTION 1212. Trustee Adjustment Disclaimer . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 1213. When No Adjustment Required . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XIII -- SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 1301. Securities Subordinate to Senior Indebtedness . . . . . . . . . . . . . . 76
SECTION 1302. Payment Over of Proceeds Upon Dissolution, Etc . . . . . . . . . . . . . 76
SECTION 1303. No Payment When Designated Senior Indebtedness in Default . . . . . . . . 77
SECTION 1304. Payment Permitted if No Default . . . . . . . . . . . . . . . . . . . . . 78
SECTION 1305. Subrogation to Rights of Holders of Senior Indebtedness . . . . . . . . . 78
SECTION 1306. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . 79
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C>
SECTION 1307. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . 79
SECTION 1308. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . 80
SECTION 1309. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1310. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . 81
SECTION 1311. Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . 81
SECTION 1312. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . . . . . . . . . . . . 81
SECTION 1313. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . 82
ARTICLE XIV -- RIGHT TO REQUIRE REPURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 1401. Repurchase of Securities at Option of the Holder upon Change of Control . 82
SECTION 1402. Effect of Change of Control Purchase Notice . . . . . . . . . . . . . . . 86
SECTION 1403. Deposit of Change of Control Purchase Price . . . . . . . . . . . . . . . 87
SECTION 1404. Securities Purchased in Part . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 1405. Covenant to Comply with Securities Laws Upon Purchase of Securities . . . 87
ARTICLE XV -- DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 1501. Company's Option to Effect Defeasance or Covenant Defeasance . . . . . . 88
SECTION 1502. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 1503. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 1504. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . 89
SECTION 1505. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions . . . . . . . . . . . 91
SECTION 1506. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
</TABLE>
-v-
<PAGE> 7
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
----------- -----------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701, 702
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1004
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
N.A. means not applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to
be a part of the Indenture.
-vi-
<PAGE> 8
INDENTURE, dated as of April 1, 1994, between Snyder Oil
Corporation, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal offices
at 777 Main Street, Fort Worth, Texas 76102, and Texas Commerce Bank National
Association, a national banking association duly organized and existing under
the laws of the United States of America, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY:
The Company has duly authorized the creation of an issue of
its ______% Convertible Subordinated Notes Due 2001 (hereinafter referred to as
the "Securities"), and to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture.
All things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder, the valid obligations of
the Company, and to make this Indenture a valid and binding agreement of the
Company have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions. 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 other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles;
<PAGE> 9
(d) 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 of this
Indenture; and
(e) the words "Article" and "Section" refer to an Article
and Section, respectively, of this Indenture.
"Act" has the meaning specified in Section 104.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, the term "control," when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise (and the terms "controlling" and "controlled" have meanings
correlative to the foregoing).
"Agent" means NationsBank of Texas, N.A., when acting in its
capacity as agent under the Bank Credit Facility and any other Person acting as
agent, trustee or other fiduciary under the Bank Credit Facility, when acting
in such capacity.
"Authenticating Agent" means any Person appointed pursuant to
Section 614 to authenticate Securities on behalf of the Trustee.
"Bank Credit Facility" means the Fourth Restated Credit
Agreement dated July 1, 1993 among the Company, the lenders named therein and
the Agent, as heretofore amended and as the same may be further amended,
restated, supplemented or otherwise modified from time to time, and any
Refinancings thereof that may be effected, whether or not with the same lenders
or the same Agent and whether or not the principal amount outstanding
thereunder shall be thereby increased.
"Bankruptcy Law" has the meaning specified in Section 501.
"Beneficial Owner" means, with respect to any shares of
Capital Stock, every Person who, for purposes of Rule 13d-3 under the Exchange
Act as in effect on the date of this Indenture, is the beneficial owner of such
shares of Capital Stock (and the terms "Beneficially Owned" and "Beneficially
Owns" have meanings correlative to the foregoing).
"Board of Directors" means the board of directors of the
Company 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 the
-2-
<PAGE> 10
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, when used with respect to any Place of
Payment or other location, each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in that Place of Payment or
other location, as the case may be, are authorized or obligated by law or
executive order to close.
"Capital Lease Obligation" means an obligation of the Company
or any Subsidiary to pay rent or other amounts under a lease of (or another
arrangement conveying the right to use) real or personal property thereof that
is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet thereof in accordance with generally
accepted accounting principles. For purposes of this Indenture, the amount of
such obligation shall be the capitalized amount thereof and the stated maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease (or other arrangement) prior to the first date upon which such
lease (or other arrangement) may be terminated by the lessee (or obligor)
without payment of a penalty.
"Capital Securities" of any Person means all Capital Stock of
such Person, all options, warrants and other rights to subscribe for or acquire
Capital Stock of such Person and all Convertible Securities of such Person.
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of
corporate stock or other equity of such Person.
"Change of Control" has the meaning specified in Section
1401(a).
"Change of Control Notice" has the meaning specified in
Section 1401(b).
"Change of Control Purchase Date" has the meaning specified in
Section 1401(a).
"Change of Control Purchase Notice" has the meaning specified
in Section 1401(c).
"Change of Control Purchase Price" has the meaning specified
in Section 1401(a).
"Closing Price" per share of Common Stock on any Trading Day
means, if the Common Stock is admitted to trading on the New York Stock
Exchange, the last reported sales price regular way or, in case no such
reported sale takes place on such
-3-
<PAGE> 11
Trading Day, the average of the reported closing bid and asked prices regular
way, in either case on such Exchange or, if the Common Stock is not admitted to
trading on the New York Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on the Nasdaq National
Market, the average of the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm that is selected
from time to time by the Company for that purpose and is reasonably acceptable
to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted and created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, the
body performing such duties at such time.
"Common Stock" of any Person means each class of the Capital
Stock of such Person that is not Preferred Stock of such Person. However,
subject to the provisions of Section 1211, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, however, that
if at any time there shall be more than one such resulting class, the shares
then so issuable of each such class shall be substantially in the proportion
which the total number of shares then so issuable of such class resulting from
all such reclassifications bears to the total number of shares of all such
classes resulting from all such reclassifications.
"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 of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Convertible Securities" of any Person means any and all
securities not constituting Capital Stock of such Person that are convertible
into or exchangeable for Capital Stock of such Person.
-4-
<PAGE> 12
"Corporate Trust Office" means the principal office of the
Trustee in the City of Dallas, Texas, at which at any particular time its
corporate trust business shall be administered, which, as of the date of this
Indenture, is located at 1201 Elm Street, 30th Floor, Dallas, Texas, Attention:
Corporate Trust Department.
"corporation" means a corporation, association, company,
joint-stock company or business trust.
"Covenant Defeasance" has the meaning specified in Section
1503.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1502.
"Definitive Security" means a Security other than a temporary
Security.
"Depositary" means the Person designated as Depositary by the
Company in Section 301 until a successor Depositary shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Depositary" shall mean or include each Person who is then a Depositary
hereunder.
"Designated Senior Indebtedness" means (i) all Senior
Indebtedness under the Bank Credit Facility if the sum of the aggregate
principal amount outstanding under the Bank Credit Facility and the aggregate
amount available for borrowing thereunder is equal to or greater than
$25,000,000 and (ii) all other Senior Indebtedness having an outstanding
principal amount equal to or greater than $25,000,000; provided, however, that
the agreements, indentures or other instruments evidencing any Senior
Indebtedness referred to in clause (ii) above specifically state that such
Senior Indebtedness shall be classified as "Designated Senior Indebtedness" for
purposes of this Indenture.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any statutory successor thereto.
"Exchange Debentures" means the Company's 8% Convertible
Subordinated Debentures due 2006 and its 6% Convertible Subordinated Debentures
due 2008 issuable in exchange for the Preferred Stock of the Company that is
outstanding on the date of this Indenture.
"Guaranty" by any Person means any Obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including, but not
-5-
<PAGE> 13
limited to, every Obligation of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or advance or supply funds for the purchase of) any security for the
payment of such Indebtedness, (ii) to purchase property, securities or services
for the purpose of assuring the holder of such Indebtedness of the payment of
such Indebtedness or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and the terms
"Guaranteed," "Guaranteeing" and "Guarantor" shall have meanings correlative to
the foregoing); provided, however, that the Guaranty by any Person shall not
include endorsements by such Person for collection or deposit, in either case
in the ordinary course of business.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indebtedness" of any Person means, without duplication, (i)
every obligation of such Person for money borrowed; (ii) every obligation of
such Person evidenced by bonds, debentures, notes or similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every obligation of such Person under conditional
sale or other title retention agreements relating to assets or property
purchased by such Person or issued or assumed as the deferred purchase price of
property, assets or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business that are not overdue by
more than 90 days or are being contested by such Person in good faith); (iv)
every Capital Lease Obligation of such Person; (v) every obligation of such
Person with respect to any Sale and Leaseback Transaction to which such Person
is a party; (vi) every obligation of such Person with respect to letters of
credit, bankers acceptances or similar facilities issued for the account of
such Person; (vii) the maximum fixed redemption or repurchase price of
outstanding Redeemable Stock of such Person; (viii) every obligation of such
Person with respect to performance, surety or similar bonds; (ix) every
obligation of such Person under interest rate swap, cap, hedge, exchange or
similar agreements, under foreign currency swap, hedge, exchange or similar
agreements or under commodity swap, hedge, exchange or similar agreements; (x)
every obligation of the type referred to in clauses (i) through (ix) and clause
(xi) of another Person the payment of which such Person has Guaranteed or is
otherwise responsible for or liable for, directly or indirectly, as obligor,
Guarantor or otherwise; and (xi) every amendment, modification, renewal and
extension of an obligation of the type referred to in clauses (i) through (x).
"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, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the
-6-
<PAGE> 14
Trust Indenture Act that are deemed to be a part of and govern this instrument
and any such supplemental indenture, respectively.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
"Junior Subordinated Payment" means any payment or
distribution which may be payable or deliverable in respect of the Securities
by reason of the payment of any Indebtedness of the Company that is subordinate
in right of payment to the payment of the Securities.
"Maturity Date" means, when used with respect to any Security,
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption on a Redemption Date or otherwise.
"Moody's" means Moody's Investors Service.
"Net Income" of any Person means the net income of such Person
net of non-cash charges taken as a result of accounting changes required to be
made by the Financial Accounting Standards Board after the date this Indenture.
"Non-Payment Event of Default" means any event, circumstance,
condition or state of facts (other than a Payment Event of Default) the
occurrence or existence of which permits one or more holders of Designated
Senior Indebtedness (or a trustee or other representative of the holders
thereof) to declare such Designated Senior Indebtedness immediately due and
payable prior to the date on which such indebtedness would otherwise become due
and payable.
"Obligation" of any Person means any obligation of such Person
to pay principal of or premium, if any, or interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company, whether or not a claim for such
post-petition interest is allowed in such proceeding) on any Indebtedness or
any penalties, reimbursement or indemnification amounts, fees, expenses or
other amounts in respect thereof.
"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.
"Opinion of Counsel" means a written opinion of legal counsel,
who may be an employee of or counsel for the Company, and which shall be in
form and substance reasonably acceptable to the Trustee.
-7-
<PAGE> 15
"Outstanding" means, when used with respect to Securities, 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 as to which money for the payment or
redemption which 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, however, 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; and
(iii) Securities which have been replaced or paid pursuant
to Section 306 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 have
been presented to the Trustee evidence satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of any such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent 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 or any other obligor upon the
Securities or any Affiliate of the Company or of any such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of and premium, if any, and interest on any Securities on
behalf of the Company.
"Payment Blockage Period" has the meaning specified in Section
1303.
-8-
<PAGE> 16
"Payment Event of Default" means any default in the payment of
principal of or premium, if any, or interest on or fees with respect to any
Designated Senior Indebtedness beyond any applicable grace period with respect
thereto.
"Permitted Junior Securities" means subordinated debt
securities of the Company (or any successor obligor with respect to the Senior
Indebtedness) provided for by a plan of reorganization or readjustment that are
subordinated in right of payment to all Senior Indebtedness that may be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are subordinated as provided in this Indenture.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment" means, when used with respect to the
Securities, the place or places where (subject to the provisions of Section
1002), the principal of and premium, if any, and interest on the Securities are
payable as specified and as contemplated by Section 301.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security. For purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Stock" of any Person means every share of each
class (however designated) of the Capital Stock of such Person that ranks
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up, to any
other share of such or any other class of the Capital Stock of such Person.
"Proceeding" means (subject to the last paragraph of Section
1302) (i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, (ii) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company.
"Rating Agencies" means (a) S&P, (b) Moody's or (c) if S&P or
Moody's, or both, shall not make a rating of the Securities publicly available,
such nationally recognized securities rating agency or agencies, as the case
may be, as are
-9-
<PAGE> 17
selected by the Company, which shall be substituted for S&P or Moody's, or
both, as the case may be.
"Rating Category" means (a) with respect to S&P, any of the
following categories: BB, B, CCC, CC, C and D (or equivalent successor
categories); (b) with respect to Moody's, any of the following categories: Ba,
B, Caa, Ca, C and D (or equivalent successor categories); and (c) with respect
to any other Rating Agency, the equivalent of any such category of S&P or
Moody's used by such Rating Agency. In determining whether the rating of the
Securities has decreased by one or more gradations, gradations within Rating
Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent
gradations for any other Rating Agency) shall be taken into account (e.g., with
respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to
B+, will constitute a decrease of one gradation).
"Rating Decline" means that, principally as a result of a
Change of Control and on, or within 90 days after, the date of the public
announcement of such Change of Control (which period shall be extended so long
as the rating of the Securities is under publicly announced consideration for
possible downgrade by any Rating Agency), any Rating Agency has lowered the
rating of the Securities below what such rating was as of the date the
Securities were originally issued by one or more gradation (including
gradations within or between Rating Categories).
"Redeemable Stock" of a Person means every Capital Security of
such Person that by its terms or otherwise is or may be (whether at the option
of the holder or otherwise) required to be redeemed or otherwise purchased by
such Person at any time prior to the Stated Maturity of the Securities.
"Redemption Date" means, when used with respect to any
Security to be redeemed, the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price" means, when used with respect to any
Security to be redeemed, the price at which such security may be redeemed
pursuant to this Indenture, including, if applicable, any accrued interest on
such Security due upon such redemption pursuant to the terms of this Indenture.
"Refinance" means, with respect to any specified Indebtedness,
to incur additional Indebtedness and use the proceeds thereof to redeem,
repurchase, retire for value, refinance or refund such specified Indebtedness
(and the terms "Refinancing" and "Refinanced" shall have meanings correlative
to the foregoing).
"Regular Record Date" for the interest payable on the
Securities on any Interest Payment Date means the March 15 or September 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.
-10-
<PAGE> 18
"Related Person" of any Person (the "Referent Person") means,
at any time, (a) if the Referent Person is the Company or any Subsidiary, every
Person (other than the Company and any Wholly Owned Subsidiary) that at such
time (i) is, or is controlled by, an Affiliate of the Company or (ii) is, or is
controlled by, a Person that Beneficially Owns 5% or more of the outstanding
Common Stock of the Company or any Subsidiary or 5% or more of the outstanding
Voting Stock of the Company or any Subsidiary; and (b) in all other cases,
every Person that at such time (i) is, or is controlled by, an Affiliate of the
Referent Person or (ii) is, or is controlled by, a Person that Beneficially
Owns 5% or more of the outstanding Common Stock of the Referent Person or any
subsidiary thereof or 5% or more of the outstanding Voting Stock of the
Referent Person or any subsidiary thereof. For purposes of this definition,
the term "controlled" shall have the meaning specified in the definition of
"Affiliate."
"Repurchase Event" has the meaning specified in Section
1401(a).
"S & P" means Standard & Poors Ratings Group, a division of
McGraw-Hill.
"Sale and Leaseback Transaction" means any arrangement with
any bank, insurance company or other lender or investor (other than the Company
or a Subsidiary), or to which such lender or investor is a party, providing for
the leasing by the Company or any Subsidiary of any property or asset that has
been or is to be sold or transferred by the Company or any Subsidiary to such
lender or investor or to any Person (other than the Company or a Subsidiary) to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset.
"Securities" has the meaning specified in the first recital of
this Indenture and, more particularly, means any Securities authenticated and
delivered under this Indenture.
"Securities Payment" means any payment or distribution of any
kind or character, whether by way of set-off or otherwise and whether in cash,
property or securities (including any Junior Subordinated Payment) on account
of principal of or premium, if any, or interest on the Securities or on account
of any purchase, repurchase, redemption or other acquisition of Securities by
the Company.
"Security Register" has the meaning specified in Section 305.
"Security Registrar" has the meaning specified in Section 305.
"Senior Indebtedness" means (i) all Obligations of the Company
under the Bank Credit Facility; and (ii) all Obligations of the Company for
Indebtedness (other than Indebtedness described in clause (vii) of the
definition of Indebtedness), whether now existing or hereafter incurred or
assumed; provided, however, that the
-11-
<PAGE> 19
Obligations referred to in clause (ii) shall not include (a) any Obligation
owed to a Subsidiary or an Affiliate or Related Person of the Company, (b) any
Obligation that by the terms of the instrument creating or evidencing the same
is not superior in right of payment to the Securities, (c) any Obligation in
respect of the Exchange Debentures, if and when issued in exchange for the
Preferred Stock of the Company outstanding on the date of this Indenture, or
(d) any Obligation constituting a trade account payable.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307(a).
"Stated Maturity" means, when used with respect to any
Security, the date specified in such Security as the fixed date on which the
principal of such Security is due and payable.
"subsidiary" of any Person means a corporation more than 50%
of the outstanding Voting Stock of which is owned, directly or indirectly, by
such Person, one or more subsidiaries of such Person or such Person and one or
more subsidiaries of such Person.
