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As filed with the Securities and Exchange Commission on August 4, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NUEVO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
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DELAWARE 1311 76-0304436
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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1331 Lamar, Suite 1650, Houston, Texas 77010
Telephone: (713) 652-0706
(Address, including zip code, and telephone number including
area code, of registrant's principal executive offices)
Robert M. King
1331 Lamar, Suite 1650, Houston, Texas 77010
Telephone: (713) 652-0706
(Name, address, including zip code, and telephone number
including area code, of agent for service)
Copy to:
BUTLER & BINION, L.L.P
1000 Louisiana, Suite 1600
Houston, Texas 77002
Attn: George G. Young III
Telephone: (713) 237-3605
Telecopy : (713) 237-3202
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
==============================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
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8-7/8% Senior Subordinated
Notes due 2008............... $100,000,000 100% $100,000,000 $29,500(1)
==============================================================================================================================
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(1) Calculated in accordance with Rule 457(f)(2).
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 said Section 8(a),
may determine.
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Subject to Completion, dated August 4, 1998
Preliminary Prospectus
NUEVO ENERGY COMPANY
Offer to Exchange its 8-7/8% Series B Senior Subordinated Notes Due 2008 that
have been registered under the Securities Act of 1933 for any and all of its
Outstanding 8-7/8% Series A Senior Subordinated Notes Due 2008
The Exchange Offer will expire at 5:00 P.M., New York City time, on
____________, 1998, unless extended (the "Expiration Date")
Nuevo Energy Company, a Delaware corporation (the "Company" or
"Nuevo"), hereby offers, upon the terms and subject to the conditions set forth
in this Prospectus (as the same may be amended or supplemented from time to
time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange up to $100,000,000
aggregate principal amount of its 8-7/8% Series B Senior Subordinated Notes due
2008 (the "Exchange Notes") that have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement
(as defined) of which this Prospectus constitutes a part, for a like principal
amount of its outstanding 8-7/8% Series A Senior Subordinated Notes due 2008
(the "Outstanding Notes" and, together with the Exchange Notes, the "Notes"), of
which $100,000,000 aggregate principal amount is outstanding. The Exchange
Notes will evidence the same debt as the Outstanding Notes and will be issued
under and will be entitled to the benefits of the Indenture (as defined).
The Exchange Notes will be general unsecured obligations of the
Company, subordinated in right of payment to all existing and future Senior
Indebtedness (as defined) of the Company, which will include borrowings under
the Company's Credit Facility (as defined). The Exchange Notes will rank pari
passu with the Company's existing and future Pari Passu Indebtedness (as
defined), including the Company's 9 1/2% Senior Subordinated Notes due 2006 (the
"Existing Notes"). The Exchange Notes also will be structurally subordinated to
liabilities of the Company's subsidiaries. Under certain circumstances
described herein, the Exchange Notes will, in the future, be jointly and
severally guaranteed on an unsecured senior subordinated basis by Restricted
Subsidiaries (as defined) of the Company. The terms of such subordination will
be the same as those for the Outstanding Notes. See "Description of the Notes-
Subordination." The Exchange Notes will rank senior to the Company's 5.75%
Convertible Subordinated Debentures (the "Convertible Debentures"). The
Indenture under which the Exchange Notes will be issued will permit the Company
and its subsidiaries to incur additional indebtedness, including additional
Senior Indebtedness and Pari Passu Indebtedness. See "Use of Proceeds" and
"Description of the Notes."
Outstanding Notes may be tendered for exchange on or prior to 5:00
p.m., New York City time, on _____________, 1998 ("Expiration Date"), unless
the Exchange Offer is extended by the Company (in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended). Tenders of Outstanding Notes may be withdrawn at any time on
or prior to 5:00 p.m., New York City time, on the business day prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
principal amount of Outstanding Notes being tendered for exchange. However, the
Exchange Offer is subject to certain events and conditions and to the terms and
provisions of the Registration Agreement (as defined). See "The Exchange Offer
- --Conditions to the Exchange Offer." Outstanding Notes may be tendered in whole
or in part in a principal amount of $1,000 and integral multiples thereof. The
Company has agreed to pay all expenses of the Exchange Offer.
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Outstanding Notes where
such Outstanding Notes were acquired by such broker-dealer as a result of market
making activities or other trading activities. The Company has agreed that, if
required under the applicable securities laws and upon prior written request,
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it will make this Prospectus available to any broker-dealer for use in
connection with any such resale for a period of 90 days after the consummation
of the Exchange Offer. See "Plan of Distribution."
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is August ___, 1998.
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The Outstanding Notes, whether sold in offshore transactions in
reliance on Regulation S under the Securities Act or in the United States in
reliance on Rule 144A under the Securities Act ("Rule 144A"), were initially
represented by two, permanent global notes (the "Global Note"), which were
deposited with the Trustee, as custodian for The Depository Trust Company
("DTC"), and registered in the name of Cede & Co., DTC's nominee, for credit to
an account of a direct or indirect participant in DTC. The Exchange Notes
exchanged for the Outstanding Notes that are represented by the Global Note will
continue to be represented by a permanent global note in definitive, fully
registered form, registered in the name of a nominee of DTC and deposited with
the Trustee as custodian, unless the beneficial holders thereof request
otherwise. See "Description of the Notes--Certain Covenants--Book Entry,
Delivery and Form."
Each Exchange Note will bear interest from the most recent date to
which interest has been paid or duly provided for on the Outstanding Note
surrendered in exchange for such Exchange Note or, if no such interest has been
paid or duly provided for on such Outstanding Note, from June 8, 1998. Holders
of the Outstanding Notes whose Outstanding Notes are accepted for exchange will
not receive accrued interest on such Outstanding Notes for any period from and
after the last interest payment date to which interest has been paid or duly
provided for on such Outstanding Notes prior to the original issue date of the
Exchange Notes or, if no such interest has been paid or duly provided for, will
not receive any accrued interest on such Outstanding Notes, and will be deemed
to have waived the right to receive any interest on such Outstanding Notes
accrued from and after such interest payment date or, if no such interest has
been paid or duly provided for, from and after June 8, 1998. This Prospectus,
together with the Letter of Transmittal, is being sent to all registered holders
of the Outstanding Notes as of August ___, 1998.
The Exchange Notes are being offered hereunder in order to satisfy
certain obligations of the Company under the Registration Agreement (the
"Registration Agreement") dated as of June 8, 1998, among the Company, Salomon
Brothers Inc, J.P. Morgan Securities Inc. and NationsBanc Montgomery Securities
LLC (the "Initial Purchasers"). Based on no-action letters issued by the staff
of the Securities and Exchange Commission (the "Commission") to third parties,
including Exxon Capital Holdings Corporation, SEC No-Action Letter (available
May 13, 1988), Morgan Stanley & Co., Inc., SEC No-Action Letter (available June
5, 1991) (the "Morgan Stanley Letter") and Mary Kay Cosmetics, SEC No-Action
Letter (available June 5, 1991), the Company believes the Exchange Notes issued
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a "Restricted Holder," being (i) a
broker-dealer who acquires Outstanding Notes exchanged for such Exchange Notes
directly from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person that is an affiliate of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the holder is acquiring the Exchange Notes in the
ordinary course of such holder's business and is not participating, and has no
arrangement or understanding with any person to participate, in the distribution
of the Exchange Notes. Holders of Outstanding Notes wishing to accept the
Exchange Offer must represent to the Company that such conditions have been met.
Holders who tender Outstanding Notes in the Exchange Offer with the intention to
participate in a distribution of the Exchange Notes may not rely on the Morgan
Stanley Letter or similar no-action letters. Each broker-dealer that receives
Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Outstanding Notes where such Outstanding Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, if required under applicable
securities laws and upon prior written request, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale for a
period of 90 days from the consummation of the Exchange Offer or such shorter
period as will terminate when all Outstanding Notes acquired by broker-dealers
for their own accounts as a result of market-making activities or other trading
activities have been exchanged for Exchange Notes and resold by such broker-
dealers. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Notes. The Company does not intend to list the Exchange Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There
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can be no assurance that an active market for the Exchange Notes will develop.
To the extent that a market for the Exchange Notes develops, the market value of
the Exchange Notes will depend on market conditions (such as yields on
alternative investments), general economic conditions, the Company's financial
condition and other conditions. Such conditions might cause the Exchange Notes,
to the extent that they are actively traded, to trade at a significant discount
from the face value. Historically, the market for securities similar to the
Exchange Notes has been subject to disruptions that have caused substantial
volatility in the prices of such securities. There can be no assurance that any
market for the Exchange Notes, if such market develops, will not be subject to
similar disruptions. The National Association of Securities Dealers, Inc.
("NASD") has designated the Outstanding Notes as securities eligible for trading
in the Private Offerings, Resales and Trading through Automatic Linkages
("PORTAL") market of the NASD and the Company has been advised that the Initial
Purchasers have heretofore acted as market makers for the Outstanding Notes. The
Company has been advised by each of the aforesaid market makers that it
currently intends to make a market in the Exchange Notes. However, they are not
so obligated, and any such market making may be discontinued at any time without
notice. Accordingly, no assurance can be given that an active public or other
market will develop for the Exchange Notes or as to the liquidity of or the
trading market for the Exchange Notes. See "Risk Factors--Lack of Public
Market."
The Company will not receive any proceeds from the Exchange Offer.
The Company has agreed to bear the expenses of the Exchange Offer. No
underwriter is being used in connection with the Exchange Offer.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION. HOLDERS OF OUTSTANDING NOTES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available upon
request from: Nuevo Energy Company, 1331 Lamar, Suite 1650, Houston, Texas
77010, Telephone (713) 652-0706; Attention: Barbara Forbes, Director of
Investor Relations. In order to ensure timely delivery of the documents, any
request should be made by ____________________________________.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy and other information may be inspected and
copied at the public reference facilities of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at
the following Regional Offices: 7 World Trade Center, Suite 1300, New York, New
York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained from the Commission by
mail at prescribed rates. Requests should be directed to the Commission's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements, and other
information. Nuevo's common stock is listed on the New York Stock Exchange.
Reports, proxy and information statements and other information relating to
Nuevo can be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form
S-4 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission, and reference is hereby made
to the Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Notes. Any statements contained
herein concerning the provisions of any document are not necessarily complete,
and, in each instance, reference is made to a copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission (File No. 001-10537), are incorporated herein by reference: (i)
Annual Report on Form 10-K for the year ended December 31, 1997, (ii) Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998, and (iii) Current
Reports on Form 8-K filed May 14, 1998 and May 20, 1998. All documents
subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the Expiration Date of the Exchange Offer shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date any such document is filed.
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.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request of such person, by
first class mail or other equally prompt means within one business day of
receipt of such request, a copy of any or all of the documents that are
incorporated by reference herein, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Nuevo Energy Company, 1331 Lamar, Suite 1650,
Houston, Texas 77010, telephone (713) 652-0706; Attention: Barbara Forbes,
Director of Investor Relations.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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PROSPECTUS SUMMARY
The following is a summary of the more detailed information appearing
elsewhere or incorporated by reference in this Prospectus and is qualified in
its entirety by reference thereto. Prospective purchasers should carefully
consider the information set forth in "Risk Factors" in evaluating the Exchange
Offer. Unless the context otherwise requires, all references in this Prospectus
to "Nuevo" or the "Company" are to Nuevo Energy Company and its subsidiaries.
The Company
Nuevo is primarily engaged in the acquisition, exploitation,
development, exploration for and production of oil and gas properties. The
Company is the largest independent producer in California, with properties
located both onshore and offshore. The Company also owns properties in East
Texas and the onshore Gulf Coast region and internationally offshore the
Republics of Congo and Ghana in West Africa. Since the Company's inception in
1990, it has grown and diversified its operations through a series of
opportunistic acquisitions of oil and gas properties and the subsequent
exploitation and development of these properties. The Company has complemented
these efforts with an active exploration program, which provides exposure to
prospects which have the potential to add substantially to the growth of the
Company.
Recent Developments
On July 2, 1998, the Company announced that it had entered into a
letter of intent to sell its Illini pipeline. Upon consummation of this sale,
the Company will have completed the sale of its non-core gas gathering pipeline
and storage assets, including the Bright Star gathering system and Richfield gas
storage assets, for approximately $14 million. Closing of the Illini pipeline
sale is expected in August, pending finalization of a purchase and sale
agreement and certain regulatory approvals.
In response to lower price realizations on its oil production during
the first quarter of 1998, the Company has announced a $45 million reduction in
capital spending plans for 1998 to $151 million, including $112 million for
exploitation and $39 million for exploration. This reduction will primarily
affect oil development projects whose projected rates of return fall below
acceptable threshold levels assuming the continuation of current low oil prices.
The Company believes that all of these projects will ultimately be undertaken
once oil prices return to acceptable levels.
Additionally, the Company has announced that it has retained an
investment banking firm to evaluate options for maximizing the value of certain
of its gas producing properties in East Texas ("East Texas Gas Properties"),
including the possible sale of such properties. Estimated net proved reserves
associated with these properties were approximately 275 Bcfe at December 31,
1997. Should the Company ultimately elect to dispose of some or all of these
properties, the cash proceeds will be primarily used to reduce indebtedness
under the Credit Facility and, depending upon market conditions and other
factors, including the receipt of a consent to an amendment to the indenture for
the Existing Notes, to fund repurchases of the Company's Common Stock pursuant
to a one million share repurchase program authorized by its Board of Directors.
The Company has elected to convert, effective January 1, 1998, from
the full cost method to the successful efforts method of accounting for its
investments in oil and gas properties. Under the successful efforts method,
certain exploration expenditures, including geological and geophysical costs,
dry hole costs and delay rentals, are expensed against current period income
rather than capitalized as under the full cost method. Management believes that
the change to the successful efforts method improves earnings quality and
results in a balance sheet that more closely approximates the underlying
economic value of the Company. In accordance with accounting rules, all prior
years' financial statements presented herein have been restated to give effect
to the change to successful efforts accounting. The effect, after tax, of the
change in accounting method as of December 31, 1997, was a reduction to retained
earnings of $64.1 million. Had the Company not converted to the successful
efforts method, the results of operations for the three months ended March 31,
1998 would have included an approximate pre-tax full cost ceiling test write-
down of $250.0 million.
The principal executive offices of the Company are located at 1331
Lamar, Suite 1650, Houston, Texas 77010. Its telephone number is (713) 652-
0706.
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The Exchange Offer
The Exchange Offer relates to the exchange of up to $100,000,000
principal amount of Exchange Notes for up to $100,000,000 principal amount of
Outstanding Notes. The form and terms of the Exchange Notes are identical in
all material respects to the form and terms of the Outstanding Notes except that
the Exchange Notes have been registered under the Securities Act and will not
contain certain transfer restrictions and hence are not entitled to the benefits
of the Registration Agreement relating to the contingent increases in the
interest rate provided for pursuant thereto. The Exchange Notes will evidence
the same debt as the Outstanding Notes and will be issued under and be entitled
to the benefits of the Indenture governing the Outstanding Notes. See
"Description of the Notes."
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Exchange Offer.................................. Up to $100,000,000 aggregate principal amount of Exchange Notes are
being offered in exchange for a like principal amount of
Outstanding Notes. Outstanding Notes may be tendered for exchange
in whole or in part in a principal amount of $1,000 and multiples
thereof. The Company is making the offer in order to satisfy its
obligations under the Registration Agreement relating to the
Outstanding Notes. The Company will issue the Exchange Notes to
tendering holders of the Outstanding Notes promptly following the
Expiration Date.
Registration Agreement.......................... The Outstanding Notes were sold by the Company on June 8, 1998 to
the Initial Purchasers, who placed the Outstanding Notes with
Qualified Institutional Buyers ("QIBs") or pursuant to offers and
sales that occurred outside the United States in reliance on
Regulation S under the Securities Act. In connection therewith,
the Company executed and delivered for the benefit of the holders
of the Outstanding Notes the Registration Agreement providing for,
among other things, the Exchange Offer. See "Exchange Offer;
Registration Rights."
Resale.......................................... The Company believes that the Exchange Notes issued pursuant to the
Exchange Offer generally will be freely transferable by the holders
thereof without registration or any prospectus delivery requirement
under the Securities Act, except for certain Restricted Holders who
may be required to deliver copies of this Prospectus in connection
with any resale of the Exchange Notes issued in exchange for such
Outstanding Notes. See "The Exchange Offer" and "Plan of
Distribution."
Expiration Date................................. 5:00 p.m., New York City time, on ____________, 1998 unless the
Exchange Offer is extended by the Company, in which case the term
"Expiration Date" means the latest date to which the Exchange Offer
is extended. See "The Exchange Offer--Expiration Date; Extensions;
Amendments."
Conditions to the Exchange Offer................ The Exchange Offer is subject to certain conditions, which may be
waived by the Company in its sole discretion. See "The Exchange
Offer--Conditions to the Exchange Offer." The Exchange Offer is
not conditioned upon any minimum aggregate principal amount of
Outstanding Notes being tendered or accepted for exchange. The
Company reserves the right (i) to delay the acceptance of the
Outstanding Notes for exchange, (ii) to terminate the Exchange
Offer at any time prior to the Expiration Date upon the occurrence
of certain conditions, (iii) to extend the Expiration Date of the
Exchange Offer and retain all of the Outstanding Notes tendered
pursuant to the Exchange Offer, subject, however, to the right of
holders of the Outstanding Notes to withdraw their tendered
Outstanding Notes and (iv) to waive any condition or otherwise
amend the terms of the Exchange Offer in any respect.
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Holders of Outstanding Notes will have certain rights against the Company
under the Registration Agreement should the Company fail to consummate the
Exchange Offer. See "The Exchange Offer--Expiration Date; Extensions;
Amendments" and "Exchange Offer; Registration Rights."
Procedures for Tendering Outstanding Notes...... Each holder of Outstanding Notes wishing to accept the Exchange
Offer must complete, sign and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, or an Agent's Message (as defined)
together with such Outstanding Notes and any other required
documentation to the Exchange Agent (as defined) at the address set
forth herein or effect a tender of Outstanding Notes pursuant to
the procedures for book-entry transfers as provided herein. See
"The Exchange Offer--Procedures for Tendering Outstanding Notes."
Special Procedures for Beneficial Owners........ Any beneficial owner whose Outstanding Notes are registered in the
name of a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender such Outstanding Notes in the
Exchange Offer should contact such registered holder promptly and
instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on its
own behalf, such owner must, prior to completing and executing the
Letter of Transmittal and delivering its Outstanding Notes, either
make appropriate arrangements to register ownership of the
Outstanding Notes in such owner's name or obtain a properly
completed bond power from the registered holder. The transfer of
registered ownership may take considerable time and may not be able
to be completed prior to the Expiration Date. See "The Exchange
Offer--Procedures for Tendering Outstanding Notes--Beneficial
Owners."
Guaranteed Delivery Procedures.................. Holders of Outstanding Notes who wish to tender their Outstanding
Notes and whose Outstanding Notes are not immediately available or
who cannot deliver their Outstanding Notes, the Letter of
Transmittal or any other documents required by the Letter of
Transmittal to the Exchange Agent prior to the Expiration Date, or
who cannot complete the procedure for book-entry transfer on a
timely basis and deliver an Agent's Message, must tender their
Outstanding Notes according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes--Guaranteed Delivery."
Withdrawal Rights............................... Tenders may be withdrawn at any time prior to 5:00 p.m. New York
City time, on the business day prior to the Expiration Date. See
"The Exchange Offer--Withdrawal Rights."
Certain Federal Income Tax Consequences......... The exchange of the Outstanding Notes for Exchange Notes by
tendering holders will generally not be a taxable exchange for
federal income tax purposes, and such holders will not recognize
any taxable gain or loss or any interest income for federal income
tax purposes as a result of such exchange. Holders should review
the information set forth under "Certain Federal Income Tax
Consequences" for a discussion of certain U.S. tax considerations
relating to the Exchange Notes prior to tendering the Outstanding Notes in
the Exchange Offer.
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Use of Proceeds................................. The Company will not receive any cash proceeds from the issuance of
the Exchange Notes offered hereby. See "Use of Proceeds."
Exchange Agent.................................. State Street Bank and Trust Company is serving as Exchange Agent in
connection with the Exchange Offer. See "The Exchange Offer--
Exchange Agent."
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The Exchange Notes
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Exchange Notes.................................. The form and terms of the Exchange Notes are identical in all
material respects to the terms of the respective Outstanding Notes
for which they may be exchanged pursuant to the Exchange Offer,
except for certain transfer restrictions and registration rights
relating to the Outstanding Notes and except for certain interest
provisions relating to such registration rights. See "Description
of the Notes."
Maturity........................................ June 1, 2008
Interest on the Exchange Notes.................. The Exchange Notes will bear interest at the rate of 8-7/8% per
annum, payable semiannually in arrears on June 1 and December 1
commencing December 1, 1998.
Optional Redemption............................. The Exchange Notes will be redeemable at the option of the Company,
in whole or in part, at any time on or after June 1, 2003, at the
redemption prices set forth herein, together with accrued and
unpaid interest, if any, to the date of redemption. In addition,
prior to June 1, 2001, up to 33-1/3% of the aggregate principal amount of
the Notes originally issued may be redeemed at the option of the Company,
in whole or in part, at any time and from time to time, at 108-7/8% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
date of redemption, with the net proceeds of one or more Equity Offerings
(as defined), provided that at least 66-2/3% of the aggregate principal
amount of the Notes originally issued remains outstanding immediately after
such redemption. See "Description of the Notes--Optional Redemption."
Mandatory Redemption............................ None.
Subsidiary Guarantees........................... The Exchange Notes will be structurally subordinated to liabilities
of the Company's subsidiaries. Under certain circumstances, the
Exchange Notes will, in the future, be jointly and severally
guaranteed on an unsecured senior subordinated basis by Restricted
Subsidiaries (as defined) of the Company. The terms of such
subordination will be the same as those for the Outstanding Notes.
See "Description of the Notes--Subsidiary Guarantees of Notes."
Subordination of Notes.......................... The Exchange Notes will be general unsecured obligations of the
Company, subordinated in right of payment to all existing and
future Senior Indebtedness of the Company, which will include
borrowings under the Credit Facility. The Notes will rank pari
passu with the Company's existing and future Pari Passu
Indebtedness, including the Company's Existing Notes, and will be
structurally subordinated to all liabilities of the Company's
subsidiaries. As of March 31, 1998, after giving effect to the
issuance of the Outstanding Notes and the application of the net
proceeds therefrom, the Company would have had approximately $63.0
million of outstanding Senior Indebtedness, which ranks senior in
right of payment to the Notes and $160.0 million of Existing Notes
which rank pari passu with the Notes. The Company also had
outstanding $115.0 million in Convertible Debentures which are
subordinated in right of payment to the Notes. In addition, as of
March 31, 1998, Nuevo's subsidiaries had liabilities on their
balance sheets of $40.9 million. See "Risk Factors--
Subordination," and "Description of the Notes--Subordination."
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Change of Control............................... Upon a Change of Control (as defined), the Company will be required
to make an offer to repurchase all outstanding Notes at 101% of the
principal amount thereof plus accrued and unpaid interest to the
date of repurchase. See "Description of the Notes--Repurchase at
the Option of Holders--Change of Control."
Certain Covenants............................... The Indenture pursuant to which the Notes will be issued will
contain certain covenants, including, but not limited to, covenants
with respect to the following matters: (i) limitation on
restricted payments; (ii) limitation on the incurrence of
indebtedness; (iii) limitation on issuances and sales of capital
stock by restricted subsidiaries; (iv) limitation on liens; (v)
limitation on disposition of proceeds of asset sales; (vi)
limitation on transactions with affiliates; (vii) limitation on
dividends and other payment restrictions; and (viii) limitation on
mergers, consolidations or sales of assets. See "Description of
the Notes--Repurchase at the Option of Holders" and "--Certain
Covenants."
Exchange Offer; Registration Rights............. The Company agreed to use its reasonable best efforts to file and
cause to become effective a registration statement relating to the
Exchange Offer for the Outstanding Notes or, in lieu thereof, to
file and cause to become effective a shelf registration statement
for the resale of the Outstanding Notes. If (i) an exchange offer
registration statement is not filed on or prior to September 6,
1998, (ii) the exchange offer registration statement or, if
applicable, the resale shelf registration statement (each, a
"Registration Statement") is not declared effective on or prior to
November 5, 1998, (iii) the Exchange Offer is not consummated on or
prior to December 5, 1998, or (iv) a Registration Statement is
filed and declared effective on or prior to November 5, 1998 and
such Registration Statement ceases to be effective or usable (at
any time the Company is obligated to maintain the effectiveness
thereof), Special Interest (as defined) will accrue and be payable
semi-annually until such time as a Registration Statement is filed
or becomes effective, as the case may be. Upon the consummation of
the Exchange Offer or the declaration of effectiveness of a shelf
registration statement with respect to the Outstanding Notes, the
Special Interest will cease accruing. See "Exchange Offer;
Registration Rights."
Absence of a Public Market for the Notes........ The Exchange Notes will be a new issue of securities for which
there is currently no market. The Company does not intend to apply
for listing of the Notes on any securities exchange or stock
market. Although the Initial Purchasers have informed the Company
that they each currently intend to make a market in the Notes and,
if issued, the Exchange Notes, they are not obligated to do so, and
any such market making may be discontinued at any time without
notice. Accordingly, there can be no assurance as to the
development of liquidity of any market for the Notes. The
Outstanding Notes currently trade in The Portal Market.
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For additional information with respect to the Exchange Notes (including
defined terms), see "Description of the Notes."
Risk Factors
Prior to making an investment decision, prospective investors in the
Exchange Notes should consider all the information set forth in this Prospectus
and should carefully evaluate the considerations set forth in "Risk Factors."
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RISK FACTORS
This Prospectus includes and incorporates by reference "forward looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All
statements other than statements of historical facts included and incorporated
by reference in this Prospectus, including without limitation, statements under
"Prospectus Summary" regarding the Company's financial position, intent to sell
the East Texas Gas Properties estimated quantities and net present values of
reserves, business strategy, plans and objectives of management of the Company
for future operations, the outcome of pending litigation and covenant
compliance, are forward-looking statements. No assurances can be made that such
forward looking statements will prove to be correct. Important factors that
could cause actual results to differ ("Cautionary Statements") materially from
the forward looking statements are disclosed below and elsewhere in this
Prospectus as well as in the documents incorporated by reference. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified by the
Cautionary Statements. Prospective purchasers of the Notes offered hereby
should carefully consider, together with other information included and
incorporated by reference in this Prospectus, the following factors that affect
the Company.
Consequences of a Failure to Exchange Outstanding Notes
The Outstanding Notes have not been registered under the Securities Act or
any state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions, including the
Company's and Trustee's right in certain cases to require the delivery of
opinions of counsel, certifications and other information prior to any such
transfer. Outstanding Notes that remain outstanding after the consummation of
the Exchange Offer will continue to bear a legend reflecting such restrictions
on transfer. In addition, upon consummation of the Exchange Offer, holders of
Outstanding Notes that remain outstanding will not be entitled to any rights to
have such Outstanding Notes registered under the Securities Act or to any
similar rights under the Registration Agreement (subject to certain limited
exceptions). The Company does not currently anticipate that it will register
the Outstanding Notes under the Securities Act. If Outstanding Notes are
tendered and accepted in the Exchange Offer, the market for untendered
Outstanding Notes is likely to diminish; accordingly, holders who do not tender
their Outstanding Notes may encounter difficulties in selling such notes
following the Exchange Offer.
The Exchange Notes and any Outstanding Notes that remain outstanding after
consummation of the Exchange Offer will constitute a single series of debt
securities under the Indenture and, accordingly, will vote together as a single
class for purposes of determining whether holders of the requisite percentage in
outstanding principal amount thereof have taken certain actions or exercised
certain rights under the Indenture. See "Description of the Notes."
The Indenture provides for the payment of Special Interest (as defined) on
the Outstanding Notes in certain circumstances. Following consummation of the
Exchange Offer, neither the Outstanding Notes nor the Exchange Notes will be
entitled to Special Interest or any increase in the interest rate thereon. See
"Description of the Notes."
Leverage and Debt Service
The Company's level of indebtedness will have several important effects on
its future operations, including (i) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest on its
indebtedness and will not be available for other purposes, (ii) covenants
contained in the Company's debt obligations will require the Company to meet
certain financial tests, and other restrictions will limit its ability to borrow
additional funds or to dispose of assets and may affect the Company's
flexibility in planning for, and reacting to, changes in its business, including
possible acquisition activities, and (iii) the Company's ability to obtain
financing in the future for working capital, capital expenditures, acquisitions,
general corporate purposes or other purposes may be impaired. The Company's
ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control.
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Subordination
The Outstanding Notes are, and the Exchange Notes will be, subordinated in
right of payment to all existing and future Senior Indebtedness of the Company
and will rank pari passu with the Company's existing and future Pari Passu
Indebtedness, including the Existing Notes. The Outstanding Notes are, and the
Exchange Notes will also be, structurally subordinated to the obligations of the
Company's subsidiaries. In the event of bankruptcy, liquidation or
reorganization of the Company and its subsidiaries, the assets of the Company
will be available to pay obligations on the Notes only after all Senior
Indebtedness has been paid in full, and the assets of the Company's subsidiaries
will be available to pay obligations on the Notes only after all obligations of
the subsidiaries have been repaid in full. There may not be sufficient assets
remaining to pay amounts due on any or all of the Notes outstanding. The
aggregate principal amount of Senior Indebtedness of the Company as of March 31,
1998 was $160.0 million and the liabilities on the balance sheet of the
Company's subsidiaries as of March 31, 1998 was $40.9 million. Additional
Senior Indebtedness may be incurred by the Company from time to time, subject to
certain restrictions, and the Company's subsidiaries may incur obligations which
are structurally senior to the Notes. See "Description of the Notes -
Subordination."
Limitation on Purchase of Notes Upon the Occurrence of a Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
make an offer to purchase the Notes and the Existing Notes at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase. If a Change of Control were to occur, there
can be no assurance that the Company would have sufficient financial resources,
or would be able to arrange financing, to pay the purchase price for all Notes
and Existing Notes tendered by the holders thereof. The Credit Facility
contains, and any future credit agreements or other agreements relating to
indebtedness (including Senior Indebtedness or other Pari Passu Indebtedness) to
which the Company becomes a party may contain, restrictions on the purchase of
Notes. If a Change of Control occurs at a time when the Company is unable to
purchase the Notes or Existing Notes (due to insufficient financial resources,
contractual prohibition or otherwise), such failure would constitute an event of
default under the Indenture and the indenture for the Existing Notes, which
would, in turn, constitute a default under the Credit Agreement and may
constitute a default under the terms of any other indebtedness of the Company
then outstanding. In such circumstances, the subordination provisions in the
Indenture would likely prohibit payments to holders of Notes. See "Description
of the Notes--Subordination" and "--Repurchase at the Option of Holders--Change
of Control." The definition of "Change of Control" in the Indenture includes a
sale, lease, conveyance or transfer of "all or substantially all" of the assets
of the Company and certain of its Restricted Subsidiaries, taken as a whole, to
a person or group of persons. There is little case law interpreting the phrase
"all or substantially all" in the context of an indenture. Because there is no
precise established definition of this phrase, the ability of a holder of the
Notes to require the Company to purchase such Notes as a result of a sale,
lease, conveyance or transfer of all or substantially all of the Company's
assets to a person or group of persons may be uncertain.
Volatility of Oil and Gas Prices
The Company's financial condition, operating results, future growth and the
value of its oil and gas properties are substantially dependent on prevailing
prices of, and demand for, oil and gas. The Company's ability to maintain or
increase its borrowing capacity and to obtain additional capital on attractive
terms is also substantially dependent upon oil and gas prices. Historically the
markets for oil and gas have been volatile and are likely to continue to be
volatile in the future. Prices for oil and gas are subject to large
fluctuations in response to relatively minor changes in the supply of and demand
for oil and gas, market uncertainty and a variety of additional factors beyond
the control of the Company. These factors include weather conditions in the
United States and elsewhere, economic conditions in the United States and
elsewhere, the actions of the Organization of Petroleum Exporting Countries
("OPEC"), domestic and foreign governmental regulation, political stability in
the Middle East and elsewhere, the domestic and foreign supply of, and demand
for, oil and gas, and the availability and prices of foreign imports and the
availability of alternate fuel sources. The NYMEX price for oil on December 31,
1997 was $17.64 per Bbl. On March 31, 1998, this price had declined to $15.61
per Bbl, and as of July 29, 1998 was $14.09 per Bbl. Applying March 31, 1998
prices to December 31, 1997 reserves would have decreased the PV-10 Value of the
Company's reserves to a total of approximately $637.3 million from $901.1
million. Any continued and extended decline in the price of oil or any
substantial and extended decline in the price of gas would have an adverse
effect on the value of the Company's reserves,
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borrowing capacity, ability to obtain additional capital, and its financial
condition, revenues, profitability and cash flows from operations.
Volatile oil and gas prices make it difficult to estimate the value of
producing properties for acquisition and often cause disruption in the market
for oil and gas producing properties, as buyers and sellers have difficulty
agreeing on such value. Price volatility also makes it difficult to budget for
and project the return on acquisitions and development and exploitation
projects.
Approximately 35% of the Company's 1997 production on a BOE basis was
California heavy oil. The market for California heavy oil differs substantially
from the established market indices for oil and gas, due principally to the
higher transportation and refining costs associated with heavy oil and periodic
crude oil imports from other oil producing nations. As a result, the price
received for heavy oil is generally lower than the price for medium and light
oil, and the production costs associated with heavy oil are relatively higher
than for lighter grades. The margin (sales price minus production costs) on
heavy oil sales is generally less than for lighter oil, and the effect of
material price decreases will more adversely affect the profitability of heavy
oil production compared with lighter grades of oil. In addition to the steep
decline in oil prices during the first quarter of 1998, the differential between
the prices for heavy oil and the prices for light and intermediate grades of oil
have increased, further reducing the price received for the Company's heavy oil
production from California. Continued low prices received by the Company for
its heavy oil production may have a material adverse effect on the Company.
There is also no established futures market for California heavy oil, and the
difference between the prices received for California heavy oil and prices in
established futures markets ("basis differential") is volatile, making it
difficult to hedge California heavy oil production. The Company generally does
not attempt to hedge the basis differential of its California heavy oil
production. See "--Hedging."
Reserve Replacement Risks
The Company's future performance depends upon its ability to find, develop
and acquire additional oil and gas reserves that are economically recoverable.
Without successful exploration, exploitation or acquisition activities, the
Company's reserves and revenues will decline. No assurances can be given that
the Company will be able to find and develop or acquire additional reserves at
an acceptable cost.
The successful acquisition and development of oil and gas properties
requires an assessment of recoverable reserves, future oil and gas prices and
operating costs, potential environmental and other liabilities and other
factors. Such assessments are necessarily inexact and their accuracy inherently
uncertain. In addition, no assurances can be given that the Company's
exploitation and development activities will result in any increases in
reserves. The Company's operations may be curtailed, delayed or canceled as a
result of lack of adequate capital and other factors, such as title problems,
weather, compliance with governmental regulations or price controls, mechanical
difficulties or shortages or delays in the delivery of equipment. In addition,
the costs of exploitation and development may materially exceed initial
estimates.
Substantial Capital Requirements
The Company makes, and will continue to make, substantial capital
expenditures for the exploitation, exploration, acquisition, development,
production and abandonment of oil and gas properties. Historically, the Company
has financed these expenditures primarily with cash generated by operations,
proceeds from bank borrowings and the proceeds of debt and equity issuances.
The Company believes that it will have sufficient cash provided by operating
activities and borrowings under its Credit Facility and proceeds of debt and
equity issuances to fund planned capital expenditures. If revenues or the
Company's Borrowing Base under its Credit Facility decreases as a result of
lower oil or gas prices, operating difficulties or declines in reserves, the
Company may have limited ability to expend the capital necessary to undertake or
complete future acquisitions, exploitations or exploration activities. There
can be no assurance that additional debt or equity financing or cash generated
by operations will be available to meet these requirements.
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Uncertainty of Estimates of Reserves and Future Net Cash Flows
Estimates of economically recoverable oil and gas reserves and of future
net cash flows are based upon a number of variable factors and assumptions, all
of which are to some degree speculative and may vary considerably from actual
results. Therefore, actual production, revenues, taxes, and development and
operating expenditures may not occur as estimated. Future results of operations
of the Company will depend upon its ability to develop, produce and sell its oil
and gas reserves. The reserve data included herein are estimates only and are
subject to many uncertainties. Actual quantities of oil and gas will differ
from the amounts set forth herein, and such differences may be material. In
addition, different reserve engineers may make different estimates of reserve
quantities and cash flows based upon the same available data.
Conversion to Successful Efforts Method of Accounting
The Company has elected to convert, effective January 1, 1998, from the
full cost method to the successful efforts method of accounting for its
investment in oil and gas properties. Under the successful efforts method,
certain exploration expenditures, including geological and geophysical costs,
dry hole costs and delay rentals, are expensed against current period income
rather than capitalized as under the full cost method. Management believes the
change to the successful efforts method improves earnings quality and results in
a balance sheet that more closely approximates the underlying economic value of
the Company. In accordance with accounting rules, all prior years' financial
statements presented herein have been restated to give effect to the change to
successful efforts accounting. The effect, after tax, of the change in
accounting method as of December 31, 1997 was a reduction to retained earnings
of $64.1 million. Had the Company not converted to the successful efforts
method, the results of operations for the three months ended March 31, 1998
would have included an approximate pre-tax full cost ceiling test write-down of
$250.0 million.
Operating Risks
Nuevo's operations are subject to risks inherent in the oil and gas
industry, such as blowouts, cratering, explosions, uncontrollable flows of oil,
gas or well fluids, fires, pollution, earthquakes and other environmental risks.
These risks could result in substantial losses to the Company due to injury and
loss of life, severe damage to and destruction of property and equipment,
pollution and other environmental damage and suspension of operations.
Moreover, offshore operations are subject to a variety of operating risks
peculiar to the marine environment, such as hurricanes or other adverse weather
and sea conditions, marine and helicopter operations, more extensive
governmental regulation, including regulations that may, in certain
circumstances, impose strict liability for pollution damage, and interruption or
termination of operations by governmental authorities based on environmental or
other considerations.
The Company's operations could result in liability for personal injuries,
property damage, oil spills, discharge of hazardous materials, remediation and
clean-up costs and other environmental damages and suspension of operations.
The Company could be liable for environmental damages caused by previous
property owners. As a result, substantial liabilities to third parties or
governmental entities may be incurred, the payment of which could have a
material adverse effect on the Company's financial condition and results of
operations. The Company carries insurance that it believes is in accordance
with customary industry practices, but, as is common in the oil and gas
industry, the Company does not fully insure against all risks associated with
its business either because such insurance is not available or because the cost
thereof is considered prohibitive. The Company maintains limited insurance
coverage for sudden environmental damages, but does not believe that insurance
coverage for environmental damages that occur over time is available at a
reasonable cost. The occurrence of an event that is not covered, or not fully
covered, by insurance could have a material adverse effect on the Company's
financial condition and results of operations.
The Company outsources certain administrative, marketing and operating
functions to Torch Energy Advisors Incorporated ("Torch"), a company engaged in
rendering outsourcing services for oil and gas companies, pursuant to various
agreements (collectively, the "Torch Agreements"). The principal agreement with
Torch provides that it may be terminated by the Company following December 31,
1998, provided that the Company gives one year's advance notice and pays certain
costs to reimburse Torch for terminating the business associated with rendering
services to the Company. Torch also has the option to terminate the agreement
after 2000. The Company and Torch are currently renegotiating the Torch
Agreements. No assurances can be given that the Torch Agreements will be
successfully renegotiated by the Company. Although the Company
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believes that it could ultimately replace or internally duplicate the services
provided by Torch, the unanticipated loss of Torch as a service provider may
have a material adverse effect on the Company.
Foreign Investments
The Company's foreign investments involve risks typically associated with
investments in emerging markets such as uncertain political, economic, legal and
tax environments and expropriation and nationalization of assets. These risks
may include, among other things, currency restrictions and exchange rate
fluctuations, loss of revenue, property and equipment as a result of hazards
such as expropriation, nationalization, war, insurrection and other political
risks, risks of increases in taxes and governmental royalties, renegotiation of
contracts with governmental entities and quasi-governmental agencies, changes in
laws and policies governing operations of foreign-based companies and other
uncertainties arising out of foreign government sovereignty over the Company's
international operations. The Company's international operations may also be
adversely affected by laws and policies of the United States affecting foreign
trade, taxation and investment. In addition, if a dispute arises in its foreign
operations, the Company may be subject to the exclusive jurisdiction of foreign
courts or may not be successful in subjecting foreign persons to the
jurisdiction of the United States. The Company attempts to conduct its business
and financial affairs so as to protect against political and economic risks
applicable to operations in the various countries where it operates, but there
can be no assurance the Company will be successful in protecting against such
risks.
The Company's private ownership of oil and gas properties under oil and gas
leases in the United States differs distinctly from its ownership interests in
foreign oil and gas properties. In foreign countries in which the Company does
and may do business in the future, the state generally retains ownership of the
minerals and consequently retains control of (and in many cases participates in)
the exploration and production of reserves. Accordingly, operations outside of
the United States may be materially affected by host governments through royalty
payments, export taxes and regulations, surcharges, value added taxes,
production bonuses and other charges. In addition, changes in prices and costs
of operations, timing of production and other factors may affect estimates of
oil and gas reserve quantities and future net cash flows attributable to non-
U.S. properties in a manner materially different than such changes would affect
estimates for U.S. properties. Agreements covering foreign oil and gas
operations also frequently contain provisions obligating the Company to spend
specified amounts on exploration and development, or to perform certain
operations, or forfeit all or a portion of the acreage subject to the contract.
During the third quarter of 1997, a civil war in Congo resulted in a new
government being established in Congo. The operator of the Company's Congo
properties temporarily moved its field offices to Gabon, but has re-established
its offices in Congo. The Company's Congo production is located approximately
30 miles offshore and flows into a floating production, storage and off-loading
vessel for direct shipment to western markets. The Company experienced no
production interruption as a result of the conflict.
In 1996, the previous Congo government requested that the convention
governing the Company's Marine I Exploitation Permit be converted to a
production sharing agreement ("PSA"). Preliminary discussions were held with
the government in early 1997. Nuevo believes that it is currently under no
obligation to convert its ownership interest to a PSA. The Company's position
with the previous government of the Congo was that any conversion to a PSA would
have no material adverse impact to Nuevo. In late 1997, a new government was
established in Congo. Preliminary discussions with the new government have
indicated that it may request conversion to a PSA. If the new government
requires such conversion, no assurances can be made as to the terms of the PSA.
Dual Consolidated Losses in Congo Subsidiary
In connection with their respective acquisitions of two subsidiaries owning
interests in the Yombo field offshore the Republic of Congo (each a "Congo
subsidiary"), the Company and a wholly owned subsidiary of CMS NOMECO Oil & Gas
Co. ("CMS") agreed with the seller of the subsidiaries not to claim certain tax
losses ("dual consolidated losses") incurred by such subsidiaries prior to the
acquisitions. Pursuant to the agreement, the Company and CMS may be liable to
the seller for the recapture of dual consolidated losses utilized by the seller
in years prior to the acquisitions if certain triggering events occur,
including: (i) a disposition by either the Company or CMS of its respective
Congo subsidiary; (ii) either Congo subsidiary's sale of its interest in the
Yombo field; (iii) the acquisition of the Company or CMS by another consolidated
group; or (iv) the
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failure of the Company's or CMS's Congo subsidiary to continue as a member of
its respective consolidated group. A triggering event will not occur, however,
if a subsequent purchaser enters into certain agreements specified in the U.S.
Internal Revenue Service's consolidated return regulations intended to ensure
that such dual consolidated losses will not be claimed. The Company and CMS have
agreed among themselves that the party responsible for the triggering event
shall indemnify the other for any liability to the seller as a result of such
triggering event. The Company's potential direct liability could be as much as
$50 million if a triggering event with respect to the Company occurs, and the
Company believes that CMS's liability (for which the Company would be jointly
liable with an indemnification right against CMS) could be as much as $67
million. The Company does not expect a triggering event to occur with respect to
it or CMS and does not believe the agreement will have a material adverse effect
upon the Company.
The Company has been advised that, under one interpretation of the
applicable agreements, the execution of a PSA with Congo could be a triggering
event unless certain provisions are included in such PSA. The Company does not
intend to enter into a PSA which causes a triggering event to occur. No
assurances can be made, however, as to the terms of the PSA. See "--Foreign
Investments."
Hedging
The Company periodically seeks to reduce its exposure to price volatility
by hedging its production through swaps, options and other commodity derivative
instruments. In a typical hedging transaction, the Company will have the right
to receive from the counterparty to the hedge the excess of the fixed price
specified in the hedge and a floating price based on a market index, multiplied
by the quantity hedged. If the floating price exceeds the fixed price, the
Company is required to pay the counterparty the difference. The Company would
be required to pay the counterparty the difference between such prices
regardless of whether the Company's production was sufficient to cover the
quantities specified in the hedge. In addition, the index used to calculate the
floating price in a hedge is frequently not the same as the prices actually
received for the production hedged. The difference (referred to as basis
differential) may be material, and may reduce the benefit or increase the
detriment caused by a particular hedge. There is not an established pricing
index for hedges of California heavy crude oil production, and the cash market
for heavy oil production in California tends to vary widely from index prices
typically used in oil hedges. Consequently, hedging California heavy crude oil
is particularly subject to the risks associated with volatile basis
differentials.
Competition; Markets for Production
The Company operates in the highly competitive areas of oil and gas,
acquisition, exploration, exploitation, development and production. The
availability of funds and information relating to a property, the standards
established by the Company for the minimum projected return on investment, the
availability of alternate fuel sources and the intermediate transportation of
gas are factors which affect the Company's ability to compete in the
marketplace. The Company's competitors include major integrated oil companies
and a substantial number of independent energy companies, many of which possess
greater financial and other resources than the Company.
The Company's heavy crude oil production in California requires special
treatment available only from a limited number of refineries. Substantial
damage to such a refinery or closures or reduction in capacity due to financial
or other factors could adversely affect the market for the Company's heavy crude
oil production. In addition, the Company's heavy crude oil production may
compete for refining capacity with heavy crude oil production that is shipped to
California from other oil producing nations.
Environmental and Other Regulation
The Company's operations are subject to numerous laws and regulations
governing the discharge of materials into the environment or otherwise relating
to environmental protection. These laws and regulations require the acquisition
of a permit before drilling commences, restrict the types, quantities and
concentration of various substances that can be released into the environment in
connection with drilling and production activities, limit or prohibit drilling
activities on certain lands lying within wilderness, wetlands and other
protected areas, and impose substantial liabilities for pollution which might
result from the Company's operations. A substantial amount of the Company's
assets are located in California, which has more stringent
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environmental regulations than many other states. Moreover, the recent trend
toward stricter standards in environmental legislation and regulation is likely
to continue. For instance, legislation has been proposed in Congress from time
to time that would reclassify certain oil and gas exploration and production
wastes as "hazardous wastes" which would make the reclassified wastes subject to
much more stringent handling, disposal and clean-up requirements. If such
legislation were to be enacted, it could have a significant impact on the
operating costs of the Company, as well as the oil and gas industry in general.
Initiatives to further regulate the disposal of oil and gas wastes are also
pending in certain states, and these various initiatives could have a similar
impact on the Company. The Company could incur substantial costs to comply with
environmental laws and regulations.
The Oil Pollution Act of 1990 imposes a variety of regulations on
"responsible parties" related to the prevention of oil spills. The
implementation of new, or the modification of existing, environmental laws or
regulations, including regulations promulgated pursuant to the Oil Pollution Act
of 1990, could have a material adverse impact on the Company.
The Company's business is subject to certain laws and regulations relating
to taxation, exploration for and development and production of oil and gas, and
environmental and safety matters in both the United States and the foreign
countries in which the Company or any of its subsidiaries operates or owns
property. Various laws and regulations often require permits for drilling wells
and also cover spacing of wells, the prevention of waste of oil and gas
including maintenance of certain gas/oil ratios, rates of production and other
matters. The effect of these statutes and regulations, as well as other
regulations that could be promulgated by the jurisdictions in which the Company
has production, could be to limit the number of wells that could be drilled on
the Company's properties and to limit the allowable production from the
successful wells completed on the Company's properties, thereby limiting the
Company's revenues.
On September 28, 1997, there was a spill of crude oil into the Santa
Barbara Channel in California from a pipeline connecting the Company's Point
Pedernales Field with shore-based processing facilities. The volume of the
spill was estimated to be 163 barrels of oil. Substantially all of the
currently identified costs to repair and clean up the spill were or are expected
to be covered by insurance, less applicable deductibles. The Company, however,
has exposure to certain costs that may not be covered by insurance, including
fines, penalties, and damages. Such costs are not quantifiable at this time,
and, although no assurances can be made, are not expected to be material to the
Company.
Acquisition Risks
The Company expects to continue to evaluate and pursue acquisition
opportunities. The successful acquisition of producing properties requires an
assessment of recoverable reserves, future oil and gas prices, operating costs,
potential environmental and other liabilities and other factors beyond the
Company's control. This assessment is necessarily inexact and its accuracy is
inherently uncertain. In connection with such an assessment, the Company
performs a review it believes to be generally consistent with industry
practices. This review, however, will not reveal all existing or potential
problems, nor will it permit the Company to become sufficiently familiar with
the properties to assess fully their deficiencies and capabilities. Inspections
generally are not performed on every well, and structural and environmental
problems are not necessarily observable even when an inspection is undertaken.
Even when problems are identified, the seller may not be willing or financially
able to give contractual protection against such problems, and the Company may
decide to assume environmental and other liabilities in connection with acquired
properties. There can be no assurance that the Company's acquisitions will be
successful. Any unsuccessful acquisition could have a material adverse effect on
the Company's financial condition and results of operations.
Lack of Public Market
The Outstanding Notes were issued to, and the Company believes are
currently owned by, a relatively small number of beneficial owners. The
Outstanding Notes have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for Exchange Notes. See "--Consequences of a Failure to Exchange
Outstanding Notes."
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<PAGE>
Although the Exchange Notes will generally be permitted to be resold or
otherwise transferred by the holders (who are not affiliates of the Company)
without compliance with the registration and prospectus delivery requirements
under the Securities Act, they will constitute a new issue of securities with no
established trading market. See "The Exchange Offer--Resales of Exchange
Notes." The Company has been advised by the Initial Purchasers that they
presently intend to make a market in the Exchange Notes, as permitted by
applicable laws and regulations. However, the Initial Purchasers are not
obligated to do so and any market making activity with respect to the Exchange
Notes may be discounted at any time without notice in the sole discretion of
each Initial Purchaser. In addition, such market making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act and may
be limited during the Exchange Offer. If the Exchange Notes are traded after
their initial issuance, they may trade at a discount from their initial offering
price, depending upon prevailing interest rates, the market for similar
securities and other factors including general economic conditions and the
financial condition of the Company. The Company does not intend to apply for a
listing or quotation of the Exchange Notes on any securities exchange or stock
market. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Exchange Notes.
The liquidity of, and trading market for, the Notes also may be adversely
affected by general declines in the market for similar securities. Such a
decline may adversely affect such liquidity and trading markets independent of
the financial performance of, and prospects for, the Company.
Exchange Offer Procedures
Issuance of the Exchange Notes in exchange for the Outstanding Notes
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of such Outstanding Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents. Therefore, holders of
the Outstanding Notes desiring to tender such Outstanding Notes in exchange for
Exchange Notes should allow sufficient time to ensure timely delivery. The
Company is under no duty to give notification of defects or irregularities with
respect to tenders of Outstanding Notes for exchange.
Year 2000 Issue
All major financial and administrative information processing services are
provided to the Company by Torch, which is conducting a review of its computer
systems to identify and upgrade systems that could be affected by the "Year
2000" issue. The Year 2000 issue results from computer programs written with
date fields that cannot distinguish between the year 1900 and 2000. The
information systems in the Company's field operations are currently not believed
to be fully Year 2000 compliant. Torch is currently studying the steps
necessary to make the Company's operations Year 2000 compliant and to otherwise
effect a smooth transition to the Year 2000. These steps include upgrading,
testing and certifying its computer system and field operation services and
obtaining Year 2000 compliance certification from all of Torch's and Nuevo's
important business suppliers. The Company does not believe that costs incurred
to address the Year 2000 issue with respect to its financial and administrative
systems will have a material effect on the Company. The Company is uncertain,
however, as to the impact that the Year 2000 issue will have on its field
operation systems or as to how the Company will be indirectly affected by the
impact that the Year 2000 issue will have on the companies with which it
conducts business. In these cases, the effect of the Year 2000 issue may be
material.
PRIVATE PLACEMENT
On June 8, 1998, the Company completed the private sale to the Initial
Purchasers of $100,000,000 principal amount of the Outstanding Notes in a
transaction not registered under the Securities Act in reliance upon Section
4(2) of the Securities Act. The Initial Purchasers thereupon offered and resold
the Outstanding Notes to QIBS or pursuant to offers and sales that occurred
outside the United States in reliance on Regulation S under the Securities Act.
The net proceeds to the Company from the sale of the Outstanding Notes was
$97.0 million. The Company used the net proceeds of the offering of the
Outstanding Notes to repay indebtedness under its Credit Facility with a
syndicate of commercial banks which was incurred to fund a portion of the
acquisition of the properties acquired in April 1996 from Union Oil Company of
California and a portion of the Company's capital budget. Amounts outstanding
under the Credit Facility bear
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<PAGE>
interest at a rate equal to the London Interbank Offered Rate ("LIBOR") plus a
number of basis points which increases as senior indebtedness of the Company as
a percent of the Borrowing Base increases. The interest rate on borrowings under
the Credit Facility averaged 6.1% for the three months ended March 31, 1998. As
of June 30, 1998, the Company had $265.0 million of borrowing capacity under its
Credit Facility after consideration of the increase in the Borrowing Base from
$330.0 million to $380.0 million, which is available to fund its capital budget
and for possible future acquisitions.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Agreement. The Company will not receive any
cash proceeds from the issuance of the Exchange Notes in the Exchange Offer. In
consideration for issuing the Exchange Notes as contemplated in this Prospectus,
the Company will receive Outstanding Notes in like principal amount. The form
and terms of the Exchange Notes are identical in all material respects to the
form and terms of the Outstanding Notes, except for certain transfer
restrictions and registration rights relating to the Outstanding Notes and
certain interest provisions relating to such registration rights. See
"Description of the Notes." The Outstanding Notes surrendered in exchange for
the Exchange Notes will be retired and canceled and cannot be reissued.
Accordingly, issuance of the Exchange Notes will not result in any increase in
the outstanding debt of the Company.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data for the Company for the
years ended December 31, 1993, 1994, 1995, 1996 and 1997 and for the three month
periods ended March 31, 1997 and 1998. The selected historical consolidated
financial information for the years ended December 31, 1993 through 1997 has
been derived from the Company's audited financial statements. The historical
information for the three months ended March 31, 1997 and 1998 is derived from
the Company's unaudited consolidated financial statements. Such unaudited
consolidated financial statements have been prepared on the same basis as the
Company's audited financial statements, and the Company believes that such
unaudited consolidated financial statements contain all adjustments necessary
for a fair presentation of the financial information presented (consisting only
of normal, recurring adjustments). Interim results are not necessarily
indicative of results for the full year. See the Consolidated Financial
Statements and Notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, (1) Ended March 31,
-------------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997(1) 1998
--------- --------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(In thousands, except per share data)
Statement of Operations Data:
Revenues:
Oil and gas revenues....................... $ 67,184 $ 79,968 $102,455 $ 279,859 $ 335,202 $ 90,137 $ 63,142
Gas plant revenues.......................... 24,680 28,798 27,183 34,802 11,597 8,824 828
Pipeline and other revenues................. 14,697 10,309 7,222 6,774 5,772 1,497 1,514
Gain on sale of assets, net................. -- 2,402 -- 6,008 1,372 1,361 1,677
Interest on sale of assets,
net and other income..................... 1,271 245 1,106 1,614 3,335 591 500
-------- --------- -------- --------- --------- -------- --------
Total revenues............................ 107,832 121,722 137,966 329,057 357,278 102,410 67,661
-------- --------- -------- --------- --------- -------- --------
Costs and expenses:
Lease operating expenses.................... 11,992 15,160 28,873 93,062 123,178 30,759 33,036
Gas plant operating expenses................ 20,975 25,794 22,667 29,311 10,220 7,871 738
Pipeline and other operating costs.......... 9,978 6,767 4,726 6,105 5,243 1,326 1,266
Provision for impairment of assets
held for sale (2)......................... -- -- -- -- 23,942 -- --
Exploration costs........................... 7,748 4,300 2,357 4,571 11,082 800 1,997
Provision for impairment of oil and
gas properties (3)........................ -- -- -- -- 30,000 -- --
General and administrative expenses......... 7,734 7,480 5,444 14,880 19,822 4,140 5,937
Outsourcing fees............................ 5,110 6,369 5,857 10,249 11,984 3,119 2,507
Depreciation, depletion and
amortization.............................. 33,009 48,144 45,233 75,664 102,158 21,361 24,782
Interest expense............................ 11,861 12,560 15,389 36,009 27,357 6,745 6,826
Loss on sales of assets, net................ 13,449 -- 645 -- -- -- --
Dividends on TECONS(4)...................... -- -- -- 165 6,613 1,615 1,653
Other expense............................... 36 2,387 45 1,069 3,019 249 228
-------- --------- -------- --------- --------- -------- --------
Total costs and expenses.................. 121,892 128,961 131,236 271,085 374,618 77,985 78,970
-------- --------- -------- --------- --------- -------- --------
Income (loss) before income taxes,
minority interest, and
extraordinary item........................ (14,060) (7,239) 6,730 57,972 (17,340) 24,425 (11,309)
Income tax expense (benefit)................ (4,368) (2,865) 2,582 23,965 (6,656) 9,831 (4,727)
Minority interest in earnings
(loss) of subsidiary...................... 272 52 16 (271) (8) (14) --
-------- --------- -------- --------- --------- -------- --------
Income (loss) before
extraordinary item........................ (9,964) (4,426) 4,132 34,278 (10,676) 14,608 (6,582)
Extraordinary loss on early
extinguishment of debt
net of income tax benefit
of $2,037(5).............................. -- -- -- -- 3,024 -- --
-------- --------- -------- --------- --------- -------- --------
Net income (loss)........................... (9,964) (4,426) 4,132 34,278 (13,700) 14,608 (6,582)
Dividends on preferred stock................ 1,750 1,750 1,472 939 -- -- --
-------- --------- -------- --------- --------- -------- --------
Earnings (loss) attributable
to common stockholders.................... $(11,714) $ (6,176) $ 2,660 $ 33,339 $ (13,700) $ 14,608 $ (6,582)
======== ========= ======== ========= ========= ======== ========
Earnings (loss) per common
share--basic.............................. $(1.18) $(0.57) $0.24 $1.99 $(0.69) $0.73 $(0.33)
======== ========= ======== ========= ========= ======== ========
Weighted average common
shares outstanding........................ 9,937 10,763 11,057 16,755 19,796 20,085 19,745
Statement of Cash Flows Data:
Net cash flows provided by
operating activities...................... $ 28,403 $ 58,513 $ 37,194 $ 126,921 $ 165,462 $ 63,259 $ 24,439
Net cash flows used in
investing activities...................... $(63,164) $(100,158) $(32,582) $(546,002) $(169,478) $(50,427) $(46,676)
Net cash flows (used in)
provided by financing
activities................................ $ 32,961 $ 29,929 $ (2,294) $ 426,952 $ (412) $(17,783) $ 17,174
Other Financial Data:
Capital expenditures........................ $ 69,659 $ 105,048 $ 41,445 $ 582,346 $ 195,895 $ 51,537 $ 50,736
EBITDAX (6)................................. $ 52,007 $ 55,363 $ 70,354 $ 168,373 $ 182,440 $ 53,585 $ 22,272
Ratio of EBITDAX to interest
expense................................... 4.4x 4.4x 4.6x 4.7x 6.7x 7.9x 3.3x
Ratio of earnings to fixed
charges (7)............................ -- -- 1.4x 2.6x -- 3.4x --
Balance Sheet Data:
Working capital (deficit).................. $ 22,382 $ 6,396 $ 15,757 $ 22,338 $ 9,257 N/A $ (8,966)
Total assets............................... 230,901 272,444 262,359 817,643 804,286 N/A 810,653
Total debt................................. 87,941 119,541 116,709 292,446 309,656 N/A 326,698
Stockholders' equity....................... 123,549 117,557 123,349 345,439 324,739 N/A 318,285
- ------------------------------------------------------
</TABLE>
(1) Effective January 1, 1998, the Company changed its method of accounting for
its investments in oil and gas properties from the full cost to the
successful efforts method. All prior years' financial statements presented
herein have been restated to reflect this change.
(2) Provision for impairment of assets held for sale reflects a charge to
reduce the value of the Company's mid-stream assets to the amount expected
to be received from the sale of these assets.
(3) The Company incurred an impairment of $30.0 million on certain fields at
December 31, 1997 due to decreased crude oil prices.
(4) TECONS are the Company-Obligated Mandatorily Redeemable Convertible
Preferred Securities of Nuevo Financing I. The principal assets of Nuevo
Financing I are $115.0 million of Convertible Debentures. Interest payments
on the Convertible Debentures made by the Company to Nuevo Financing I are
paid by Nuevo Financing I as dividends on the TECONS.
(5) During 1997 the Company redeemed its 12 1/2% Senior Subordinated Notes
prior to maturity and recorded $3.0 million as an extraordinary loss on
early extinguishment of debt, net of income tax benefit.
(6) EBITDAX is defined as earnings before interest, dividends on TECONS, taxes,
depreciation, depletion and amortization, property impairment and
exploration costs and certain other non-cash charges. EBITDAX is included
as a supplemental disclosure because it is commonly accepted as providing
useful information regarding a company's ability to incur debt. EBITDAX,
however, should not be considered in isolation or as a substitute for net
income, cash flow provided by operating activities or other income or cash
flow data prepared in accordance with generally accepted accounting
principals or as a measure of a company's profitability or liquidity.
Because EBITDAX excludes some, but not all, non-cash charges, it may not be
comparable to similarly titled items of other companies.
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income (loss) before income taxes and fixed charges, and fixed
charges include interest expense (including interest on the TECONS),
amortization of debt issuance costs and that portion of operating lease
expense which is deemed to be representative of an interest factor.
Earnings were not sufficient to cover fixed changes in the years 1993, 1994
and 1997 and the first three months of 1998 by $14.1 million, $7.2 million,
$19.5 million and $11.6 million, respectively.
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THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
In connection with the sale of the Outstanding Notes, the Company entered
into the Registration Agreement with the Initial Purchasers, pursuant to which
the Company agreed to file and to use its best efforts to cause to become
effective with the Commission a registration statement with respect (subject to
certain exceptions) to the exchange of the Outstanding Notes for debt securities
with terms identical in all material respects to the terms of the Outstanding
Notes. A copy of the Registration Agreement has been filed as an Exhibit to the
Registration Statement of which this Prospectus is a part. See "Exchange Offer;
Registration Rights."
The Exchange Offer is being made to satisfy the contractual obligations of
the Company under the Registration Agreement. The form and terms of the Exchange
Notes are the same as the form and terms of the Outstanding Notes except that:
(i) the Exchange Notes have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Outstanding Notes and will not be entitled to resale registration under the
Registration Agreement, although the Registration Agreement does provide for
prospectus delivery procedures to assist resales of Exchange Notes, and (ii) the
Exchange Notes will not provide for any increase in the interest rate thereon.
In that regard, the Outstanding Notes provide that if (i) an exchange offer
registration statement is not filed on or prior to September 6, 1998, (ii) the
exchange offer registration statement or, if applicable, the resale shelf
registration statement (each, a "Registration Statement") is not declared
effective on or prior to November 5, 1998, (iii) the Exchange Offer is not
consummated on or prior to December 5, 1998, or (iv) a Registration Statement is
filed and declared effective on or prior to November 5, 1998 and such
Registration Statement ceases to be effective or usable (at any time the Company
is obligated to maintain the effectiveness thereof), Special Interest (as
defined) will accrue and be payable semi-annually until such time as an exchange
offer registration statement is filed or becomes effective, as the case may be.
See "Description of the Notes--Registration Rights" and "Exchange Offer;
Registration Rights."
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Outstanding Notes in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction. Unless the context
requires otherwise, the term "holder" with respect to the Exchange Offer means
any person in whose name the Outstanding Notes are registered on the books of
the Company or any other person who has obtained a properly completed bond power
from the registered holder, or any person whose Outstanding Notes are held of
record by The Depository Trust Company who desires to deliver such Outstanding
Notes by book-entry transfer at The Depository Trust Company. Only a holder may
tender Outstanding Notes in the Exchange Offer.
Terms of the Exchange
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $100,000,000 aggregate principal amount of Exchange Notes for a
like aggregate principal amount of Outstanding Notes properly tendered on or
prior to the Expiration Date and not properly withdrawn in accordance with the
procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $100,000,000 of Exchange
Notes in exchange for a like principal amount of Outstanding Notes tendered and
accepted in connection with the Exchange Offer. Holders may tender their
Outstanding Notes in whole or in part in a principal amount of $1,000 and
integral multiples thereof.
The Exchange Offer is not conditioned upon any minimum number of
Outstanding Notes being tendered. As of the date of this Prospectus,
$100,000,000 aggregate principal amount of the Outstanding Notes are
outstanding.
Holders of Outstanding Notes do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Outstanding Notes that are not
tendered for or are tendered but not accepted in connection with the Exchange
Offer will remain outstanding and be entitled to the benefits of the Indenture,
but will not be entitled to any further registration rights under the
Registration Agreement, except under limited circumstances. See "Risk Factors--
Consequences of a Failure to Exchange Outstanding Notes."
If any tendered Outstanding Notes are not accepted for exchange because of
an invalid tender, or upon the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Outstanding Notes will
be returned, without expense, to the tendering holder thereof promptly after the
Expiration Date.
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<PAGE>
Holders who tender Outstanding Notes in connection with the Exchange Offer
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of Outstanding Notes in connection with the Exchange Offer. The Company
will pay all charges and expenses, other than certain applicable taxes described
below, in connection with the Exchange Offer. See "--Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF OUTSTANDING NOTES AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OUTSTANDING NOTES PURSUANT TO
THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF OUTSTANDING NOTES MUST MAKE THEIR OWN DECISION
WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE
AMOUNT OF OUTSTANDING NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE
LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR
OWN FINANCIAL POSITION AND REQUIREMENTS.
