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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 2000
REGISTRATION NO. 333-46580
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NUEVO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
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DELAWARE
(State or other jurisdiction of incorporation or 76-0304436
organization) (I.R.S. Employer Identification No.)
1021 MAIN ST., SUITE 2100 BRUCE K. MURCHISON
HOUSTON, TEXAS 77002 1021 MAIN, SUITE 2100
(713) 652-0706 HOUSTON, TEXAS 77002
(Address, including zip code, and telephone number, (713) 652-0706
including area code, (Name, address, including zip code, and telephone
of registrant's principal executive offices) number, including area code, of agent for service)
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Copy to:
GEORGE G. YOUNG III
HAYNES AND BOONE, LLP
1000 LOUISIANA ST., SUITE 4300
HOUSTON, TEXAS 77002
TELEPHONE: (713) 547-2081
TELECOPY: (713) 547-2600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED(2) OFFERING PRICE(1) REGISTRATION FEE
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Debt Securities
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9 1/2% Senior Subordinated Notes due 2008
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9 3/8% Senior Subordinated Notes due 2010
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Preferred Stock, par value $1.00 per share
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Common Stock, par value $0.01 per share
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Securities Warrants
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Securities Purchase Contracts
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Preferred Stock Purchase Right(3)
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Total $500,000,000 $132,000
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all securities issued from time to time pursuant to this
Registration Statement exceed $500,000,000 or the equivalent thereof in
foreign currencies, foreign currency units or composite currencies. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) Subject to footnote 1, there is also being registered an indeterminate
principal amount of Debt Securities, an indeterminate number of shares of
Preferred Stock and Common Stock, an indeterminate number of Securities
Warrants and an indeterminate number of Securities Purchase Contracts as may
be issuable, offered or sold upon conversion, redemption, exchange or
exercise of the Debt Securities, Preferred Stock, Securities Warrants or
Securities Purchase Contracts registered hereunder. Pursuant to Rule 416,
the Registration Statement also covers such indeterminate additional shares
of Common Stock as may become issuable to prevent dilution resulting from
stock splits, stock dividends or similar events.
(3) Each share of Common Stock is accompanied by a preferred stock purchase
right pursuant to the Shareholder Rights Agreement, dated as of March 5,
1997, between the Registrant and American Stock Transfer and Trust Company,
as rights agent.
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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, AS AMENDED, 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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EXPLANATORY NOTE
This registration statement consists of two separate prospectuses covering
registration of the offering, issuance and sale of:
- debt securities, preferred stock, common stock, securities warrants and
securities purchase contracts;
- our 9 1/2% senior subordinated notes which may be issued under an
indenture between us and State Street Bank and Trust Company; and
- our 9 3/8% senior subordinated notes which may be issued under an
indenture between us and State Street Bank and Trust Company
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 15, 2000
[NUEVO ENERGY CO. LOGO]
NUEVO ENERGY COMPANY
1021 Main, Suite 2100
Houston, Texas 77002
(800) 364-0206
$500,000,000
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
SECURITIES WARRANTS
SECURITIES PURCHASE CONTRACTS
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INVESTING IN THESE SECURITIES INVOLVES RISKS.
WE WILL PROVIDE SPECIFIC RISK FACTORS
IN SUPPLEMENTS TO THIS PROSPECTUS.
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Nuevo Energy Company's common stock is listed on the New York Stock
Exchange, under the symbol "NEV."
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
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This prospectus may not be used to consummate sales of securities unless we
also furnish you with a prospectus supplement describing the final terms of the
securities offered.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated , 2000
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TABLE OF CONTENTS
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PAGE
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About This Prospectus....................................... 1
Where You Can Find More Information......................... 1
Disclosure Regarding Forward Looking Statements............. 2
About Nuevo Energy Company.................................. 2
Use of Proceeds............................................. 2
Ratios of Earnings to Fixed Charges and of Earnings to
Combined Fixed Charges and Preferred Stock Dividends...... 3
Description of Debt Securities.............................. 3
Description of Capital Stock................................ 13
Description of Securities Warrants.......................... 16
Description of Securities Purchase Contracts and Securities
Purchase Units and Prepaid Securities..................... 17
Plan of Distribution........................................ 18
Experts..................................................... 19
Legal Matters............................................... 19
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ABOUT THIS PROSPECTUS
In this prospectus, the words "Company," "we," "our," "ours" and "us" refer
to Nuevo Energy Company, and its subsidiaries, unless otherwise stated or the
context requires.