"Subsidiary" of the Company means a corporation more than 50%
of the outstanding Voting Stock of which is owned, directly or indirectly, by
the Company, one or more Subsidiaries or the Company and one or more
Subsidiaries.
"Trading Day" means each day on which the securities exchange
or automated interdealer quotation system, which is used to determine the
Closing Price is open for trading or quotation.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have assumed all of
the duties and obligations of this Indenture pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean such
successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this Indenture was executed, except as
provided in Section 905; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, to the extent required by any
such amendment, the term "Trust Indenture Act" means the Trust Indenture Act of
1939, as so amended.
"U.S. Government Obligations" has the meaning specified in
Section 1504.
"Vice President" means, when used with respect to the Company
or the Trustee, any vice president, whether designated by a number or a word or
words added before or after the title "vice president."
-12-
<PAGE> 20
"Voting Stock" of any Person means every share of any class
(however designated) of the Capital Stock of such Person that ordinarily has
voting power for the election of directors (or similar governing body) of such
Person, whether at all times or only as long as no share of any senior class of
Capital Stock has such voting power, whether by reason of the occurrence of any
contingency or otherwise.
"Wholly Owned Subsidiary" of the Company means a Subsidiary
all of the outstanding Capital Stock of which (other than directors' qualifying
shares) is owned, directly or indirectly, by the Company, one or more Wholly
Owned Subsidiaries or the Company and one or more Wholly Owned Subsidiaries.
SECTION 102. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust Indenture Act.
Each such certificate or opinion shall be in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 1004) shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of
each such individual, such condition or covenant has been complied
with.
SECTION 103. 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
-13-
<PAGE> 21
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 of the Company may be
based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the opinion with respect to the matters upon which his certificate or
opinion is based are erroneous. Any opinion of counsel may be based, insofar
as it relates to factual matters, upon a certificate of, or representations by,
an officer or officers of the Company, stating that the information with
respect to such factual matters is in the possession of the Company, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or representations with respect to such matters are erroneous.
SECTION 104. Acts of Holders; Record Date.
(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 agent 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. Any such instrument or instruments (and the action
embodied therein and evidenced thereby) are hereinafter 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 (subject to Section 601) 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
acknowledgements 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 his 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.
(c) The ownership of Securities shall be proved
by the Security Register.
-14-
<PAGE> 22
(d) 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 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. Without limiting the foregoing, a Holder entitled hereunder
to give or take any action hereunder with regard to any particular
Security (or his duly appointed agents) may do so with regard to all
or any part of the principal amount of such Security.
(e) The Company may, in the circumstances
permitted by the Trust Indenture Act, set any day as the record date
for the purpose of determining the Holders of Outstanding Securities
entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other Act provided or permitted
by this Indenture to be given or taken by Holders of Securities. With
regard to any record date set pursuant to this paragraph, the Holders
of Outstanding Securities on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to give or take the
relevant action, whether or not such Persons remain Holders after such
record date.
SECTION 105. Notices, Etc., to Trustee and Company. 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,
(a) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate
Trust Office, or
(b) the Company by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first class
postage prepaid, to the Company, addressed to it at the address of its
principal office specified in the first paragraph of this Indenture or
at any other address previously furnished in writing to the Trustee by
the Company.
SECTION 106. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing 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
(if any) and not earlier than the earliest date (if any), 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
-15-
<PAGE> 23
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders.
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 regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such Act to be a part of and govern this
Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that
may be so modified or excluded, the latter provision shall be deemed to apply
to this Indenture as so modified or excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience of reference only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its respective
successors and assigns.
SECTION 110. Severability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture. Nothing in this
Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, the holders of
Senior Indebtedness of the Company and the Holders of Securities, any benefit
or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD
-16-
<PAGE> 24
REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, AND THE
APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA. THE COMPANY HEREBY
CONSENTS TO AND ACCEPTS, GENERALLY AND UNCONDITIONALLY, FOR ITSELF AND FOR ITS
PROPERTIES, THE NON-EXCLUSIVE JURISDICTION OF THE STATE OR FEDERAL COURTS OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK IN ANY DISPUTE ARISING UNDER OR
IN CONNECTION WITH THIS INDENTURE, THE SECURITIES OR ANY OTHER DOCUMENT OR
INSTRUMENT RELATED HERETO OR THERETO AND HEREBY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION, SUIT OR PROCEEDING IN
ANY SUCH COURT, INCLUDING, BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS. THE COMPANY FURTHER
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED BY ANY SUCH COURT
IN CONNECTION WITH THIS INDENTURE, THE SECURITIES OR ANY OTHER DOCUMENTS OR
INSTRUMENTS RELATED HERETO OR THERETO FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. THE COMPANY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM (OR ANY
SUCCESSOR THERETO OR REPLACEMENT THEREFOR REASONABLY SATISFACTORY TO THE
TRUSTEE THAT IS DESIGNATED BY THE COMPANY FROM TIME TO TIME BY MEANS OF AN
OFFICERS' CERTIFICATE DELIVERED TO THE TRUSTEE SETTING FORTH THE NAME AND
ADDRESS OF SUCH SUCCESSOR OR REPLACEMENT) AS ITS AGENT TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS IN ANY ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE COMPANY TO BE VALID AND
EFFECTIVE IN EVERY RESPECT. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY SUCH COURT BY THE MAILING OF COPIES THEREOF BY
FIRST-CLASS MAIL, POSTAGE PREPAID, TO THE COMPANY AT THE LOCATION SPECIFIED AS
ITS ADDRESS FOR NOTICE IN OR PURSUANT TO THIS INDENTURE. NOTHING CONTAINED
HEREIN SHALL AFFECT THE RIGHT OF ANY PERSON TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
SECTION 113. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, Maturity Date or Stated Maturity of any Security
or the last date on which a Holder has the right to convert his Securities
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest on or principal of or
premium, if any, on or conversion of the Securities need not he 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, Maturity Date, Redemption
Date or Stated Maturity or on such last day for conversion; provided, however,
that no interest shall accrue for the period from and
-17-
<PAGE> 25
after such Interest Payment Date, Redemption Date, Maturity Date or Stated
Maturity, as the case may be, if such payment is made or duly provided for on
the next succeeding Business Day.
SECTION 114. Incorporators, Stockholders, Officers and
Directors of the Company Exempt from Individual Liability. No recourse under
or upon any obligation, covenant or agreement of this Indenture or any
indenture supplemental hereto or of any Security, or for any claim based
thereon or otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor Person, either directly or through the Company or
any successor Person, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, it being
expressly understood that this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers or directors, as such, of the Company or of any
successor Person, or any of them, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants or
agreements contained in this Indenture or in any of the Securities or implied
therefrom; and that any and all such personal liability of every name and
nature, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator,
stockholder, officer or director, as such, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities
or implied therefrom, is hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issue
of such Securities.
ARTICLE II
FORMS OF SECURITIES
SECTION 201. Forms Generally. The Securities and the
Trustee's certificate of authentication shall be in substantially the 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, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof.
The Definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on
-18-
<PAGE> 26
which the Securities may be listed, all as determined by the officers executing
such Securities, as evidenced by their execution thereof.
SECTION 202. Form of Face of Security.
SNYDER OIL CORPORATION
_____% CONVERTIBLE SUBORDINATED NOTE DUE 2001
Number ______________________ $_________________________________
CUSIP ____________________________
SNYDER OIL CORPORATION, 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 March 31, 2001, and to pay interest thereon from
__________ ____, 1994 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on March 31 and
September 30 of each year, commencing September 30, 1994, until the principal
hereof is paid or duly provided for, at the rate per annum of _____% from the
date of issuance of this Security until maturity or earlier redemption. 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 Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the March 15 or September 15 (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 will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this 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 Securities not less than 10 days prior to such Special Record Date,
or be paid at any time and 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, all as more fully
provided in said Indenture.
Payment of the principal of and premium, if any, and interest
on, and the Change of Control Purchase Price, if any, and Redemption Price with
respect to, this Security will be made at the office or agency of the Company
maintained in the Borough of Manhattan, the City of New York and at any other
office or agency maintained by the Company for such purpose, 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 at the
option of the Company, payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
The Indenture provides that no Holder of any Security shall
have the right to enforce any remedy under the Indenture except in the case of
the refusal or neglect of the Trustee to act after receipt of notice of default
and the request by the Holders of 25% in aggregate principal amount of the
Securities then outstanding and the offer to the Trustee of such reasonable
security or indemnity as it may require; provided, however, that the foregoing
limitations do not prevent the Holder of any such Security from enforcing the
right to receive payment of principal of and premium, if any, and interest on
such
-19-
<PAGE> 27
Security on or after the respective due dates therefor or to demand conversion
of its Securities or require the purchase of its Securities by the Company upon
the occurrence of a Change in Control in accordance with the Indenture.
Reference is hereby made to the further provisions of this
Security set forth herein, which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to below by manual signature, this Security
shall not be entitled to any benefit under the Indenture and shall not be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated:
SNYDER OIL CORPORATION
By:_____________________________
Attest:
___________________________________________
Secretary
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities
of the Company designated as its _____% Convertible Subordinated Notes Due 2001
(hereinafter referred to as the "Securities"), limited in aggregate principal
amount to $100,000,000 (plus up to $15,000,000 to cover over-allotments) issued
and to be issued under an Indenture, dated as of April 1, 1994 (herein called
the "Indenture"), between the Company and Texas Commerce Bank National
Association, as Trustee (hereinafter referred to as 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 and immunities thereunder of
the Company, the Trustee, the holders of Senior Indebtedness and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at his option, at any time
on or before the close of business on March 31, 2001, or in case this Security
or a portion hereof is called for redemption, then in respect of this Security
or such portion hereof until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
fifth Business Day preceding the Redemption Date (except that, with respect to
any redemption occurring on March 31, 1997 or within five business days
thereafter, the conversion right shall terminate at the close of business on
the Redemption Date such that all of the holders of Securities to be redeemed
will be entitled to receive the March 31, 1997 interest payment, assuming such
holders held such Securities on the Regular Record Date next preceeding March
31, 1997), to convert this Security (or any portion of the principal amount
hereof equal to $1,000 or an integral multiple thereof) into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of
a share) of Common Stock of the Company at a conversion price equal to $_____
-20-
<PAGE> 28
aggregate principal amount of Securities for each share of Common Stock (or at
the current adjusted conversion price, if an adjustment has been made as
provided in the Indenture) by surrender of this Security, duly endorsed or
assigned to the Company or in blank, to the Company at the office or agency
maintained by the Company in the Borough of Manhattan, the City of New York or
at any other office or agency maintained by the Company for such purpose,
accompanied by written notice to the Company stating that the Holder hereof
elects to convert this Security, or if less than the entire principal amount
hereof is to be converted, the portion hereof to be converted, and, in case
such surrender shall be made during the period from the close of business on
any Regular Record Date next preceding any Interest Payment Date to the opening
of business on such Interest Payment Date (unless this Security or the portion
thereof being converted has a Maturity Date prior to such Interest Payment
Date), also accompanied by payment in New York Clearing House or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date, on the principal amount of this Security then being
converted. Subject to the aforesaid requirement for payment by the Holder and,
in the case of a conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment Date, to the right
of the Holder of this Security (or any Predecessor Security) of record at such
Regular Record Date to receive an installment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be made
on conversion for interest accrued hereon or for dividends on the Common Stock
issued on conversion. The Company's delivery to the Holder of the fixed number
of shares of Common Stock of the Company (and any cash in lieu of a fractional
share of such Common Stock) into which the Security is convertible shall be
deemed to satisfy the Company's obligation to pay the principal amount of the
Security and all accrued interest that has not previously been paid. The Common
Stock of the Company so delivered shall be treated as issued first in payment
of accrued interest and then in payment of principal. Thus, accrued interest
shall be treated as paid rather than cancelled, extinguished or forfeited. No
fractions of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest the Company shall pay a cash
adjustment as provided in the Indenture. The conversion price is subject to
adjustment as provided in the Indenture. In addition, the Indenture provides
that in case of certain consolidations or mergers to which the Company is a
party or the transfer or lease of its properties and assets substantially as an
entirety, the Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger, transfer or lease by a holder of the
number of shares of Common Stock into which this Security might have been
converted immediately prior to such consolidation, merger or transfer (assuming
such holder of Common Stock failed to exercise any rights of election and
received per share the kind and amount of consideration received per share by a
plurality of nonelecting shares).
The Securities are subject to redemption upon not less than 20
nor more than 60 days' notice by mail, at any time on or after March 31, 1997,
as a whole or from time to time in part, at the election of the Company, at the
Redemption Prices (expressed as percentages of the principal amount) set forth
below, if redeemed during the 12-month period beginning March 31 of the years
indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- -------------
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . .
1998 . . . . . . . . . . . . . . . . . . . . . . . .
1999 . . . . . . . . . . . . . . . . . . . . . . . .
2000 . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
-21-
<PAGE> 29
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose stated due date is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Regular Record Dates referred to on the face hereof, all as provided
in the Indenture.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
In the event there shall occur any Change of Control
constituting a Repurchase Event with respect to the Company, each Holder of
Securities shall have the right, at such Holder's option but subject to the
limitations, conditions and subordination provisions set forth in the
Indenture, to require the Company to purchase on the Change of Control Purchase
Date all or any part of such Holder's Securities at a Change of Control
Purchase Price equal to 100% of the principal amount thereof, together with
accrued interest to the Change of Control Purchase Date, all as provided in the
Indenture.
If an Event of Default shall occur and be continuing, the
principal of all the Securities may become due and payable in the manner and
with the effect provided in the Indenture.
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 rights of the Holders of the Securities
under the Indenture at any time by the Company 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 the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
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, and interest on this 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 Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency maintained by the Company in the Borough of
Manhattan, the City of New York or at any other office or agency maintained by
the Company 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 Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
The 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
-22-
<PAGE> 30
limitations therein set forth, Securities are exchangeable for a like aggregate
principal amount of Securities of a different authorized denomination, as
requested by a Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not any amount due in respect of this
Security be overdue, and none of the Company, the Trustee or any such agent
shall be affected by notice to the contrary.
No recourse for the payment of the principal of, premium, if
any, or interest on this Security, or for any claim based hereon or otherwise
in respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
Person, either directly or through the Company, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the issue hereof, expressly
waived and released.
The Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York as applied to
contracts made and performed within the State of New York, without regard to
any principles of conflicts of laws that may require the application of the
laws of any other jurisdiction, and the applicable Federal laws of the United
States of America.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By_______________________________________
Authorized Signatory
-23-
<PAGE> 31
SECTION 205. Form of Election to Convert.
CONVERSION NOTICE
The undersigned owner of this Security does hereby irrevocably
exercise its option to convert this Security, or the portion hereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Snyder Oil Corporation in accordance with the terms of the Indenture
referred to in this Security, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for any
fractional shares and any Securities representing any unconverted principal
amount hereof, be issued and delivered to the registered Holder hereof unless a
different name has been indicated below. If shares are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Any amount required to be paid by
the undersigned on account of interest accompanies this Security.
Portion of Security to be
converted ($1,000 or an
integral multiple thereof):
$_________________________________
Date:_____________________________ Signature*:_____________________________
(Sign exactly as your
name appears on the Security
in every particular, without
alteration or enlargement or
any change whatsoever)
If shares of Common Stock are to be
issued and registered otherwise than to
the registered Holder named above,
please print or type name and address,
including zip code, and social security
or other taxpayer identification number.
________________________________________
________________________________________
________________________________________
Signature Guarantee:
_______________________________
Member or member's organization
of the New York Stock
Exchange or commercial bank or
trust company having an office in
the United States
*Your signature must be guaranteed by a commercial bank or trust company or by
a member or members' organization of the New York Stock Exchange.
-24-
<PAGE> 32
SECTION 206. Form of Assignment.
ASSIGNMENT
The undersigned owner of this Security does hereby sell, assign and transfer
this Security unto:
______________________________________
______________________________________
(Insert assignee's Social Security or
other taxpayer identification number)
______________________________________
______________________________________
(Print or type assignee's
name, address and zip code)
and irrevocably appoints
______________________________________
______________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date:_____________________________ Signature*:_____________________________
(Sign exactly as your
name appears on the Security
in every particular, without
alteration or enlargement or
any change whatsoever)
Signature Guarantee:
__________________________________
Member or members' organization of the
New York Stock Exchange or commercial
bank or trust company having an
office in the United States
*Your signature must be guaranteed by a commercial bank or trust company or by
a member or members' organization of the New York Stock Exchange.
-25-
<PAGE> 33
SECTION 207. Form of Option of Holder to Elect to Require
Purchase.
ELECTION TO REQUIRE PURCHASE
If you wish to elect to have this Security purchased by the
Company pursuant to Section 1402 of the Indenture, check the box: ( )
If you wish to elect to have only part of this Security
purchased by the Company pursuant to Section 1402 of the Indenture, state the
amount ($1,000 or an integral multiple thereof):
$________________________
Date:_________________________________ Signature*:____________________________
(Sign exactly as your
name appears on the Security
in every particular, without
alteration or enlargement or
any change whatsoever)
Signature Guarantee:
___________________________________________
Member or members' organization of the
New York Stock Exchange or commercial
bank or trust company having an office
in the United States
*Your signature must be guaranteed by a commercial bank or trust company or by
a member or members' organization of the New York Stock Exchange.
ARTICLE III
THE SECURITIES
SECTION 301. Title and Terms. The aggregate principal amount
of Securities which may be authenticated and delivered under this Indenture is
limited to $100,000,000 (and such additional principal amount of Securities, if
any, as shall be determined pursuant to the next succeeding paragraph), except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities pursuant to Sections 304, 305,
306, 906, 1108, 1202 or 1404.