Expiration Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on
_________ unless the Exchange Offer is extended by the Company (in which case
the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended).
The Company expressly reserves the right in its sole and absolute
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Outstanding Notes for exchange, (ii) to terminate
the Exchange Offer (whether or not any Outstanding Notes have theretofore been
accepted for exchange) if any of the events or conditions referred to under
"--Conditions to the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and retain
all Outstanding Notes tendered pursuant to the Exchange Offer, subject, however,
to the right of holders of Outstanding Notes to withdraw their tendered
Outstanding Notes as described under "--Withdrawal Rights," and (iv) to waive
any condition or otherwise amend the terms of the Exchange Offer in any respect.
If the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, or if the Company waives a material condition of
the Exchange Offer, the Company will promptly disclose such amendment by means
of a prospectus supplement that will be distributed to the registered holders of
the Outstanding Notes, and the Company will extend the Exchange Offer for a
period of five to ten business days, depending upon the significance of the
amendment and the manner of disclosure to the registered holders if the Exchange
Offer would otherwise expire during such five to ten business day period.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
Acceptance for Exchange and Issuance of Exchange Notes
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will issue to the Exchange Agent, Exchange Notes for
Outstanding Notes validly tendered and not withdrawn (pursuant to the withdrawal
rights described under "--Withdrawal Rights") promptly after the Expiration
Date.
In all cases, delivery of Exchange Notes in exchange for Outstanding Notes
tendered and accepted for exchange pursuant to the Exchange Offer will be made
only after timely receipt by the Exchange Agent of (i) (x) Outstanding Notes and
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or (y) a book-entry
confirmation of a book-entry transfer of Outstanding Notes into the Exchange
Agent's account at the DTC and an Agent's Message, and (ii) any other documents
required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of Outstanding Notes into the Exchange Agent's account at DTC.
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<PAGE>
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby exchanged, Outstanding
Notes validly tendered and not withdrawn as, if and when the Company gives
written notice to the Exchange Agent of the Company's acceptance of such
Outstanding Notes for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Company for the purpose of receiving tenders of
Outstanding Notes, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving Outstanding Notes, Letters of
Transmittal and related documents and transmitting Exchange Notes to validly
tendering holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever, acceptance for exchange or the exchange of
any Outstanding Notes tendered pursuant to the Exchange Offer is delayed
(whether before or after the Company's acceptance for exchange of Outstanding
Notes) or the Company extends the Exchange Offer or is unable to accept for
exchange or exchange Outstanding Notes tendered pursuant to the Exchange Offer,
then, without prejudice to the Company's rights set forth herein, the Exchange
Agent may, nevertheless, on behalf of the Company and subject to Rule 14e-1(c)
under the Exchange Act, retain tendered Outstanding Notes and such Outstanding
Notes may not be withdrawn except to the extent tendering holders are entitled
to withdrawal rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Outstanding Notes will
warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Outstanding Notes, that
the Company will acquire good, marketable and unencumbered title to the tendered
Outstanding Notes, free and clear of all liens, restrictions, charges and
encumbrances, and the Outstanding Notes tendered for exchange are not subject to
any adverse claims or proxies. The holder also will warrant and agree that it
will, upon request, execute and deliver any additional documents deemed by the
Company or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment, and transfer of the Outstanding Notes tendered
pursuant to the Exchange Offer.
Procedures for Tendering Outstanding Notes
Valid Tender
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, or an Agent's Message,
together with the Outstanding Notes and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
In addition, either (i) the certificates for such Outstanding Notes must be
received by the Exchange Agent along with the Letter of Transmittal or (ii) a
book-entry confirmation, if such procedure is available, pursuant to the
procedure for book-entry transfer described below, must be received by the
Exchange Agent along with an Agent's Message prior to the Expiration Date or
(iii) the Holder must comply with the guaranteed delivery procedures described
below. The tender by a holder of Outstanding Notes will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal. Delivery of
all documents must be made to the Exchange Agent at its address set forth
herein. Holders may also request that their respective brokers, dealers,
commercial banks, trust companies or nominees effect such tender for such
holders.
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering Outstanding Notes which are the subject of such
book-entry confirmation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal, and that the Company may
enforce such agreement against such participant.
If less than all of the Outstanding Notes are tendered, a tendering holder
should fill in the amount of Outstanding Notes being tendered in the appropriate
box on the Letter of Transmittal. The entire amount of Outstanding Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. NO LETTER OF
TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE COMPANY.
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Book Entry Transfer
The Exchange Agent will establish an account with respect to the
Outstanding Notes at DTC for purposes of the Exchange Offer within two business
days after the date of this Prospectus. Any financial institution that is a
participant in DTC's book-entry transfer facility system may make a book-entry
delivery of the Outstanding Notes by causing DTC to transfer such Outstanding
Notes into the Exchange Agent's account at DTC in accordance with DTC's
procedures for transfers. However, although delivery of Outstanding Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
an Agent's Message must be transmitted to and received by the Exchange Agent at
the Exchange Agent's address set forth under "--Exchange Agent" on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. THE LETTER OF TRANSMITTAL OR AN
AGENT'S MESSAGE MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME ON [ ], 1998.
Signature Guarantees
If the Letter of Transmittal is signed by the record holder(s) of the
Outstanding Notes tendered thereby, the signature must correspond with the
name(s) written on the face of the Outstanding Notes without alteration,
enlargement or any change whatsoever. If the Letter of Transmittal is signed by
a participant in DTC, the signature must correspond with the name as it appears
on the security position listing as the holder of the Outstanding Notes.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (an "Eligible Institution") unless the Outstanding Notes
tendered pursuant thereto are tendered (i) by a registered holder (or by a
participant in DTC whose name appears on a security position listing as the
owner) who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal and the Exchange
Notes are being issued directly to such registered holder (or deposited in the
participant's account at DTC) or (ii) for the account of an Eligible
Institution. If the Letter of Transmittal is signed by a person other than the
registered holder of any Outstanding Notes listed therein, such Outstanding
Notes must be endorsed or accompanied by appropriate bond powers which authorize
such person to tender the Outstanding Notes on behalf of the registered holder,
in either case signed as the name of the registered holder or holders appears on
the Outstanding Notes.
Guaranteed Delivery
If a holder desires to tender Outstanding Notes pursuant to the Exchange
Offer and the certificates for such Outstanding Notes are not immediately
available or time will not permit the Letter of Transmittal to reach the
Exchange Agent on or before the Expiration Date, or the procedures for book-
entry transfer and delivery of an Agent's Message cannot be completed on a
timely basis, such Outstanding Notes may nevertheless be tendered, provided that
all of the following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(iii) the certificates (or a book-entry confirmation and Agent's
Message) representing all tendered Outstanding Notes, in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal and all other documents required by the Letter of Transmittal,
are received by the Exchange Agent within five New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Exchange Notes
in exchange for Outstanding Notes tendered and accepted for exchange pursuant to
the Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Outstanding Notes and a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), or of a book-entry confirmation
with respect to such Outstanding Notes and an Agent's Message. Accordingly, the
delivery of Exchange Notes might not be made to all tendering holders at the
same
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time, and will depend upon when Outstanding Notes, book-entry confirmations
with respect to Outstanding Notes and other required documents are received by
the Exchange Agent.
The Company's acceptance for exchange of Outstanding Notes tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity
All questions as to the form of documents, validity, eligibility (including
time of receipt), acceptance for exchange of any tendered Outstanding Notes and
withdrawal of any tendered Outstanding Notes will be determined by the Company,
in its sole discretion, whose determination shall be final and binding on all
parties. The Company reserves the absolute right, in its sole and absolute
discretion, to reject any and all tenders determined by it not to be in proper
form or the acceptance of which, or exchange for, may, in the view of counsel to
the Company, be unlawful. The Company also reserves the absolute right, subject
to applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Outstanding Notes of any particular holder whether
or not similar conditions or irregularities are waived in the case of other
holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Outstanding Notes will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. Neither the Company, any affiliates or assigns of the Company,
the Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
Beneficial Owners
Any beneficial holder whose Outstanding Notes are registered in the name of
such holder's broker, dealer, commercial bank, trust company or other nominee
and who wishes to tender should contact such registered holder promptly and
instruct such registered holder to tender on behalf of the registered holder.
If such beneficial holder wishes to tender directly, such beneficial holder
must, prior to completing and executing the Letter of Transmittal and delivering
his Outstanding Notes, either make appropriate arrangements to register
ownership of the Outstanding Notes in such holder's name or obtain a properly
completed bond power from the registered holder. The transfer of record
ownership may take considerable time and may not be able to be complete prior to
the Expiration Date.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity
such person should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
Resales of Exchange Notes
The Company is making the Exchange Offer in reliance on a position of the
staff of the Division of Corporation Finance of the Commission as set forth in
certain interpretive letters addressed to third parties, including Exxon Capital
Holdings Corporation, SEC No-Action Letter (available May 13, 1988), Morgan
Stanley & Co., Inc., SEC No-Action Letter (available June 5, 1991) (the "Morgan
Stanley Letter") and Mary Kay Cosmetics, SEC No-Action Letter (available June 5,
1991). However, the Company has not sought its own interpretive letter and
there can be no assurance that the staff of the Division of Corporation Finance
of the Commission would make a determination with respect to the Exchange Offer
similar to that made in such interpretive letters to third parties. Based on
these interpretations by the staff of the Division of Corporation Finance, and
subject to the two immediately following sentences, the Company believes that
Exchange Notes issued pursuant to this Exchange Offer in exchange for
Outstanding Notes may be offered for resale, resold and otherwise transferred by
a holder thereof (other than a "Restricted Holder," being (i) a broker-dealer
who acquires Outstanding Notes exchanged for such Exchange Notes directly from
the Company to resell pursuant to Rule 144A or any other available exemption
under the Securities Act or (ii) a person that is an affiliate of the Company
within the meaning of Rule 405 under the Securities Act) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holder's business and that such holder is not participating, and
has no arrangement or understanding with any person to participate, in a
distribution (within the meaning of the Securities Act) of such Exchange Notes.
Accordingly, any holder of Outstanding Notes who is a Restricted Holder, who did
not acquire the Exchange Notes in the ordinary course of such holder's business
or who intends to participate in the Exchange Offer for the purpose of
distributing Exchange Notes, (a)
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will not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such
Outstanding Notes in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Outstanding Notes unless such
sale is made pursuant to an exemption from such requirements. In addition, as
described below, if any broker-dealer holds Outstanding Notes acquired for its
own account as a result of market-making or other trading activities and
exchanges such Outstanding Notes for Exchange Notes, then such broker-dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such Exchange Notes. In the event that applicable
interpretations by the staff of the Division of Corporation Finance change or
otherwise do not permit resales of the Exchange Notes without compliance with
the registration and prospectus delivery requirements of the Securities Act,
holders of Exchange Notes who transfer Exchange Notes in violation of the
prospectus delivery requirements of the Securities Act or without an exemption
from registration thereunder may incur liability thereunder.
Each holder of Outstanding Notes who wishes to exchange Outstanding Notes
for Exchange Notes in the Exchange Offer will be required to represent that (i)
it is neither an affiliate of the Company nor a broker-dealer tendering
Outstanding Notes acquired directly from the Company for its own account, (ii)
any Exchange Notes to be received by it are being acquired in the ordinary
course of its business, (iii) it is not participating in, and it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Notes, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its
own account pursuant to the Exchange Offer must acknowledge that it acquired the
Outstanding Notes for its own account as the result of market-making activities
or other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. Based on the
position taken by the staff of the Division of Corporation Finance of the
Commission in the interpretive letters issued to third parties, including
Shearman & Sterling SEC No-Action Letter (available July 2, 1993), the Company
believes that broker-dealers who acquired Outstanding Notes for their own
accounts as a result of market-making activities or other trading activities
("Participating Broker-Dealers") may fulfill their prospectus delivery
requirements with respect to the Exchange Notes received upon exchange of such
Outstanding Notes (other than Outstanding Notes that represent an unsold
allotment from the original sale of the Outstanding Notes) with a prospectus
meeting the requirements of the Securities Act, which may be the prospectus
prepared for an exchange offer so long as it contains a description of the plan
of distribution with respect to the resale of such Exchange Notes. Accordingly,
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer during the period referred to below in
connection with resales of Exchange Notes received in exchange for Outstanding
Notes where such Outstanding Notes were acquired by such Participating Broker-
Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration
Agreement, the Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such Exchange Notes for a period ending ninety days
after the consummation of the Exchange Offer or, if earlier, when all such
Exchange Notes have been disposed of by such Participating Broker-Dealer. See
"Plan of Distribution." Any Participating Broker-Dealer who is an "affiliate" of
the Company may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Outstanding
Notes pursuant to the Exchange Offer will be deemed to have agreed, by execution
of the Letter of Transmittal, that, upon receipt of notice from the Company of
the occurrence of any event or the discovery of any fact which makes any
statement contained in this Prospectus untrue in any material respect or which
causes this Prospectus to omit to state a material fact necessary in order to
make the statements herein, in light of the circumstances under which they were
made, not misleading or of the occurrence of certain other events specified in
the Registration Agreement, such Participating Broker-Dealer will suspend the
sale of Exchange Notes pursuant to this Prospectus until the Company has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the Exchange
Notes may be resumed, as the case may be. If the Company gives such notice to
suspend the sale of the Exchange Notes, it shall extend the ninety day period
referred to above during which Participating Broker-Dealers are entitled to use
this Prospectus in connection with the resale of Exchange Notes by the number of
days during the period from and including the date of the giving of such notice
to and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the Exchange Notes or to and including the date on which the Company has given
notice that the sale of Exchange Notes may be resumed, as the case may be.
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Withdrawal Rights
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the business
day prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "--Exchange Agent" on or prior
to 5:00 p.m., New York City time, on the business day prior to the Expiration
Date. Any such notice of withdrawal must (i) specify the name of the person who
tendered the Outstanding Notes to be withdrawn, (ii) identify the Outstanding
Notes to be withdrawn (including the certificate number or numbers and the
aggregate principal amount), and (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the trustee under the Indenture register the transfer of such
Outstanding Notes into the name of the person withdrawing the tender and (iv) if
certificates for such Outstanding Notes have been tendered, the name of the
registered holder of the Outstanding Notes as set forth on the Outstanding
Notes, if different from that of the person who tendered such Outstanding Notes.
If Outstanding Notes have been delivered or otherwise identified to the Exchange
Agent, then prior to the physical release of such Outstanding Notes, the
tendering holder must submit the serial numbers shown on the particular
Outstanding Notes to be withdrawn and the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution, except in the case of Outstanding
Notes tendered for the account of an Eligible Institution. If Outstanding Notes
have been tendered pursuant to the procedures for book-entry transfer set forth
in "--Procedures for Tendering Outstanding Notes," the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawal of Outstanding Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Outstanding Notes may not be
rescinded. Outstanding Notes properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any
subsequent time on or prior to the Expiration Date by following any of the
procedures described above under "--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any affiliates or assigns of the Company, the Exchange
Agent nor any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Outstanding Notes which have been
tendered but which are withdrawn will be returned to the holder thereof promptly
after withdrawal.
Interest on the Exchange Notes
Each Exchange Note will bear interest at the rate of 8-7/8% per annum from
the most recent date to which interest has been paid or duly provided for on the
Outstanding Note surrendered in exchange for such Exchange Note or, if no
interest has been paid or duly provided for on such Outstanding Note, from June
8, 1998 (the date of original issuance of such Outstanding Notes). Interest on
the Exchange Notes will be payable semiannually in arrears on June 1 and
December 15, commencing on the first such date following the original issuance
date of the Exchange Notes. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Holders of Outstanding Notes whose Outstanding Notes are accepted for
exchange will not receive accrued interest on such Outstanding Notes for any
period from and after the last interest payment date to which interest has been
paid or duly provided for on such Outstanding Notes prior to the original issue
date of the Exchange Notes or, if no such interest has been paid or duly
provided for, will not receive any accrued interest on such Outstanding Notes,
and will be deemed to have waived the right to receive any interest on such
Outstanding Notes accrued from and after such interest payment date or, if no
such interest has been paid or duly provided for, from and after June 8, 1998.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Outstanding Notes for any Exchange Notes, and, as
described below, may terminate the Exchange Offer (whether or not any
Outstanding Notes have theretofore been accepted for exchange), or may waive any
conditions to or amend the Exchange Offer, if any of the following conditions
have occurred or exist or have not been satisfied:
(a) the Exchange Offer, or the making of any exchange pursuant to the
Exchange Offer, violates applicable law or any applicable interpretation of
the staff of the Commission; or
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(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer; or
(c) any law, statute, rule or regulation shall have been adopted or
enacted prohibiting or limiting the Exchange Offer; or
(d) a banking moratorium shall have been declared by United States
federal, New York or Texas state authorities; or
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority; or
(f) such other conditions reasonably acceptable to the Initial
Purchasers which, in the Company's judgment, would reasonably be expected
to impair the ability of the Company to proceed with the Exchange Offer.
If the Company determines in its sole and absolute discretion that any of
the foregoing events or conditions has occurred or exists or has not been
satisfied, the Company may, subject to applicable law and the provisions of the
Registration Agreement, terminate the Exchange Offer (whether or not any
Outstanding Notes have theretofore been accepted for exchange) or may waive any
such condition or otherwise amend the terms of the Exchange Offer in any
respect. If such waiver or amendment constitutes a material change to the
Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered holders of the
Outstanding Notes, and the Company will extend the Exchange Offer to the extent
required by Rule 14e-1 under the Exchange Act.
Exchange Agent
State Street Bank and Trust Company has been appointed as Exchange Agent
for the Exchange Offer. Delivery of the Letter of Transmittal and any other
required documents, questions, requests for assistance, and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as follows:
by Registered or Certified mail: by hand or overnight delivery:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Two International Place
Post Office Box 778 Corporate Trust Window, Fourth Floor
Boston, Massachusetts 02102 Boston, Massachusetts 02110
Attention: Kellie Mullen Attention: Kellie Mullen
Telephone: (617) 664-5587
Facsimile: (617) 664-5290 (for Eligible Institutions only)
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Outstanding Notes, and in handling or tendering for
their customers.
Holders who tender their Outstanding Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Notes and/or substitute Outstanding Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Outstanding Notes tendered, or if tendered
Outstanding Notes are registered in the name of any person other than the person
signing this letter, or if a transfer tax is imposed for any reason other than
the exchange of Outstanding Notes in connection with the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter
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of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder and the Exchange Agent will retain possession of an amount
of Exchange Notes with a face amount equal to the amount of such transfer taxes
due by such tendering holder pending receipt by the Exchange Agent of the amount
of such taxes.
The Company will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The expenses of soliciting
tenders will be borne by the Company. The principal solicitation is being made
by mail; however, additional solicitation may be made by telegraph, telephone or
in person by officers and regular employees of the Company and its affiliates.
Accounting Treatment
The Exchange Notes will be recorded at the same carrying value as the
Outstanding Notes, which is face value, as reflected in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized by the Company upon the consummation of
the Exchange Offer. The expenses of the Exchange Offer will be amortized by the
Company over the term of the Exchange Notes under generally accepted accounting
principles.
DESCRIPTION OF THE NOTES
The Exchange Notes are to be issued under the Indenture, dated as of June
8, 1998 (the "Indenture"), between the Company and State Street Bank and Trust
Company, as trustee (the "Trustee"). The Exchange Notes will be issued under
the same Indenture as the Outstanding Notes and the Outstanding Notes and the
Exchange Notes will constitute a single series of debt securities under the
Indenture. The terms of the Exchange Notes are identical in all material
respects to the Outstanding Notes, except that the Outstanding Notes have not
been registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain registration rights under the Registration
Agreement (which rights terminate upon the consummation of the Exchange Offer,
except under limited circumstances). If the Exchange Offer is consummated, any
Outstanding Notes that remain outstanding after consummation of the Exchange
Offer and the Exchange Notes issued in the Exchange Offer will vote together as
a single class for purposes of determining whether holders of the requisite
percentage in outstanding principal of Notes (as defined herein) have taken
certain actions or exercised certain rights under the Indenture.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Notes are subject to all such terms,
and Holders of Notes are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. The Company will provide a copy of the Indenture upon request to
the Company at the address set forth under "Available Information." Whenever
particular provisions and definitions of the Indenture are referred to, such
provisions and definitions are incorporated by reference as part of the
statements made, and the statements are qualified in their entirety by such
reference. For purposes of this section of this Prospectus, references to the
"Company" mean Nuevo Energy Company, excluding its subsidiaries. The
definitions of certain terms used in the following summary are set forth below
under "--Certain Definitions."
The Exchange Notes will be limited to $100,000,000 aggregate principal
amount. The Outstanding and Exchange Notes are referred to herein as the
"Notes." Under the circumstances described below, the obligations of the
Company under the Notes will be in the future unconditionally guaranteed on an
unsecured senior subordinated basis by Restricted Subsidiaries of the Company.
See "--Subsidiary Guarantees of Notes."
Principal, Maturity and Interest
The Exchange Notes will be general unsecured senior subordinated
obligations of the Company, limited in aggregate principal amount to
$100,000,000 and will mature on June 1, 2008. Interest on the Notes will accrue
at the rate of 8-7/8% per annum and will be payable semiannually in arrears
on June 1 and December 1 to the Persons in whose names the Notes are registered
in the Note Register at the close of business on May 15 or November 15 next
preceding such interest payment date. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
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Principal, premium, if any, and interest on the Notes will be payable, and
the Notes will be exchangeable and transferable, at the office or agency of the
Company maintained for such purpose within the City and State of New York. In
addition, in the event the Notes do not remain in book-entry form, interest may
be paid, at the option of the Company, by check mailed to the registered holders
of the Notes at their respective addresses as set forth on the Note Register.
No service charge will be made for any transfer or exchange of Notes, but the
Company or the Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge that may be payable in connection therewith. The
Notes will be issued in denominations of $1,000 and integral multiples thereof.
The interest on the Outstanding Notes is subject to increase in certain
circumstances (such additional interest being referred to as "Special Interest")
if the Company does not file a registration statement relating to the Exchange
Offer on a timely basis, if such registration statement is not declared
effective on a timely basis or if certain other conditions are not satisfied,
all as further described under "--Registration Rights." All references herein to
interest include Special Interest, if applicable.
Subordination
The payment of the principal of, and premium, if any, and interest on the
Notes will be subordinated in right of payment, as set forth in the Indenture,
to the prior payment in full of Senior Indebtedness, which will include
borrowings under the Credit Facility, whether outstanding on the date of the
Indenture or thereafter incurred. In the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relating to the Company or
to its creditors, as such, or to its assets, or any liquidation, dissolution or
other winding-up of the Company, whether voluntary or involuntary and whether or
not including insolvency or bankruptcy, or any assignment for the benefit of
creditors or other marshaling of assets or liabilities of the Company (provided
that this provision will not require the repayment of all Senior Indebtedness in
full in connection with the consolidation or merger of the Company or its
liquidation or dissolution following the conveyance, transfer, lease or other
disposition of all or substantially all the properties and assets of the Company
and its Restricted Subsidiaries on a consolidated basis upon the terms and
conditions described under "--Merger, Consolidation or Sale of Assets" below as
a prerequisite to any payments being made to Holders of Notes), the holders of
Senior Indebtedness will first be entitled to receive payment in full of all
amounts due on or in respect of all Senior Indebtedness, or provision must be
made for such payment, before the Holders of Notes will be entitled to receive
any direct or indirect payment or distribution of any kind or character (other
than any payment or distribution in the form of Permitted Junior Securities) on
account of principal of (or premium, if any, on) or interest on the Notes or on
account of the purchase or redemption or other acquisition of the Notes
(including pursuant to an optional redemption, a Change of Control Offer or a
Net Proceeds Offer). In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Note receives any payment or distribution of
properties or assets of the Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, in respect of principal of (or
premium, if any, on) or interest on the Notes before all Senior Indebtedness is
paid or provided for in full, then the Trustee or the Holders of Notes receiving
any such payment or distribution (other than a payment or distribution in the
form of Permitted Junior Securities) will be required to pay or deliver such
payment or distribution 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.
The Company also may not make any payment or distribution of any properties
or assets of the Company of any kind or character (other than Permitted Junior
Securities) on account of principal of (or premium, if any, on) or Interest on
the Notes or on account of the purchase or redemption or other acquisition of
Notes upon the occurrence of a Payment Event of Default and receipt by the
Trustee of written notice thereof until such Payment Event of Default shall have
been cured or waived or shall have ceased to exist or such Senior Indebtedness
shall have been paid in full or otherwise discharged, after which the Company
shall resume making any and all required payments in respect of the Notes,
including any missed payments.
The Company also may not make any payment or distribution of any properties
or assets of the Company of any kind or character (other than Permitted Junior
Securities) on account of any principal of (or premium, if any, on) or interest
on the Notes or on account of the purchase or redemption or other acquisition of
Notes for the period specified below ("Payment Blockage Period") upon the
occurrence of a Non-payment Event of Default and receipt by the Trustee and the
Company of written notice thereof from one or more of the holders of Specified
Senior Indebtedness (or their representative). The Payment Blockage Period will
commence upon the earlier of the dates of receipt by the Trustee or the Company
of such notice from one of more or the holders of Specified Senior Indebtedness
(or their representative) and shall end on the earliest of (i) 179 days
thereafter, (ii) the date, as set forth in a written notice from the holders of
the Specified Senior Indebtedness (or their representative) to the Company or
the Trustee, on which such Non-payment Event of Default is cured, waived in
writing or ceases to exist or such Specified Senior Indebtedness is discharged
or (iii) the date on which such Payment Blockage Period shall have been
terminated by written notice to the Company
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or the Trustee from one or more of such holders (or their representative)
initiating such Payment Blockage Period, after which the Company will resume
(unless otherwise prohibited pursuant to the immediately preceding paragraph)
making any and all required payments in respect of the Notes, including any
missed payments. In any event, not more than one Payment Blockage Period may be
commenced during any period of 360 consecutive days. No Non-payment Event of
Default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee can be made the basis for a subsequent Payment
Blockage Notice. In the event that, notwithstanding the foregoing, the Company
makes any payment to the Trustee or the Holder of any Note prohibited by the
subordination provision of the Indenture, then such payment will be required to
be paid over and delivered forthwith to the Company.
If the Company fails to make any payment on the Notes when due or within
any applicable grace period, whether or not on account of the payment blockage
provision described above, such failure would constitute an Event of Default
under the Indenture and would enable the Holders of the Notes to accelerate the
maturity thereof. See "Certain Covenants--Events of Default and Remedies."
As a result of such subordination provisions described above, in the event
of a distribution of assets upon the liquidation, receivership, reorganization
or insolvency of the Company, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Holders of the Notes, and
assets which would otherwise be available to pay obligations in respect of the
Notes will be available only after all Senior Indebtedness has been paid in
full, and there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes.
The subordination provisions described above will cease to be applicable to
the Notes upon any Legal Defeasance or Covenant Defeasance of the Notes as
described under "--Legal Defeasance and Covenant Defeasance."
At March 31, 1998, after giving pro forma effect to the transactions
described under "Capitalization" and the application of the estimated net
proceeds therefrom as described in "Use of Proceeds", the amount of Senior
Indebtedness outstanding would have been approximately $63.0 million. See "Use
of Proceeds" and "Capitalization." Although the Indenture will contain
limitations on the amount of additional Indebtedness that the Company and its
Restricted Subsidiaries may incur, the amounts of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Senior Indebtedness or
Guarantor Senior Indebtedness. See "--Certain Covenants--Incurrence of
Indebtedness."
Subsidiary Guarantees of Notes
The Company shall cause each Restricted Subsidiary, prior to, or
contemporaneously with, such Restricted Subsidiary's incurrence of any
obligations that guarantee or secure any Pari Passu Indebtedness or Subordinated
Indebtedness of the Company, to execute and deliver a supplement to the
Indenture pursuant to which such Restricted Subsidiary agrees to be bound by the
terms of the Indenture and to unconditionally guarantee, jointly and severally,
the full and prompt performance of the Company's obligations under the Indenture
and the Notes, including the payment of principal of (and premium, if any, on)
and interest on the Notes.
The obligations of each Subsidiary Guarantor will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or made by or on behalf of any other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law. Each Subsidiary Guarantor that makes a
payment or distribution under its Subsidiary Guarantee shall be entitled to a
contribution from each other Subsidiary Guarantor, if any, in a pro rata amount
based on the Adjusted Net Assets of each Subsidiary Guarantor.
Each Subsidiary Guarantor may consolidate with or merge into or sell or
otherwise dispose of all or substantially all of its properties and assets to
the Company or another Subsidiary Guarantor without limitation, except to the
extent any such transaction is subject to the "Merger, Consolidation or Sale of
Assets" covenant of the Indenture. Each Subsidiary Guarantor may consolidate
with or merge into or sell all or substantially all of its properties and assets
to a Person other than the Company or another Subsidiary Guarantor (whether or
not Affiliated with the Subsidiary Guarantor), provided that (a) if the
surviving Person is not the Subsidiary Guarantor, the surviving Person agrees to
assume the Subsidiary Guarantor's Subsidiary Guarantee and all its obligations
pursuant to the Indenture (except to the extent the following paragraph would
result in the release of such Subsidiary Guarantee) and (b) such transaction
does not (i) violate any of the covenants described under the heading "--Certain
Covenants" or (ii) result in a Default or Event of Default immediately
thereafter that is continuing.
Upon the sale or other disposition (by merger or otherwise) of a Subsidiary
Guarantor (or all or substantially all of its properties and assets) to a Person
other than the Company or another Subsidiary Guarantor and pursuant to a
transaction that is otherwise in compliance with the
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Indenture (including as described in the foregoing paragraph), such Subsidiary
Guarantor shall be deemed released from its Subsidiary Guarantee and the related
obligations set forth in the Indenture; provided, however, that any such
termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, other Indebtedness
of the Company or any other Restricted Subsidiary shall also terminate upon such
sale or other disposition. In addition, all of the Subsidiary Guarantors shall
be deemed released from their respective Subsidiary Guarantees and the related
obligations set forth in the Indenture in the event that all obligations of the
Subsidiary Guarantors under all of their guarantees of, and under all of their
pledges of assets or other security interests which secure, other Indebtedness
of the Company (excluding any Senior Indebtedness) shall also terminate.
The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee
will be subordinated to the prior payment in full of all Guarantor Senior
Indebtedness of such Subsidiary Guarantor to substantially the same extent as
the Notes are subordinated to Senior Indebtedness.
Optional Redemption
The Notes will not be redeemable at the Company's option prior to June 1,
2003. Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 or more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest to the applicable redemption
date, if redeemed during the twelve-month period beginning on June 1/st/ of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2003......................................... 104.438%
2004......................................... 102.958%
2005......................................... 101.479%
2006 and thereafter.......................... 100.00%
</TABLE>
Notwithstanding the foregoing, prior to June 1, 2001 the Company may, at
any time or from time to time, redeem up to 33-1/3% of the aggregate
principal amount of the Notes originally issued at a redemption price of 108
7/8% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of redemption (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), with the net proceeds of one or more Equity Offerings of the Company,
provided that at least 66-2/3% of the aggregate principal amount of the
Notes originally issued remains outstanding after the occurrence of such
redemption and provided, further, that such redemption shall occur not later
than 90 days after the date of the closing of any such Equity Offering. The
redemption shall be made in accordance with procedures set forth in the
Indenture.
If less than all the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee on a pro rata basis; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
surrender of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
Mandatory Redemption
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral part thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, thereon (the "Change of Control Purchase Price") to the date
of purchase (the "Change of Control Payment Date"). Within 30 days following
any Change of Control, the
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Company will mail a notice to the Trustee and each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes pursuant to the procedures required by the Indenture and
described in such notice. The Change of Control Payment Date shall be a Business
Day not less than 30 days nor more than 60 days after such notice is mailed. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions relating to the
Change of Control Offer, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
described herein by virtue thereof.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Purchase Price in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Indenture will
provide that, prior to complying with the provisions of this covenant, but in
any event within 30 days following a Change of Control, the Company will either
repay all outstanding Senior Indebtedness or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Indebtedness to permit
the repurchase of Notes required by this covenant. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
Indenture will not contain provisions that permit the Holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring.
The Credit Facility provides that certain change of control events with
respect to the Company would constitute a default thereunder. Any future credit
agreements or other agreements relating to Senior Indebtedness to which the
Company becomes a party may contain similar restrictions and provisions. In the
event a Change of Control occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In such
case, the Company's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture which would, in turn, constitute a default under
the Credit Facility. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the Holders of Notes.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer at the same
purchase price, at the same times and otherwise in substantial compliance with
the requirements applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Asset Sales
(a) The Indenture will provide that the Company will not, and will not
permit any Restricted Subsidiary to, engage in any Asset Sale unless (i) the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets and properties sold or otherwise disposed of pursuant to the
Asset Sale (as determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board Resolution), (ii) all
of the consideration received by the Company or the Restricted Subsidiary, as
the case may be, in respect of such Asset Sale consists of cash, Cash
Equivalents, Liquid Securities or Exchanged Properties ("Permitted
Consideration"); provided, however, that the Company and its Restricted
Subsidiaries shall be permitted to receive any property or assets other than
Permitted Consideration, so long as the aggregate fair market value (determined
on the date of each Asset Sale) of all such property or assets other than
Permitted Consideration received from Asset Sales and held by the Company or any
Restricted Subsidiary at any one time shall not exceed 10.0% of Adjusted
Consolidated Net Tangible Assets and (iii) the Company delivers to the Trustee
an Officers' Certificate (which Officers' Certificate shall be conclusive)
certifying that such Asset Sale complies with clauses (i) and (ii). The amount
(without duplication) of any Indebtedness (other than Subordinated Indebtedness
or Pari Passu Indebtedness) of the Company or such Restricted Subsidiary that is
expressly assumed by the transferee in such Asset Sale and with respect to which
the Company or such Restricted Subsidiary, as the case may be, is
unconditionally released by the holder of such Indebtedness, shall be deemed to
be cash or Cash Equivalents for purposes of
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clause (ii) and shall also be deemed to constitute a repayment of, and a
permanent reduction in, the amount of such Indebtedness for purposes of the
following paragraph.
(b) If the Company or any Restricted Subsidiary engages in an Asset Sale,
the Company or such Restricted Subsidiary may either, no later than 365 days
after such Asset Sale, (i) apply all or any of the Net Cash Proceeds therefrom
to (A) repay Indebtedness under the Credit Facility or (B) repay or purchase
other Indebtedness (other than Subordinated Indebtedness or Pari Passu
Indebtedness) of the Company or any Restricted Subsidiary, provided, in the case
of clause (B), that the related loan commitment (if any) is thereby permanently
reduced by the amount of such Indebtedness so repaid or purchased, or (ii)
invest all or any part of the Net Cash Proceeds thereof in properties and assets
that will be used in the Oil and Gas Business of the Company or its Restricted
Subsidiaries, as the case may be. The amount of such Net Cash Proceeds not
applied or invested as provided in this paragraph will constitute "Excess
Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds $10
million, the Company shall make an offer to purchase, from all Holders of the
Notes and any then outstanding Pari Passu Indebtedness required to be
repurchased or repaid on a permanent basis in connection with an Asset Sale, an
aggregate principal amount of Notes and any such Pari Passu Indebtedness equal
to such Excess Proceeds as follows:
(i) (A) The Company shall make an offer to purchase (a "Net Proceeds
Offer") from all Holders of the Notes in accordance with the procedures set
forth in the Indenture the maximum principal amount (expressed as a
multiple of $1,000) of Notes that may be purchased out of an amount (the
"Payment Amount") equal to the product of such Excess Proceeds multiplied
by a fraction, the numerator of which is the outstanding principal amount
of the Notes and the denominator of which is the sum of the outstanding
principal amount of the Notes and such Pari Passu Indebtedness, if any
(subject to proration in the event such amount is less than the aggregate
Offered Price (as defined in clause (ii) below) of all Notes tendered), and
(B) to the extent required by any such Pari Passu Indebtedness and provided
there is a permanent reduction in the principal amount of such Pari Passu
Indebtedness, the Company shall make an offer to purchase such Pari Passu
Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu
Indebtedness Amount") equal to the excess of the Excess Proceeds over the
Payment Amount.
(ii) The offer price for the Notes shall be payable in cash in an
amount equal to 100% of the principal amount of the Notes tendered pursuant
to a Net Proceeds Offer, plus accrued and unpaid interest, if any, to the
date such Net Proceeds Offer is consummated (the "Offered Price"), in
accordance with the procedures set forth in the Indenture. To the extent
that the aggregate Offered Price of the Notes tendered pursuant to a Net
Proceeds Offer is less than the Payment Amount relating thereto or the
aggregate amount of the Pari Passu Indebtedness that is purchased or repaid
pursuant to the Pari Passu Offer is less than the Pari Passu Indebtedness
Amount (such shortfall constituting a "Net Proceeds Deficiency"), the
Company may use such Net Proceeds Deficiency, or a portion thereof, for
general corporate purposes, subject to the limitations of the "Restricted
Payments" covenant.
(iii) If the aggregate Offered Price of Notes validly tendered and
not withdrawn by Holders thereof exceeds the Payment Amount, Notes to be
purchased will be selected on a pro rata basis. Upon completion of such
Net Proceeds Offer and Pari Passu Offer, the amount of Excess Proceeds
shall be reset to zero.
The Company will not permit any Restricted Subsidiary to enter into or suffer to
exist any agreement that would place any restriction of any kind (other than
pursuant to law or regulation) on the right of the Company to make a Net
Proceeds Offer following any Asset Sale. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder, if applicable, in the event that an Asset Sale
occurs and the Company is required to purchase Notes as described above. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions relating to the Net Proceeds Offer, the Company will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations described above by virtue thereof.
Certain Covenants
Ownership of Capital Stock
The Indenture will provide that the Company (a) will not permit any
Restricted Subsidiary to issue any Capital Stock (other than to the Company or a
Wholly Owned Restricted Subsidiary) and (b) will not permit any Person (other
than the Company or a Wholly Owned Restricted Subsidiary) to own any Capital
Stock of any Restricted Subsidiary, except, in each case, for (i) directors'
qualifying shares, (ii) Capital Stock of a
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Restricted Subsidiary organized in a foreign jurisdiction required to be issued
to, or owned by, the government of such foreign jurisdiction or individual or
corporate citizens of such foreign jurisdiction in order for such restricted
Subsidiary to transact business in such foreign jurisdiction, (iii) a sale of
all or substantially all of the Capital Stock of a Restricted Subsidiary
effected in accordance with the "Asset Sales" covenant, (iv) Qualifying TECONS
and (v) the Capital Stock of a Restricted Subsidiary owned by a Person at the
time such Restricted Subsidiary became a Restricted Subsidiary or acquired by
such Person in connection with the formation of the Restricted Subsidiary;
provided, however, that any Capital Stock retained by the Company or a
Restricted Subsidiary shall be treated as an Investment for purposes of the
"Restricted Payments" covenant, if the amount of such Capital Stock represents
less than a majority of the Voting Stock of such Restricted Subsidiary.
Restricted Payments
(a) The Indenture will provide that the Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, take the following
actions:
(i) declare or pay any dividend or make any distribution on account of
the Company's Capital Stock (other than dividends or distributions payable
solely in shares of Qualified Capital Stock of the Company or in options,
warrants or other rights to purchase Qualified Capital Stock of the
Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Affiliate thereof (other than any
Wholly Owned Restricted Subsidiary) or any options, warrants or other
rights to acquire such Capital Stock;
(iii) make any principal payment on, or repurchase, redeem, defease
or otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or maturity, any Subordinated
Indebtedness, except that this clause (iii) shall not include any such
payment with respect to any such Subordinated Indebtedness (A) to the
extent of Excess Proceeds remaining after compliance with the provisions of
the Indenture described under "Asset Sales" and (B) to the extent required
by the indenture or other agreement or instrument pursuant to which such
Subordinated Indebtedness was issued;
(iv) declare or pay any dividend on, or make any distribution to the
holders of, any shares of Capital Stock of any Restricted Subsidiary (other
than to the Company or any of its Wholly Owned Restricted Subsidiaries) or
purchase, redeem or otherwise acquire or retire for value any Capital Stock
of any Restricted Subsidiary or any options, warrants or other rights to
acquire any such Capital Stock (other than with respect to any such Capital
Stock held by the Company or any Wholly Owned Restricted Subsidiary of the
Company); or
(v) make any Investment (other than any Permitted Investment);
(such payments or other actions described in (but not excluded from) clauses (i)
through (v) are collectively referred to as "Restricted Payments"), unless at
the time of and after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall be the amount
determined by the Board of Directors of the Company, whose determination shall
be conclusive and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing, (2) the Company could incur $1.00
of additional Indebtedness (excluding Permitted Indebtedness) in accordance with
the covenant described under "--Incurrence of Indebtedness," and (3) the
aggregate amount of all Restricted Payments declared or made after the date of
the Indenture shall not exceed the sum (without duplication) of the following:
(A) 50% of the aggregate Consolidated Net Income of the Company accrued on
a cumulative basis during the period beginning on April 1, 1998 and ending on
the last day of the Company's last fiscal quarter ending prior to the date of
such proposed Restricted Payment (or, if such aggregate Consolidated Net Income
shall be a loss, minus 100% of such loss), plus
(B) the aggregate net cash proceeds or the fair market value of any
property or assets other than cash, received after the date of the Indenture by
the Company as capital contributions to the Company (other than from any
Restricted Subsidiary), plus
(C) the aggregate net cash proceeds or the fair market value of any
property or assets other than cash, received after the date of the Indenture by
the Company from the issuance or sale (other than to any of its Restricted
Subsidiaries) of shares of Qualified Capital Stock of the Company or any option,
warrants or rights to purchase such shares of Qualified Capital Stock of the
Company, plus
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(D) the aggregate net cash proceeds received after the date of the
Indenture by the Company (other than from any of its Restricted Subsidiaries)
upon the exercise of any options, warrants or rights to purchase shares of
Qualified Capital Stock of the Company, plus
(E) the aggregate net cash proceeds received after the date of the
Indenture by the Company from the issuance or sale (other than to any of its
Restricted Subsidiaries) of debt securities or shares of Redeemable Capital
Stock that have been converted into or exchanged for Qualified Capital Stock of
the Company, together with the aggregate cash received by the Company at the
time of such conversion or exchange, plus
(F) the aggregate net cash proceeds received after the date of the
Indenture by the Company or its Restricted Subsidiaries, computed on a
consolidated basis, constituting a return of capital on an Investment (other
than a Permitted Investment) made by the Company or any Restricted Subsidiary
after the date of the Indenture, plus
(G) $25 million.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take the following actions so long as at the time thereof, no
Default or Event of Default shall have occurred and be continuing (except in the
case of clause (i) below) and (in the case of clause (vi) below) the Company
could incur $1.00 of additional Indebtedness (excluding Permitted Indebtedness)
in accordance with the covenant described under "--Incurrence of Indebtedness":
(i) the payment of any dividend on any other Capital Stock of the
Company or any Restricted Subsidiary within 60 days after the date of
declaration thereof, if at such declaration date such declaration complied
with the provisions of paragraph (a) above (and such payment shall be
deemed to have been paid on such date of declaration for purposes of any
calculation required by the provisions of paragraph (a) above);
(ii) the repurchase, redemption or other acquisition or retirement of
any shares of any class of Capital Stock of the Company or any Restricted
Subsidiary, in exchange for, or out of the aggregate net cash proceeds of,
a substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of shares of Qualified Capital Stock of the Company;
(iii) the repurchase, redemption, repayment, defeasance or other
acquisition or retirement for value of any Subordinated Indebtedness (other
than Redeemable Capital Stock) in exchange for, or out of the aggregate net
cash proceeds of, a substantially concurrent issue and sale (other than to
a Restricted Subsidiary) of shares of Qualified Capital Stock of the
Company;
(iv) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of Subordinated Indebtedness in
exchange for, or out of the aggregate net cash proceeds of, a substantially
concurrent incurrence (other than to a Restricted Subsidiary) of,
Subordinated Indebtedness so long as (A) the principal amount of such new
Indebtedness does not exceed the principal amount (or, if such Subordinated
Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination)
of the Indebtedness being so purchased, redeemed, repaid, defeased,
acquired or retired, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing, plus the amount of
expenses of the Company incurred in connection with such refinancing, (B)
such new Indebtedness is subordinated to the Notes at least to the same
extent as such Indebtedness so purchased, redeemed, repaid, defeased,
acquired or retired, and (C) such new Indebtedness has an Average Life to
Stated Maturity that is longer than the Average Life to Stated Maturity of
the Notes and such new Indebtedness has a Stated Maturity for its final
scheduled principal payment that is at least 91 days later than the Stated
Maturity for the final scheduled principal payment of the Notes;
(v) the repurchase, redemption or other acquisition or retirement for
value of any Qualified Capital Stock of the Company or any of its
Subsidiaries held by any current or former officers, directors or employees
of the Company or any of its Subsidiaries pursuant to the terms of
agreements (including employment agreements) or plans approved by the
Company's Board of Directors, including any such repurchase, redemption,
acquisition or retirement of shares of such Qualified Capital Stock that is
deemed to occur upon the exercise of stock options or similar rights if
such shares represent all or a portion of the exercise price or are
surrendered in connection with satisfying federal income tax obligations;
provided, however, that the aggregate amount of such repurchases,
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redemptions, acquisitions and retirements shall not exceed the sum of (a)
$1.0 million in any twelve-month period and (b) the aggregate net proceeds,
if any, received by the Company during such twelve-month period from any
issuance of such Qualified Capital Stock pursuant to such agreements or
plans; and
(vi) the repurchase or other acquisition of any Qualified Capital
Stock of the Company in an amount not to exceed the lesser of (A)
$40,000,000 and (B) 50% of the net after-tax gain from Specified Property
Sales.
The actions described in clause (i) of this paragraph (b) shall be Restricted
Payments that shall be permitted to be taken in accordance with this paragraph
(b) but shall reduce the amount that would otherwise be available for Restricted
Payments under clause (3) of paragraph (a) (provided that any dividend or
distribution paid pursuant to clause (i) of this paragraph (b) shall reduce the
amount that would otherwise be available under clause (3) of paragraph (a) when
declared, but not also when subsequently paid pursuant to such clause (i)), and
the actions described in clauses (ii), (iii), (iv), (v) and (vi) of this
paragraph (b) shall be Restricted Payments that shall be permitted to be taken
in accordance with this paragraph and shall not reduce the amount that would
otherwise be available for Restricted Payments under clause (3) of paragraph
(a). Further, the Company or any Restricted Subsidiary may make a Restricted
Payment, if at the time the Company or any Restricted Subsidiary first incurred
a commitment for such Restricted Payment such Restricted Payment could have been
made; provided that all commitments incurred and outstanding shall be treated as
if such commitments were Restricted Payments expended by the Company or a
Restricted Subsidiary at the time the commitments were incurred, except that
commitments incurred and outstanding which are treated as a Restricted Payment
expended by the Company or a Restricted Subsidiary and which are terminated
shall no longer be treated as a Restricted Payment expended by the Company or a
Restricted Subsidiary upon the termination of such commitment for such purposes;
and provided further, that at the time such Restricted Payment is made no
Default or Event of Default shall have occurred and be continuing and the
Company could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) in accordance with the "Incurrence of Indebtedness" covenant.
Incurrence of Indebtedness
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, create, incur, assume, guarantee or
otherwise become directly or indirectly liable for the payment of (collectively,
"incur") any Indebtedness (including any Acquired Indebtedness but excluding
Permitted Indebtedness), unless at the time of such event and after giving
effect thereto on a pro forma basis the Consolidated Fixed Charge Coverage Ratio
for the four full fiscal quarters immediately preceding such event, taken as one
period, would have been at least equal to 2.5 to 1.0.
Liens
The Indenture will provide that the Company will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind, except for Permitted Liens, upon any of
their respective assets or properties, whether now owned or acquired after the
date of the Indenture, or any income or profits therefrom to secure any Pari
Passu Indebtedness or Subordinated Indebtedness, unless prior to or
contemporaneously therewith the Notes are directly secured equally and ratably,
provided that (1) if such secured Indebtedness is Pari Passu Indebtedness, the
Lien securing such Pari Passu Indebtedness shall be subordinate and junior to,
or pari passu with, the Lien securing the Notes and (2) if such secured
Indebtedness is Subordinated Indebtedness, the Lien securing such Subordinated
Indebtedness shall be subordinate and junior to the Lien securing the Notes at
least to the same extent as such Subordinated Indebtedness is subordinated to
the Notes. The foregoing covenant will not apply to any Lien securing Acquired
Indebtedness, provided that any such Lien extends only to the properties or
assets that were subject to such Lien prior to the related acquisition by the
Company or such Restricted Subsidiary and was not created, incurred or assumed
in contemplation of such transaction.
Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries
The Indenture will provide that the Company will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any Restricted Subsidiary to (a) pay dividends, in
cash or otherwise, or make any other distributions on or in respect of its
Capital Stock to the Company or any other Restricted Subsidiary, (b) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (c) make an
Investment in the Company or any other Restricted Subsidiary or (d) transfer any
of its properties or assets to the Company or any other Restricted Subsidiary,
except in each instance for such encumbrances or restrictions pursuant to (i)
the Indenture, the Credit Facility or any other agreement in effect on the date
of the Indenture, (ii) any agreement or other instrument of a Person acquired by
the Company or any Restricted Subsidiary in existence at the time
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of such acquisition (but not created in contemplation thereof), which
encumbrance or restriction is not applicable to any other Person, or the
properties or assets of any other Person, other than the Person, or the property
or assets of the Person, so acquired, (iii) customary restrictions in leases and
licenses relating to the property covered thereby and entered into in the
ordinary course of business or (iv) any agreement that extends, renews,
refinances or replaces the agreements containing the restrictions in the
foregoing clauses (i) through (iii), provided that the terms and conditions of
any such restrictions are not materially less favorable to the Holders of the
Notes than those under or pursuant to the agreement evidencing the Indebtedness
so extended, renewed, refinanced or replaced, and except with respect to clause
(d) only, (i) restrictions in the form of Liens which are not prohibited as
described in the "Liens" covenant and which contain customary limitations on the
transfer of collateral and (ii) with respect to clause (d) only, customary
restrictions contained in asset sale agreements limiting the transfer of such
assets pending the closing of such sale.
Limitation on Layering Debt
The Indenture will provide that the Company will not incur, or permit to
remain outstanding, any Indebtedness (including Acquired Indebtedness and
Permitted Indebtedness) other than the Notes, that is subordinated in right of
payment to any Senior Indebtedness, unless such Indebtedness is also pari passu
with, or subordinated in right of payment to, the Notes pursuant to
subordination provisions substantially similar to those contained in the
Indenture.
Merger, Consolidation or Sale of Assets
The Indenture will provide that the Company will not, in any single
transaction or series of related transactions, consolidate or merge with or into
any other Person, or sell, assign, convey, transfer, lease or otherwise dispose
of all or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries on a consolidated basis to any Person or group of
Affiliated Persons, and the Company will not permit any of its Restricted
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in a
sale, assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries on a consolidated basis to any other Person or group of Affiliated
Persons, unless at the time and after giving effect thereto (i) either (A) if
the transaction is a merger or consolidation, the Company shall be the surviving
Person of such merger or consolidation, or (B) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or to
which the properties and assets of the Company or its Restricted Subsidiaries,
as the case may be, are sold, assigned, conveyed, transferred, leased or
otherwise disposed of (any such surviving Person or transferee Person being the
"Surviving Entity") shall be a corporation organized and existing under the laws
of the United States of America, any state thereof or the District of Columbia
and shall, in either case, expressly assume by a supplemental indenture to the
Indenture executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Notes and the Indenture,
and, in each case, the Indenture shall remain in full force and effect; (ii)
immediately before and immediately after giving effect to such transaction or
series of transactions on a pro forma basis (and treating any Indebtedness not
previously an obligation of Company or any of its Restricted Subsidiaries in
connection with or as a result of such transaction as having been incurred at
the time of such transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing; (iii) except in the case of the
consolidation or merger of any Restricted Subsidiary with or into the Company,
immediately after giving effect to such transaction or transactions on a pro
forma basis, the Consolidated Net Worth of the Company (or the Surviving Entity
if the Company is not the continuing obligor under the Indenture) is at least
equal to the Consolidated Net Worth of the Company immediately before such
transaction or transactions; (iv) except in the case of the consolidation or
merger of the Company with or into a Wholly Owned Restricted Subsidiary or any
Restricted Subsidiary with or into the Company or any Wholly Owned Restricted
Subsidiary, immediately before and immediately after giving effect to such
transaction or transactions on a pro forma basis (on the assumption that the
transaction or transactions occurred on the first day of the period of four
fiscal quarters ending immediately prior to the consummation of such transaction
or transactions, with the appropriate adjustments with respect to the
transaction or transactions being included in such pro forma calculation), the
Company (or the Surviving Entity if the Company is not the continuing obligor
under the Indenture) could incur $1.00 of additional Indebtedness (excluding
Permitted Indebtedness) pursuant to the covenant described under "--Incurrence
of Indebtedness"; (v) if any of the properties or assets of the Company or any
of its Restricted Subsidiaries would upon such transaction or series of related
transactions become subject to any Lien (other than a Permitted Lien), the
creation or imposition of such Lien shall have been in compliance with the
"Liens" covenant; (vi) if the Company is not the continuing obligor under the
Indenture, then any Subsidiary Guarantor, unless it is the Surviving Entity,
shall have by supplemental indenture to the Indenture confirmed that its
Subsidiary Guarantee of the Notes shall apply to the Surviving Entity's
obligations under the Indenture and the Notes; and (vii) the Company (or the
Surviving Entity if the Company is not the continuing obligor under the
Indenture) shall have delivered to the Trustee, in form and substance reasonably
satisfactory to the Trustee, (a) an Officers' Certificate stating that such
consolidation, merger, conveyance, transfer, lease or other disposition and the
supplemental
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indenture, if any, in respect thereto comply with the requirements under the
Indenture and (b) an Opinion of Counsel stating that the requirements of clause
(i) of this paragraph have been satisfied.
Upon any consolidation or merger or any sale, assignment, lease,
conveyance, transfer or other disposition of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries on a
consolidated basis in accordance with the foregoing, in which the Company is not
the continuing corporation, the Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if the Surviving Entity had been named as
the Company therein, and thereafter the Company, except in the case of a lease,
will be discharged from all obligations and covenants under the Indenture and
the Notes and may be dissolved and liquidated.
Transactions with Affiliates
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, enter into or
suffer to exist any transaction or series of related transactions (including,
without limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate of the Company (other than the Company or a
Restricted Subsidiary) unless (i) such transaction or series of related
transactions is on terms that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than would be available in a
comparable transaction in arm's-length dealings with an unrelated third party,
(ii) with respect to a transaction or series of related transactions involving
payments in excess of $1.0 million in the aggregate, the Company delivers an
Officers' Certificate to the Trustee certifying that such transaction complies
with clause (i) above, (iii) with respect to a transaction or series of
transactions involving payments in excess of $5.0 million but less than $25
million in the aggregate, the Company delivers an Officers' Certificate to the
Trustee certifying that (A) such transaction or series of related transactions
complies with clause (i) above and (B) such transaction or series of related
transactions shall have been approved by a majority of the independent directors
of the Board of Directors of the Company and (iv) with respect to a transaction
or series of transactions involving payments of $25 million or more in the
aggregate, the Company delivers an Officers' Certificate to the Trustee
certifying that (A) such transaction or series of related transactions complies
with clause (i) above; (B) such transaction or series of related transactions
shall have been approved by a majority of the independent directors of the Board
of Directors of the Company and (C) the Company shall have received the written
opinion of a nationally recognized investment banking firm or appraisal firm in
the United States that such transaction or series of transactions is fair, from
a financial point of view, to the Company or such Restricted Subsidiary;
provided, however, that the foregoing restriction shall not apply to (s) the
provision of services and payments under any of the existing agreements with
Torch or its subsidiaries described under "Management--Relationship with Torch"
so long as each of the agreements (including any modifications, renewals,
replacements or substitutions thereof or amendments thereto entered into on or
after the date of the Indenture) has been approved by a majority of the
independent directors of the Board of Directors of the Company, (t) loans or
advances to officers, directors and employees of the Company or any Restricted
Subsidiary made in the ordinary course of business and consistent with past
practices of the Company and its Restricted Subsidiaries in an aggregate amount
not to exceed $3,000,000 outstanding at any one time, (u) the payment of
reasonable and customary regular fees to directors of the Company or any of its
Restricted Subsidiaries who are not employees of the Company or any Affiliate,
(v) the Company's employee compensation and other benefit arrangements, (w)
indemnities of officers and directors of the Company or any Subsidiary
consistent with such Person's bylaws and applicable statutory provisions or (x)
Restricted Payments permitted by the Indenture.
Reports
The Indenture will require that the Company file on a timely basis with the
Securities and Exchange Commission ("Commission"), to the extent such filings
are accepted by the Commission and whether or not the Company has a class of
securities registered under the Exchange Act, the annual reports, quarterly
reports and other documents that the Company would be required to file if it
were subject to Section 13 or 15 of the Exchange Act. The Company will also be
required (a) to file with the Trustee (with exhibits), and provide to each
Holder of Notes (without exhibits), without cost to such Holder, copies of such
reports and documents within 30 days after the date on which the Company files
such reports and documents with the Commission or the date on which the Company
would be required to file such reports and documents if the Company were so
required and (b) if filing such reports and documents with the Commission is not
accepted by the Commission or is prohibited under the Exchange Act, to supply at
its cost copies of such reports and documents (including any exhibits thereto)
to any Holder of Notes, securities analyst or prospective investor promptly upon
written request.
Events of Default and Remedies
The Indenture will provide that each of the following constitutes an "Event
of Default":
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(i) default for 30 days in the payment when due of interest on the
Notes; or
(ii) default in the payment when due of the principal of or premium,
if any, on the Notes, whether such payment is due at maturity, upon
redemption, upon repurchase pursuant to a Change of Control Offer or a Net
Proceeds Offer, upon acceleration or otherwise; or
(iii) default in the performance or breach of the provisions
described under the "Merger, Consolidation or Sale of Assets" covenant, the
failure to make or consummate a Change of Control Offer in accordance with
the provisions of the "Change of Control" covenant or the failure to make
or consummate a Net Proceeds Offer in accordance with the provisions of the
"Asset Sales" covenant; or
(iv) failure by the Company or any Subsidiary Guarantor to comply with
any other term, covenant or agreement contained in the Notes, any
Subsidiary Guarantee or the Indenture (other than a default specified in
(i), (ii) or (iii) above) for a period of 60 days after written notice of
such failure stating that it is a "notice of default" under the Indenture
and requiring the Company or such Subsidiary Guarantor, as the case may
be, to remedy the same shall have been given (x) to the Company by the
Trustee or (y) to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Notes then outstanding; or
(v) the occurrence and continuation beyond any applicable grace period
of any default in the payment of the principal of or premium, if any, on or
interest on any Indebtedness of the Company (other than the Notes) or any
Restricted Subsidiary for money borrowed when due, or any other default
resulting in acceleration of any Indebtedness of the Company or any
Restricted Subsidiary for money borrowed, provided, that the aggregate
principal amount of such Indebtedness shall exceed $10,000,000 (or, in the
case of Non-Recourse Purchase Money Indebtedness, $40,000,000), and
provided, further, that if any such default is cured or waived or any such
acceleration rescinded, or such Indebtedness is repaid, within a period of
10 days from the continuation of such default beyond the applicable grace
period or the occurrence of such acceleration, as the case may be, such
Event of Default under the Indenture and any consequential acceleration of
the Notes shall be automatically rescinded, so long as such rescission does
not conflict with any judgment or decree; or
(vi) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to
be, in full force and effect, enforceable in accordance with its terms
(except pursuant to the release or termination or any such Subsidiary
Guarantee in accordance with the Indenture); or
(vii) final judgments or orders rendered against the Company or any
Restricted Subsidiary that are unsatisfied and that require the payment in
money, either individually or in an aggregate amount, that is more than
$10,000,000 over the coverage under applicable insurance policies and
either (A) commencement by any creditor of an enforcement proceeding upon
such judgment (other than a judgment that is stayed by reason of pending
appeal or otherwise) or (B) the occurrence of a 60-day period during which
a stay of such judgment or order, by reason of pending appeal or otherwise,
was not in effect; or
(viii) the entry of a decree or order by a court having jurisdiction
in the premises (A) for relief in respect of the Company or any Material
Subsidiary in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar
law or (B) adjudging the Company or any Material Subsidiary bankrupt or
insolvent, or approving a petition seeking reorganization, arrangement,
adjustment or composition of the Company or any Material Subsidiary under
any applicable federal or state law, or appointing under any such law a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Material Subsidiary or of a
substantial part of its consolidated assets, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(ix) the commencement by the Company or any Material Subsidiary of a
voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or any other
case or proceeding to be adjudicated a bankruptcy or insolvent, or the
consent by the Company or any Material Subsidiary to the entry of a decree
or order for relief in respect thereof in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by
the Company or any Material Subsidiary of a petition or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by it under
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any such law to the filing of any such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee
or sequestrator (or other similar official) of any of the Company or any
Material Subsidiary or of any substantial part of its consolidated assets,
or the making by it of an assignment for the benefit of creditors under any
such law, or the admission by it in writing of its inability to pay its
debts generally as they become due or taking of corporate action by the
Company or any Material Subsidiary in furtherance of any such action.
If any Event of Default (other than as specified in clause (viii) or (ix)
above) occurs and is continuing, the Trustee, by written notice to the Company,
or the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by notice to the Trustee and the Company, may, and the Trustee upon
the request of the Holders of not less than 25% in aggregate principal amount of
the Notes then outstanding shall, declare the principal of, premium, if any, and
accrued interest on all of the Notes due and payable immediately, upon which
declaration all amounts payable in respect of the Notes shall be immediately due
and payable. If an Event of Default specified in clause (viii) or (ix) above
occurs and is continuing, then the principal of, premium, if any, and accrued
interest on all of the Notes shall automatically become and be immediately due
and payable without any declaration, notice or other act on the part of the
Trustee or any Holder of Notes.
After a declaration of acceleration under the Indenture, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company, the Subsidiary Guarantors,
if any, and the Trustee, may rescind such declaration if (a) the Company or any
Subsidiary Guarantor has paid or deposited with the Trustee a sum sufficient to
pay (i) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest on all Notes, (iii) the
principal of (and premium, if any, on) any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the rate borne
by the Notes, and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue principal at the rate borne by the
Notes (without duplication of any amount paid or deposited pursuant to clause
(ii) or (iii)); (b) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction; and (c) all Events of Default,
other than the nonpayment of principal of (and premium, if any, on) or interest
on the Notes that has become due solely by such declaration of acceleration,
have been cured or waived.
No Holder of any of the Notes will have any right to institute any
proceeding with respect to the Indenture or any remedy thereunder, unless such
Holder has notified the Trustee of a continuing Event of Default and the Holders
of at least 25% in aggregate principal amount of the outstanding Notes have made
written request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as Trustee under the Notes and the Indenture, the Trustee has
failed to institute such proceeding within 60 days after receipt of such notice
and the Trustee, within such 60-day period, has not received directions
inconsistent with such written request by Holders of a majority in aggregate
principal amount of the outstanding Notes. Such limitations will not apply,
however, to a suit instituted by a Holder of a Note for the enforcement of the
payment of the principal of (or premium, if any, on) or interest on such Note on
or after the respective due dates expressed in such Note.
During the existence of an Event of Default, the Trustee will be required
to exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
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 not
be under any obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders of Notes unless such
Holders shall have offered to the Trustee reasonable security or indemnity.
Subject to certain provisions concerning the rights 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 under the Indenture.
If a Default occurs and is continuing and is known to the Trustee, the
Trustee shall mail to each Holder of Notes notice of the Default within 60 days
after the occurrence thereof. Except in the case of a Default in payment of
principal of (or premium, if any, on) or interest on any Notes, the Trustee may
withhold the notice to the Holders of Notes if the Trustee determines in good
faith that withholding the notice is in the interest of such Holders.
The Company is required to deliver to the Trustee annual and quarterly
statements regarding compliance with the Indenture, and the Company will also be
required, upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default.
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Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of the
obligations of the Company and the Subsidiary Guarantors, if any, discharged
with respect to the outstanding Notes ("Legal Defeasance"). Such Legal
Defeasance means that the Company and the Subsidiary Guarantors shall be deemed
to have paid and discharged the entire Indebtedness represented by the
outstanding Notes and to have been discharged from all their other obligations
with respect to such Notes and the Subsidiary Guarantees, except for (i) the
rights of Holders of outstanding Notes to receive payment in respect of the
principal of and premium, if any, and interest on such Notes when such payments
are due, (ii) the Company's obligations to replace any temporary Notes, register
the transfer or exchange of any Notes, replace mutilated, destroyed, lost or
stolen Notes and maintain an office or agency for payments in respect of the
Notes, (iii) the rights, powers, trusts, duties and immunities of the Trustee,
and (iv) the Legal Defeasance provisions of the Indenture. In addition, the
Company may, at its option and at any time, elect to have the obligations of the
Company and each Subsidiary Guarantor released with respect to certain covenants
that are described in the Indenture, some of which are described under "--
Certain Covenants" above, and thereafter any omission to comply with such
obligations shall not constitute a Default or an Event of Default with respect
to the Notes ("Covenant Defeasance"). In the event Covenant Defeasance occurs,
certain events (not including nonpayment, bankruptcy, insolvency and
reorganization events) described under "Events of Default and Remedies" will no
longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company or any Subsidiary Guarantor must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the Notes, cash in United
States dollars, U.S. Government Obligations (as defined in the Indenture), or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of (and premium, if any, on) and interest on the outstanding Notes to
redemption or maturity; (ii) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance 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 Legal Defeasance or Covenant Defeasance had not
occurred (in the case of Legal Defeasance, such opinion must refer to and be
based upon a published ruling of the Internal Revenue Service or a change in
applicable federal income tax laws); (iii) no Default or Event of Default shall
have occurred and be continuing on the date of such deposit or insofar as
clauses (viii) and (ix) under the first paragraph under "--Events of Default and
Remedies" are concerned, at any time during the period ending on the 91st day
after the date of deposit; (iv) such Legal Defeasance or Covenant Defeasance
shall not cause the Trustee to have a conflicting interest under the Indenture
or the Trust Indenture Act with respect to any securities of the Company or any
Subsidiary Guarantor; (v) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound; and (vi) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, which, taken
together, state that all conditions precedent under the Indenture to either
Legal Defeasance or Covenant Defeasance, as the case may be, have been complied
with.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money or certain United States governmental obligations
have theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust) have
been delivered to the Trustee for cancellation or (b) all Notes not theretofore
delivered to the Trustee for cancellation have become due and payable or will
become due and payable at their Stated Maturity within one year, or are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the serving of notice of redemption by the Trustee in the name, and
at the expense, of the Company, and the Company has irrevocably deposited or
caused to be deposited with the Trustee funds in an amount sufficient to pay and
discharge the entire indebtedness on the Notes not theretofore delivered to the
Trustee for cancellation, for principal of (and premium, if any, on) and
interest on the Notes to the date of deposit (in the case of Notes which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be, together with instructions from the Company irrevocably directing
the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be; (ii) the Company has paid all other sums then
due and payable under the Indenture by the Company; and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
which, taken together, state that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with.