This prospectus is part of a registration statement that we have filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may sell the securities describe in this prospectus and in related prospectuses
for our 9 1/2% senior subordinated notes and our 9 3/8% senior subordinated
notes in one or more offerings up to a total dollar amount of $500,000,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
containing specific information about the terms of that offering. The prospectus
supplement may also add, update or change the information in this prospectus.
You should read this prospectus, the relevant prospectus supplement and the
information described under the heading "Where You Can Find More Information."
We believe that we have included or incorporated by reference all
information material to investors in this prospectus, but certain details that
may be important for specific investment purposes have not been included. To see
more detail, you should read the exhibits filed with or incorporated by
reference into this registration statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file, including
the registration statement, at the SEC's public reference room located at 450
Fifth Street, N.W., Washington, D.C., 20549, or its public reference rooms
located in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for information on the operation of the public reference rooms.
Our SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov. They are located in the EDGAR database on that web site. You
may also obtain information about us from the New York Stock Exchange, where our
common stock is listed.
The SEC allows us to "incorporate by reference" information from the
documents we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we later file with the SEC will automatically update and
supersede this information. Specifically, we incorporate by reference the
documents listed below and any future filings we make with the SEC (including
any filings we make prior to the effectiveness of the registration statement)
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until the offering is terminated:
- Our Annual Report on Form 10-K for the year ended December 31, 1999;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000;
- Our Current Reports on Form 8-K filed on February 23, 2000 and March 6,
2000;
- The description of our common stock contained in the Registration
Statement on Form 8-A filed on May 15, 1990; and
- The description of our Series C Preferred Stock Purchase Rights contained
in the Registration Statement on Form 8-A filed on April 1, 1997.
This prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-46580).
You may request a copy of any of the information incorporated by reference,
at no cost, by writing or telephoning us at the following address:
Nuevo Energy Company
1021 Main, Suite 2100
Houston, Texas 77002
(800) 364-0206
Attention: Corporate Secretary
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date of those documents.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference include
forward-looking statements. We can not assure you that the plans, intentions or
expectations upon which our forward-looking statements are based will occur. Our
forward-looking statements are subject to risks, uncertainties and assumptions,
including those discussed elsewhere in this prospectus and the documents that
are incorporated by reference into this prospectus. Some of these risks which
could affect our future results and could cause results to differ materially
from those expressed in our forward-looking statements include:
- the volatility of oil and gas prices;
- the uncertainty of estimates of oil and gas reserves;
- the prices of goods and services we use to explore for, develop and
produce our reserves;
- difficulties encountered during the exploration for and development and
production of oil and gas;
- the difficulties encountered in delivering oil and gas to commercial
markets;
- changes in the supply of or demand for oil and gas;
- the uncertainty of our ability to attract capital;
- changes in the extensive government regulations regarding the oil and gas
business; and
- compliance with environmental regulations.
The information contained in this prospectus and in the documents
incorporated by reference into this prospectus identify additional factors that
could affect our operating results and performance. We urge you to carefully
consider those factors.
ABOUT NUEVO ENERGY COMPANY
We are an independent oil and gas company. Our properties are concentrated
in California, where we are the largest independent producer, with properties
located both onshore and offshore. Our onshore California properties are located
primarily in the San Joaquin, Los Angeles and Ventura Basins. Our offshore
California properties are located in Santa Barbara Channel and offshore Long
Beach. We also own properties in the onshore Gulf Coast region and
internationally offshore the Republics of Congo and Ghana in West Africa and
onshore Tunisia in North Africa. Since our inception in 1990, we have expanded
our operations through a series of disciplined, low-cost acquisitions of oil and
gas properties and the subsequent exploitation and development of these
properties. We have complemented these efforts with strategic divestitures and
an opportunistic exploration program which provides exposure to prospects with
the potential to add substantially to the growth of our shareholder value.