Upon receipt by the Trustee of an Officers' Certificate
stating that the Underwriters (as defined below) have elected to purchase from
the Company a specified aggregate principal amount of additional Securities
(which are referred to in said Underwriting Agreement as the "Optional
Securities") not to exceed a total of $15,000,000 for all such elections in
accordance with this paragraph pursuant to the Underwriting Agreement, dated
May ____, 1994, between the Company and CS First
-26-
<PAGE> 34
Boston Corporation, PaineWebber Incorporated, Petrie Parkman & Co., Inc. and
Smith Barney Shearson Inc. (the "Underwriters"), the Trustee shall authenticate
and make available for delivery such specified aggregate principal amount of
such additional Securities to or upon a Company Order, and such specified
aggregate principal amount of such additional Securities shall be considered
part of the original aggregate principal amount of the Securities.
The Securities shall be known and designated as the "_____%
Convertible Subordinated Notes Due 2001" of the Company. Their Stated Maturity
shall be March 31, 2001, and they shall bear interest at the rate per annum of
___% from the date of issuance thereof until maturity or earlier redemption,
payable semiannually on March 31 and September 30 of each year, commencing
September 30, 1994.
The principal of and premium, if any, and interest on the
Securities shall be payable at the office or agency maintained by the Company
in the Borough of Manhattan, the City of New York and at any other office or
agency maintained by the Company for such purpose; provided, however, that at
the option of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register.
The Securities shall be redeemable as provided in Article XI.
The Securities shall be convertible as provided in Article XII.
The Securities shall be subordinated in right of payment to
Senior Indebtedness, to the extent provided in Article XIII.
The Securities shall be subject to repurchase by the Company,
at the option of the Holders, to the extent provided in Article XIV.
SECTION 302. 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 303. Execution, Authentication, Delivery and Dating.
(a) The Securities shall be executed on behalf of
the Company by its Chairman of the Board, its President or one of its
Vice Presidents, under its corporate seal reproduced thereon attested
by its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company
shall bind
-27-
<PAGE> 35
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.
At any time and from time to time after the execution
and delivery of this Indenture, the Company may deliver Securities
executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such
Securities; and the Trustee in accordance with such Company Order
shall authenticate and deliver such Securities as in this Indenture
provided and not otherwise.
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 executed by the Trustee by manual
signature, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing,
if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in
Section 309, for all purposes of this Indenture such Security shall be
deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities. Pending the preparation
of Definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and make available for delivery, 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 with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities.
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 any office or agency of the Company designated pursuant to
Section 1002, 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 make available for delivery in exchange therefor a like
principal amount of Definitive Securities of authorized denominations.
-28-
<PAGE> 36
Until so exchanged the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as Definitive Securities.
SECTION 305. Registration, Registration of Transfer and
Exchange.
(a) The Company shall cause to be kept at the
Corporate Trust Office of the Trustee a register (the register
maintained in such office and in any other office or agency designated
pursuant to Section 1002 being hereinafter sometimes collectively
referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and the registration of transfers
of Securities entitled to be registered or transferred as herein
provided. The Trustee is hereby appointed the initial registrar
(hereinafter referred to as the "Security Registrar") for the purpose
of registering Securities and transfers of Securities as herein
provided. The Company may at any time replace such Security
Registrar, change such office or agency or act as its own Security
Registrar. The Company will give prompt written notice to the Trustee
of any change of the Security Registrar or of the location of such
office or agency.
Upon surrender for registration of transfer of any
Security at an office or agency of the Company designated pursuant to
Section 1002 for such purpose, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in the
name of the designated transferee or transferees, one or more new
Securities of any authorized denominations and of a like aggregate
principal amount.
At the option of the Holder, Securities may be
exchanged for other Securities of any authorized denominations and of
a like aggregate principal amount, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and make available for delivery, the Securities
which the Holder making the exchange is entitled to receive.
(b) All Securities issued upon any registration
of transfer or exchange of Securities shall be the valid obligations
of the Company 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 Trustee) 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, with the signatures
-29-
<PAGE> 37
guaranteed by a commercial bank or trust company having an office in
the United States or by a member or members' organization of the New
York Stock Exchange.
No service charge shall be made for any registration
of transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to
Section 304, 906, 1108, 1202 or 1404 not involving any transfer.
The Company shall not be required
(i) to issue, register the transfer of
or exchange any Security, during a period beginning at the
opening of business 15 days before the day of the mailing of a
notice of redemption of Securities selected for redemption
under Section 1104 and ending at the close of business on the
day of such mailing, or
(ii) to register the transfer of or
exchange any Security so selected for redemption in whole or
in part, except the unredeemable portion of any Security being
redeemed in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities. If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and make available for
delivery in exchange therefor a new Security, of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (b) such security or indemnity as may be required by them to save
each of them and any agent of either 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 and upon its request the Trustee
shall authenticate and make available for delivery, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and 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
-30-
<PAGE> 38
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 destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities 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.
SECTION 307. 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 that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (hereinafter
referred to as "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date, notwithstanding the fact that such
Holder was a Holder on such Regular Record Date, and such Defaulted Interest
may be paid by the Company, at its election, 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, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as provided in this clause (a). 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 notice from the Company in writing of
the proposed payment. The Trustee shall promptly notify the Company
of such
-31-
<PAGE> 39
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 mailed,
first-class postage prepaid, to each Holder at his address as it
appears in the Security Register, 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 mailed,
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 then 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 (b), such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.
In the case of any Security which is converted after any
Regular Record Date and on or prior to the next succeeding Interest Payment
Date (other than any Security whose Maturity Date is prior to such Interest
Payment Date), interest whose stated due date is on such Interest Payment Date
shall be payable on such Interest Payment Date notwithstanding such conversion,
and such interest (whether or not punctually paid or duly provided for) shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on such Regular Record Date.
Except as otherwise expressly provided in the immediately preceding sentence,
in the case of any Security which is converted, interest whose stated due date
is after the date of conversion of such Security shall not be payable.
SECTION 308. Persons Deemed Owners. Prior to due presentment
of a Security for registration of transfer, the Company, the Trustee and any
agent of the Company 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, and (subject to Sections
305 and 307) interest on such Security and for all other purposes whatsoever,
whether or not any payment due in respect of such Security be overdue, and none
of the Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
-32-
<PAGE> 40
SECTION 309. Cancellation. All Securities surrendered for
payment, redemption, registration of transfer or exchange or conversion 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 may deliver to the Trustee (or any other Person for delivery to
the Trustee) for cancellation any Securities previously authenticated hereunder
which the Company has not issued and sold, 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.
SECTION 310. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year consisting of
twelve 30-day months.
SECTION 311. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such "CUSIP" numbers either as
printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such "CUSIP" numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. This
Indenture shall upon Company Request cease to be of further effect (except as
to any surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for) and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore
authenticated and delivered (other than (A) Securities which
have been mutilated, destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (B)
Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
-33-
<PAGE> 41
Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee
for cancellation; or
(ii) all such Securities not theretofore
delivered to the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at
their Stated Maturity within one year, or
(C) 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 (A), (B) or (C) above, has (subject to
Section 402) irrevocably deposited or caused to be deposited with the Trustee
as trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness in respect of Securities not theretofore
delivered to the Trustee for cancellation for principal of and premium, if any,
and interest on such Securities 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;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for 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 in Sections 305, 306, 607, 608, 702,
1001, 1002 and 1003 and in Article XII shall survive until the Securities are
no longer outstanding.
SECTION 402. Application of Trust Money. Subject to the
provisions of the last paragraph of Section 1003, all money deposited with the
Trustee pursuant to Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture, to the
payment to the Persons entitled thereto, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent), as the Trustee
may determine, of the principal of and premium, if any, and interest on the
Securities for whose payment such money has been deposited with
-34-
<PAGE> 42
the Trustee. The Trustee shall hold all money deposited with it pursuant to
Section 401 for the benefit of the Holders of such Securities, and the Trustee
shall be under no liability for interest thereon. All money deposited with the
Trustee pursuant to Section 401 (and held by it or any Paying Agent) for the
payment of Securities subsequently converted shall be returned to the Company
upon Company Request.
ARTICLE V
REMEDIES
SECTION 501. Events of Default. The term "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 occasioned by the
provisions of Article XIII or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order or 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, or the Redemption Price of, any Security when the
same becomes due and payable at its Maturity Date, whether or not such
payment is prohibited by Article XIII; or
(b) default in the payment of any interest upon
any Security when it becomes due and payable, and continuance of such
default for a period of 30 days, whether or not such payment is
prohibited by Article XIII; or
(c) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of
such default or breach for a period of 60 days after there has been
given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(d) a default under any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any indebtedness of the Company in excess of
$10,000,000 either for borrowed money or representing any Senior
Indebtedness (other than indebtedness which is nonrecourse to the
Company beyond the property securing such indebtedness), resulting in
the acceleration of such indebtedness prior to its express maturity;
provided, however, that if such default under such
-35-
<PAGE> 43
mortgage, indenture or instrument shall be remedied or cured by the
Company or waived by the holders of such indebtedness, then the Event
of Default hereunder by reason thereof shall be deemed likewise to
have been thereupon remedied, cured or waived without further action
upon the part of either the Trustee or any of the Holders of the
Securities; and provided, further, that the Trustee (subject to
Sections 601 and 602) shall not have any rights, duties, liabilities
or responsibilities with respect to such default unless and until the
Trustee shall have received written notice thereof at the Corporate
Trust Office from the Company, the trustee under any such mortgage,
indenture or instrument, the holder or holders of any such
indebtedness or the agent of any such holder or holders or the Holder
or Holders of any Outstanding Securities; or
(e) a decree or order by a court having
jurisdiction in the premises shall have been entered adjudging the
Company as bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization of the Company under any Bankruptcy
Law, and such decree or order shall have continued undischarged and
unstayed for a period of 60 days; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver
or liquidator or trustee or assignee in bankruptcy or insolvency of
the Company or of its property, or for the winding up or liquidation
of its affairs, shall have been entered, and such decree or order
shall have remained in force undischarged and unstayed for a period of
60 days; or
(f) the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer
or consent seeking reorganization under any Bankruptcy Law, or shall
consent to the filing of any such petition, or shall consent to the
appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of it or of its property, or shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due.
Notwithstanding the 60-day period and notice requirement
contained in Section 501(c) above, with respect to a default under Article XIV:
(i) the 60-day period referred to in Section 501(c) shall be deemed to have
begun as of the date the Change of Control Notice is required to be sent in the
event the Change of Control Notice indicates (or would, if sent, indicate) that
the Company has not timely complied with the covenant in the second sentence of
Section 1401(a), and either (a) the Holders duly elect to have at least 25% in
principal amount of Outstanding Securities repurchased in accordance with the
requirements of Article XIV, or (b) the Holders of at least 25% in principal
amount of the Outstanding Securities or the Trustee thereafter gives the Notice
of Default to the Company, and if applicable, the Trustee, referred to in
Section 501(c); and (ii) if the breach or default is a result of a default in
the payment when due
-36-
<PAGE> 44
of the Change of Control Purchase Price on the Change of Control Purchase Date,
such default shall arise on the Change of Control Purchase Date, provided that
either (a) the Holders duly elect to have at least 25% in principal amount of
Outstanding Securities repurchased in accordance with the requirements of
Article XIV, or (b) the Holders of at least 25% in principal amount of the
outstanding Securities or the Trustee thereafter gives the Notice of Default to
the Company, and if applicable, the Trustee, referred to in Section 501(c).
"Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors.
SECTION 502. Acceleration of Maturity Date; Rescission and
Annulment. If an Event of Default (other than an Event of Default specified in
Section 501(e) or 501(f)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be
due and payable, by a notice in writing to the Company (and to the Trustee if
given by Holders), and upon the earlier of (a) the fifth Business Day after
receipt by the Company (and the Trustee if given by Holders) of any such
written notice and (b) a default in the payment of principal, or an
acceleration of Indebtedness under any Senior Indebtedness or upon any earlier
time as such principal under any Senior Indebtedness shall become immediately
due and payable, such principal shall become immediately due and payable. If
an Event of Default specified in Section 501(e) or 501(f) occurs, all unpaid
principal and accrued interest on the Securities then outstanding shall become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder.
In the event of a declaration of acceleration under this
Indenture because an Event of Default set forth in Section 501(d) has occurred
and is continuing, such declaration of acceleration under this Indenture shall
be automatically annulled if the holders of the accelerated indebtedness
described in Section 501(d) have rescinded their declaration of acceleration in
respect of such indebtedness within 90 days thereof and no other Event of
Default has occurred during such 90-day period which has not been cured or
waived.
At any time after such 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 V provided, the Holders
of a majority in principal amount of the Outstanding Securities, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if the Company has paid or deposited with the Trustee a
sum sufficient to pay:
(a) all overdue interest on all Securities,
-37-
<PAGE> 45
(b) the principal of and premium, if any, on any
Securities which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities,
(c) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate borne by the
Securities, and
(d) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and
(e) all Events of Default, other than the
non-payment of the principal of Securities which have become due
solely by such declaration of acceleration, have been cured or waived
as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if
(a) default is made in the payment of any
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 Date
thereof, including the payment of the Redemption Price on any
Redemption Date,
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, to the extent that payment of such interest shall be lawful, interest on
any overdue principal (and premium, if any) and on any overdue 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 and as trustee of an express trust in
addition to the remedies specified in Section 502, 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 moneys
adjudged or decreed to be payable in the manner
-38-
<PAGE> 46
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,
in addition to the remedies specified in Section 502, 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 effective 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 504. Trustee May File Proofs of Claim. In case of
any judicial proceeding relative to the Company or any other obligor upon the
Securities, their property or their creditors, the Trustee shall be entitled
and empowered, by intervention in such proceeding or otherwise, to take any and
all actions authorized under the Trust Indenture Act in order to have claims of
the Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
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 to
the Trustee any amount due 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 607.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment, or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities 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 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 506. Application of Money Collected. Subject to
Article XIII, any money collected by the Trustee pursuant to this Article V
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the
-39-
<PAGE> 47
distribution of such money on account of principal, 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 607;
SECOND: To the payment of the amounts then due and unpaid for
principal of and premium, if any, and interest on the Securities in
respect of which or for the benefit 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, premium, if any, and interest, respectively; and
THIRD: The balance, if any, to the Company.
SECTION 507. Limitation on Suits. No Holder of any Security
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 principal
amount of the outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Defaults in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the
Trustee security or indemnity reasonably satisfactory to it 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 written 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 in 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
-40-
<PAGE> 48
right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert. Notwithstanding any other
provision in this Indenture but subject to the provisions of Article XIII, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if any, and
(subject to Sections 305 and 307) interest on such Security on the respective
Stated Maturities of such payments as expressed in such Security (and in the
case of redemption, the Redemption Price on the applicable Redemption Date) and
to convert such Security in accordance with Article XII and to require the
purchase of such Security upon the occurrence of a Change in Control in
accordance with Article IV and to institute suit for the enforcement of any
such payment and right to convert and require purchase, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. 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 Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. 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 306, 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 511. 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 V 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.
-41-
<PAGE> 49
SECTION 512. Control by Holders. The Holders of a majority
in 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, however, that
(a) such direction shall not be in conflict with
any rule of law or with this Indenture, and
(b) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Default. The Holders of not less
than a majority in principal amount of the Outstanding Securities may on behalf
of the Holders of all the Securities waive any past default hereunder and its
consequences, except a default
(a) in the payment of the principal of or
premium, if any or interest on any Security as specified in clauses
(a) and (b) of Section 501,
(b) in respect of a covenant or provision hereof
which under Article IX cannot he modified or amended without the
consent of the Holder of each Outstanding Security affected or
(c) in respect of the right of a Holder of any
Security to convert such Security in accordance with Article XII.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, a court
may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, in
the manner and to the extent provided in the Trust Indenture Act; provided that
neither this Section nor the Trust Indenture Act shall be deemed to authorize
any court to require such undertaking or to make such an assessment in any suit
instituted by the Company or in connection with any suit for the enforcement of
the right to convert any Security in accordance with the terms hereof.
SECTION 515. Waiver of Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of,
-42-
<PAGE> 50
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities. The duties
and responsibilities of the Trustee shall be as provided by the Trust Indenture
Act. Notwithstanding the foregoing, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or 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 security or
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 602. Notice of Default. If a default occurs
hereunder with respect to Securities, the Trustee shall give the Holders of the
Securities notice of such default as and to the extent provided by the Trust
Indenture Act; provided, however, that in the case of any default of the
character specified in Section 501(c), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default.
SECTION 603. Certain Rights of Trustee. Subject to the
provisions of Section 601:
(a) the Trustee may 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, direction, order or demand of
the Company mentioned herein shall be sufficiently evidenced by a
Company Request or
-43-
<PAGE> 51
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;
(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
security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in compliance
with such request or direction which shall be reasonably satisfactory
to the Trustee;
(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 see fit; provided, however, that the
Trustee shall not thereby be deemed to be required to act or be held
to any higher duty of care than existed prior to such inquiry; and
(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.
SECTION 604. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility or liability whatsoever
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. The Trustee shall not
be accountable for the use or application by the Company of Securities or the
proceeds thereof.
-44-
<PAGE> 52
SECTION 605. May Hold Securities. The Trustee, any
Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 606. 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 in writing with the
Company.
SECTION 607. Compensation and Reimbursement. The Company
agrees:
(a) to pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time
agree upon in writing 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 the Trustee's performance of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its non-employee agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or willful misconduct; and
(c) to indemnify each of the Trustee or any
predecessor Trustee for, and to hold it harmless against, any and all
loss, damage, claims, liability or expense incurred without negligence
or willful misconduct on its part, 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, except those attributable to its negligence or
willful misconduct. This obligation shall survive the maturity of the
Securities.