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Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a nonconsenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the Stated Maturity of any
Note or alter the provisions with respect to the redemption of the Notes (other
than provisions relating to the covenants described above under the caption
"Repurchase at the Option of Holders"), (iii) reduce the rate of or change the
time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of (or the premium, if any, on) or interest
on the Notes (except a rescission of acceleration of the Notes by the Holders of
at least a majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration), (v) make any Note
payable in money other than that stated in the Notes, (vi) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of Holders of Notes to receive payments of principal of or premium, if
any, or interest on the Notes, (vii) waive a redemption payment with respect to
any Note (other than a payment required by one of the covenants described above
under the caption "Repurchase at the Option of Holders"), (viii) reduce the
relative ranking of any Notes or any Subsidiary Guarantees or (ix) make any
change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the Subsidiary Guarantors, if any, and the Trustee may amend or
supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to add or release any Subsidiary Guarantor pursuant to the terms
of the Indenture, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to provide for the assumption of the Company's
obligations to Holders of Notes in the case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of Notes or that does not adversely affect the interests of any such
Holder in any material respect, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
Concerning the Trustee
State Street Bank and Trust Company will serve as trustee under the
Indenture. State Street Bank and Trust Company also acts as trustee under the
indenture for the Existing Notes and maintains normal banking relationships
with the Company and its Subsidiaries and may perform certain services for and
transact other business with the Company or its Subsidiaries from time to time
in the ordinary course of business.
The Indenture (including the provisions of the Trust Indenture Act
incorporated by reference therein) will contain limitations on the rights of the
Trustee thereunder, should it become a creditor of the Company, to obtain
payment of claims in certain cases or to realize on certain property received by
it in respect of any such claims, as security or otherwise. The Indenture will
permit the Trustee to engage in other transactions; provided, however, if it
acquires any conflicting interest (as defined in the Trust Indenture Act) it
must eliminate such conflict or resign.
Governing Law
The Indenture, the Notes and any Subsidiary Guarantees will be governed by
the laws of the State of New York, without regard to the principles of conflicts
of law.
Book-Entry, Delivery and Form
The Notes will be issued in the form of a fully registered Global
Certificate. The Global Certificates will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York (the "Depositary") and
registered in the name of the Depositary's nominee.
Except as set forth below, the Global Certificate may be transferred, in
whole and not in part, only to another nominee of the Depositary or to a
successor of the Depositary or its nominee.
The Depositary has advised the Company as follows: It is a limited-purpose
trust company which was created to hold securities for its participating
organizations (the "Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and
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dealers (including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to the Depositary's book-
entry system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). Persons
who are not Participants may beneficially own securities held by the Depositary
only through Participants or Indirect Participants.
The Depositary has also advised that pursuant to procedures established by
it (i) upon the issuance by the Company, of the Notes, the Depositary will
credit the accounts of Participants designated by the Initial Purchasers with
the principal amount of the Notes purchased by the Initial Purchasers, and (ii)
ownership of beneficial interests in any Global Certificate will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the Depositary (with respect to Participants' interests), the
Participants and the Indirect Participants. Any person acquiring an interest in
a Global Certificate through an offshore transaction in reliance on Regulation S
may hold such interest through the Euroclear System or Cedel, S.A. The laws of
some states require that certain persons take physical delivery in definitive
form of securities which they own. Consequently, the ability to transfer
beneficial interests in a Global Certificate is limited to such extent.
So long as the Depositary or its nominee is the registered owner of a
Global Certificate, the Depositary or such nominee will be considered the sole
owner or holder of the Notes for all purposes under the Indenture. Except as
provided below, owners of beneficial interests in the Global Certificate will
not be entitled to have Notes registered in their names, will not receive or be
entitled to receive physical delivery of Notes in definitive form and will not
be considered the owners or holders thereof under the Indenture.
Neither the Company, the Trustee, the paying agent nor the Notes registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a Global
Certificate, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Principal and interest payments on a Global Certificate registered in the
name of the Depositary or its nominee will be made by the Company, either
directly or through a paying agent, to the Depositary or its nominee as the
registered owner of such Global Certificate. Under the terms of the Indenture,
the Company and the Trustee will treat the persons in whose names the Notes are
registered as the owners of such Notes for the purpose of receiving payments of
principal and interest on such Notes and for all other purposes whatsoever.
Therefore, neither the Company, the Trustee nor any paying agent has any direct
responsibility or liability for the payment of principal or interest on the
Notes to owners of beneficial interests in a Global Certificate. The Depositary
has advised the Company and the Trustee that its present practice is, upon
receipt of any payment of principal or interest to credit immediately the
accounts of the Participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in a Global
Certificate as shown on the records of the Depositary. Payments by Participants
and Indirect Participants to owners of beneficial interests in a Global
Certificate will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name" and will be the responsibility of such
Participants or Indirect Participants.
As long as the Notes are represented by a Global Certificate, the
Depositary's nominee will be the holder of the Notes and therefore will be the
only entity that can exercise a right to repayment or repurchase of the Notes.
See "--Repurchase at the Option of Holders--Change of Control" and "--Asset
Sales." Notice by Participants or Indirect Participants or by owners of
beneficial interests in a Global Certificate held through such Participants or
Indirect Participants of the exercise of the option to elect repayment of
beneficial interests in Notes represented by a Global Certificate must be
transmitted to the Depositary in accordance with its procedures on a form
required by the Depositary and provided to Participants. In order to ensure
that the Depositary's nominee will timely exercise a right to repayment with
respect to a particular Note, the beneficial owner of such Note must instruct
the broker or other Participant or Indirect Participant through which it holds
an interest in such Note to notify the Depositary of its desire to exercise a
right to repayment. Different firms have cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner should
consult the broker or other Participant or Indirect Participant through which it
holds an interest in a Note in order to ascertain the cut-off time by which such
an instruction must be given in order for timely notice to be delivered to the
Depositary. The Company will not be liable for any delay in delivery of notices
of the exercise of the option to elect repayment.
Certificated Notes
The Company will issue Notes in definitive form in exchange for a Global
Certificate if, and only if, either (1) the Depositary is at any time unwilling
or unable to continue as depositary and a successor depositary is not appointed
by the Company within 90 days, or (2) an Event of Default has occurred and is
continuing and the Notes registrar has received a request from the Depositary to
issue Notes in definitive form in lieu of all or a portion of such Global
Certificate. In either instance, an owner of a beneficial interest in a Global
Certificate will be entitled to have Notes
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equal in principal amount to such beneficial interest registered in its name and
will be entitled to physical delivery of such Notes in definitive form. Notes so
issued in definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
Registration Rights
Holders of Exchange Notes are not entitled to any registration rights with
respect to the Exchange Notes. Holders of Outstanding Notes are entitled to
certain registration rights pursuant to the Registration Agreement. The Company
has agreed with the Initial Purchasers pursuant to the terms of the Registration
Agreement, for the benefit of the Holders of the Outstanding Notes, that the
Company will use its reasonable best efforts, to file and cause to become
effective a registration statement (the "Exchange Offer Registration
Statement") with respect to a registered offer to exchange the Outstanding
Notes for an issue of notes of the Company with terms identical to the
Outstanding Notes (except that the Exchange Notes will not contain terms with
respect to transfer restrictions, registration rights or the additional interest
provisions described below). Upon such registration statement being declared
effective, the Company shall offer the Exchange Notes in return for surrender of
the Outstanding Notes. The Exchange Offer shall remain open for not less than
30 days after the date notice of the Exchange Offer is mailed to Holders of the
Outstanding Notes. For each Outstanding Note surrendered to the Company under
the Exchange Offer, the Holder will receive an Exchange Note of the same series
and of equal principal amount. The Registration Statement of which this
Prospectus is a part constitutes the Exchange Offer Registration Statement.
In the event that applicable interpretations of the staff of the Commission
do not permit the Company to effect the Exchange Offer or one of the other
events specified under "Exchange Offer; Registration Rights" occurs the Company
shall use its best efforts to cause to become effective a shelf registration
statement with respect to resales of the Notes (a "Shelf Registration
Statement"). The Company agrees to use its best efforts to keep the Shelf
Registration Statement continuously effective until June 8, 2000 or such shorter
period that will terminate when all of the Outstanding Notes and Exchange Notes
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement.
The Outstanding Notes provide that if (i) an Exchange Offer Registration
Statement is not filed with the Commission on or prior to September 6, 1998,
(ii) the Exchange Offer Registration Statement or, if applicable, a Shelf
Registration Statement (each a "Registration Statement") is not declared
effective on or prior to November 5, 1998, (iii) the Exchange Offer is not
consummated on or prior to December 5, 1998, or (iv) a Registration Statement is
filed and declared effective on or prior to November 5, 1998, but shall
thereafter cease to be effective or usable (at any time that the Company is
obligated to maintain the effectiveness thereof) in connection with resales of
Outstanding Notes or Exchange Notes in accordance with and during the periods
specified in the Registration Agreement (each such event referred to in clauses
(i) through (iv), a "Registration Default"), Special Interest will accrue on the
Outstanding Notes (in addition to the stated interest on the Outstanding Notes)
from and including the date on which the first such Registration Default shall
occur to but excluding the date on which all Registration Defaults have been
cured. Special Interest will accrue at a rate of 0.5% per annum during the 90-
day period immediately following the occurrence of the first such Registration
Default and shall increase by 0.25% per annum at the end of each subsequent 90-
day period, but in no event shall such rate exceed 1.00% per annum. All accrued
Special Interest shall be paid to holders in the same manner as interest
payments on the Outstanding Notes on semi-annual payment dates which correspond
to interest payment dates for the Notes. Following the cure of all Registration
Defaults, the accrual of Special Interest will cease. The Exchange Notes are
not entitled to any such Special Interest.
If the Company affects the Exchange Offer, the Company will be entitled to
close the Exchange Offer 30 days after the commencement thereof, provided that
it has accepted all Outstanding Notes theretofore validly surrendered in
accordance with the terms of the Exchange Offer. Outstanding Notes not tendered
in the Exchange Offer shall bear interest at the rate set forth on the cover
page of the Offering Memorandum dated June 3, 1998 and be subject to all of the
terms and conditions specified in the Indenture and to the transfer restrictions
described in the Offering Memorandum dated June 3, 1998 under "Exchange Offer;
Registration Rights" and "Notice to Investors."
This summary of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Agreement, a
copy of which is available from the Company upon request.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
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"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an acquisition of properties or assets from such Person or (b)
outstanding at the time such Person becomes a Subsidiary of any other Person
(other than any Indebtedness incurred in connection with, or in contemplation
of, such acquisition or such Person becoming such a Subsidiary). Acquired
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of properties or assets from any Person or the date the acquired
Person becomes a Subsidiary.
"Adjusted Consolidated Net Tangible Assets" means (without duplication), as
of the date of determination, (a) the sum of (i) discounted future net revenues
from proved oil and gas reserves of the Company and its Restricted Subsidiaries
calculated in accordance with SEC guidelines before any state or federal income
taxes, as estimated by a nationally recognized firm of independent petroleum
engineers in a reserve report prepared as of the end of the Company's most
recently completed fiscal year, as increased by, as of the date of
determination, the estimated discounted future net revenues from (A) estimated
proved oil and gas reserves acquired since the date of such year-end reserve
report, and (B) estimated oil and gas reserves attributable to extensions,
discoveries and other additions and upward revisions of estimates of proved oil
and gas reserves since the date of such year-end reserve report due to
exploration, development, exploitation, production or other activities, in each
case calculated in accordance with SEC guidelines (but before any state or
federal incomes taxes and utilizing the prices utilized in such year-end reserve
report), and decreased by, as of the date of determination, the estimated
discounted future net revenues from (C) estimated proved oil and gas reserves
produced or disposed of since the date of such year-end reserve report and (D)
estimated oil and gas reserves attributable to downward revisions of estimates
of proved oil and gas reserves since the date of such year-end reserve report
due to exploration, development, exploitation, production or other activities,
in each case calculated in accordance with SEC guidelines (but before any state
or federal income taxes and utilizing the prices utilized in such year-end
reserve report); provided, that in the case of each of the determinations made
pursuant to clauses (A) through (D), such increases and decreases shall be as
estimated by the Company's petroleum engineers, except that in the event there
is a Material Change as a result of such acquisitions, dispositions, or
revisions, then the discounted future net revenues utilized for purposes of this
clause (a)(i) shall be confirmed in writing by a nationally recognized firm of
independent petroleum engineers, (ii) the capitalized costs that are
attributable to oil and gas properties of the Company and its Restricted
Subsidiaries to which no proved oil and gas reserves are attributable, based on
the Company's books and records as of a date no earlier than the date of the
Company's latest annual or quarterly financial statements, (iii) the Net Working
Capital on a date no earlier than the date of the Company's latest annual or
quarterly financial statements and (iv) the greater of (A) the net book value on
a date no earlier than the date of the Company's latest annual or quarterly
financial statements or (B) the appraised value, as estimated by independent
appraisers, of other tangible assets (including, without duplication,
Investments in unconsolidated Restricted Subsidiaries) of the Company and its
Restricted Subsidiaries, as of the date no earlier than the date of the
Company's latest audited financial statements, minus (b) the sum of (i) minority
interests (other than a minority interest in a Finance Person), (ii) any net gas
balancing liabilities of the Company and its Restricted Subsidiaries reflected
in the Company's latest audited financial statements, (iii) to the extent
included in (a)(i) above, the discounted future net revenues, calculated in
accordance with SEC guidelines (but before any state or federal income taxes and
utilizing the prices utilized in the Company's year-end reserve report),
attributable to reserves which are required to be delivered to third parties to
fully satisfy the obligations of the Company and its Restricted Subsidiaries
with respect to Volumetric Production Payments on the schedules specified with
respect thereto and (iv) the discounted future net revenues, calculated in
accordance with SEC guidelines, but before any state or federal incomes taxes,
attributable to reserves subject to Dollar-Denominated Production Payments
which, based on the estimates of production and price assumptions included in
determining the discounted future net revenues specified in (a)(i) above, would
be necessary to fully satisfy the payment obligations of the Company and its
Restricted Subsidiaries with respect to Dollar-Denominated Production Payments
on the schedules specified with respect thereto.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date means the
amount by which the fair value of the properties and assets of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at such
date.
"Affiliate" of any specified Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any other Person who is a director or
executive officer of (a) such specified Person or (b) any Person described in
the preceding clause (i). For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
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"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by way of merger or consolidation)
(collectively, for purposes or this definition, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary held by the Company or any Restricted Subsidiary
(other than directors' qualifying shares and shares owned by foreign
shareholders to the extent required by applicable local laws in the foreign
countries), (b) all or substantially all of the properties and assets of the
Company or any of its Restricted Subsidiaries or (c) any other properties or
assets of the Company or any of its Restricted Subsidiaries other than (i) a
disposition of hydrocarbons or other mineral products, inventory, accounts
receivable, cash, Cash Equivalents or other property in the ordinary course of
business, (ii) any lease, abandonment, disposition, relinquishment or farm-out
of any oil and gas property in the ordinary course of business, (iii) the
liquidation of property or assets received in settlement of debts owing to the
Company or any Restricted Subsidiary as a result of foreclosure, perfection or
enforcement of any Lien or debt, which debts were owing to the Company or any
Restricted Subsidiary in the ordinary course of business of the Company or such
Restricted Subsidiary or (iv) the issuance and sale of Qualified Capital Stock
by a Finance Person. For the purposes of this definition, the term "Asset Sale"
shall not include (i) any transfer of properties or assets that is governed by,
and made in accordance with, the provisions described under "--Merger,
Consolidation or Sale of Assets"; (ii) any transfer of properties or assets to
an Unrestricted Subsidiary, if permitted under the "Restricted Payments"
covenant; or (iii) any transfer, in one or a series of related transactions, of
properties or assets having a fair market value of less than $2,500,000.
"Average Life" means, with respect to any Indebtedness, as at any date of
determination, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years (and any portion thereof) from the date of determination
to the date or dates of each successive scheduled principal payment (including,
without limitation, any sinking fund or mandatory redemption payment
requirements) of such Indebtedness multiplied by (ii) the amount of each such
principal payment by (b) the sum of all such principal payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options exercisable
for, exchangeable for or convertible into such an equity interest in such
Person.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for the purpose of
the Indenture, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) demand and time deposits and certificates of deposit or
acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500,000,000; (iii) commercial
paper with a maturity of 180 days or less issued by a corporation that is not an
Affiliate of the Company and is organized under the laws of any state of the
United States or the District of Columbia and rated at least A-1 by S&P or at
least P-l by Moody's; (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any commercial bank meeting the specifications of clause (ii)
above; (v) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in clause (ii) above; (vi) deposits
available for withdrawal on demand with any commercial bank not meeting the
qualifications specified in clause (ii) above but which is organized under the
laws of any country in which the Company or any Restricted Subsidiary maintains
an office or is engaged in the Oil and Gas Business, provided that (A) all such
deposits are required to be made in such accounts in the ordinary course of
business, (B) such deposits do not at any one time exceed $5,000,000 in the
aggregate and (C) no funds so deposited remain on deposit in such bank for more
than 30 days; (vii) deposits available for withdrawal on demand with any
commercial bank not meeting the qualifications specified in clause (ii) above
but which is a lending bank under any of the Company's or any Restricted
Subsidiary's credit facilities, provided all such deposits do not exceed
$5,000,000 in the aggregate at any one time; and (viii) investments in money
market funds substantially all of whose assets comprise securities of the types
described in clauses (i) through (v).
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the
total Voting Stock of the Company; (b) the Company is merged with or into or
consolidated with another Person and, immediately after giving effect to the
merger or consolidation, (A) less than 50% of the total voting power of the
outstanding Voting Stock of the surviving or resulting Person is then
"beneficially owned" (within the meaning of Rule 13d-3 under the Exchange Act)
in the
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aggregate by the stockholders of the Company immediately prior to such merger or
consolidation, and (B) any "person" or "group" (as defined in Section 13(d)(3)
or 14(d)(2) of the Exchange Act) has become the direct or indirect "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the
total voting power of the Voting Stock of the surviving or resulting Person; (c)
the Company, either individually or in conjunction with one or more Restricted
Subsidiaries, sells, assigns, conveys, transfers, leases or otherwise disposes
of, or the Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of, all or substantially all of the properties and assets of
the Company and the Restricted Subsidiaries, taken as a whole (either in one
transaction or a series of related transactions), including Capital Stock of the
Restricted Subsidiaries, to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary); (d) during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office;
(e) the liquidation or dissolution of the Company; or (f), so long as any
Existing Notes are outstanding, any other event constituting a Change of Control
pursuant to the indenture for the Existing Notes.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Exploration Expenses" means, for any period, exploration
expenses of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of (a) the sum of Consolidated Net Income, Consolidated Interest Expense, the
portion of Consolidated Exploration Expenses deducted in computing Consolidated
Net Income, Consolidated Income Tax Expense and Consolidated Non-cash Charges
deducted in computing Consolidated Net Income, in each case, for such period, of
the Company and its Restricted Subsidiaries on a consolidated basis, all
determined in accordance with GAAP, decreased (to the extent included in
determining Consolidated Net Income) by the sum of (x) the amount of deferred
revenues that are amortized during such period and are attributable to reserves
that are subject to Volumetric Production Payments and (y) amounts recorded in
accordance with GAAP as repayments of principal and interest pursuant to Dollar-
Denominated Production Payments, to (b) the sum of such Consolidated Interest
Expense for such period; provided, however, that (i) the Consolidated Fixed
Charge Coverage Ratio shall be calculated on the assumption that (A) the
Indebtedness to be incurred (and all other Indebtedness incurred after the first
day of such period of four full fiscal quarters referred to in the covenant
described under "--Certain Covenants--Incurrence of Indebtedness" through and
including the date of determination) and (if applicable) the application of the
net proceeds therefrom (and from any other such Indebtedness), including to
refinance other Indebtedness, had been incurred on the first day of such four-
quarter period and, in the case of Acquired Indebtedness, on the assumption that
the related transaction (whether by means of purchase, merger or otherwise) also
had occurred on such date with the appropriate adjustments with respect to such
acquisition being included in such pro forma calculation and (B) any acquisition
or disposition by the Company or any Restricted Subsidiary of any properties or
assets outside the ordinary course of business, or any repayment of any
principal amount of any Indebtedness of the Company or any Restricted Subsidiary
prior to the Stated Maturity thereof, in either case since the first day of such
period of four full fiscal quarters through and including the date of
determination, had been consummated on such first day of such four-quarter
period, (ii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness required to be computed on a pro
forma basis in accordance with the covenant described under "--Certain
Covenants--Incurrence of Indebtedness" and (A) bearing a floating interest rate
shall be computed as if the rate in effect on the date of computation had been
the applicable rate for the entire period and (B) which was not outstanding
during the period for which the computation is being made but which bears, at
the option of the Company, a fixed or floating rate of interest, shall be
computed by applying, at the option of the Company, either the fixed or floating
rate, (iii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
required to be computed on a pro forma basis in accordance with the covenant
described in paragraph (a) under "--Certain Covenants--Incurrence of
Indebtedness" shall be computed based upon the average daily balance of such
Indebtedness during the applicable period, provided that such average daily
balance shall be reduced by the amount of any repayment of Indebtedness under a
revolving credit facility during the applicable period, which repayment
permanently reduced the commitments or amounts available to be reborrowed under
such facility, (iv) notwithstanding clauses (ii) and (iii) of this proviso,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations, shall be deemed to have accrued at the rate per annum resulting
after giving effect to the operation of such agreements, (v) in making such
calculation, Consolidated Interest Expense shall exclude interest attributable
to Dollar-Denominated Production Payments, and (vi) if after the first day of
the period referred to in clause (a) of this definition the Company has retired
any Indebtedness out of the net cash proceeds of the issue and sale of shares of
Qualified Capital Stock of the
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Company within 30 days of such issuance and sale, Consolidated Interest Expense
shall be calculated on a pro forma basis as if such Indebtedness had been
retired on the first day of such period.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes (including any state franchise
taxes accounted for as income taxes in accordance with GAAP) of the Company and
its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
(i) the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (A) any amortization of debt discount,
(B) the net cost under Interest Rate Protection Obligations (including any
amortization of discounts), (C) the interest portion of any deferred payment
obligation constituting Indebtedness, (D) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and (E) all accrued interest, in each case to the extent attributable
to such period, (b) to the extent any Indebtedness of any Person (other than the
Company or a Restricted Subsidiary) is guaranteed by the Company or any
Restricted Subsidiary, the aggregate amount of interest paid (to the extent not
accrued in a prior period) or accrued by such other Person during such period
attributable to any such Indebtedness, in each case to the extent attributable
to that period, (c) the aggregate amount of the interest component of
Capitalized Lease Obligations paid (to the extent not accrued in a prior
period), accrued and/or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP and (d) the aggregate amount of dividends paid (to the
extent not accrued in a prior period) or accrued on Redeemable Capital Stock of
the Company and its Restricted Subsidiaries, to the extent such Redeemable
Capital Stock is owned by Persons other than the Company or its Restricted
Subsidiaries, and to the extent such dividends are not paid in Common Stock,
less (ii) to the extent included in (i) above, amortization of capitalized debt
issuance costs of the Company and its Restricted Subsidiaries during such
period.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto), (b)
net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to Asset Sales, (c) the net income (or net loss) of any Person
(other than the Company or any of its Restricted Subsidiaries), in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions or interest on
indebtedness actually paid to the Company or any of its Restricted Subsidiaries
in cash by such other Person during such period (regardless of whether such cash
dividends, distributions or interest on indebtedness is attributable to net
income (or net loss) of such Person during such period or during any prior
period), (d) net income (or net loss) of any Person combined with the Company or
any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (e) the net income
of any Restricted Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary is not at the
date of determination permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (f) dividends paid on Qualifying TECONS and (g)
Consolidated Exploration Expenses and any writedowns or impairments of non-
current assets (less an amount equal to the amortization on a quarterly basis of
the cumulative Consolidated Exploration Expenses and writedowns or impairments
of the non-current assets, calculated as two and one-half percent of the
cumulative net balance of such costs).
"Consolidated Net Worth", means, at any date, the consolidated
stockholders' equity of the Company and its Restricted Subsidiaries less the
amount of such stockholders' equity attributable to Redeemable Capital Stock or
treasury stock of the Company and its Restricted Subsidiaries, as determined in
accordance with GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization and other non-cash expenses of the Company
and its Restricted Subsidiaries reducing Consolidated Net Income for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such non-cash charge which requires an accrual of or reserve for cash
charges for any future period).
"Credit Facility" means that certain Amended and Restated Credit Agreement
among the Company, certain Subsidiaries of the Company, NationsBank of Texas,
N.A., as Administrative Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and certain lenders named therein, as the same may be
amended, modified, supplemented, extended, restated, replaced, renewed or
refinanced from time to time.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
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"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Equity Offering" means a bona fide underwritten sale to the public of
Common Stock of the Company pursuant to a registration statement (other than on
Form S-8 or any other form relating to securities issuable under any employee
benefit plan of the Company) that is declared effective by the Commission
following the Issue Date.
"Event of Default" has the meaning set forth above under the caption
"Events of Default and Remedies."
"Exchanged Properties" means properties or assets used or useful in the Oil
and Gas Business received by the Company or a Restricted Subsidiary in exchange
for other properties or assets owned by it, whether directly or indirectly
through the acquisition of the Capital Stock of a Person holding such properties
or assets so that such Person becomes a Wholly Owned Restricted Subsidiary of
the Company, in trade or as a portion of the total consideration for such other
properties or assets.
"Finance Person" means a Subsidiary of the Company, the Common Stock of
which is owned by the Company, that does not engage in any activity other than
(i) the holding of Subordinated Indebtedness with respect to which payments of
interest on such Subordinated Indebtedness can, at the election of the issuer
thereof, be deferred for one or more payment periods, (ii) the issuance of
Qualifying TECONS and Common Stock and/or debt securities and (iii) any activity
necessary, incidental or related to the foregoing.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States of America, which are
effective on the date of the Indenture.
The term "guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments or documents for collection
in the ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of non-
performance) of all or any part of such obligation, including, without limiting
the foregoing, the payment of amounts drawn down by letters of credit; provided,
however, that a guarantee by any Person shall not include a contractual
commitment by one Person to invest in another Person provided that such
Investment is otherwise permitted by the Indenture. When used as a verb,
"guarantee" shall have a corresponding meaning.
"Guarantor Senior Indebtedness" means the principal of (and premium, if
any, on) and interest on (including interest accruing after the filing of a
petition initiating any proceeding pursuant to any bankruptcy law) and other
amounts due on or in connection with (including any fees, premiums, expenses,
including costs of collection, and indemnities) any Indebtedness of a Subsidiary
Guarantor, whether outstanding on the date of the Indenture or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness will be
pari passu with or subordinated in right of payment to its Subsidiary Guarantee.
Notwithstanding the foregoing, Guarantor Senior Indebtedness of a Subsidiary
Guarantor will not include (i) Indebtedness of such Subsidiary Guarantor
evidenced by its Subsidiary Guarantee, (ii) Indebtedness of such Subsidiary
Guarantor that is expressly pari passu with its Subsidiary Guarantee or is
expressly subordinated in right of payment to any Guarantor Senior Indebtedness
of such Subsidiary Guarantor or its Subsidiary Guarantee, (iii) Indebtedness of
such Subsidiary Guarantor to the extent incurred in violation of the "Incurrence
of Indebtedness" covenant of the Indenture, (iv) Indebtedness of such Subsidiary
Guarantor to the Company or any of the Company's other Subsidiaries or to any
Affiliate of the Company or any Subsidiary of such Affiliate and (v) any
Indebtedness which when incurred and without regard to any election under
Section 1111(b) of the Federal Bankruptcy Code is without recourse to such
Subsidiary Guarantor.
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of property or services (excluding any trade accounts payable and other
accrued current liabilities incurred in the ordinary course of business), and
all liabilities of such Person incurred in connection with any letters of
credit, bankers' acceptances or other similar credit transactions or any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock of such Person, or any
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warrants, rights or options to acquire such Capital Stock outstanding on the
date of the Indenture or thereafter, if, and to the extent, any of the foregoing
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, if, and to the extent, any of
the foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (c) all Indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) all Indebtedness referred to in the preceding
clauses of other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right to be secured by) any Lien upon property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness
(the amount of such obligation being deemed to be the lesser of the value of
such property or asset or the amount of the obligation so secured), (f) all
guarantees by such Person of Indebtedness referred to in this definition
(including, with respect to any Production Payment, any warranties or guaranties
of production or payment by such Person with respect to such Production Payment
but excluding other contractual obligations of such Person with respect to such
Production Payment), (g) all Redeemable Capital Stock of such Person valued at
the greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued dividends and (h) all obligations of such Person under or in respect of
currency exchange contracts, oil or natural gas price hedging arrangements and
Interest Rate Protection Obligations; provided, however, that Indebtedness shall
not include Qualifying TECONS and Indebtedness (including guarantees thereof)
relating to Qualifying TECONS and held by a Finance Person. For purposes hereof,
the "maximum fixed repurchase price" of any Redeemable Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture, and if such price is based upon, or measured by, the
fair market value of such Redeemable Capital Stock, such fair market value shall
be determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock; provided, however, that if such Redeemable Capital
Stock is not at the date of determination permitted or required to be
repurchased, the "maximum fixed repurchase price" shall be the book value of
such Redeemable Capital Stock. Subject to clause (f) of the first sentence of
this definition, neither Dollar-Denominated Production Payments nor Volumetric
Production Payments shall be deemed to be Indebtedness.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's and any of its Subsidiaries' exposure to
fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other property or assets to
others or any payment for property, assets or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the fair
market value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary shall be
deemed to be an "Investment" made by the Company in such Unrestricted Subsidiary
at such time. "Investments" shall exclude (a) extensions of trade credit under
a joint operating agreement or otherwise in the ordinary course of business,
workers' compensation, utility, lease and similar deposits and prepaid expenses
made in the ordinary course of business, (b) Interest Rate Protection
Obligations entered into in the ordinary course of business or as required by
any Permitted Indebtedness or any other Indebtedness incurred in compliance with
the "Incurrence of Indebtedness" covenant, but only to the extent that the
stated aggregate notional amounts of such Interest Rate Protection Obligations
do not exceed 105% of the aggregate principal amount of such Indebtedness to
which such Interest Rate Protection Obligations relate, (c) bonds, notes,
debentures or other securities received in compliance with the "Asset Sales"
covenant, and (d) endorsements of negotiable instruments and documents for
collection in the ordinary course of business.
"Issue Date" means the date on which the Exchange Notes were first issued
under the Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing) upon or with respect to any property of any kind. A Person shall be
deemed to own subject to a Lien any
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property which such Person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Liquid Securities" means securities (i) of an issuer that is not an
Affiliate of the Company, (ii) that are publicly traded on the New York Stock
Exchange, the American Stock Exchange, the Toronto Stock Exchange, the
Australian Stock Exchange, the London Stock Exchange or the Nasdaq National
Market; provided that securities meeting the requirements of clauses (i) and
(ii) above shall be treated as Liquid Securities from the date of receipt
thereof until and only until the earlier of (x) the date on which such
securities (or securities exchangeable for, or convertible into, such
securities) are sold or exchanged for cash or Cash Equivalents and (y) 180 days
following the date of receipt of such securities. If such securities (or
securities exchangeable for, or convertible into, such securities) are not sold
or exchanged for cash or Cash Equivalents within 180 days of receipt thereof,
for purposes of determining whether the transaction pursuant to which the
Company or a Restricted Subsidiary received the securities was in compliance
with the provisions of the Indenture described under "Asset Sales," such
securities shall be deemed not to have been Liquid Securities 181 days following
the date of receipt of such securities.
"Material Change" means an increase or decrease (excluding changes that
result solely from changes in prices) of more than 30% during a fiscal quarter
in the estimated discounted future net revenues from proved oil and gas reserves
of the Company and its Restricted Subsidiaries, calculated in accordance with
clause (a) (i) of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change: (i) any acquisitions during the quarter of oil and gas
reserves that have been estimated by a nationally recognized firm of independent
petroleum engineers and on which a report or reports exist and (ii) any
disposition of properties held at the beginning of such quarter that have been
disposed of as provided in the covenant described under the caption "--Asset
Sales."
"Material Subsidiary" means, at any particular time, any Restricted
Subsidiary that, together with its Subsidiaries, (a) accounted for more than 5%
of the consolidated revenues of the Company and its Restricted Subsidiaries for
the most recently completed fiscal year of the Company, or (b) was the owner of
more than 5% of the consolidated assets of the Company and its Restricted
Subsidiaries at the end of such fiscal year, all as shown in the case of (a) and
(b) on the consolidated financial statements of the Company and its Restricted
Subsidiaries for such fiscal year.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary) net of (i) brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel and investment banks) related to such Asset Sale, (ii) provisions for
all taxes payable as a result of such Asset Sale, (iii) amounts required to be
paid to any Person (other than the Company or any Restricted Subsidiary) owning
a beneficial interest in the assets subject to the Asset Sale and (iv)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve required in accordance with GAAP consistently
applied against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee; provided,
however, that any amounts remaining after adjustments, revaluations or
liquidations of such reserves shall constitute Net Cash Proceeds.
"Net Working Capital" means (i) all current assets of the Company and its
Restricted Subsidiaries, less (ii) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in consolidated financial statements of
the Company prepared in accordance with GAAP.
"Non-payment Event of Default" means any event (other than a Payment Event
of Default), the occurrence of which (with or without notice or the passage of
time) entitles one or more Persons to accelerate the maturity of any Specified
Senior Indebtedness.
"Non-Recourse Purchase Money Indebtedness" means (i) Indebtedness (other
than Capital Lease Obligations) of the Company or any Restricted Subsidiary
incurred in connection with the acquisition by the Company or such Restricted
Subsidiary in the ordinary course of business of fixed assets used in the Oil
and Gas Business (including office buildings and other real property used by the
Company or such Restricted Subsidiary in conducting its operations) and (ii) any
renewals and refinancings of such Indebtedness; provided that the holders of
such Indebtedness described in clauses (i) and (ii) agree that they will look
solely to the fixed assets so acquired which secure such Indebtedness (subject
to customary exceptions such as indemnifications for environmental, title, fraud
and other matters), and neither the Company nor any Restricted
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Subsidiary (a) is directly or indirectly liable for such Indebtedness or (b)
provides credit support, including any undertaking, guarantee, agreement or
instrument that would constitute Indebtedness (other than the grant of a Lien on
such acquired fixed assets).
"Note Register" means the register maintained by or for the Company in
which the Company shall provide for the registration of the Notes and of
transfer of the Notes.
"Oil and Gas Business" means (i) the acquisition, exploration, development,
operation and disposition of interests in oil, gas and other hydrocarbon
properties, (ii) the gathering, marketing, treating, processing, storage,
selling and transporting of any production from such interests or properties,
(iii) any business relating to or arising from exploration for or development,
production, treatment, processing, storage, transportation or marketing of oil,
gas and other minerals and products produced in association therewith, (iv) any
power generation and electrical transmission business in a jurisdiction outside
of North America where fuel required by such business is supplied, directly or
indirectly, from production reserves substantially from blocks in which the
Company or its Restricted Subsidiaries participate and (v) any activity
necessary, appropriate or incidental to the activities described in the
foregoing clauses (i) through (iv) of this definition.
"OPIC Facility" means that certain Finance Agreement dated December 28,
1994, among The Nuevo Congo Company, The Congo Holding Company, and the Overseas
Private Investment Corporation, as such agreement may be amended, modified,
supplemented, extended, restated, replaced, renewed or refinanced from time to
time in one or more credit agreements, loan agreements, instruments or similar
agreements, as such may be further amended, modified, extended, restated,
replaced, renewed or refinanced.
"Pari Passu Indebtedness" means any Indebtedness of the Company that is
pari passu in right of payment to the Notes, including, without limitation, the
Existing Notes.
"Payment Event of Default" means any default in the payment or required
prepayment of principal of (or premium, if any, on) or interest on any Specified
Senior Indebtedness when due (whether at final maturity, upon scheduled
installment, upon acceleration or otherwise).
"Permitted Indebtedness" means any of the following:
(i) Indebtedness under the Credit Facility in an aggregate principal
amount at any one time outstanding not to exceed the greater of (i)
$400,000,000, less any amounts of principal of such Indebtedness repaid
pursuant to clause (b)(i)(A) of the covenant described under "Asset Sales,"
or (ii) the borrowing base thereunder, provided, (i) and (ii) shall include
any guarantee of any such Indebtedness and any fees, premiums, expenses
(including costs of collection), indemnities and other amounts payable in
connection with such Indebtedness;
(ii) Indebtedness under the Notes and any Subsidiary Guarantees
relating thereto or to any other Notes;
(iii) Indebtedness outstanding on the date of the Indenture (and not
repaid or defeased with the proceeds of the offering of the Notes) and
additional Indebtedness permitted to be incurred pursuant to commitments
existing under the OPIC Facility on the date of the Indenture;
(iv) obligations of the Company or a Restricted Subsidiary pursuant to
Interest Rate Protection Obligations, but only to the extent that the
stated aggregate notional amounts of such obligations do not exceed 105% of
the aggregate principal amount of the Indebtedness covered by such Interest
Rate Protection Obligations; obligations under currency exchange contracts
entered into in the ordinary course of business; and hedging arrangements
that the Company or a Restricted Subsidiary enters into in the ordinary
course of business for the purpose of protecting its production against
fluctuations in oil or natural gas prices;
(v) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary or a Finance Person and Indebtedness of a Restricted Subsidiary
to the Company or a Wholly Owned Restricted Subsidiary or a Finance Person;
provided, however, that upon any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly Owned
Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or
such Finance Person ceasing to be a Finance Person, as the case may be, or
any other subsequent transfer of any such Indebtedness (except to the
Company or a Wholly Owned Restricted Subsidiary or a Finance Person), such
Indebtedness shall be deemed, in each case, to be incurred and shall be
treated as an incurrence for purposes of the
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"Incurrence of Indebtedness" covenant at the time the Wholly Owned
Restricted Subsidiary or Finance Person in question ceased to be a Wholly
Owned Restricted Subsidiary or Finance Person, as the case may be;
(vi) in-kind obligations relating to net gas balancing positions
arising in the ordinary course of business and consistent with past
practice;
(vii) Indebtedness in respect of bid, performance or surety bonds
issued for the account of the Company or any Restricted Subsidiary in the
ordinary course of business, including guaranties and letters of credit
supporting such bid, performance or surety obligations (in each case other
than for an obligation for money borrowed);
(viii) any guarantee of Senior Indebtedness or Guarantor Senior
Indebtedness, incurred in compliance with the Limitation on Indebtedness
covenant, by a Restricted Subsidiary or the Company;
(ix) Non-Recourse Purchase Money Indebtedness;
(x) any renewals, substitutions, exchanges, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or a Restricted Subsidiary of any Indebtedness incurred pursuant to
the provisions of the Limitation on Indebtedness covenant or pursuant to
clause (ii) or (iii) of this definition, including any successive
refinancings by the Company or such Restricted Subsidiary, so long as (A)
any such new Indebtedness shall be in a principal amount that does not
exceed the principal amount (or, if such Indebtedness being refinanced
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof, such lesser amount as
of the date of determination) so refinanced plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the
terms of the Indebtedness refinanced or the amount of any premium
reasonably determined by the Company or such Restricted Subsidiary as
necessary to accomplish such refinancing, plus the amount of expenses of
the Company or such Restricted Subsidiary incurred in connection with such
refinancing, and (B) in the case of any refinancing of Indebtedness of the
Company that is not Senior Indebtedness, such new Indebtedness is either
pari passu with the Notes or subordinated to the Notes at least to the same
extent as the Indebtedness being refinanced and (C) such new Indebtedness
has an Average Life equal to or longer than the Average Life of the
Indebtedness being refinanced and a final Stated Maturity equal to or later
than the final Stated Maturity of the Indebtedness being refinanced; and
(xi) any additional Indebtedness in an aggregate principal amount not
to exceed $25.0 million at any one time outstanding.
"Permitted Investments" means any of the following: (i) Investments in Cash
Equivalents; (ii) Investments in the Company or any of its Restricted
Subsidiaries; (iii) Investments in any amount not to exceed $10,000,000 at any
one time outstanding (iv) Investments by the Company or any of its Restricted
Subsidiaries in another Person, if as a result of such Investment (A) such other
Person becomes a Restricted Subsidiary or (B) such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its properties and assets to, the Company or a Restricted Subsidiary; (v)
investments and expenditures made in the ordinary course of, and of a nature
that is or shall have become customary in, the Oil and Gas Business as means of
actively exploiting, exploring for, acquiring, developing, processing,
gathering, marketing or transporting oil and gas through agreements,
transactions, interests or arrangements which permit a Person to share risks or
costs, comply with regulatory requirements regarding local ownership or satisfy
other objectives customarily achieved through the conduct of Oil and Gas
Business jointly with third parties, including, without limitation, (A)
ownership interests in oil and gas properties or gathering systems and (B)
Investments and expenditures in the form of or pursuant to operating agreements,
processing agreements, farm-in agreements, farm-out agreements, development
agreements, area of mutual interest agreements, unitization agreements, pooling
arrangements, joint bidding agreements, service contracts, joint venture
agreements, partnership agreements (whether general or limited), subscription
agreements, stock purchase agreements and other similar agreements with third
parties (including Unrestricted Subsidiaries); (vi) entry into any hedging
arrangements in the ordinary course of business for the purpose of protecting
the Company's or any Restricted Subsidiary's production against fluctuations in
oil or natural gas prices; (vii) entry into any currency exchange contract in
the ordinary course of business; (viii) Investments in obligations or securities
received as a result of any Asset Sale; (ix) advances and loans to officers,
directors and employees of the Company or any Restricted Subsidiary in the
ordinary course of business; (x) Investments pursuant to any agreement or
obligation in effect on the date of the Indenture; and (xi) Investments in
obligations or securities received in settlement of debts owing to the Company
or a Restricted Subsidiary as a result of bankruptcy or insolvency proceedings
or upon the foreclosure, perfection or enforcement of any Lien in favor of the
Company or a Restricted Subsidiary, in each case as to debt owing to the Company
or a Restricted Subsidiary that arose in the ordinary course of business of the
Company or any such Restricted Subsidiary.
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"Permitted Junior Securities" means any equity securities or 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, in the case of any such subordinated debt securities, are subordinated in
right of payment to all Senior Indebtedness that may at the time be outstanding
to substantially the same degree as, or to a greater extent than, the Notes are
so subordinated as provided in the Indenture.
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the Issue Date (except to the extent such
Liens secure Indebtedness that is repaid or defeased with proceeds of the
offering of the Notes), and any renewal, extension, refunding, exchange or
refinancing of any such Lien provided that thereafter such Lien extends
only to the properties that were subject to such Lien prior to the renewal,
extension, refunding, exchange or refinancing thereof;
(b) Liens securing the Notes or the Subsidiary Guarantees relating
thereto;
(c) Liens in favor of the Company; and
(d) Liens resulting from the deposit of funds or evidence of
Indebtedness in trust for the purpose of decreasing or defeasing
Indebtedness of the Company or any of its Subsidiaries so long as such
deposit of funds is permitted under the "Restricted Payments" covenant.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of the Indenture, including, without limitation, all classes and series
of preferred or preference stock of such Person.
"Production Payments" means, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock and, with respect to the
Company, Qualified Capital Stock includes, without limitation, any Qualifying
TECONS.
"Qualifying TECONS" means preferred trust securities or similar securities
issued by a Finance Person after the date of the Indenture.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or by contract or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed prior to the final Stated Maturity of the
Notes or is redeemable at the option of the holder thereof at any time prior to
such final Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to such final Stated Maturity.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of the Indenture, unless such Subsidiary of the
Company is an Unrestricted Subsidiary or is designated as an Unrestricted
Subsidiary pursuant to the terms of the Indenture.
"S&P" means Standard and Poor's Ratings Service, a division of The McGraw-
Hill Companies, Inc., and its successors.
"Senior Indebtedness" means the principal of (and premium, if any, on) and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law) and other amounts due
on or in connection with (including any fees, premiums, expenses, including
costs of collection, and indemnities) any Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness will be pari passu with or
subordinated in right of payment to the Notes. Notwithstanding the foregoing,
"Senior Indebtedness" will not include (A) Indebtedness evidenced by the Notes,
(B) Indebtedness of the Company that is Pari Passu Indebtedness or is expressly
subordinated in right of payment to any other Indebtedness of the Company, (C)
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Indebtedness that is represented by Redeemable Capital Stock, (D) Indebtedness
of the Company to the extent incurred in violation of the covenant described
under "--Certain Covenants--Incurrence of Indebtedness," (E) Indebtedness of the
Company to any Subsidiary of the Company or any other Affiliate of the Company
or any subsidiary of such Affiliate and (F) Indebtedness which when incurred and
without regard to any election under Section 1111 (b) of the Federal Bankruptcy
Code is without recourse to the Company.
"Specified Senior Indebtedness" means (a) all Senior Indebtedness of the
Company in respect of the Credit Facility and any renewals, amendments,
extensions, supplements, modifications, deferrals, refinancings, or replacements
(each, for purposes of this definition, a "refinancing") thereof by the Company,
including any successive refinancings thereof by the Company and (b) any other
Senior Indebtedness and any refinancings thereof by the Company having a
principal amount of at least $10,000,000 as of the date of determination and
provided that the agreements, indentures or other instruments evidencing such
Senior Indebtedness or pursuant to which such Senior Indebtedness was issued
specifically designates such Senior Indebtedness as "Specified Senior
Indebtedness" for purposes of the Indenture. For purposes of this definition, a
refinancing of any Specified Senior Indebtedness shall be treated as a Specified
Senior Indebtedness only if the Indebtedness issued in such refinancing ranks or
would rank pari passu with the Specified Senior Indebtedness refinanced and only
if Indebtedness issued in such refinancing is permitted by the covenant
described under "--Certain Covenants--Incurrence of Indebtedness."
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and, when used with respect to any other Indebtedness or any
installment of interest thereon, means the date specified in the instrument
evidencing or governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or such installment of interest is due and
payable.
"Subordinated Indebtedness" means Indebtedness of the Company which is
expressly subordinated in right of payment to the Notes.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons performing
similar functions).
"Subsidiary Guarantee" means an unconditional, unsecured, senior
subordinated guarantee of the Notes by any Restricted Subsidiary pursuant to the
terms of the Indenture.
"Subsidiary Guarantor" means, unless released from their Subsidiary
Guarantees as permitted by the Indenture, any Restricted Subsidiary that becomes
a guarantor of the Notes in compliance with the provisions of the Indenture and
executes a supplemental indenture in which such Restricted Subsidiary agrees to
be bound by the terms of the Indenture.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company as an Unrestricted Subsidiary so long as (a)
neither the Company nor any Restricted Subsidiary is directly or indirectly
liable pursuant to the terms of any Indebtedness of such Subsidiary; (b) no
default with respect to any Indebtedness of such Subsidiary would permit (upon
notice, lapse of time or otherwise) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity; (c) neither the Company nor any Restricted Subsidiary has
made an Investment in such Subsidiary unless such Investment was made pursuant
to, and in accordance with, the "Restricted Payments" covenant (other than
Investments of the type described in clause (iv) of the definition of Permitted
Investment); and (d) such designation shall not result in the creation or
imposition of any Lien on any of the properties or assets of the Company or any
Restricted Subsidiary (other than any Permitted Lien or any Lien the creation or
imposition of which shall have been in compliance with the "Liens" covenant);
provided, however, that with respect to clause (a), the Company or Restricted
Subsidiary may be liable for Indebtedness of an Unrestricted Subsidiary if (x)
such liability constituted a Permitted Investment or a Restricted Payment
permitted by the "Restricted Payments" covenant, in each case at the time of
incurrence, or (y) the liability would be a Permitted Investment at the time of
designation of such Subsidiary as an Unrestricted Subsidiary. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing a Board Resolution with the Trustee giving effect to such
designation. The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after giving
effect to such designation, (i) no Default or Event of Default shall have
occurred and be continuing, (ii) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness)
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under the "Incurrence of Indebtedness" covenant and (iii) if any of the
properties or assets of the Company or any of its Restricted Subsidiaries would
upon such designation become subject to any Lien (other than a Permitted Lien),
the creation or imposition of such Lien shall have been in compliance with the
"Liens" covenant.
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent (i) all of the Capital Stock or other ownership interests in such
Restricted Subsidiary, other than any directors' qualifying shares mandated by
applicable law, is owned directly or indirectly by the Company or (ii) such
Restricted Subsidiary is organized in a foreign jurisdiction and is required by
the applicable laws and regulations of such foreign jurisdiction to be partially
owned by the government of such foreign jurisdiction or individual or corporate
citizens of such foreign jurisdiction in order for such Restricted Subsidiary to
transact business in such foreign jurisdiction, provided that the Company,
directly or indirectly, owns the remaining Capital Stock or ownership interest
in such Restricted Subsidiary and, by contract or otherwise, controls the
management and business of such Restricted Subsidiary and derives the economic
benefits of ownership of such Restricted Subsidiary to substantially the same
extent as if such Restricted Subsidiary were a wholly owned Subsidiary.
EXCHANGE OFFER; REGISTRATION RIGHTS
The Company agreed pursuant to a registration agreement (the "Registration
Agreement") with the Initial Purchasers, for the benefit of the Holders, that
the Company will, at its cost, use its reasonable best efforts to (i) not later
than September 6, 1998, file a registration statement with the Commission with
respect to a registered offer (the "Exchange Offer") to exchange the Outstanding
Notes for Exchange Notes having terms substantially identical in all material
respects to the Outstanding Notes (except that the Exchange Notes will not
contain terms with respect to transfer restrictions) and (ii) cause the Exchange
Offer Registration Statement to be declared effective under the Securities Act
not later than November 5, 1998. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company will offer the Exchange Notes in exchange
for surrender of the Outstanding Notes. The Company will use its reasonable
best efforts to keep the Exchange Offer open for not less than 30 days (or
longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to the holders. For each Outstanding Note surrendered to the
Company pursuant to the Exchange Offer, the holder of such Outstanding Note will
receive an Exchange Note having a principal amount equal to that of the
surrendered Outstanding Note. Interest on each Exchange Note will accrue from
the last interest payment date on which interest was paid on the Outstanding
Note surrendered in exchange therefor or, if no interest has been paid on such
Outstanding Note, from June 8, 1998. Under existing Commission interpretations,
the Exchange Notes would be freely transferable by holders (other than
affiliates of the Company and broker-dealers who purchased Outstanding Notes
from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act) after the Exchange Offer without further
registration under the Securities Act if the holder of the Exchange Notes
represents that it is acquiring the Exchange Notes in the ordinary course of its
business, that it has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes and that it is not an
affiliate of the Company, as such terms are interpreted by the Commission,
provided that broker-dealers who acquired Outstanding Notes for their own
accounts as a result of market-making activities or other trading activities
("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer
will have a prospectus delivery requirement with respect to resales of such
Exchange Notes. The Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to Exchange Notes with the prospectus contained in the Exchange Offer
Registration Statement. Under the Registration Agreement, the Company is
required to allow Participating Broker-Dealers and other persons, if any, with
similar prospectus delivery requirements to use the prospectus contained in the
Exchange Offer Registration Statement in connection with the resale of such
Exchange Notes.
A holder of Outstanding Notes (other than certain specified holders) who
wishes to exchange such Outstanding Notes for Exchange Notes in the Exchange
Offer will be required to represent that (i) any Exchange Notes to be received
by it will be acquired in the ordinary course of its business, (ii) that at the
time of the commencement of the Exchange Offer it has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes and (iii) that it is not an
"affiliate" of the Company, as defined in Rule 405 under the Securities Act.
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If (i) changes in law or applicable interpretations of the Commission staff
do not permit the Company to effect such an Exchange Offer, (ii) for any other
reason the Exchange Offer Registration Statement is not declared effective on or
prior to November 5, 1998 or the Exchange Offer is not consummated on or prior
to December 5, 1998, (iii) any of the Initial Purchasers so request with respect
to Outstanding Notes not eligible to be exchanged for Exchange Notes in the
Exchange Offer or with respect to Exchange Notes received in an Exchange Offer
that are not freely tradable, (iv) any holder (other than an Initial Purchaser)
is not eligible to participate in the Exchange Offer or does not receive freely
tradable Exchange Notes in the Exchange Offer other than by reason of such
holder being an affiliate of the Company (it being understood that the
requirement that a Participating Broker-Dealer deliver the prospectus contained
in the Exchange Offer Registration Statement in connection with sales of
Exchange Notes shall not result in such Exchange Notes being not "freely
tradable"), (v) any applicable law or interpretations do not permit any holder
to participate in the Exchange Offer, or (vi) the Company so elects, the Company
will, at its cost, use its reasonable best efforts to (i) as promptly as
practicable (but in no event more than 30 days after so requested pursuant to
the Registration Agreement), file a Shelf Registration Statement covering
resales of the Outstanding Notes or the Exchange Notes, as the case may be, (ii)
cause the Shelf Registration Statement to be declared effective under the
Securities Act and (iii) keep the Shelf Registration Statement effective until
June 8, 2000 or such shorter period that will terminate when all of the
Outstanding Notes and Exchange Notes covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement. The Company will,
in the event a Shelf Registration Statement is filed, among other things,
provide to each holder for whom such Shelf Registration Statement was filed
copies of the prospectus that is a part of the Shelf Registration Statement,
notify each such holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resales of the Outstanding Notes or the Exchange Notes, as the case may be. A
holder who sells such Outstanding Notes or Exchange Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions of the
Securities Act in connection with such sales and will be bound by the provisions
of the Registration Agreement which are applicable to such holder (including
certain indemnification obligations).
The Outstanding Notes provide that if (i) an Exchange Offer Registration
Statement is not filed with the Commission on or prior to September 6, 1998,
(ii) the Exchange Offer Registration Statement or, if applicable, a Shelf
Registration Statement (each a "Registration Statement") is not declared
effective on or prior to November 5, 1998, (iii) the Exchange Offer is not
consummated on or prior to December 5, 1998, or (iv) a Registration Statement is
filed and declared effective on or prior to November 5, 1998, but shall
thereafter cease to be effective or usable (at any time that the Company is
obligated to maintain the effectiveness thereof) in connection with resales of
Outstanding Notes or Exchange Notes in accordance with and during the periods
specified in the Registration Agreement (each such event referred to in clauses
(i) through (iv), a "Registration Default"), Special Interest will accrue on the
Outstanding Notes (in addition to the stated interest on the Outstanding Notes)
from and including the date on which the first such Registration Default shall
occur to but excluding the date on which all Registration Defaults have been
cured. Special Interest will accrue at a rate of 0.5% per annum during the 90-
day period immediately following the occurrence of the first such Registration
Default and shall increase by 0.25% per annum at the end of each subsequent 90-
day period, but in no event shall such rate exceed 1.00% per annum. All accrued
Special Interest shall be paid to holders in the same manner as interest
payments on the Outstanding Notes on semi-annual payment dates which correspond
to interest payment dates for the Notes. Following the cure of all Registration
Defaults, the accrual of Special Interest will cease. The Exchange Notes are not
entitled to any such Special Interest.
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which is available upon request to the Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences generally applicable to a holder that exchanges Outstanding Notes
for Exchange Notes in the Exchange Offer. This discussion is based on the
Internal Revenue Code of 1986, as amended to the date hereof (the "Code"),
existing and proposed Treasury regulations, and judicial and administrative
determinations, all of which are subject to change at any time, possibly on a
retroactive basis. It relates only to persons who hold their Outstanding Notes,
and will hold Exchange Notes exchanged therefor, as "capital assets" within the
meaning of Section 1221 of the Code. It does not discuss state, local or
foreign tax consequences, nor except as otherwise noted, does it discuss tax
consequences to categories of holders that are subject to special rules, such as
foreign persons, tax-exempt organizations, insurance companies, banks and
dealers in stocks and securities. Tax consequences may vary depending on the
particular status of an investor. No rulings will be sought from the Internal
Revenue Service ("IRS") with respect to the federal income tax consequences of
the Exchange Offer. There can be no assurance that the IRS will not take
positions concerning tax consequences of the purchase, ownership or disposition
of the Outstanding Notes or the Exchange Notes which are different from those
discussed herein.
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THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO PARTICIPATE IN THE
EXCHANGE OFFER. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR
CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO
ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE ITS OUTSTANDING
NOTES FOR EXCHANGE NOTES.
The Exchange Offer
Under recently-issued Treasury regulations, the exchange of Outstanding
Notes for Exchange Notes pursuant to the Exchange Offer should not constitute a
significant modification of the terms of the Outstanding Notes and, accordingly,
such exchange should be treated as a "nonevent" for federal income tax purposes.
Therefore, such exchange should have no federal income tax consequences to
holders of Outstanding Notes who participate in the exchange, and each such
holder would continue to be required to include interest on the Exchange Notes
in its gross income in accordance with its method of accounting for federal
income tax purposes.
Certain Federal Income Tax Consequences to U.S. Holders
A U.S. holder is any holder who or which is (i) a citizen or resident of
the United States, (ii) a domestic corporation or domestic partnership or (iii)
an estate or trust other than a "foreign estate" or "foreign trust" as defined
in Section 7701(a)(31) of the Code.
Taxation of Stated Interest
In general, U.S. Holders of the Exchange Notes will be required to include
interest received thereon in taxable income as ordinary income at the time it
accrues or is received, in accordance with the holder's regular method of
accounting for federal income tax purposes.
Under the tax rules relating to original issue discount, holders of debt
instruments issued at a discount that exceeds a nominal amount may be required
to recognize taxable interest prior to the receipt of accrual of stated
interest. The Outstanding Notes were treated by the Company as issued without
taxable original issue discount. In the case of a debt instrument issued that
provides for contingent payments, Treasury Regulations provide that such
payments will not be taken into account in computing original issue discount if
there is a remote likelihood that the payments will occur. Had the Company
failed to effect the Exchange Offer on a timely basis, special interest (the
"Special Interest") would have accrued on the Outstanding Notes. Because the
Company determined that, when the Outstanding Notes were issued, there was only
a remote possibility that events would occur which would cause the Special
Interest to accrue on the Outstanding Notes, the Company determined that the
Special Interest should not be taken into account in concluding that the
Outstanding Notes were issued without original issue discount. The IRS could
disagree with this determination. Each U.S. Holder should consult his own tax
advisor with respect to the possible accrual of original issue discount on the
Outstanding Notes or the Exchange Notes.
Optional Redemption or Repurchase
The Outstanding Notes and the Exchange Notes are subject to (i) redemption
at the option of the Company on or after June 1, 2003, at predetermined
redemption prices plus any accrued and unpaid interest, and (ii) repurchase at
the option of each Holder thereof upon the circumstances described under
"Description of the Notes--Repurchase at the Option of Holders" at predetermined
redemption prices plus any accrued and unpaid interest. See "Description of the
Notes." Upon the optional redemption or repurchase of an Outstanding Note or an
Exchange Note, it is expected that the amount received by a Holder in excess of
the Holder's adjusted tax basis in the Outstanding Note or Exchange Note will be
taxable as a capital gain, if the Outstanding Note or the Exchange Note is held
as a capital asset (except to the extent that such amount received is
attributable to accrued but unpaid interest or market discount, which will be
treated as ordinary income).
Payments of Principal; Dispositions
Upon the sale, exchange, redemption, retirement at maturity or other
disposition of an Outstanding Note or an Exchange Note, a U.S. Holder will
generally recognize taxable gain or loss equal to the difference between the sum
of cash plus the fair market value of all other property received on such
disposition (except to the extent such cash or property is attributable to
accrued but unpaid interest or market discount, which will be taxable as
ordinary income) and such U.S. Holder's adjusted
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tax basis in the Outstanding Note or the Exchange Note. A U.S. Holder's adjusted
tax basis in an Outstanding Note or an Exchange Note generally will equal the
cost of the Outstanding Note or the Exchange Note to such U.S. Holder (increased
for accrued original issue discount, if any), less any principal payment
received by such U.S. Holder. Gain or loss realized by a U.S. Holder on the
sale, redemption or other disposition of an Outstanding Note or an Exchange Note
generally will be long-term capital gain or loss if, at the time of the
disposition, the Outstanding Note or the Exchange Note has been held for more
than one year. Beginning after December 31, 2000, special capital gain rates may
apply if the Outstanding Note or Exchange Note has been held for more than five
years.
Backup Withholding
Under the Code, a holder of an Outstanding Note or Exchange Note may be
subject, under certain circumstances, to "backup withholding" at a 31% rate with
respect to payments in respect of interest thereon or the gross proceeds from
the disposition thereof. This withholding generally applies only if the holder
(i) fails to furnish his or her social security or other taxpayer identification
number ("TIN") after request therefor, (ii) furnishes an incorrect TIN, (iii) is
notified by the IRS that he or she has failed to report properly payments of
interest and dividends and the IRS has notified the Company that he or she is
subject to backup withholding or (iv) fails, under certain circumstances, to
provide a certified statement, signed under penalty of perjury, that the TIN
provided is his or her correct number and that he or she is not subject to
backup withholding. Any amount withheld from a payment to a holder under the
backup withholding rules is allowable as a credit against such holder's federal
income tax liability, provided that the required information is furnished to the
IRS. Corporations, Non-U.S. Holders and certain other entities described in the
Code and Treasury regulations are generally exempt from such withholding if
their exempt status is properly established.
Certain Federal Income Tax Consequences to Non-U.S. Holders
This section discusses special rules applicable to a Non-U.S. Holder of
Exchange Notes. This summary does not address the tax consequences to
stockholders, partners or beneficiaries in a Non-U.S. Holder or the tax
consequences to Non-U.S. Holders that are subject to United States federal
income tax on a net basis on income with respect to a Note because such income
is effectively connected with the conduct of a U.S. trade or business. For
purposes hereof, a "Non-U.S. Holder" is any person that is not a U.S. Holder.
Interest
Payments of interest on the Exchange Notes to a Non-U.S. Holder that do not
qualify for the portfolio interest exception discussed below will be subject to
withholding of U.S. federal income tax at a rate of 30% unless a U.S. income tax
treaty applies to reduce the rate of withholding. To claim a treaty reduced
rate, the Non-U.S. Holder must provide a properly executed Form 1001 (see
discussion below for changes to withholding tax provisions to be effective for
payments of interest made after December 1, 1998).
Interest that is paid to a Non-U.S. Holder on an Exchange Note will not be
subject to U.S. income or withholding tax if the interest qualified as
"portfolio interest." Generally, interest on the Exchange Notes that is paid by
the Company will qualify as portfolio interest if (i) the Non-U.S. Holder does
not own, actually or constructively, 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote, (ii) the Non-U.S.
Holder is not a controlled foreign corporation that is related to the Company
actually or constructively through stock ownership for U.S. federal income tax
purposes, (iii) the Non-U.S. Holder is not a bank receiving interest on a loan
entered into in the ordinary course of business, and (iv) either (x) the
beneficial owner of the Note provides the Company or its paying agent, a
properly executed certification on IRS Form W-8 (or a suitable substitute form)
signed under penalties of perjury that the beneficial owner is not a "U.S.
person" for U.S. federal income tax purposes and that provides the beneficial
owner's name and address, or (y) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its business holds the Note and certifies to the Company or its agent
under penalties of perjury that the IRS Form W-8 (or a suitable substitute) has
been received by it from the beneficial owner of the Exchange Note or a
qualifying intermediary and furnishes the payor a copy thereof.
Sale, Exchange or Retirement of Notes
Any gain realized by a Non-U.S. Holder on the sale, exchange or retirement
of the Exchange Notes, will generally not be subject to U.S. federal income tax
or withholding unless (i) the Non-U.S. Holder is an individual who was present
in the U.S. for 183 days or more in the taxable year of the disposition and
meets certain other requirements, or (ii) the Non-U.S. Holder is subject to tax
pursuant to certain provisions of the Code applicable to certain individuals who
renounce their U.S. citizenship or terminate long-term U.S. residency. If a
Non-U.S. Holder falls under (ii) above, the holder will be taxed on the net gain
derived from the sale under the graduated U.S. federal income tax rates that are
applicable to U.S.
-61-
<PAGE>
citizens, resident aliens, and domestic corporations, as the case may be, and
may be subject to withholding under certain circumstances. If a Non-U.S. Holder
falls under (i) above, the holder generally will be subject to U.S. federal
income tax at a rate of 30% on the gain derived from the sale (or reduced treaty
rate) and may be subject to withholding in certain circumstances.
U.S. Information Reporting and Backup Withholding Tax
Back-up withholding and information reporting generally will not apply to
an Exchange Note issued in registered form that is beneficially owned by a Non-
U.S. Holder if the certification of Non-U.S. Holder status is provided to the
Company or its agent as described above in " --Certain Federal Income Tax
Consequences to Non-U.S. Holders-Interest," provided that the payor does not
have actual knowledge that the holder is a U.S. person. The Company may be
required to report annually on Form 1042-S to the IRS and to each Non-U.S.
Holder the amount of interest paid to, and the tax withheld, if any, with
respect to each Non-U.S. Holder.
If payments of principal and interest are made to the beneficial owner of
an Exchange Note by or through the foreign office of a custodian, nominee or
other agent of such beneficial owner, or if the proceeds of the sale of Notes
are made to the beneficial owner of an Exchange Note through a foreign office of
a "broker" (as defined in the pertinent Treasury Regulations), the proceeds will
not be subject to backup withholding (absent actual knowledge that the payee is
a U.S. person). Information reporting (but not backup withholding) will apply,
however, to a payment by a foreign office of a custodian, nominee, agent or
broker that is (i) a U.S. person, (ii) a controlled foreign corporation for U.S.
federal income tax purposes, or (iii) derives 50% or more of its gross income
from the conduct of a U.S. trade or business for a specified three-year period;
unless the broker has in its records documentary evidence that the holder is not
a Non-U.S. Holder and certain conditions are met (including that the broker has
no actual knowledge that the holder is a U.S. Holder) or the holder otherwise
establishes an exemption. Payment through the U.S. office of a custodian,
nominee, agent or broker is subject to both backup withholding at a rate of 31%
and information reporting, unless the holder certifies that it is a Non-U.S.