USE OF PROCEEDS
Unless otherwise set forth in the applicable prospectus supplement,
proceeds from the sale of the securities sold by us will be used for general
corporate purposes. These purposes may include acquisitions, working capital,
capital expenditures, the repurchase of outstanding securities and the repayment
of indebtedness. Proceeds from the sale of securities may be temporarily
invested in short-term securities.
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RATIOS OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges and of earnings to combined fixed
charges and preferred stock dividends for the periods indicated below as
calculated under generally accepted accounting principles are as follows:
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YEAR ENDED DECEMBER 31,
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1995 1996 1997 1998 1999
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Ratio of earnings to fixed charges.......................... 1.4x 2.6x -- -- 1.7x
Ratio of earnings to fixed charges and preferred stock
dividends................................................. 1.4x 2.6x -- -- 1.7x
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When we calculate our ratio of earnings to fixed charges, "earnings" are
composed of the following:
- consolidated earnings or loss from continuing operations before tax,
excluding undistributed equity earnings or affiliated companies; plus
- fixed charges, excluding capitalized interest.
Fixed charges are comprised of the following:
- interest expense on indebtedness and capitalized interest;
- dividends on the TECONS (TECONS are the company-obligated mandatorily
redeemable convertible preferred securities issued by our financing
subsidiary, Nuevo Financing I);
- amortization of debt issuance costs, discounts and premiums; and
- the portion of operating leases deemed to be representative of interest.
Earnings did not cover fixed charges for 1998 and 1997 by $127.5 million
and $19.5 million, respectively.
DESCRIPTION OF DEBT SECURITIES
Any debt securities issued using this prospectus will be our direct
unsecured obligations. The debt securities will be either senior debt securities
or subordinated debt securities. The debt securities will be issued under one or
more indentures between us and a trustee that we will name in the prospectus
supplement. Senior debt securities will be issued under a "senior indenture" and
subordinated debt securities will be issued under a "subordinated indenture."
Together, we refer to the senior indenture and subordinated indenture as the
"indentures."
We have not restated the indentures in their entirety. We filed the forms
of the indentures as exhibits to our registration statement. We urge you to read
the indentures because they, and not this description, will control your rights
as holders of debt securities. In the summary below, we have included references
to section numbers of the applicable indentures so that you can easily locate
these provisions. Capitalized terms used in this summary have the meanings
specified in the indentures.
Unless otherwise specifically noted in the following discussion, references
to "we," "us" or "our" means Nuevo Energy Company without its subsidiaries.
We have summarized the material provisions of the indentures in the
following order:
- those applicable to both indentures; and
- those applicable only to the subordinated indenture.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
General
The debt securities described in a prospectus supplement will be our
unsecured, senior or subordinated obligations. The senior debt securities will
rank equally with all of our other unsecured and unsubordinated debt, and will
rank senior to our subordinated debt. The subordinated debt securities will have
a junior position to our senior indebtedness. Subordinated debt securities may
rank equally with or junior to our existing subordinated indebtedness. The terms
of subordi-
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nation are described below under "Provisions Applicable Solely to Subordinated
Debt Securities -- Subordination" and may be further described or changed in a
prospectus supplement.