The Trustee shall have a claim prior to the Securities as to
all property and funds properly held by it hereunder for any amount owing it or
any predecessor Trustee pursuant to this Section 607, except with respect to
funds held in trust for the benefit of the Holders of particular Securities.
-45-
<PAGE> 53
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(e) or Section
501(f), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 608. Disqualification; Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or
resign, to the extant and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall (a) be a corporation
organized and doing business under the laws of the United States of America,
any State thereof or the District of Columbia, (b) authorized under such laws
to exercise corporate trust powers, (c) have a combined capital and surplus of
at least $50,000,000 (or, in the case of the initial Trustee hereunder, have a
combined capital and surplus meeting the requirements of the Trust Indenture
Act and be a wholly owned subsidiary of a Person that would otherwise meet the
eligibility requirements of this Section), and (iv) be subject to supervision
or examination by Federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, 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 VI. The Trustee shall comply with Trust Indenture Act Section 310(b).
SECTION 610. 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 under Section 611.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. If an instrument of acceptance
by a successor Trustee required by Section 611 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning
-46-
<PAGE> 54
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 a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply
with Section 608 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
(ii) the Trustee shall cease to be
eligible under Section 609 and shall fail to resign after
written request therefor by the Company or by any such Holder,
or
(iii) the Trustee shall become incapable
of acting or shall be judged 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, (A) the Company may remove the Trustee with respect to
all Securities, or (ii) subject to Section 514, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all other 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 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 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 in
accordance with the applicable requirements of Section 611, 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.
-47-
<PAGE> 55
(f) The Company shall give notice of each
resignation and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders as their names and
addresses appear in the Security Register. Each notice shall include
the name of the successor Trustee and the address of its Corporate
Trust Office.
SECTION 611. 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 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 its charges pursuant to
Section 607, 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 property and
money hold 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 VI.
SECTION 612. 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 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 VI, 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.
SECTION 613. Preferential Collection of Claims Against
Company. If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon 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).
-48-
<PAGE> 56
SECTION 614. Appointment of Authenticating Agent. The
Trustee may appoint an Authenticating Agent or Agents acceptable to the Company
which shall be authorized to act on behalf of the Trustee to authenticate
Securities issued upon original issue and upon exchange, registration of
transfer, partial conversion or partial redemption or pursuant to Section 306,
and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company
and shall at all times be a corporation organized and doing business under the
laws of the United States of America, any State thereof or the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent 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
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate agency or corporate trust business of such
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee,
the Company or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first- class mail, postage prepaid, to all Holders of
Securities, as their names and addresses appear in the Security Register.
-49-
<PAGE> 57
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay each Authenticating Agent, as
appointed from time to time, such reasonable fees as may be agreed to in
writing with the Company, for services rendered under this Section 614.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's certificates
of authentication, an alternate certificate of authentication in the following
form:
This is one of the Securities described in the within
mentioned Indenture.
Dated:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By:___________________________________________
As Authenticating Agent
By:___________________________________________
Authorized Signatory
ARTICLE VII
HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders.
The Company will furnish or cause to be furnished to the
Trustee:
(a) semi-annually, not more than 10 days after
each Regular Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of
such Regular Record Date, and
(b) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Company of
any such request, a list of
-50-
<PAGE> 58
similar form and content as of a date not more than 15 days prior to
the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar or Paying Agent.
SECTION 702. Preservation of Information; Communications to
Holders.
(a) The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as provided
in Section 701 and the names and addresses of Holders received by the
Trustee in its capacity as Security Registrar or Paying Agent. The
Trustee may destroy any list furnished to it as provided in Section
701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with
other Holders with respect to their rights under this Indenture or
under the Securities, and the corresponding rights and privileges of
the Trustee, shall be as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee that neither
the Company nor the Trustee nor any agent of any of them shall be held
accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders in accordance with Section
702(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason
of mailing any material pursuant to a request made under Section
702(b).
SECTION 703. Reports by Trustee. The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and the Company.
SECTION 704. Reports by Company.
The Company shall:
-51-
<PAGE> 59
(a) file with the Trustee, within 15 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 it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Exchange Act in respect of a security listed and
registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(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, including, in the case of annual reports,
if required by such rules and regulations, certificates or opinions of
independent public accountants, conforming to the requirements of
Section 102 of this Indenture; and
(c) transmit by mail to all Holders, as their
names and addresses appear in the Security Register, within 30 days
after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (a) and (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 801. Company May Consolidate, Etc., Only on Certain
Terms. The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(a) the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by
conveyance or transfer, or which leases, the properties and assets of
the Company substantially as an entirety shall be a corporation,
partnership or trust organized and validly
-52-
<PAGE> 60
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall have expressly assumed,
by an indenture supplemental hereto, executed and delivered by the
successor Person to the Trustee, in form satisfactory to the Trustee,
the due and punctual payment of the principal of and premium, if any,
and interest on all the Securities and the performance of every
covenant of this Indenture on the part of the Company to be performed
or observed by it and shall have provided for conversion rights in
accordance with Article XII;
(b) immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or
lapse of time, or both, would become an Event of Default, shall have
occurred and be continuing; and
(c) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and
that all conditions precedent provided for herein relating to such
transaction have been complied with.
SECTION 802. Successor Substituted for Company. Upon any
consolidation of the Company with, or merger of the Company into, any other
Person or any conveyance, transfer or lease of the properties and assets of the
Company substantially as an entirety in accordance with Section 801, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Company and the Trustee, 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 herein and in the Securities in accordance
with Article VIII; or
-53-
<PAGE> 61
(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
(c) to secure the Securities; or
(d) to make provision with respect to the
conversion rights of Holders pursuant to the requirements of Section
1211; or
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities; or
(f) to cure any ambiguity, to correct or
supplement any provision herein which may be inconsistent with any
other provision herein, or to make any other provisions with respect
to matters or questions arising under this Indenture which shall not
be inconsistent with the provisions of this Indenture; provided,
however, that such action pursuant to this clause (f) shall not
adversely affect the interests of the Holders in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
Subject to Section 508, with the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by Act of said
Holders delivered to the Company and the Trustee, the Company and the Trustee
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. Notwithstanding the foregoing, 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 the stated due date of any installment of interest on, any
Security, or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof,
or change the coin or currency in which any Security or any premium or
the interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or adversely affect the right of a Holder to convert
any Security as provided in Article XII, or modify the provisions of
this Indenture with respect to the subordination of the Securities in
a manner adverse to the Holders, or
(b) reduce the percentage in 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
-54-
<PAGE> 62
waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in
this Indenture, or
(c) modify any of the provisions of this Section
or Section 513 or Section 1009, 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.
It shall not be necessary for any Act of 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.
After a supplemental indenture under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the supplemental indenture. Any failure of the Company to
mail such notice, or defect therein, shall not, however, in any way impair or
affect the validity of such supplemental indenture.
SECTION 903. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying upon, an Opinion
of Counsel of the Company 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 904. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article IX, 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 905. 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 906. Reference in Securities to Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX 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 Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental
-55-
<PAGE> 63
indenture may be prepared and executed by the Company, and authenticated and
made available for delivery by the Trustee in exchange for Outstanding
Securities.
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it will duly and punctually pay the
principal of and premium, if any, and interest on the Securities and the
Redemption Price and Change of Control Purchase Price as and when due, in
accordance with the terms of the Securities and this Indenture.
The Company shall pay interest on overdue amounts at the rate
set forth in the Securities, and it shall pay interest on overdue interest at
the same rate compounded semiannually (to the extent that the payment of such
interest shall be lawful), which interest on overdue interest shall accrue from
the date such amounts became overdue.
SECTION 1002. Maintenance of Office or Agency. The Company
will maintain in the Borough of Manhattan, the City of New York an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange, where
Securities may be surrendered for conversion and where notices and demands to
or upon the Company in respect of the Securities and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
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 (in or outside the Borough of Manhattan, the City of
New York) where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
SECTION 1003. Money for Security Payments to Be Held in
Trust. If the Company shall at any time act as its own Paying Agent, it will,
on or before each
-56-
<PAGE> 64
due date of the principal of and premium, if any, 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, premium, if any, or interest so
becoming due until such sums 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, it
will, on or prior to each due date of the principal of and premium, if any, or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal, premium, if any, or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will 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, and 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 money.
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, or interest on any Security and remaining unclaimed for two
years after such principal, 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
-57-
<PAGE> 65
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 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 1004. Statements of Officers of Company as to
Default; Notice of Default.
(a) The Company will deliver to the Trustee,
within 120 days after the end of each fiscal year of the Company
ending after the date hereof, a certificate, signed by the principal
executive officer, principal financial officer or principal accounting
officer, stating whether or not to the best knowledge of the signers
thereof the Company is in default (without regard to periods of grace
or requirements of notice) in the performance and observance of any of
the terms, provisions and conditions hereof, and if the Company shall
be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.
(b) The Company shall file with the Trustee
written notice of the occurrence of any default or Event of Default
within five Business Days of its becoming aware of any such default or
Event of Default.
SECTION 1005. Existence. The Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, material rights (charter and statutory) and material franchises;
provided, however, that the Company shall not be required to preserve any such
right or franchise if its Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company; and provided further that a transaction that complies with Article
VIII shall not be deemed a breach of this Section 1005.
SECTION 1006. Maintenance of Properties. The Company will
cause all material properties used or useful in the conduct of its business or
the business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company, may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from
-58-
<PAGE> 66
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and could not reasonably be
expected to have a material adverse effect on the business and operations of
the Company.
SECTION 1007. Payment of Taxes and Other Claims. The Company
shall pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (b) all material
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a lien upon the property of the Company or any Subsidiary, unless the
failure to pay or discharge any such tax, assessment, charge or claim would not
have a material adverse effect on the business and operations of the Company
and its Subsidiaries taken as a whole; 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
adequate reserves in accordance with generally accepted accounting principles
have been made.
SECTION 1008. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
perform such further acts as may be reasonably necessary or proper to carry out
more effectively the purposes of this Indenture.
SECTION 1009. Waiver of Certain Covenants. The Company may
omit in any particular instance to comply with any term, provision or condition
set forth in this Article X (other than Sections 1001 through 1004, inclusive),
if before the time for such compliance the Holders of at least a majority (or
such greater amount as may be specified in any such term, provision or
condition) in principal amount of the outstanding Securities shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance 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.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. 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
-59-
<PAGE> 67
or after March 31, 1997, at the Redemption Prices specified in the form of
Security hereinbefore set forth, together with accrued interest to the
Redemption Date.
SECTION 1102. Applicability of Article. Redemption of
Securities at the election of the Company, as permitted by any provision of the
Securities or this Indenture, shall be made in accordance with such provision
and this Article XI.
SECTION 1103. Election to Redeem; Notice to Trustee. The
election of the Company to redeem any Securities pursuant to Section 1101 shall
be evidenced by a Board Resolution. In case of any redemption at the election
of the Company of less than all the Securities, the Company shall, at least 35
days prior to the Redemption Date fixed by the Company (unless a shorter period
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities to be redeemed.
SECTION 1104. 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 more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem appropriate and
fair and which may provide for the selection for redemption of portions (equal
to $1,000 or any integral multiple thereof) of the principal amount of
Securities.
If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption.
Securities which have been converted during a selection of Securities to be
redeemed shall be treated by the Trustee as Outstanding for the purpose of such
selection.
The Trustee shall promptly notify the Company and each
Security Registrar 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 the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
SECTION 1105. Notice of Redemption. Notice of redemption
shall be mailed not less than 20 nor more than 60 days prior to the Redemption
Date to each Holder of Securities to be redeemed at his address appearing in
the Security Register.
All notices of redemption shall state:
-60-
<PAGE> 68
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Securities
are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed,
(d) that on the Redemption Date the Redemption
Price will become due and payable upon each such Security to be
redeemed and that interest thereon will cease to accrue on and after
that date,
(e) the conversion price, and any adjustments
thereto, the date on which the right to convert the principal of the
Securities to be redeemed will terminate and the place or places where
such Securities may be surrendered for conversion,
(f) the place or places where such Securities are
to be surrendered for payment of the Redemption Price, and
(g) the CUSIP number of the Securities to be
redeemed.
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.
SECTION 1106. Deposit of Redemption Price. At least one
Business Day prior to 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, the Company shall segregate and hold in trust as provided in Section
1003) an amount of money sufficient to pay the Redemption Price of, and (unless
the Redemption Date shall be an Interest Payment Date) accrued interest on, all
the Securities which are to be redeemed on that date other than any Securities
called for redemption on that date which have been converted prior to the date
of such deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held
in trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 1107. Securities Payable on Redemption Date. Notice
of redemption having been given as aforesaid, the Securities so to be redeemed
shall, on
-61-
<PAGE> 69
the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued 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 interest to the Redemption Date;
provided, however, that installments of interest whose stated due date 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 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal of and premium, if any, on
such Security shall, until paid, bear interest from the Redemption Date at the
rate borne by the Security.
SECTION 1108. Securities Redeemed in Part. Any Security
which is to be redeemed only in part shall be surrendered at an office or
agency of the Company designated for that purpose pursuant to Section 1002
(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 his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
make available for delivery 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 of the Security so
surrendered.
ARTICLE XII
CONVERSION OF SECURITIES
SECTION 1201. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Security or any portion of the principal
amount thereof which is $1,000 or an integral multiple of $1,000 may be
converted into fully paid and nonassessable shares of the Common Stock of the
Company, at the conversion price, determined as hereinafter provided, in effect
at the time of conversion. Such conversion right shall expire at the close of
business on March 31, 2001. In case a Security or portion thereof is called
for redemption, unless the Company defaults in making the payment due upon
redemption, such conversion right in respect of the Security or portion so
called shall expire at the close of business on the fifth Business Day
preceding the Redemption Date (except that, with respect to any redemption
occurring on March 31, 1997 or within five business days thereafter, the
conversion right shall terminate at the close of business on the Redemption
Date such that all of the holders of Securities to
-62-
<PAGE> 70
be redeemed will be entitled to receive the March 31, 1997 interest payment,
assuming such holders held such Securities on the Regular Record Date next
preceeding March 31, 1997).
The price at which shares of Common Stock shall be delivered
upon conversion (hereinafter referred to as the "conversion price") shall be
initially $_____ per share of Common Stock. The conversion price shall be
adjusted in certain instances as provided in Section 1204.
In case the Company shall, by dividend or otherwise, declare
or make a distribution on its Common Stock referred to in paragraph (d) or (e)
of Section 1204, the Holder of each Security, upon the conversion thereof
pursuant to this Article subsequent to the close of business on the date fixed
for the determination of stockholders entitled to receive such distribution and
prior to the effectiveness of the conversion price adjustment in respect of
such distribution pursuant to paragraph (d) or (e) of Section 1204, shall be
entitled to receive for each share of Common Stock into which such Security is
converted, the portion of the evidences of indebtedness, shares of capital
stock, cash or assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Company (whose election shall
be evidenced by a Board Resolution filed with the Trustee) with respect to all
Holders so converting, the Company may, in lieu of delivering to such Holder
any portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount equal to the fair market value thereof (as
determined in good faith by the Board of Directors, whose determination shall
be evidenced by a Board Resolution filed with the Trustee). If any conversion
of a Security entitled to the benefits described in the immediately preceding
sentence occurs prior to the payment date for a distribution to holders of
Common Stock which the Holder of the Security so converted is entitled to
receive in accordance with the immediately preceding sentence, the Company may
elect (such election to be evidenced by a Board Resolution filed with the
Trustee) to distribute to such Holder a due bill for the evidences of
indebtedness, shares of capital stock, cash or assets to which such Holder is
so entitled, provided that such due bill (i) meets any applicable requirements
of the principal national securities exchange or other market on which the
Common Stock is then traded and (ii) requires payment or delivery of such
evidences of indebtedness, shares of capital stock, cash or assets no later
than the date of payment or delivery thereof to holders of Common Stock
receiving such distribution.
SECTION 1202. Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the Holder of any Security to be converted
shall surrender such Security, duly endorsed or assigned to the Company or in
blank, at any office or agency maintained by the Company pursuant to Section
1002, accompanied by written notice to the Company substantially in the form
set forth in Section 205 at such office or agency that the Holder elects to
convert such Security or, if less than the entire principal amount thereof is
to be converted, the portion thereof to be converted.
-63-
<PAGE> 71
Securities surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date shall (except for
Securities whose Maturity Date is prior to such Interest Payment Date) be
accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Securities being surrendered
for conversion. Except as provided in the preceding sentence and subject to
the last paragraph of Section 307, no payment or adjustment shall be made upon
any conversion on account of any interest accrued on the Securities surrendered
for conversion or on account of any dividends on the Common Stock issued upon
conversion.
Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common
Stock at such time. As promptly as practicable on or after the conversion
date, the Company shall issue and shall deliver at such office or agency a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 1203.
In the case of any Security which is converted in part only,
as promptly as practicable on or after the conversion date the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the Holder thereof, at the expense of the Company, a new Security or
Securities, of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security.
The Company's delivery to the Holder of the fixed number of
shares of the Common Stock of the Company (and any cash in lieu of any
fractional share of Common Stock) into which the Security is convertible shall
be deemed to satisfy the Company's obligation to pay the principal amount of
the Security and all accrued interest and original issue discount that has not
previously been paid. The Common Stock of the Company so delivered shall be
treated as issued first in payment of accrued interest and original issue
discount and then in payment of principal. Thus, accrued interest and original
issue discount shall be treated paid rather than cancelled, extinguished or
forfeited.