Holder under penalties of perjury or otherwise establishes an exemption.
Any amount withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a credit against, or refund of, such holder's
U.S. federal income tax liability, provided that certain information is provided
by the holder to the IRS.
The IRS released Treasury Regulations on October 14, 1997 that revise the
procedures for withholding tax, and the associated backup withholding and
information reporting rules described above for payments of interest and gross
proceeds made after December 31, 1999. The regulations modify the requirements
imposed on a Non-U.S. Holder or certain intermediaries for establishing the
recipient's status as a Non-U.S. Holder eligible for exemption from withholding
and backup withholding. In particular, the regulations impose more stringent
conditions on the ability of financial intermediaries acting for a Non-U.S.
Holder to provide certifications on behalf of the Non-U.S. Holder, which may
include entering into an agreement with the IRS to audit certain documentation
with respect to such certifications. Non-U.S. Holders should consult their tax
advisors to determine how the regulations will affect their particular
circumstances.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Outstanding Notes where
such Outstanding Notes were acquired as a result of market-making activities or
other trading activities. The Company has agreed that for a period of 90 days
after the consummation of the Exchange Offer, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale, if required under applicable securities laws and upon
prior written request. A broker-dealer that delivers such a prospectus to
purchasers in connection with such resales will be subject to certain of the
civil liability provisions under the Securities Act and will be bound by the
provisions of the Registration Agreement (including certain indemnification
rights and obligations).
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-
dealer that resells Exchange Notes that were received by it for its own
-62-
<PAGE>
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit from any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus meeting the requirements of the Securities Act, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of ninety days after the consummation of the Exchange Offer,
the Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the holders of the Securities) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Outstanding Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
The Company has not entered into any arrangements or understandings with
any person to distribute the Exchange Notes to be received in the Exchange
Offer.
LEGAL MATTERS
The validity of the Exchange Notes will be passed upon by Butler & Binion,
L.L.P.
EXPERTS
The consolidated financial statements of Nuevo and subsidiaries as of
December 31, 1996 and 1997 and for each of the years in the three-year period
ended December 31, 1997, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP covering the December 31, 1997, consolidated
financial statements contains an explanatory paragraph that states that the
Company has given retroactive effect to the change in accounting for oil and gas
properties from the full cost method to the successful efforts method.
INDEPENDENT RESERVE ENGINEERS
Information incorporated by reference in this Prospectus from the Company's
Annual Report on Form 10-K regarding the Company's estimated quantities of oil
and gas reserves and the discounted present value of future net cash flows
therefrom is based upon estimates of such reserves and present values prepared
by Miller and Lents, Ltd., S.A., Holditch and Associates, Inc., Ryder Scott
Company, D.O.R. Engineering Inc., T.J. Smith & Company, Inc. and Poco Oil Co.,
independent petroleum engineers. All of such information has been incorporated
by reference herein in reliance upon the authority of such firms as experts in
such matters.
-63-
<PAGE>
<TABLE>
=================================================== =====================================================
<S> <C>
No dealer, salesperson or any other person has
been authorized to give any information or to $100,000,000
make any representations not contained in this
Prospectus in connection with the offer contained
herein and, if given or made, such information or
representations must not be relied upon as having
been authorized by the Company. This Prospectus
does not constitute an offer to sell or a
solicitation of an to buy, the Notes offered
hereby by anyone in any jurisdiction in which
such offer is not authorized, or in which the NUEVO ENERGY COMPANY
person making such offer is not qualified to do
so, or to any person to whom it is unlawful to
make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create
an implication that there has been no change in 8-7/8% SENIOR SUBORDINATED NOTES DUE 2008
the affairs of the Company since the date hereof
or that the information contained herein is
correct as of any time subsequent to the date
hereof.
- ---------------------------------------------------
Table of Contents
Page
----
Available Information 4
Prospectus Summary 6
Risk Factors 12
Use of Proceeds 20
Selected Consolidated Financial Data 21
The Exchange Offer 22 ----------
Description of the Notes 30 PROSPECTUS
Exchange Offer; Registration Rights 58 ----------
Certain Federal Income Tax
Consequences 59
Plan of Distribution 62
Legal Matters 63
Experts 63
Independent Reserve Engineers 63
AUGUST ___, 1998
=================================================== =====================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware,
pursuant to which the Company is incorporated, provides generally and in
pertinent part that a Delaware corporation may indemnify its directors and
officers against expenses, judgments, fines, and settlements actually and
reasonably incurred by them in connection with any civil, criminal,
administrative, or investigative suit or action except actions by or in the
right of the corporation if, in connection with the matters in issue, they acted
in good faith and in a manner they reasonably believed to be in or not opposed
to the best interests of the corporation, and in connection with any criminal
suit or proceeding, if in connection with the matters in issue, they had no
reasonable cause to believe their conduct was unlawful. Section 145 further
provides that in connection with the defense or settlement of any action by or
in the right of the corporation, a Delaware corporation may indemnify its
directors and officers against expenses actually and reasonably incurred by them
if, in connection with the matters in issue, they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, except that no indemnification may be made in respect of any
claim, issue, or matter as to which such person has been adjudged liable to the
corporation unless the Delaware Court of Chancery or other court in which such
action or suit is brought approves such indemnification. Section 145 further
permits a Delaware corporation to grant its directors and officers additional
rights of indemnification through bylaw provisions and otherwise, and or
purchase indemnity insurance on behalf of its directors and officers. Article
Nine of the Certificate of Incorporation of the Company and Article VII of the
Bylaws of the Company provide, in general, that the Company may indemnify its
officers and directors to the full extent of Delaware law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT NUMBER AND DESCRIPTION
(1) Underwriting agreement*
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession*
(4) Instruments defining the rights of security holders, including
indentures
4.1 Indenture dated June 8, 1998 between the Company and the Trustee
4.2 Form of Note (included in Exhibit 4.1)
4.3 Registration Agreement
4.4 Purchase Agreement
(5) Opinion re legality
5.1 Opinion of Butler & Binion, L.L.P.
(8) Opinion re tax matters
8.1 Opinion of Butler & Binion, L.L.P. (included in the prospectus
that forms a part hereof)
(12) Statement re computation of ratios
12.1 Computations of ratio of earnings to fixed charges
(15) Letter re unaudited interim financial information*
(23) Consents of experts and counsel
23.1 Consent of Butler & Binion, L.L.P. (included in its opinion
filed as Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Miller and Lents, Ltd.
23.4 Consent of S.A. Holditch and Associates, Inc.
23.5 Consent of Ryder Scott Company
23.6 Consent of D.O.R. Engineering Inc.
23.7 Consent of T.J. Smith & Company, Inc.
23.8 Consent of Poco Oil Co.**
(24) Power of attorney (included on the signature page hereof)
(25) Statement of Eligibility of Trustee
25.1 Form T-1
II-1
<PAGE>
(99) Additional Exhibits
99.1 Form of Exchange Agent Agreement
99.2 Letter of Transmittal
- ---------------------
* Inapplicable to this filing
** To be filed with an amendment to this Registration Statement
FINANCIAL STATEMENT SCHEDULES
None.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act (and
where applicable, each filing of an employee benefits plan's annual report
pursuant to Section 15(d) of the 1934 Act) that is incorporated by reference in
the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions referred to in Item 20, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of section 310 of the Trust Indenture Act ("Act") in accordance with the
rules and regulations prescribed by the Commission under section 305(b)(2) of
the Act.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form S-4, within one business day or receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on July 30, 1998.
NUEVO ENERGY COMPANY
(Registrant)
By: s/ Douglas L. Foshee
-----------------------------------------
Douglas L. Foshee, Chairman of the Board,
President and Chief Executive Officer
(principal executive officer)
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Douglas L. Foshee and Robert M. King, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Commission, and any other regulatory authority, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, thereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ------- ------
<S> <C> <C>
/s/ Douglas L. Foshee Chairman of the Board, President July 30, 1998
- ---------------------------------- and Chief Executive Officer
Douglas L. Foshee (principal executive officer)
/s/ Robert M. King Senior Vice President and Chief Financial July 30, 1998
- ---------------------------------- Officer (principal accounting and financial
Robert M. King officer)
/s/ Robert L. Gerry III Director July 30, 1998
- ----------------------------------
Robert L. Gerry, III
/s/ David Ross Director July 30, 1998
- ----------------------------------
David Ross
/s/ Gary R. Petersen Director July 30, 1998
- ----------------------------------
Gary R. Petersen
/s/ Thomas D. Barrow Director July 30, 1998
- ----------------------------------
Thomas D. Barrow
/s/ Isaac Arnold, Jr. Director July 30, 1998
- ----------------------------------
Isaac Arnold, Jr.
/s/ James T. Hackett Director July 30, 1998
- ----------------------------------
James T. Hackett
/s/ Robert W. Shower Director July 30, 1998
- ----------------------------------
Robert W. Shower
/s/ Charles M. Elson Director July 30, 1998
- ----------------------------------
Charles M. Elson
</TABLE>
II-4
<PAGE>
EXHIBIT 4.1
NUEVO ENERGY COMPANY,
ANY SUBSIDIARY GUARANTORS
Named in Supplements Hereto
and
STATE STREET BANK AND TRUST COMPANY
Trustee
Indenture
Dated as of June 8, 1998
Series A and Series B
8 7/8% Senior Subordinated Notes due 2008
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........ 2
Section 1.1 Definitions.................................................... 2
Section 1.2 Other Definitions.............................................. 26
Section 1.3 Incorporation by Reference of Trust Indenture Act.............. 26
Section 1.4 Rules of Construction.......................................... 27
ARTICLE II SECURITY FORMS................................................. 27
Section 2.1 Forms Generally................................................ 27
Section 2.2 Form of Face of Security....................................... 28
Section 2.3 Form of Reverse of Security.................................... 31
Section 2.4 Form of Notation Relating to Subsidiary Guarantee.............. 39
Section 2.5 Form of Trustee's Certificate of Authentication................ 40
ARTICLE III THE SECURITIES................................................. 41
Section 3.1 Title and Terms................................................ 41
Section 3.2 Denominations.................................................. 42
Section 3.3 Execution, Authentication, Delivery and Dating................. 42
Section 3.4 Temporary Securities........................................... 44
Section 3.5 Registration of Transfer and Exchange.......................... 44
Section 3.6 Book-Entry Provisions for Global Securities.................... 48
Section 3.7 Mutilated, Destroyed, Lost and Stolen Securities............... 49
Section 3.8 Payment of Interest; Interest Rights Preserved................. 49
Section 3.9 Persons Deemed Owners.......................................... 50
Section 3.10 Cancellation................................................... 51
Section 3.11 Computation of Interest........................................ 51
Section 3.12 Private Placement Legend....................................... 51
ARTICLE IV SATISFACTION AND DISCHARGE..................................... 52
Section 4.1 Satisfaction and Discharge of Indenture........................ 52
Section 4.2 Application of Trust Money..................................... 53
ARTICLE V REMEDIES....................................................... 53
Section 5.1 Events of Default.............................................. 53
Section 5.2 Acceleration of Maturity: Rescission and Annulment............. 55
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee 56
Section 5.4 Trustee May File Proofs of Claim............................... 57
Section 5.5 Trustee May Enforce Claims Without Possession of Securities.... 58
Section 5.6 Application of Money Collected................................. 58
Section 5.7 Limitation on Suits............................................ 58
Section 5.8 Unconditional Right of Holders to Receive Principal Premium
and Interest................................................... 59
<PAGE>
Section 5.9 Restoration of Rights and Remedies............................. 59
Section 5.10 Rights and Remedies Cumulative................................. 59
Section 5.11 Delay or Omission Not Waiver................................... 59
Section 5.12 Control by Holders............................................. 60
Section 5.13 Waiver of Past Defaults........................................ 60
Section 5.14 Waiver of Stay, Extension or Usury Laws........................ 60
ARTICLE VI THE TRUSTEE.................................................... 61
Section 6.1 Duties of Trustee.............................................. 61
Section 6.2 Certain Rights of Trustee...................................... 61
Section 6.3 Trustee Not Responsible for Recitals or Issuance of Securities. 63
Section 6.4 May Hold Securities............................................ 63
Section 6.5 Money Held in Trust............................................ 63
Section 6.6 Compensation and Reimbursement................................. 63
Section 6.7 Corporate Trustee Required; Eligibility........................ 64
Section 6.8 Conflicting Interests.......................................... 64
Section 6.9 Resignation and Removal; Appointment of Successor.............. 65
Section 6.10 Acceptance of Appointment by Successor......................... 66
Section 6.11 Merger, Conversion, Consolidation or Succession to Business.... 66
Section 6.12 Preferential Collection of Claims Against Company.............. 67
Section 6.13 Notice of Defaults............................................. 67
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.............. 67
Section 7.1 Holders' Lists; Holder Communications; Disclosures Respecting
Holders........................................................ 67
Section 7.2 Reports By Trustee............................................. 68
Section 7.3 Reports by Company............................................. 68
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........... 69
Section 8.1 Company May Consolidate, etc., Only on Certain Terms........... 69
Section 8.2 Successor Substituted.......................................... 70
ARTICLE IX SUPPLEMENTAL INDENTURES........................................ 71
Section 9.1 Supplemental Indentures Without Consent of Holders............. 71
Section 9.2 Supplemental Indentures with Consent of Holders................ 72
Section 9.3 Execution of Supplemental Indentures........................... 73
Section 9.4 Effect of Supplemental Indentures.............................. 73
Section 9.5 Conformity with Trust Indenture Act............................ 73
Section 9.6 Reference in Securities to Supplemental Indentures............. 73
Section 9.7 Notice of Supplemental Indentures and Waivers.................. 73
Section 9.8 Effect on Senior Indebtedness.................................. 73
<PAGE>
ARTICLE X COVENANTS..................................................... 74
Section 10.1 Payment of Principal, Premium, if any, and Interest........... 74
Section 10.2 Maintenance of Office or Agency............................... 74
Section 10.3 Money for Security Payments to Be Held in Trust............... 75
Section 10.4 Corporate Existence........................................... 76
Section 10.5 Payment of Taxes and Other Claims............................. 76
Section 10.6 Maintenance of Properties..................................... 77
Section 10.7 Insurance..................................................... 77
Section 10.8 Statement by Officers as to Default........................... 77
Section 10.9 Provision of Financial Information............................ 78
Section 10.10 Limitation on Restricted Payments............................. 78
Section 10.11 Limitation on Other Senior Subordinated Indebtedness.......... 82
Section 10.12 Incurrence of Indebtedness.................................... 82
Section 10.13 Guarantors.................................................... 82
Section 10.14 Limitation on Issuance and Sale of Capital Stock by
Restricted Subsidiaries....................................... 83
Section 10.15 Limitation on Liens........................................... 83
Section 10.16 Purchase of Securities Upon Change of Control................. 83
Section 10.17 Disposition of Proceeds of Asset Sales........................ 86
Section 10.18 Limitation on Transactions with Affiliates.................... 88
Section 10.19 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries............................. 89
Section 10.20 Waiver of Certain Covenants................................... 90
Section 10.21 Qualification of Indenture.................................... 90
ARTICLE XI REDEMPTION OF SECURITIES...................................... 90
Section 11.1 Right of Redemption........................................... 90
Section 11.2 Applicability of Article...................................... 91
Section 11.3 Election to Redeem; Notice to Trustee......................... 91
Section 11.4 Selection by Trustee of Securities to Be Redeemed............. 91
Section 11.5 Notice of Redemption.......................................... 92
Section 11.6 Deposit of Redemption Price................................... 92
Section 11.7 Securities Payable on Redemption Date......................... 93
Section 11.8 Securities Redeemed in Part................................... 93
Section 11.9 Purchase of Securities........................................ 93
ARTICLE XII DEFEASANCE AND COVENANT DEFEASANCE............................ 93
Section 12.1 Company's Option to Effect Defeasance or Covenant Defeasance.. 93
Section 12.2 Defeasance and Discharge...................................... 94
Section 12.3 Covenant Defeasance........................................... 94
Section 12.4 Conditions to Defeasance or Covenant Defeasance............... 95
Section 12.5 Deposited Money and U.S. Government Obligations to Be
Held in Trust: Other Miscellaneous Provisions................. 96
Section 12.6 Reinstatement................................................. 97
<PAGE>
ARTICLE XIII SUBSIDIARY GUARANTEES......................................... 97
Section 13.1 Unconditional Guarantee....................................... 97
Section 13.2 Subsidiary Guarantors May Consolidate, etc., on Certain Terms. 98
Section 13.3 Release of Subsidiary Guarantors.............................. 99
Section 13.4 Limitation of Subsidiary Guarantors' Liability................ 100
Section 13.5 Contribution.................................................. 100
Section 13.6 Execution and Delivery of Notations of Subsidiary Guarantees.. 101
Section 13.7 Severability.................................................. 101
Section 13.8 Subsidiary Guarantees Subordinated to Guarantor Senior
Indebtedness.................................................. 101
Section 13.9 Subsidiary Guarantors Not to Make Payments with Respect to
Subsidiary Guarantees in Certain Circumstances................ 102
Section 13.10 Subsidiary Guarantees Subordinated to Prior Payment of
All Guarantor Senior Indebtedness upon Dissolution, etc....... 103
Section 13.11 Holders to be Subrogated to Rights of Holders of Guarantor
Senior Indebtedness........................................... 104
Section 13.12 Obligations of Subsidiary Guarantors Unconditional............ 104
Section 13.13 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice............................................. 105
Section 13.14 Application by Trustee of Money Deposited with it............. 105
Section 13.15 Subordination Rights Not Impaired by Acts or Omissions of
Subsidiary Guarantors or Holders of Guarantor Senior
Indebtedness.................................................. 106
Section 13.16 Holders Authorize Trustee to Effectuate Subordination
of Subsidiary Guarantees...................................... 106
Section 13.17 Right of Trustee to Hold Guarantor Senior Indebtedness........ 107
Section 13.18 Article XIII Not to Prevent Events of Default................. 107
Section 13.19 Payment....................................................... 107
Section 13.20 Payment Permitted If No Default............................... 107
ARTICLE XIV SUBORDINATION OF SECURITIES................................... 107
Section 14.1 Securities Subordinate to Senior Indebtedness................. 107
Section 14.2 Payment over of Proceeds upon Dissolution, etc................ 108
Section 14.3 Suspension of Payment When Senior Indebtedness in Default..... 109
Section 14.4 Payment Permitted If No Default............................... 110
Section 14.5 Subrogation to Rights of Holders of Senior Indebtedness....... 110
Section 14.6 Provisions Solely to Define Relative Rights................... 110
Section 14.7 Trustee to Effectuate Subordination........................... 111
Section 14.8 No Waiver of Subordination Provision.......................... 111
Section 14.9 Notice to Trustee............................................. 111
Section 14.10 Reliance on Judicial Order or Certificate of Liquidating
Agent Bank.................................................... 112
Section 14.11 Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights.............................. 112
<PAGE>
Section 14.12 Article Applicable to Paying Agents........................... 113
Section 14.13 No Suspension of Remedies..................................... 113
Section 14.14 Trust Money Not Subordinated.................................. 113
ARTICLE XV MISCELLANEOUS................................................. 113
Section 15.1 Compliance Certificates and Opinions.......................... 113
Section 15.2 Form of Documents Delivered to Trustee........................ 114
Section 15.3 Acts of Holders............................................... 114
Section 15.4 Notices, etc. to Trustee, Company and Subsidiary Guarantors... 116
Section 15.5 Notice to Holders; Waiver..................................... 116
Section 15.6 Effect of Headings and Table of Contents...................... 117
Section 15.7 Successors and Assigns........................................ 117
Section 15.8 Separability Clause........................................... 117
Section 15.9 Benefits of Indenture......................................... 117
Section 15.10 Governing Law; Trust Indenture Act Controls................... 117
Section 15.11 Legal Holidays................................................ 118
Section 15.12 No Recourse Against Others.................................... 118
Section 15.13 Duplicate Originals........................................... 118
Section 15.14 Adverse Interpretation of Other Agreements.................... 118
Exhibit A - Form of Legend for Global Securities
Exhibit B - Transfer or Exchange Certificate
Exhibit C - Transferee Certificate for Institutional
Accredited Investors
Exhibit D - Transferee Certificate for Regulation S Transfers
Exhibit E - Form of Supplemental Indenture
Annex A - Registration Rights Agreement
<PAGE>
Reconciliation and Tie between Trust Indenture Act
of 1939 and Indenture, dated as of June 8, 1998
Trust Indenture Indenture
Act Section Section
(S)310(a)(1)............................... 6.7
(a)(2)............................... 6.7
(b).................................. 6.7,6.8,6.9
(S)311(a).................................. 6.12
(b).................................. 6.12
(S)312..................................... 7.1
(S)313..................................... 7.2
(S)314(a).................................. 7.3
(a)(4)............................... 10.8(a)
(c)(1)............................... 15.1
(c)(2)............................... 15.1
(e).................................. 15.1
(S)315(a).................................. 6.1
(b).................................. 6.13
(c).................................. 6.1
(d).................................. 6.1
(S)316(a) (last sentence)
1.1("Outstanding")
(a)(1)(A)............................ 5.2,5.12
(a)(1)(B)............................ 5.13
(b).................................. 5.8
(c).................................. 15.3(d)
(S)317(a)(1)............................... 5.3
(a)(2)............................... 5.4
(b).................................. 10.3
(S)318(a).................................. 15.10(b)
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
THIS INDENTURE, dated as of June 8, 1998, is between NUEVO ENERGY COMPANY,
a Delaware corporation (hereinafter called the "Company"), any SUBSIDIARY
GUARANTORS (as defined hereinafter) that may become parties hereto and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company (hereinafter called
the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of a series of its debt
securities denominated as its 8 7/8% Senior Subordinated Notes due 2008, Series
A (the "Series A Securities") and a second series of such debt securities
denominated as its 8 7/8% Senior Subordinated Notes due 2008, Series B (the
"Series B Securities" and, together with the Series A Securities, the
"Securities"), of substantially the tenor and principal amounts hereinafter set
forth, and to provide therefor the Company has duly authorized the execution and
delivery of this Indenture.
The Series A Securities are to be originally issued in an aggregate
principal amount of $100,000,000 on the date hereof pursuant to the Purchase
Agreement; additional Series A Securities may be originally issued from time to
time thereafter in an aggregate principal amount of up to $75,000,000; and
Series B Securities may also be originally issued from time to time hereafter,
but only in exchange for Series A Securities then outstanding, in each case
pursuant to a Registration Rights Agreement in an Exchange Offer.
The Company shall cause each of its Restricted Subsidiaries (as defined
herein), prior to, or contemporaneously with, such Restricted Subsidiary's
incurrence of certain obligations as set forth in this Indenture, to execute and
deliver a supplement hereto pursuant to which such Restricted Subsidiary shall
agree to be bound by the terms of this Indenture, as if it were an original
party hereto, and to guarantee the Company's obligations under this Indenture
and the Securities, thereby becoming a Subsidiary Guarantor for purposes of this
Indenture.
All things necessary have been done on the part of the Company to make the
Securities, when issued and executed by the Company and authenticated and
delivered by the Trustee as herein provided, the valid obligations of the
Company, in accordance with their respective terms.
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, without preference of
one series of Securities over the other and without preference of any Securities
of one series over any other Securities of the same series as a result of any
different dates of their original issuance, as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an acquisition of Properties from such Person or (b) outstanding
at the time such Person becomes a Subsidiary of any other Person (other than any
Indebtedness incurred in connection with, or in contemplation of, such
acquisition or such Person becoming such a Subsidiary). Acquired Indebtedness
shall be deemed to be incurred on the date of the related acquisition of
Properties from any Person or the date the acquired Person becomes a Subsidiary.
"Act," when used with respect to any Holder, has the meaning specified in
Section 15.3.
"Adjusted Consolidated Net Tangible Assets" means (without duplication), as
of the date of determination, (a) the sum of (i) discounted future net revenues
from proved oil and gas reserves of the Company and its Restricted Subsidiaries
calculated in accordance with SEC guidelines but before any state or federal
income taxes, as estimated by a nationally recognized firm of independent
petroleum engineers in a reserve report prepared as of the end of the Company's
most recently completed fiscal year, as increased by, as of the date of
determination, the estimated discounted future net revenues from (A) estimated
proved oil and gas reserves acquired since the date of such year-end reserve
report, and (B) estimated oil and gas reserves attributable to extensions,
discoveries and other additions and upward revisions of estimates of proved oil
and gas reserves since the date of such year-end reserve report due to
exploration, development, exploitation, production or other activities, in each
case calculated in accordance with SEC guidelines (but before any state or
federal income taxes and utilizing the prices utilized in such year-end reserve
report), and decreased by, as of the date of determination, the estimated
discounted future net revenues from (C) estimated proved oil and gas reserves
produced or disposed of since the date of such year-end reserve report and (D)
estimated oil and gas reserves attributable to downward revisions of estimates
of proved oil and gas reserves since the date of such year-end reserve report
due to exploration, development, exploitation, production or other activities,
in each case calculated in accordance with SEC guidelines (but before any state
or federal income taxes and utilizing the prices utilized in such year-end
reserve report); provided, that in the case of each of the determinations made
pursuant to clauses (A) through (D), such increases and decreases shall be as
estimated by the Company's petroleum engineers, except that in the event there
is a Material Change as a result of such acquisitions, dispositions, or
revisions, then the discounted future net revenues utilized for purposes of this
clause (a)(i) shall be confirmed in writing by a nationally recognized firm of
independent petroleum engineers, (ii) the capitalized costs that are
attributable to oil and gas properties of the Company and its Restricted
Subsidiaries to which no proved oil and gas reserves are attributable, based on
the Company's books and records as of a date no earlier than the date of the
Company's latest annual or quarterly financial statements, (iii) the Net Working
Capital on a date no earlier than the date of the Company's latest annual or
quarterly financial statements and (iv) the greater of (A) the net book value on
a date no earlier than the date of the Company's latest annual or quarterly
financial
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statements or (B) the appraised value, as estimated by independent appraisers,
of other tangible assets (including, without duplication, Investments in
unconsolidated Restricted Subsidiaries) of the Company and its Restricted
Subsidiaries, as of the date no earlier than the date of the Company's latest
audited financial statements, minus (b) the sum of (i) minority interests (other
than a minority interest in a Finance Person), (ii) any net gas balancing
liabilities of the Company and its Restricted Subsidiaries reflected in the
Company's latest audited financial statements, (iii) to the extent included in
(a)(i) above, the discounted future net revenues, calculated in accordance with
SEC guidelines (but before any state or federal income taxes and utilizing the
prices utilized in the Company's year-end reserve report), attributable to
reserves which are required to be delivered to third parties to fully satisfy
the obligations of the Company and its Restricted Subsidiaries with respect to
Volumetric Production Payments on the schedules specified with respect thereto
and (iv) the discounted future net revenues, calculated in accordance with SEC
guidelines but before any state or federal income taxes, attributable to
reserves subject to Dollar-Denominated Production Payments which, based on the
estimates of production and price assumptions included in determining the
discounted future net revenues specified in (a)(i) above, would be necessary to
fully satisfy the payment obligations of the Company and its Restricted
Subsidiaries with respect to Dollar-Denominated Production Payments on the
schedules specified with respect thereto.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
amount by which the fair value of the Properties of such Subsidiary Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
its Subsidiary Guarantee, of such Subsidiary Guarantor at such date.
"Affiliate" of any specified Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any other Person who is a director or
executive officer of (a) such specified Person or (b) any Person described in
the preceding clause (i). For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by way of merger or consolidation)
(collectively, for purposes of this definition, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary held by the Company or any Restricted Subsidiary
(other than directors' qualifying shares and shares owned by foreign
shareholders to the extent required by applicable local laws in the foreign
countries), (b) all or substantially all of the Properties of the Company or any
of its Restricted Subsidiaries or (c) any other Properties of the Company or any
of its Restricted Subsidiaries other than (i) a disposition of hydrocarbons or
other mineral
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products, inventory, accounts receivable, cash, Cash Equivalents or other
Property in the ordinary course of business, (ii) any lease, abandonment,
disposition, relinquishment or farm-out of any oil and gas Property in the
ordinary course of business, (iii) the liquidation of Property received in
settlement of debts owing to the Company or any Restricted Subsidiary as a
result of foreclosure, perfection or enforcement of any Lien or debt, which
debts were owing to the Company or any Restricted Subsidiary in the ordinary
course of business of the Company or such Restricted Subsidiary or (iv) the
issuance and sale of Qualified Capital Stock by a Finance Person. For the
purposes of this definition, the term "Asset Sale" shall not include (i) any
transfer of Properties which is governed by, and made in accordance with, the
provisions of Article VIII hereof; (ii) any transfer of Properties to an
Unrestricted Subsidiary, if permitted under Section 10.10 hereof; or (iii) any
transfer, in one or a series of related transactions, of Properties having a
Fair Market Value of less than $2,500,000.
"Average Life" means, with respect to any Indebtedness, as at any date of
determination, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years (and any portion thereof) from the date of determination
to the date or dates of each successive scheduled principal payment (including,
without limitation, any sinking fund or mandatory redemption payment
requirements) of such Indebtedness multiplied by (ii) the amount of each such
principal payment by (b) the sum of all such principal payments.
"Bcfe" means billion cubic feet of natural gas equivalent, using the ratio
of 6,000 cubic feet of natural gas to one barrel of oil, condensate or natural
gas liquids.
"Board of Directors" means, with respect to the Company, either the board
of directors of the Company or any duly authorized committee of such board of
directors, and, with respect to any Subsidiary, either the board of directors of
such Subsidiary or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by its Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee, and with respect to a Subsidiary, a
copy of a resolution certified by the Secretary or an Assistant Secretary of
such Subsidiary to have been duly adopted by its Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the Borough of Manhattan,
The City of New York, New York or the City of Boston, Massachusetts, are
authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options exercisable
for, exchangeable for or convertible into such an equity interest in such
Person. (For avoidance of doubt, the Capital Stock of the Company includes any
Qualifying TECONS.)
3
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"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
Property (whether real, personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for the purpose of
this Indenture, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) demand and time deposits and certificates of deposit or
acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500,000,000; (iii) commercial
paper with a maturity of 180 days or less issued by a corporation that is not an
Affiliate of the Company and is organized under the laws of any state of the
United States or the District of Columbia and rated at least A-l by S&P or at
least P-l by Moody's; (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any commercial bank meeting the specifications of clause (ii)
above; (v) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in clause (ii) above; (vi) deposits
available for withdrawal on demand with any commercial bank not meeting the
qualifications specified in clause (ii) above but which is organized under the
laws of any country in which the Company or any Restricted Subsidiary maintains
an office or is engaged in the Oil and Gas Business, provided that (A) all such
deposits are required to be made in such accounts in the ordinary course of
business, (B) such deposits do not at any one time exceed $5,000,000 in the
aggregate and (C) no funds so deposited remain on deposit in such bank for more
than 30 days; (vii) deposits available for withdrawal on demand with any
commercial bank not meeting the qualifications specified in clause (ii) above
but which is a lending bank under any of the Company's or any Restricted
Subsidiary's credit facilities, provided all such deposits do not exceed
$5,000,000 in the aggregate at any one time; and (viii) investments in money
market funds substantially all of whose assets comprise securities of the types
described in clauses (i) through (v).
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the
total Voting Stock of the Company; (b) the Company is merged with or into or
consolidated with another Person and, immediately after giving effect to the
merger or consolidation, (A) less than 50% of the total voting power of the
outstanding Voting Stock of the surviving or resulting Person is then
"beneficially owned" (within the meaning of Rule 13d-3 under the Exchange Act)
in the aggregate by the stockholders of the Company immediately prior to such
merger or consolidation, and (B) any "person" or "group" (as defined in Section
13(d)(3) or 14(d)(2) of the Exchange Act) has become the direct or indirect
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 50% of the
4
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total voting power of the Voting Stock of the surviving or resulting Person; (c)
the Company, either individually or in conjunction with one or more Restricted
Subsidiaries, sells, assigns, conveys, transfers, leases or otherwise disposes
of, or the Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of, all or substantially all of the Properties of the Company
and the Restricted Subsidiaries, taken as a whole (either in one transaction or
a series of related transactions), including Capital Stock of the Restricted
Subsidiaries, to any Person (other than the Company or a Wholly Owned Restricted
Subsidiary); (d) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; (e) the
liquidation or dissolution of the Company; or (f), so long as any Existing Notes
are outstanding, any other event constituting a Change of Control pursuant to
the Existing Indenture.
"Code" shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations thereunder issued by the
Internal Revenue Service.
"Commission" or "SEC" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding-up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated Exploration Expenses" means, for any period, exploration
expenses of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of (a) the sum of Consolidated Net Income, Consolidated Interest Expense, the
portion of Consolidated Exploration Expenses deducted in computing Consolidated
Net
5
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Income, Consolidated Income Tax Expense and Consolidated Non-cash Charges
deducted in computing Consolidated Net Income, in each case, for such period, of
the Company and its Restricted Subsidiaries on a consolidated basis, all
determined in accordance with GAAP, decreased (to the extent included in
determining Consolidated Net Income) by the sum of (x) the amount of deferred
revenues that are amortized during such period and are attributable to reserves
that are subject to Volumetric Production Payments and (y) amounts recorded in
accordance with GAAP as repayments of principal and interest pursuant to Dollar-
Denominated Production Payments, to (b) the sum of such Consolidated Interest
Expense for such period; provided, however, that (i) the Consolidated Fixed
Charge Coverage Ratio shall be calculated on the assumption that (A) the
Indebtedness to be incurred (and all other Indebtedness incurred after the first
day of such period of four full fiscal quarters referred to in Section 10.12(a)
hereof through and including the date of determination) and (if applicable) the
application of the net proceeds therefrom (and from any other such
Indebtedness), including to refinance other Indebtedness, had been incurred on
the first day of such four-quarter period and, in the case of Acquired
Indebtedness, on the assumption that the related transaction (whether by means
of purchase, merger or otherwise) also had occurred on such date with the
appropriate adjustments with respect to such acquisition being included in such
pro forma calculation and (B) any acquisition or disposition by the Company or
any Restricted Subsidiary of any Properties outside the ordinary course of
business, or any repayment of any principal amount of any Indebtedness of the
Company or any Restricted Subsidiary prior to the Stated Maturity thereof, in
either case since the first day of such period of four full fiscal quarters
through and including the date of determination, had been consummated on such
first day of such four-quarter period, (ii) in making such computation, the
Consolidated Interest Expense attributable to interest on any Indebtedness
required to be computed on a pro forma basis in accordance with Section 10.12(a)
hereof and (A) bearing a floating interest rate shall be computed as if the rate
in effect on the date of computation had been the applicable rate for the entire
period and (B) which was not outstanding during the period for which the
computation is being made but which bears, at the option of the Company, a fixed
or floating rate of interest, shall be computed by applying, at the option of
the Company, either the fixed or floating rate, (iii) in making such
computation, the Consolidated Interest Expense attributable to interest on any
Indebtedness under a revolving credit facility required to be computed on a pro
forma basis in accordance with Section 10.12(a) hereof shall be computed based
upon the average daily balance of such Indebtedness during the applicable
period, provided that such average daily balance shall be reduced by the amount
of any repayment of Indebtedness under a revolving credit facility during the
applicable period, which repayment permanently reduced the commitments or
amounts available to be reborrowed under such facility, (iv) notwithstanding
clauses (ii) and (iii) of this proviso, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements relating
to Interest Rate Protection Obligations, shall be deemed to have accrued at the
rate per annum resulting after giving effect to the operation of such
agreements, (v) in making such calculation, Consolidated Interest Expense shall
exclude interest attributable to Dollar-Denominated Production Payments, and
(vi) if after the first day of the period referred to in clause (a) of this
definition the Company has retired any Indebtedness out of the net cash proceeds
of the issue and sale of shares of Qualified Capital Stock of the Company within
30 days of such issuance and sale, Consolidated Interest Expense shall be
calculated on a pro forma basis as if such Indebtedness had been retired on the
first day of such period.
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"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes (including state franchise taxes
accounted for as income taxes in accordance with GAAP) of the Company and its
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
(i) the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (A) any amortization of debt discount,
(B) the net cost under Interest Rate Protection Obligations (including any
amortization of discounts), (C) the interest portion of any deferred payment
obligation constituting Indebtedness, (D) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and (E) all accrued interest, in each case to the extent attributable
to such period, (b) to the extent any Indebtedness of any Person (other than the
Company or a Restricted Subsidiary) is guaranteed by the Company or any
Restricted Subsidiary, the aggregate amount of interest paid (to the extent not
accrued in a prior period) or accrued by such other Person during such period
attributable to any such Indebtedness, in each case to the extent attributable
to that period, (c) the aggregate amount of the interest component of
Capitalized Lease Obligations paid (to the extent not accrued in a prior
period), accrued or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP and (d) the aggregate amount of dividends paid (to the
extent not accrued in a prior period) or accrued on Redeemable Capital Stock of
the Company and its Restricted Subsidiaries, to the extent such Redeemable
Capital Stock is owned by Persons other than the Company or its Restricted
Subsidiaries and to the extent such dividends are not paid in Common Stock, less
(ii) to the extent included in clause (i), amortization of capitalized debt
issuance costs of the Company and its Restricted Subsidiaries during such
period.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto), (b)
net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to Asset Sales, (c) the net income (or net loss) of any Person
(other than the Company or any of its Restricted Subsidiaries), in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions or interest on
indebtedness actually paid to the Company or any of its Restricted Subsidiaries
in cash by such other Person during such period (regardless of whether such cash
dividends, distributions or interest on indebtedness is attributable to net
income (or net loss) of such Person during such period or during any prior
period), (d) net income (or net loss) of any Person combined with the Company or
any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (e) the net income
of any Restricted Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary is not at the
date of determination permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (f) dividends paid on Qualifying TECONS and (g)
Consolidated Exploration
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Expenses and any writedowns or impairments of non-current assets (less an amount
equal to the amortization on a quarterly basis of the cumulative Consolidated
Exploration Expenses and writedowns or impairments of non-current assets,
calculated as two and one-half percent of the cumulative net balance of such
costs).
"Consolidated Net Worth" means, at any date, the consolidated stockholders'
equity of the Company and its Restricted Subsidiaries less the amount of such
stockholders' equity attributable to Redeemable Capital Stock or treasury stock
of the Company and its Restricted Subsidiaries, as determined in accordance with
GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization and other non-cash expenses of the Company
and its Restricted Subsidiaries reducing Consolidated Net Income for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such non-cash charge which requires an accrual of or reserve for cash
charges for any future period).
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at Two International Place, Corporate Trust Department, 4th Floor, Boston,
Massachusetts 02110.
"Credit Facility" means that certain Amended and Restated Credit Agreement
among the Company, certain Subsidiaries of the Company, NationsBank of Texas,
N.A., as Administrative Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and certain lenders named therein, as the same may be
amended, modified, supplemented, extended, restated, replaced, renewed or
refinanced from time to time.
"Default" means any event that is or with the passage of time or giving of
notice or both would be an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.8 hereof.
"Depository" means The Depository Trust Company, its nominees and their
respective successors.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a Board Resolution hereunder, a member of the Board of
Directors of the Company who does not have any material direct or indirect
financial interest (other than an interest arising solely from the beneficial
ownership of Capital Stock of the Company) in or with respect to such
transaction or series of transactions.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
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"Equity Offering" means a bona fide underwritten sale to the public of
Common Stock of the Company pursuant to a registration statement (other than on
Form S-8 or any other form relating to securities issuable under any employee
benefit plan of the Company) that is declared effective by the Commission
following the Issue Date.
"Event of Default" has the meaning specified in Section 5.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor act thereto.
"Exchange Offer" means the offer that may be made by the Company pursuant
to a Registration Rights Agreement to exchange Series B Securities for Series A
Securities.
"Exchanged Properties" means Properties used or useful in the Oil and Gas
Business received by the Company or a Restricted Subsidiary in exchange for
other Properties owned by it, whether directly or indirectly through the
acquisition of the Capital Stock of a Person holding such Properties so that
such Person becomes a Wholly Owned Restricted Subsidiary of the Company, in
trade or as a portion of the total consideration for such other Properties.
"Existing Indenture" means that certain Indenture dated as of April 1, 1996
among the Company, its Subsidiaries party thereto and State Street Bank and
Trust Company, as Trustee, as the same may have been amended or supplemented
from time to time prior to the date hereof.
"Existing Notes" means the 9 1/2% Senior Subordinated Notes due 2006 issued
pursuant to the Existing Indenture.
"Existing TECONS" means the Company-Obligated Mandatorily Redeemable
Convertible Preferred Securities issued by Nuevo Financing I, a statutory
business trust wholly owned by the Company, on December 23, 1996, in an
aggregate liquidation amount of $115,000,000.
"Fair Market Value" means the fair market value of a Property (including
shares of Capital Stock) as determined in good faith by the Board of Directors
of the Company and evidenced by a Board Resolution, which determination shall be
conclusive for purposes of this Indenture; provided, however, that unless
otherwise specified herein, the Board of Directors shall be under no obligation
to obtain any valuation or assessment from any investment banker, appraiser or
other third party.
"Federal Bankruptcy Code" means the United States Bankruptcy Code of Title
11 of the United States Code, as amended from time to time.
"Finance Person" means a Subsidiary of the Company, the Common Stock of
which is owned by the Company, that does not engage in any activity other than
(i) the holding of Subordinated Indebtedness with respect to which payments of
interest on such Subordinated
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Indebtedness can, at the election of the issuer thereof, be deferred for one or
more payment periods, (ii) the issuance of Qualifying TECONS and Common Stock
and/or debt securities and (iii) any activity necessary, incidental or related
to the foregoing.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States of America, which are
effective on the date of this Indenture.
The term "guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments or documents for collection
in the ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of non-
performance) of all or any part of such obligation, including, without limiting
the foregoing, the payment of amounts drawn down by letters of credit; provided,
however, that a guarantee by any Person shall not include a contractual
commitment by one Person to invest in another Person provided that such
Investment is otherwise permitted by this Indenture. When used as a verb,
"guarantee" shall have a corresponding meaning.
"Guarantor Senior Indebtedness" means the principal of (and premium, if
any, on) and interest on (including interest accruing after the filing of a
petition initiating any proceeding pursuant to any bankruptcy law) and other
amounts due on or in connection with (including any fees, premiums, expenses,
including costs of collection, and indemnities) any Indebtedness of a Subsidiary
Guarantor, whether outstanding on the date of this Indenture or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness will be
pari passu with or subordinated in right of payment to its Subsidiary Guarantee.
Notwithstanding the foregoing, Guarantor Senior Indebtedness of a Subsidiary
Guarantor shall not include (i) Indebtedness of such Subsidiary Guarantor
evidenced by its Subsidiary Guarantee, (ii) Indebtedness of such Subsidiary
Guarantor that is expressly pari passu with its Subsidiary Guarantee or is
expressly subordinated in right of payment to any Guarantor Senior Indebtedness
of such Subsidiary Guarantor or its Subsidiary Guarantee, (iii) Indebtedness of
such Subsidiary Guarantor to the extent incurred in violation of Section 10.12
hereof, (iv) Indebtedness of such Subsidiary Guarantor to the Company or any of
the Company's other Subsidiaries or to any Affiliate of the Company or any
Subsidiary of such Affiliate and (v) Indebtedness which when incurred and
without regard to any election under Section 1111(b) of the Federal Bankruptcy
Code is without recourse to such Subsidiary Guarantor.
"Holder" means a Person in whose name a Security is registered in a
Security Register.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of Property or services
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(excluding any trade accounts payable and other accrued current liabilities
incurred in the ordinary course of business), and all liabilities of such Person
incurred in connection with any letters of credit, bankers' acceptances or other
similar credit transactions or any agreement to purchase, redeem, exchange,
convert or otherwise acquire for value any Capital Stock of such Person, or any
warrants, rights or options to acquire such Capital Stock outstanding on the
date of this Indenture or thereafter, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (b) all obligations of such Person evidenced
by bonds, notes, debentures or other similar instruments, if, and to the extent,
any of the foregoing would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, (c) all Indebtedness of such Person
created or arising under any conditional sale or other title retention agreement
with respect to Property acquired by such Person (even if the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such Property), but excluding trade
accounts payable arising in the ordinary course of business, (d) all Capitalized
Lease Obligations of such Person, (e) all Indebtedness referred to in the
preceding clauses of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right to be secured by) any Lien upon Property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness
(the amount of such obligation being deemed to be the lesser of the value of
such Property or the amount of the obligation so secured), (f) all guarantees by
such Person of Indebtedness referred to in this definition (including, with
respect to any Production Payment, any warranties or guaranties of production or
payment by such Person with respect to a Production Payment but excluding other
contractual obligations of such Person with respect to such Production Payment),
(g) all Redeemable Capital Stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued dividends
and (h) all obligations of such Person under or in respect of currency exchange
contracts, oil and natural gas price hedging arrangements and Interest Rate
Protection Obligations; provided, however, that Indebtedness shall not include
Qualifying TECONS and Indebtedness (including guarantees thereof) relating to
Qualifying TECONS and held by a Finance Person. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to this Indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Redeemable Capital Stock, such Fair Market Value shall
be determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock; provided, however, that if such Redeemable Capital
Stock is not at the date of determination permitted or required to be
repurchased, the "maximum fixed repurchase price" shall be the book value of
such Redeemable Capital Stock. Subject to clause (f) of the first sentence of
this definition, neither Dollar-Denominated Production Payments nor Volumetric
Production Payments shall be deemed to be Indebtedness.
"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.
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"Initial Purchasers" means the initial purchasers from the Company of the
Offered Securities, viz. Salomon Brothers Inc, J.P. Morgan Securities Inc. and
NationsBanc Montgomery Securities LLC.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
(a) an insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or similar case or proceeding in connection
therewith, relative to such Person or its creditors, as such, or its assets or
(b) any liquidation, dissolution or other winding-up proceeding of such Person,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy or (c) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of such Person.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's and any of its Subsidiaries' exposure to
fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other Property to others or
any payment for Property or services for the account or use of others), or any
purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities (including derivatives) or evidences of
Indebtedness issued by, any other Person. In addition, the Fair Market Value of
the net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary shall be deemed to be an
"Investment" made by the Company in such Unrestricted Subsidiary at such time.
"Investments" shall exclude (a) extensions of trade credit under a joint
operating agreement or otherwise in the ordinary course of business, workers'
compensation, utility, lease and similar deposits and prepaid expenses in the
ordinary course of business, (b) Interest Rate Protection Obligations entered
into in the ordinary course of business or as required by any Permitted
Indebtedness or any other Indebtedness incurred in compliance with Section 10.12
hereof, but only to the extent that the stated aggregate notional amounts of
such Interest Rate Protection Obligations do not exceed 105% of the aggregate
principal amount of such Indebtedness to which such Interest Rate Protection
Obligations relate, (c) bonds, notes, debentures or other securities received as
a result of Asset Sales permitted under Section 10.17 hereof and (d)
endorsements of negotiable instruments and documents in the ordinary course of
business.
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"Issue Date" means the date on which the Offered Securities were first
issued under this Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing) upon or with respect to any Property of any kind. A Person shall be
deemed to own subject to a Lien any Property which such Person has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"Liquid Securities" means securities (i) of an issuer that is not an
Affiliate of the Company and (ii) that are publicly traded on the New York Stock
Exchange, the American Stock Exchange, the Toronto Stock Exchange, the
Australian Stock Exchange, the London Stock Exchange or the Nasdaq National
Market; provided that securities meeting the requirements of clauses (i) and
(ii) above shall be treated as Liquid Securities from the date of receipt
thereof until and only until the earlier of (x) the date on which such
securities (or securities exchangeable for, or convertible into, such
securities) are sold or exchanged for cash or Cash Equivalents and (y) 180 days
following the date of receipt of such securities. If such securities (or
securities exchangeable for, or convertible into, such securities) are not sold
or exchanged for cash or Cash Equivalents within 180 days of receipt thereof,
for purposes of determining whether the transaction pursuant to which the
Company or a Restricted Subsidiary received the securities was in compliance
with the provisions of Section 10.17(a) hereof, such securities shall be deemed
not to have been Liquid Securities until 181 days following the date of receipt
of such securities.
"Material Change" means an increase or decrease (excluding changes that
result solely from changes in prices) of more than 30% during a fiscal quarter
in the estimated discounted future net revenues from proved oil and gas reserves
of the Company and its Restricted Subsidiaries, calculated in accordance with
clause (a)(i) of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change: (i) any acquisitions during the quarter of oil and gas
reserves that have been estimated by a nationally recognized firm of independent
petroleum engineers and on which a report or reports exist and (ii) any
disposition of properties held at the beginning of such quarter that have been
disposed of in compliance with section 10.17 hereof.
"Material Subsidiary" means, at any particular time, any Restricted
Subsidiary that, together with its Subsidiaries, (a) accounted for more than 5%
of the consolidated revenues of the Company and its Restricted Subsidiaries for
the most recently completed fiscal year of the Company, or (b) was the owner of
more than 5% of the consolidated assets of the Company and its Restricted
Subsidiaries at the end of such fiscal year, all as shown in the case of (a) and
(b) on the consolidated financial statements of the Company and its Restricted
Subsidiaries for such fiscal year.
"Maturity" means, with respect to any Security, the date on which any
principal of such
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Security becomes due and payable as therein or herein provided, whether at the
Stated Maturity with respect to such principal or by declaration of
acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary), net of (i) brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel and investment banks) related to such Asset Sale, (ii) provisions for
all taxes payable as a result of such Asset Sale, (iii) amounts required to be
paid to any Person (other than the Company or any Restricted Subsidiary) owning
a beneficial interest in the Property subject to the Asset Sale and (iv)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve required in accordance with GAAP consistently
applied against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee; provided,
however, that any amounts remaining after adjustments, revaluations or
liquidations of such reserves shall constitute Net Cash Proceeds.
"Net Working Capital" means (i) all current assets of the Company and its
Restricted Subsidiaries, less (ii) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in consolidated financial statements of
the Company prepared in accordance with GAAP.
"Non-payment Event of Default" means any event (other than a Payment Event
of Default), the occurrence of which (with or without notice or the passage of
time) entitles one or more Persons to accelerate the maturity of any Specified
Senior Indebtedness.
"Non-Recourse Purchase Money Indebtedness" means (i) Indebtedness (other
than Capital Lease Obligations) of the Company or any Restricted Subsidiary
incurred in connection with the acquisition by the Company or such Restricted
Subsidiary in the ordinary course of business of fixed assets used in the Oil
and Gas Business (including office buildings and other real property used by the
Company or such Restricted Subsidiary in conducting its operations) and (ii) any
renewals and refinancings of such Indebtedness; provided that the holders of
such Indebtedness described in clauses (i) and (ii) agree that they will look
solely to the fixed assets so acquired which secure such Indebtedness (subject
to customary exceptions such as indemnifications for environmental, title, fraud
and other matters), and neither the Company nor any Restricted Subsidiary (a) is
directly or indirectly liable for such Indebtedness or (b) provides credit
support, including any undertaking, guarantee, agreement or instrument that
would constitute Indebtedness (other than the grant of a Lien on such acquired
fixed assets).
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"Offered Securities" has the meaning set forth in Section 3.1 hereof.
"Officer" means, with respect to any Person, the Chairman of the Board, the
President, any Vice President, the Chief Financial Officer or the Treasurer of
such Person.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Oil and Gas Business" means (i) the acquisition, exploration, development,
operation and disposition of interests in oil, gas and other hydrocarbon
Properties, (ii) the gathering, marketing, treating, processing, storage,
selling and transporting of any production from such interests or Properties,
(iii) any business relating to or arising from exploration for or development,
production, treatment, processing, storage, transportation or marketing of oil,
gas and other minerals and products produced in association therewith, (iv) any
power generation and electrical transmission business in a jurisdiction outside
of North America where fuel required by such business is supplied, directly or
indirectly, from production reserves substantially from blocks in which the
Company or its Restricted Subsidiaries participate and (v) any activity
necessary, appropriate or incidental to the activities described in the
foregoing clauses (i) through (iv) of this definition.
"OPIC Facility" means that certain Finance Agreement dated December 28,
1994, among The Nuevo Congo Company, The Congo Holding Company, and the Overseas
Private Investment Corporation, as such agreement may be amended, modified,
supplemented, extended, restated, replaced, renewed or refinanced from time to
time in one or more credit agreements, loan agreements, instruments or similar
agreements, as such may be further amended, modified, extended, restated,
replaced, renewed or refinanced.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company (or any Subsidiary Guarantor), including an employee of the
Company (or any Subsidiary Guarantor), and who shall be reasonably acceptable to
the Trustee.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities, provided that, if such
Securities are to be redeemed, notice of such redemption
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has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities, except to the extent provided in Sections 12.2 and
12.3 hereof, with respect to which the Company has effected legal
defeasance or covenant defeasance as provided in Article XII hereof; and
(iv) Securities which have been paid pursuant to Section 3.7 hereof or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such securities are held by a bona
fide purchaser in whose hands the Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities owned
by the Company, any Subsidiary Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, any Subsidiary Guarantor or such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, consent, notice or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company, any Subsidiary Guarantor or
any other obligor upon the Securities or any Affiliate of the Company, any
Subsidiary Guarantor or such other obligor.
"Pari Passu Indebtedness" means any Indebtedness of the Company that is
pari passu in right of payment to the Securities, including, without limitation,
the Existing Notes.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (and premium, if any,
on) or interest on any Securities on behalf of the Company.
"Payment Event of Default" means any default in the payment or required
prepayment of principal of (or premium, if any, on) or interest on any Specified
Senior Indebtedness when due (whether at final maturity, upon scheduled
installment, upon acceleration or otherwise).
"Permitted Guarantor Junior Securities" means with respect to any
Subsidiary Guarantor, equity securities or subordinated debt securities of such
Subsidiary Guarantor or any successor obligor with respect to its Guarantor
Senior Indebtedness provided for by a plan of reorganization or readjustment
that, in the case of any such subordinated debt securities, are subordinated in
right of payment to all Guarantor Senior Indebtedness of such Subsidiary
Guarantor or successor obligor that may at the time be outstanding to
substantially the same extent as, or to a greater extent than, the Subsidiary
Guarantee of such Subsidiary Guarantor is so subordinated as provided in this
Indenture.
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"Permitted Indebtedness" means any of the following:
(i) Indebtedness under the Credit Facility in an aggregate principal
amount at any one time outstanding not to exceed the greater of (A)
$400,000,000, less any amounts of principal of such Indebtedness repaid
pursuant to clause (b)(i)(A) of Section 10.17 hereof, or (B) the borrowing
base thereunder, provided that both clauses (A) and (B) shall include any
guarantee of any such Indebtedness and any fees, premiums, expenses
(including costs of collection), indemnities and other amounts payable in
connection with such Indebtedness;
(ii) Indebtedness under the Offered Securities and any Subsidiary
Guarantees relating thereto or to any other Securities;
(iii) Indebtedness outstanding on the date of this Indenture (and not
repaid or defeased with the proceeds of the offering of the Securities) and
additional Indebtedness permitted to be incurred pursuant to commitments
existing under the OPIC Facility on the date of this Indenture;
(iv) obligations of the Company or a Restricted Subsidiary pursuant to
Interest Rate Protection Obligations, but only to the extent that the
stated aggregate notional amounts of such obligations do not exceed 105% of
the aggregate principal amount of the Indebtedness covered by such Interest
Rate Protection Obligations; obligations under currency exchange contracts
entered into in the ordinary course of business; and hedging arrangements
that the Company or a Restricted Subsidiary enters into in the ordinary
course of business for the purpose of protecting its production against
fluctuations in oil or natural gas prices;
(v) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary or a Finance Person and Indebtedness of a Restricted Subsidiary
to the Company or a Wholly Owned Restricted Subsidiary or a Finance Person;
provided, however, that upon any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly Owned
Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or
such Finance Person ceasing to be a Finance Person, as the case may be, or
any other subsequent transfer of any such Indebtedness (except to the
Company or a Wholly Owned Restricted Subsidiary or a Finance Person), such
Indebtedness shall be deemed, in each case, to be incurred and shall be
treated as an incurrence for purposes of Section 10.12 at the time the
Wholly Owned Restricted Subsidiary or Finance Person in question ceased to
be a Wholly Owned Restricted Subsidiary or Finance Person, as the case may
be;
(vi) in-kind obligations relating to net gas balancing positions
arising in the ordinary course of business and consistent with past
practice;
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(vii) Indebtedness in respect of bid, performance or surety bonds
issued for the account of the Company or any Restricted Subsidiary in the
ordinary course of business, including guaranties and letters of credit
supporting such bid, performance or surety obligations (in each case other
than for an obligation for money borrowed);
(viii) any guarantee of Senior Indebtedness or Guarantor Senior
Indebtedness incurred in compliance with Section 10.12 hereof, by a
Restricted Subsidiary or the Company;
(ix) Non-Recourse Purchase Money Indebtedness;
(x) any renewals, substitutions, exchanges, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company or a Restricted Subsidiary of any Indebtedness incurred pursuant to
the provisions of Section 10.12(a) (excluding Permitted Indebtedness) or
pursuant to clause (ii) or (iii) of this definition, including any
successive refinancings by the Company or such Restricted Subsidiary, so
long as (A) any such new Indebtedness shall be in a principal amount that
does not exceed the principal amount (or, if such Indebtedness being
refinanced provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration thereof, such lesser
amount as of the date of determination) so refinanced plus the amount of
any premium required to be paid in connection with such refinancing
pursuant to the terms of the Indebtedness refinanced or the amount of any
premium reasonably determined by the Company or such Restricted Subsidiary
as necessary to accomplish such refinancing, plus the amount of expenses of
the Company or such Restricted Subsidiary incurred in connection with such
refinancing, and (B) in the case of any refinancing of Indebtedness of the
Company that is not Senior Indebtedness, such new Indebtedness is either
pari passu with the Securities or subordinated to the Securities at least
to the same extent as the Indebtedness being refinanced and (C) such new
Indebtedness has an Average Life equal to or longer than the Average Life
of the Indebtedness being refinanced and a final Stated Maturity equal to
or later than the final Stated Maturity of the Indebtedness being
refinanced; and
(xi) any additional Indebtedness in an aggregate principal amount not
in excess of $25,000,000 at any one time outstanding.
"Permitted Investments" means any of the following: (i) Investments in
Cash Equivalents; (ii) Investments in the Company or any of its Restricted
Subsidiaries; (iii) Investments in an amount not to exceed $10,000,000 at any
one time outstanding; (iv) Investments by the Company or any of its Restricted
Subsidiaries in another Person, if as a result of such Investment (A) such other
Person becomes a Restricted Subsidiary or (B) such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its Properties to, the Company or a Restricted Subsidiary; (v) Investments and
expenditures made in the ordinary course of, and of a nature that is or shall
have become customary in, the Oil and Gas Business as a means of actively
exploiting, exploring for, acquiring, developing, processing, gathering,
marketing or transporting oil and gas through agreements, transactions,
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interests or arrangements which permit a Person to share risks or costs, comply
with regulatory requirements regarding local ownership or satisfy other
objectives customarily achieved through the conduct of the Oil and Gas Business
jointly with third parties, including, without limitation, (A) ownership
interests in oil and gas properties or gathering systems and (B) Investments and
expenditures in the form of or pursuant to operating agreements, processing
agreements, farm-in agreements, farm-out agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling
arrangements, joint bidding agreements, service contracts, joint venture
agreements, partnership agreements (whether general or limited), subscription
agreements, stock purchase agreements and other similar agreements with third
parties (including Unrestricted Subsidiaries); (vi) entry into any hedging
arrangements in the ordinary course of business for the purpose of protecting
the Company's or any Restricted Subsidiary's production against fluctuations in
oil or natural gas prices; (vii) entry into any currency exchange contract in
the ordinary course of business; (viii) Investments in obligations or securities
received as a result of any Asset Sale; (ix) advances and loans to officers,
directors and employees of the Company or any Restricted Subsidiary in the
ordinary course of business; (x) Investments pursuant to any agreement or
obligation in effect on the date of this Indenture; and (xi) Investments in
obligations or securities received in settlement of debts owing to the Company
or a Restricted Subsidiary as a result of bankruptcy or insolvency proceedings
or upon the foreclosure, perfection or enforcement of any Lien in favor of the
Company or a Restricted Subsidiary, in each case as to debt owing to the Company
or a Restricted Subsidiary that arose in the ordinary course of business of the
Company or any such Restricted Subsidiary.
"Permitted Junior Securities" means any equity securities or 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, in the case of any such subordinated debt securities, are subordinated in
right of payment to all Senior Indebtedness that may at the time be outstanding
to substantially the same degree as, or to a greater extent than, the Securities
are so subordinated as provided in this Indenture.
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the Issue Date (except to the extent such
Liens secure Indebtedness that is repaid or defeased with proceeds of the
offering of the Offered Securities), and any renewal, extension, refunding,
exchange or refinancing of any such Lien provided that thereafter such Lien
extends only to the Properties that were subject to such Lien prior to the
renewal, extension, refunding, exchange or refinancing thereof;
(b) Liens securing the Securities or the Subsidiary Guarantees; and
(c) Liens in favor of the Company.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
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"Predecessor Security" of any particular Security means every previous
Security, including any Security of a different series, evidencing all or a
portion of the same debt as that evidenced by such particular Security; and, for
the purposes of this definition, any Security authenticated and delivered under
Section 3.7 hereof in exchange for a mutilated security or in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of this Indenture, including, without limitation, all classes and
series of preferred or preference stock of such Person.
"Private Placement Legend" means the legend initially set forth in Section
2.2 hereof.
"Production Payments" means, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other Person.
"Purchase Agreement" means the Purchase Agreement dated June 3, 1998
between the Company and the Initial Purchasers.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock and, with respect to the
Company, Qualified Capital Stock includes, without limitation, any Qualifying
TECONS.
"Qualified Institutional Buyer" has the meaning attributed thereto in Rule
144A under the Securities Act.
"Qualifying TECONS" means preferred trust securities or similar securities
issued by a Finance Person after the date of this Indenture.
"Record Date" means a Regular Record Date or a Special Record Date.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or by contract or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed prior to the final Stated Maturity of the
Securities or is redeemable at the option of the holder thereof at any time
prior to such final Stated Maturity, or is convertible into or exchangeable for
debt securities at any time prior to such final Stated Maturity.
"Redemption Date," when used with respect to any Security to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
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"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registration Default" has the meaning ascribed thereto in a Registration
Rights Agreement.
"Registration Rights Agreement" means (a) the Registration Agreement, dated
as of June 8, 1998, by and among the Company and the Initial Purchasers relating
to the Offered Securities, a copy of which is attached hereto as Annex A, and
(b) any similar agreement that the Company may enter into in relation to any
other Series A Securities, in each case as such agreement may be amended,
modified or supplemented from time to time.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the May 15 or November 15 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Resale Restriction Termination Date" means, in relation to any particular
Series A Securities, the date which is two years after the later of the date of
original issue of such Series A Securities and the last date that the Company or
any Affiliate thereof was the owner of such Series A Securities (or any
Predecessor Securities).
"Responsible Officer," when used with respect to the Trustee, means any
officer in the Corporate Trust Department of the Trustee, and also means, with
respect to a particular corporate trust matter, any other officer of the Trustee
to whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of this Indenture, unless such Subsidiary of the
Company is an Unrestricted Subsidiary or is designated as an Unrestricted
Subsidiary pursuant to the terms of this Indenture.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Service, a division of The McGraw-
Hill Companies, Inc., and its successors.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Series A Securities or Series B Securities
authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor act thereto.
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"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5 hereof.
"Senior Indebtedness" means the principal of (and premium, if any, on) and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law) and other amounts due
on or in connection with (including any fees, premiums, expenses, including
costs of collection, and indemnities) any Indebtedness of the Company, whether
outstanding on the date of this Indenture or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness will be pari passu with or expressly
subordinated in right of payment to the Securities. Notwithstanding the
foregoing, "Senior Indebtedness" will not include (A) Indebtedness evidenced by
the Securities, (B) Indebtedness of the Company that is Pari Passu Indebtedness
or is expressly subordinated in right of payment to any other Indebtedness of
the Company, (C) Indebtedness that is represented by Redeemable Capital Stock,
(D) Indebtedness of the Company to the extent incurred in violation of Section
10.12(a) hereof, (E) Indebtedness of the Company to any Subsidiary of the
Company or any other Affiliate of the Company or any subsidiary of such
Affiliate and (F) Indebtedness which when incurred and without regard to any
election under Section 1111(b) of the Federal Bankruptcy Code is without
recourse to the Company.
"Series A Securities" has the meaning stated in the first recital of this
Indenture and includes the Offered Securities.
"Series B Securities" has the meaning stated in the first recital of this
Indenture.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8 hereof.
"Specified Guarantor Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, (a) all Guarantor Senior Indebtedness of such Subsidiary
Guarantor in respect of the Credit Facility and any renewals, amendments,
extensions, supplements, modifications, deferrals, refinancings or replacements
(each, for purposes of this definition, a "refinancing") thereof by such
Subsidiary Guarantor, including any successive refinancings thereof by such
Subsidiary Guarantor, and (b) any other Guarantor Senior Indebtedness and any
refinancings thereof having a principal amount of at least $10,000,000 as of the
date of determination and provided that the agreements, indentures or other
instruments evidencing such Guarantor Senior Indebtedness or pursuant to which
such Guarantor Senior Indebtedness was issued specifically designates such
Guarantor Senior Indebtedness as "Specified Guarantor Senior Indebtedness" for
purposes of this Indenture. For purposes of this definition, a refinancing of
any Specified Guarantor Senior Indebtedness shall be treated as Specified
Guarantor Senior Indebtedness only if the Indebtedness issued in such
refinancing ranks or would rank pari passu with the Specified Guarantor Senior
Indebtedness refinanced and only if the Indebtedness issued in such refinancing
is permitted under Section 10.12(a) hereof.
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"Specified Property Sales" means the sales of any of the Company's and its
Restricted Subsidiaries' domestic oil and gas properties owned on the date of
this Indenture and located outside the State of California having proved
reserves not greater than 300 Bcfe in the aggregate, according to the most
recent reserve reports relating thereto prepared by a nationally recognized firm
of independent petroleum engineers.