A prospectus supplement relating to any series of debt securities that we
offer will include specific terms relating to that series. These terms will
include, among other things, some or all of the following:
- the title of the debt securities;
- the total principal amount;
- whether they are senior debt securities or subordinated debt securities;
- if they are subordinated debt securities, the terms of subordination if
different from those described below;
- whether the series of debt securities are issuable as registered
securities, bearer securities or both;
- whether any debt securities of the series are to be issuable in temporary
or permanent global form with or without coupons, and whether permanent
global securities may be exchanged for securities of such series;
- the person to whom any interest on any series shall be payable;
- the dates on which principal and any premium on the debt securities will
be payable;
- the interest rate or the method used to determine the interest rate, and
the record and interest payment dates;
- whether and under what circumstances any additional amounts with respect
to the debt securities will be payable;
- the place or places where payments on the debt securities are payable or
the method of payment and where the debt securities may be surrendered
for transfer or exchange;
- any optional redemption provisions;
- any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the series of debt before final maturity;
- the denominations in which the debt securities will be issuable;
- whether payments on the debt securities will be payable in foreign
currency or currency units or another form, and whether payments will be
payable by reference to any index or formula;
- the portion of the principal amount of debt securities that will be
payable if the maturity is accelerated, if other than the entire
principal amount;
- whether the securities of the series will be issued in the form of
book-entry securities, the depositary for such series, and the
circumstances for exchanging such book-entry securities for certificated
securities;
- any means of defeasance on the debt securities and any additional
conditions or limitations to defeasance of the debt securities;
- any changes to or additional events of default or covenants;
- if the principal amount payable at the stated maturity of any securities
will not be determinable at any time prior to the stated maturity, the
amount which shall be deemed to be the principal amount of such
securities as of any such time;
- any restriction or condition on the transfer or exchange of the debt
securities;
- any rights that we may have to defer payments of interest;
- any terms for the conversion or exchange of the debt securities for other
securities of ours or any other entity; and
- any other terms of the series of debt securities.
A series of debt securities may be issued with an original issue discount.
An original issue discount provides that less than the entire principal amount
of the series of debt securities is payable upon declaration of acceleration of
the maturity of the series of debt securities. Special U.S. federal income tax
considerations may be applicable to debt securities issued at an original issue
discount. These special considerations will be
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set forth in a prospectus supplement relating to the series of debt securities.
The indentures do not limit the amount of debt securities or other types of
indebtedness we may issue. The indentures allow debt securities to be issued up
to any principal amount that we may authorize. The subordinated indenture allows
us to issue subordinated debt securities which are convertible into other
securities, including shares of our common stock or preferred stock.
Debt securities may be issued in certificated or global form. (Sections
201, 203 and 301)
Information about the Trustee
The trustee may resign at any time. The prospectus supplement will describe
any rights the holders of a series of debt securities have to remove the
trustee. Under the Trust Indenture Act of 1939, as amended, governing trustee
conflicts of interest, any uncured Event of Default with respect to any series
of senior debt securities will force the trustee to resign as trustee under
either the subordinated indenture or the senior indenture. Similarly, any
uncured Event of Default with respect to any series of subordinated debt
securities will force the trustee to resign as trustee under either the senior
indenture or subordinated indenture. If the trustee resigns, is removed or
becomes incapable of acting as trustee, a successor trustee will have to be
appointed in accordance with the provisions of the applicable indenture.
Denominations
The prospectus supplement for each series of debt securities will state
whether we will issue the debt securities in registered form or in bearer form.
Modification of Indentures; Waiver of Covenants
We generally may amend the indentures or the debt securities with the
written consent of a majority in principal amount of the outstanding debt
securities of each series affected by the amendment, with each series voting
separately as a class. The holders of a majority in principal amount of the
outstanding debt securities of any series may also waive our compliance with any
provision of the indentures with respect to debt securities of that series. We
must, however, obtain the consent of each holder of debt securities affected by
an amendment or waiver which does, among other things, any of the following:
- changes the stated maturity of, or any installment of principal of or
interest on, any debt securities;
- reduces the principal amount of, or rate of interest or premium payable
on, any debt securities;
- reduces the amount of the principal of an original issue discount
security or other security which would be payable upon acceleration of
the debt securities;
- adversely affects any right of repayment at the option of a holder of any
debt security;
- reduces the amount of, or postpones the date fixed for, the payment of
any sinking fund or analogous obligation;
- changes the place of payment where, or the currency in which, any debt
security is payable;
- impairs the right to institute suit for the enforcement of any payment on
or after the stated maturity date of any debt security; or
- reduces the percentage of holders required to consent to any supplements,
modifications, waivers or amendments to the indentures. (Section 902)
Additionally, the subordinated indenture may not be modified to alter the
terms of subordination of any outstanding series of subordinated debt securities
without the consent of the holder of senior indebtedness that would be adversely
affected by the modification. (Section 907 of the subordinated indenture)
If we issue convertible subordinated debt securities, the terms of
conversion may not be modified in a manner which is adverse to the holders of
the convertible subordinated debt securities without the consent of such
holders. (Section 902 of the subordinated indenture)
If we issue a series of debt securities with an original issue discount or
with a principal amount that is not fixed, the applicable prospectus supplement
will describe the manner in which we will determine whether holders of a
majority of principal amount of a series of debt securities have
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approved a modification or waiver of a provision of an indenture.