SECTION 1203. Fractions of Shares. No fractional shares of
Common Stock shall be issued upon conversion of Securities. If more than one
Security shall be surrendered for conversion at one time by the same Holder,
the number of full shares which shall be issuable upon conversion thereof shall
be computed on the basis of the
-64-
<PAGE> 72
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment (rounded
to the nearest cent) in respect of such fraction in an amount equal to the same
fraction of the Closing Price per share of the Common Stock on the day of
conversion (or, if such day is not a Trading Day, on the Trading Day
immediately preceding such day).
SECTION 1204. Adjustment of Conversion Price.
(a) In case the Company shall pay or make a
dividend or other distribution on its Common Stock exclusively in
Common Stock or shall pay or make a dividend or other distribution on
any other class of capital stock of the Company which dividend or
distribution includes Common Stock, the conversion price in effect at
the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the sum
of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this paragraph (a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock.
The Company shall not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.
(b) Subject to the last sentence of paragraph (h)
of this Section, in case the Company shall pay or make a dividend or
other distribution on its Common Stock consisting exclusively of, or
shall otherwise issue to all holders of its Common Stock, rights,
warrants or options entitling the holders thereof to subscribe for or
purchase shares of Common Stock at a price per share less than the
current market price per share (determined as provided in paragraph
(i) of this Section) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights,
warrants or options, the conversion price in effect at the opening of
business on the day following the date fixed for such determination
shall be reduced by multiplying such conversion price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of
Common
-65-
<PAGE> 73
Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this paragraph (b), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock.
The Company shall not issue any rights, options or warrants in respect
of shares of Common Stock held in the treasury of the Company.
(c) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock,
the conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case outstanding
shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the conversion price in effect at the opening
of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become affective immediately after
the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) Subject to the last sentence of this
paragraph (d) and to the last sentence of paragraph (h) of this
Section, in case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness, shares of any class of capital stock, cash or other
assets (including Securities, but excluding (w) any rights, options or
warrants referred to in paragraph (b) of this Section, (x) any
dividend or distribution paid exclusively in cash up to the greater of
(i) retained earnings of the Company on the date such distribution or
dividend was declared and (ii) Net Income of the Company during the
four full fiscal quarters preceding the date such distribution or
dividend was declared, (y) any dividend or distribution referred to in
paragraph (a) of this Section and (z) other than in connection with a
tender offer or other negotiated purchase made by the Company or any
Subsidiary for all or any portion of the Company's Common Stock), the
conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect
immediately prior to the effectiveness of the conversion price
reduction contemplated by this paragraph (d) by a fraction of which
the numerator shall be the current market price per share (determined
as provided in paragraph (i) of this Section) of the Common Stock on
the date fixed for such effectiveness less the fair market value (as
determined in good
-66-
<PAGE> 74
faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution filed with the
Trustee), on the date of such effectiveness, of the portion of the
evidences of indebtedness, shares of capital stock, cash and other
assets so distributed applicable to one share of Common Stock
(collectively, the "Market Value of the Distribution") and the
denominator shall be such current market price per share of the Common
Stock, such reduction to become effective immediately prior to the
opening of business on the day following the later of (i) the date
fixed for the payment of such distribution and (ii) the date 20 days
after notice relating to such distribution is required to be given
pursuant to Section 1206(a) (such later date of (i) and (ii) being
referred to as the "Reference Date"). If the Board of Directors
determines the fair market value of any distribution for purposes of
this paragraph (d) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in
doing so consider the prices in such market over the same period used
in computing the current market price per share pursuant to paragraph
(i) of this Section. For purposes of this paragraph (d), any dividend
or distribution that includes shares of Common Stock, rights, options
or warrants to subscribe for or purchase shares of Common Stock or
other securities convertible into or exchangeable for shares of Common
Stock shall be deemed instead to be (A) a dividend or distribution of
the evidences of indebtedness, cash, assets or shares of capital stock
other than such shares of Common Stock, such rights, options or
warrants or such other convertible or exchangeable securities (making
any conversion price reduction required by and in accordance with this
paragraph (d)) immediately followed by (B) in the case of such shares
of Common Stock or such right, options or warrants, a dividend or
distribution thereof making any further conversion price reduction
required by paragraph (a) or (b) of this Section, except (1) the
Reference Date of such dividend or distribution as defined in this
paragraph (d) shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or
other distribution" and "the date fixed for such determination" within
the meaning of paragraphs (a) and (b) of this Section and (2) any
shares of Common Stock included in such dividend or distribution shall
not be deemed "outstanding at the close of business on the date fixed
for such determination" within the meaning of paragraph (a) of this
Section) or (c) in the case of such other convertible or exchangeable
securities, a dividend or distribution of such number of shares of
Common Stock as would then be issuable upon the conversion or exchange
thereof, whether or not the conversion or exchange of such securities
is subject to any conditions (making any further conversion price
reduction required by paragraph (a) of this Section, except (i) the
Reference Date of such dividend or distribution as defined in this
paragraph (a) shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or
other distribution" and "the date fixed for such determination", and
(ii) the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of
-67-
<PAGE> 75
business on the date fixed for such determination," each within the meaning of
paragraph (a) of this Section). In the event that, with respect to any
distribution to which this paragraph (d) of Section 1204 would otherwise apply,
the Market Value of the Distribution is greater than the current market price
per share, then the adjustment provided by this paragraph (d) of Section 1204
shall not be made and in lieu thereof the provisions of Section 1211 shall
apply to such distribution.
(e) In case the Company shall, by dividend or
otherwise, at any time distribute to all holders of its Common Stock
cash (specifically including any distributions of cash up to the
greater of (x) retained earnings of the Company on the date such
distribution or dividend was declared and (y) Net Income of the
Company during the four full fiscal quarters preceding the date such
distribution or dividend was declared but excluding any cash that is
distributed as part of a distribution requiring a purchase price
adjustment pursuant to paragraph (d) of this Section) in an aggregate
amount that, together with (i) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such
distribution and in respect of which no conversion price adjustment
pursuant to paragraph (d) of this Section or this paragraph (e) has
been made and (ii) the portion of the aggregate of any cash plus the
fair market value (as determined by the Board of Directors, whose
determination shall be evidenced by a Board Resolution) of
consideration payable in respect of any tender offer or other
negotiated purchase by the Company or a Subsidiary for all or any
portion of the Company's Common Stock concluded within the 12 months
preceding the date of payment of such distribution and in respect of
which no conversion price adjustment pursuant to paragraph (g) of this
Section has been made that is in excess of an amount equal to the
product of (x) the number of shares of Common Stock with respect to
which the aggregate tender offer or negotiated purchase consideration
is payable times (y) the average of the daily Closing Prices per share
of Common Stock on the five consecutive Trading Days selected by the
Company out of the 10 consecutive Trading Days next succeeding the
date of payment of the negotiated purchase consideration or expiration
of the tender offer, as the case may be, exceeds 20% of the product of
the current market price per share (determined as provided in
paragraph (i) of this Section) of the Common Stock on the date fixed
for stockholders entitled to receive such distribution times the
number of shares of Common Stock outstanding on such date (excluding
shares held in the Treasury of the Company), the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying such conversion price in effect immediately prior to the
conversion price reduction contemplated by this paragraph (e) by a
fraction of which the numerator shall be the current market price per
share (determined as provided in paragraph (i) of this Section) of the
Common Stock on the date of such distribution less the amount of cash
so distributed applicable
-68-
<PAGE> 76
to one share of Common Stock and the denominator shall be such current
market price per share (determined as provided in paragraph (i) of
this Section) of the Common Stock on the date of such distribution,
such reduction to become effective immediately prior to the opening of
business on the day following the date fixed for the payment of such
distribution.
(f) In case the Company shall issue to an
Affiliate shares of its Common Stock at a net price per share less
than the current market price per share (determined as provided in
paragraph (i) of this Section) on the date the Company fixes the
offering price of such additional shares, the conversion price shall
be reduced immediately thereafter so that it shall equal the price
determined by multiplying such conversion price in effect immediately
prior thereto by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares
of Common Stock so offered would purchase at the current market price
and the denominator shall be the number of shares of Common Stock that
would be outstanding immediately after the issuance of such additional
shares. Such adjustment shall be made successively whenever such an
issuance is made. For the purposes of this paragraph (f), the number
of shares of Common Stock at any time outstanding shall not include
shares held in the Treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock. This paragraph (f) shall not apply to
Common Stock issued to any Affiliate under bona fide benefit plans in
which only directors, officers and employees of the Company and its
Subsidiaries are eligible to participate adopted by the Board of
Directors and approved by the holders of Common Stock when required by
law.
(g) In case a tender offer or other negotiated
purchase (the "Current Purchase") made by the Company or any
Subsidiary for all or any portion of the Company's Common Stock shall
be consummated, if the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination
shall be evidenced by a Board Resolution) of consideration payable in
respect of such tender offer or other negotiated purchase is in excess
of an amount equal to the product of (i) the number of shares of
Common Stock with respect to which the aggregate tender offer or
negotiated purchase consideration is payable, (ii) the average of the
daily Closing Prices per share of Common Stock on the five consecutive
Trading Days selected by the Company out of the 10 consecutive Trading
Days next succeeding the date of payment of the negotiated purchase
consideration or expiration of the tender offer, as the case may be
(the "Reference Price"), and the amount of such excess, together with
(A) the portion of the aggregate of the cash, plus the fair market
value (as determined by the Board of Directors, whose determination
shall be evidenced by in a Board Resolution) of
-69-
<PAGE> 77
consideration payable in respect of any tender offer or other
negotiated purchase (the "Prior Purchase") by the Company or a
Subsidiary for all or any portion of the Company's Common Stock
concluded within the 12 months preceding the expiration of a tender
offer or the consummation of any negotiated purchase, as the case may
be, that is the subject of the Current Purchase (the "Current Purchase
Expiration Time") and in respect of which no conversion price
adjustment pursuant to this paragraph (g) has been made, that is in
excess of an amount equal to the product of (1) the number of shares
of Common Stock with respect to which the aggregate consideration for
the Prior Purchase was payable and (2) the average of the daily
Closing Prices per share of Common Stock on the five consecutive
Trading Days selected by the Company out of the 10 consecutive Trading
Days next succeeding the date of payment of the negotiated purchase
consideration or expiration of the tender offer, as the case may be,
with respect to the negotiated purchase or tender offer that was the
subject of the Prior Purchase, and (iii) the aggregate amount of any
distributions to all holders of the Company's Common Stock made
exclusively in cash (specifically including distributions of cash out
of retained earnings of the Company or Net Income of the Company
during the four full fiscal quarters preceding the date such
distribution or dividend was declared) within the 12 months preceding
the expiration of the tender offer and as to which no adjustment
pursuant to paragraph (d) or paragraph (e) of this Section has been
made, exceeds 20% of the product of the Reference Price times the
number of shares of Common Stock outstanding (including any tendered
shares but excluding any shares held in the Treasury of the Company)
on the Current Purchase Expiration Time, the conversion price shall be
reduced so that the same shall equal the price determined by
multiplying such conversion price in effect immediately prior to the
Current Purchase Expiration Time by a fraction of which the numerator
shall be (A) the product of the Reference Price times the number of
shares of Common Stock outstanding (including any tendered shares but
excluding any shares held in the Treasury of the Company) on the
Current Purchase Expiration Time minus (B) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in
the terms of the tender offer or other negotiated purchase) of all
shares validly tendered and not withdrawn or purchased in any
negotiated purchase as of the Current Purchase Expiration Time (the
shares deemed so accepted or purchased, up to any such maximum, being
referred to as the "Purchased Shares") and the denominator shall be
the product of (1) such Reference Price times (2) such number of
outstanding shares (excluding any shares held in the Treasury of the
Company) on the Current Purchase Expiration Time less the number of
Purchased Shares, such reduction to become effective immediately prior
to the opening of business on the day following the Current Purchase
Expiration Time.
-70-
<PAGE> 78
(h) The reclassification of Common Stock into
securities other than Common Stock (other than any reclassification
upon a consolidation or merger to which Section 1211 applies) shall be
deemed to involve (i) a distribution of such securities other than
Common Stock to all holders of Common Stock (and the effective date of
such reclassification shall be deemed to be "the Reference Date"
within the meaning of paragraph (d) of this Section), and (ii) a
subdivision or combination, as the case may be, of the number of
shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such
subdivision becomes effective," or "the day upon which such
combination becomes effective", as the case may be, and "the day upon
which such subdivision or combination becomes effective" within the
meaning of paragraph (c) of this Section). Rights, warrants or
options issued or distributed by the Company to all holders of its
Common Stock entitling the holders thereof to subscribe for or
purchase shares of Common Stock or preferred stock, which rights,
warrants or options (A) are deemed to be transferred with such shares
of Common Stock, (B) are not exercisable and (C) are also issued or
distributed in respect of future issuances of Common Stock, in each
case in clauses (A) through (C) until the occurrence of a specified
event or events ("Trigger Events"), shall for purposes of this Section
1204 not be deemed issued or distributed until the occurrence of the
earliest Trigger Event.
(i) For the purpose of any computation under
paragraph (b), (d), (e), (f) or (g) of this Section, the "current
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing not more than 10
Trading Days before, and ending not later than, the date in question.
(j) The Company may, but shall not be required
to, make such reductions in the conversion price, in addition to those
required by paragraphs (a), (b), (c), (d), (e), (f) and (g) of this
Section, as it considers to be advisable in order that any event
treated for Federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to the recipients.
(k) No adjustment in the conversion price shall
be required unless such adjustment would require an increase or
decrease of at least 1% in the conversion price; provided, however,
that any adjustments which by reason of this paragraph (k) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article XIII
shall be made to the nearest cent or to the nearest one-hundredth of a
share of Common Stock, as the case may be.
-71-
<PAGE> 79
(l) Anything herein to the contrary
notwithstanding, in the event the Company shall declare any dividend
or distribution requiring an adjustment in the conversion price
hereunder and shall, thereafter and before the payment of such
dividend or distribution to stockholders, legally abandon its plan to
pay such dividend or distribution, the conversion price then in effect
hereunder, if changed to reflect such dividend or distribution, shall
upon the legal abandonment of such plan be changed to the conversion
price which would have been in effect at the time of such abandonment
(after giving effect to all other adjustments not so legally abandoned
pursuant to the provisions of this Article XII) had such dividend or
distribution never been declared.
(m) Notwithstanding any other provision of this
Section 1204, no adjustment to the conversion price shall reduce the
conversion price below the then par value per share of the Common
Stock, and any such purported adjustment shall instead reduce the
conversion price to such par value. The Company hereby covenants not
to take any action (i) to increase the par value per share of the
Common Stock or (ii) that would or does result in any adjustment in
the conversion price that, if made without giving effect to the
previous sentence, would cause the conversion price to be less than
the then par value per share of the Common Stock of the Company.
(n) Anything herein to the contrary
notwithstanding, no single event shall require or result in an
adjustment in the conversion price pursuant to more than one of the
foregoing paragraphs of this Section 1204.
SECTION 1205. Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted by the Company as herein provided:
(a) the Company shall compute the adjusted
conversion price in accordance with Section 1204 and shall prepare a
certificate signed by the Treasurer or any Assistant Treasurer of the
Company setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed (with a copy to the Trustee)
at each office or agency maintained for the purpose of conversion of
Securities pursuant to Section 1002; and
(b) a notice stating that the conversion price
has been adjusted and setting forth the adjusted conversion price
shall forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by the Company to all Holders at
their last addresses as they shall appear in the Security Register.
-72-
<PAGE> 80
SECTION 1206. Notice of Certain Corporate Action. In case:
(a) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable (i) otherwise than
exclusively in cash out of retained earnings of the Company or Net
Income of the Company during the four full fiscal quarters preceding
the date such distribution or dividend was declared or (ii)
exclusively in cash out of retained earnings of the Company or Net
Income of the Company during the four full fiscal quarters preceding
the date such distribution or dividend was declared in an amount that
would require a conversion price adjustment pursuant to paragraph (e)
of Section 1204; or
(b) the Company shall authorize the granting to
all holders of its Common Stock of rights, warrants or options to
subscribe for or purchase any shares of capital stock of any class or
of any other rights (excluding employee stock options or other rights
under employee benefit plans); or
(c) of any reclassification of the Common Stock
of the Company (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any consolidation or merger
to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the sale, transfer or
lease of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company or any Subsidiary of the Company
shall commence a tender offer for all or a portion of the Company's
outstanding shares of Common Stock (or shall amend any such tender
offer),
then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 1002, and shall
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, at least 20 days (or 10 days in any case specified in
clause (a), (b) or (e) above) prior to the applicable record, effective or
expiration date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or
granting of rights, warrants or options, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined,
or (y) the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution,
-73-
<PAGE> 81
liquidation or winding up, or (z) the date on which such tender offer
commenced, the date on which such tender offer is scheduled to expire unless
extended, the consideration offered and the other material terms thereof (or
the material terms of any amendment thereto).
SECTION 1207. Company to Reserve Common Stock. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, for the purpose of effecting the
conversion of Securities, the full number of shares of Common Stock then
issuable upon the conversion of all outstanding Securities.
SECTION 1208. Taxes on Conversions. The Company will pay any
and all taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of Securities pursuant hereto. The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted,
and no such issue or delivery shall be made unless and until the Person
requesting such issue has paid to the Company the amount of any such tax, or
has established to the satisfaction of the Company that such tax has been paid.
SECTION 1209. Covenant as to Common Stock. The Company
covenants that all shares of Common Stock which may be issued upon conversion
of Securities will upon issue be fully paid and nonassessable, free of
preemptive or any similar rights, and, except as provided in Section 1208, the
Company will pay all taxes, liens and charges with respect to the issue
thereof.
The Company will endeavor promptly to comply with all Federal
and state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in
the over-the-counter market or such other market on which the Common Stock is
then listed or quoted.