"Specified Senior Indebtedness" means (a) all Senior Indebtedness of the
Company in respect of the Credit Facility and any renewals, amendments,
extensions, supplements, modifications, deferrals, refinancings, or replacements
(each, for purposes of this definition, a "refinancing") thereof by the Company,
including any successive refinancings thereof by the Company and (b) any other
Senior Indebtedness and any refinancings thereof by the Company having a
principal amount of at least $10,000,000 as of the date of determination and
provided that the agreements, indentures or other instruments evidencing such
Senior Indebtedness or pursuant to which such Senior Indebtedness was issued
specifically designates such Senior Indebtedness as "Specified Senior
Indebtedness" for purposes of this Indenture. For purposes of this definition,
a refinancing of any Specified Senior Indebtedness shall be treated as a
Specified Senior Indebtedness only if the Indebtedness issued in such
refinancing ranks or would rank pari passu with the Specified Senior
Indebtedness refinanced and only if Indebtedness issued in such refinancing is
permitted by Section 10.12(a) hereof.
"Stated Maturity" means, when used with respect to any Security or any
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable, and, when used with respect to any other
Indebtedness or any installment of interest thereon, means the date specified in
the instrument evidencing or governing such Indebtedness as the fixed date an
which the principal of such Indebtedness or such installment of interest is due
and payable.
"Subordinated Indebtedness" means Indebtedness of the Company which is
expressly subordinated in right of payment to the Securities.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons performing
similar functions).
"Subsidiary Guarantee" has the meaning specified in Section 13.1 hereof.
"Subsidiary Guarantor" means, unless and until released from its Subsidiary
Guarantor pursuant to Section 13.3 hereof, each of (i) the Company's Restricted
Subsidiaries, if any, executing a supplemental indenture in compliance with the
provisions of Section 10.13(a) hereof and (ii) any Person that becomes a
successor guarantor of the Securities in compliance with the provisions of
Section 13.2 hereof.
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"Torch Agreement" means, collectively, the Amended and Restated
Administrative Services Agreement, dated as of January 1, 1996, between the
Company and Torch Energy Advisors Incorporated, the Agreement for Contract
Operations, dated November 11, 1991, between the Company and Torch Operating
Company and the Marketing Agreement, dated effective January 1, 1996, between
Torch Energy Marketing, Inc. and the Company, in each case, as the same may have
been modified or amended from time to time prior to the date of this Indenture.
"Transfer Restricted Security" has the meaning attributed thereto in a
Registration Rights Agreement; provided, however, that the Trustee shall be
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether or not any Security is a Transfer Restricted Security.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended and in force at the date as of which this Indenture is qualified under
the TIA, except as provided in Section 9.5 hereof.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company as an Unrestricted Subsidiary so long as (a)
neither the Company nor any Restricted Subsidiary is directly or indirectly
liable pursuant to the terms of any Indebtedness of such Subsidiary; (b) no
default with respect to any Indebtedness of such Subsidiary would permit (upon
notice, lapse of time or otherwise) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity; (c) neither the Company nor any Restricted Subsidiary has
made an Investment in such Subsidiary unless such Investment was made pursuant
to, and in accordance with, Section 10.10 hereof (other than Investments of the
type described in clause (iv) of the definition of Permitted Investments); and
(d) such designation shall not result in the creation or imposition of any Lien
on any of the Properties of the Company or any Restricted Subsidiary (other than
any Permitted Lien or any Lien the creation or imposition of which shall have
been in compliance with Section 10.15 hereof); provided, however, that with
respect to clause (a), the Company or a Restricted Subsidiary may be liable for
Indebtedness of an Unrestricted Subsidiary if (x) such liability constituted a
Permitted Investment or a Restricted Payment permitted by Section 10.10 hereof,
in each case at the time of incurrence, or (y) the liability would be a
Permitted Investment at the time of designation of such Subsidiary as an
Unrestricted Subsidiary. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing a Board Resolution with the
Trustee giving effect to such designation. The Board of Directors of the Company
may designate any Unrestricted Subsidiary
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as a Restricted Subsidiary if, immediately after giving effect to such
designation, (i) no Default or Event of Default shall have occurred and be
continuing, (ii) the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under Section 10.12(a) hereof and (iii) if any of
the Properties of the Company or any of its Restricted Subsidiaries would upon
such designation become subject to any Lien (other than a Permitted Lien), the
creation or imposition of such Lien shall have been in compliance with Section
10.15 hereof.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent (i) all of the Capital Stock or other ownership interests in such
Restricted Subsidiary, other than any directors' qualifying shares mandated by
applicable law, is owned directly or indirectly by the Company or (ii) such
Restricted Subsidiary is organized in a foreign jurisdiction and is required by
the applicable laws and regulations of such foreign jurisdiction to be partially
owned by the government of such foreign jurisdiction or individual or corporate
citizens of such foreign jurisdiction in order for such Restricted Subsidiary to
transact business in such foreign jurisdiction, provided that the Company,
directly or indirectly, owns the remaining Capital Stock or ownership interest
in such Restricted Subsidiary and, by contract or otherwise, controls the
management and business of such Restricted Subsidiary and derives the economic
benefits of ownership of such Restricted Subsidiary to substantially the same
extent as if such Restricted Subsidiary were a wholly owned Subsidiary.
Section 1.2 Other Definitions.
Defined
Term in Section
------ ----------
"Agent Members"................................ 3.6
"Change of Control Notice"..................... 10.16(b)
"Change of Control Offer"...................... 10.16(a)
"Change of Control Purchase Date".............. 10.16(a)
"Change of Control Purchase Price"............. 10.16(a)
"Defaulted Interest"........................... 3.8
"Excess Proceeds".............................. 10.17(b)
"Funding Guarantor"............................ 13.5
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"Global Security".............................. 2.1
"Net Proceeds Deficiency"...................... 10.17(c)
"Net Proceeds Offer"........................... 10.17(c)
"Net Proceeds Payment Date".................... 10.17(c)
"Offered Price"................................ 10.17(c)
"Pari Passu Indebtedness Amount"............... 10.17(c)
"Pari Passu Offer"............................. 10.17(c)
"Payment Amount"............................... 10.17(c)
"Payment Blockage Notice"...................... 14.3(b)
"Payment Blockage Period"...................... 14.3(b)
"Permitted Consideration"...................... 10.17(a)
"Physical Securities".......................... 2.1
"Purchase Notice".............................. 10.17(c)
"Restricted Payment"........................... 10.10(a)
"Special Interest.............................. 3.1
"Subsidiary Guarantor Non-Payment Default"..... 13.9(b)
"Subsidiary Guarantor Payment Default"......... 13.9(a)
"Subsidiary Guarantor Payment Notice".......... 13.9(b)
"Surviving Entity"............................. 8.1(a)
"Trigger Date"................................. 10.17(c)
"U.S. Government Obligations".................. 12.4(a)
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities,
"indenture security holder" means a Holder,
"indenture to be qualified" means this Indenture,
"indenture trustee" or "institutional trustee" means the Trustee, and
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein.
Section 1.4 Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
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(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(d) the masculine gender includes the feminine and the neuter;
(e) when used with reference to the Securities, the expression "of
like tenor" refers to Securities of the same series; and
(f) references to agreements and other instruments include subsequent
amendments and waivers but only to the extent not prohibited by this Indenture.
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally.
The definitive Securities shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities or notations of Subsidiary Guarantees,
as the case may be, as evidenced by their execution of such Securities or
notations of Subsidiary Guarantees, as the case may be.
Securities (including the notations thereon relating to the Subsidiary
Guarantees, if any, and the Trustee's certificate of authentication) offered and
sold shall be issued initially in the form of one or more permanent global
Securities substantially in the form set forth in Sections 2.2 through 2.5
hereof (each being herein called a "Global Security") deposited with the
Trustee, as custodian for the Depository, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. To the extent required by
the rules and procedures of the Depository, Series A Securities initially issued
in reliance on Regulation S and Rule 144A shall be represented by separate
Global Securities. Subject to the limitation set forth in Section 3.1, the
principal amounts of the Global Securities may be increased or decreased from
time to time by adjustments made on the records of the Trustee as custodian for
the Depository, as hereinafter provided.
Securities (including the notations thereon relating to the Subsidiary
Guarantees, if any, and the Trustee's certificate of authentication) exchanged
for beneficial interests in a Global Security as described in Section 3.6 shall
be issued in the form of permanent certificated
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securities in registered form in substantially the form set forth in Sections
2.2 through 2.5 hereto ("Physical Securities").
The Series A Securities and the Series B Securities, the notations thereon
relating to the Subsidiary Guarantees, if any, and the Trustee's certificate of
authentication shall be in substantially the respective forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, CUSIP or other numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with the
rules of any securities exchange or as may, consistently herewith, be determined
by the officers executing such Securities or notations of Subsidiary Guarantees,
as the case may be, as evidenced by their execution of the Securities or
notations of Subsidiary Guarantees, as the case may be. Any portion of the text
of any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security. In addition to the requirements
of Section 2.3, the Securities may also have set forth on the reverse side
thereof a form of assignment and forms to elect purchase by the Company pursuant
to Section 10.16 or 10.17 hereof.
Section 2.2 Form of Face of Security.
[THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) or
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT
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OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN
A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE ISSUER'S, THE INITIAL PURCHASERS' AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.]/1/
NUEVO ENERGY COMPANY
8__% Senior Subordinated Note due 2008, Series ____
No._____ $_______________
CUSIP No. 670509 ______
Nuevo Energy Company, 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 [(or such
lesser amount as may be shown on the Schedule of Exchanges attached hereto)]/2/
on June 1, 2008, at the office or agency of the Company referred to below, and
to pay interest thereon, commencing on ______________ and continuing
semiannually thereafter, on June 1 and December 1 in each year, from
_____________, or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, at the rate of 8__% per annum, until the
principal hereof is paid or duly provided for, and (to the extent lawful) to pay
on demand interest on any overdue interest at the rate borne by the Securities
from the date on which such overdue interest becomes payable to the date payment
of such interest has been made or duly provided for. [The Company also promises
to pay any Special Interest required by a Registration Rights Agreement, upon
the conditions, at the rates and for the periods specified therein.]/3/ 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 on the
Security Register at the close of business on the Regular Record Date for such
interest, which shall be the May 15 or
- --------------------
/1/ This legend should only be included on a Transfer Restricted Security.
/2/ This clause should be included only in a Global Security.
/3/ This sentence should be included only in a Series A Security.
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November 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 shall forthwith cease to be payable to the Holder on such Regular
Record Date, and such Defaulted Interest, and (to the extent lawful) interest on
such Defaulted Interest at the rate borne by the Securities, may be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered on the Security Register 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 may be paid at any time 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. [Accrued but
unpaid interest on any Series A Security that is exchanged for a Series B
Security pursuant to an Exchange Offer should be paid on the first Interest
Payment Date on the Series B Securities.]/4/
Payment of the principal of (and premium, if any, on) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made on
Physical Securities at the option of the Company on or before the due date by
check mailed to the address of the Person entitled thereto as such address shall
appear on the Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
NUEVO ENERGY COMPANY
[SEAL]
By:
President
Attest:
______________________________
Secretary
- ----------------------
/4/ This sentence should be included only in a Series A Security.
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<PAGE>
Section 2.3 Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company designated as its 8__% Senior Subordinated Notes due 2008, Series ___
(herein called the "Series ___ Securities" and, together with the Series ___
Securities, the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $175,000,000 at
any time Outstanding, which may be issued under an indenture (herein called the
"Indenture") dated as of June 8, 1998 between the Company and State Street Bank
and Trust Company (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties, obligations and immunities thereunder of
the Company, any Subsidiary Guarantors party thereto, the Trustee and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
The Indebtedness evidenced by the Securities is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture) and this Security is issued subject to such provisions. Each Holder
of this Security, by accepting the same, (i) agrees to and shall be bound by
such provisions, (ii) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (iii) appoints the Trustee as his attorney-in-
fact for such purpose.
The Securities are subject to redemption, at the option of the Company, in
whole or in part, at any time on or after June 1, 2003, upon not less than 30 or
more than 60 days' notice at the following Redemption Prices (expressed as
percentages of principal amount) set forth below if redeemed during the 12-month
period beginning June 1, of the years indicated below:
Redemption
Year Price
---- ----------
2003 104.438
2004 102.958
2005 101.479
2006 and thereafter 100.000%
together in the case of any such redemption with accrued and unpaid interest, if
any, to the Redemption Date, all as provided in the Indenture.
Notwithstanding the foregoing, prior to June 1, 2001 the Company may, at
any time or from time to time, redeem up to 33__% of the aggregate principal
amount of the Securities originally issued (excluding, for this purpose, any
Series B Securities issued in exchange for Series A Securities) at a Redemption
Price of 108.875% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the Redemption Date, with the net proceeds of one or more
Equity Offerings of the Company, provided that at least 66__% of the aggregate
principal amount of the Securities originally issued (excluding, for this
purpose, any Series B Securities issued in exchange for Series A Securities)
remains Outstanding after the occurrence of such redemption and provided,
further, that such redemption shall occur not later than 90 days after the date
of the closing of any such Equity Offering.
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<PAGE>
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Date referred to on the face hereof.
Securities (or portions thereof) for whose redemption and payment provision is
made in accordance with the Indenture shall cease to bear interest from and
after the Redemption Date.
The Securities do not have the benefit of any mandatory redemption or
sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase, on a Business Day not more than 60 or
less than 30 days following the mailing of a notice of the occurrence of a
Change of Control of the Company, all of the then Outstanding Securities at a
purchase price equal to 101% of the principal amount thereof, together with
accrued and unpaid interest to the Change of Control Purchase Date, all as
provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Securities at a purchase price equal to 100% of the principal
amount of the Securities, together with accrued and unpaid interest to the Net
Proceeds Payment Date.
Holders of Securities that are the subject of an offer to purchase their
securities from the Company may elect to have such Securities purchased by
completing the form entitled "Option of Holder to Elect Purchase" below.
As set forth in the Indenture, an Event of Default is generally (i) failure
to pay principal upon maturity, redemption or otherwise (including pursuant to a
Change of Control Offer or a Net Proceeds Offer); (ii) default for 30 days in
payment of interest on any of the Securities; (iii) default in the performance
of agreements relating to mergers, consolidations and sales of all or
substantially all assets or the failure to make or consummate a Change of
Control Offer or a Net Proceeds Offer; (iv) failure for 60 days after notice to
comply with any other covenants in the Indenture, any Subsidiary Guarantee or
the Securities; (v) certain payment defaults under, and the acceleration prior
to the maturity of, certain Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount in excess of $10,000,000 (or
$40,000,000 in the case of Non-Recourse Purchase Money Indebtedness); (vi) the
failure of any Subsidiary Guarantee to be in full force and effect or otherwise
to be enforceable (except as permitted by the Indenture); (vii) certain final
judgments or orders against the Company or any Restricted Subsidiary in an
aggregate amount of more than $10,000,000 over the coverage under applicable
insurance policies which remain unsatisfied and either become subject to
commencement of enforcement proceedings or remain unstayed for a period of 60
days; and (viii) certain events of bankruptcy, insolvency or reorganization of
the Company or any Material Subsidiary. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate
32
<PAGE>
principal amount of the Outstanding Securities may declare the principal amount
of all the Securities to be due and payable immediately, except that (i) in the
case of an Event of Default arising from certain events of bankruptcy,
insolvency or reorganization of the Company or any Material Subsidiary, the
principal amount of the Securities will become due and payable immediately
without further action or notice, and (ii) in the case of an Event of Default
which relates to certain payment defaults or acceleration with respect to
certain Indebtedness, any such Event of Default and any consequential
acceleration of the Securities will be automatically rescinded if any such
Indebtedness is repaid or if the default relating to such Indebtedness is cured
or waived and if the holders thereof have accelerated such Indebtedness then
such holders have rescinded their declaration of acceleration. No Holder may
pursue any remedy under the Indenture unless the Trustee shall have failed to
act after notice from such Holder of an Event of Default and written request by
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities, and the offer to the Trustee of indemnity reasonably satisfactory to
it; however, such provision does not affect the right to sue for enforcement of
any overdue payment on a Security by the Holder thereof. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the
Outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except default in payment of principal, premium or interest) if it determines
in good faith that withholding the notice is in the interest of the Holders. The
Company is required to file annual and quarterly reports with the Trustee as to
the absence or existence of defaults.
The Indenture contains provisions for (i) defeasance at any time of the
entire indebtedness of the Company on this Security and (ii) discharge from
certain restrictive covenants and the related Defaults and Events of Default,
upon compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and any Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, such Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the Holder of this 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. Without the consent of any Holder, the
Company, any Subsidiary Guarantors and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, to
add or release any Subsidiary Guarantor pursuant to the Indenture, to provide
for uncertificated Securities in addition to or in place of certificated
Securities and to make certain other specified changes and other changes that do
not adversely affect the interests of any Holder in any material respect.
33
<PAGE>
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest on this 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 registerable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of like tenor and 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 limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of like
tenor and of a different authorized denomination, as requested by the Holder
surrendering the same.
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 payable in connection therewith.
A director, officer, employee, incorporator, stockholder or Affiliate of
the Company or any Subsidiary Guarantor, as such, past, present or future shall
not have any personal liability under this Security or the Indenture by reason
of his or its status as such director, officer, employee, incorporator,
stockholder or Affiliate, or any liability for any obligations of the Company or
any Subsidiary Guarantor under the Securities or the Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation.
Each Holder, by accepting this Security with the notation of Subsidiary
Guarantee endorsed hereon, waives and releases all such liability. Such waiver
and release are part of the consideration for the issuance of this Security with
the notation of Subsidiary Guarantee endorsed hereon.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, any Subsidiary Guarantors, 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 this Security is
overdue, and neither the Company, any Subsidiary Guarantors, the Trustee nor any
agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture. The Company will furnish to
any Holder upon written request and without charge a copy of the Indenture.
Requests may be made to the Company at 1331 Lamar, Suite 1600, Houston, Texas
77010.
34
<PAGE>
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders thereof. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identifying information
printed hereon.
Interest on this Security shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
This Security shall be governed by and construed in accordance with the
laws of the State of New York without regard to conflicts of law principles.
35
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:_______________________
Your Signature:_______________________________
(Sign exactly as your name appears on the face
of this Security)
Signature Guarantee:__________________________
(By an institution that is a member of the
Signature Guarantee Medallion program)
36
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 10.16 or 10.17 of the Indenture, check the box below:
[_] Section 10.17 Section 10.16
If you want to elect to have only part of the Security purchased by the
Company pursuant to Section 10.16 or Section 10.17 of the Indenture, state the
amount you elect to have purchased: $___________
Date:_______________________ Your Signature:_________________________
(Sign exactly as your name
appears on the Security)
Soc. sec. or Tax Identification
No.:_____________________________________
Signature Guarantee:_____________________
(By an institution that is a member of the
Signature Guarantee Medallion program)
37
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES/5/
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL SECURITY FOR OTHER SECURITIES
HAVE BEEN MADE:
<TABLE>
<S> <C> <C> <C> <C>
- ---------------- ---------------- ---------------- ---------------- ---------------
Date of Exchange Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized
Principal Amount Principal Amount Security officer of
of this Global of this Global following such Trustee or
Security Security decrease (or Security Custodian
increase)
</TABLE>
- ----------------------
/5/. This should be included only if the Security is issued in global form.
38
<PAGE>
Section 2.4 Form of Notation Relating to Subsidiary Guarantees.
The form of notation to be set forth on each Security relating to the
Subsidiary Guarantees, if any, shall be in substantially the following form:
SUBSIDIARY GUARANTEES
Subject to the limitations set forth in the Indenture, all Subsidiary
Guarantors (as defined in the Indenture referred to in the Security upon which
this notation is endorsed and each being hereinafter referred to as a
"Subsidiary Guarantor," which term includes any successor Subsidiary Guarantor
under the Indenture) that may become party to the Indenture after the execution
and delivery thereof, have, jointly and severally, unconditionally guaranteed
(a) the due and punctual payment of the principal (and premium, if any) of and
interest on the Securities, whether at maturity, acceleration, redemption or
otherwise, (b) the due and punctual payment of interest on the overdue principal
of and interest on the Securities, if any, to the extent lawful, (c) the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in the Indenture, and
(d) in case of any extension of time of payment or renewal of any Securities or
any of such other obligations, the same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at Stated Maturity, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor are limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law. Each Subsidiary Guarantor that makes a
payment or distribution under a Subsidiary Guarantee shall be entitled to a
contribution from each other Subsidiary Guarantor in a pro rata amount based on
the Adjusted Net Assets of each Subsidiary Guarantor.
The obligations of the Subsidiary Guarantors to the Holders or the
Trustee pursuant to the Subsidiary Guarantees and the Indenture are expressly
subordinate to all Guarantor Senior Indebtedness to the extent set forth in
Article XIII of the Indenture and reference is made to such Indenture for the
precise terms of such subordination.
No stockholder, officer, director, employee, incorporator or Affiliate
as such, past, present or future, of any Subsidiary Guarantor shall have any
personal liability under its Subsidiary Guarantee by reason of his or its status
as such stockholder, officer, director, employee, incorporator or Affiliate, or
any liability for any obligations of any Subsidiary Guarantor under the
Securities or the Indenture or for any claim based on, in respect of, or by
reason of such obligations or their creation.
39
<PAGE>
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee
upon the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are
defined in the Indenture referred to in this Security upon which this notation
of Subsidiary Guarantees is endorsed shall have the meanings assigned to them in
such Indenture.
The Subsidiary Guarantees shall be binding upon the Subsidiary
Guarantors and shall inure to the benefit of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee
respecting the Security upon which the foregoing Subsidiary Guarantees are
noted, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof and in the Indenture.
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Security upon which the
foregoing Subsidiary Guarantees are noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its authorized
signatories.
[SUBSIDIARY GUARANTORS]
By:
__________________________
Section 2.5 Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: ________________ State Street Bank and Trust Company, as Trustee
By:_______________________________________
Authorized Signatory
40
<PAGE>
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms.
The aggregate principal amount of Series A Securities which may be
authenticated and delivered under this Indenture for original issue on the Issue
Date is limited to $100,000,000 (such Series A Securities being herein called
the "Offered Securities"), and from time to time after the Issue Date up to an
additional $75,000,000 aggregate principal amount of Series A Securities may be
issued, authenticated and delivered hereunder. The aggregate principal amount
of Series B Securities which may be authenticated and delivered under this
Indenture for original issue is limited to $175,000,000. The aggregate
principal amount of Securities Outstanding at any one time may not exceed
$175,000,000 except as provided in Section 3.7 hereof.
The Series A Securities shall be known and designated as the "8__%
Senior Subordinated Notes due 2008, Series A" of the Company. Their Stated
Maturity shall be June 1, 2008, and they shall bear interest at the rate of 8__%
per annum from the date of their original issuance, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
payable semiannually on June 1 and December 1 in each year, commencing, in the
case of the Offered Securities, December 1, 1998, and at said Stated Maturity,
until the principal thereof is paid or duly provided for.
The Series B Securities shall be known and designated as the "8__%
Senior Subordinated Notes due 2008, Series B" of the Company. Their Stated
Maturity shall be June 1, 2008, and they shall bear interest at the rate of 8__%
per annum from the date of their original issuance, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
payable semiannually on June 1 and December 1 in each year, commencing on the
first June 1or December 1 following the original issuance of the Series B
Securities, and at said Stated Maturity, until the principal thereof is paid or
duly provided for.
Upon the occurrence of a Registration Default, the interest rate on
Transfer Restricted Securities shall increase ("Special Interest"), with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, by 0.50% per annum and shall increase by an additional
0.25% per annum with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of 1.0% per annum
with respect to all Registration Defaults. Following the cure of a Registration
Default, the accrual of Special Interest with respect to such Registration
Default shall cease and upon the cure of all Registration Defaults the interest
rate shall revert to the original rate. Any Special Interest due on any
Security shall be payable on the appropriate Interest Payment Date to the Holder
entitled to receive the interest payment to be made on such date. Each
obligation to pay Special Interest shall be deemed to accrue from and including
the date of the first applicable Registration Default to but excluding the date
on which all Registration Defaults have been cured.
41
<PAGE>
Accrued but unpaid interest on any Series A Security that is exchanged
for a Series B Security pursuant to a Registration Rights Agreement shall be
paid on the first Interest Payment Date on the Series B Securities.
The Series A Securities and the Series B Securities shall be
considered collectively to be a single class for all purposes of this Indenture,
including, without limitation, waivers, amendments, redemptions and offers to
purchase.
As provided in the applicable Registration Rights Agreement and
subject to the limitations set forth therein, at the option of the Holders, the
Series A Securities shall be exchangeable for Series B Securities of like
aggregate principal amount pursuant to an Exchange Offer.
The principal of (and premium, if any, on) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York; provided, however, that, at the option
of the Company, interest may be paid on Physical Securities by check mailed on
or before the due date to addresses of the Persons entitled thereto as such
addresses shall appear on the Security Register.
The Securities shall be redeemable as provided in Article XI hereof.
The Securities shall be subject to defeasance at the option of the
Company as provided in Article XII hereof.
The Securities shall be guaranteed by the Subsidiary Guarantors, if
any, as provided in Article XIII hereof.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIV hereof.
Section 3.2 Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or a Vice President of the Company, under
its corporate seal reproduced thereon and attested by its Secretary or an
Assistant Secretary of the Company. The signature of any of these officers on
the Securities may be manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such
42
<PAGE>
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 after the execution and delivery of this Indenture, the
Company may deliver Series A Securities executed by the Company (and if at such
time there are any Subsidiary Guarantors, then having the notations of
Subsidiary Guarantees executed by such Subsidiary Guarantors) to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Series A Securities, and the Trustee in accordance with such
Company Order shall authenticate and deliver such Series A Securities with the
notations of Subsidiary Guarantees, if any, thereon as provided in this
Indenture. Such Company Order shall specify the principal amount of the Series
A Securities to be authenticated and the date on which the original issue of
Series A Securities is to be authenticated. In addition, on or prior to the
date of consummation of any Exchange Offer, the Company may deliver Series B
Securities executed by the Company (and if at such time there are any Subsidiary
Guarantors, then having the notations of Subsidiary Guarantees executed by such
Subsidiary Guarantors) to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Series B Securities,
and the Trustee in accordance with such Company Order shall authenticate and
deliver such Series B Securities with the notations of Subsidiary Guarantees, if
any, thereon as provided in this Indenture. Such Company Order shall specify
the principal amount of the Series B Securities to be authenticated and the date
on which the Series B Securities are to be exchanged for an equal principal
amount of Series A Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.
In case the Company, pursuant to and in compliance with Article VIII
hereof, shall be consolidated or merged with or into any other Person or shall
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of its Properties to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a sale, conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an
indenture supplemental hereto with the Trustee pursuant to Article VIII hereof,
any of the Securities authenticated or delivered prior to such sale,
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person be exchanged for other
Securities executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like
tenor as the Securities surrendered for such exchange and of like principal
amount; and the Trustee, upon Company Request of the successor Person, shall
authenticate and deliver Securities as specified in such request for the purpose
of such exchange. If Securities shall at any time be authenticated and delivered
in any new name of a successor Person pursuant to this Section in exchange or
substitution for or upon registration of
43
<PAGE>
transfer of any Securities, such successor Person, at the option of the Holders
but without expense to them, shall provide for the exchange of all Securities at
the time Outstanding for Securities authenticated and delivered in such new
name.
Section 3.4 Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued (and if at
such time there are any Subsidiary Guarantors, then having the notations of
Subsidiary Guarantees thereon) and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
(and notations of Subsidiary Guarantees, if any) may determine, as conclusively
evidenced by their execution of such Securities (and notations of Subsidiary
Guarantees, if any).
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 10.2
hereof, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of like tenor and of authorized denominations (and if at
such time there are any Subsidiary Guarantors, then having the notations of
Subsidiary Guarantees thereon). Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities.
Section 3.5 Registration of Transfer and Exchange.
The Company shall cause to be kept a register (the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities and of transfers of
Securities. The Security Register shall be in written form or any other form
capable of being converted into written form within a reasonable time. At all
reasonable times and during normal business hours, the Security Register shall
be open to inspection by the Trustee. The Trustee is hereby initially appointed
as security registrar (the "Security Registrar") for the purpose of registering
Securities and transfers of Securities as herein provided.
Subject to the provisions of this Section 3.5 and Section 3.6 hereof,
upon surrender for registration of transfer of any Security at the office or
agency of the Company designated pursuant to Section 10.2 hereof, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of like
tenor and of any authorized denominations and of a like aggregate principal
amount, each such Security having the notation of Subsidiary Guarantees thereon
if there are then any Subsidiary Guarantors.
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Furthermore, any Holder of a Global Security shall, by acceptance of
such Global Security, be deemed to have agreed that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depository (or its agent), and that ownership of a
beneficial interest in a Global Security shall be required to be reflected in a
book entry.
At the option of any Holder, Securities may be exchanged for other
Securities of like tenor or of any authorized denomination and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
the office or agency of the Company designated pursuant to Section 10.2 hereof.
Further, at the option of any Holder, Series A Securities may be exchanged,
pursuant to an Exchange Offer and subject to the terms and conditions thereof,
for Series B Securities of like aggregate principal amount, upon surrender of
the Series A Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, the
Subsidiary Guarantors, if any, shall execute notations of Subsidiary Guarantees
on, and the Trustee shall authenticate and deliver, the Securities which the
Holder making the exchange is entitled to receive.
All Securities and the Subsidiary Guarantees noted thereon, if any,
issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company and the respective Subsidiary Guarantors, if
any, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing. As a special
condition to registration of transfer or exchange of any Transfer Restricted
Securities involving removal of a Private Placement Legend (other than pursuant
to an effective registration statement under the Securities Act), the Holder
requesting such registration of transfer or exchange shall furnish the Opinion
of Counsel called for by Section 3.12 hereof. The following additional special
conditions shall apply to the indicated types of transfers or exchanges:
(a) Respecting any requested registration of transfer or exchange of
Transfer Restricted Securities in the form of Physical Securities, such Physical
Securities shall be accompanied, in the sole discretion of the Company, by the
following additional information and documents, as applicable:
(1) if such Physical Security is being delivered to the Security
Registrar by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in substantially
the form of Exhibit B hereto); or
(2) if such Physical Security is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A, a certification to that
effect (in substantially the form of Exhibit B hereto); or
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(3) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification to that effect
(in substantially the form of Exhibit B hereto), a Transferee Certificate for
Institutional Accredited Investors in the form of Exhibit C hereto and an
Opinion of Counsel to the effect that such transfer is in compliance with the
Securities Act; or
(4) if such Physical Security is being transferred in reliance on
Regulation S, delivery of a certification to that effect (substantially in
the form of Exhibit B hereto), a Transferor Certificate for Regulation S
Transfers in the form of Exhibit D hereto and an Opinion of Counsel to the
effect that such transfer is in compliance with the Securities Act; or
(5) if such Physical Security is being transferred in reliance on
Rule 144, delivery of a certification to that effect (substantially in the
form of Exhibit B hereto) and an Opinion of Counsel to the effect that such
transfer is in compliance with the Securities Act; or
(6) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the Securities Act, a
certification to that effect (in substantially the form of Exhibit B hereto)
and an Opinion of Counsel to the effect that such transfer is in compliance
with the Securities Act.
Any Physical Security issued upon any such registration of transfer or exchange
shall be in a minimum principal amount of $250,000.
(b) Respecting any requested exchange of a Physical Security for a
beneficial interest in a Global Security, such Physical Security shall be
accompanied, in the sole discretion of the Company, by the following additional
information and documents:
(1) a certification, substantially in the form of Exhibit B hereto,
that such Physical Security is being transferred to a Person reasonably
believed to be a Qualified Institutional Buyer; and
(2) written instructions directing the Security Registrar to make,
or to direct the Depository to make, an endorsement on the Global Security to
reflect an increase in the aggregate amount of the Securities represented by
the Global Security;
whereupon the Security Registrar shall cancel such Physical Security and cause,
or direct the Depository to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Security Registrar, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Security is then outstanding, the Company
shall issue and the Trustee shall upon Company Order authenticate a new Global
Security in the appropriate amount.
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(c) With the prior approval of the Company, any Person having a
beneficial interest in a Global Security may upon request to the Security
Registrar exchange such beneficial interest for a Physical Security. Upon
receipt by the Security Registrar of written instructions (or such other form of
instructions as is customary for the Depository) from the Depository or its
nominee on behalf of any Person having a beneficial interest in a Global
Security and upon receipt by the Security Registrar of a written order or such
other form of instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest containing
registration instructions and, in the case of any such transfer or exchange of a
beneficial interest in Transfer Restricted Securities, the following additional
information and documents:
(1) if such beneficial interest is being transferred to the Person
designated by the Depository as being the beneficial owner, a certification
from such Person to that effect (in substantially the form of Exhibit B
hereto); or
(2) if such beneficial interest is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A under the Securities Act, a
certification to that effect (in substantially the form of Exhibit B hereto);
or
(3) if such beneficial interest is being transferred to an
Institutional Accredited Investor, delivery of a certification to that effect
(substantially in the form of Exhibit B hereto), a Transferee Certificate for
Institutional Accredited Investors in the form of Exhibit C hereto and an
Opinion of Counsel to the effect that such transfer is in compliance with the
Securities Act; or
(4) if such beneficial interest is being transferred in reliance on
Regulation S, delivery of a certification to that effect (substantially in
the form of Exhibit B hereto), a Transferor Certificate for Regulation S
Transfers in the form of Exhibit D hereto and an Opinion of Counsel to the
effect that such transfer is in compliance with the Securities Act; or
(5) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to that effect
(substantially in the form of Exhibit B hereto) and an Opinion of Counsel to
the effect that such transfer is in compliance with the Securities Act; or
(6) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the Securities Act, a
certification to that effect (in substantially the form of Exhibit B hereto)
and an Opinion of Counsel to the effect that such transfer is in compliance
with the Securities Act,
then the Security Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository and the Security
Registrar, the aggregate principal amount of the Global Security to be reduced
and, following such reduction, the Company will execute and, upon receipt of a
Company Order, the Trustee will authenticate and deliver to the transferee a
Physical Security. Securities issued in exchange for a beneficial interest in a
Global
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Security pursuant to this Section 3.5(c) shall be registered in such names and
in such authorized denominations as the Depository, pursuant to instructions
from Agent Members or otherwise, shall instruct the Security Registrar in
writing; provided, however, that any Transfer Restricted Security shall be
issued in a minimum denomination of $250,000. The Security Registrar shall
deliver such Physical Securities to the Persons in whose names such Physical
Securities are so registered.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to an Exchange Offer or Section 3.4, 9.6 or 11.8 hereof
not involving any transfer.
Neither the Trustee, the Security Registrar nor the Company shall be
required (i) to issue, register the transfer of or exchange any Physical
Security during a period beginning at the opening of business 15 days before the
mailing of a notice of redemption of Securities selected for redemption under
Section 11.4 hereof and ending at the close of business on the day of such
mailing of the relevant notice of redemption, or (ii) to register the transfer
of or exchange any Physical Security so selected for redemption in whole or in
part, except the unredeemed portion of any Physical Security being redeemed in
part.
Section 3.6 Book-Entry Provisions for Global Securities.
Each Global Security shall (i) be registered in the name of the
Depository for such Global Security or the nominee of such Depository, (ii) be
delivered to the Trustee as custodian for such Depository and (iii) bear the
legend set forth in Exhibit A hereto.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under such
Global Security, and the Depository may be treated by the Company, the
Subsidiary Guarantors, if any, the Trustee and any agent of the Company, the
Subsidiary Guarantors, if any, or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Subsidiary Guarantors, if any, the
Trustee or any agent of the Company, the Subsidiary Guarantors, if any, or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or shall impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any Security.
Transfers of a Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to the Depository, its successors or
their respective nominees. Interests of beneficial owners in a Global Security
may be transferred or exchanged for Physical Securities in accordance with the
rules and procedures of the Depository and the provisions of Section 3.5 hereof.
In addition, Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in a Global Security if, and only if,
either (1) the Depository notifies the Company that it is unwilling or unable to
continue as depositary for the Global Security and a
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successor depositary is not appointed by the Company within 90 days of such
notice, or (2) an Event of Default has occurred and is continuing and the
Security Registrar has received a request from the Depository to issue Physical
Securities in lieu of all or a portion of the Global Security (in which case the
Company shall deliver Physical Securities within 30 days of such request).
In connection with the transfer of an entire Global Security to
beneficial owners pursuant to this Section, the Global Security shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall upon Company Order authenticate and deliver, to
each beneficial owner identified by the Depository, in exchange for its
beneficial interest in the Global Security, an equal aggregate principal amount
of Physical Securities of authorized denominations.
The Holder of the Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
Section 3.7 Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee or (ii)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, the Subsidiary Guarantors, if any, and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute, the Subsidiary
Guarantors, if any, shall execute the notation of Subsidiary Guarantees, and
upon Company Order the Trustee shall authenticate and deliver, in exchange for
any such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount, having the notation
of Subsidiary Guarantees thereon if at such time there are any Subsidiary
Guarantors, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and the respective Subsidiary
Guarantors, if any, whether or not the mutilated, destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Securities of like tenor duly issued hereunder.
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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 3.8 Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose pursuant to Section
10.2 hereof.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease to
be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted Interest")
may be paid by the Company, at its election in each case, as provided in clause
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, and such
money when deposited shall be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date, and in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given in the
manner provided for in Section 15.5 hereof, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been so given, such Defaulted
Interest shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given
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by the Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 3.9 Persons Deemed Owners.
Prior to the due presentment of a Security for registration of
transfer, the Company, the Subsidiary Guarantors, if any, the Security
Registrar, the Trustee and any agent of the Company, the Subsidiary Guarantors,
if any, or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any, on) and (subject to Section 3.8 hereof)
interest on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and none of the Company, the Subsidiary Guarantors, if
any, the Security Registrar, the Trustee or any agent of the Company, the
Subsidiary Guarantors, if any, or the Trustee shall be affected by notice to the
contrary.
Section 3.10 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Securities held by
the Trustee shall be disposed of as directed by a Company Order or in accordance
with the Trustee's usual practice; provided, however, that the Trustee shall not
be required to destroy canceled Securities.
Section 3.11 Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Section 3.12 Private Placement Legend.
(a) All Transfer Restricted Securities shall bear the Private
Placement Legend upon the original issuance thereof. Upon the transfer,
exchange or replacement of Securities bearing the Private Placement Legend, the
Security Registrar shall deliver only Securities that bear the Private Placement
Legend unless, and the Trustee is hereby authorized to deliver Securities
without the Private Placement Legend if, (i) there is delivered to the Trustee
an Opinion of
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Counsel to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act or (ii) such Security has been sold pursuant to an effective
registration statement under the Securities Act. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the Security
Registrar shall deliver Securities that do not bear the Private Placement
Legend.
(b) Notwithstanding the provisions of the preceding paragraph of this
Section 3.12, the Private Placement Legend on any Transfer Restricted Security
shall be removed upon the request of the Holder thereof upon delivery of such
Security to the Security Registration for exchange at any time after the Resale
Restriction Termination Date.
(c) By its acceptance of any Security bearing the Private Placement
Legend, each Holder of such a Security acknowledges the restrictions on transfer
of such Security set forth in this Indenture and in the Private Placement Legend
and agrees that it will transfer such Security only as provided in this
Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Securities, as expressly provided for in this Indenture) as to all Outstanding
Securities, and the Trustee, at the expense of the Company, shall, upon payment
of all amounts due the Trustee under Section 6.6 hereof, execute proper
instruments acknowledging satisfaction and discharge of this Indenture when
(a) either
(1) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.7 hereof and (ii) Securities
for whose payment money or United States governmental obligations of the type
described in clause (i) of the definition of Cash Equivalents have
theretofore been deposited in trust with the Trustee or any Paying Agent or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 10.3 hereof)
have been delivered to the Trustee for cancellation, or
(2) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
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(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of clause (2)(i), (2)(ii) or (2)(iii) above, has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such deposit (in
the case of Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be, together with instructions
from the Company irrevocably directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be;
(b) the Company has paid or caused to be paid all other sums then
due and payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that all
conditions precedent herein relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.6 hereof and, if money
shall have been deposited with the Trustee pursuant to this Section, the
obligations of the Trustee under Section 4.2 hereof and the last paragraph of
Section 10.3 hereof shall survive.
Section 4.2 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3
hereof, all money deposited with the Trustee pursuant to Section 4.1 hereof
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee.
ARTICLE V
REMEDIES
Section 5.1 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
occasioned by the
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provisions of Article XIV or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of the principal of or premium, if any, on
any of the Securities when the same becomes due and payable, whether such
payment is due at Stated Maturity, upon redemption, upon repurchase pursuant to
a Change of Control Offer or a Net Proceeds Offer, upon acceleration or
otherwise; or
(b) default in the payment of any installment of interest on any of
the Securities, when it becomes due and payable, and the continuance of such
default for a period of 30 days; or
(c) default in the performance or breach of the provisions of Article
VIII hereof, the failure to make or consummate a Change of Control Offer in
accordance with the provisions of Section 10.16 or the failure to make or
consummate a Net Proceeds Offer in accordance with the provisions of Section
10.17; or
(d) failure of the Company or any Subsidiary Guarantor to comply with
any other term, covenant or agreement contained in the Securities, any
Subsidiary Guarantee or this Indenture (other than a default specified in
subparagraph (a), (b) or (c) above) for a period of 60 days after written notice
of such failure stating that it is a "notice of default" hereunder and requiring
the Company or such Subsidiary Guarantor, as the case may be, to remedy the same
shall have been given (x) to the Company by the Trustee or (y) to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities then Outstanding; or
(e) the occurrence and continuation beyond any applicable grace period
of any default in the payment of the principal of (or premium, if any, on) or
interest on any Indebtedness of the Company (other than the Securities) or any
Restricted Subsidiary for money borrowed when due, or any other default
resulting in acceleration of any Indebtedness of the Company or any Restricted
Subsidiary for money borrowed, provided that the aggregate principal amount of
such Indebtedness shall exceed $10,000,000 (or $40,000,000 in the case of Non-
Recourse Purchase Money Indebtedness); or
(f) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to be,
in full force and effect, enforceable in accordance with its terms (except
pursuant to the release or termination of any such Subsidiary Guarantee in
accordance with this Indenture); or
(g) final judgments or orders rendered against the Company or any
Restricted Subsidiary that are unsatisfied and that require the payment in
money, either individually or in an aggregate amount, that is more than
$10,000,000 over the coverage under applicable insurance policies and either (A)
commencement by any creditor of an enforcement proceeding upon such judgment
(other than a judgment that is stayed by reason of pending appeal or otherwise)
or (B) the occurrence of a 60-day period during which a stay of such judgment or
order, by reason of pending appeal or otherwise, was not in effect: or
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(h) the entry of a decree or order by a court having jurisdiction in
the premises (A) for relief in respect of the Company or any Material Subsidiary
in an involuntary case or proceeding under the Federal Bankruptcy Code or any
other applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or (B) adjudging the Company or any Material Subsidiary
bankrupt or insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of the Company or a Material Subsidiary
under the Federal Bankruptcy Code or any applicable federal or state law, or
appointing under any such law a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any Material
Subsidiary or of a substantial part of its consolidated assets, or ordering the
winding up or liquidation of its affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect for
a period of 60 consecutive days; or
(i) the commencement by the Company or any Material Subsidiary of a
voluntary case or proceeding under the Federal Bankruptcy Code or any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or
any other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company or any Material Subsidiary to the entry of a decree or
order for relief in respect thereof in an involuntary case or proceeding under
the Federal Bankruptcy Code or any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by the
Company or any Material Subsidiary of a petition or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by it under any such law to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of the Company or
any Material Subsidiary or of any substantial part of its consolidated assets,
or the making by it of an assignment for the benefit of creditors under any such
law, or the admission by it in writing of its inability to pay its debts
generally as they become due or taking of corporate action by the Company or any
Material Subsidiary in furtherance of any such action.
Section 5.2 Acceleration of Maturity: Rescission and Annulment.
If any Event of Default (other than an Event of Default specified in
Section 5.1(h) or (i) hereof) occurs and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
then Outstanding, by written notice to the Company (and to the Trustee if such
notice is given by the Holders), may, and the Trustee upon the request of the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities shall, by a notice in writing to the Company, declare all unpaid
principal of, premium, if any, and accrued and unpaid interest on all the
Securities to be due and payable immediately, upon which declaration all amounts
payable in respect of the Securities shall be immediately due and payable. If an
Event of Default specified in Section 5.1(h) or (i) hereof occurs and is
continuing, the amounts described above shall become and be immediately due and
payable without any declaration, notice or other act on the part of the Trustee
or any Holder.
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At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in aggregate principal amount of the Securities Outstanding, by written notice
to the Company, the Subsidiary Guarantors, if any, and the Trustee, may rescind
and annul such declaration and its consequences if
(a) the Company or any Subsidiary Guarantor has paid or deposited
with the Trustee a sum sufficient to pay,
(1) all overdue interest on all Outstanding Securities,
(2) all unpaid principal of (and premium, if any, on) any
Outstanding Securities which have become due otherwise than by such
declaration of acceleration, including any Securities required to have been
purchased on a Change of Control Date or a Net Proceeds Payment Date pursuant
to a Change of Control Offer or a Net Proceeds Offer, as applicable, and
interest on such unpaid principal at the rate borne by the Securities,
(3) to the extent that payment of such interest is lawful, interest
on overdue interest and overdue principal at the rate borne by the Securities
(without duplication of any amount paid or deposited pursuant to clauses (1)
and (2) above), and
(4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;
(b) the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction as certified to the Trustee by the Company; and
(c) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Securities which have
become due solely by such declaration of acceleration, have been cured or waived
as provided in Section 5.13 hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the foregoing, if an Event of Default specified in
Section 5.1(e) hereof shall have occurred and be continuing, such Event of
Default and any consequential acceleration shall be automatically rescinded if
the Indebtedness that is the subject of such Event of Default has been repaid,
or if the default relating to such Indebtedness is waived or cured and if such
Indebtedness has been accelerated, then the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness (provided, in each
case, that such repayment, waiver, cure or rescission is effected within a
period of 10 days from the continuation of such default beyond the applicable
grace period or the occurrence of such acceleration), and written notice of such
repayment, or cure or waiver and rescission, as the case may be, shall have been
given to
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the Trustee by the Company and countersigned by the holders of such Indebtedness
or a trustee, fiduciary or agent for such holders or other evidence satisfactory
to the Trustee of such events is provided to the Trustee, within 30 days after
any such acceleration in respect of the Securities, and so long as such
rescission of any such acceleration of the Securities does not conflict with any
judgment or decree as certified to the Trustee by the Company.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof or with respect to any Security
required to have been purchased by the Company on the Change of Control Purchase
Date or the Net Proceeds Payment Date pursuant to a Change of Control Offer or
Net Proceeds Offer, as applicable,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by the Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
money adjudged or decreed to be payable in the manner provided by law out of the
Property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, any Subsidiary Guarantor or any
other obligor upon the Securities, their creditors or
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the Property of the Company, any Subsidiary Guarantor or of such other obligor,
the Trustee (irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company,
the Subsidiary Guarantors, if any, or such other obligor for the payment of
overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents and take any other actions including
participation as a full member of any creditor or other committee as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) subject to Article XIV, to collect and receive any money or other
Property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.6 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the Subsidiary Guarantees, if any, or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 5.5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
or the Subsidiary Guarantees, if any, may be prosecuted and enforced by the
Trustee without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name and as trustee of an express
trust, and any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders of
the Securities in respect of which such judgment has been recovered.
Section 5.6 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in the case of the distribution of
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such money on account of principal (or premium, if any) or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under Section
6.6 hereof;
SECOND: subject to Article XIV, to the payment of the amounts then
due and unpaid for principal of (and premium, if any, on) and interest on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal
(and premium, if any) and interest, respectively; and
THIRD: subject to Article XIV, the balance, if any, to the Company.
Section 5.7 Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority or more in
aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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Section 5.8 Unconditional Right of Holders to Receive Principal
Premium and Interest.
Notwithstanding any other provision in this Indenture (but subject to
Articles XIII and XIV hereof), the Holder of any Security shall have the right,
which is absolute and unconditional, to receive payment, as provided herein
(including, if applicable, Article XII hereof) and in such Security of the
principal of (and premium if any, on) and (subject to Section 3.8 hereof)
interest on, such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 5.9 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Subsidiary Guarantors, if
any, the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereunder and all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 5.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.7 hereof, no right or remedy herein conferred upon or reserved to
the Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12 Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided that
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(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders not joining therein.
Section 5.13 Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities may on behalf of the Holders of all the Securities
waive any existing Default or Event of Default hereunder and its consequences,
except a Default or Event of Default,
(a) in respect of the payment of the principal of (or premium, if any,
on) or interest on any Security, or
(b) in respect of a covenant or provision hereof which under Article
IX hereof cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected thereby.
Upon any such waiver, such Default or Event of Default shall cease to
exist for every purpose under this Indenture, but no such waiver shall extend to
any subsequent or other fault or Event of Default or impair any right consequent
thereon. Any such waiver may (but need not) be given in connection with a tender
offer or exchange offer for the Securities.
Section 5.14 Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Subsidiary Guarantors, if any, covenants
(to the extent that each may lawfully do so) that it will not at any time insist
upon, plead or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension, or usury law or other law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company or any
Subsidiary Guarantor from paying all or any portion of the principal of
(premium, if any, on) or interest on the Securities as contemplated herein, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each of the Company and the Subsidiary
Guarantors, if any, hereby expressly waives all benefit or advantage of any such
law, and covenant that they will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
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ARTICLE VI
THE TRUSTEE
Section 6.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, and shall be fully protected in so relying, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; provided, however, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph shall not limit the effect of Section 6.1(b);
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 5.12.
Section 6.2 Certain Rights of Trustee.
Subject to the provisions of Section 6.1 hereof:
(a) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
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(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 reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may reasonably see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; and
(i) the Trustee shall not be deemed to have notice or knowledge of any
matter unless a Responsible Officer has actual knowledge thereof or unless
written notice thereof is received by the Trustee at its Corporate Trust Office
and such notice references the Securities generally, the Company or this
Indenture.
The Trustee shall not be required to advance, expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
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Section 6.3 Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities and the notations
of Subsidiary Guarantees thereon, if any, except for the Trustee's certificates
of authentication, shall be taken as the statements of the Company or the
Subsidiary Guarantors, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture, the Subsidiary Guarantees, if
any, or the Securities, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. The Trustee shall not be accountable for
the use or application by the Company of any Securities or the proceeds thereof.
Section 6.4 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, the Subsidiary Guarantors, if any, or of the Trustee, in
its individual or any other capacity, may become the owner or pledgee of
Securities and, subject to TIA Sections 310(b) and 311 in the case of the
Trustee, may otherwise deal with the Company and the Subsidiary Guarantors, if
any, with the same rights it would have if it were not the Trustee, Paying
Agent, Security Registrar or such other agent.
Section 6.5 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company or any Subsidiary Guarantor.
Section 6.6 Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to the Trustee's willful misconduct,
negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without willful misconduct, negligence or
bad faith on its part, (i) arising out of or in connection with the acceptance
or administration of this trust, including the costs and
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expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder or (ii) in
connection with enforcing this indemnification provision.
The obligations of the Company under this Section 6.6 to compensate
the Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall not be
subordinated to the payment of Senior Indebtedness pursuant to Article XIV
hereof and shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture or any other termination under
any Insolvency or Liquidation Proceeding. As security for the performance of
such obligations of the Company, the Trustee shall have a claim and lien prior
to the Securities upon all property and funds held or collected by the Trustee
as such, except funds held in trust for payment of principal of (and premium, if
any, on) or interest on particular Securities. Such lien shall survive the
satisfaction and discharge of this Indenture or any other termination under any
Insolvency or Liquidation Proceeding.
When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in paragraph (h) or (i) of Section
5.1 of this Indenture, such expenses and the compensation for such services are
intended to constitute expenses of administration under any Insolvency or
Liquidation Proceeding.
Section 6.7 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined
capital and surplus of at least $50,000,000. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section 6.7, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 6.8 Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b) of the
Trust Indenture Act; provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) the Existing Indenture and any other
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 6.9 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10 hereof.
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(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 hereof shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in aggregate principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.7 hereof
and shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the Company
or the Holders and accepted appointment in the manner hereinafter provided, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee. The
evidence of such successorship may, but need not be, evidenced by a supplemental
indenture.
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(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to the Holders of
Securities in the manner provided for in Section 15.5 hereof. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
Section 6.10 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of all amounts due
it under Section 6.6 hereof, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all money
and other Property held by such retiring Trustee hereunder. Upon request of any
such successor Trustee, the Company shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 6.11 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Securities of like tenor or in this Indenture provided;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
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Section 6.12 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 6.13 Notice of Defaults.
Within 60 days after the occurrence of any Default hereunder, the
Trustee shall transmit in the manner and to the extent provided in TIA Section
313(c), notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; provided, however, that, except in the
case of a Default in the payment of the principal of (or premium, if any, on) or
interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 Holders' Lists; Holder Communications; Disclosures
Respecting Holders.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. Neither the Company, any Subsidiary Guarantor nor the Trustee shall
be under any responsibility with regard to the accuracy of such list. If the
Trustee is not the Security Registrar, the Company shall furnish to the Trustee
semi-annually before each Regular Record Date, and at such other times as the
Trustee may reasonably request in writing, a list, in such form as the Trustee
may reasonably request, as of such date of the names and addresses of the
Holders then known to the Company. The Company and the Trustee shall also
satisfy any other requirements imposed upon each of them by TIA Section 312(a).
Holders may communicate pursuant to Section 312(b) of the TIA with
other Holders with respect to their rights under this Indenture or the
Securities.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company, the Subsidiary Guarantors, if any, the Security Registrar and
the Trustee that none of the Company, the Subsidiary Guarantors, if any, the
Security Registrar or the Trustee, or any agent of any of them, shall be held
accountable by reason of the disclosure of any information as to the names and
addresses of the Holders in accordance with TIA Section 312, regardless of the
source from which such information was derived, that each of such Persons shall
have the protection of TIA Section 312(c) and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
TIA Section 312(b).
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Section 7.2 Reports By Trustee.
Within 60 days after May 15 of each year commencing with May 15, 1999,
the Trustee shall transmit by mail to the Holders, as their names and addresses
appear in the Security Register, a brief report dated as of such May 15 in
accordance with and to the extent required under TIA Section 313(a). The Trustee
shall also comply with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
Commencing at the time this Indenture is qualified under the Trust
Indenture Act, a copy of each Trustee's report, at the time of its mailing to
Holders of Securities, shall be mailed to the Company and filed with the
Commission and each stock exchange, if any, on which the Securities are listed.
Section 7.3 Reports by Company.
The Company shall:
(a) file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports pursuant
to either of said Sections, then the Company shall file with the Trustee such
information, documents or reports as required pursuant to Section 10.9 hereof;
(b) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(c) transmit by mail to all Holders, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information, documents and
reports (without exhibits except to the extent required by TIA Section 313(c))
required to be filed by the Company pursuant to paragraph (a) or (b) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company May Consolidate, etc., Only on Certain Terms.
The Company shall not, in any single transaction or a series of
related transactions, merge or consolidate with or into any other Person, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all the Properties of the Company and its Restricted Subsidiaries
on a consolidated basis to any Person or group of Affiliated Persons, and the
Company shall not permit any of its Restricted Subsidiaries to enter into any
such transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any other Person or group of Affiliated Persons, unless at the time and
after giving affect thereto:
(a) either (i) if the transaction is a merger or consolidation, the
Company shall be the surviving Person of such merger or consolidation, or (ii)
the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or to which the Properties of the Company or its
Restricted Subsidiaries, as the case may be, are sold, assigned, conveyed,
transferred, leased or otherwise disposed of (any such surviving Person or
transferee Person being called the "Surviving Entity") shall be a corporation
organized and existing under the laws of the United States of America, any state
thereof or the District of Columbia and shall, in either case, expressly assume
by a supplemental indenture to this Indenture executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture, and, in each case, this Indenture shall
remain in full force and effect;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
Indebtedness not previously an obligation of the Company or any of its
Restricted Subsidiaries which becomes the obligation of the Company or any of
its Restricted Subsidiaries in connection with or as a result of such
transaction or transactions as having been incurred at the time of such
transaction or transactions), no Default or Event of Default shall have occurred
and be continuing;
(c) except in the case of the consolidation or merger of any
Restricted Subsidiary with or into the Company, immediately after giving effect
to such transaction or transactions on a pro forma basis, the Consolidated Net
Worth of the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) is at least equal to the Consolidated
Net Worth of the Company immediately before such transaction or transactions;
(d) except in the case of the consolidation or merger of the Company
with or into a Wholly-Owned Restricted Subsidiary or any Restricted Subsidiary
with or into the Company or any Wholly Owned Restricted Subsidiary, immediately
before and immediately after giving effect to such transaction or transactions
on a pro forma basis (on the assumption that the transaction or transactions
occurred on the first day of the period of four full fiscal quarters ending
immediately prior to the consummation of such transaction or transactions, with
the appropriate adjustments with respect to the transaction or transactions
being included in such pro
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forma calculation), the Company (or the Surviving Entity if the Company is not
the continuing obligor under this Indenture) could incur $1.00 of additional
Indebtedness (excluding Permitted Indebtedness) under Section 10.12(a) hereof;
(e) if the Company is not the continuing obligor under this Indenture,
then any Subsidiary Guarantor, unless it is the Surviving Entity, shall have by
supplemental indenture confirmed that its Subsidiary Guarantee of the Securities
shall apply to the Surviving Entity's obligations under this Indenture and the
Securities:
(f) if any of the Properties of the Company or any of its Restricted
Subsidiaries would upon such transaction or series of related transactions
become subject to any Lien (other than a Permitted Lien), the creation or
imposition of such Lien shall have been in compliance with Section 10.15 hereof;
and
(g) the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) shall have delivered to the Trustee, in
form and substance reasonably satisfactory to the Trustee, (i) an Officers'
Certificate stating that such consolidation, merger, conveyance, transfer, lease
or other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture, comply with this Indenture
and (ii) an Opinion of Counsel stating that the requirements of Section 8.1(a)
have been satisfied.
Section 8.2 Successor Substituted.
Upon any consolidation of the Company with or merger of the Company
into any other corporation or any sale, assignment, lease, conveyance, transfer
or other disposition of all or substantially all of the Properties of the
Company and its Restricted Subsidiaries on a consolidated basis in accordance
with Section 8.1 hereof, the Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such Surviving Entity had been named
as the Company herein, and in the event of any such sale, assignment, lease,
conveyance, transfer or other disposition, the Company (which term shall for
this purpose mean the Person named as the "Company" in the first paragraph of
this Indenture or any successor Person which shall theretofore become such in
the manner described in Section 8.1 hereof), except in the case of a lease,
shall be discharged from all obligations and covenants under this Indenture and
the Securities, and the Company may be dissolved and liquidated and such
dissolution and liquidation shall not cause a Change of Control under clause (e)
of the definition thereof to occur unless the sale, assignment, lease,
conveyance, transfer or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any Person otherwise results in a Change of Control.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, each of the Subsidiary Guarantors, if any, when authorized by
a Board Resolution, and the Trustee upon Company Request, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company contained
herein and in the Securities; or
(b) to add to the covenants of the Company for the benefit of the
Holders, to provide any additional rights or benefits to the Holders or to
surrender any right or power herein conferred upon the Company; or
(c) to add any additional Events of Default; or
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Sections 6.9
and 6.10 hereof; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture provided that such action shall not adversely affect the
interests of the Holders in any material respect; or
(f) to secure the Securities pursuant to the requirements of Section
10.15 hereof or otherwise; or
(g) to add any Restricted Subsidiary as a Subsidiary Guarantor as
provided in Section 10.13(a) hereof or to evidence the succession of another
Person to any Subsidiary Guarantor pursuant to Section 13.2(b) hereof and the
assumption by any such successor of the covenants and agreements of such
Subsidiary Guarantor contained herein, in the Securities and in the Subsidiary
Guarantee of such Subsidiary Guarantor; or
(h) to release a Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 13.3 hereof; or
(i) to provide for uncertificated Securities in addition to or in
place of certificated Securities; or
(j) to comply with the requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
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Section 9.2 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities (which consent may, but
need not, be given in connection with any tender offer or exchange offer for the
Securities), by Act of said Holders delivered to the Company and the Trustee,
the Company, when authorized by a Board Resolution, each of the Subsidiary
Guarantors, if any, when authorized by a Board Resolution, and the Trustee upon
Company Request may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders under this Indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the Stated Maturity of the
principal of, or any installment of interest on, any Security or alter or waive
any of the provisions with respect to the redemption of the Securities, except
as provided below with respect to Sections 10.16 and 10.17 hereof;
(c) reduce the rate of or change the time for payment of interest,
including Defaulted Interest, on any Security;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Securities (except a rescission of
acceleration of the Securities by the Holders of at least a majority in
aggregate principal amount of the then Outstanding Securities and a waiver of
the payment default that resulted from such acceleration);
(e) make any Security payable in money other than that stated in the
Securities;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Securities to receive
payments of principal of or interest on the Securities;
(g) waive a redemption payment with respect to any Security (other
than a payment required by Section 10.16 or Section 10.17 hereof); or
(h) modify any provisions of this Indenture relating to the relative
ranking of the Securities or the Subsidiary Guarantees, if any, in a manner
adverse to the Holders thereof; or
(i) make any change in Section 5.8, 5.13 or 10.20 hereof or in the
foregoing amendment and waiver provisions.
It shall not be necessary for any Act of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
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Section 9.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company, with the notations of Subsidiary Guarantees thereon executed by the
Subsidiary Guarantors, if there are then any Subsidiary Guarantors, and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
Section 9.7 Notice of Supplemental Indentures and Waivers.
Promptly after (i) the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 9.2 hereof or (ii)
a waiver under Section 5.13 or 10.20 hereof becomes effective, the Company shall
give notice thereof to the Holders of each Outstanding Security affected, in the
manner provided for in Section 15.5 hereof, setting forth in general terms the
substance of such supplemental indenture or waiver, as the case may be.
Section 9.8 Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the rights of the
holders of Senior Indebtedness under Article XIV hereof or the holders of
Guarantor Senior Indebtedness under
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Sections 13.8, 13.9, 13.10, 13.11, 13.13, 13.14, 13.15, 13.16 and 13.19 hereof
unless expressly consented to in writing by or on behalf of such holders (or by
any specified percentage of holders of a class of Senior Indebtedness or
Guarantor Senior Indebtedness, as the case may be, required to consent thereto
pursuant to the terms of the agreement or instrument creating, evidencing or
governing such Senior Indebtedness or Guarantor Senior Indebtedness, as the case
may be), in which event such supplemental indenture shall be binding on all
successors and assigns of such holders and on all Persons who become holders of
such Senior Indebtedness or Guarantor Senior Indebtedness issued after the date
of such amendment or modification.
ARTICLE X
COVENANTS
Section 10.1 Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any, on) and
interest (including Special Interest) on the Securities in accordance with the
terms of the Securities and this Indenture. Principal, premium, if any, and
interest shall be considered paid on the date due if by 11:00 a.m., Eastern
time, on such date the Trustee or a Paying Agent (other than the Company or its
Affiliates, except any such Affiliate providing commercial banking services to
the Company or its Subsidiaries upon commercially reasonable terms in the
ordinary course of such Affiliate's business) holds in accordance with this
Indenture money sufficient to pay all principal, premium, if any, and interest
then due and the Trustee or such Paying Agent, as the case may be, is not
prohibited from paying such money to the Holders of Securities on that date
pursuant to the terms of this Indenture. The Company shall notify the Trustee
and any Paying Agent immediately upon the occurrence of any Registration Default
and, with respect to Special Interest payments pursuant to a Registration Rights
Agreement, the Company shall notify the Trustee and any Paying Agent prior to
any Interest Payment Date of the amount of Special Interest payable to each
Holder.
Section 10.2 Maintenance of Office or Agency.
The Company shall maintain an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities, the Subsidiary Guarantees and this
Indenture may be served. The Corporate Trust Office shall be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
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The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind any such designation.
Further, if at any time there shall be no such office or agency in The City of
New York where the Securities may be presented or surrendered for payment, the
Company shall forthwith designate and maintain such an office or agency in The
City of New York, in order that the Securities shall at all times be payable in
The City of New York. (The office of State Street Bank and Trust Company
National Association, located at 61 Broadway, 15th floor, New York, New York
10006, is hereby designated as such agency.) The Company will give prompt
written notice to the Trustee of any such designation or rescission and any
change in the location of any such other office or agency.
Section 10.3 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
shall, on or before 11:00 a.m., Eastern time, on each due date of the principal
of (and premium, if any, on) or interest on any of the Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal (and premium, if any) or interest so becoming due until
such sum shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will on or before 11:00 a.m., Eastern time, on each due date of
the principal of (and premium, if any, on), or interest on, any Securities,
deposit with a Paying Agent immediately available funds in a sum sufficient to
pay the principal (and premium, if any) or interest so becoming due, such funds
to be held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of such action or any failure so to act.
The Company shall cause each Paying Agent (other than the Trustee or
itself) to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal
(and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
Initially, the Company shall act as its own Paying Agent, and it shall
be deemed to have agreed with the Trustee that it will adhere to the agreement
described in the immediately
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preceding paragraph. Further, the Company shall give the Trustee notice within
30 days of the making of any payment of principal (and premium, if any) or
interest hereunder by any Paying Agent (including the Company if acting as its
own Paying Agent, but excluding the Trustee), which notice shall specify the
amounts of principal (and premium, if any) and interest so paid and, in the
event of any payment of principal, the aggregate unpaid principal amount of all
Securities then Outstanding.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums. The Trustee and each Paying Agent shall promptly pay to the Company
upon Company Request any money held by them (other than pursuant to Article XII)
at any time in excess of amounts required to pay principal of, premium, if any,
or interest on the Securities.
Subject to applicable escheat and abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
on any Security and remaining unclaimed for one year after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 10.4 Corporate Existence.
Except as expressly permitted by Article VIII hereof, Section 10.17
hereof or other provisions of this Indenture, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect the
corporate existence, rights (charter and statutory) and franchises of the
Company and each Restricted Subsidiary; provided, however, that the Company
shall not be required to preserve any such existence of its Restricted
Subsidiaries, rights or franchises, if the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not disadvantageous
in any material respect to the Holders.
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Section 10.5 Payment of Taxes and Other Claims.
The Company shall, or, as applicable, shall cause its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or Property of the Company or any
Restricted Subsidiary and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the Property of the
Company or any Restricted Subsidiary; provided, however, that the Company and
its Restricted Subsidiaries shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which appropriate provision has been made in accordance with
GAAP.
Section 10.6 Maintenance of Properties.