SECTION 1210. Cancellation of Converted Securities. All
Securities delivered for conversion shall be delivered to the Trustee to be
cancelled by or at the direction of the Trustee, which shall dispose of the
same as provided in Section 309.
SECTION 1211. Provisions in Case of Consolidations, Merger or
Sale of Assets; Special Distributions. Subject to any applicable right of the
Holders to have their Securities purchased pursuant to the provisions of
Section 1401, in case of any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any transfer or lease of the Company's
-74-
<PAGE> 82
properties or assets substantially as an entirety, the Person formed by such
consolidation or resulting from such merger or which acquires such properties
or assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 1201, to convert such Security
only into the kind and amount of securities, cash and other property
receivable, if any, upon such consolidation, merger, sale, transfer or lease by
a holder of the number of shares of Common Stock of the Company into which such
Security might have been converted immediately prior to such consolidation,
merger, sale, transfer or lease, assuming such holder of Common Stock of the
Company (a) is not a Person with which the Company consolidated or into which
the Company merged or which merged into the Company or to which such sale,
transfer or lease was made, as the case may be (a "Constituent Person"), or an
Affiliate of a Constituent Person and (b) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale, transfer or lease
(provided that if the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale, transfer or lease is not the
same for each share of Common Stock of the Company held immediately prior to
such consolidation, merger, sale, transfer or lease by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purpose of
this Section the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale, transfer or lease by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Such supplemental indenture
shall provide for adjustments which, for events subsequent to the effective
date of such supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, sales, transfers or leases.
If the Company makes a distribution to all holders of its
Common Stock that, but for the provisions of the last sentence of paragraph (d)
of Section 1204, would otherwise result in an adjustment in the conversion
price pursuant to the provisions of Section 1204, then, from and after the
record date for determining the holders of Common Stock entitled to receive the
distribution, a Holder of a Security that converts such Security in accordance
with the provisions of this Indenture shall upon conversion be entitled to
receive, in addition to the shares of Common Stock into which the Security is
convertible, the kind and amount of evidences of indebtedness, shares of
capital stock, cash or assets comprising the distribution that such Holder
would have received if such Holder had converted the Security immediately prior
to the record date for determining the holders of Common Stock entitled to
receive the distribution.
SECTION 1212. Trustee Adjustment Disclaimer. The Trustee has
no duty to determine when an adjustment under this Article XII should be made,
how it should be made or what it should be. The Trustee has no duty to
determine whether a
-75-
<PAGE> 83
supplemental indenture under Section 1211 need be entered into or whether any
provisions of any supplemental indenture are correct. The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities.
SECTION 1213. When No Adjustment Required.
(a) Except as expressly set forth in Section
1204, no adjustment in the conversion price shall be made because the
Company issues, in exchange for cash, property or services, shares of
Common Stock, or any securities convertible into or exchangeable for
shares of Common Stock, or securities (including warrants, rights and
options) carrying the right to subscribe for or purchase shares of
Common Stock or such convertible or exchangeable securities.
(b) Notwithstanding anything herein to the
contrary, no adjustment in the conversion price shall be made pursuant
to Section 1204 in respect of any dividend or distribution if the
Holders may participate therein (on a basis to be determined in good
faith by the Board of Directors) and receive the same consideration
they would have received if they had converted the Securities
immediately prior to the record date with respect to such dividend or
distribution (a "Non-Adjustment Distribution"). All Non-Adjustment
Distributions shall be ignored for purposes of any computation under
paragraph (e) or (g) of Section 1204.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 1301. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
Articles IV and XV), the Indebtedness represented by the Securities and the
payment of the principal of and premium, if any, and interest on each and all
of the Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
SECTION 1302. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of any Proceeding, the holders of Senior Indebtedness shall be
entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision shall be made for such
payment in cash or cash equivalents or otherwise in a manner satisfactory to
the holders of Senior Indebtedness, before the Holders of the Securities are
entitled to receive any Securities Payment (other
-76-
<PAGE> 84
than a Securities Payment in the form of Permitted Junior Securities), and to
that end the holders of Senior Indebtedness shall be entitled to receive, for
application to the payment thereof, any Securities Payment (other than any
Securities Payment in the form of Permitted Junior Securities), which may be
payable or deliverable in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received any
Securities Payment (other than any Securities Payment in the form of Permitted
Junior Securities), before all Senior Indebtedness is paid in full or payment
thereof is provided for in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Indebtedness, and if the Trustee or such
Holder, as the case may be, shall, at or prior to the time of such Securities
Payment have actual knowledge of such fact, then and in each such event, such
Securities Payment shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of all or substantially all of its
properties and assets as an entirety to another Person upon the terms and
conditions set forth in Article VIII shall not be deemed a Proceeding for the
purposes of this Section if the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer such properties and assets as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance or transfer, comply with
the conditions set forth in Article VIII.
SECTION 1303. No Payment When Designated Senior Indebtedness
in Default. In the event that any Payment Event of Default shall have occurred
and be continuing, no Securities Payment (other than a Securities Payment in
the form of Permitted Junior Securities) shall be made unless and until such
Payment Event of Default shall have been cured or waived or shall have ceased
to exist or all amounts then due and payable in respect of Designated Senior
Indebtedness shall have been paid in full, or provision shall have been made
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Designated Senior Indebtedness.
In the event that any Non-Payment Event of Default shall have
occurred with respect to any Designated Senior Indebtedness and be continuing,
then, upon the receipt by the Trustee and the Company of written notice of such
Non-Payment Event of Default from the trustee or representative for, or holders
of, at least a majority in principal amount of such Designated Senior
Indebtedness, no Securities Payment (other
-77-
<PAGE> 85
than a Securities Payment in the form of Permitted Junior Securities) shall be
made during the period (the "Payment Blockage Period") commencing on the date
of receipt of such written notice and ending on the earlier of (a) the date on
which such Non- Payment Event of Default shall have been cured or waived or
shall have ceased to exist or any acceleration of the Designated Senior
Indebtedness to which such Non-Payment Event of Default relates shall have been
rescinded or annulled or such Designated Senior Indebtedness shall have been
discharged and (b) the 176th day after the date of such receipt of such written
notice. During any 360-day period the aggregate of all Payment Blockage
Periods shall not exceed 176 days and there shall be a period of at least 184
consecutive days in each 360-day period when no Payment Blockage Period is in
effect. For all purposes of this paragraph, no Non- Payment Event of Default
that existed or was continuing on the date of commencement of any Payment
Blockage Period shall be, or be made, the basis for the commencement of a
subsequent Payment Blockage Period by a trustee or representative for, or
holders of, Designated Senior Indebtedness unless such Payment Event of Default
or Non-Payment Event of Default shall have been cured for a period of not less
than 90 consecutive days.
In the event that, notwithstanding the foregoing, the Company
shall make any Securities Payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section, and if such fact shall,
at or prior to the time of such Securities Payment, have been made known to the
Trustee or, such Holder, as the case may be, then and in such event such
Securities Payment shall be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any
Securities Payment with respect to which Section 1302 would be applicable.
SECTION 1304. Payment Permitted if No Default. Nothing
contained in this Article or elsewhere in this Indenture or in any of the
Securities shall prevent (a) the Company, at any time except during the
pendency of any Proceeding referred to in Section 1302 or under the conditions
described in Section 1303, from making Securities Payments or (b) the
application by the Trustee of any money deposited with it hereunder to
Securities Payments or the retention of such Securities Payment by the Holders,
if, at the time of such application by the Trustee, it did not have actual
knowledge that such Securities Payment would have been prohibited by the
provisions of this Article.
SECTION 1305. Subrogation to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all amounts due and to become
due on or in respect of Senior Indebtedness, or the provision for such payment
in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Indebtedness, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the holders
of such Senior Indebtedness pursuant to the provisions of this Article to the
rights of the holders of such Senior Indebtedness to receive
-78-
<PAGE> 86
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and premium, if any, and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Indebtedness and
the Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
SECTION 1306. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of and premium, if any, and interest on
the Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders
of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 1307. Trustee to Effectuate Subordination. Each
Holder of a Security by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate, as between the Holders of the Securities and the holders of Senior
Indebtedness, the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding up or liquidation or reorganization under any
applicable bankruptcy law of the Company (whether in bankruptcy, insolvency or
receivership proceedings or otherwise), the timely filing of a claim for the
unpaid balance of such Holder's Securities in the form required in such
proceedings and the causing of such claim to be approved. If the Trustee does
not file a claim or proof of debt in the form required in such proceedings
prior to 10 days before the expiration of the time to file such claims of
proofs, then the holders of Senior Indebtedness, jointly, or their
representative shall have the right to file an appropriate claim for and on
behalf of the Holders. Nothing contained herein shall be construed to
authorize the Trustee or the holders of Senior Indebtedness to authorize
-79-
<PAGE> 87
or consent to or to accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder or to authorize the Trustee or the holders of
Senior Indebtedness to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 1308. No Waiver of Subordination Provisions. No
right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (c) release any Person liable in any manner for the
collection of Senior Indebtedness and settle or compromise Senior Indebtedness
(which, to the extent so settled and compromised, shall be deemed to have been
paid in full for all purposes hereof); (d) apply any amounts received to any
liability of the Company owing to holders of Senior Indebtedness; and (e)
exercise or refrain from exercising any rights against the Company and any
other Person.
SECTION 1309. Notice to Trustee. The Company shall give
prompt written notice to the Trustee of any default or event of default with
respect to any Senior Indebtedness or of any fact known to the Company which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder of Senior
Indebtedness or from any trustee therefor; and, prior to the receipt of any
such written notice, the Trustee, subject to the provisions of Section 601,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section at least five Business Days prior to the date upon which by the
terms
-80-
<PAGE> 88
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of and premium, if any, or interest on
any Security), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purpose for which such money was received and shall not
be affected by any notice to the contrary which may be received by it within
five Business Days prior to such date.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 1310. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of Section
601, and the Holders of the Securities shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which any
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders of Securities, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article.
SECTION 1311. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness.
SECTION 1312. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual
capacity shall be entitled to all the rights set forth in this Article with
respect to any Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.
-81-
<PAGE> 89
Nothing in this Article shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 607.
SECTION 1313. Article Applicable to Paying Agents. In case
at any time any Paying Agent other than the Trustee shall have been appointed
by the Company and be then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that Section 1312
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
SECTION 1401. Repurchase of Securities at Option of the
Holder upon Change of Control.
(a) If at any time there shall have occurred a
Change of Control (as defined below) with respect to the Company which
constitutes a Repurchase Event (as defined below), each Holder shall
have the right, at such Holder's option, subject to the terms and
conditions of this Indenture, to require the Company to repurchase all
or a portion of such Holder's Securities (in denominations of $1,000
or integral multiples thereof), at a purchase price equal to 100% of
the principal amount of such Securities, together with accrued
interest to the Change of Control Purchase Date (the "Change of
Control Purchase Price"), on the date (the "Change of Control Purchase
Date") that is 60 days after the date on which the Company's Change of
Control Notice (as defined below) is mailed (or such later date as is
required by law), subject to substantial satisfaction by or on behalf
of the Holder of the requirements set forth in Section 1401(c).
Promptly, but in any event within 29 days following any such Change of
Control constituting a Repurchase Event, the Company hereby covenants,
with respect to any Senior Indebtedness that would prohibit the
repurchase of Securities by the Company in the event of such Change of
Control, to either (i) repay all such Senior Indebtedness in full; or
(ii) obtain the requisite consents under any agreement or instrument
pursuant to which such Senior Indebtedness is issued to permit the
repurchase of the Securities as provided below. The Company shall
first comply with the covenants in the preceding sentence before it
shall be required to repurchase Securities pursuant to this Article
XIV. The foregoing shall in no way limit the occurrence of an Event
of Default, including an Event of Default arising from a default under
the covenants of the second sentence of this Section 1401(a), and the
right to
-82-
<PAGE> 90
declare all the principal of the Securities to be immediately due and
payable in accordance with the provisions of this Indenture.
A "Change of Control" shall occur when: (i) all or
substantially all of the Company's assets are sold as an entirety to
any person or related group of persons; (ii) there shall be
consummated any consolidation or merger of the Company (A) in which
the Company is not the continuing or surviving corporation (other than
a consolidation or merger with a wholly owned subsidiary of the
Company in which all shares of Common Stock outstanding immediately
prior to the effectiveness thereof are changed into or exchanged for
the same consideration) or (B) pursuant to which the Common Stock
would be converted into cash, securities or other property, in each
case, other than a consolidation or merger of the Company in which the
holders of the Common Stock immediately prior to the consolidation or
merger have, directly or indirectly, at least a majority of the Common
Stock of the continuing or surviving corporation immediately after
such consolidation or merger; or (iii) any person or any persons
acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act (other than the Company, any
Subsidiary, any employee stock purchase plan, stock option plan or
other stock incentive plan or program, retirement plan or automatic
dividend reinvestment plan or any substantially similar plan of the
Company or any Subsidiary or any person holding securities of the
Company for or pursuant to the terms of any such employee benefit
plan), together with any affiliates thereof, shall Beneficially Own,
directly or indirectly, at least 50% of the total Voting Stock of the
Company.
Notwithstanding the foregoing provisions of this
Section 1401(a), a Change of Control shall not be deemed to have
occurred by virtue of the purchase by one or more underwriters of
Capital Stock of the Company pursuant to a firm commitment
underwriting in connection with a public offering of such Capital
Stock; provided, however, that upon the expiration of 20 Business Days
following the acquisition by such underwriters of Capital Stock of the
Company pursuant to such a firm commitment underwriting, such
underwriters shall not Beneficially Own, directly or indirectly, at
least 50% of the total Voting Stock of the Company.
A Change of Control as described above shall
constitute a "Repurchase Event" unless (i) the closing price per share
of the Common Stock on the five consecutive Trading Days selected by
the Company out of the 10 consecutive Trading Days ending immediately
after the later of the Change of Control or the public announcement of
the Change of Control (in the case of a Change of Control under
clauses (i) or (ii) of the definition of Change of Control) or ending
immediately before the Change of Control (in the case of a Change of
Control under clause (iii) of the definition of Change of Control) is
-83-
<PAGE> 91
at least equal to 105% of the conversion price of the Securities in
effect immediately preceding the time of such Change of Control, or
(ii) all of the consideration (excluding cash payments for fractional
shares) in the transaction giving rise to such Change of Control to
the holders of Common Stock consists of shares of Common Stock that
are, or immediately upon issuance will be, listed on a national
securities exchange or quoted in the Nasdaq National Market, and as a
result of such transaction the Securities become convertible solely
into such Common Stock and there has not been a Rating Decline, or
(iii) the consideration in the transaction giving rise to such Change
of Control to the holders of Common Stock consists of cash, securities
that are, or immediately upon issuance will be, listed on a national
securities exchange or quoted in the Nasdaq National Market, or a
combination of cash and such securities, and the aggregate fair market
value of such consideration (which, in the case of such securities,
shall be equal to the average of the daily Closing Prices of such
securities on the five consecutive Trading Days selected by the
Company out of the 10 consecutive Trading Days following consummation
of such transaction) is at least 105% of the conversion price of the
Securities in effect on the date immediately preceding the closing
date of such transaction.
(b) Within 29 days after the occurrence of a
Change of Control which constitutes a Repurchase Event, the Company
covenants that it shall mail a written notice (the "Change of Control
Notice") of Change of Control by first- class mail to the Trustee and
to each Holder (and to beneficial owners as required by applicable
law) and shall cause a copy of such notice to be published in a daily
newspaper of national circulation. The notice shall state:
(i) the events causing a Change of
Control (setting forth a brief description of such event) and
the date of such Change of Control;
(ii) the date by which the Change of
Control Purchase Notice pursuant to this Section 1401 must be
given;
(iii) the Change of Control Purchase Date;
(iv) the Change of Control Purchase Price;
(v) the name and address of the Paying
Agent and the conversion agent;
(vi) the conversion price and any
adjustments thereto and the place or places where Securities
may be surrendered for conversion;
-84-
<PAGE> 92
(vii) that Securities as to which a Change
of Control Purchase Notice has been given may be converted
into Common Stock only if the Change of Control Purchase
Notice has been withdrawn in accordance with the terms of this
Indenture;
(viii) the procedures the Holder must
follow to exercise rights under this Section 1401 and a brief
description of such rights; and
(ix) the procedures for withdrawing a
Change of Control Purchase Notice.
The Change of Control Notice shall also state whether
or not the Company has satisfied its obligations with respect to any
Senior Indebtedness that would prohibit the repurchase of Securities
by the Company in the event of a Change of Control pursuant to Section
1401(a). If the Company is unable to satisfy such obligations, the
Change of Control Notice shall also state that the Company is or will
be in default under Section 501(c) of the Indenture, that receipt by
the Company of one or more Change of Control Purchase Notices by
Holders of at least 25% of the outstanding Securities will constitute
a Notice of Default thereunder, and that the failure of the Company to
cure such default within 60 days (or the then applicable time period)
will be an Event of Default allowing the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities to
declare the principal of all the Securities to be due and payable
immediately.
(c) A Holder may exercise its rights specified in
Section 1401(a) upon delivery of a written notice of purchase (a
"Change of Control Purchase Notice") to the Paying Agent at any time
prior to the close of business on the Change of Control Purchase Date,
stating:
(i) the certificate number or numbers of
the Security or Securities which the Holder will deliver to be
purchased;
(ii) the portion of the principal amount
of the Security or Securities which the Holder will deliver to
be repurchased, which portion must be $1,000 or an integral
multiple thereof; and
(iii) that such Security or Securities
shall be repurchased pursuant to the terms and conditions
specified in this Article XIV.