The Company shall, or, as applicable, shall cause its Restricted
Subsidiaries to, cause all material Properties owned by the Company or any
Restricted Subsidiary and used or held for use in the conduct of its business or
the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted), all as in
the judgment of the Company or such Restricted Subsidiary may be necessary so
that its or its Restricted Subsidiary's business may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company or any Restricted Subsidiary from
discontinuing the maintenance of any of such Properties if such discontinuance
is, in the judgment of the Company or such Restricted Subsidiary, as the case
may be, desirable in the conduct of the business of the Company or such
Restricted Subsidiary and not disadvantageous in any material respect to the
Holders. Notwithstanding the foregoing, nothing contained in this Section 10.6
shall limit or impair in any way the right of the Company and its Restricted
Subsidiaries to sell, divest and otherwise to engage in transactions that are
otherwise permitted by this Indenture.
Section 10.7 Insurance.
The Company shall at all times keep all of its, and cause its
Restricted Subsidiaries to keep their, Properties which are of an insurable
nature insured with insurers, believed by the Company to be responsible, against
loss or damage to the extent that property of similar character and in a similar
location is usually so insured by corporations similarly situated and owning
like Properties.
The Company or any Restricted Subsidiary may adopt such other plan or
method of protection, in lieu of or supplemental to insurance with insurers,
whether by the establishment of an insurance fund or reserve to be held and
applied to make good losses from casualties, or otherwise, conforming to the
systems of self-insurance maintained by corporations similarly situated and in a
similar location and owning like Properties, as may be determined by the Board
of Directors of the Company or such Restricted Subsidiary.
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Section 10.8 Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company and within 45 days of the end of each
of the first, second and third quarters of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its Restricted Subsidiaries during the preceding fiscal quarter or fiscal year,
as applicable, has been made under the supervision of the signing Officers with
a view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of such Officer's
knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and no Default or Event of Default has
occurred and is continuing (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which such
Officer may have knowledge and what action the Company is taking or proposes to
take with respect thereto). Such Officers' Certificate shall comply with TIA
Section 314(a)(4). For purposes of this Section 10.8(a), such compliance shall
be determined without regard to any period of grace or requirement of notice
under this Indenture.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee forthwith upon any of its Officers becoming
aware of any Default or Event of Default an Officers' Certificate specifying
such Default or Event of Default and what action the Company proposes to take
with respect thereto.
Section 10.9 Provision of Financial Information.
The Company shall file on a timely basis with the SEC, to the extent
such filings are accepted by the Commission and whether or not the Company has a
class of securities registered under the Exchange Act, the annual reports,
quarterly reports and other documents that the Company would be required to file
if it were subject to Section 13 or 15 of the Exchange Act. The Company shall
also file with the Trustee (with exhibits), and provide to each Holder of
Securities (without exhibits), without cost to such Holder, copies of such
reports and documents within 30 days after the date on which the Company files
such reports and documents with the Commission or the date on which the Company
would be required to file such reports and documents if the Company were so
required and, if filing such reports and documents with the Commission is not
accepted by the Commission or is prohibited under the Exchange Act, the Company
shall supply at its cost copies of such reports and documents (including any
exhibits thereto) to any Holder of Securities, securities analyst or prospective
purchaser of any Securities promptly upon written request given in accordance
with Section 15.4 hereof.
Section 10.10 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, take the following actions:
(i) declare or pay any dividend or make any distribution on account
of the Company's Capital Stock (other than dividends or distributions payable
solely in shares of Qualified Capital Stock of the Company or in options,
warrants or other rights to purchase Qualified Capital Stock of the Company);
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(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Affiliate thereof (other than any Wholly
Owned Restricted Subsidiary) or any options, warrants or other rights to
acquire such Capital Stock;
(iii) make any principal payment on, or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to any scheduled
principal payment, scheduled sinking fund payment or maturity, any
Subordinated Indebtedness, except that this clause (iii) shall not include
any such payment with respect to any such Subordinated Indebtedness (A) to
the extent of Excess Proceeds remaining after compliance with the provisions
of Section 10.17(c) hereof and (B) to the extent (and only to the extent)
required by the indenture or other agreement or instrument pursuant to which
such Subordinated Indebtedness was issued;
(iv) declare or pay any dividend on, or make any distribution to
the holders of, any shares of Capital Stock of any Restricted Subsidiary
(other than to the Company or any of its Wholly Owned Restricted
Subsidiaries) or purchase, redeem or otherwise acquire or retire for value
any Capital Stock of any Restricted Subsidiary or any options, warrants or
other rights to acquire any such Capital Stock (other than with respect to
any such Capital Stock held by the Company or any Wholly Owned Restricted
Subsidiary of the Company); or
(v) make any Investment (other than any Permitted Investment);
(such payments or other actions described in (but not excluded from) clauses (i)
through (v) are collectively referred to as "Restricted Payments"), unless at
the time of and after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall be the amount
determined by the Board of Directors of the Company, whose determination shall
be conclusive and evidenced by a Board Resolution), (A) no Default or Event of
Default shall have occurred and be continuing, (B) the Company could incur $1.00
of additional Indebtedness (excluding Permitted Indebtedness) in accordance with
Section 10.12(a) hereof and (C) the aggregate amount of all Restricted Payments
declared or made after the date of this Indenture shall not exceed the sum
(without duplication) of the following:
(1) 50% of the aggregate Consolidated Net Income of the Company accrued on
a cumulative basis during the period beginning on April 1, 1998 and
ending on the last day of the Company's last fiscal quarter ending
prior to the date of such proposed Restricted Payment (or, if such
aggregate Consolidated Net Income shall be a loss, minus 100% of such
loss), plus
(2) the aggregate net cash proceeds or the Fair Market Value of any
Property other than cash, received after the date of this Indenture by
the Company as capital contributions to the Company (other than from
any Restricted Subsidiary), plus
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(3) the aggregate net cash proceeds or the Fair Market Value of any
Property other than cash, received after the date of this Indenture by
the Company from the issuance or sale (other than to any of its
Restricted Subsidiaries) of shares of Qualified Capital Stock of the
Company or any option, warrants or rights to purchase such shares of
Qualified Capital Stock of the Company, plus
(4) the aggregate net cash proceeds received after the date of this
Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options, warrants or rights to
purchase shares of Qualified Capital Stock of the Company, plus
(5) the aggregate net cash proceeds received after the date of this
Indenture by the Company from the issuance or sale (other than to any
of its Restricted Subsidiaries) of debt securities or shares of
Redeemable Capital Stock that have been converted into or exchanged for
Qualified Capital Stock of the Company, together with the aggregate
cash received by the Company at the time of such conversion or
exchange, plus
(6) the aggregate net cash proceeds received after the date of this
Indenture by the Company or its Restricted Subsidiaries, computed on a
consolidated basis, constituting a return of capital on an Investment
(other than a Permitted Investment) made by the Company or any
Restricted Subsidiary after the date of this Indenture, plus
(7) $25,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its
Restricted Subsidiaries may take the following actions so long as, at the time
thereof, no Default or Event of Default shall have occurred and be continuing
(except in the case of clause (i) below) and (in the case of clause (vi) below)
the Company could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) in accordance with Section 10.12(a) hereof:
(i) the payment of any dividend on any other Capital Stock of the
Company or any Restricted Subsidiary within 60 days after the date of
declaration thereof, if at such declaration date such declaration complied
with the provisions of paragraph (a) above (and such payment shall be deemed
to have been paid on such date of declaration for purposes of any calculation
required by the provisions of paragraph (a) above);
(ii) the repurchase, redemption or other acquisition or retirement
of any shares of any class of Capital Stock of the Company or any Restricted
Subsidiary, in exchange for, or out of the aggregate net cash proceeds of, a
substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of shares of Qualified Capital Stock of the Company;
(iii) the repurchase, redemption, repayment, defeasance or other
acquisition or retirement for value of any Subordinated Indebtedness (other
than Redeemable Capital Stock) in exchange for or out of the aggregate net
cash proceeds of, a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of shares of Qualified Capital Stock of the Company;
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(iv) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of Subordinated Indebtedness in exchange
for, or out of the aggregate net cash proceeds of, a substantially concurrent
incurrence (other than to a Restricted Subsidiary) of, Subordinated
Indebtedness so long as (A) the principal amount of such new Indebtedness
does not exceed the principal amount (or, if such Subordinated Indebtedness
being refinanced provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration thereof,
such lesser amount as of the date of determination) of the Indebtedness being
so purchased, redeemed, repaid, defeased, acquired or retired, plus the
amount of any premium required to be paid in connection with such refinancing
pursuant to the terms of the Indebtedness refinanced or the amount of any
premium reasonably determined by the Company as necessary to accomplish such
refinancing, plus the amount of expenses of the Company incurred in
connection with such refinancing, (B) such new Indebtedness is subordinated
to the Securities at least to the same extent as such Indebtedness so
purchased, redeemed, repaid, defeased, acquired or retired, (C) such new
Indebtedness has an Average Life to Stated Maturity that is longer than the
Average Life to Stated Maturity of the Securities and (D) such new
Indebtedness has a Stated Maturity for its final scheduled principal payment
that is at least 91 days later than the Stated Maturity for the final
scheduled principal payment of the Securities;
(v) the repurchase, redemption or other acquisition or retirement
for value of any Qualified Capital Stock of the Company or any of its
Subsidiaries held by any current or former officers, directors or employees
of the Company or any of its Subsidiaries pursuant to the terms of agreements
(including employment agreements) or plans approved by the Company's Board of
Directors, including any such repurchase, redemption, acquisition or
retirement of shares of such Qualified Capital Stock that is deemed to occur
upon the exercise of stock options or similar rights if such shares represent
all or a portion of the exercise price or are surrendered in connection with
satisfying Federal income tax obligations; provided, however, that the
aggregate amount of such repurchases, redemptions, acquisitions and
retirements shall not exceed the sum of (a) $1,000,000 in any twelve-month
period and (b) the aggregate net proceeds, if any, received by the Company
during such twelve-month period from any issuance of such Qualified Capital
Stock pursuant to such agreements or plans; and
(vi) the repurchase or other acquisition of any Qualified Capital
Stock of the Company in an amount not to exceed the lesser of (A) $40,000,000
and (B) 50% of the net after-tax gain from Specified Property Sales.
The actions described in clause (i) of this paragraph (b) shall be Restricted
Payments that shall be permitted to be taken in accordance with this paragraph
(b) but shall reduce the amount that would otherwise be available for Restricted
Payments under clause (C) of paragraph (a) (provided that any dividend paid
pursuant to clause (i) of this paragraph (b) shall reduce the amount that would
otherwise be available under clause (C) of paragraph (a) when declared, but
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not also when subsequently paid pursuant to such clause (i)), and the actions
described in clauses (ii), (iii), (iv), (v) and (vi) of this paragraph (b) shall
be Restricted Payments that shall be permitted to be taken in accordance with
this paragraph (b) and shall not reduce the amount that would otherwise be
available for Restricted Payments under clause (C) of paragraph (a). Further,
the Company or any Restricted Subsidiary may make a Restricted Payment, if at
the time the Company or any Restricted Subsidiary first incurred a commitment
for such Restricted Payment such Restricted Payment could have been made;
provided that all commitments incurred and outstanding shall be treated as if
such commitments were Restricted Payments expended by the Company or a
Restricted Subsidiary at the time the commitments were incurred, except that
commitments incurred and outstanding which are treated as a Restricted Payment
expended by the Company or a Restricted Subsidiary and which are terminated
shall no longer be treated as a Restricted Payment expended by the Company or a
Restricted Subsidiary upon the termination of such commitment for such purposes;
and provided, further, that at the time such Restricted Payment is made no
Default or Event of Default shall have occurred and be continuing and the
Company could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) in accordance with Section 10.12(a) hereof.
(c) In computing Consolidated Net Income of the Company under
paragraph (a) above, (1) the Company shall use audited financial statements for
the portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (2) the Company shall be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment would in the good faith determination of
the Company be permitted under the requirements of this Indenture, such
Restricted Payment shall be deemed to have been made in compliance with this
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the Company
for any period.
Section 10.11 Limitation on Other Senior Subordinated Indebtedness.
The Company shall not incur (as such term is defined in Section
10.12(a) hereof), or permit to remain outstanding, any Indebtedness (including
Acquired Indebtedness and Permitted Indebtedness) other than the Securities,
that is subordinated in right of payment to any Senior Indebtedness, unless such
Indebtedness is also pari passu with, or subordinated in right of payment to,
the Securities pursuant to subordination provisions substantially similar to
those contained in this Indenture.
Section 10.12 Incurrence of Indebtedness.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume, guarantee or otherwise become directly
or indirectly liable for (collectively, "incur") any Indebtedness (including any
Acquired Indebtedness), other than Permitted Indebtedness, unless at the time of
such event and after giving effect thereto on a pro
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forma basis the Consolidated Fixed Charge Coverage Ratio for the four full
fiscal quarters immediately preceding such event, taken as one period, would
have been at least equal to 2.5 to 1.0.
(b) The amount of any guarantees by the Company or any Restricted
Subsidiary of any Indebtedness of the Company or one or more Restricted
Subsidiaries shall not be deemed to be outstanding or incurred for purposes of
this Section 10.12 hereof in addition to the amount of Indebtedness which it
guarantees.
Section 10.13 Subsidiary Guarantors.
(a) The Company shall cause each Restricted Subsidiary, prior to, or
contemporaneously with, its incurrence of any obligations that guarantee or
secure any Pari Passu Indebtedness or Subordinated Indebtedness of the Company,
to execute and deliver a supplemental indenture to this Indenture, substantially
in the form of Exhibit E hereto, agreeing to be bound by its terms applicable to
a Subsidiary Guarantor and providing for a Subsidiary Guarantee of the
Securities by such Restricted Subsidiary.
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant
to this Section 10.13 shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon the terms and conditions set
forth in Section 13.3 hereof.
Section 10.14 Limitation on Issuance and Sale of Capital Stock by
Restricted Subsidiaries.
The Company (a) shall not permit any Restricted Subsidiary to issue
any Capital Stock (other than to the Company or a Wholly Owned Restricted
Subsidiary) and (b) shall not permit any Person (other than the Company or a
Wholly Owned Restricted Subsidiary) to own any Capital Stock of any Restricted
Subsidiary, except, in each case, for (i) directors' qualifying shares, (ii)
Capital Stock of a Restricted Subsidiary organized in a foreign jurisdiction
required to be issued to, or owned by, the government of such foreign
jurisdiction or individual or corporate citizens of such foreign jurisdiction in
order for such Restricted Subsidiary to transact business in such foreign
jurisdiction, (iii) a sale of all or substantially all the Capital Stock of a
Restricted Subsidiary effected in accordance with Section 10.17, (iv) Qualifying
TECONS and (v) the Capital Stock of a Restricted Subsidiary owned by a Person at
the time such Restricted Subsidiary became a Restricted Subsidiary or acquired
by such Person in connection with the formation of the Restricted Subsidiary;
provided, however, that any Capital Stock retained by the Company or a
Restricted Subsidiary shall be treated as an Investment for purposes of Section
10.10, if the amount of such Capital Stock represents less than a majority of
the Voting Stock of such Restricted Subsidiary.
Section 10.15 Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or
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indirectly, create, incur, assume or suffer to exist any Lien of any kind,
except for Permitted Liens, upon any of their respective Properties, whether now
owned or acquired after the date of this Indenture, or any income or profits
therefrom to secure any Pari Passu Indebtedness or Subordinated Indebtedness,
unless prior to or contemporaneously therewith the Securities are directly
secured equally and ratably, provided that (1) if such secured Indebtedness is
Pari Passu Indebtedness, the Lien securing such Pari Passu Indebtedness shall be
subordinate and junior to, or pari passu with, the Lien securing the Securities
and (2) if such secured Indebtedness is Subordinated Indebtedness, the Lien
securing such Subordinated Indebtedness shall be subordinate and junior to the
Lien securing the Securities at least to the same extent as such Subordinated
Indebtedness is subordinated to the Securities. The foregoing covenant shall not
apply to any Lien securing Acquired Indebtedness, provided that any such Lien
extends only to the Properties that were subject to such Lien prior to the
related acquisition by the Company or such Restricted Subsidiary and was not
created, incurred or assumed in contemplation of such transaction.
Section 10.16 Purchase of Securities Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of
Securities shall have the right to require the Company to purchase such Holder's
Securities, in whole or in part, in a principal amount that is an integral
multiple of $1,000, pursuant to the offer described in Section 10.16(b) hereof
(the "Change of Control Offer") at a purchase price (the "Change of Control
Purchase Price") in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, thereon to the date of purchase (the
"Change of Control Purchase Date"). The Company will not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer at the same purchase price, at the same times and
otherwise in substantial compliance with the requirements applicable to a Change
of Control Offer made by the Company and purchases all Securities validly
tendered and not withdrawn under such Change of Control Offer.
(b) Within 30 calendar days after the date of any Change of Control,
the Company, or the Trustee at the request and expense of the Company, shall
send to each Holder, in the manner provided in Section 15.5, a notice (the
"Change of Control Notice") prepared by the Company describing the transaction
or transactions that constitute the Change of Control and stating:
(i) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to this Section 10.16, and that all Securities that
are timely tendered will be accepted for payment;
(ii) the Change of Control Purchase Price, and the Change of Control
Purchase Date, which date shall be a Business Day no earlier than 30 calendar
days nor later than 60 calendar days subsequent to the date such notice is
mailed;
(iii) that any Securities or portions thereof not tendered or accepted
for payment will continue to accrue interest;
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(iv) that, unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Securities or portions thereof
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest from and after the Change of Control Purchase Date;
(v) that any Holder electing to have any Securities or portions
thereof purchased pursuant to a Change of Control Offer will be required to
surrender such Securities, with the form to elect purchase by the Company
pursuant to this Section 10.16 completed, to the Paying Agent at the address
specified in the notice, prior to the close of business on the third Business
Day preceding the Change of Control Purchase Date;
(vi) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Purchase Date, a facsimile
transmission or letter, setting forth the name of the Holder, the principal
amount of Securities delivered for purchase, and a statement that such Holder is
withdrawing such Holder's election to have such Securities or portions thereof
purchased pursuant to the Change of Control Offer;
(vii) that any Holder electing to have Securities purchased
pursuant to the Change of Control offer must specify the principal amount that
is being tendered for purchase, which principal amount must be $1,000 or an
integral multiple thereof;
(viii) if Physical Securities have been issued pursuant to Section
2.1, that any Holder of Physical Securities whose Physical Securities are being
purchased only in part will be issued new Physical Securities equal in principal
amount to the unpurchased portion of the Physical Securities surrendered, which
unpurchased portion will be equal in principal amount to $1,000 or an integral
multiple thereof; and
(ix) any other information necessary to enable any Holder to tender
Securities and to have such Securities purchased pursuant to this Section 10.16.
If any of the Securities subject to a Change of Control Offer is in the form of
a Global Security, then the Company shall modify the Change of Control Notice to
the extent necessary to accord with the procedures of the Depository applicable
to repurchases.
(c) On the Change of Control Payment Date, the Company shall (1)
accept for payment all Securities or portions thereof properly tendered pursuant
to the Change of Control Offer, (2) irrevocably deposit with the Paying Agent,
by 11:00 a.m., Eastern time, on such date, in immediately available funds, an
amount equal to the Change of Control Purchase Price in
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respect of all Securities or portions thereof so accepted and (3) deliver or
cause to be delivered to the Trustee the Securities so accepted together with an
Officers' Certificate stating the aggregate principal amount of Securities or
portions thereof being purchased by the Company. The Paying Agent shall promptly
send, in the manner provided in Section 15.5, to each Holder of Securities or
portions thereof so accepted for payment the Change of Control Purchase Price
for such Securities or portions thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For purposes of this Section 10.16, the Trustee
shall act as the Paying Agent.
(d) Upon surrender and cancellation of a Physical Security that is
purchased in part pursuant to the Change of Control Offer, the Company shall
promptly issue and the Trustee shall authenticate and deliver to the
surrendering Holder of such Physical Security a new Physical Security equal in
principal amount to the unpurchased portion of such surrendered Physical
Security; provided that each such new Physical Security shall be in a principal
amount of $1,000 or an integral multiple thereof.
(e) The Company shall comply with Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable, in the event that a Change of Control occurs and
the Company is required to purchase Securities as described in this Section
10.16. To the extent that the provisions of any securities laws or regulations
conflict with the provisions relating to the Change of Control Offer, the
Company will comply with the applicable securities laws and regulations and will
not be deemed to have breached its obligations under this Section 10.16 by
virtue thereof.
(f) Prior to complying with the provisions of this Section 10.16, but
in any event within 30 days following a Change of Control, the Company shall
either repay all outstanding Senior Indebtedness or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Indebtedness
to permit the repurchase of Securities required by this Section 10.16.
Section 10.17 Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the Properties sold
or otherwise disposed of pursuant to the Asset Sale, (ii) all of the
consideration received by the Company or the Restricted Subsidiary, as the case
may be, in respect of such Asset Sale consists of cash, Cash Equivalents, Liquid
Securities or Exchanged Properties ("Permitted Consideration"); provided,
however, that the Company and its Restricted Subsidiaries shall be permitted to
receive any Property other than Permitted Consideration, so long as the
aggregate Fair Market Value (determined on the date of each Asset Sale) of such
Property other than Permitted Consideration received from Asset Sales and held
by the Company or any Restricted Subsidiary at any one time shall not exceed
10.0% of Adjusted Consolidated Net Tangible Assets and (iii) the Company
delivers to the Trustee an Officers' Certificate (which Officers' Certificate
shall be conclusive) certifying that such Asset Sale complies with clauses (i)
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and (ii) of this Section 10.17(a). The amount (without duplication) of any
Indebtedness (other than Subordinated Indebtedness or Pari Passu Indebtedness)
of the Company or such Restricted Subsidiary that is expressly assumed by the
transferee in such Asset Sale and with respect to which the Company or such
Restricted Subsidiary, as the case may be, is unconditionally released by the
holder of such Indebtedness, shall be deemed to be cash or Cash Equivalents for
purposes of clause (ii) and shall also be deemed to constitute a repayment of,
and a permanent reduction in, the amount of such Indebtedness for purposes of
the next following paragraph.
(b) If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company or such Restricted Subsidiary may either, no later than 365
days after such Asset Sale, (i) apply all or any of the Net Cash Proceeds
therefrom to (A) repay Indebtedness under the Credit Facility or (B) repay or
purchase other Indebtedness (other than Subordinated Indebtedness or Pari Passu
Indebtedness) of the Company or any Restricted Subsidiary, provided, in the case
of clause (B), that the related loan commitment (if any) is thereby permanently
reduced by the amount of such Indebtedness so repaid or purchased, or (ii)
invest all or any part of the Net Cash Proceeds thereof in Properties that will
be used in the Oil and Gas Business of the Company or its Restricted
Subsidiaries, as the case may be. The amount of such Net Cash Proceeds not
applied or invested as provided in this paragraph (after the periods specified
in this paragraph) shall constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$10,000,000 (the "Trigger Date"), the Company shall make an offer to purchase,
from all Holders of the Securities and holders of any then outstanding Pari
Passu Indebtedness required to be repurchased or repaid on a permanent basis in
connection with an Asset Sale, an aggregate principal amount of Securities and
any such Pari Passu Indebtedness equal to such Excess Proceeds as follows:
(1) Not later than the 30th day following the Trigger Date, the
Company shall (i) give to the Trustee in the manner provided in Section 15.4
hereof and each Holder of the Securities in the manner provided in Section
15.5 hereof, a notice (a "Purchase Notice") offering to purchase (a "Net
Proceeds Offer") from all Holders of the Securities the maximum principal
amount (expressed as a multiple of $1,000) of Securities that may be
purchased out of an amount (the "Payment Amount") equal to the product of
such Excess Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Securities and the denominator of which
is the sum of the outstanding principal amount of the Securities and any such
Pari Passu Indebtedness (subject to proration in the event such amount is
less than the aggregate Offered Price (as hereinafter defined) of all
Securities tendered), and (ii) to the extent required by any Pari Passu
Indebtedness and provided there is a permanent reduction in the principal
amount of such Pari Passu Indebtedness, the Company shall make an offer to
purchase such Pari Passu Indebtedness (a "Pari Passu Offer") in an amount
(the "Pari Passu Indebtedness Amount") equal to the excess of the Excess
Proceeds over the Payment Amount.
(2) The offer price for the Securities shall be payable in cash in
an amount equal to 100% of the aggregate principal amount of the Securities
tendered pursuant to a
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Net Proceeds Offer, plus accrued and unpaid interest, if any, to the date
such Net Proceeds Offer is consummated (the "Offered Price"), in accordance
with paragraph (d) of this Section. To the extent that the aggregate Offered
Price of the Securities tendered pursuant to a Net Proceeds Offer is less
than the Payment Amount relating thereto or the aggregate amount of the Pari
Passu Indebtedness that is purchased or repaid pursuant to the Pari Passu
Offer is less than the Pari Passu Indebtedness Amount (such shortfall
constituting a "Net Proceeds Deficiency"), the Company may use such Net
Proceeds Deficiency, or a portion thereof, for general corporate purposes,
subject to the limitations of Section 10.10 hereof.
(3) If the aggregate Offered Price of Securities validly tendered
and not withdrawn by Holders thereof exceeds the Payment Amount, Securities
to be purchased will be selected on a pro rata basis by the Trustee based on
the aggregate principal amount of Securities so tendered. Upon completion of
a Net Proceeds Offer and a Pari Passu Offer, the amount of Excess Proceeds
shall be reset to zero.
(4) The Purchase Notice shall set forth a purchase date (the "Net
Proceeds Payment Date"), which shall be on a Business Day no earlier than 30
days nor later than 60 days from the Trigger Date. The Purchase Notice shall
also state (i) that a Trigger Date with respect to one or more Asset Sales
has occurred and that such Holder has the right to require the Company to
repurchase such Holder's Securities at the Offered Price, subject to the
limitations described in the forgoing paragraph (3), (ii) any information
regarding such Net Proceeds Offer required to be furnished pursuant to Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder, (iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest, (iv) that, unless the
Company defaults in depositing money with the Paying Agent in accordance with
the last paragraph of clause (d) of this Section 10.17, or payment is
otherwise prevented, any Security, or portion thereof, accepted for payment
pursuant to the Net Proceeds Offer shall cease to accrue interest after the
Net Proceeds Payment Date, and (v) the instructions a Holder must follow in
order to have his Securities repurchased in accordance with paragraph (d) of
this Section.
(d) Holders electing to have Securities purchased will be required to
surrender such Securities to the Paying Agent at the address specified in the
Purchase Notice prior to the close of business on the third Business Days prior
to the Net Proceeds Payment Date. Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on
the second Business Days prior to the Net Proceeds Payment Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Securities delivered for purchase by the Holder as to which his
election is to be withdrawn and a statement that such Holder is withdrawing his
election to have such Securities purchased. Holders of Physical Securities whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered, which
unpurchased portion will be equal to $1,000 or an integral multiple thereof.
On the Net Proceeds Payment Date, the Company shall (i) accept for
payment Securities
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or portions thereof validly tendered pursuant to a Net Proceeds Offer in an
aggregate principal amount equal to the Payment Amount or such lesser amount of
Securities as has been tendered, (ii) irrevocably deposit with the Paying Agent,
by 11:00 a.m., Eastern time, immediately available funds sufficient to pay the
purchase price of all Securities or portions thereof so tendered in an aggregate
principal amount equal to the Payment Amount or such lesser amount and (iii)
deliver or cause to be delivered to the Trustee the Securities so accepted. The
Paying Agent shall promptly send, in the manner provided in Section 15.5, to
Holders of the Securities so accepted payment in an amount equal to the purchase
price, and the Company shall execute and the Trustee shall authenticate and mail
or make available for delivery to such Holders a new Security equal in principal
amount to any unpurchased portion of the Security which any such Holder did not
surrender for purchase. Any Securities not so accepted will be promptly mailed
or delivered to the Holder thereof. The Company shall announce the results of a
Net Proceeds Offer on or as soon as practicable after the Net Proceeds Payment
Date. For purposes of this Section 10.17, the Trustee will act as the Paying
Agent.
(e) The Company shall not permit any Restricted Subsidiary to enter
into or suffer to exist any agreement that would place any restriction of any
kind (other than pursuant to law or regulation) on the ability of the Company to
make a Net Proceeds Offer following any Asset Sale. The Company shall comply
with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder, if applicable, in the event that an Asset Sale occurs
and the Company is required to purchase Securities as described in this Section
10.17. To the extent that the provisions of any securities laws or regulations
conflict with the provisions relating to the Net Proceeds Offer, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 10.17 by virtue
thereof.
Section 10.18 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of Property or services) with any
Affiliate of the Company (other than the Company or a Restricted Subsidiary)
unless (i) such transaction or series of related transactions is on terms that
are no less favorable to the Company or such Restricted Subsidiary, as the case
may be, than would be available in a comparable transaction in arm's-length
dealings with an unrelated third party, (ii) with respect to a transaction or
series of related transactions involving payments in excess of $1,000,000 in the
aggregate, the Company delivers an Officers' Certificate to the Trustee
certifying that such transaction complies with clause (i) above, (iii) with
respect to a transaction or series of related transactions involving payments in
excess of $5,000,000 but less than $25,000,000 in the aggregate, the Company
delivers an Officers' Certificate to the Trustee certifying that (A) such
transaction or series of related transactions complies with clause (i) above and
(B) such transaction or series of related transactions shall have been approved
by a majority of the Disinterested Directors of the Company and (iv) with
respect to a transaction or series of related transactions involving payments of
$25,000,000 or more in the aggregate, the Company delivers an Officers'
Certificate to the Trustee certifying that (A) such transaction or series of
related
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transactions complies with clause (i) above, (B) such transaction or series of
related transactions shall have been approved by a majority of the Disinterested
Directors of the Company and (C) the Company shall have received the written
opinion of a nationally recognized investment banking firm or appraisal firm in
the United States that such transaction or series of related transactions is
fair, from a financial point of view, to the Company or such Restricted
Subsidiary; provided, however, that the foregoing restriction shall not apply to
(s) the provision of services and payments under the Torch Agreement, so long as
the Torch Agreement (including any modifications, renewals, replacements or
substitutions thereof or amendments thereto entered into on or after the date of
this Indenture) has been approved by a majority of the Disinterested Directors
of the Company, (t) loans or advances to officers, directors and employees of
the Company or any Restricted Subsidiary made in the ordinary course of business
and consistent with past practices of the Company and its Restricted
Subsidiaries in an aggregate amount not to exceed $3,000,000 outstanding at any
one time, (u) the payment of reasonable and customary regular fees to directors
of the Company or any of its Restricted Subsidiaries who are not employees of
the Company or any Affiliate, (v) the Company's employee compensation and other
benefit arrangements, (w) indemnities of officers and directors of the Company
or any Subsidiary consistent with such Person's bylaws and applicable statutory
provisions or (x) Restricted Payments permitted by Section 10.10 hereof.
Section 10.19 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise,
or make any other distributions on or in respect of its Capital Stock to the
Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed to the
Company or any other Restricted Subsidiary, (c) make an Investment in the
Company or any other Restricted Subsidiary or (d) transfer any of its Properties
to the Company or any other Restricted Subsidiary, except in each instance for
such encumbrances or restrictions pursuant to (i) this Indenture, the Credit
Facility or any other agreement in effect on the date of this Indenture, (ii)
any agreement or other instrument of a Person acquired by the Company or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any other Person, or the Properties of any other Person, other
than the Person, or the Property of the Person, so acquired, (iii) customary
restrictions in leases and licenses relating to the Property covered thereby and
entered into in the ordinary course of business or (iv) any agreement that
extends, renews, refinances or replaces the agreements containing the
restrictions in the foregoing clauses (i), (ii) and (iii), provided that the
terms and conditions of any such restrictions are not materially less favorable
to the Holders of the Securities than those under or pursuant to the agreement
evidencing the Indebtedness so extended, renewed, refinanced or replaced, and
except with respect to clause (d) only, (i) restrictions in the form of Liens
which are not prohibited under Section 10.15 and which contain customary
limitations on the transfer of collateral and (ii) with respect to clause (d)
only, customary restrictions contained in asset sale agreements limiting the
transfer of such assets pending the closing of such sale.
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Section 10.20 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 10.5 through 10.19 (excluding
Section 10.13) hereof if, before or after the time for such compliance, the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities, by Act of such Holders, waive such compliance in such instance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
Section 10.21 Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the initial Registration Rights Agreement and
shall pay all costs and expenses (including attorneys' fees for the Company and
the Trustee) incurred in connection therewith. In connection with any such
qualification of this Indenture under the TIA, the Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Right of Redemption.
The Securities may be redeemed, at the election of the Company, as a
whole or from time to time in part, at any time on or after June 1, 2003, upon
not less than 30 or more than 60 days' notice to each Holder of Securities to be
redeemed, subject to the conditions and at the Redemption Prices (expressed as
percentages of principal amount) specified in the form of Security, together
with accrued and unpaid interest, if any, to the Redemption Date.
Notwithstanding the foregoing, prior to June 1, 2001 the Company may,
at any time or from time to time, redeem up to 33__% of the aggregate principal
amount of the Securities originally issued (excluding, for this purpose, any
Series B Securities issued in exchange for Series A Securities) at a Redemption
Price of 108.875% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the Redemption Date, with the net proceeds of one or more
Equity Offerings of the Company, provided that at least 66__% of the aggregate
principal amount of the Securities originally issued (excluding, for this
purpose, any Series B Securities issued in exchange for Series A Securities)
remains Outstanding after the occurrence of such redemption and provided,
further, that such redemption shall occur not later than 90 days after the date
of the closing of any such Equity Offering.
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Section 11.2 Applicability of Article.
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 11.3 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 11.1 hereof shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 60 days
(or, in the case of a full redemption of all Outstanding Securities, at least 45
days) prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities to be redeemed and shall deliver
to the Trustee such documentation and records as shall enable the Trustee to
select the Securities to be redeemed pursuant to Section 11.4 hereof. Any
election to redeem Securities shall be revocable until the Company gives a
notice of redemption pursuant to Section 11.5 hereof to the Holders of
Securities to be redeemed.
Section 11.4 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not less than 30 days nor more than
60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, pro rata or by any other method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal of Securities; provided,
however, that any such partial redemption shall be in integral multiples of
$1,000.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a Global Security, whether such Global
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the Global
Security shall be in an authorized denomination.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 11.5 Notice of Redemption.
Notice of redemption shall be given in the manner provided for in
Section 15.5 hereof not
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less than 30 nor more than 60 days prior to the Redemption Date, to each Holder
of Securities to be redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) in the case of a partial redemption of Physical Securities, the
identification of the particular Securities to be redeemed, and, if any Global
Security or Physical Security is to be redeemed in part, the portion of the
principal amount thereof to be redeemed;
(d) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided in Section
11.7 hereof) will become due and payable upon each such Security, or the portion
thereof, to be redeemed, and that, unless the Company shall default in the
payment of the Redemption Price and any applicable accrued and unpaid interest,
interest thereon will cease to accrue on and after said date; and
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
If any Security to be redeemed is in global form, then the Company
shall modify such notice to the extent necessary to accord with the procedures
of the Depository applicable to repurchases.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. Failure to give such
notice by mailing to any Holder of Securities or any defect therein shall not
affect the validity of any proceedings for the redemption of other Securities.
Section 11.6 Deposit of Redemption Price.
On or before 11:00 a.m., Eastern time, on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3 hereof) immediately available funds in an amount
sufficient to pay the Redemption Price of, and any accrued and unpaid interest
on, all the Securities which are to be redeemed on such Redemption Date.
Section 11.7 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued and unpaid interest,
if any, to the Redemption Date), and from
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and after such date (unless the Company shall default in the payment of the
Redemption Price and accrued and unpaid interest) such Securities shall cease to
bear interest. Upon surrender of any such Security for redemption in accordance
with said notice, such Security shall be paid by the Company at the Redemption
Price, together with accrued and unpaid interest, if any, to the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.8 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.
Section 11.8 Securities Redeemed in Part.
Any Physical Security which is to be redeemed only in part shall be
surrendered at the office or agency of the Company maintained for such purpose
pursuant to Section 10.2 hereof (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or such Holder's attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Physical Security or Securities, of like
tenor and of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal amount of the Security so surrendered.
Section 11.9 Purchase of Securities.
The Company shall have the right at any time and from time to time to
purchase Securities in the open market or otherwise at any price.
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE
Section 12.1 Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 12.2 or Section 12.3
hereof be applied to all Outstanding Securities upon compliance with the
conditions set forth below in this Article XII.
Section 12.2 Defeasance and Discharge.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.2, the Company and the Subsidiary Guarantors, if
any, shall be deemed to have been
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discharged from their respective obligations with respect to all Outstanding
Securities on the date the conditions set forth in Section 12.4 hereof are
satisfied (hereinafter, "legal defeasance"). For this purpose, such legal
defeasance means that the Company and the Subsidiary Guarantors, if any, shall
be deemed (i) to have paid and discharged their respective obligations under the
Outstanding Securities; provided, however, that the Securities shall continue to
be deemed to be "Outstanding" for purposes of Section 12.5 hereof and the other
Sections of this Indenture referred to in clauses (A) and (B) below, and (ii) to
have satisfied all their other obligations with respect to such Securities and
this Indenture (and the Trustee, at the expense and direction of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Securities to receive,
solely from the trust fund described in Section 12.4 hereof and as more fully
set forth in such Section, payments in respect of the principal of (and premium
if any, on) and interest on such Securities when such payments are due (or at
such time as the Securities would be subject to redemption at the option of the
Company in accordance with this Indenture), (B) the respective obligations of
the Company and the Subsidiary Guarantors, if any, under Sections 3.3, 3.4, 3.5,
3.6, 3.7, 5.8, 6.6, 6.9, 6.10, 10.2, 10.3, 10.21, 13.1 (to the extent it relates
to the foregoing Sections and this Article XII), 13.4 and 13.5 hereof, (C) the
rights, powers, trusts, duties and immunities of the Trustee hereunder, and (D)
the obligations of the Company and the Subsidiary Guarantors, if any, under this
Article XII. Subject to compliance with this Article XII, the Company may
exercise its option under this Section 12.2 notwithstanding the prior exercise
of its option under Section 12.3 hereof with respect to the Securities.
Section 12.3 Covenant Defeasance.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.3, (i) the Company and each Subsidiary Guarantor,
if any, shall be released from their respective obligations under any covenant
contained in Article VIII, in Sections 10.5 through 10.19 and in Section 13.2
hereof, and any covenant added to this Indenture pursuant to Section 9.1(b), and
(ii) the occurrence of any event specified in Section 5.1(c) or 5.1(d) hereof
(with respect to any of Article VIII, Sections 10.5 through 10.19, Section 13.2
and any covenant added to this Indenture pursuant to Section 9.1(b)) shall be
deemed not to be or result in an Event of Default, in each case with respect to
the Outstanding Securities on and after the date the conditions set forth below
are satisfied (hereinafter, "covenant defeasance"), and the Securities shall
thereafter be deemed not to be "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Outstanding Securities, the Company
and each Subsidiary Guarantor, if any, may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Article or Section (to the extent so specified in the case of Sections 5.1(c)
and 5.1(d) hereof), whether directly or indirectly, by reason of any reference
elsewhere herein to any such Article or Section or by reason of any reference in
any such Article or Section to any other provision herein or in any other
document, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby. In addition, upon the Company's
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exercise under Section 12.1 hereof of the option applicable to this Section
12.3, subject to the satisfaction of the conditions set forth in Section 12.4
hereof, Sections 5.1(e) and 5.1(g) hereof shall thereafter not constitute Events
of Default.
Section 12.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
12.2 or Section 12.3 hereof to the Outstanding Securities:
(a) The Company or any Subsidiary Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 6.7 hereof who shall agree to comply with
the provisions of this Article XII applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Securities, (A)
cash in U.S. Dollars in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, the principal of (and premium,
if any, on) and interest on the Outstanding Securities on the Stated Maturity
thereof (or Redemption Date, if applicable), provided that the Trustee shall
have been irrevocably instructed in writing by the Company to apply such money
or the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities. Before such a deposit, the Company may give to the
Trustee, in accordance with Section 11.3 hereof, a notice of its election to
redeem all of the Outstanding Securities at a future date in accordance with
Article XI hereof, which notice shall be irrevocable. Such irrevocable
redemption notice, if given, shall be given effect in applying the foregoing.
For this purpose, "U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.
(b) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or, insofar as
Sections 5.1(h) and 5.1(i) are
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concerned, at any time during the period ending on the 91st day after the date
of such deposit.
(c) Such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest under this Indenture or the Trust
Indenture Act with respect to any securities of the Company or any Subsidiary
Guarantor.
(d) Such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under any other material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound, as evidenced to the Trustee in an Officers'
Certificate delivered to the Trustee concurrently with such deposit.
(e) In the case of an election under Section 12.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable federal income tax laws, in either case providing that
the Holders of the Outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such legal defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such legal defeasance had
not occurred (it being understood that (x) such Opinion of Counsel shall also
state that such ruling or applicable law is consistent with the conclusions
reached in such Opinion of Counsel and (y) the Trustee shall be under no
obligation to investigate the basis or correctness of such ruling).
(f) In the case of an election under Section 12.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had not
occurred.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which, taken together, state that all
conditions precedent provided for relating to either the legal defeasance under
Section 12.2 hereof or the covenant defeasance under Section 12.3 (as the case
may be) have been complied with.
Section 12.5 Deposited Money and U.S. Government Obligations to Be
Held in Trust: Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3
hereof, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee--collectively
for purposes of this Section 12.5, the "Trustee") pursuant to Section 12.4
hereof in respect of the Outstanding Securities shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due
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and to become due thereon in respect of principal (and premium, if any) and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 12.4 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Securities.
Anything in this Article XII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 12.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal defeasance or covenant
defeasance, as applicable, in accordance with this Article.
Section 12.6 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 12.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and any Subsidiary Guarantors' obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 12.2 or 12.3 hereof, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 12.5 hereof; provided, however,
that if the Company or any Subsidiary Guarantor makes any payment of principal
of (or premium, if any, on) or interest on any Security following the
reinstatement of its obligations, the Company or such Subsidiary Guarantor shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE XIII
SUBSIDIARY GUARANTEES
Section 13.1 Unconditional Guarantee.
Each Subsidiary Guarantor, if any, hereby unconditionally, jointly and
severally, guarantees (each such guarantee being referred to herein as this
"Subsidiary Guarantee," with all such guarantees being referred to herein as the
"Subsidiary Guarantees") to each Holder of Securities authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns, the
full and prompt performance of the Company's obligations under this Indenture
and the Securities and that:
(a) the principal of (and premium, if any, on) and interest on the
Securities will be
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promptly paid in full when due (subject to any applicable grace periods),
whether at maturity, by acceleration, redemption or otherwise, and interest on
the overdue principal of and interest on the Securities, if any, to the extent
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity by acceleration or otherwise;
subject, however, in the case of clauses (a) and (b) above, to the limitations
set forth in Section 13.4 hereof.
Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Subsidiary Guarantors will be
jointly and severally obligated to pay the same immediately. Each Subsidiary
Guarantor hereby agrees that its obligations hereunder shall, to the extent
permitted by law, be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Subsidiary Guarantor hereby waives, to the extent permitted by
law, diligence, presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that its Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture and in this Subsidiary Guarantee. If any Holder or the Trustee is
required by any court or otherwise to return to the Company, any Subsidiary
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Subsidiary Guarantor, any amount paid
by the Company or any Subsidiary Guarantor to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each Subsidiary Guarantor agrees it shall not be
entitled to enforce any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that,
as between each Subsidiary Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article V hereof for the purposes of
this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article V hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by each Subsidiary Guarantor for
the purpose of this Subsidiary Guarantee.
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Section 13.2 Subsidiary Guarantors May Consolidate, etc., on Certain
Terms.
(a) Except as set forth in Article VIII hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor or shall prevent any sale, conveyance or other disposition of all or
substantially all the Properties of a Subsidiary Guarantor to the Company or
another Subsidiary Guarantor.
(b) Except as set forth in Article VIII hereof, nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into a Person other than the Company or
another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary
Guarantor), or successive consolidations or mergers in which a Subsidiary
Guarantor or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance or other disposition of all or substantially all
the Properties of a Subsidiary Guarantor to a Person other than the Company or
another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary
Guarantor) authorized to acquire and operate the same; provided, however, that
(i) immediately after such transaction, and giving effect thereto, no Default or
Event of Default shall have occurred as a result of such transaction and be
continuing, (ii) such transaction shall not violate any of the covenants of
Sections 10.1 through 10.19 hereof, and (iii) each Subsidiary Guarantor hereby
covenants and agrees that, upon any such consolidation, merger, sale, conveyance
or other disposition, such Subsidiary Guarantor's Subsidiary Guarantee set forth
in this Article XIII and in a notation to the Securities, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by such Subsidiary Guarantor, shall be expressly
assumed (in the event that the Subsidiary Guarantor is not the surviving
corporation in a merger), by supplemental indenture substantially in the form of
Exhibit E hereto, executed and delivered to the Trustee, by such Person formed
by such consolidation, or into which the Subsidiary Guarantor shall have merged,
or by the Person that shall have acquired such Property (except to the extent
the following Section 13.3 would result in the release of such Subsidiary
Guarantee, in which case such surviving Person or transferee of such Property
shall not have to execute any such supplemental indenture and shall not have to
assume such Subsidiary Guarantor's Subsidiary Guarantee). In the case of any
such consolidation, merger, sale, conveyance or other disposition and upon the
assumption by the successor Person, by supplemental indenture executed and
delivered to the Trustee substantially in the form of Exhibit E hereto of the
due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Subsidiary Guarantor, such successor Person
shall succeed to and be substituted for the Subsidiary Guarantor with the same
effect as if it had been named herein as the initial Subsidiary Guarantor.
Section 13.3 Release of Subsidiary Guarantors.
Upon the sale or disposition (by merger or otherwise) of a Subsidiary
Guarantor (or all or substantially all of its Properties) to a Person other than
the Company or another Subsidiary Guarantor and pursuant to a transaction that
is otherwise in compliance with the terms of this Indenture, including but not
limited to the provisions of Section 13.2 hereof or pursuant to Article VIII
hereof, such Subsidiary Guarantor shall be deemed released from its Subsidiary
Guarantee and all related obligations under this Indenture; provided, however,
that any such termination shall occur only to the extent that all obligations of
such Subsidiary Guarantor under
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all of its guarantees of, and under all of its pledges of assets or other
security interests which secure, other Indebtedness of the Company or any other
Restricted Subsidiary shall also terminate upon such sale or other disposition.
The Trustee shall deliver an appropriate instrument evidencing such release upon
receipt of a Company Request accompanied by an Officers' Certificate and an
Opinion of Counsel certifying that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture.
Each Subsidiary Guarantor that is designated as an Unrestricted
Subsidiary in accordance with the provisions of this Indenture shall be released
from its Subsidiary Guarantee and all related obligations under this Indenture
for so long as it remains an Unrestricted Subsidiary. The Trustee shall deliver
an appropriate instrument evidencing such release upon its receipt of the Board
Resolution designating such Unrestricted Subsidiary.
Notwithstanding any other provision of this Indenture, all of the
Subsidiary Guarantors shall be deemed released from their respective Subsidiary
Guarantees and all related obligations under this Indenture in the event that
all obligations of the Subsidiary Guarantors under all of their guarantees of,
and under all of their pledges of assets or other security interests which
secure, other Indebtedness of the Company (excluding any Senior Indebtedness)
shall also terminate. The Trustee shall deliver an appropriate instrument
evidencing such release upon receipt of a Company Request accompanied by an
Officer's Certificate and Opinion of Counsel certifying that all such
obligations of the Subsidiary Guarantors have terminated.
Any Subsidiary Guarantor not released in accordance with this Section
13.3 shall remain liable for the full amount of principal of (and premium, if
any, on) and interest on the Securities as provided in this Article XIII.
Section 13.4 Limitation of Subsidiary Guarantors' Liability.
Each Subsidiary Guarantor, and by its acceptance hereof each Holder,
hereby confirm that it is the intention of all such parties that the guarantee
by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute
a fraudulent transfer or conveyance for purposes of the Federal Bankruptcy Code,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law. To effectuate the foregoing intention, the
Holders and each Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities (including, but not limited to, Guarantor
Senior Indebtedness) of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to Section 13.5 hereof, result in the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not
constituting such a fraudulent conveyance or fraudulent transfer. This Section
13.4 is for the benefit of the creditors of each Subsidiary Guarantor, and, for
purposes of the Federal Bankruptcy Code, the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act any each other similar federal or state law,
any Indebtedness of a Subsidiary Guarantor incurred from time to time pursuant
to the Credit Facility shall be deemed to have been incurred
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prior to the incurrence by such Subsidiary Guarantor of liability under its
Subsidiary Guarantee.
Section 13.5 Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (if
any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to its Subsidiary Guarantee.
Section 13.6 Execution and Delivery of Notations of Subsidiary
Guarantees.
To evidence its Subsidiary Guarantee set forth in Section 13.1 hereof,
each Subsidiary Guarantor hereby agrees to execute the notations of Subsidiary
Guarantees in substantially the form set forth in Section 2.4 hereof to be
endorsed on all Securities ordered to be authenticated and delivered by the
Trustee, unless at such time there are no Subsidiary Guarantors, and each
Subsidiary Guarantor agrees that any supplement to this Indenture shall be
executed on behalf of such Subsidiary Guarantor by its President or one of its
Vice Presidents. Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 13.1 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Subsidiary Guarantee. Each such notation of Subsidiary Guarantee shall be signed
on behalf of each Subsidiary Guarantor by its President or one of its Vice
Presidents (each of whom shall, in each case, have been duly authorized by all
requisite corporate action) prior to the authentication of the Security on which
it is endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of such Subsidiary
Guarantor. Such signatures upon the notation of Subsidiary Guarantee may be by
manual or facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Subsidiary Guarantee, and in case any such officer who shall
have signed the notation of Subsidiary Guarantee shall cease to be such officer
before the Security on which such notation of Subsidiary Guarantee is endorsed
shall have been authenticated and delivered by the Trustee or disposed of by the
Company, such Security nevertheless may be authenticated and delivered or
disposed of as though the person who signed the notation of Subsidiary Guarantee
had not ceased to be such officer of the Subsidiary Guarantor.
Section 13.7 Severability.
In case any provision of this Subsidiary Guarantee shall be invalid,
illegal or unenforceable, that portion of such provision that is not invalid,
illegal or unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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Section 13.8 Subsidiary Guarantees Subordinated to Guarantor Senior
Indebtedness.
Each Subsidiary Guarantor covenants and agrees, and each Holder of a
Security, by his acceptance of the Subsidiary Guarantees, likewise covenants and
agrees, for the benefit of the holders, from time to time, of Guarantor Senior
Indebtedness, that the indebtedness, obligations and liabilities of such
Subsidiary Guarantor in respect of its Subsidiary Guarantee are subordinated and
subject in right of payment, to the extent and in the manner provided in this
Article XIII, to the prior payment in full of all Guarantor Senior Indebtedness
of such Subsidiary Guarantor, whether outstanding on the date of this Indenture
or thereafter created, incurred, assumed or guaranteed; provided, however, that
the Subsidiary Guarantee of such Subsidiary Guarantor, the Indebtedness
represented thereby and the payment of the principal of (and premium, if any,
on) and the interest on the Securities pursuant to such Subsidiary Guarantee in
all respects shall rank pari passu with, or prior to, all existing and future
unsecured indebtedness (including, without limitation, Indebtedness) of such
Subsidiary Guarantor that is subordinated to its Guarantor Senior Indebtedness.
This Article XIII shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Guarantor Senior Indebtedness, and such provisions are made for the benefit of
the holders of Guarantor Senior Indebtedness, and such holders are made obligees
hereunder and any of them may enforce such provisions.
Section 13.9 Subsidiary Guarantors Not to Make Payments with Respect
to Subsidiary Guarantees in Certain Circumstances.
(a) No payment or distribution of any Property of any Subsidiary
Guarantor of any kind or character (other than Permitted Guarantor Junior
Securities) may be made by such Subsidiary Guarantor in respect of its
Subsidiary Guarantee upon (i) the happening of any default in respect of the
payment or required prepayment of any of its Guarantor Senior Indebtedness when
the same becomes due and payable (a "Subsidiary Guarantor Payment Default") and
(ii) receipt by the Trustee of written notice thereof, unless and until such
Subsidiary Guarantor Payment Default shall have been cured or waived in writing
or shall have ceased to exist or such Guarantor Senior Indebtedness shall have
been paid in full or otherwise discharged, after which (unless otherwise
prohibited pursuant to Section 13.10 hereof) such Subsidiary Guarantor shall
resume making any and all required payments in respect of its Subsidiary
Guarantee, including any missed payments.
(b) Upon the happening of any event (other than a Subsidiary Guarantor
Payment Default) the occurrence of which entitles one or more Persons to
accelerate the maturity of any Specified Guarantor Senior Indebtedness (a
"Subsidiary Guarantor Non-payment Default"), and receipt by the applicable
Subsidiary Guarantor and the Trustee of written notice thereof from one or more
of the holders of such Specified Guarantor Senior Indebtedness or their
representative (a "Subsidiary Guarantor Payment Notice"), then, unless and until
such Subsidiary Guarantor Non-payment Default shall have been cured or waived in
writing or shall have ceased to exist or such Specified Guarantor Senior
Indebtedness is paid in full or otherwise discharged or the holders (or a
representative of the holders) of such Specified Guarantor Senior Indebtedness
give their
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written approval, no payment or distribution shall be made by such Subsidiary
Guarantor in respect of its Subsidiary Guarantee (other than Permitted Guarantor
Junior Securities); provided, however, that these provisions will not prevent
the making of any payment for more than 179 days after a Subsidiary Guarantor
Payment Notice shall have been given after which such Subsidiary Guarantor will
resume (unless otherwise prohibited pursuant to the immediately preceding
paragraph or Section 13.10 hereof) making any and all required payments in
respect of its Subsidiary Guarantee, including any missed payments.
Notwithstanding the foregoing, not more than one Subsidiary Guarantor Payment
Notice shall be given with respect to any Subsidiary Guarantee within a period
of 360 consecutive days. No Subsidiary Guarantor Non-payment Default that
existed or was continuing on the date of delivery of any Subsidiary Guarantor
Payment Notice with respect to the Specified Guarantor Senior Indebtedness
initiating such Subsidiary Guarantor Payment Notice will be, or can be, made the
basis for the commencement of a subsequent Subsidiary Guarantor Payment Notice
with respect to such Subsidiary Guarantee.
(c) In the event that, notwithstanding the foregoing, a Subsidiary
Guarantor shall make any payment in respect of its Subsidiary Guarantee to the
Trustee or the Holder of any Security prohibited by the foregoing provisions of
this Section 13.9, then and in such event such payment shall be paid over and
delivered forthwith to the Company. In the event that a Subsidiary Guarantor
shall make any payment in respect of its Subsidiary Guarantee to the Trustee and
the Trustee shall receive written notice of a Subsidiary Guarantor Payment
Default or a Subsidiary Guarantor Nonpayment Default from one or more of the
holders of Specified Guarantor Senior Indebtedness (or their representative)
prior to making any payment to Holders in respect of the Subsidiary Guarantee
and prior to 11:00 a.m. Eastern Time on the date which is two Business Days
prior to the date upon which by the terms hereof any money may become payable
for any purpose, such payments shall be paid over by the Trustee and delivered
forthwith to the Company. Each Subsidiary Guarantor shall give prompt written
notice to the Trustee of any default under any of its Guarantor Senior
Indebtedness or under any agreement pursuant to which its Guarantor Senior
Indebtedness may have been issued.
Section 13.10 Subsidiary Guarantees Subordinated to Prior Payment of
All Guarantor Senior Indebtedness upon Dissolution, etc.
Upon any distribution of Properties of any Subsidiary Guarantor or
payment on behalf of a Subsidiary Guarantor in the event of any Insolvency or
Liquidation Proceeding with respect to such Subsidiary Guarantor:
(a) the holders of such Subsidiary Guarantor's Guarantor Senior
Indebtedness shall be entitled to receive payment in full of such Guarantor
Senior Indebtedness, or provision must be made for such payment, before the
Holders are entitled to receive any direct or indirect payment or distribution
of any kind or character, whether in cash, property or securities (other than
Permitted Guarantor Junior Securities), on account of any payment in respect of
such Subsidiary Guarantor's Subsidiary Guarantee;
(b) any direct or indirect payment or distribution of Properties of
such Subsidiary
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Guarantor of any kind or character, whether in cash, property or securities
(other than a payment or distribution in the form of Permitted Guarantor Junior
Securities), by set-off or otherwise, to which the Holders or the Trustee, on
behalf of the Holders, would be entitled except for the provisions of this
Article XIII, shall be paid by the Subsidiary Guarantor or by any liquidating
trustee or agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of such Guarantor Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Guarantor Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of such Senior Guarantor Indebtedness held or represented by each, to
the extent necessary to make payment in full of all such Guarantor Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
the holders of such Guarantor Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 13.10, any direct or indirect payment or distribution of Properties
of such Subsidiary Guarantor of any kind or character, whether in cash, property
or securities (other than a payment or distribution in the form of Permitted
Guarantor Junior Securities), shall be received by the Trustee or the Holders
before all such Guarantor Senior Indebtedness is paid in full or otherwise
discharged, such Properties shall be received and held in trust for and shall be
paid over to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of such Subsidiary Guarantor, for application to the payment of such
Guarantor Senior Indebtedness until all such Guarantor Senior Indebtedness shall
have been paid or provided for in full, after giving effect to any concurrent
payment or distribution to the holders of such Guarantor Senior Indebtedness.
The Company or a Subsidiary Guarantor shall give prompt written notice
to the Trustee of the occurrence of any Insolvency or Liquidation Proceeding
with respect to such Subsidiary Guarantor.
Section 13.11 Holders to be Subrogated to Rights of Holders of
Guarantor Senior Indebtedness.
After the payment in full of all Guarantor Senior Indebtedness of a
Subsidiary Guarantor, the Holders shall be subrogated (equally and ratably with
the holders of all other Indebtedness of such Subsidiary Guarantor which by its
express terms is subordinated to such Guarantor Senior Indebtedness to
substantially the same extent as such Subsidiary Guarantee is so subordinated
and which is entitled to like rights of subrogation as a result of payments made
to the holders of such Guarantor Senior Indebtedness) to the rights of the
holders of such Guarantor Senior Indebtedness to receive payments or
distributions of cash, property and securities of such Subsidiary Guarantor
applicable to such Guarantor Senior Indebtedness until all amounts owing on the
Securities shall be paid in full, and for the purpose of such subrogation no
payments or distributions to the holders of such Guarantor Senior Indebtedness
by or on behalf of such Subsidiary Guarantor or by or on behalf of the Holders
by virtue of this Article XIII which otherwise would have been made to the
Holders shall, as between such Subsidiary Guarantor, its
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creditors other than the holders of Guarantor Senior Indebtedness, and the
Holders of the Securities, be deemed to be a payment or distribution by such
Subsidiary Guarantor to or on account of such Guarantor Senior Indebtedness, it
being understood that the subordination provisions of this Article XIII are, and
are intended solely for, the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of Guarantor Senior Indebtedness, on
the other hand.
Section 13.12 Obligations of Subsidiary Guarantors Unconditional.
Nothing contained in this Article XIII or elsewhere in this Indenture
or in any Security is intended to or shall impair, as between the Subsidiary
Guarantors and the Holders, the obligation of the Subsidiary Guarantors under
the Subsidiary Guarantees, or is intended to or shall affect the relative rights
of the Holders and creditors of the Subsidiary Guarantors, nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon Default under this Indenture, subject
to the rights, if any, under this Article XIII of the holders of Guarantor
Senior Indebtedness in respect of cash, property or securities of any Subsidiary
Guarantor received upon the exercise of any such remedy. Upon any distribution
of Properties of a Subsidiary Guarantor referred to in this Article XIII, the
Trustee, subject to the provisions of Section 6.2 hereof, and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of a trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, or agent or other Person making any distribution to the Trustee or
to the Holders of the Securities, for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the related
Guarantor Senior Indebtedness and other indebtedness of such Subsidiary
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
XIII.
Section 13.13 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts that would prohibit the making of any payment to or by
the Trustee, unless it shall have received at its Corporate Trust Office written
notice thereof from a Subsidiary Guarantor or from one or more holders of
Guarantor Senior Indebtedness or Specified Guarantor Senior Indebtedness, in the
case of a Subsidiary Guarantor Non-payment Default, or from any representative
thereof; and, prior to the receipt of any such written notice, the Trustee,
subject to TIA Sections 315(a) through 315(d), shall be entitled to assume
conclusively that no such facts exist. The Trustee shall be entitled to rely on
the delivery to it of a written notice by a Person representing himself to be a
holder of Guarantor Senior Indebtedness or Specified Guarantor Senior
Indebtedness, in the case of a Subsidiary Guarantor Non-payment Default (or a
representative on behalf of such holder), to establish that such notice has been
given by a holder of Guarantor Senior Indebtedness or Specified Guarantor Senior
Indebtedness, in the case of a Subsidiary Guarantor Non-payment Default, or a
representative on behalf of any such holder or holders.
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Section 13.14 Application by Trustee of Money Deposited with it.
Except as provided in Article XIV, any deposit of money by a
Subsidiary Guarantor with the Trustee or any Paying Agent (whether or not in
trust) for any payment in respect of the related Subsidiary Guarantee shall be
subject to the provisions of Sections 13.8, 13.9, 13.10 and 13.11 hereof except
that, if prior to 11:00 a.m. Eastern time on the date which is two Business Days
prior to the date on which by the terms of this Indenture any such money may
become payable for any purpose, the Trustee or, in the case of any such deposit
of money with a Paying Agent, the Paying Agent shall not have received with
respect to such money the notice provided for in Section 13.13 hereof, then the
Trustee or such Paying Agent, as the case may be, shall have full power and
authority to receive such money and to apply the same to the purpose for which
it was received, and shall not be affected by any notice to the contrary which
may be received by it on or after 11:00 a.m., Eastern time, two Business Days
prior to such payment date. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Guarantor Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XIII, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Guarantor Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article XIII, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Guarantor Senior Indebtedness but shall have only such
obligations to such holders as are expressly set forth in this Article XIII.
Section 13.15 Subordination Rights Not Impaired by Acts or Omissions
of Subsidiary Guarantors or Holders of Guarantor Senior Indebtedness.
No right of any present or future holders of any Guarantor Senior
Indebtedness of a Subsidiary Guarantor to enforce subordination as provided
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of such Subsidiary Guarantor or by any act or failure
to act by any such holder, or by any noncompliance by such Subsidiary Guarantor
with the terms of this Indenture, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with.
Without in any way limiting the generality of the preceding paragraph
of this Section, the holders of Guarantor 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 or other
benefits provided in this Article, or the obligations hereunder of the Holders
of the Securities to the holders of Guarantor Senior Indebtedness, do any one or
more of the following: (1) change the manner, place or terms of payment or
extend the time of payment of, or renew, exchange, amend, increase or alter,
Guarantor Senior Indebtedness or the term of any instrument evidencing the same
or any agreement under which Guarantor Senior
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Indebtedness is outstanding or any liability of any obligor thereon (unless such
change, extension or alteration results in such Indebtedness no longer being
Guarantor Senior Indebtedness as defined in this Indenture); (2) sell, exchange,
release or otherwise deal with any Property pledged, mortgaged or otherwise
securing Guarantor Senior Indebtedness; (3) settle or compromise any Guarantor
Senior Indebtedness or any liability of any obligor thereon or release any
Person liable in any manner for the collection of Guarantor Senior Indebtedness;
and (4) exercise or refrain from exercising any rights against the Company and
any other Person.
Section 13.16 Holders Authorize Trustee to Effectuate Subordination of
Subsidiary Guarantees.
Each Holder, by his acceptance thereof, authorizes and expressly
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article XIII and
appoints the Trustee as his attorney-in-fact for such purpose, including, in the
event of any Insolvency or Liquidation Proceeding with respect to any Subsidiary
Guarantor, the immediate filing of a claim for the unpaid balance of his
Securities pursuant to the related Subsidiary Guarantee in the form required in
said proceedings and the causing of said claim to be approved.
Section 13.17 Right of Trustee to Hold Guarantor Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article XIII in respect of any Guarantor Senior Indebtedness at any time held by
it to the same extent as any other holder of Guarantor Senior Indebtedness, and
nothing in this Indenture shall be construed to deprive the Trustee of any of
its rights as such holder.
Section 13.18 Article XIII Not to Prevent Events of Default.
The failure to make a payment on account of the Subsidiary Guarantees
by reason of any provision in this Article XIII shall not be construed as
preventing the occurrence of an Event of Default under this Indenture.
Section 13.19 Payment.
For purposes of this Article XIII, a payment with respect to any
Subsidiary Guarantee or with respect to principal of or interest on the Security
or any Subsidiary Guarantee shall include, without limitation, payment of
principal of and interest on any Security, any depositing of funds under Article
IV hereof, any payment on account of any repurchase or redemption of any
Security and any payment or recovery on any claim (whether for rescission or
damages and whether based on contract, tort, duty imposed by law, or any other
theory of liability) relating to or arising out of the offer, sale or purchase
of any Security.
Section 13.20 Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities
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shall prevent any Subsidiary Guarantor, at any time except during the pendency
of any Insolvency or Liquidation Proceeding referred to in Section 13.10 hereof
or under the conditions described in Section 13.9 hereof, from making payments
at any time on its Subsidiary Guarantee.
ARTICLE XIV
SUBORDINATION OF SECURITIES
Section 14.1 Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, for the benefit of the
holders, from time to time, of Senior Indebtedness, that, to the extent and in
the manner hereinafter set forth in this Article, the Indebtedness represented
by the Securities and the payment of the principal of (and premium, if any, on)
and interest on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment as provided in this Article to the
prior payment in full of all Senior Indebtedness, whether outstanding on the
date of this Indenture or thereafter created, incurred, assumed or guaranteed;
provided, however, that the Securities, the Indebtedness represented thereby and
the payment of the principal of (and premium, if any, on) and interest on the
Securities in all respects shall rank equally with, or prior to, all existing
and future unsecured indebtedness (including, without limitation, Indebtedness)
of the Company that is subordinated to Senior Indebtedness.
This Article XIV shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and any one
or more of them may enforce such provisions.
Section 14.2 Payment over of Proceeds upon Dissolution, etc.