The delivery of such Security or Securities to the
Paying Agent prior to, on or after the Change of Control Purchase Date
(together with all necessary endorsements) at the offices of the
Paying Agent shall be a condition
-85-
<PAGE> 93
to the receipt by the Holder of the Change of Control Purchase Price
therefor, and the Change of Control Purchase Price shall be paid
pursuant to this Section 1401 only if the Security or Securities so
delivered to the Paying Agent shall conform in all respects to the
description thereof set forth in the related Change of Control
Purchase Notice.
The Company shall repurchase from the Holder thereof,
pursuant to this Section 1401, a portion of a Security if such portion
is $1,000 or an integral multiple of $1,000.
Notwithstanding anything herein to the contrary, any
Holder delivering to the Paying Agent the Change of Control Purchase
Notice contemplated by this Section 1401(c) shall have the right to
withdraw such Change of Control Purchase Notice at any time prior to
the close of business on the Change of Control Purchase Date by
delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 1402.
SECTION 1402. Effect of Change of Control Purchase Notice.
Upon receipt by the Company of the Change of Control Purchase Notice specified
in Section 1401, the Holder of the Security in respect of which such notice was
given shall (unless such notice is withdrawn as specified in the following
paragraph) thereafter be entitled to receive solely the Change of Control
Purchase Price with respect to such Security. Such price shall be paid to such
Holder (provided the conditions in Section 1401 have been satisfied) promptly
following the later of (x) the Change of Control Purchase Date with respect to
such Security and (y) the time of delivery of such Security to the Paying Agent
by the Holder thereof in the manner required by Section 1401(c). Securities in
respect of which a Change of Control Purchase Notice has been given by the
Holder thereof may not be converted into shares of Common Stock on or after the
date of the delivery of such Change of Control Purchase Notice unless such
notice has first been validly withdrawn as specified in the following
paragraph.
A Change of Control Purchase Notice may be withdrawn by means
of a written notice of withdrawal delivered to the office of the Paying Agent
at any time prior to the close of business on the Change of Control Purchase
Date specifying:
(i) the certificate number or numbers of the
Security or Securities in respect of which such notice of
withdrawal is being submitted;
(ii) the portion of the principal amount of the
Security or Securities with respect to which such notice of
withdrawal is being submitted, which portion must be $1,000 or
an integral multiple thereof, and
-86-
<PAGE> 94
(iii) the portion of the principal amount, if any,
of such Security or Securities which remains subject to the
original Change of Control Purchase Notice and which has been
or will be delivered for purchase by the Company, which
portion must be $1,000 or an integral multiple thereof.
In addition to the requirement that the Company must first
comply with the covenants set forth in Section 1401, there shall be no
repurchase of any Securities pursuant to Section 1401 if there has occurred
(prior to, on or after the giving, by the Holders of such Securities, of the
required Change of Control Purchase Notice) and is continuing an Event of
Default. The foregoing shall in no way limit the occurrence of an Event of
Default, including an Event of Default arising from a default under the
covenants in this Article XIV and the right to declare the principal of the
Securities to be immediately due and payable in accordance with the provisions
of this Indenture.
SECTION 1403. Deposit of Change of Control Purchase Price.
At least one Business Day prior to the Change of Control Purchase Date, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the aggregate Change of Control Purchase
Price of all the Securities or portions thereof which are to be purchased as of
the Change of Control Purchase Date.
SECTION 1404. Securities Purchased in Part. Any Security
which is to be purchased only in part shall be surrendered at the office of the
Paying Agent (with, if the Company or the Trustee so requires, due endorsement
by, or 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 make available for delivery to the Holder of such Security,
without service charge, a new Security or Securities, of any authorized
denomination requested by such Holder in aggregate principal amount equal to,
and in exchange for, the portion of the principal amount of the Security so
surrendered which is not purchased.
SECTION 1405. Covenant to Comply with Securities Laws Upon
Purchase of Securities. In connection with any purchase of Securities under
Section 1401 hereof, the Company shall, to the extent then applicable and
required by law: (a) comply with Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act; (b) file the
related Schedule 13E-4 (or any successor or similar schedule, form or report)
under the Exchange Act; and (c) otherwise comply with all Federal and state
securities laws so as to permit the rights and obligations under Section 1401
to be exercised in the time and in the manner specified in Section 1401.
-87-
<PAGE> 95
ARTICLE XV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1501. Company's Option to Effect Defeasance or
Covenant Defeasance. The Company may at its option by Board Resolution, at any
time, elect to have the provisions of either Section 1502 or Section 1503 apply
to the Outstanding Securities upon compliance with the conditions set forth
below in this Article XV.
SECTION 1502. Defeasance and Discharge. Upon the Company's
election to have this Section 1502 apply to the Outstanding Securities, the
Company shall be deemed to have been discharged from its obligations with
respect to the Outstanding Securities (including the provisions of Article XIII
hereof) on the date the conditions set forth below are satisfied (hereinafter
referred to as a "Defeasance"). For this purpose, such Defeasance means that
the Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Outstanding Securities and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense 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 1504 and as more fully set forth in such Section,
payments in respect of the principal of and premium, if any, and interest on
such Securities when such payments are due, (b) the Company's obligations with
respect to such Securities under Sections 305, 306, 607, 608, 702, 1002 and
1003, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, (d) the Company's obligations under Article XII and (e) this Article
XV.
Subject to compliance with this Article XV, the Company may
exercise its option under this Section 1502 notwithstanding the prior exercise
of its option under Section 1503.
SECTION 1503. Covenant Defeasance. Upon the Company's
election to have this Section 1503 apply to the Outstanding Securities, the
Company (a) shall be released from its obligations under Section 1007, Section
1008, and the provisions of Article XIII hereof, and (b) the occurrence of an
event specified in Section 501(d) shall not constitute an Event of Default, and
such Sections and Article shall no longer apply with respect to or for the
benefit of the Company, the Securities, the Holders of Securities and the
holders of Senior Indebtedness on and after the date the conditions set forth
below are satisfied (hereinafter referred to as a "Covenant Defeasance"). For
this purpose, such Covenant Defeasance means that the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Sections or Article, whether directly or
indirectly by reason of any reference elsewhere herein to any such Sections or
Article or by reason of any
-88-
<PAGE> 96
reference in any such Sections or Article to any other provision herein or in
any other document, but the remainder of this Indenture and such Securities
shall be unaffected thereby.
SECTION 1504. Conditions to Defeasance or Covenant
Defeasance. The following shall be the conditions to the application of either
Section 1502 or Section 1503 to the Outstanding Securities:
(a) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 609 who shall agree to comply
with the provisions of this Article XV 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, (i) money in an amount, or
(ii) 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 each installment of interest
on the Securities on the Stated Maturity of such principal or the
stated due date of such installment of interest in accordance with the
terms of this Indenture and of such Securities. For this purpose,
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the 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 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 of 1933, as amended) as custodian with
respect to any such U.S. Government obligation or a specific payment
of principal of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of such
depository receipt; provided, however, that (except as required by
law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
(b) In the case of an election under Section
1502, the Company shall have delivered to the Trustee an Opinion of
Counsel stating that
-89-
<PAGE> 97
(x) the Company has received from, or there has been published by, the
Internal Revenue service a ruling or (y) since the date of this
Indenture there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a
result of such deposit, Defeasance and discharge 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 Defeasance had not
occurred.
(c) In the case of an election under Section
1503, 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 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 deposit and Covenant
Defeasance had not occurred.
(d) In the case of an election under Section 1502
or 1503, the Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(e) At the time of such Defeasance or Covenant
Defeasance: (i) no default in the payment of all or a portion of
principal of or premium, if any, or interest on any Senior
Indebtedness shall have occurred and be continuing, and no event of
default with respect to any Senior Indebtedness shall have occurred
and be continuing and shall have resulted in such Senior Indebtedness
becoming or being declared due and payable prior to the date on which
it would otherwise have become due and payable and (ii) (A) no other
event of default with respect to any Senior Indebtedness shall have
occurred and be continuing permitting the holders of such Senior
Indebtedness (or a trustee on behalf of the holders thereof) to
declare such Senior Indebtedness due and payable prior to the date on
which it would otherwise have become due and payable, (B) no judicial
proceeding shall be pending with respect to any such event of default
and (C) the Company and the Trustee shall not have received a notice
with respect to any such event of default from any holder of Senior
Indebtedness (or their representative or representatives), or, in the
case of either clause (A) or clause (B) above, each such default or
event of default shall have been cured or waived or shall have ceased
to exist.
(f) No Event of Default or event which with
notice or lapse of time, or both, would become an Event of Default
shall have occurred and be continuing on the date of such deposit or,
insofar as Sections 501(e) and (f) are
-90-
<PAGE> 98
concerned, at any time during the period ending on the 90th day after
the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
(g) Such Defeasance or Covenant Defeasance shall
not cause the Trustee to have a conflicting interest as defined in
Section 608 and for purposes of the Trust Indenture Act with respect
to any securities of the Company.
(h) Such Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under,
any other agreement or instrument to which the Company is a party or
by which it is bound.
(i) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to either
the Defeasance under Section 1502 or the Covenant Defeasance under
Section 1503 (as the case may be) have been complied with.
(j) Such Defeasance or Covenant Defeasance shall
not result in the trust arising from such deposit to constitute,
unless it is qualified as, a regulated investment company under the
Investment Company Act of 1940, as amended.
The subordination provisions of Article XIII shall no longer
apply to the Securities upon such Defeasance or Covenant Defeasance.
SECTION 1505. 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 1003, 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 1505, the
"Trustee") pursuant to Section 1504 shall be held in trust and applied by the
Trustee, 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 Holders of the Securities, of all sums due and to become due
thereon, in respect of principal of and premium, if any, and interest on the
Securities, but such money need not be segregated from other funds except to
the extent required by law. Money so held in trust, to the extent allocated
for the payment of Securities, shall not be subject to the provisions of
Article XIII.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1504 or the principal and interest
received in respect
-91-
<PAGE> 99
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 XV 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 1504 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 hereof which would then
be required to be deposited to effect an equivalent Defeasance or Covenant
Defeasance.
The provisions for subordination of the Securities set forth
in Article XIII are hereby expressly made subject to the provisions for
Defeasance or Covenant Defeasance in this Article XV and, anything herein to
the contrary notwithstanding, upon the effectiveness of such Defeasance or
Covenant Defeasance, such Securities shall thereupon cease to be so
subordinated.
SECTION 1506. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money in accordance with Section 1502 or 1503 by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XV until
such time as the Trustee or Paying Agent is permitted to apply all such money
in accordance with Section 1502 or 1503; provided, however, that if the Company
makes any payment of principal of or premium, if any, or interest on any
Security following the reinstatement of its obligations, the Company 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.
-92-
<PAGE> 100
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
SNYDER OIL CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
as Trustee
By:_____________________________________
Authorized Signatory
-93-
<PAGE> 1
FIRST AMENDMENT TO
FOURTH RESTATED CREDIT AGREEMENT
This First Amendment to Fourth Restated Credit Agreement (this
"Amendment") is entered into as of the 28th day of April, 1994 by and
among Snyder Oil Corporation ("Borrower"), NationsBank of Texas, N.A.
as Agent ("Agent"), and NationsBank of Texas, N.A., Wells Fargo Bank,
N.A. and Bank One, Texas, N.A., each a national banking association
(NationsBank of Texas, N.A., Wells Fargo Bank, N.A. and Bank One,
Texas, N.A. are collectively referred to herein as the "Banks").
Capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned to such terms in the Fourth Restated
Credit Agreement dated as of July 1, 1993 by and among Borrower,
Agent and the Banks (the "Credit Agreement").
W I T N E S S E T H:
WHEREAS, Borrower, Agent and the Banks entered into the Credit
Agreement pursuant to which the Banks agreed to make Loans to
Borrower on the terms and conditions set forth therein; and
WHEREAS, Borrower, Agent and the Banks desire to amend the
Credit Agreement in certain respects;
NOW, THEREFORE, for and in consideration of the mutual covenants
and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments to Definitions. The definitions of "Bank Redemption
Notice," "Borrowing Base Report," "Conversion Price," "Redemption
Notice," and "Restricted Payment" contained in Section 1.1 of the
Credit Agreement shall be amended to read in full as follows:
"Bank Redemption Notice" means any notice required to be given
by Borrower to the Banks pursuant to the definitions of "Qualified
Redemption of First Issue," "Qualified Redemption of Second Issue"
and "Qualified Redemption of Third Convertible Debentures."
"Borrowing Base Report" means the report required to be
delivered to the Banks pursuant to Section 4.1 and 4.3 which shall
(a) set forth the aggregate amount of all obligations of Borrower to
the holders of the Subordinated Notes, the Convertible Debentures and
the Preferred Stock coming due within the twelve (12) month period
following the next succeeding Determination Date, including, without
limitation, (i) dividends anticipated to be paid during such period
whether or not declared, and (ii) the full amount of any redemption,
sinking fund or mandatory prepayment obligation anticipated to come
due during such period with respect to the Subordinated Notes, the
Convertible Debentures or the Preferred Stock (whether or not a Bank
Redemption Notice or Redemption Notice has been delivered), and (b)
include a copy of the Reserve Report and the Related Asset Report
upon which the Total Borrowing Base is to be determined.
"Conversion Price" means (a) in the case of the First Preferred
Stock, the "conversion price" in effect at the time in question as
such term is defined in the First Preferred Stock Designation or, if
the First Preferred Stock has been exchanged for the First
Convertible Debentures, as such term is defined in the First
Page 1
<PAGE> 2
Indenture, (b) in the case of the Second Preferred Stock, the
"conversion price" in effect at the time in question as such term is
defined in the Second Preferred Stock Designation or, if the Second
Preferred Stock has been exchanged for the Second Convertible
Debentures, as such term is defined in the Second Indenture and (c)
in the case of the Third Convertible Debentures, the "conversion
price" in effect at the time in question as such term is defined in
the Third Indenture.
"Convertible Debentures" means the First Convertible Debentures,
the Second Convertible Debentures and the Third Convertible
Debentures, collectively.
"Redemption Notice" means a notice by Borrower (or the First
Indenture Trustee, the Second Indenture Trustee or the Third
Indenture Trustee) to the holders of First Preferred Stock, Second
Preferred Stock, First Convertible Debentures, Second Convertible
Debentures or Third Convertible Debentures, as applicable, pursuant
to which Borrower (or the First Indenture Trustee, the Second
Indenture Trustee or the Third Indenture Trustee) calls any such
securities for redemption.
"Restricted Payment" means (a) any Distribution by Borrower or
any Distribution by DJ Partners, L.P., (b) any capital contribution,
loan or advance by Borrower or any Restricted Subsidiary to any
Unrestricted Subsidiary of Borrower or to DJ Partners, L.P., (c) the
issuance of a Guarantee by Borrower or any Restricted Subsidiary with
respect to any Debt or other obligation of any Unrestricted
Subsidiary, (d) the retirement, redemption or prepayment prior to the
scheduled maturity by Borrower or a Restricted Subsidiary of Borrower
of any Debt of Borrower or such Restricted Subsidiary which is
subordinate to the Obligations, including without limitation, the
Subordinate Notes and the Convertible Debentures (and, in the case of
the Third Convertible Debentures, any payment of the Change of
Control Purchase Price [as defined in the Third Indenture]), and (e)
any Investment by Borrower which is a Permitted Investment pursuant
to subsection (e) of the definition of Permitted Investment.
Notwithstanding the foregoing, "Restricted Payments" shall not
include (y) advances made under the Intercompany Loan or (z)
contributions by Borrower and SWAT to DJ Partners, L.P. of (i) oil
and gas properties owned by Borrower and DJ Partners, L.P. on
September 30, 1992 located in Weld County, Colorado (as to the Codell
and Niobrara formation only) and Cheyenne County, Nebraska (as to the
Niobrara formation only) and (ii) the oil and gas properties owned by
Borrower described on Schedule 2 hereto; provided, that, in the case
of (z) (i) and (ii) preceding, such properties shall be mortgaged to
Agent for the benefit of Banks as required by Section 5.1 hereof
prior to the date such properties are contributed to DJ Partners,
L.P. for purposes of this definition, at the time Borrower or any
Restricted Subsidiary issues any Guarantee of any Debt or other
obligation of any Unrestricted Subsidiary, Borrower or such
Restricted Subsidiary will be deemed to have made a Restricted
Payment in an amount equal to the maximum potential liability of
Borrower or such Restricted Subsidiary under such Guarantee.
2. Additional Definitions. The Credit Agreement shall be amended
to include new definitions of "Delmar," "Delmar Acquisition," "Delmar
Plan," "Qualified Redemption of Third Convertible Debentures," "Third
Convertible Debentures," "Third Indenture," "Third Indenture Trustee"
and "Third Registration Statement," which shall read in their
Page 2
<PAGE> 3
respective entirety as follows:
"Delmar" means Delmar Operating, Inc., a Delaware corporation
which may become a Subsidiary of Borrower as a result of the Delmar
Acquisition.
"Delmar Acquisition" means the acquisition by Borrower of more
than fifty percent (50%) of the outstanding capital stock (on a fully
diluted basis) of Delmar Petroleum, Inc. a Delaware corporation,
which holds one hundred percent (100%) of the issued and outstanding
capital stock of Delmar.
"Delmar Plan" means the Delmar Operating, Inc. Pension Plan, a
Plan maintained by Delmar.