Upon any distribution of Properties of the Company or payment on
behalf of the Company with respect to the Securities in the event of any
Insolvency or Liquidation Proceeding with respect to the Company:
(a) the holders of Senior Indebtedness shall be entitled to receive
payment in full of such Senior Indebtedness, or provision must be made for such
payment, before the Holders of the Securities are entitled to receive any direct
or indirect payment or distribution of any kind or character, whether in cash,
property or securities (other than Permitted Junior Securities) on account of
principal of (or premium, if any, on) or interest on the Securities or on
account of the purchase or redemption or other acquisition of Securities
(including pursuant to a Change of Control Offer or a Net Proceeds Offer); and
(b) any direct or indirect payment or distribution of Properties of
the Company of any kind or character, whether in cash, property or securities
(other than a payment or distribution in
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the form of Permitted Junior Securities), by set-off or otherwise, to which the
Holders or the Trustee, on behalf of the Holders, would be entitled but for the
provisions of this Article shall be paid by the Company or by any liquidating
trustee or agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of Senior Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of Properties of the Company of any kind or character,
whether in cash, property or securities, by set-off or otherwise, in respect of
principal of (and premium, if any, on) or interest on the Securities before all
Senior Indebtedness is paid or provided for in full, then and in such event such
payment or distribution (other than a payment or distribution in the form of
Permitted Junior Securities) shall be received and held in trust for and 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, 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 sale, assignment, conveyance, transfer, lease or other disposition of all or
substantially all its Properties on a consolidated basis to another Person or
group of Affiliated Persons pursuant to, and in compliance with, the terms and
conditions set forth in Article VIII hereof shall not be deemed an Insolvency or
Liquidation Proceeding (requiring the repayment of all Senior Indebtedness in
full as a prerequisite to any payments being made to the Holders) for the
purposes of this Section.
Section 14.3 Suspension of Payment When Senior Indebtedness in
Default.
(a) Upon (1) the occurrence of a Payment Event of Default and (2)
receipt by the Trustee of written notice of such occurrence, then no payment or
distribution of any Properties of the Company of any kind or character (other
than Permitted Junior Securities) shall be made by the Company on account of
principal of (or premium, if any, on) or interest on the Securities or on
account of the purchase or redemption or other acquisition of Securities unless
and until such Payment Event of Default shall have been cured or waived in
writing or shall have ceased to exist or such Senior Indebtedness shall have
been paid in full or otherwise discharged, after which (unless otherwise
prohibited by Section 14.2 hereof) the Company shall resume making any and all
required payments in respect of the Securities, including any missed payments.
(b) Upon (1) the occurrence of a Non-payment Event of Default and (2)
receipt by the Trustee and the Company of written notice of such occurrence from
one or more of the holders of Specified Senior Indebtedness (or their
representative), then no payment or distribution of any
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Properties of the Company of any kind or character (other than Permitted Junior
Securities) shall be made by the Company on account of any principal of (or
premium, if any, on) or interest on the Securities or on account of the purchase
or redemption or other acquisition of Securities for the period specified below
(the "Payment Blockage Period"). The Payment Blockage Period will commence upon
the earlier of the dates of receipt by the Trustee or the Company of such notice
(the "Payment Blockage Notice") from one or more of the holders of Specified
Senior Indebtedness (or their representative) and shall end on the earliest of
(i) 179 days thereafter, (ii) the date, as set forth in a written notice from
the holders of the Specified Senior Indebtedness (or their representative) to
the Company or the Trustee, on which such Non-payment Event of Default is cured,
waived in writing or ceases to exist or such Specified Senior Indebtedness is
discharged or (iii) the date on which such Payment Blockage Period shall have
been terminated by written notice to the Company or the Trustee from one or more
of the holders (or their representative) initiating such Payment Blockage
Period, after which the Company will resume (unless otherwise prohibited
pursuant to the immediately preceding paragraph or Section 14.2 hereof) making
any and all required payments in respect of the Securities, including any missed
payments. In any event, not more than one Payment Blockage Period may be
commenced during any period of 360 consecutive days. No Non-payment Event of
Default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee will be, or can be, made the basis for the
commencement of a subsequent Payment Blockage Period.
(c) In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Security prohibited
by the foregoing provisions of this Section 14.3, then and in such event such
payment shall be paid over and delivered forthwith to the Company. In the event
that the Company shall make any payment in respect of the Securities to the
Trustee and the Trustee shall receive written notice of a Payment Event of
Default or a Non-payment Event of Default from one or more of the holders of
Specified Senior Indebtedness (or their representative) prior to making any
payment to Holders in respect of the Securities and prior to 11:00 a.m. Eastern
time on the date which is two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose, such payments shall
be paid over by the Trustee and delivered forthwith to the Company.
Section 14.4 Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent the Company, at any time except during the
pendency of any Insolvency or Liquidation Proceeding referred to in Section 14.2
hereof or under the conditions described in Section 14.3 hereof, from making
payments at any time of principal of (and premium, if any, on) or interest on
the Securities.
Section 14.5 Subrogation to Rights of Holders of Senior Indebtedness.
After the payment in full of all Senior Indebtedness, the Holders of
the Securities shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to Senior
Indebtedness to substantially the same extent as the Securities are so
subordinated and which is entitled to like rights of subrogation as a result of
the
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payments made to the holders of Senior Indebtedness) to the rights of the
holders of Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to Senior Indebtedness until all amounts
owing on the Securities shall be paid in full. For purposes of such subrogation,
no payments or distributions to the holders of Senior Indebtedness by or on
behalf of the Company or by or on behalf of the Holders by virtue of this
Article which otherwise would have been made to the Holders shall, as between
the Company, 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 14.6 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 between the Company and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of (and premium, if any,
on) 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.
Section 14.7 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 the subordination provided in this Article and
appoints the Trustee as his attorney-in-fact for any and all such purposes,
including, in the event of any Insolvency or Liquidation Proceeding with respect
to the Company, the immediate filing of a claim for the unpaid balance of his
Securities pursuant to this Indenture in the form required in said proceedings
and the causing of said claim to be approved.
Section 14.8 No Waiver of Subordination Provision.
(a) 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 by any such holder, or by any non-
compliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
(b) Without in any way limiting the generality of paragraph (a) of
this Section, the holders of any Senior Indebtedness, in accordance with the
terms of the instrument or agreement evidencing their 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
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responsibility to the Holders of the Securities and without impairing or
releasing the subordination or other benefits 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: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew, exchange, amend,
increase or alter, Senior Indebtedness or the terms of any instrument evidencing
the same or any agreement under which Senior Indebtedness is outstanding or any
liability of any obligor thereon (unless such change, extension, amendment,
increase or other alteration results in such Indebtedness no longer being Senior
Indebtedness as defined in this Indenture); (2) sell, exchange, release or
otherwise deal with any Property pledged, mortgaged or otherwise securing Senior
Indebtedness; (3) settle or compromise any Senior Indebtedness or any liability
of any obligor thereon or release any Person liable in any manner for the
collection of Senior Indebtedness; and (4) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 14.9 Notice to Trustee.
(a) The Company shall give prompt written notice to the Trustee 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 one or more of the holders of Senior Indebtedness (or their
representative), with respect to a Payment Default, or one or more of the
holders of Specified Senior Indebtedness (or their representative), with respect
to a Non-payment Event of Default, or from any trustee, fiduciary or agent
therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to TIA Sections 315(a) through 315(d), 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 prior to 11:00
a.m. Eastern time on the date which is two Business Days prior to the date upon
which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (and premium, if
any, on) 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 on or after 11:00 a.m. Eastern time two Business Days prior to
such payment date.
(b) Subject to TIA Sections 315(a) through 315(d), 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,
fiduciary or agent therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee, fiduciary or agent 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, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other
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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 14.10 Reliance on Judicial Order or Certificate of Liquidating
Agent Bank.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to TIA Sections 315(a) through 315(d), 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 such Insolvency or
Liquidation 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 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 14.11 Rights of Trustee as a 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. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.6 hereof.
Section 14.12 Article Applicable to Paying Agents.
In case at any time a 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 14.11 hereof shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 14.13 No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the Trustee
or the Holders of Securities to take any action to accelerate the maturity of
the Securities pursuant to Article V hereof or to pursue any rights or remedies
hereunder or under applicable law, except as provided in Article V hereof.
Section 14.14 Trust Money Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from cash or the
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proceeds of U.S. Government Obligations held in trust under Article XII hereof
by the Trustee (or other qualifying trustee) and which were deposited in
accordance with the terms of Article XII hereof and not in violation of Section
14.2 or 14.3 hereof for the payment of principal of (and premium, if any, on)
and interest on the Securities shall not be subordinated to the prior payment of
any Senior Indebtedness or subject to the restrictions set forth in this Article
XIV, and none of the Holders shall be obligated to pay over any such amount to
the Company or any holder of Senior Indebtedness or any other creditor of the
Company.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Compliance Certificates and Opinions.
Upon any application or request by the Company or any Subsidiary
Guarantor to the Trustee to take any action under any provision of this
Indenture, the Company or such Subsidiary Guarantor, as the case may be, shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act or this Indenture. Each such certificate and each such
opinion shall be in the form of an Officers' Certificate or an Opinion of
Counsel, as applicable, and shall comply with the requirements of this
Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such 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
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
The certificates and opinions provided pursuant to this Section 15.1
and the statements required by this Section 15.1 shall comply in all respects
with TIA Sections 314(c) and (e).
Section 15.2 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion
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of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such Opinion of Counsel may be based, insofar as it relates to factual matters,
upon an officers' certificate, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate with respect to such matters
is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 15.3 Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of Securities
held by any Person, and the date of holding the same, shall be proved by the
Security Register.
(d) If the Company shall solicit from the Holders of Securities any
request, demand,
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authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. Notwithstanding TIA Section 316(c), such
record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the
first solicitation of Holders generally in connection therewith and not later
than the date such solicitation is completed. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date, provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than eleven
months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
including, without limitation, any Series B Security exchanged for a Series A
Security, in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
Section 15.4 Notices, etc. to Trustee, Company and Subsidiary
Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to or filed with,
(1) the Trustee by any Holder, the Company, any Subsidiary Guarantor
or any holder of Senior Indebtedness or Guarantor Senior Indebtedness
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing (in the English language) and delivered
in person or mailed by certified or registered mail (return receipt
requested) to the Trustee at its Corporate Trust Office; or
(2) the Company or any Subsidiary Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing (in the English
language) and delivered in person or mailed by certified or registered
mail (return receipt requested) to the Company or such Subsidiary
Guarantor, as applicable, addressed to it at the Company's principal
office located at 1331 Lamar Street, Suite 1600, Houston, Texas 77010,
or at any other address otherwise furnished in writing to the Trustee
by the Company.
Section 15.5 Notice to Holders; Waiver.
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Where this Indenture provides for notice of any event to Holders by
the Company, the Trustee or any Paying Agent, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing (in the English
language) and mailed, first-class postage prepaid, to each Holder affected by
such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
Section 15.6 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 15.7 Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Subsidiary Guarantors, if any, shall bind their respective successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 15.8 Separability Clause.
In case any provision in this Indenture or in the Securities or the
Subsidiary Guarantees, if any, shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, and a Holder shall have no claim
therefor against any party hereto.
Section 15.9 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person (other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder, the Holders and, to the
extent set forth in Section 13.4 hereof, creditors of any
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Subsidiary Guarantor, the holders of Senior Indebtedness and the holders of
Guarantor Senior Indebtedness) any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 15.10 Governing Law; Trust Indenture Act Controls.
(a) THIS INDENTURE, THE SUBSIDIARY GUARANTEES, IF ANY, AND THE
SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK. THE COMPANY AND EACH SUBSIDIARY GUARANTOR, IF ANY,
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE, THE SECURITIES OR THE SUBSIDIARY GUARANTEES, IF ANY, AND THE COMPANY
AND EACH SUBSIDIARY GUARANTOR, IF ANY, IRREVOCABLY AGREE THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED BY ANY SUCH
COURT.
(b) Effective upon and subject to the qualification of this Indenture
pursuant to the provisions of the Trust Indenture Act, if and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by operation of Section 318(c) of the Trust Indenture Act, or conflicts
with any provision (an "incorporated provision") required by or deemed to be
included in this Indenture by operation of such Trust Indenture Act section,
such imposed duties or incorporated provision shall control.
Section 15.11 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities or
any Subsidiary Guarantee) payment of interest or principal (and premium, if any)
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date,
Redemption Date or at the Stated Maturity or Maturity; provided, however, that
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date, Stated Maturity or Maturity, as the case may be.
Section 15.12 No Recourse Against Others.
A director, officer, employee, stockholder, incorporator or Affiliate,
as such, past, present or future, of the Company or any Subsidiary Guarantor
shall not have any personal liability under the Securities or this Indenture by
reason of his or its status as a director, officer, employee, stockholder,
incorporator or Affiliate or any liability for any obligations of the Company or
any Subsidiary Guarantor under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder, by accepting any of the Securities, waives and releases all such
liability to the extent permitted by applicable law.
120
<PAGE>
Section 15.13 Duplicate Originals.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 15.14 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
121
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
ISSUER:
NUEVO ENERGY COMPANY
By: /s/ ROBERT M. KING
________________________________________
Name: Robert M. King
Title: Senior Vice President and Chief
Financial Officer
TRUSTEE:
STATE STREET BANK AND TRUST COMPANY
By: /s/ STATE STREET BANK AND TRUST COMPANY
________________________________________
122
<PAGE>
EXHIBIT A
---------
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend in addition to the Private Placement Legend, if required by Section 3.12
hereof, in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OF ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
A-1
<PAGE>
EXHIBIT B
---------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 8__% Senior Subordinated Notes due 2008, Series A, and
8__% Senior Subordinated Notes due 2008, Series B
(the "Securities"), of Nuevo Energy Company
This Certificate relates to $_________ principal amount of Securities held
in the form of *[ ] a beneficial interest in a Global Security or *[ ] Physical
Securities by _________________ (the "Transferor").
The Transferor:*
[ ] has requested by written order that the Security Registrar deliver in
exchange for its beneficial interest in the Global Security held by the
Depository a Physical Security or Physical Securities in definitive, registered
form of authorized denominations and in an aggregate principal amount equal to
its beneficial interest in such Global Security (or the portion thereof
indicated above); or
[ ] has requested that the Security Registrar by written order exchange or
register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 3.5 of such Indenture, and that the
transfer of these Securities does not require registration under the Securities
Act of 1933, as amended (the "Act") because *:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of subparagraph (a)(1) or (c)(1) of Section
3.5 of the Indenture).
[ ] Such Security is being transferred to a person whom the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A under the Act), in reliance on Rule 144A.
[ ] Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act).
[ ] Such Security is being transferred in reliance on Regulation S under
the Act.
[ ] Such Security is being transferred in reliance on Rule 144 under the
Act.
[ ] Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
---------------------------------
[INSERT NAME OF TRANSFEROR]
By:
______________________________
[Authorized Signatory]
Date: _________________________________
*Check applicable box.
B-1
<PAGE>
EXHIBIT C
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
____________, _______
State Street Bank and
Trust Company, Trustee
225 Asylum street
Hartford, Connecticut 06103
Re: Nuevo Energy Company Indenture (the "Indenture")
relating to 8__% Senior Subordinated Notes due 2008,
Series A, or 8__% Senior Subordinated Notes due 2008, Series B
Ladies and Gentlemen:
In connection with our proposed purchase of 8__% Senior Subordinated Notes
due 2008, Series A, or 8__% Series Notes due 2008, Series B (the "Securities"),
of Nuevo Energy Company (the "Company"), we confirm that:
1. We have received such information as we deem necessary in order to
make our investment decision.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Company or any subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the Trustee a signed letter
substantially in the form hereof, (D) outside the United States in accordance
with Regulation S under the Securities Act, (E) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing Securities from us a
notice advising such purchaser that resales of the Securities are restricted as
stated herein.
C-1
<PAGE>
4. We understand that, on any proposed resale of Securities, we will be
required to furnish to you and the Company, such certification, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend to the
foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be, for an indefinite period.
6. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion, for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act.
You and the Company and yours and their respective counsel are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
____________________________
[Authorized Signatory]
C-2
<PAGE>
EXHIBIT D
---------
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
____________, ______
State Street Bank and
Trust Company, Trustee
225 Asylum street
Hartford, Connecticut 06103
Re: Nuevo Energy Company ("the Company")
8__% Senior Subordinated Notes due 2008, Series A, and 8__%
Senior Subordinated Notes due 2008, Series B (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $______________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knew that the transaction had been pre-
arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company and yours and their respective counsel are entitled to
rely upon
D-1
<PAGE>
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby. Defined terms used
herein without definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
________________________________
[Authorized Signature]
D-2
<PAGE>
EXHIBIT E
================================================================================
NUEVO ENERGY COMPANY
and
the Guarantors named herein
________________________________________
SERIES A AND SERIES B
8__% SENIOR SUBORDINATED NOTES DUE 2008
________________________________________
___________________
FORM OF SUPPLEMENTAL INDENTURE
AND AMENDMENT -- SUBSIDIARY GUARANTEE
DATED AS OF ________ ___, ____
___________________
STATE STREET BANK AND TRUST COMPANY
Trustee
___________________
================================================================================
E-1
<PAGE>
This SUPPLEMENTAL INDENTURE, dated as of __________ ___, ____, is among
Nuevo Energy Company, a Delaware corporation (the "Company"), each of the
parties identified under the caption "Subsidiary Guarantors" on the signature
page hereto (the "Subsidiary Guarantors") and State Street Bank and Trust
Company, as Trustee.
RECITALS
WHEREAS, the Company and the Trustee entered into an Indenture, dated as of
June 8, 1998 (the "Indenture"), pursuant to which the Company has originally
issued $______________ in principal amount of 8__% Senior Subordinated Notes due
2008 (the "Securities"); and
WHEREAS, Section 9.1(g) of the Indenture provides that the Company and the
Trustee may amend or supplement the Indenture in order to execute and deliver a
guarantee (a "Subsidiary Guarantee") to comply with Section 10.13 or 13.2
thereof without the consent of the Holders of the Securities; and
WHEREAS, all acts and things prescribed by the Indenture, by law and by the
Certificate of Incorporation and the Bylaws (or comparable constituent
documents) of the Company, of the Subsidiary Guarantors and of the Trustee
necessary to make this Supplemental Indenture a valid instrument legally binding
on the Company, the Subsidiary Guarantors and the Trustee, in accordance with
its terms, have been duly done and performed;
NOW, THEREFORE, to comply with the provisions of the Indenture and in
consideration of the above premises, the Company, the Subsidiary Guarantors and
the Trustee covenant and agree for the equal and proportionate benefit of the
respective Holders of the Securities as follows:
ARTICLE 1
Section 1.01. This Supplemental Indenture is supplemental to the Indenture
and does and shall be deemed to form a part of, and shall be construed in
connection with and as part of, the Indenture for any and all purposes.
Section 1.02. This Supplemental Indenture shall become effective
immediately upon its execution and delivery by each of the Company, the
Subsidiary Guarantors and the Trustee.
ARTICLE 2
From this date, in accordance with Section 10.13 or 13.2, as applicable,
and by executing this Supplemental Indenture and the accompanying notation of
Subsidiary Guarantee, the Subsidiary Guarantors whose signatures appear below
are subject to the provisions of the Indenture to the extent provided for in
Article XIII thereunder.
ARTICLE 3
E-2
<PAGE>
Section 3.01. Except as specifically modified herein, the Indenture and
the Securities are in all respects ratified and confirmed (mutatis mutandis) and
shall remain in full force and effect in accordance with their terms with all
capitalized terms used herein without definition having the same respective
meanings ascribed to them as in the Indenture.
Section 3.02. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Supplemental Indenture. This
Supplemental Indenture is executed and accepted by the Trustee subject to all
the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made
applicable to the Trustee with respect hereto.
Section 3.03. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE AND ENFORCE THIS SUPPLEMENTAL INDENTURE.
Section 3.04. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of such
executed copies together shall represent the same agreement.
[NEXT PAGE IS SIGNATURE PAGE]
E-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed, all as of the date first written above.
NUEVO ENERGY COMPANY
By__________________________________
Name:
Title:
SUBSIDIARY GUARANTORS
[_____________________________]
By__________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By__________________________________
Name:
Title:
E-4
<PAGE>
EXHIBIT 4.3
NUEVO ENERGY COMPANY
8 7/8% SENIOR SUBORDINATED NOTES DUE 2008
REGISTRATION AGREEMENT
New York, New York
June 8, 1998
Salomon Brothers Inc
J.P. Morgan Securities Inc.
NationsBanc Montgomery Securities LLC
As Representatives of the Initial Purchasers
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
Nuevo Energy Company, a Delaware corporation (the "Company"), proposes to
issue and sell to certain purchasers (the "Initial Purchasers"), upon the terms
set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), its 8 7/8% Senior Subordinated Notes due 2008 (the "Securities")
(the "Initial Placement"). As an inducement to the Initial Purchasers to enter
into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, (i) for your benefit and
the benefit of the other Initial Purchasers and (ii) for the benefit of the
holders from time to time of the Securities (including you and the other Initial
Purchasers) (each of the foregoing a "Holder" and together the "Holders"), as
follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which, directly
or indirectly,
<PAGE>
is in control of, is controlled by, or is under common control with, such
specified person. For purposes of this definition, control of a person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such person whether by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the 90 day period following the
consummation of the Registered Exchange Offer, exclusive of any period during
which any stop order shall be in effect suspending the effectiveness of the
Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration statement of
the Company on an appropriate form under the Act with respect to the Registered
Exchange Offer, all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchanging Dealer" means any Holder (which may include the Initial
Purchasers) which is a broker-dealer, electing to exchange Securities acquired
for its own account as a result of market-making activities or other trading
activities, for New Securities.
"Final Memorandum" has the meaning set forth in the Purchase Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Securities and the New
Securities dated as of June 8, 1998, between the Company and State Street Bank
and Trust Company, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering.
-2-
<PAGE>
"New Securities" means debt securities of the Company identical in all
material respects to the Securities (except that interest rate step-up
provisions and the transfer restrictions will be modified or eliminated, as
appropriate), to be issued under the Indenture.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Securities or the New Securities, covered by such Registration
Statement, and all amendments and supplements to the Prospectus, including post-
effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
issue and deliver to such Holders, in exchange for the Securities, a like
principal amount of the New Securities.
"Registration Statement" means any Exchange Offer Registration Statement or
Shelf Registration Statement that covers any of the Securities or the New
Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration" means a registration effected pursuant to Section 3
hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 3 hereof which covers some or
all of the Securities or New Securities, as applicable, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Transfer Restricted Securities" means each Security until (i) the date on
which such Security has been exchanged for a freely transferable New Security in
the Exchange Offer, (ii) the date on which such Security has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Offered Note is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.
"Trustee" means the trustee with respect to the Securities and the New
Securities under the Indenture.
-3-
<PAGE>
"underwriter" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of New Securities by Exchanging
Dealers; Private Exchange.
(a) The Company shall prepare and, not later than 90 days following
the Closing Date, shall file with the Commission the Exchange Offer
Registration Statement with respect to the Registered Exchange Offer. The
Company shall use its reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Act as promptly as
practicable after the filing thereof, but in any event on or prior to 150
days after the Closing Date.
(b) Unless the Registered Exchange Offer would not be permitted by a
policy of the Commission, the Company will commence the Registered Exchange
Offer and will use its reasonable best efforts to consummate the Registered
Exchange Offer as promptly as practicable, but in any event on or prior to
180 days after the Closing Date.
(c) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable
each Holder electing to exchange Securities for New Securities (assuming
that such Holder is not an affiliate of the Company within the meaning of
the Act, acquires the New Securities in the ordinary course of such
Holder's business and has no arrangements with any person to participate in
the distribution of the New Securities) to trade such New Securities from
and after their receipt without any limitations or restrictions under the
Act.
(d) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30
days (or longer if required by applicable law) after the date notice
thereof is mailed to the Holders;
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City
of New York; and
(iv) comply in all respects with all applicable laws.
(e) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
-4-
<PAGE>
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver to
each Holder of Securities New Securities equal in principal amount to
the Securities of such Holder so accepted for exchange.
(f) The Initial Purchasers and the Company acknowledge that, pursuant
to interpretations by the Commission's staff of Section 5 of the Act, and
in the absence of an applicable exemption therefrom, each Exchanging Dealer
is required to deliver a Prospectus in connection with a sale of any New
Securities received by such Exchanging Dealer pursuant to the Registered
Exchanger Offer in exchange for Securities acquired for its own account as
a result of market-making activities or other trading activities.
Accordingly, the Company shall:
(i) include the information set forth in Annex A hereto on the
cover of the Exchange Offer Registration Statement, in Annex B hereto
in the forepart of the Exchange Offer Registration Statement in a
section setting forth details of the Exchange Offer, and in Annex C
hereto in the underwriting or plan of distribution section of the
Prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in
the Letter of Transmittal delivered pursuant to the Registered
Exchange Offer; and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective under the Act during the Exchange
Offer Registration Period for delivery by Exchanging Dealers in
connection with sales of New Securities received pursuant to the
Registered Exchange Offer, as contemplated by Section 4(h) below.
(g) In the event that any Initial Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect to
the exchange of Securities constituting any portion of an unsold allotment,
at the request of such Initial Purchaser, the Company shall issue and
deliver to such Initial Purchaser or the party purchasing New Securities
registered under a Shelf Registration Statement as contemplated by Section
3 hereof from such Initial Purchaser, in exchange for such Securities, a
like principal amount of New Securities. The Company shall seek to cause
the CUSIP Service Bureau to issue the same CUSIP number for such New
Securities as for New Securities issued pursuant to the Registered Exchange
Offer.
3. Shelf Registration. If (i) because of any change in law or applicable
-5-
<PAGE>
interpretations thereof by the Commission's staff, the Company determines upon
advice of its outside counsel that it is not permitted to effect the Registered
Exchange Offer as contemplated by Section 2 hereof, or (ii) for any other reason
the Exchange Offer Registration Statement is not declared effective within 150
days after the Closing Date or the Registered Exchange Offer is not consummated
within 180 days after the Closing Date, or (iii) if any Initial Purchaser so
requests with respect to Securities (or any New Securities received pursuant to
Section 2(f)) not eligible to be exchanged for New Securities in a Registered
Exchange Offer or, in the case of any Initial Purchaser that participates in any
Registered Exchange Offer, such Initial Purchaser does not receive freely
tradeable New Securities, or (iv) if any Holder (other than an Initial
Purchaser) is not eligible to participate in the Registered Exchange Offer or
such Holder does not receive freely tradeable New Securities in the Registered
Exchange Offer other than by reason of such Holder being an affiliate of the
Company (it being understood that, for purposes of this Section 3, (x) the
requirement that an Initial Purchaser deliver a Prospectus containing the
information required by Items 507 and/or 508 of Regulation S-K under the Act in
connection with sales of New Securities acquired in exchange for such Securities
shall result in such New Securities being not "freely tradeable" but (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection with
sales of New Securities acquired in the Registered Exchange Offer in exchange
for Securities acquired as a result of market-making activities or other trading
activities shall not result in such New Securities being not "freely
tradeable"), or (v) any applicable law or interpretations do not permit any
Holder of Securities to participate in the Registered Exchange Offer, or (vi)
the Company so elects, the following provisions shall apply:
(a) The Company shall as promptly as practicable (but in no event more
than 30 days after so required or requested pursuant to this Section 3)
file with the Commission and thereafter shall use its reasonable best
efforts to cause to be declared effective under the Act as promptly as
practicable after the filing thereof, a Shelf Registration Statement
relating to Transfer Restricted Securities by the Holders from time to time
in accordance with the methods of distribution elected by such Holders and
set forth in such Shelf Registration Statement; provided, that with
respect to New Securities received by an Initial Purchaser in exchange for
Securities constituting any portion of an unsold allotment, the Company
may, if permitted by current interpretations by the Commission's staff,
file a post-effective amendment to the Exchange Offer Registration
Statement containing the information required by Regulation S-K Items 507
and/or 508, as applicable, in satisfaction of its obligations under this
paragraph (a) with respect thereto, and any such Exchange Offer
Registration Statement, as so amended, shall be referred to herein as, and
governed by the provisions herein applicable to, a Shelf Registration
Statement.
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of two
years after the Closing Date or such shorter period that will terminate
when all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf
Registration Period").
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The Company shall be deemed not to have used its reasonable best efforts to
keep the Shelf Registration Statement effective during the requisite period
if it voluntarily takes any action that would result in Holders of Transfer
Restricted Securities covered thereby not being able to offer and sell such
Transfer Restricted Securities during that period, unless (i) such action
is required by applicable law, or (ii) such action is taken by the Company
in good faith and for valid business reasons (not including avoidance of
the Company's obligations hereunder), including the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies
with the requirements of Section 4(k) hereof, if applicable.
For so long as any Transfer Restricted Securities are outstanding, the Company
will continue to provide to holders of the Securities and to prospective
purchasers of the Securities the information required by Rule 144A(d)(4) under
the Securities Act.
4. Registration Procedures. In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing thereof with
the Commission, a copy of any Shelf Registration Statement and any Exchange
Offer Registration Statement, and each amendment thereof and each amendment
or supplement, if any, to the Prospectus included therein and shall use its
best efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably may propose.
(b) The Company shall ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder, (ii) any Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any
Registration Statement, and any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading.
(c) (1) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and, if
requested by you or any such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become
effective; and
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<PAGE>
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby,
and, in the case of an Exchange Offer Registration Statement, any
Exchanging Dealer which has provided in writing to the Company a
telephone or facsimile number and address for notices, and, if
requested by you or any such Holder or Exchanging Dealer, confirm such
advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and
(iii) of the happening of any event that requires the
making of any changes in the Registration Statement or the
Prospectus so that, as of such date, the statements therein are
not misleading and do not omit to state a material fact required
to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made).
(d) The Company shall use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of any Registration Statement at the
earliest possible time.
(e) The Company shall furnish to each Holder of securities included
within the coverage of any Shelf Registration Statement, without charge, at
least one copy of such Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if
the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of securities included within the coverage of any Shelf
Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto
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<PAGE>
as such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of securities in connection with the offering and sale of
the securities covered by the Prospectus or any amendment or supplement
thereto.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
(including those incorporated by reference).
(h) The Company shall, if required under applicable securities laws,
during the Exchange Offer Registration Period, promptly deliver to each
Exchanging Dealer, without charge, as many copies of the Prospectus
included in such Exchange Offer Registration Statement and any amendment or
supplement thereto as such Exchanging Dealer may reasonably request in
writing for delivery by such Exchanging Dealer in connection with a sale of
New Securities received by it pursuant to the Registered Exchange Offer;
and the Company consents to the use of the Prospectus or any amendment or
supplement thereto by any such Exchanging Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other offering of
securities pursuant to any Registration Statement, the Company shall
register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holders reasonably request
in writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the securities
covered by such Registration Statement; provided, however, that the Company
will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names
as Holders may request prior to sales of securities pursuant to such
Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the securities included therein, the
Prospectus will not 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.
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<PAGE>
(l) Not later than the effective date of any such Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement, and provide the Trustee with printed certificates
for such Securities or New Securities, in a form eligible for deposit with
The Depository Trust Company.
(m) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the
effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner.
(o) The Company may require each Holder of securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such securities as
the Company may from time to time reasonably require for inclusion in such
Registration Statement.
(p) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters and Majority
Holders reasonably agree should be included therein and shall make all
required filings of such Prospectus supplement or post-effective amendment
as soon as notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the Company shall
enter into such agreements (including underwriting agreements) and take all
other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 (or such other provisions and procedures
acceptable to the Majority Holders and the Managing Underwriters, if any),
with respect to all parties to be indemnified pursuant to Section 7 from
Holders of Securities to the Company.
(r) In the case of any Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by the Holders of securities
to be registered thereunder, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by the Holders or any such underwriter
all relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries; (ii) cause the Company's
officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with any
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<PAGE>
such Registration Statement as is customary for similar due diligence
examinations; provided, however, that any information that is designated in
writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by the Holders or
any such underwriter, attorney, accountant or agent, unless such disclosure
is made in connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality; (iii) make
such representations and warranties to the Holders of securities registered
thereunder and the underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set
forth in the Purchase Agreement; (iv) obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters,
if any) addressed to each selling Holder and the underwriters, if any,
covering such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters; (v) obtain "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each selling Holder of securities registered
thereunder and the underwriters, if any, in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings; and (vi) deliver such
documents and certificates as may be reasonably requested by the Majority
Holders and the Managing Underwriters, if any, including those to evidence
compliance with Section 4(k) and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 4(r) shall be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and (B)
each closing under any underwriting or similar agreement as and to the
extent required thereunder.
(s) In the case of any Exchange Offer Registration Statement, the
Company shall (i) make reasonably available for inspection by such Initial
Purchaser, and any attorney, accountant or other agent retained by such
Initial Purchaser, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to supply all
relevant information reasonably requested by such Initial Purchaser or any
such attorney, accountant or agent in connection with any such Registration
Statement as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the Company,
in good faith, as confidential at the time of delivery of such information
shall be kept confidential by such Initial Purchaser or any such attorney,
accountant or agent, unless such disclosure is made in connection with a
court proceeding or required by law, or such information becomes
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<PAGE>
available to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such representations
and warranties to such Initial Purchaser, in form, substance and scope as
are customarily made by issuers to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set
forth in the Purchase Agreement; (iv) obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to such Initial Purchaser and
its counsel), addressed to such Initial Purchaser, covering such matters as
are customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Initial Purchaser
or its counsel; (v) obtain "cold comfort" letters and updates thereof from
the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to such Initial
Purchaser, in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with primary underwritten
offerings, or if requested by such Initial Purchaser or its counsel in lieu
of a "cold comfort" letter, an agreed-upon procedures letter under
Statement on Auditing Standards No. 35, covering matters requested by such
Initial Purchaser or its counsel; and (vi) deliver such documents and
certificates as may be reasonably requested by such Initial Purchaser or
its counsel, including those to evidence compliance with Section 4(k) and
with conditions customarily contained in underwriting agreements. The
foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this
Section 4(s) shall be performed at the close of the Registered Exchange
Offer and on the effective date of any post-effective amendment to the
Exchange Offer Registration Statement.
5. Special Interest. The parties hereto agree that the Holders of the
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) a Registration Statement is
not filed with the Commission on or prior to 90 days after the Closing Date,
(ii) the Exchange Offer Registration Statement or a Shelf Registration
Statement, if applicable, is not declared effective on or prior to 150 days
after the Closing Date, (iii) the Registered Exchange Offer is not consummated
on or prior to 180 days after the Closing Date or (iv) a Registration Statement
is filed and declared effective on or prior to 150 days after the Closing Date
but shall thereafter cease to be effective or usable (at any time that the
Company is obligated to maintain the effectiveness thereof) in connection with
resales of Securities or New Securities without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective on or prior to the date specified for such
effectiveness in this Agreement (each such event referred to in clauses (i)
through (iv), a "Registration Default"), Special Interest will accrue on the
Securities and the New Securities (in addition to the stated interest on the
Securities and the New Securities) from and including the date on which the
first such Registration Default shall occur to but excluding the date on which
all Registration Defaults have been cured. Special Interest will accrue at a
rate of 0.5% per annum during the 90-day period immediately following the
occurrence of the first such Registration Default and shall increase by 0.25%
per annum at
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<PAGE>
the end of each subsequent 90-day period, but in no event shall such rate exceed
1.00% per annum. All accrued Special Interest shall be paid to Holders in the
same manner as interest payments on the Securities on semi-annual payment dates
which correspond to interest payment dates for the Securities. Following the
cure of all Registration Defaults, the accrual of Special Interest will cease.
The parties hereto agree that the Special Interest provided for in this
Section 5 constitutes a reasonable estimate of the damages that may be incurred
by Holders of Securities by reason of the occurrence of a Registration Default.
6. Registration Expenses. The Company shall bear all expenses incurred in
connection with the performance of its obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchasers for the reasonable fees and
disbursements of counsel acting in connection therewith.
7. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Company agrees to indemnify and hold harmless each
Holder of securities covered thereby (including each Initial Purchaser and, with
respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each
Exchanging Dealer), the directors, officers, employees and agents of each such
Holder and each person who controls any such Holder within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or 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 a material fact contained in
the Registration Statement as originally filed or in any amendment thereof, or
in any preliminary Prospectus or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any such Holder specifically for inclusion therein.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
The Company also agrees to indemnify or contribute to Losses (as defined
below) of, as provided in Section 7(d), any underwriters of Securities
registered under a Shelf Registration Statement, their officers and directors
and each person who controls such underwriters on
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<PAGE>
substantially the same basis as that of the indemnification of the Initial
Purchasers and the selling Holders provided in this Section 7(a) and shall, if
requested by any Holder, enter into an underwriting agreement reflecting such
agreement, as provided in Section 4(q) hereof.
(b) Each Holder of securities covered by a Registration Statement
(including each Initial Purchaser and, with respect to any Prospectus delivery
as contemplated in Section 4(h) hereof, each Exchanging Dealer) severally agrees
to indemnify and hold harmless (i) the Company, (ii) each of its directors,
(iii) each of its officers who signs such Registration Statement and (iv) each
person who controls the Company within the meaning of either the Act or the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each such Holder, but only with reference to written information relating to
such Holder furnished to the Company by or on behalf of such Holder specifically
for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 or
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder
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<PAGE>
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 7 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
no case shall any Initial Purchaser or any subsequent Holder of any Security or
New Security be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a
New Security, applicable to the Security which was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall any
underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the securities purchased by such underwriter under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Memorandum and
(y) the total amount of additional interest which the Company was not required
to pay as a result of registering the securities covered by the Registration
Statement which resulted in such Losses. Benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions as set forth on the cover page of the Final Memorandum, and benefits
received by any other Holders shall be deemed to be equal to the value of
receiving Securities or New Securities, as applicable, registered under the Act.
Benefits received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. Relative fault shall be determined by reference to whether any alleged
untrue statement or omission relates to information provided by the indemnifying
party, on the one hand, or by the indemnified party, on the other hand. The
parties agree that it would not be just and equitable if contribution were
determined by the pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person who
controls a Holder within the meaning of either
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the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The provisions of this Section 7 will remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the
Company or any of the officers, directors or controlling persons referred to in
this Section 7, and will survive the sale by a Holder of securities covered by a
Registration Statement.
8. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with
the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of the Holders of at least a majority of the then
outstanding aggregate principal amount of Securities (or, after the
consummation of any Exchange Offer in accordance with Section 2 hereof, of
New Securities); provided that, with respect to any matter that directly or
indirectly affects the rights of any Initial Purchaser hereunder, the
Company shall obtain the written consent of each such Initial Purchaser
against which such amendment, qualification, supplement, waiver or consent
is to be effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders may be
given by the Majority Holders, determined on the basis of securities being
sold rather than registered under such Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this
Section 8(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the registrar under the
Indenture, with a copy in like manner to Salomon Brothers Inc;
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(2) if to you, initially at the respective addresses set forth in
the Purchase Agreement; and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Securities and/or New Securities.
The Company hereby agrees to extend the benefits of this Agreement to any
Holder of Securities and/or New Securities and any such Holder may
specifically enforce the provisions of this Agreement as if an original
party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired or affected thereby, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent
permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other
than subsequent Holders of Securities or New Securities if such
-17-
<PAGE>
subsequent Holders are deemed to be Affiliates solely by reason of their
holdings of such Securities or New Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of
such required percentage.
-18-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
NUEVO ENERGY COMPANY
By: /s/ NUEVO ENERGY COMPANY
Accepted in New York, New York
June 8, 1998
SALOMON BROTHERS INC
J.P. MORGAN SECURITIES INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
By: SALOMON BROTHERS INC
By: /s/ SALOMON BROTHERS INC.
For themselves and the other Purchasers named
in Schedule I to the Purchase Agreement
<PAGE>
Annex A
Each broker-dealer that receives New Securities for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Securities where such New Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, if required under applicable
securities laws and upon prior written request, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale for a
period of 90 days after the consummation of the Exchange Offer. See "Plan of
Distribution."
<PAGE>
Annex B
Each broker-dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the consummation of the Exchange Offer, it
will make this Prospectus, as amended or supplemented, available to any broker-
dealer for use in connection with any such resale, if required under applicable
securities laws and upon prior written request. In addition, until _______,
199__, all dealers effecting transactions in the New Securities may be required
to deliver a prospectus.*
The Company will not receive any proceeds from any sale of New Securities
by broker-dealers. New Securities received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Securities. Any broker-
dealer that resells New Securities that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of New Securities may be deemed to be an "underwriter" within the
meaning of the Act and any profit of any such resale of New Securities and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Act.
For a period of 90 days after the consummation of the Exchange Offer, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the holders of the Securities) other than commissions or concessions of any
- --------------------
* In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer Prospectus.
<PAGE>
brokers or dealers and will indemnify the holders of the Securities (including
any broker-dealers) against certain liabilities, including liabilities under the
Act.
[If applicable, add information required by Regulation S-K Items 507 and/or
508.]
<PAGE>
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
Rider B
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of New
Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for Securities that were acquired by
it as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such New Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.
<PAGE>
EXHIBIT 4.4
NUEVO ENERGY COMPANY
$100,000,000
8 7/8% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A
PURCHASE AGREEMENT
New York, New York
June 3, 1998
Salomon Brothers Inc
J.P. Morgan Securities Inc.
NationsBanc Montgomery Securities LLC
As Representatives of the Initial Purchasers
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Nuevo Energy Company, a Delaware corporation (the "Company"), proposes to
issue and sell to the parties named in Schedule I hereto (the "Initial
Purchasers"), for whom you are acting as representatives (the
"Representatives"), $100,000,000 principal amount of its 8 7/8% Senior
Subordinated Notes due 2008, Series A (the "Securities"). The Securities are to
be issued under an indenture (the "Indenture") dated as of June 8, 1998, between
the Company and State Street Bank and Trust Company, as trustee (the "Trustee").
If you are the only Initial Purchasers, all references herein to the
Representatives shall be deemed to be to the Initial Purchasers.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. You have advised the Company that the
Initial Purchasers will offer and sell the Securities purchased by them
hereunder in accordance with Section 4 hereof as soon as you deem advisable.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum, dated May 19, 1998 (including any and all
exhibits thereto, the
<PAGE>
"Preliminary Memorandum"), and a final offering memorandum, dated June 3, 1998
(including any and all exhibits thereto, the "Final Memorandum"). Each of the
Preliminary Memorandum and the Final Memorandum sets forth certain information
concerning the Company and the Securities. The Company hereby confirms that it
has authorized the use of the Preliminary Memorandum and the Final Memorandum,
and any amendment or supplement thereto, in connection with the offer and sale
of the Securities by the Initial Purchasers. Unless stated to the contrary, all
references herein to the Final Memorandum are to the Final Memorandum at the
Execution Time (as defined below) and are not meant to include any amendment or
supplement subsequent to the Execution Time.
1. Representations and Warranties. The Company represents and warrants to
each Initial Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Final Memorandum, at the
date hereof, does not, and at the Closing Date (as defined below) will not
(and any amendment or supplement thereto, at the date thereof and at the
Closing Date, will not), contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty as to the information contained in or omitted from the Preliminary
Memorandum or the Final Memorandum, or any amendment or supplement thereto,
in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Initial Purchasers through the
Representatives specifically for inclusion therein.
(b) The Securities have been duly and validly authorized and, when
issued, delivered and sold, and authenticated by the Trustee, in accordance
with this Agreement and the Indenture, will have been duly and validly
executed, issued, delivered and authenticated, and will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms and entitled to the benefits
provided by the Indenture, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
of general application relating to or affecting creditors' rights generally
or the availability of equitable remedies.
(c) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of
the Company and is enforceable against the Company in accordance with the
terms hereof, except as rights to indemnity and contribution hereunder may
be limited by federal and state securities laws and as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
-2-
<PAGE>
conveyance or other laws of general application relating to or affecting
creditors' rights generally or the availability of equitable remedies,
regardless of whether such enforcement is considered in a proceeding in
equity or at law. The Indenture has been duly authorized and, when executed
and delivered by the Company and the Trustee, will constitute a valid and
binding agreement of the Company and will be enforceable against the
Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other laws of general application relating to or affecting creditors'
rights generally or the availability of equitable remedies, regardless of
whether such enforcement is considered in a proceeding in equity or at law.
The Registration Agreement (as defined in the Final Memorandum) has been
duly authorized and, when executed and delivered by the Company and the
Initial Purchasers, will constitute a valid and binding agreement of the
Company and will be enforceable against the Company in accordance with its
terms, except as rights to indemnity and contribution thereunder may be
limited by federal and state securities laws and as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other laws of general application relating to or affecting creditors'
rights generally or the availability of equitable remedies, regardless of
whether such enforcement is considered in a proceeding in equity or at law.
The performance by the Company of its obligations under this Agreement, the
Indenture, the Registration Agreement and the Securities and the
consummation by it of the transactions contemplated hereby and thereby will
not result in the creation or imposition of any lien, charge or encumbrance
upon any of the assets of the Company or any of its subsidiaries pursuant
to the terms or provisions of, or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations under, or result in
the acceleration of any obligation under, the certificate or articles of
incorporation, bylaws or other organizational documents of the Company or
any of its subsidiaries, any contract or other agreement to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries, or any of their respective properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or
body applicable to the business or properties of the Company or any of its
subsidiaries.
(d) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for
the consummation by the Company of the transactions contemplated in this
Agreement, the Registration Agreement, the Indenture and the Securities,
except such as may be required (i) under state securities or blue sky laws
in connection with the purchase and sale of the Securities by the Initial
Purchasers and (ii) under the Securities Act, the Trust Indenture Act or
the rules of the National Association of Securities Dealers, Inc. in
connection with the registration of the Securities pursuant to the
Registration Agreement.
(e) Neither the Company, nor any of its Affiliates (as defined in Rule
501(b)
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<PAGE>
of Regulation D under the Securities Act ("Regulation D")), nor any person
acting on its or their behalf has, directly or indirectly, made offers or
sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of the Securities under
the Securities Act.
(f) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities in the United States.
(g) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(h) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf has engaged in any directed selling efforts
with respect to the Securities, and each of them has complied with the
offering restrictions requirement of Regulation S ("Regulation S") under
the Securities Act. Terms used in this paragraph have the meanings given
to them by Regulation S.
(i) The Company has been advised by the National Association of
Securities Dealers, Inc. PORTAL Market that the Securities have been
designated PORTAL eligible securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc.
(j) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), without taking account of any exemption arising out of the number of
holders of the Company's securities.
(k) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act.
(l) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any Securities (except as
contemplated by this Agreement).
(m) The information provided by the Company pursuant to Section 5(h)
hereof will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(n) The financial statements, and the related notes thereto, included
in the Final Memorandum present fairly the consolidated financial position
of the Company and
-4-
<PAGE>
its consolidated subsidiaries as of the dates indicated and the results of
their operations and changes in their consolidated cash flows for the
periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis. The other financial and statistical information and data
included in the Final Memorandum are, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements
and the books and records of the Company.
(o) Since the respective dates as of which information is given in the
Final Memorandum, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise
than as set forth, or contemplated in the Final Memorandum. Except as set
forth or contemplated in the Final Memorandum, neither the Company nor any
of its subsidiaries has entered into any transaction or agreement (whether
or not in the ordinary course of business) material to the Company and its
subsidiaries taken as a whole.
(p) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own its properties and
conduct its business as described in the Final Memorandum, and has been
duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not have a material adverse effect on the general affairs,
business, prospects, management, financial position, stockholders' equity
or results of operations of Company and its subsidiaries, taken as a whole
(collectively, a "Material Adverse Effect").
(q) Each of the Company's subsidiaries has been duly incorporated and
is validly existing as a corporation under the laws of its jurisdiction of
incorporation, with corporate power and authority to own its properties and
conduct its business as described in the Final Memorandum, and has been
duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. All the outstanding
shares of capital stock of each corporate subsidiary of the Company have
been duly authorized and validly issued, are fully-paid and non-assessable,
and, except as otherwise set forth in the Final Memorandum, are owned by
the Company, directly or indirectly, free and clear of all liens,
encumbrances, security interests and claims.
-5-
<PAGE>
(r) The Company has an authorized capitalization as set forth in the
Final Memorandum and all of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully-paid and
non-assessable and are not subject to any preemptive or similar rights.
(s) Neither the Company nor any of its subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, its respective certificate of incorporation or by-laws or
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them or any of their respective properties is bound,
except for violations and defaults which individually and in the aggregate
are not material to the Company and its subsidiaries taken as a whole.
(t) Other than as set forth or contemplated in the Final Memorandum,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries or any of their
respective properties or to which the Company or any of its subsidiaries is
or may be a party or to which any property of the Company or any of its
subsidiaries is or may be the subject which, if determined adversely to the
Company or any of its subsidiaries could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and, to the best
of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(u) The Company and its subsidiaries have good and indefeasible title
in fee simple to all real property (other than oil and gas properties which
are covered in (v) below) and good title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects
except such as are described or referred to in the Final Memorandum or such
as do not materially affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company
and its subsidiaries; and any property held under lease by the Company and
its subsidiaries are held by them under valid, existing and enforceable
leases with such exceptions as are not material and do not interfere with
the use made or proposed to be made of such property by the Company or its
subsidiaries.
(v) Each of the Company and its subsidiaries has good and defensible
title to its oil and gas properties, free and clear of all liens,
encumbrances, security interests, and claims, title investigation having
been carried out by or on behalf of such person in accordance with good
practice in the oil and gas industry in the areas in which the Company
operates except (i) as specified in the Final Memorandum; (ii) liens for
taxes not yet due; (iii) liens, claims and encumbrances under gas sales
contracts, operating agreements, unitization and pooling agreements and
such other agreements as are customarily found in connection with
comparable drilling and producing operations; and
-6-
<PAGE>
(iv) other liens, claims, encumbrances and title defects that are, singly
and in the aggregate, not material in amount and do not materially
interfere with the Company's or any of its subsidiaries' use or enjoyment
of their respective oil and gas properties.
(w) No relationship, direct or indirect, exists between or among the
Company or any or its subsidiaries on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of its
subsidiaries on the other hand, which would be required to be described in
the reports of the Company filed with the Commission under the Exchange Act
which is not described in the Final Memorandum or in a report filed with
the Commission.
(x) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Securities Act.
(y) The Company and its subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and have
paid all taxes shown thereon and all assessments received by them or any of
them to the extent that such taxes have become due and are not being
contested in good faith; and, except as disclosed in the Final Memorandum,
there is no tax deficiency which has been or might reasonably be expected
to be asserted or threatened against the Company or any subsidiary.
(z) Each of the Company and its subsidiaries owns, possesses or has
obtained all material licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, and neither the Company
nor any such subsidiary has received any actual notice of any proceeding
relating to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except as
described in the Final Memorandum. Each of the Company and its
subsidiaries is in compliance with all laws and regulations relating to the
conduct of its business as conducted as of the date hereof, except where
noncompliance with such laws and regulations would not have a Material
Adverse Effect.
(aa) There are no existing or, to the best knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
subsidiaries which are likely to have a Material Adverse Effect.
(bb) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes,
-7-
<PAGE>
pollutants or contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except as described in the Final Memorandum or where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a Material Adverse Effect.
(cc) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect.
(dd) Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, ("ERISA")
that is maintained, administered or contributed to by the Company or any of
its affiliates for employees or former employees of the Company and its
affiliates has been maintained in compliance with its terms and the
requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986,
as amended, ("Code"). No prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code has occurred with respect
to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA no
"accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeded the present value of all benefits accrued under
such plan determined using reasonable actuarial assumptions.
(ee) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
-8-
<PAGE>
(ff) The Company maintains insurance policies currently in effect,
including levels of deductibles, that are customary in the oil and gas
industry. Such policies provide coverage for operations of the Company and
its subsidiaries in amounts and covering such risks as the Company believes
is necessary to conduct its business.
(gg) Neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, 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.
(hh) Except as described in the Final Memorandum, as of the date
hereof, (i) all royalties, rentals, deposits and other amounts due on the
oil and gas properties of the Company have been properly and timely paid,
and no proceeds from the sale or production attributable to the oil and gas
properties of the Company are currently being held in suspense by any
purchaser thereof, except where such amounts due could not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and (ii) there are no claims under take-or-
pay contracts pursuant to which natural gas purchasers have any make-up
rights affecting the interests of the Company in its oil and gas
properties, except where such claims could not, singly or in the aggregate,
have a Material Adverse Effect.
(ii) Except as described in the Final Memorandum, as of the date
hereof, the aggregate undiscounted monetary liability of the Company for
petroleum taken or received under any operating or gas balancing and
storage agreement relating to its oil and gas properties that permits any
person to receive any portion of the interest of the Company in any
petroleum or to receive cash or other payments to balance any
disproportionate allocation of petroleum could not, singly or in the
aggregate, have a Material Adverse Effect.
(jj) Neither the Company nor any subsidiary of the Company is a
"holding company" or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 97.625% of the
principal amount thereof, plus accrued interest, if any, from June 8, 1998 to
the Closing Date, the principal amount of Securities set forth opposite such
Initial Purchaser's name in Schedule I hereto.
-9-
<PAGE>
3. Delivery and Payment. Delivery of and payment for the Securities shall
be made at 10:00 AM, New York City time, on June 8, 1998, which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). The Securities to be
purchased by the Initial Purchasers hereunder will be represented by one or more
definitive global Securities in book-entry form which will be deposited by or on
behalf of the Company with The Depository Trust Company ("DTC") or its
designated custodian. The Company will deliver each of the global Securities to
Salomon Brothers Inc for the account of each Initial Purchaser, against payment
by or on behalf of such Initial Purchaser of the purchase price therefor to the
Company by wire transfer of same day funds to a bank account designated by the
Company, by causing DTC to credit the Securities to the account of Salomon
Brothers Inc at DTC.
Such Securities, if any, as the Representatives may request upon at least
48 hours' prior notice to the Company (such request to include the authorized
denominations and the names in which they are to be registered), shall be
delivered in definitive certificated form, by or on behalf of the Company to the
Representatives for the account of certain of the Initial Purchasers, against
payment by or on behalf of such Initial Purchasers of the purchase price
therefor to the Company by wire transfer of same day funds to a bank account
designated by the Company. The Company agrees to have the Securities available
for inspection, checking and packaging by the Representatives in New York, New
York, not later than 1:00 PM on the business day prior to the Closing Date.
The closing of the purchase and sale of the Securities shall be held at the
office of Butler & Binion, L.L.P. ("Counsel for the Company"), 1000 Louisiana,
Houston, Texas.
4. Offering of Securities. Each Initial Purchaser, severally and not
jointly, represents and warrants to and agrees, with the Company that:
(a) It is a qualified institutional buyer (as defined in Rule 144A
under the Securities Act) or an institutional accredited investor (within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act).
(b) It has not offered or sold, and will not offer or sell, any
Securities except (i) to those it reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act) and
that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such Securities is aware
that such sale is being made in reliance on Rule 144A or (ii) in accordance
with the restrictions set forth in Exhibit A hereto.
(c) Neither it nor any person acting on its behalf has made or will
make offers or sales of the Securities in the United States by means of any
form of general solicitation
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or general advertising (within the meaning of Regulation D) in the United
States.
5. Agreements. The Company agrees with each Initial Purchaser that:
(a) The Company will furnish to each Initial Purchaser and to Vinson &
Elkins L.L.P. ("Counsel for the Initial Purchasers"), without charge,
during the period referred to in paragraph (c) below, as many copies of the
Final Memorandum and any amendments and supplements thereto as it may
reasonably request. The Company will pay the expenses of printing or other
production of all documents relating to the offering.
(b) The Company will not amend or supplement the Final Memorandum
without the prior written consent of the Representatives.
(c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the
Representatives), any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it should be necessary to amend
or supplement the Final Memorandum to comply with applicable law, the
Company will promptly notify the Representatives of the same and, subject
to the requirements of paragraph (b) of this Section 5, will prepare and
provide to the Representatives pursuant to paragraph (a) of this Section 5
an amendment or supplement which will correct such statement or omission or
effect such compliance.
(d) The Company will use its reasonable best efforts to arrange for
the qualification of the Securities for sale by the Initial Purchasers
under the laws of such jurisdictions as the Initial Purchasers may
designate and will maintain such qualifications in effect so long as
required for the sale of the Securities; provided, that the Company will
not be obligated to file any general consent to service of process or
qualify as a foreign corporation or as a dealer in securities in any U.S.
jurisdiction in which it is not so qualified or subject itself to taxation
in respect of doing business in any jurisdiction in which it is not
otherwise subject. The Company will promptly advise the Representatives of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(e) The Company will not, and will not permit any of its Affiliates
to, resell any Securities that have been acquired by any of them.
(f) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will, directly or indirectly, make offers or
sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities under
the Securities Act.
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<PAGE>
(g) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities in the United States.
(h) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144 (a) (3) under the Securities Act, the
Company will, during any period in which it is not subject to and in
compliance with Section 13 or 15(d) of the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request
of such holder or prospective purchaser, any information required to be
provided by Rule 144A (d) (4) under the Securities Act. This covenant is
intended to be for the benefit of the holders, and the prospective
purchasers designated by such holders, from time to time of such restricted
securities.
(i) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any directed selling efforts
with respect to the Securities, and each of them will comply with the
offering restrictions requirement of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S.
(j) The Company will cooperate with the Representatives and use its
reasonable best efforts to permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(k) During the period of five years hereafter, the Company will
furnish to the Representatives and upon request, to each of the other
Initial Purchasers, as soon as practicable after it is sent to security
holders, a copy of its annual report to stockholders for such year, and the
Company will furnish to the Representatives (i) as soon as practicable
after filing or mailing, 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 the Representatives may reasonably
request.
6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein at the date and time that this Agreement is executed
and delivered by the parties hereto (the "Execution Time"), and the Closing
Date, to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
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(a) The Company shall have furnished to the Representatives the
opinion of Counsel for the Company, dated the Closing Date, to the effect
that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware
with corporate power and authority to own, lease and operate its
assets and conduct its business as described in the Final Memorandum,
and the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the
nature of its activities requires such qualification, except where
such failure to be in good standing would not have a Material Adverse
Effect.
(ii) Each of the subsidiaries of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its assets and conduct
its business as described in the Final Memorandum, and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which the nature of its activities
requires such qualification, except where such failure to be in good
standing would not have a Material Adverse Effect.
(iii) All the outstanding shares of capital stock of the Company
and each subsidiary of the Company have been duly and validly
authorized and issued and are fully paid and nonassessable, and,
except as otherwise set forth in the Final Memorandum, all outstanding
shares of capital stock of the subsidiaries of the Company are owned,
directly or indirectly, by the Company free and clear of any security
interest and, to the knowledge of such counsel, after due inquiry, any
other security interests, claims, liens or encumbrances.
(iv) The Company's authorized equity capitalization is as set
forth in the Final Memorandum.
(v) The Company has full corporate power and authority to enter
into each of this Agreement, the Registration Agreement and the
Indenture and each of this Agreement, the Registration Agreement and
the Indenture has been duly authorized, executed and delivered by the
Company (and assuming it has been duly authorized, executed and
delivered by the Trustee), is a valid and binding obligation of the
Company and is enforceable against the Company in accordance with the
terms thereof, except as rights to indemnity and contribution
thereunder may be limited by federal and state securities laws and as
may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws of general application relating to
or affecting creditors' rights generally or the availability of
equitable remedies.
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<PAGE>
(vi) The Securities have been duly and validly authorized and,
when issued, delivered and sold and authenticated by the Trustee, in
accordance with this Agreement and the Indenture, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms and entitled to the
benefits provided by the Indenture, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws of general application relating to or
affecting creditors' rights generally or the availability of equitable
remedies.
(vii) The statements set forth in the Final Memorandum under the
headings "Business and Properties--Legal Proceedings," "Description of
Existing Indebtedness" and "Description of the Notes" provide a fair
summary of the legal matters, documents and proceedings described
therein in all material respects.
(viii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated herein and in the Registration Agreement,
the Indenture and the Securities, except such as may be required (i)
under the blue sky or securities laws of any jurisdiction in
connection with the purchase and sale of the Securities by the Initial
Purchasers, (ii) under the Securities Act, the Trust Indenture Act or
the rules of the National Association of Securities Dealers, Inc. in
connection with the registration of the Securities pursuant to the
Registration Agreement and (iii) such other approvals (specified in
such opinion) as have been obtained.
(ix) The execution and delivery of this Agreement, the
Registration Agreement, the Securities and the Indenture and the
consummation of the transactions contemplated herein and therein will
not (i) to the best of such counsel's knowledge, conflict with or
constitute a breach of, or default under, or result in the creation of
any lien, charge or encumbrance on any property, or assets of the
Company or any of its subsidiaries pursuant to any material contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which
it or any of them may be bound or to which the property or assets of
the Company or any of its subsidiaries is subject, or (ii) result in a
violation of the provisions of the charter or bylaws of the Company
or, to the best of such counsel's knowledge, any law, administrative
regulation or administrative court decree.
(x) Except as set forth or contemplated in the Final Memorandum,
to the best of such counsel's knowledge, there are no legal or
governmental investigations, actions, suits or proceedings pending or
threatened against or affecting the Company or any of its subsidiaries
or any of their respective properties or to which the Company or any
of its subsidiaries is or may be a party
-14-
<PAGE>
or to which any property of the Company or its subsidiaries is or may
be the subject which, if determined adversely to the Company or any of
its subsidiaries, could individually or in the aggregate reasonably be
expected to have a material adverse effect on the general affairs,
business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole.
(xi) Assuming the accuracy of the representations and warranties
and compliance with the agreements contained herein, no registration
of the Securities under the Securities Act is required, and no
qualification of the Indenture under the Trust Indenture Act of 1939
is necessary, for the offer and sale by the Initial Purchasers of the
Securities in the manner contemplated by this Agreement.
(xii) The Company is not an "investment company" within the
meaning of the Investment Company Act without taking account of any
exemption arising out of the number of holders of the Company's
securities.
(xiii) Such counsel believes that (other than the financial
statements and other financial and statistical and reserve data
included therein as to which such counsel expresses no opinion) the
Final Memorandum, at the Execution Time, did not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and that the Final Memorandum, at the Closing
Date, does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York, the State of Delaware or the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to Counsel for the Initial Purchasers and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials.
All references in this Section 6(a) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
(b) The Representatives shall have received from Counsel for the
Initial Purchasers such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Securities, the Final Memorandum
(as amended or supplemented at the Closing Date) and other related matters
as the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
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<PAGE>
(c) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Final Memorandum, any amendment or supplement
to the Final Memorandum and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date,
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date; and
(ii) since the date of the most recent financial statements
included in the Final Memorandum, there has been no material adverse
change in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereto).
(d) At the Execution Time and at the Closing Date, KPMG Peat Marwick
LLP shall have furnished to the Representatives a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Securities Act and the
Exchange Act and the applicable rules and regulations thereunder and Rule
101 of the Code of Professional Conduct of the American Institute of
Certified Public Accountants (the "AICPA") and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Final Memorandum and
reported on by them comply in form in all material respects with the
applicable accounting requirements of the Exchange Act and the related
published rules and regulations thereunder;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review in accordance with the standards established by the
AICPA of the unaudited interim financial information as indicated in
their report included in the Final Memorandum; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
stockholders, directors and committees of the Company and its
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<PAGE>
subsidiaries; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the
Company and its subsidiaries as to transactions and events subsequent
to December 31, 1997, nothing came to their attention which caused
them to believe that:
(1) any unaudited financial statements included in the Final
Memorandum do not comply in form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; and said unaudited financial
statements are not, in all material respects, in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Final Memorandum; or
(2) with respect to the period subsequent to March 31, 1998,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the long-term
debt of the Company and its subsidiaries or capital stock of the
Company or decreases in the stockholders' equity of the Company
or decreases in working capital of the Company and its
subsidiaries as compared with the amounts shown on the March 31,
1998 consolidated balance sheet included in the Final Memorandum,
or for the period from April 1, 1998 to such specified date there
were any decreases, as compared with the corresponding period in
the preceding year; in net revenues or income before income taxes
or in total or per share amounts of net income of the Company and
the Subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives; or
(3) the information included under the headings "Offering
Memorandum Summary--Summary Consolidated Financial Data" and
"Selected Financial Data" is not in conformity with the
disclosure requirements of Regulation S-K.
(iii) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Final Memorandum agrees with the accounting records of
the Company and its subsidiaries, excluding any questions of legal
interpretation.
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<PAGE>
KPMG Peat Marwick LLP shall have also furnished to the Representatives
a letter stating that the Company's system of internal accounting controls
taken as a whole is sufficient to meet the broad objectives of internal
accounting control insofar as those objective pertain to the prevention of
detection of errors or irregularities in amounts that would be material in
relation to the financial statements of the Company and the Subsidiaries.
All references in this Section 6(d) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the date of the
letter.
(e) At the Execution Time and at the Closing Date, each of Ryder Scott
Company, Miller and Lents, Ltd., S.A. Holditch and Associates, Inc., DOR
Engineering, Inc., T.J. Smith & Company, Inc. and POCO Oil Co. shall have
furnished to the Representatives a letter or letters dated respectively as
of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, each stating, as of the date of such
letter (or, with respect to matters involving changes or developments since
the respective dates as of which specified information with respect to the
oil and gas reserves is given in the Final Memorandum as of the date not
more than five days prior to the date of such letter), the conclusions and
findings of such firm with respect to the oil and gas reserves of the
Company.
All references in the Section 6(e) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the date of the
letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum, there shall not have
been (i) any change or decrease specified in the letter or letters referred
to in paragraph (d) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to market the Securities as contemplated by the Final
Memorandum.
(g) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act) or any notice given of
any intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
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<PAGE>
(h) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and Counsel for the Initial Purchasers,
this Agreement and all obligations of the Initial Purchasers hereunder may be
canceled at, or at any time prior to, the Closing Date by the Representatives.
Notice of such cancellation shall be given to the Company in writing or by
telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 will be delivered
at the office of Counsel for the Company, at 1000 Louisiana, Houston, Texas, on
the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Initial Purchasers in payment for the Securities on the Closing Date, the
Company will reimburse the Initial Purchasers severally upon demand for all out-
of-pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by them in connection with the proposed purchase and
sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Initial Purchaser, the directors, officers, employees and
agents of each Initial Purchaser and each person who controls any Initial
Purchaser within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law 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 a material fact contained in the Preliminary
Memorandum, the Final Memorandum or any information provided by the Company to
any holder or prospective purchaser of Securities pursuant to Section 5(h), or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged
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<PAGE>
omission made in the Preliminary Memorandum or the Final Memorandum, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Initial
Purchasers through the Representatives specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Initial Purchaser severally agrees to indemnify and hold harmless
the Company, its directors, its officers, and each person who controls the
Company within the meaning of either the Securities Act or the Exchange Act, to
the same extent as the foregoing indemnity from the Company to each Initial
Purchaser, but only with reference to written information relating to such
Initial Purchaser furnished to the Company by or on behalf of such Initial
Purchaser through the Representatives specifically for inclusion in the
Preliminary Memorandum or the Final Memorandum (or in any amendment or
supplement thereto). This indemnity agreement will be in addition to any
liability which any Initial Purchaser may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and under the heading "Plan of Distribution" in the Preliminary Memorandum
and the Final Memorandum constitute the only information furnished in writing by
or on behalf of the Initial Purchasers for inclusion in the Preliminary
Memorandum or the Final Memorandum (or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the
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indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnifying party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Initial Purchasers agree to contribute
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the Initial
Purchasers may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and by the Initial Purchasers from the
offering of the Securities; provided, however, that in no case shall any Initial
Purchaser (except as may be provided in any agreement among the Initial
Purchasers relating to the offering of the Securities) be responsible for any
amount in excess of the purchase discount or commission applicable to the
Securities purchased by such Initial Purchaser hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Initial Purchasers shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and of the Initial Purchasers in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Initial Purchasers shall be deemed to be
equal to the total purchase discounts and commissions received by the Initial
Purchasers from the Company in connection with the purchase of the Securities
hereunder. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Initial Purchasers. The Company and the Initial Purchasers agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of an Initial
Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer and director of the Company
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (d).
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9. Default of an Initial Purchaser. If any one or more Initial Purchasers
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set
forth in Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such non-defaulting Initial Purchasers do not purchase
all the Securities, this Agreement will terminate without liability to any non-
defaulting Initial Purchaser or the Company. In the event of a default by any
Initial Purchaser as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Final Memorandum or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Initial Purchaser of its liability, if
any, to the Company or any non-defaulting Initial Purchaser for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in any of the Company's securities shall have been suspended by the Commission
or the New York Stock Exchange or trading in securities generally on the New
York Stock Exchange shall have been suspended or limited or minimum prices shall
have been established on such exchange, (ii) a banking moratorium shall have
been declared either by Federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Final Memorandum.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
-22-
<PAGE>
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, care of Salomon Brothers Inc, at
Seven World Trade Center, New York, New York, 10048; or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at 1331 Lamar,
Suite 1650, Houston, Texas 77010, attention: Chief Financial Officer.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and,
except as expressly set forth in Section 5(h) hereof, no other person will have
any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
15. Business Day. For purposes of this Agreement, "business day" means
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in The City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
-23-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement between the
Company and the Initial Purchasers.
Very truly yours,
Nuevo Energy Company
By: /s/ NUEVO ENERGY COMPANY
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
Salomon Brothers Inc
J.P. Morgan Securities Inc.
NationsBanc Montgomery Securities LLC
By: Salomon Brothers Inc
By: /s/ SALOMON BROTHERS INC
For themselves and the other Initial Purchasers
named in Schedule I to the foregoing Agreement
-24-
<PAGE>
SCHEDULE I
----------------------
Initial Purchasers Principal Amount of
------------------ Securities
to be Purchased
Salomon Brothers Inc.......................... $ 55,000,000
J.P. Morgan Securities Inc.................... 22,500,000
NationsBanc Montgomery Securities LLC......... 22,500,000
----------------------
Total.......................... $100,000,000
-25-
<PAGE>
EXHIBIT A
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Securities have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. Each Initial Purchaser represents and
agrees that, except as otherwise permitted by Section 4(a)(i) of the Agreement
to which this is an exhibit, it has offered and sold the Securities, and will
offer and sell the Securities, (i) as part of their distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the offering
and the Closing Date, only in accordance with Rule 903 of Regulation S under the
Securities Act. Accordingly, each Initial Purchaser represents and agrees that
neither it, nor any of its affiliates nor any person acting on its or their
behalf has engaged or will engage in any directed selling efforts with respect
to the Securities, and that it and they have complied and will comply with the
offering restrictions requirement of Regulation S. Each Initial Purchaser
agrees that, at or prior to the confirmation of sale of Securities (other than a
sale of Securities pursuant to Section 4(a)(i) of the Agreement to which this is
an exhibit), it shall have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases Securities from
it during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering and
specify closing date of the offering, except in either case in accordance
with Regulation S or Rule 144A under the Securities Act. Terms used above
have the meanings given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it has not
entered and will not enter into any contractual arrangement with any distributor
with respect to the distribution of the Securities, except with its affiliates
or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them by
Regulation S.
(2) Each Initial Purchaser represents and agrees that (i) it has not
offered or sold, and will not offer or sell, any Offered Notes in the United
Kingdom by means of any document other than to persons whose ordinary business
is to buy, hold, manage or dispose of investments, whether as principal or
agent, for purposes of their businesses or otherwise in circumstances that do
not constitute an offer to the public in the United Kingdom within the meaning
of the Public
A-1
<PAGE>
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 of the United
Kingdom with respect to anything done by it in relation to the Offered Notes in,
from or otherwise involving the United Kingdom and (iii) it has only issued or
passed on and will only issue or pass on, to any person in the United Kingdom,
any document received by them in connection with the issue of the Offered Notes,
if that person is of a kind described in Article 11 (3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom the document may otherwise lawfully be issued or passed on.
A-2
<PAGE>
EXHIBIT 5.1
[BUTLER & BINION, L.L.P. LETTERHEAD APPEARS HERE]
August 4, 1998
Nuevo Energy Company
1331 Lamar, Suite 1650
Houston, Texas 77010
Re: Registration of $100,000,000 of 8-7/8% Series B Senior Subordinated
Notes due 2008 of Nuevo Energy Company
Gentlemen:
We have acted as counsel for Nuevo Energy Company, a Delaware corporation
(the "Company"), in connection with the registration and sale of $100,000,000 in
8-7/8% Series B Senior Subordinated Notes due 2008 ("Notes") of the Company.
We have made such inquiries and examined such documents as we have
considered necessary or appropriate for the purposes of giving the opinion
hereinafter set forth, including the examination of executed or conformed
counterparts, or copies certified or otherwise proved to our satisfaction of the
following:
(i) the Certificate of Incorporation of the Company, as amended;
(ii) the Bylaws of the Company as of the date of this opinion;
(iii) the Registration Statement on Form S-4 of the Company, including
the related prospectus, filed with the Securities and Exchange
Commission on August 4, 1998 (the "Registration Statement");
(iv) the Indenture ("Indenture") dated June 8, 1998 between the Company
and State Street Bank and Trust Company, as Trustee ("Trustee"),
pursuant to which the Notes will be issued; and
(v) such other documents, corporate records, certificates and other
instruments as we have deemed necessary or appropriate for the
purpose of this opinion.
We have assumed the genuineness and authenticity of all signatures on all
original documents, the authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies and the due authorization, execution, delivery or recordation of all
documents where due authorization, execution, delivery or recordation are
prerequisites to the effectiveness thereof. Capitalized terms used herein and
not otherwise defined are used as defined in the Registration Statement.
<PAGE>
Nuevo Energy Company
July 31, 1998
Page 2
Based upon the foregoing, and having regard for such legal considerations
as we deem relevant, we are of the opinion that:
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware pursuant
to the Delaware General Corporation Law;
(ii) The Notes to be sold by the Company pursuant to the Registration
Statement have been duly authorized for issuance, and when
executed by the Company, authenticated by the Trustee and
delivered and sold in accordance with the provisions of the
Registration Statement, will be legally issued and binding
obligations of the Company enforceable in accordance with their
terms and entitled to the benefits of the Indenture (except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws now or hereafter in effect affecting
the rights of creditors generally).
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the references to us under the caption "Legal
Matters" in the prospectus forming a part of the Registration Statement.
Very truly yours,
/s/ Butler & Binion, L.L.P
BUTLER & BINION, L.L.P.
<PAGE>
EXHIBIT 12.1
NUEVO ENERGY COMPANY
COMPUTATIONS OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, (1) ENDED MARCH 31,
------------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997(1) 1998
-------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income taxes,
minority interest and extraordinary item (14,060) (7,239) 6,730 57,972 (17,340) 24,425 (11,309)
Interest expense......................... 11,861 12,560 15,389 36,009 27,357 6,745 6,826
TECONS dividends......................... -- -- -- 165 6,613 1,615 1,653
---------- ------- ------- -------- -------- ------- --------
Adjusted earnings (loss)............... (2,199) 5,321 22,119 94,146 16,630 32,785 (2,830)
Fixed Charges.............................
Interest expense......................... 11,861 12,560 15,389 36,009 27,357 6,745 6,826
Capitalized interest..................... -- -- -- -- 2,143 1,422 241
TECONS dividends......................... -- -- -- 165 6,613 1,615 1,653
---------- ------- ------- -------- -------- ------- --------
Total Fixed Charges.................... 11,861 12,560 15,389 36,174 36,113 9,782 8,720
Ratio of Earnings to Fixed Charges........ -- -- 1.4 2.6 -- 3.4 --
Earnings required to cover Fixed
Charges.................................. 14,060 7,239 -- -- 19,483 -- 11,550
</TABLE>
_____________________
1 Effective January 1, 1998, the Company changed its method of accounting for
its investments in oil and gas properties from the full cost to the
successful efforts method. All prior years' financial statements presented
herein have been restated to reflect this change.
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Nuevo Energy Company:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
Our report dated May 12, 1998, contains an explanatory paragraph that states
that the Company has given retroactive effect to the change in accounting for
oil and gas properties from the full cost method to the successful efforts
method.
August 4, 1998
/s/ KPMG Peat Marwick LLP
<PAGE>
EXHIBIT 23.3
MILLER AND LENTS, LTD.
CONSENT OF MILLER AND LENTS, LTD.,
INDEPENDENT PETROLEUM ENGINEERS
We consent to reference to our firm under the caption "Independent
Reserve Engineers" and elsewhere in the Registration Statement and related
Prospectus constituting Nuevo Energy Company's Registration Statement on Form
S-4 filed with the Securities and Exchange Commission on August 4, 1998.
MILLER AND LENTS, LTD.
By /s/ Larry M. Gring
---------------------------
Larry M. Gring
Senior Vice President
Houston, Texas
August 4, 1988
<PAGE>
EXHIBIT 23.4
CONSENT OF S.A. HOLDITCH & ASSOCIATES, INC.
INDEPENDENT PETROLEUM ENGINEERS
We consent to reference to our firm under the caption "Independent
Reserve Engineers" and elsewhere in the Registration Statement and related
Prospectus constituting Nuevo Energy Company's Registration Statement on Form
S-4 filed with the Securities and Exchange Commission on August 4, 1998.
S.A. HOLDITCH & ASSOCIATES, INC.
BY /s/ W. Denton Copeland
---------------------------
TITLE: Vice President
July 31, 1998
<PAGE>
[RYDER SCOTT COMPANY LETTERHEAD APPEARS HERE]
EXHIBIT 23.5
CONSENT OF RYDER SCOTT COMPANY,
INDEPENDENT PETROLEUM ENGINEERS
We consent to reference to our firm under the caption "Independent
Reserve Engineers" in the Registration Statement and related Prospectus
constituting Nuevo Energy Company's Registration Statement on Form S-4 filed
with the Securities and Exchange Commission on August 4, 1998.
/s/ Ryder Scott Company
Petroleum Engineers
-----------------------------
Ryder Scott Company
Petroleum Engineers
August 4, 1998
<PAGE>
EXHIBIT 23.6
CONSENT OF D-O-R ENGINEERING, INC.
INDEPENDENT PETROLEUM ENGINEERS
We consent to reference to our firm under the caption "Independent
Reserve Engineers" and elsewhere in the Registration Statement and related
Prospectus constituting Nuevo Energy Company's Registration Statement on
Form S-4 filed with the Securities and Exchange Commission on August 4, 1998.
D-O-R ENGINEERING, INC.
By:/s/ Mike McKenzie
---------------------------
Lafayette, Louisiana
July 31, 1998
<PAGE>
EXHIBIT 23.7
[T.J. SMITH & COMPANY, INC. LETTERHEAD APPEARS HERE]
CONSENT OF T.J. SMITH & COMPANY, INC.
INDEPENDENT PETROLEUM ENGINEERS
We consent to reference to our firm under the caption "Independent
Reserve Engineers" and elsewhere in the Registration Statement and related
Prospectus constituting Nuevo Energy Company's Registration Statement on Form
S-4 filed with the Securities and Exchange Commission on August 4, 1998.
T.J. Smith & Company, Inc.
By /s/ D.J. Pierson, P.E.
---------------------------
D.J. Pierson, P.E.
Houston, Texas
July 31, 1998
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
_________
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
Trustee
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
NUEVO ENERGY COMPANY,
ANY SUBSIDIARY GUARANTORS
(Exact name of obligor as specified in its charter)
DELAWARE 76-0304436
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1311 Lamar, Suite 1650, Houston, Texas 77010
(713) 652-0706
(Address of principal executive offices) (Zip Code)
Series A and Series B 8 7/8% Senior Subordinated Notes
(Title of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to which
it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent, State
Street Corporation.
(See note on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in effect.
A copy of the Articles of Association of the trustee, as now in effect,
is on file with the Securities and Exchange Commission as Exhibit 1 to
Amendment No. 1 to the Statement of Eligibility and Qualification of
Trustee (Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of Massachusetts
that no certificate of authority for the trustee to commence business
was necessary or issued is on file with the Securities and Exchange
Commission as Exhibit 2 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents specified in
paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise corporate trust
powers is on file with the Securities and Exchange Commission as
Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated
herein by reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on file with
the Securities and Exchange Commission as Exhibit 4 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Eastern Edison Company (File No. 33-37823)
and is incorporated herein by reference thereto.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is in
default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 31st day of July, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ruth Smith
______________________________________
Ruth Smith
Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by Nuevo Energy
Company and any Subsidiary Gurarantors. of its Series A and Series B 8 7/8%
Senior Subordinated Notes, we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ruth Smith
_____________________________________
Ruth Smith
Vice President
Dated: July 31, 1998
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin................... 1,144,309
Interest-bearing balances............................................ 9,914,704
Securities................................................................ 10,062,052
Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and its Edge subsidiary................. 8,073,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ............................ 6,433,627
Allowance for loan and lease losses.................................. 88,820
Allocated transfer risk reserve...................................... 0
Loans and leases, net of unearned income and allowances.............. 6,344,807
Assets held in trading accounts........................................... 1, 117,547
Premises and fixed assets................................................. 453,576
Other real estate owned................................................... 100
Investments in unconsolidated subsidiaries................................ 44,985
Customers' liability to this bank on acceptances outstanding.............. 66,149
Intangible assets......................................................... 263,249
Other assets.............................................................. 1,066,572
----------
Total assets.............................................................. 38,552,020
==========
LIABILITIES
Deposits:
In domestic offices.................................................. 9,266,492
Noninterest-bearing................................................ 6,824,432
Interest-bearing................................................... 2,442,060
In foreign offices and Edge subsidiary............................... 14,385,048
Noninterest-bearing................................................ 75,909
Interest-bearing................................................... 14,309,139
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary.................................. 9,949,994
Demand notes issued to the U.S. Treasury and Trading Liabilities.......... 171,783
Trading liabilities....................................................... 1,078,189
Other borrowed money...................................................... 406,583
Subordinated notes and debentures......................................... 0
Bank's liability on acceptances executed and outstanding.................. 66,149
Other liabilities......................................................... 878,947
Total liabilities......................................................... 36,203,185
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus............................. 0
Common stock.............................................................. 29,931
Surplus................................................................... 450,003
Undivided profits and capital reserves/Net unrealized holding
gains (losses)........................................................... 1,857,021
Net unrealized holding gains (losses) on available-for-sale securities.... 18,136
Cumulative foreign currency translation adjustments....................... (6,256)
Total equity capital...................................................... 2,348,835
----------
Total liabilities and equity capital...................................... 38,552,020
==========
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<PAGE>
EXCHANGE AGENT AGREEMENT
August , 1998
State Street Bank and Trust Company
Two International Place
Corporate Trust Window, Fourth Floor
Boston, Massachusetts 02110
Ladies and Gentlemen:
Nuevo Energy Company (the "Issuer") proposes to make an offer (the
"Exchange Offer") to exchange its outstanding 8-7/8% Series A Senior
Subordinated Notes due 2008 (the "Old Notes"), of which an aggregate of
$100,000,000 in principal amount is outstanding as of the date hereof, for an
equal principal amount of newly issued 8-7/8% Series B Senior Subordinated Notes
due 2008 (the "New Notes") which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"). The Old Notes and New Notes are
collectively referred to herein as the "Notes." The terms and conditions of the
Exchange Offer as currently contemplated are set forth in a prospectus, dated
August , 1998 (the "Prospectus"), proposed to be distributed to all record
holders of the Old Notes and beneficial interests therein. Terms used and not
defined herein have the meanings set forth in the Prospectus or the Letter of
Transmittal (except that the term "Old Notes" shall include beneficial interests
therein ("Book-Entry Interests"), held by or through participants in The
Depository Trust Company (the "Book-Entry Transfer Facility") and Old Notes held
in definitive registered form ("Definitive Registered Notes")).
The Issuer hereby appoints State Street Bank & Trust Company to act as
exchange agent (the "Exchange Agent") in connection with the Exchange Offer.
References hereinafter to "you" shall refer to State Street Bank & Trust
Company.
The Exchange Offer is expected to be commenced by the Issuer on or about
, 1998. The Letter of Transmittal accompanying the Prospectus is to be
used by the holders of the Old Notes to accept the Exchange Offer, and contains
certain instructions with respect to the delivery of Book-Entry Interests and
Definitive Registered Notes.
The Exchange Offer shall expire at 5:00 p.m., New York City time, ,
1998 or on such later date or time to which the Issuer may extend the Exchange
Offer (the "Expiration Date"). Subject to the terms and conditions set forth in
the Prospectus, the Issuer expressly reserves the right to extend the Exchange
Offer from time to time and may extend the Exchange Offer by giving oral
(confirmed in writing) or written notice to you before 9:00 a.m., New York City
time, on the business day following the previously scheduled Expiration Date.
The Issuer expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified in the Prospectus under the section "The Exchange Offer -- Conditions
to the Exchange Offer." The Issuer will give oral (confirmed in writing) or
written notice of any amendment, termination or nonacceptance to you as promptly
as practicable.
In carrying out your duties as Exchange Agent, you are to act in accordance
with the following instructions:
1
<PAGE>
1. You will perform such duties and only such duties as are specifically
set forth in the section of the Prospectus captioned "The Exchange Offer," as
specifically set forth in the Letter of Transmittal, and as specifically set
forth herein and such duties which are necessarily incidental thereto; PROVIDED,
HOWEVER, that in no way will your general duty to act in good faith be
discharged by the foregoing.
2. You will establish an account with respect to the Old Notes at the
Book-Entry Transfer Facility for purposes of the Exchange Offer within two
business days after the date of the Prospectus or, if you already have
established an account with the Book-Entry Transfer Facility suitable for the
Exchange Offer, you will identify such preexisting account to be used in the
Exchange Offer, and any financial institution that is a participant in the Book-
Entry Transfer Facility's systems may make book-entry delivery of the Old Notes
by causing the Book-Entry Transfer Facility to transfer such Old Notes into your
account in accordance with the Book-Entry Transfer Facility's procedure for such
transfer.
3. You are to examine each of the Letters of Transmittal, each of the
certificates for Old Notes in the case of Definitive Registered Notes, or, in
the case of Book-Entry Interests, confirmation of book-entry transfer into your
account at the Book-Entry Transfer Facility via the Book-Entry Transfer
Facility's Automated Tender Offer Program and any accompanying Agent's Message
and any other documents delivered or mailed to you by or for holders of the Old
Notes to ascertain whether: (i) the Letters of Transmittal and any such other
documents are duly executed and properly completed in accordance with
instructions set forth therein and (ii) the Old Notes have otherwise been
properly tendered. In each case where the Letter of Transmittal or any other
document has been improperly completed or executed, any of the certificates for
Old Notes are not in proper form for transfer or some other irregularity in
connection with the acceptance of the Exchange Offer exists, you will endeavor
to inform the presenters of the need for fulfillment of all requirements and to
take any other action as may be necessary or advisable to cause such
irregularity to be corrected.
4. With the approval of the Chief Financial Officer of the Company or the
Company Secretary (such approval, if given orally, to be confirmed in writing)
or any other party designated by such an officer in writing, you are authorized
to waive any irregularities in connection with any tender of Old Notes pursuant
to the Exchange Offer.
5. Tenders of Old Notes may be made only as set forth in the section of
the Prospectus captioned "The Exchange Offer -- Procedures for Tendering
Outstanding Notes" or in the Letter of Transmittal, and Old Notes shall be
considered properly tendered to you only when tendered in accordance with the
procedures set forth therein.
Notwithstanding the provisions of this Paragraph 5, Old Notes which the
Chief Financial Officer of the Company or the Company Secretary or any other
party designated by such an officer in writing shall approve as having been
properly tendered shall be considered to be properly tendered (such approval, if
given orally, shall be confirmed in writing).
6. You shall advise the Company with respect to any Old Notes delivered
subsequent to the Expiration Date and accept its instructions with respect to
disposition of such Old Notes.
7. You shall accept tenders:
a. in cases where the Old Notes are registered in two or more
names only if signed by all named holders;
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<PAGE>
b. in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity
only when proper evidence of his or her authority to so act is
submitted; and
c. from persons other than the registered holder of Old Notes
provided that customary transfer requirements, including any
applicable transfer taxes, are fulfilled.
8. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Issuer will notify you (such notice if given orally, to be confirmed
in writing) of its acceptance, promptly after the Expiration Date, of all Old
Notes properly tendered; and you, on behalf of the Issuer, will exchange such
Old Notes for New Notes and cause such Old Notes to be canceled. Delivery of New
Notes will be made on behalf of the Issuer by you at the rate of $1,000
principal amount of New Notes for each $1,000 principal amount of the Old Notes
tendered promptly after notice (such notice if given orally, to be confirmed in
writing) of acceptance of said Old Notes by the Issuer; PROVIDED, HOWEVER, that
in all cases, Old Notes tendered pursuant to the Exchange Offer will be
exchanged only after timely receipt by you of properly endorsed Definitive
Registered Notes or confirmation of book-entry transfer into your account at the
Book-Entry Transfer Facility, or a properly completed and duly executed Letter
of Transmittal (or facsimile thereof) with any required signature guarantees (or
in lieu thereof an Agent's Message, where applicable) and any other required
document. You shall issue New Notes only in denominations of $1,000 or any
integral multiple thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and upon the conditions set forth in the Prospectus and the
Letter of Transmittal, Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
10. The Issuer shall not be required to exchange any Old Notes tendered if
any of the conditions set forth in the Exchange Offer are not met. Notice of any
decision by the Issuer not to exchange any Old Notes tendered shall be given
(such notice, if given orally, shall be confirmed in writing) by the Issuer to
you.
11. If, pursuant to the Exchange Offer, the Issuer does not accept for
exchange all or part of the Old Notes tendered because of an invalid tender, the
occurrence of certain other events set forth in the Prospectus under the caption
"The Exchange Offer -- Conditions to the Exchange Offers" or otherwise, you
shall as soon as practicable after the expiration or termination of the Exchange
Offer effect the appropriate book-entry transfer of the unaccepted Old Notes,
and return any related required documents and the Letters of Transmittal
relating thereto that are in your possession, to the persons who deposited them.
12. You are not authorized to pay or offer to pay any concessions,
commission or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any person to solicit tenders.
13. As Exchange Agent hereunder you:
a. will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of Old
Notes, and will not be required to and will make no representations as to the
validity, value or genuineness of the Exchange Offer; PROVIDED, HOWEVER, that in
no way will your general duty to act in good faith be discharged by the
foregoing;
b. shall not be obligated to take any legal action hereunder which might
in your reasonable judgment involve any expense or liability, unless you shall
have been furnished with reasonable indemnity;
3
<PAGE>
c. shall not be liable to the Issuer for any action taken or omitted by
you, or any action suffered by you to be taken or omitted, without negligence,
misconduct or bad faith on your part, by reason of or as a result of the
administration of your duties hereunder in accordance with the terms and
conditions of this Agreement or by reason of your compliance with the
instructions set forth herein or with any written or oral instructions delivered
to you pursuant hereto, and may reasonably rely on and shall be protected in
acting in good faith in reliance upon any certificate, instrument, opinion,
notice, letter, facsimile or other document or security delivered to you and
reasonably believed by you to be genuine and to have been signed by the proper
party or parties;
d. may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due execution and
validity and the effectiveness of its provisions, but also as to the truth and
accuracy of any information contained therein, which you shall in good faith
reasonably believe to be genuine or to have been signed or represented by a
proper person or persons;
e. may rely on and shall be protected in acting upon written or oral
instructions from any officer of the Issuer with respect to the Exchange Offer;
f. shall not advise any person tendering Old Notes pursuant to the
Exchange Offer as to the wisdom of making such tender or as to the market value
or decline or appreciation in market value of any Old Notes; and
g. may consult with your counsel and the written opinion of such counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by you hereunder in good faith and in accordance with
such written opinion of such counsel.
14. All requests for information relating to the Exchange Offer shall be
directed to:
Nuevo Energy Company
1311 Lamar, Suite 1650
Houston, Texas 77010
Attn: Barbara Forbes, Director of Investor Relations
Telephone: (713) 652-0706
15. You shall advise by facsimile transmission or telephone, and promptly
thereafter, confirm in writing to:
Robert M. King
Nuevo Energy Company
1311 Lamar, Suite 1650
Houston, Texas 77010
Telephone: (713) 652-0706
Facsimile: (713) 756-1744
4
<PAGE>
and such other person or persons as the Company may request, daily, and more
frequently if reasonably requested, up to and including the Expiration Date, as
to the principal amount of the Old Notes which have been tendered pursuant to
the Exchange Offer and the items received by you pursuant to this Agreement,
separately reporting and giving cumulative totals as to items properly received
and items improperly received. In addition, you will also inform, and cooperate
in making available to, the Issuer or any such other person or persons as the
Issuer requests from time to time prior to the Expiration Date of such other
information as they, it or he reasonably requests. Such cooperation shall
include, without limitation, the granting by you to the Issuer and such persons
as the Issuer may request of access to those persons on your staff who are
responsible for receiving tenders in order to ensure that immediately prior to
the Expiration Date, the Issuer shall have received information in sufficient
detail to enable it to decide whether to extend the Exchange Offer. You shall
prepare a list of persons who failed to tender or whose tenders were not
accepted and the aggregate principal amount of Old Notes not tendered or Old
Notes not accepted and deliver said list to the Issuer at least seven days prior
to the Expiration Date. You shall also prepare a final list of all persons whose
tenders were accepted, the aggregate principal amount of Old Notes tendered and
the aggregate principal amount of Old Notes accepted and deliver said list to
the Issuer.
16. Letters of Transmittal and Notices of Guaranteed Delivery shall be
stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Issuer.
17. For services rendered as Exchange Agent hereunder you shall be
entitled to a fee of $3,000 and you shall be entitled to reimbursement of your
expenses (including fees and expenses of your counsel, which fees are expected
under normal circumstances to be not in excess of $1,500) incurred in connection
with the Exchange Offer.
18. You hereby acknowledge receipt of the Prospectus and the Letter of
Transmittal attached hereto and further acknowledge that you have examined each
of them to the extent that they relate to your duties hereunder. Any
inconsistency between this Agreement, on the one hand, and the Prospectus and
the Letter of Transmittal (as they may be amended from time to time), on the
other hand, shall be resolved in favor of the latter two documents, except with
respect to the duties, liabilities and indemnification of you as Exchange Agent
which shall be controlled by this Agreement.
19. The Issuer agrees to indemnify and hold you harmless in your capacity
as Exchange Agent hereunder against any liability, cost or expense, including
reasonable attorneys' fees, arising out or in connection with the acceptance or
administration of your duties hereunder, including, without limitation, in
connection with any act, omission, delay or refusal made by you in reasonable
reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by you to be valid, genuine and sufficient and in accepting any tender or
effecting any transfer of Old Notes reasonably believed by you in good faith to
be authorized, and in delaying or refusing in good faith to accept any tenders
or effect any transfer of Old Notes; PROVIDED, HOWEVER, that the Issuer shall
not be liable for indemnification or otherwise for any loss, liability, cost or
expense to the extent arising out of your negligence, willful breach of this
Agreement, willful misconduct or bad faith. In no case shall the Issuer be
liable under this indemnity with respect to any claim against you unless the
Issuer shall be notified by you, by letter or cable or by facsimile confirmed by
letter, of the written assertion of a claim against you or of any other action
commenced against you, promptly after you shall have received any such written
assertion or commencement of action. The Issuer shall be entitled to participate
at its own expense in the defense of any such claim or other action, and, if the
Issuer so elects, the Issuer shall assume the defense of any suit brought to
enforce any such claim. In the event that the Issuer shall assume the defense of
any such suit, the Issuer shall not be liable for the fees and expenses of any
additional counsel thereafter retained by you so long as the Issuer shall retain
counsel
5
<PAGE>
reasonably satisfactory to you to defend such suit unless, in the opinion of
your counsel, the Issuer's counsel has a conflict of interest representing both
you and the Issuer. You shall not compromise or settle any such action or claim
without the consent of the Issuer.
20. This Agreement and your appointment as Exchange Agent hereunder shall
be construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such state,
and without regard to conflicts of law principles, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
21. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which taken together
constitute one and the same agreement.
22. In case any provision of this Agreement 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.
23. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
24. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:
If to the Issuer:
Nuevo Energy Company
1311 Lamar, Suite 1650
Houston, Texas 77010
Telephone: (713) 652-0706
Facsimile: (713) 756-1744
Attn: Robert M. King, Chief Financial Officer
with a copy to:
Butler & Binion, L.L.P.
1000 Louisiana, Suite 1600
Houston, TX 77002
Telephone: (713) 237-3111
Facsimile: (713) 237-3202
Attn: George G. Young
6
<PAGE>
If to the Exchange Agent:
by Registered or Certified mail: by hand or overnight delivery:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Two International Place
Post Office Box 778 Corporate Trust Window, Fourth Floor
Boston, Massachusetts 02102 Boston, Massachusetts 02110
Attention: Jacklyn Thompson Attention: Jacklyn Thompson
Telephone: (617) 664-5587
Facsimile: (617) 664-5290 (by facsimile for Eligible Institutions only)
with a copy to:
Bingham Dana, L.L.P.
100 Pearl Street
Hartford, CT 06103
Telephone: (860) 541-3075
Facsimile: (860) 527-5188
Attention: Robert M. Borden
25. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 90 days following the Expiration Date. Notwithstanding the foregoing,
Paragraphs 17 and 19 shall survive the termination of this Agreement. Upon any
termination of this Agreement, you shall promptly deliver to the Issuer any
funds or property (including, without limitation, Letters of Transmittal and any
other documents relating to the Exchange Offer) then held by you as Exchange
Agent under this Agreement except as provided in Section 16.
26. This Agreement shall be binding and effective as of the date hereof.
Please acknowledge receipt of this Agreement and confirm the arrangements
herein provided by signing and returning the enclosed copy.
NUEVO ENERGY COMPANY
By:
--------------------------------
Name:
Title:
Accepted as the date first above written:
STATE STREET BANK & TRUST COMPANY
By:
---------------------------------
Name:
Title:
7
<PAGE>
EXHIBIT 99.2
LETTER OF TRANSMITTAL
NUEVO ENERGY COMPANY
OFFER TO EXCHANGE
8-7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
Which Have Been Registered Under The Securities Act of 1933, As Amended Pursuant
To The Prospectus Dated [ ], 1998
FOR
ALL OUTSTANDING
8-7/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON [ ], 1998 UNLESS EXTENDED (THE "EXPIRATION DATE")
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE
DELIVER TO STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT
by registered or certified mail: by hand or overnight delivery:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Two International Place
Post Office Box 778 Corporate Trust Window, Fourth Floor
Boston, Massachusetts 02102 Boston, Massachusetts 02110
Attention: Kellie Mullen Attention: Kellie Mullen
Telephone: (617) 664-5587
Facsimile: (617) 664-5290 (for Eligible Institutions only)
(originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated [ ], 1998 (the "Prospectus"), of
Nuevo Energy Company, a Delaware corporation (the "Company"), and this Letter of
Transmittal (the "Letter"), which together constitute the Company's offer (the
"Exchange Offer") to exchange, from the registered holders (the "holders")
thereof an aggregate principal amount of up to $100,000,000 of the Company's
8-7/8% Series B Senior Subordinated Notes due 2008 (the "Exchange Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is part, for a like principal amount of the issued and outstanding 8-7/8% Series
A Senior Subordinated Notes
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<PAGE>
due 2008 (the "Outstanding Notes") of the Company. Capitalized terms used but
not defined herein have the respective meaning given to them in the Prospectus.
For each Outstanding Note accepted for exchange, the holder of such
Outstanding Note will receive an Exchange Note having a principal amount equal
to that of the surrendered Outstanding Note. Accordingly, registered holders of
Exchange Notes on the relevant record date for the first interest payment date
following the consummation of the Exchange Offer will receive interest accruing
from the most recent date to which interest has been paid on the Outstanding
Notes or, if no interest has been paid, from June 8, 1998. Outstanding Notes
accepted for exchange will cease to accrue interest from and after the date of
consummation of the Exchange Offer. Holders whose Outstanding Notes are
accepted for exchange will not receive any payment in respect of accrued
interest on such Outstanding Notes otherwise payable on any interest payment
date the record date for which occurs on or after consummation of the Exchange
Offer.
This Letter is to be completed by a holder of Outstanding Notes either if
certificates for such Outstanding Notes are to be forwarded herewith or if a
tender is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "DTC") pursuant to the
procedures set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes--Book-Entry Transfer" section of the Prospectus and an Agent's
Message is not delivered. Tenders by book-entry transfer may also be made by
delivering an Agent's Message in lieu of this Letter of Transmittal. The term
"Agent's Message" means a message, transmitted by the DTC to and received by the
Exchange Agent and forming a part of a Book-Entry Confirmation (as defined
below), which states that the DTC has received an express acknowledgment from
the tendering holder, which acknowledgment states that such holder has received
and agrees to be bound by the Letter of Transmittal and that the Company may
enforce the Letter of Transmittal against such holder. Holders of Outstanding
Notes whose certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry tender of their
Outstanding Notes into the Exchange Agent's account at the DTC (a "Book-Entry
Confirmation") and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their Outstanding Notes
according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering Outstanding Notes--Guaranteed Delivery" section
of the Prospectus. See Instruction 1. Delivery of documents to the DTC does not
constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
The undersigned, by completing the box entitled "Description of 8-7/8%
Series A Senior Subordinated Notes due 2008" below and signing this Letter, will
be deemed to have tendered the Outstanding Notes as set forth in such box below.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL AND
THE PROSPECTUS CAREFULLY BEFORE COMPLETING THE BOXES
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
2
<PAGE>
List below the Outstanding Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Outstanding Notes should be listed on a separate signed schedule affixed hereto.
DESCRIPTION OF 8-7/8% SERIES A SENIOR
SUBORDINATED NOTES DUE 2008
<TABLE>
<CAPTION>
NAME AND ADDRESS OF REGISTERED AGGREGATE PRINCIPAL AMOUNT
HOLDERS (AS IT/THEY APPEAR(S) PRINCIPAL AMOUNT TENDERED (MUST BE
ON THE NOTES) CERTIFICATE REPRESENTED BY IN INTEGRAL MULTIPLES
(PLEASE FILL IN IF BLANK) NUMBERS(*) CERTIFICATE(S) OF $1,000)**
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless indicated in the column labeled "Principal Amount Tendered," any
tendering holder of 8-7/8% Series A Senior Subordinated Notes due 2008 will
be deemed to have tendered the entire aggregate principal amount represented
by the column labeled "Aggregate Principal Amount Represented by
Certificates(s)." If the space provided above is inadequate, list the
certificate numbers and principal amounts on a separate signed schedule and
affix the list to this Letter of Transmittal. The minimum permitted tender
is $1,000 in principal amount of 8-7/8% Series A Senior Subordinated Notes
due 2008 and all tenders must be in integral multiples of $1,000 in
principal amount.
[_] Check here if tendered Outstanding Notes are enclosed herewith.
[_] Check here if tendered Outstanding Notes are being delivered by book-entry
transfer made to the account maintained by the Exchange Agent with DTC and
complete the following (for use by eligible institutions (as hereinafter
defined) only):
Name of Tendering Institution__________________________________________________
Account Number_________________________________________________________________
Transaction Code Number________________________________________________________
[_] Check here and enclose a photocopy of the Notice of Guaranteed Delivery if
tendered Outstanding Notes are being delivered pursuant to a Notice of
Guaranteed Delivery previously sent to the Exchange Agent and complete the
following (for use by eligible institutions only):
Name(s)of Registered Holder(s)_________________________________________________
Date of Execution of Notice of Guaranteed Delivery_____________________________
Window Ticket Number (if available)____________________________________________
Name of Institution which Guaranteed Delivery__________________________________
Account Number (if delivered by book-entry transfer)___________________________
Transaction Code Number (if delivered by book-entry transfer)__________________
Tendering Institution (if delivered by book-entry transfer)____________________
3
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3, 4 and 5) (See Instructions 3 and 4)
To be completed ONLY (i) if To be completed ONLY if
certificates for Outstanding certificates for Outstanding
Notes not tendered, or Notes not tendered, or
Exchange Notes issued in Exchange Notes issued in
exchange for Outstanding exchange for Outstanding Notes
Notes accepted for exchange, accepted for exchange, are to
are to be issued in the name be delivered to someone other
of someone other than the than the undersigned, or to
undersigned, or (ii) if the undersigned at an address
Outstanding Notes tendered other than that shown above.
by book-entry transfer which
are not exchanged are to be Mail to:
returned by credit to an
account maintained at the Name:__________________________
DTC other than the DTC (Please Print)
Account Number set forth
above. Address:_______________________
Issue certificate(s) to: _______________________________
(Include Zip Code)
Name___________________________
(Please Print)
_______________________________
Address________________________ (Tax Identification or Social
Security No.)
_________________________________
(Include Zip Code)
_________________________________
(Tax Identification or
Social Security No.)
Credit Outstanding Notes not
exchanged and delivered by
book-entry transfer to the
DTC account set forth below:
__________________________________
DTC Account Number
4
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS
CAREFULLY.
Ladies and Gentlemen:
1. Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Outstanding Notes described above. Subject to, and effective upon, the
acceptance for exchange of the Outstanding Notes tendered hereby, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Company all right, title and interest in and to such Outstanding Notes as are
being tendered hereby. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent its agent and attorney-in-fact (with full knowledge
that the Exchange Agent also acts as the agent of the Company) with respect to
the tendered Outstanding Notes with full power of substitution to (i) deliver
certificates for such Outstanding Notes, or transfer ownership of such
Outstanding Notes on the account books maintained by DTC, to the Company and
deliver all accompanying evidences of transfer and authenticity to, or upon the
order of, the Company and (ii) present such Outstanding Notes for transfer on
the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Outstanding Notes, all in accordance with
the terms of the Exchange Offer. The power of attorney granted in this
paragraph shall be deemed irrevocable and coupled with an interest.
2. The undersigned hereby represents, warrants and agrees that the
undersigned has full power and authority to tender, exchange, sell, assign and
transfer the Outstanding Notes tendered hereby and to acquire the Exchange Notes
issuable upon the exchange of such tendered Outstanding Notes and that the
Company will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claims or proxies when the same are accepted by the Company.
3. The undersigned also acknowledges that the Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Outstanding Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or a broker-dealer who acquired Outstanding Notes exchanged for such
Exchange Notes directly from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business and such holders are not participating, and have no arrangement with
any person to participate, in a distribution of such Exchange Notes; however,
the Commission has not considered the Exchange Offer in the context of a no-
action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as in
other circumstances. If any holder is an affiliate of the Company, is engaged
in or intends to engage in, or has any arrangement or understanding with any
person to participate in, a distribution of the Exchange Notes to be acquired
pursuant to the Exchange Offer, such holder (i) could not rely on the applicable
interpretations of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is not a broker-
dealer, the undersigned represents that it is not engaged in, and does not
intend to engage in, a distribution of the Exchange Notes. If the undersigned
or person receiving the Exchange Notes is a broker-dealer that will receive
Exchange Notes for its own account, it represents that the Outstanding Notes to
be exchanged for the Exchange Notes were acquired by it as a result of market-
making activities or other trading activities and acknowledges and agrees that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Each such broker-dealer agrees that upon receipt of notice from the Company of
the occurrence of any event or the discovery of any fact which makes any
statement contained in the Prospectus untrue in any material respect or which
causes the Prospectus to omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading or the occurrence of certain other events specified in the
Registration Rights Agreement, such broker-dealer will suspend the sale of
Exchange Notes pursuant to the Prospectus until the Company has amended or
supplemented the Prospectus to
5
<PAGE>
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such broker-dealer or the Company has given notice
that the sale of the Exchange Notes may be resumed, as the case may be. The
undersigned acknowledges that if the undersigned is participating in the
Exchange Offer for the purpose of distributing the Exchange Notes (i) the
undersigned cannot rely on the position of the staff of the SEC in the Morgan
Stanley Letter and similar SEC no-action letters, and, in the absence of an
exemption therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Exchange Notes, in which case the registration statement must
contain the selling security holder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the SEC, and (ii) a broker-dealer that
delivers such a prospectus to purchasers in connection with such resales will be
subject to certain of the civil liability provisions under the Securities Act
and will be bound by the provisions of the Registration Rights Agreement
(including certain indemnification rights and obligations).
4. Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that:
(i) the Exchange Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the holder whether or
not the undersigned;
(ii) the holder is not participating in and does not intend to
participate in a distribution (within the meaning of the Securities Act) of
such Exchange Notes;
(iii) the holder does not have an arrangement or understanding with
any person to participate in the distribution (within the meaning of the
Securities Act) of such Exchange Notes; and
(iv) the holder is not an "affiliate," as such term is defined under
Rule 405 promulgated under the Securities Act, of the Company or, if the
undersigned is an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent
applicable.
5. The undersigned may, if, and only if, unable to make all of the
representations and warranties contained in Item 4, above, elect to have its
Outstanding Notes registered in the shelf registration statement described in
the registration agreement (the "Registration Agreement") dated as of June 8,
1998, among the Company and the Initial Purchasers. Such election may be made by
checking the box under "Special Registration Instructions" on page 7. By making
such election, the undersigned agrees, as a holder of Outstanding Notes or
Exchange Notes participating in a shelf registration, to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs such
shelf registration statement and each person who controls the Company within the
meaning of either the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or 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 a material fact contained in
the Registration Statement as originally filed or in any amendment thereof, or
any preliminary Prospectus or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission of alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; but only with respect to
information relating to the undersigned furnished in writing by or on behalf of
the undersigned expressly for use in the Registration Statement, the preliminary
Prospectus or Prospectus or any amendments or supplements thereto. Any such
indemnification shall be governed by the terms and subject to the conditions set
forth in the Registration Rights Agreement, including, without limitation, the
provisions regarding notice, retention of counsel, contribution and payment of
expenses set forth therein. The above summary of the indemnification provision
of the Registration Agreement is not intended to be exhaustive and is qualified
in its entirety by the Registration Agreement.
6
<PAGE>
6. The undersigned acknowledges that the Company's acceptance of properly
tendered Outstanding Notes pursuant to the procedures described under the
caption "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the
Prospectus and in the instructions hereto will constitute a binding agreement
between the undersigned and the Company upon the terms and subject to the
conditions of the Exchange Offer. The undersigned warrants and agrees to, upon
request, execute and deliver any additional documents deemed by the Company or
the Exchange Agent to be necessary or desirable to complete the exchange, sale,
assignment and transfer of the Outstanding Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus. Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" above, please issue the Exchange Notes (and, if
applicable, substitute certificates representing Outstanding Notes for any
Outstanding Notes not exchanged) in the name of the undersigned or, in the case
of a book-entry delivery of Outstanding Notes, please credit the account
indicated above maintained at the DTC. Similarly, unless otherwise indicated
under the box entitled "Special Delivery Instructions" above, please send the
Exchange Notes (and, if applicable, substitute certificates representing
Outstanding Notes for any Outstanding Notes not exchanged) to the undersigned at
the address(es) shown above in the box entitled "Description of 8-7/8% Series A
Senior Subordinated Notes due 2008."
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if (i) the undersigned satisfies the conditions set forth
in Item 5 above, (ii) the undersigned elects to register its Outstanding Notes
in the shelf registration statement described in the Registration Rights
Agreement and (iii) the undersigned agrees to indemnify certain entities and
individuals as set forth in Item 5 above. (See Item 5.)
[_] By checking this box the undersigned hereby (i) represents that it is unable
to make all of the representations and warranties set forth in Item 4 above,
(ii) elects to have its Outstanding Notes registered pursuant to the shelf
registration statement described in the Registration Rights Agreement and
(iii) agrees to indemnify certain entities and individuals identified in,
and to the extent provided in, Item 5 above.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:________________________________________________________
Address:_____________________________________________________
_____________________________________________________
_____________________________________________________
7
<PAGE>
PLEASE SIGN HERE
TO BE COMPLETED BY ALL TENDERING HOLDERS
(Complete accompanying Substitute W-9)
______________________________ ___________________________, 1998
Signature(s) of Holder(s) Date
______________________________ ___________________________, 1998
Signature(s) of Holder(s) Date
Area Code and Telephone Number:________________________________________
This letter must be signed by the registered holder(s) as the name(s)
appear(s) on the certificate(s) for the Outstanding Notes hereby tendered or on
a security position listing, or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):_______________________________________________________________________
(Please Type or Print)
Capacity (Full Title):_________________________________________________________
Address:_______________________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE (if required by Instruction 3)
Signature(s) Guaranteed by an Eligible Institution:
________________________________________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name of Firm)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Area Code and Telephone Number)
Date: __________________, 1998
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND OUTSTANDING NOTES, GUARANTEED DELIVERY
PROCEDURES. This Letter is to be completed by holders of Outstanding Notes
either if certificates for such Outstanding Notes are to be forwarded herewith
or if tenders are to be made pursuant to the procedures for delivery by book-
entry transfer set forth in "The Exchange Offer Procedures for Tendering
Outstanding Notes Book Entry Transfer" section of the Prospectus and an Agent's
Message is not delivered. Tenders by book-entry transfer may also be made by
delivering an Agent's Message in lieu of this Letter of Transmittal. The term
"Agent's Message" means a message, transmitted by the DTC to and received by the
Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that the DTC has received an express acknowledgment from the tendering holder,
which acknowledgment states that such holder has received and agrees to be bound
by the Letter of Transmittal and that the Company may enforce the Letter of
Transmittal against such holder. Certificates for all physically tendered
Outstanding Notes, or Book-Entry Confirmation, as the case may be, as well as a
properly completed and duly executed Letter (or facsimile hereof or Agent's
Message in lieu thereof) and any other documents required by this Letter, must
be received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Outstanding Notes tendered hereby must be
in denominations of principal amount of $1,000 and any integral multiple
thereof.
Holders whose certificates for Outstanding Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Outstanding Notes pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes--
Guaranteed Delivery" section of the Prospectus. Pursuant to such procedures, (i)
such tender must be made through an Eligible Institution; (ii) on or prior to
5:00 p.m., New York City time, on the Expiration Date, the Exchange Agent must
receive from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the Company
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Outstanding Notes and the amount of
Outstanding Notes tendered stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Outstanding Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter (or facsimile thereof or Agent's
Message in lieu thereof) with any required signature guarantees and any other
documents required by this Letter will be deposited by the Eligible Institution
with the Exchange Agent; and (iii) the certificates for all physically tendered
Outstanding Notes, in proper form for transfer, or Book-Entry Confirmation, as
the case may be, together with a properly completed and duly executed Letter (or
facsimile thereof or Agent's Message in lieu thereof) with any required
signature guarantees and all other documents required by this Letter, are
deposited by the Eligible Institution within five NYSE trading days after the
date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Outstanding Notes and all other
required documents is at the option and sole risk of the tendering holders, and
the delivery will be deemed made only when actually received by the Exchange
Agent. If Outstanding Notes are sent by mail, it is suggested that the mailing
be registered mail, properly insured, with return receipt requested, or by an
overnight delivery service, and made sufficiently in advance of the Expiration
Date to permit delivery to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date.
Only a holder (as defined in the Prospectus) of Outstanding Notes may
tender such Outstanding Notes in the Exchange Offer. Any beneficial holder of
Outstanding Notes who is not the registered holder and who wishes to tender
should arrange with the registered holder to execute and deliver this Letter of
Transmittal on his behalf or must, prior to completing and executing this Letter
of Transmittal and delivering his Outstanding Notes, either make appropriate
arrangements to register ownership of the Outstanding Notes in such holder's
name or obtain a properly completed bond power from the registered holder.
9
<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Outstanding Notes and withdrawal of tendered
Outstanding Notes will be determined by the Company in its sole discretion,
which determination will be final and binding. The Company reserves the absolute
right, in its sole and absolute discretion, to reject any and all Outstanding
Notes not properly tendered or any Outstanding Notes the Company's acceptance of
which, or exchange for, would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer or any irregularities
or conditions of tender as to particular Outstanding Notes whether or not
similar conditions or irregularities are waived in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Outstanding Notes must be cured within such time as
the Company shall determine. Neither the Company, any affiliates or assigns of
the Company, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of
Outstanding Notes, nor shall any of them incur any liability for failure to give
such notification. Tenders of Outstanding Notes will not be deemed to have been
made until such defects or irregularities have been cured or waived. Any
Outstanding Notes received by the Exchange Agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering holders of Outstanding Notes,
unless otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date. See "The Exchange Offer" section of the
Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTE HOLDERS WHO TENDER BY BOOK-
ENTRY TRANSFER). If less than all of the Outstanding Notes evidenced by a
submitted certificate are to be tendered, the tendering holder(s) should fill in
the aggregate principal amount of Outstanding Notes to be tendered in the box
above entitled "Description of 8-7/8% Series A Senior Subordinated Notes due
2008--Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Outstanding Notes will be sent to such tendering holder,
unless otherwise provided in the appropriate box of this Letter, promptly after
the Expiration Date. All of the Outstanding Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
3. SIGNATURES ON THIS LETTER, BOND POWERS AND ENDORSEMENTS, GUARANTEE OF
SIGNATURES. If this Letter is signed by the holder of the Outstanding Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates or on a DTC security position listing without
any change whatsoever.
If any tendered Outstanding Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Outstanding Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the
Outstanding Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Exchange
Notes are to be issued, or any untendered Outstanding Notes are to be reissued,
to a person other than the registered holder, then endorsements of any
certificates transmitted hereby or separate bond powers are required. Signatures
on such certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons
10
<PAGE>
should so indicate when signing, and, unless waived by the Company, proper
evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Outstanding Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each, an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Outstanding Notes are tendered: (i) by a registered
holder of Outstanding Notes (or by a participant in DTC whose name appears on a
security position listing as the owner) who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on this
Letter and Exchange Notes are being issued directly to such registered holder
(or deposited in the holder's account at DTC), or (ii) for the account of an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of
Outstanding Notes should indicate in the applicable box the name and address to
which Exchange Notes issued pursuant to the Exchange Offer and/or substitute
certificates evidencing Outstanding Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Note holders
tendering Outstanding Notes by book-entry transfer may request that Outstanding
Notes not exchanged be credited to such account maintained at the DTC. If no
such instructions are given, such Outstanding Notes not exchanged will be
returned to the name and address of the person signing this Letter.
5. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the transfer of Outstanding Notes to it or its order pursuant to
the Exchange Offer. If, however, Exchange Notes and/or substitute Outstanding
Notes not exchanged are to be delivered to, or are to be registered or issued in
the name of, any person other than the registered holder of the Outstanding
Notes tendered hereby, or if tendered Outstanding Notes are registered in the
name of any person other than the person signing this Letter, or if a transfer
tax is imposed for any reason other than the transfer of Outstanding Notes to
the Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed to such tendering holder and the Exchange Agent
will retain possession of an amount of Exchange Notes with a face amount equal
to the amount of such transfer taxes due by such tendering holder pending
receipt by the Exchange Agent of the amount of such taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Outstanding Notes specified in this
Letter.
6. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions to the Exchange Offer enumerated in the
Prospectus.
7. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Outstanding Notes,
by execution of this Letter or an Agent's Message in lieu thereof, shall waive
any right to receive notice of the acceptance of their Outstanding Notes for
exchange.
8. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. Any holder
whose Outstanding Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions.
9. WITHDRAWAL OF TENDERS. Tenders of Outstanding Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the business day prior to
the Expiration Date. For a withdrawal of a tender of Outstanding Notes to be
effective, a written, telegraphic, telex or facsimile transmission notice of
withdrawal must be received by the Exchange Agent at its address set forth above
prior to 5:00 p.m., New York City time, on the business day prior to the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having
11
<PAGE>
deposited the Outstanding Notes to be withdrawn (the "Depositor"), (ii) identify
the Outstanding Notes to be withdrawn (including the certificate number or
numbers (where certificates for Outstanding Notes have been transmitted) and
principal amount of such Outstanding Notes), (iii) be signed by the holder in
the same manner as the original signature on this Letter (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the trustee under the Indenture register the transfer of such Outstanding
Notes into the name of the person withdrawing the tender and (iv) specify the
name in which any such Outstanding Notes are registered, if different from that
of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
in its sole discretion, whose determination shall be final and binding on all
parties. Neither the Company, any affiliates or assigns of the Company, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Outstanding Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Outstanding Notes that have been tendered
for exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Outstanding Notes may be retendered by following the procedures
described above at any time on or prior to 5:00 p.m., New York City time, on the
Expiration Date.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus, this Letter and other related documents may be directed to the
Exchange Agent, at the address and telephone number indicated above.
11. IMPORTANT TAX INFORMATION. Under current federal income tax law, a
holder of Exchange Notes is required to provide the Company (as payor) with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
or otherwise establish a basis for exemption from backup withholding to prevent
backup withholding on any Exchange Notes delivered pursuant to the Exchange
Offer and any payments received in respect of the Exchange Notes. If a holder of
Exchange Notes is an individual, the TIN is such holder's social security
number. If the Company is not provided with the correct taxpayer identification
number, a holder of Exchange Notes may be subject to a $50 penalty imposed by
the Internal Revenue Service. Accordingly, each prospective holder of Exchange
Notes to be issued pursuant to Special Issuance Instructions should complete the
attached Substitute Form W-9. The Substitute Form W-9 need not be completed if
the box entitled Special Issuance Instructions has not been completed.
Certain holders of Exchange Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt prospective holders of Exchange
Notes should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to the Company,
through the Exchange Agent, a properly completed Internal Revenue Service Form
W-8 (which the Exchange Agent will provide upon request) signed under penalty of
perjury, attesting to the holder's exempt status. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of Exchange Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service. To prevent backup
withholding on any Exchange Notes delivered pursuant to the Exchange Offer and
any payments received in respect of the Exchange Notes, each prospective holder
of Exchange Notes to be issued pursuant to Special Issuance Instructions must
provide the Company, through the Exchange Agent, with either: (i) such
prospective holder's correct TIN by completing the form below, certifying that
the TIN provided on Substitute Form W-9 is correct (or that such prospective
holder is awaiting a TIN) and that (A) such prospective holder has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or (B)
the Internal Revenue Service has notified such prospective holder that he or she
is no longer subject to backup withholding; or (ii) an adequate basis for
exemption.
12
<PAGE>
If the Outstanding Notes are in more than one name or are not in the name
of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a TIN,
check the box in Part 2 of the Substitute Form W-9 and write "applied for" in
lieu of its TIN. Note: Checking this box and writing "applied for" on the form
means that such holder has already applied for a TIN or that such holder intends
to apply for one in the near future. If such holder does not provide its TIN to
the Company within 60 days, backup withholding will begin and continue until
such holder furnishes its TIN to the Company.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH THE ORIGINAL NOTES DELIVERED BY BOOK-ENTRY TRANSFER OR IN
ORIGINAL HARD COPY FORM) MUST BE RECEIVED BY THE EXCHANGE AGENT, OR THE NOTICE
OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT, PRIOR TO THE
EXPIRATION DATE.
13
<PAGE>
TO BE COMPLETED BY TENDERING HOLDERS
(SEE INSTRUCTION 11)
PAYOR'S NAME: NUEVO ENERGY COMPANY
<TABLE>
<S> <C> <C>
______________________________
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE Social Security Number
BOX AT RIGHT AND CERTIFY BY SIGNING AND OR
Form W-9 DATING BELOW. ______________________________
Employer Identification Number
_________________________________________________________________________________________
Department of the PART 2--Certification Under penalties of perjury, I certify that:
Treasury--
Internal Revenue Service (1) The number shown on this form is my correct taxpayer Identification Number (or I
am waiting for a number to be issued to me) and
PAYER'S REQUEST FOR
Taxpayer Identification (2) I am not subject to backup withholding either because I have not been notified by
Number (TIN) the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result
of failure to report all interest or dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
Certification Instructions--You must cross out item (2) in Part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of under reporting
interest or dividends on your tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another notification from the IRS stating that
you are no longer subject to backup withholding, do not cross out item (2).
-----------------------------------------------------------------------------------------------
SIGNATURE__________________________________ PART 3--
Awaiting TIN [_]
DATE _________________________________, 1998 Please complete the Certificate of
Awaiting Taxpayer Identification
Number below.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
14
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the payor within 60
days, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
Signature:______________________________ Date _____________________, 1998
CERTIFICATE FOR FOREIGN RECORD HOLDERS
Under penalties of perjury, I certify that I am not a United States citizen or
resident (or I am signing for a foreign corporation, partnership, estate or
trust).
Signature:______________________________ Date _____________________, 1998
15
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR NUEVO ENERGY COMPANY
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Nuevo Energy Company (the "Company") made pursuant to the
Prospectus, dated [ ], 1998 (the "Prospectus"), if
certificates for the outstanding 8-7/8% Series A Senior Subordinated Notes due
2008 (the "Outstanding Notes") of the Company are not immediately available or
if the procedure for book-entry transfer cannot be completed on a timely basis
or time will not permit all required documents to reach the Exchange Agent prior
to 5:00 p.m., New York City time, on the Expiration Date of the Exchange Offer.
Such form may be delivered or transmitted by telegram, telex, facsimile
transmission, mail or hand delivery to State Street Bank and Trust Company
("Exchange Agent") as set forth below. Capitalized terms not defined herein are
defined in the Prospectus.
STATE STREET BANK AND TRUST COMPANY, Exchange Agent
by registered or certified mail: by hand or overnight delivery:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Two International Place
Post Office Box 778 Corporate Trust Window, Fourth Floor
Boston, Massachusetts 02102 Boston, Massachusetts 02110
Attention: Kellie Mullen Attention: Kellie Mullen
Telephone: (617) 664-5587
Facsimile: (617) 664-5290 (for Eligible Institutions only)
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE TO A NUMBER OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, the signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
16
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus, the undersigned
hereby tenders to the Company the principal amount of Outstanding Notes set
forth below, pursuant to the guaranteed delivery procedure described in "The
Exchange Offer--Procedures for Tendering Outstanding Notes--Guaranteed Delivery"
section of the Prospectus.
Principal Amount of Outstanding If Outstanding Notes will be
Notes Tendered: delivered to DTC,
provide account number.
$______________________________
Account Number:_______________
Certificate Nos. (if available):
________________________________
Total Principal Amount Represented by
Certificate(s):
$_______________________________
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
_______________________________________________ ___________________, 1998
Signatures of Holder(s) or Authorized Signatory Date
_______________________________________________ ___________________, 1998
Signatures of Holder(s) or Authorized Signatory Date
Must be signed by the holder(s) of Outstanding Notes as their name(s)
appear(s) on certificates for Outstanding Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative capacity,
such person must set forth his or her full title below. If Outstanding Notes
will be delivered by book-entry transfer to DTC, provide account number.
Please print name(s) and address(es)
Name(s):_______________________________________________________________________
Capacity:______________________________________________________________________
Address(es):___________________________________________________________________
Area Code and Telephone Number:________________________________________________
Account Number:________________________________________________________________
17
<PAGE>
GUARANTEE
(Not to be used for signature guarantees)
The undersigned, a financial institution that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees that the undersigned will deliver to the Exchange Agent the
certificates representing the Outstanding Notes being tendered hereby in proper
form for transfer or confirmation of book-entry transfer of such Outstanding
Notes into the Exchange Agent's account at DTC pursuant to the procedures for
book-entry transfer set forth in the Prospectus, in either case, together with
one or more properly completed and duly executed letters of transmittal/or
facsimile thereof or Agent's Message in lieu thereof and any other documents
required by the Letter of Transmittal within five NYSE trading days after the
date of execution of this Notice of Guaranteed Delivery.
Name of Firm:__________________________________________________________________
Address:_______________________________________________________________________
Area Code & Telephone No.:_____________________________________________________
______________________________________
Authorized Signature
______________________________________
Name (Please Type or Print)
______________________________________
Title
________________________________, 1997
Date
NOTE: DO NOT SEND CERTIFICATES OF OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES OF OUTSTANDING NOTES SHOULD BE SENT ONLY WITH A COPY OF THE LETTER
OF TRANSMITTAL.
18
<PAGE>
NUEVO ENERGY COMPANY
LETTER TO CLIENTS
FOR
TENDER OF ALL OUTSTANDING
8-7/8% SERIES A SENIOR NOTES DUE 2008
IN EXCHANGE FOR
8-7/8% SERIES B SENIOR NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
____________, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE
UNLESS PREVIOUSLY ACCEPTED FOR EXCHANGE.
To Our Clients:
We are enclosing herewith a Prospectus, dated __________, 1998, of Nuevo
Energy Company, a Delaware corporation (the "Company"), and a related Letter of
Transmittal, which together constitute the Company's offer (the "Exchange
Offer") to exchange its 8-7/8% Series B Senior Notes due 2008 (the Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of its issued and
outstanding 8-7/8% Series A Senior Notes due 2008 (the "Outstanding Notes"),
upon the terms and subject to the conditions set forth in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum number of
Outstanding Notes being tendered.
We are the holder of record of Outstanding Notes held by us for your own
account. A tender of such Outstanding Notes can be made only by us as the
record holder and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Outstanding Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Outstanding Notes held by us for your account pursuant to the terms and
conditions of the Exchange Offer. We also request that you confirm that we may
on your behalf make the representations and warranties contained in the Letter
of Transmittal.
Very truly yours,
PLEASE RETURN YOUR INSTRUCTIONS TO US IN THE ENCLOSED ENVELOPE WITHIN AMPLE
TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION
DATE.
<PAGE>
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER PARTICIPANT
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
____________, 1998 (the "Prospectus") of Nuevo Energy Company, a Delaware
corporation (the "Company") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange its 8-7/8% Series B Senior Notes due 2008 (the
"Exchange Notes"), for all of its outstanding 8-7/8% Series A Senior Notes due
2008 (the "Outstanding Notes"). Capitalized terms used but not defined herein
have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Outstanding Notes held by you for the account
of the undersigned.
The aggregate face amount of the Outstanding Notes held by you for the
account of the undersigned is (FILL IN AMOUNT):
$__________ of the 8-7/8% Series A Senior Notes due 2008.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[_] To TENDER the following Outstanding Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF OUTSTANDING NOTES TO BE
TENDERED) (IF ANY):
[_] NOT to TENDER any Outstanding Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by
you for the account of the undersigned, it is understood that you are
authorized to make, on behalf of the undersigned (and the undersigned by
its signature below, hereby makes to you), the representations and
warranties contained in the Letter of Transmittal that are to be made with
respect to the undersigned as a beneficial owner, including but not limited
to the representations, that (i) the Exchange Notes acquired in exchange
for Outstanding Notes pursuant to the Exchange Offer are being acquired in
the ordinary course of business of the person receiving such Exchange
Notes, whether or not the undersigned, (ii) the undersigned is not
participating in and does not intend to participate in a distribution of
the Exchange Notes, (iii) the undersigned does not have any arrangement or
understanding with any person to participate in the distribution of
Exchange Notes, and (iv) neither the undersigned nor any such other person
is an "affiliate" (within the meaning of Rule 405 under the Securities Act
of 1933, as amended) of the Company. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for
Outstanding Notes, it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
SIGN HERE
Name of beneficial owner(s):____________________________________________________
Signature(s)
Name(s):________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
Telephone number:_______________________________________________________________
Taxpayer Identification or Social Security Number:______________________________
Date:___________________________________________________________________________
<PAGE>
NUEVO ENERGY COMPANY
LETTER TO REGISTERED HOLDERS AND
DEPOSITORY TRUST COMPANY PARTICIPANTS
FOR
TENDER OF ALL OUTSTANDING
8 7/8% SERIES A SENIOR NOTES DUE 2008
IN EXCHANGE FOR
8 7/8% SERIES B SENIOR NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
__________, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE")
OUTSTANDING NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE BUSINESS DAY PRIOR TO THE
EXPIRATION DATE UNLESS PREVIOUSLY ACCEPTED FOR EXCHANGE.
To Registered Holders and Depository Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by Nuevo Energy Company, a Delaware corporation (the "Company"), to exchange its
8 7/8% Series B Senior Notes due 2008 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its issued and outstanding 8 7/8% Series A Senior
Notes due 2008 (the "Outstanding Notes") upon the terms and subject to the
conditions set forth in the Company's Prospectus, dated ___________, 1998, and
the related Letter of Transmittal (which together constitute the "Exchange
Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated ___________, 1998;
2. Letter of Transmittal (together with accompanying Substitute Form W-9
Guidelines);
3. Notice of Guaranteed Delivery;
4. Letter which may be sent to your clients for whose account you hold
Outstanding Notes in your name or in the name of your nominee; and
5. Letter which may be sent from your clients to you with such client's
instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the
Exchange Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of
Outstanding Notes being tendered.
Pursuant to the Letter of Transmittal, each holder of Outstanding Notes
will make certain representations, including but not limited to, representations
that (i) the Exchange Notes acquired in exchange for Outstanding Notes pursuant
to the Exchange Offer are being acquired in the ordinary course
<PAGE>
of business of the person receiving such Exchange Notes, whether or not the
undersigned, (ii) the undersigned is not participating in and does not intend to
participate in a distribution of the Exchange Notes, (iii) the undersigned does
not have any arrangement or understanding with any person to participate in the
distribution of Exchange Notes, and (iv) neither the undersigned nor any such
other person is an "affiliate" (within the meaning of Rule 405 under the
Securities Act of 1933, as amended) of the Company. If the holder is a broker-
dealer that will receive Exchange Notes for its own account in exchange for
Outstanding Notes, it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Outstanding Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Outstanding Notes pursuant to the Exchange Offer.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
NUEVO ENERGY COMPANY
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