"Qualified Redemption of Third Convertible Debentures" means a
redemption by Borrower of the Third Convertible Debentures pursuant
to Article XI of the Third Indenture which meets each of the
following qualifications: (a) Borrower shall have given the Banks a
Bank Redemption Notice not less than twenty (20) days nor more than
sixty (60) days prior to the delivery of a Redemption Notice to the
holders of the Third Convertible Debentures; (b) Borrower shall not
(and shall not permit the Third Indenture Trustee to) deliver the
Redemption Notice more than thirty (30) days prior to the date fixed
for redemption; (c) such redemption shall not be effective prior to
March 31, 1997; and (d) the Closing Price of Borrower's Common Stock
on each trading day in the period commencing thirty (30) days prior
to the date of delivery of the Redemption Notice through the fifth
(5th) Domestic Business Day prior to the date fixed for redemption
shall be at least one hundred twenty percent (120%) of the Conversion
Price.
"Third Convertible Debentures" means Borrower's ___% Convertible
Subordinated Notes Due 2001 which may be issued pursuant to the Third
Registration Statement.
"Third Indenture" means an Indenture to be entered into by and
between Borrower and the Third Indenture Trustee setting forth the
terms of the Third Convertible Debentures, which shall be in form and
substance acceptable to Required Banks.
"Third Indenture Trustee" means Texas Commerce Bank National
Association and any successor trustee appointed pursuant to the Third
Indenture.
"Third Registration Statement" means the Registration Statement
on Form S-3 (No. 33-52807) under the Securities Act registering the
offering and sale of the Third Convertible Debentures in accordance
with the Securities Act filed by Borrower with the Securities and
Exchange Commission, together with all changes and completions to
such Registration Statement filed with the Securities and Exchange
Commission after the date hereof, but before the effective date of
such Registration Statement.
3. Amendment to Representation Regarding ERISA. Section 7.7 of the
Credit Agreement shall be amended to read in full as follows:
SECTION 7.7 ERISA. With the exception of the Delmar Plan
(to the extent Borrower completes the Delmar Acquisition),
neither the Borrower nor any of its Subsidiaries is a party
Page 3
<PAGE> 4
to or bound by, or at any time prior to the date hereof,
has been a party to or bound by, any Plan.
4. Addition of Representations Regarding Third Convertible
Debentures. The Credit Agreement shall be amended to include a new
Section 7.18 which shall read in full as follows:
SECTION 7.18. Issuance of Third Convertible Debentures. Upon
the issuance and sale of the Third Convertible Debentures upon
the terms and conditions set forth in the Third Indenture, the
Third Convertible Debentures will have been duly authorized by
all necessary corporate action on the part of Borrower, will
require no action by or in respect of or filing with, any
government authority, agency or official and will not
contravene, or constitute a default under any provision of
applicable law or regulation or of the certificates of
incorporation, or partnership agreement, bylaws or other
organizational documents of Borrower or any of its Subsidiaries
or of any Material Agreement, judgment, injunction, order,
decree or other instrument binding upon any such Person or the
creation of any Lien on the assets of any such Person other than
the Liens securing the Notes, and (b) the Third Registration
Statement when it becomes effective will conform in all material
respects to the requirements of the Securities Act and the
Exchange Act. Neither the Third Registration Statement nor the
final prospectus constituting a part thereof (including any
documents incorporated therein by reference) will include any
untrue statement of 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. The issuance of the Third
Convertible Debentures will be conducted in accordance with all
provisions of the Securities Act and the Exchange Act and
applicable state securities laws.
5. Amendment to Reporting Covenant. Section 8.1(j) of the Credit
Agreement shall be amended to read in full as follows:
(j) immediately upon receipt of the same, a copy of the any
notice received by Borrower of the occurrence of any Event of
Default under and as defined in the Securities Purchase
Agreement, the First Indenture, the Second Indenture or the
Third Indenture or any event which with notice, lapse of time or
both, would, unless cured or waived, become such an Event of
Default;
6. Amendment to Debt Covenant. Section 9.1 of the Credit Agreement
shall be amended to read in full as follows:
SECTION 9.1. Total Additional Debt of the Borrower, Restricted
Subsidiaries and DJ Partners, L.P. Neither the Borrower, any
Restricted Subsidiary nor DJ Partners, L.P. will incur any Debt
other than (a) Debt secured by Permitted Encumbrances described
in subpart (1) of the definition of Permitted Encumbrances, (b)
Nonrecourse Debt, (c) Third Party Letters of Credit permitted by
Section 2.1 hereof, (d) the Loans, (e) the Intercompany Loan,
(f) margin accounts with brokers and dealers relating to Margin
Stock and other securities, and (g) Guarantees of Debt and other
liabilities of other Restricted Subsidiaries and of Borrower
provided that such Debt and other liabilities are permitted
Page 4
<PAGE> 5
pursuant to this Agreement; provided, that the Debt permitted
pursuant to Section 9.1(a) and (b) shall not exceed $15,000,000
in the aggregate; provided further that the Third Party Letter
of Credit Exposure under Cash Secured Third Party Letters of
Credit shall not exceed at any time five percent (5%) of the
Borrowing Base in effect at such time; and provided further,
that the maximum aggregate outstanding balance of Borrower's and
its Subsidiaries' margin accounts shall not exceed one percent
(1%) of Borrower's Consolidated Tangible Net Worth at any time.
In addition to the foregoing, Borrower may issue the First
Convertible Debentures in exchange for the First Preferred
Stock, Borrower may issue the Second Convertible Debentures in
exchange for the Second Preferred Stock, and Borrower may issue
the Third Convertible Debentures; provided, that Borrower shall
give each Bank ninety (90) days advance notice of Borrower's
intention to complete any exchange of Convertible Debentures for
Preferred Stock, and if Majority Banks require that Borrower and
the Restricted Subsidiaries grant Liens on their oil and gas
properties and Related Assets pursuant to Section 5.1(b),
Borrower will not complete such exchange until all requisite
Mortgages have been executed and delivered by Borrower and the
Restricted Subsidiaries and Agent has notified Borrower that all
such Mortgages have been filed of record and that all other
steps necessary to perfect (and confirm perfection) of the Liens
created by such Mortgages have been taken.
7. Amendment to Restricted Payments Covenants. Section 9.2 of the
Credit Agreement shall be amended to read in full as follows:
SECTION 9.2. Restricted Payments. Neither the Borrower, any
Restricted Subsidiary nor DJ Partners, L.P. will declare or make
any Restricted Payment; provided, that, so long as no Default or
Event of Default, Borrowing Base Deficiency or noncompliance
with Section 10.4 exists (without giving effect to the cure
periods provided by Section 4.4 or 10.4), and provided further
that no Default or Event of Default would result from such
Restricted Payment, Borrower, Restricted Subsidiaries and DJ
Partners, L.P. may (a) make Restricted Payments in an aggregate
amount (measured cumulatively from March 31, 1993) not to exceed
the sum of the following (i) $10,000,000, plus (ii) the net cash
proceeds to Borrower from all equity offerings completed by
Borrower after March 31, 1993, plus (iii) all cash Distributions
actually received by Borrower or any Restricted Subsidiary from
Unrestricted Subsidiaries after March 31, 1993, plus (iv) fifty
percent (50%) of Borrower's Consolidated Cash Flow earned after
March 31, 1993, (b) declare and make a Qualified Redemption of
the First Issue, (c) declare and make a Qualified Redemption of
the Second Issue, (d) declare and make a Qualified Redemption of
the Third Convertible Debentures, (e) issue the First
Convertible Debentures in exchange for the Preferred Stock, and
(f) at any time on or after March 31, 1994, issue the Second
Convertible Debentures in exchange for the Second Preferred
Stock.
8. Amendment to Plan Covenant. Section 9.10 of the Credit
Agreement shall be amended to read in full as follows:
SECTION 9.10 Plans. With the exception of the Delmar Plan
(to the extent Borrower completes the Delmar Acquisition),
neither the Borrower nor any of its Subsidiaries shall
Page 5
<PAGE> 6
create, adopt or become bound by any Plan. To the extent
Borrower completes the Delmar Acquisition, Borrower shall
(a) immediately notify the Banks of the occurrence of any
Reportable Event (as defined in Section 4043 of ERISA) with
respect to the Delmar Plan, (b) cause the Delmar Plan to at
all times meet the minimum funding requirements contained
in Section 412 of the Code, (c) cause Delmar to take all
steps required to maintain the qualification of the Delmar
Plan under Section 401(a) of the Code and the tax exempt
status of the related trust under Section 501(a) of the
Code, (d) not permit Delmar to materially increase the
benefits provided under the Delmar Plan, and (e) not permit
Delmar to terminate the Delmar Plan if such termination
would result in liability to Borrower or any of its
Subsidiaries (including Delmar) of $1,000,000 or more.
9. Amendment to Schedule of Subsidiaries. Schedule 1 to the Credit
Agreement is hereby amended to delete Lido Atlantic Trading Company,
Inc., Oil Field Systems Corporation and American Onshore Petroleum
Company, Inc. due to the merger of such Subsidiaries out of
existence.
10. Revocation of Exchange Letters. Reference is hereby made to (a)
that certain letter dated September 17, 1993, from Peter E. Lorenzen,
Vice President and General Counsel of Borrower addressed to the Banks
(the "Exchange Notice Letter"), pursuant to which the Banks were
notified of Borrower's intention to issue the First Convertible
Debentures in exchange for the First Convertible Stock (the
"Exchange"), and (b) the letter agreement (the "Collateral Waiver
Letter") dated as of October 6, 1993, by and between Borrower and
Banks regarding the Banks limited waiver of the right contained in
Section 5.1(b) of the Credit Agreement to require the grant of
certain Liens in connection with the Exchange. Borrower has notified
Banks that it did not complete the Exchange and that it does not
currently intend to complete the Exchange. As such, Borrower hereby
rescinds the Exchange Notice and Banks and Borrower hereby mutually
rescind the Collateral Waiver Letter, in each case to the same extent
as if such letters had never been executed or delivered. As a result
of the foregoing, in the event Borrower elects to complete an
exchange of the First Preferred Stock for the First Convertible
Debentures in the future, it will be necessary for Borrower to again
comply with the requirements of Section 9.1 and 5.1(b) of the Credit
Agreement.
11. Conditions to Effectiveness. This Amendment shall not be deemed
effective until the following shall have been received or occurred:
a. Evidence of Corporate Authority; Legal Opinion. Borrower
shall have delivered to the Banks (a) resolutions of Borrower's
(and to the extent requested, each Restricted Subsidiary's)
Board of Directors authorizing execution and delivery of this
Amendment certified as being true and correct by Borrower's (or
the applicable Restricted Subsidiaries') corporate secretary,
and (b) an opinion of Peter E. Lorenzen, Esq., in form and
substance acceptable to the Banks, opining with respect to the
matters set forth in Paragraph 12 hereof and such other
materials as Agent shall reasonably request.
b. Approval of Third Convertible Debentures Offering
Documents. The Third Indenture and any other related documents,
Page 6
<PAGE> 7
instruments and agreements shall be in form and substance
acceptable to the Required Banks.
c. Consent of Guarantors. Borrower shall have caused each
Restricted Subsidiary to execute and deliver to the Banks an
Acknowledgement of Guaranty substantially in the form of Exhibit
A attached hereto.
12. Certificate of Effectiveness. Upon satisfaction of each of the
conditions set forth in Paragraph 11 hereof, Borrower and each Bank
shall execute a Certificate of Effectiveness (herein so called)
substantially in the form of Exhibit B attached hereto and
incorporated herein. Upon the execution and delivery of the
Certificate of Effectiveness, the Credit Agreement shall be
automatically amended on the terms set forth herein without the
necessity of any other action on the part of Borrower, Agent or the
Banks. Until the execution and delivery of the Certificate of
Effectiveness, the Credit Agreement shall remain in full force and
effect in accordance with its terms. The date the Certificate of
Effectiveness is delivered is referred to herein as the "Effective
Date."
13. Legal Expenses. Borrower hereby agrees to pay on demand all
reasonable fees and expenses of counsel to Agent incurred by Agent in
connection with the preparation, negotiation and execution of this
Amendment and all related documents.
14. Certification of Representations and Warranties. Borrower
hereby certifies to each Bank that each representation and warranty
of it and the Restricted Subsidiaries contained in the Credit
Agreement and the other Loan Papers (after giving effect to this
Amendment) is true and correct on the date hereof and will be true
and correct on the Effective Date; provided, however, that the
representation and warranty contained in Section 7.5 of the Credit
Agreement shall apply to the most recent financial statements
delivered to the Banks pursuant to Section 8.1 thereof.
15. Binding Effect. Borrower hereby represents and warrants to the
Banks as follows:
a. The execution, delivery and performance by Borrower of this
Amendment is within the Borrower's corporate powers, has been
duly authorized by all necessary action, requires no action by
or in respect of, or filing with, any governmental body, agency
or official and do not violate or constitute a default under any
provision of applicable law or regulation or of any agreement,
judgment, injunction, order, decree or other instrument binding
upon Borrower, any Restricted Subsidiary or DJ Partners, L.P. or
result in the creation or imposition of any Lien upon any of the
assets of Borrower, any Restricted Subsidiary or DJ Partners,
L.P.; and
b. This Amendment constitutes a valid and binding obligation
of the Borrower enforceable in accordance with its terms, except
as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights
generally, and (ii) the availability of equitable remedies may
be limited by equitable principles of general application.
16. No Defenses. Borrower hereby represents and warrants to the
Page 7
<PAGE> 8
Banks that there are no defenses to payment, counterclaims or rights
of set-off with respect to the Loans existing on the date hereof.
17. Reaffirmation of Loan Papers; Extension of Liens. Any and all
of the terms and provisions of the Credit Agreement and the Loan
Papers shall, except as amended and modified hereby, remain in full
force and effect. Borrower hereby extends the Liens securing the
Obligations until the Obligations have been paid in full, and agrees
that the amendments and modifications herein contained shall in no
manner affect or impair the Obligations or the Liens securing payment
and performance thereof.
18. Parties in Interest. All of the terms and provisions of this
Amendment shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
19. Counterparts. This Amendment may be executed in counterparts,
and all parties need not execute the same counterpart. However, no
party shall be bound by this Amendment until all parties have
executed a counterpart.
20. COMPLETE AGREEMENT. THIS AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN PAPERS COLLECTIVELY REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF BORROWER,
THE AGENT AND THE BANKS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
BORROWER, THE AGENT AND BORROWER.
20. Headings. The headings, captions and arrangements used in this
Amendment are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of this
Amendment, nor affect the meaning thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers on the date
and year first above written.
BORROWER
SNYDER OIL CORPORATION,
a Delaware corporation
By: /s/ PETER E. LORENZEN
Peter E. Lorenzen
Vice President
AGENT
NATIONSBANK OF TEXAS, N.A.
By: /s/ E. MURPHY MARKHAM, IV
E. Murphy Markham, IV
Senior Vice President
Page 8
<PAGE> 9
BANKS
NATIONSBANK OF TEXAS, N.A.
By: /s/ E. MURPHY MARKHAM, IV
E. Murphy Markham, IV
Senior Vice President
WELLS FARGO BANK, N.A.
By: /s/ KIRK SCOGGINS
Kirk Scoggins
Vice President
BANK ONE, TEXAS, N.A.
By: /s/ BRAD BARTEK
Brad Bartek
Vice President
Page 9
<PAGE> 1
(LOGO)
SNYDER OIL CORPORATION
777 Main Street, Suite 2500
Fort Worth, Texas 76102
817 / 338-4043
May 3, 1994
Snyder Oil Corporation
777 Main Street, Suite 2500
Fort Worth, Texas 76102
Re: Registration Statement on Form S-3
Registration No. 33-52807
Dear Sirs:
As Vice President and General Counsel of Snyder Oil Corporation, a
Delaware corporation (the "Company"), I have acted as counsel to the Company in
connection with the preparation and filing of the Company's Registration
Statement on Form S-3 (Registration No. 33-52807) (the "Registration
Statement") filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), relating to the offering by the
Company of (i) up to an aggregate $115,000,000 face amount of Convertible
Subordinated Notes Due 2001 (the "Notes") and (ii) an indeterminate number of
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), into which the Notes are convertible. Capitalized terms used and not
defined herein have the meaning set forth in the prospectus (the "Prospectus")
that is included as part of the Registration Statement.
For purposes of this opinion, I have assumed that the final terms of the
offering of the Notes will be duly authorized by the committee of the Company's
Board of Directors established for such purpose, and that the Indenture will be
executed and delivered and the Notes will be executed, authenticated and
delivered, in the forms heretofor filed as exhibits to the Registration
Statement, with such changes as are necessary to reflect the final terms of the
Notes.
In connection with the opinions expressed below, I have examined such
documents, corporate records and other writings as I have deemed necessary to
enable me to express the opinions set forth herein. In such examination I have
assumed the genuineness of all original documents and the conformity to
original documents of all copies submitted to me.
Based upon the foregoing, it is my opinion that:
1. Upon the due execution and delivery of the Indenture and the due
execution, authentication and delivery of the Notes in accordance
with the terms and in the manner described in the Registration
Statement, the Notes will be validly issued and will constitute
binding obligations of the Company, enforceable against the Company
in accordance with their terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws
<PAGE> 2
affecting creditors' rights generally and by general equitable
principles limiting the availability of specific enforcement.
2. The shares of Common Stock initially issuable on conversion of the
Notes have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion in accordance with
the terms of the Indenture and the Notes, will be validly issued,
fully paid and nonassessable.
This opinion is limited to the substantive laws of the States of Texas and
New York, the General Corporation Law of the State of Delaware and the
applicable federal laws of the United States. I express no opinion as to any
matter other than as expressly set forth above, and no opinion or any other
matter may be inferred herefrom. This opinion is given as of the date hereof,
and I undertake no, and hereby disclaim any, obligation to advise you of any
change in any matter set forth herein.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the use of my name under the caption "Legal
Opinions" in the Prospectus. In giving such consent, I do not admit that I
come within the category of persons whose consent is required by Section 7 of
the Act.
Very truly yours,
Peter E. Lorenzen
Vice President
and General Counsel