We may amend the indentures or outstanding debt securities without notice
to or consent from any holder of the debt security to do, among other things,
any of the following:
- permit a successor corporation to assume our obligations under the
indenture following a merger, consolidation or similar transaction;
- add to our covenants for the benefit of the holders of any series of debt
securities;
- add additional events of default for the benefit of the holders of all or
any series of securities;
- accept the appointment of a successor trustee of one or more series and
to provide for more than one trustee, if applicable;
- cure any ambiguity, defect or inconsistency;
- secure debt securities issued pursuant to the indentures;
- provide that bearer securities may be registrable as to principal, amend
restrictions on the payment of principal, premiums or interest on bearer
securities, or permit bearer securities to be issued in exchange for
registered securities or bearer securities of other authorized
denominations;
- amend any provision of an indenture in a manner that does not apply to,
or modify the rights of holders of, any debt securities outstanding at
the time and entitled to rely on the provision;
- provide for uncertificated securities of any series;
- comply with the requirements of the SEC in order to effect or maintain
the qualification of the indentures under the Trust Indenture act; or
- make any change that does not adversely affect the interests of any
holder of outstanding debt securities. (Section 901)
Meetings of Holders of Debt Securities
Each indenture contains provisions for convening meetings of the holders of
a series if debt securities of that series are issuable as bearer securities.
(Section 1401) A meeting may be called at any time by the Trustee, by our board
of directors or the holders of at least 10% in aggregate principal amount of the
outstanding securities of such series. (Section 1402) Except for any consent
which must be given by the holder of each outstanding security affected thereby,
as described above, any resolution presented at a meeting (or adjourned meeting
at which a quorum is present) may be adopted by the affirmative vote of the
holders of a majority in aggregate principal amount of the outstanding
securities of that series; provided, however, that any resolution with respect
to any request, demand, authorization, direction, notice, consent, waiver or
other action which may be made, given or taken by the holders of a specified
percentage which is less than a majority in aggregate principal amount of the
outstanding securities of a series may be adopted at a meeting (or adjourned
meeting duly reconvened at which a quorum is present) by the affirmative vote of
the holders of such specified percentage in aggregate principal amount of the
outstanding securities of that series. Any resolution passed or decision taken
at any meeting of holders of any series duly held in accordance with the
applicable indenture will be binding on all holders of that series and related
coupons. The quorum at any meeting, and at any reconvened meeting, will be
persons holding or representing a majority in aggregate principal amount of the
outstanding securities of a series. (Section 1404)
No Protection if a Change of Control Occurs
Unless we otherwise state in a prospectus supplement, the debt securities
will not contain any provision which may allow holders of debt securities the
right to require us to repurchase the debt securities if a change of control
occurs or if we engage in a transaction which materially increases our leverage.
A change of control or a highly leveraged transaction could adversely affect the
holders of debt securities.
Events of Default
Unless we inform you otherwise in the prospectus supplement, "Event of
Default" means any of the following (Section 501):
- failure to pay the principal of or any premium on any debt security when
due;
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- failure to pay interest on any debt security within 30 days after due;
- failure to deposit any sinking fund payment within 30 days after due;
- failure to perform, or breach of, any other covenant in the indenture
(other than an agreement or covenant that we have included in the
indenture solely for the benefit of other series of debt securities) that
continues for 90 days after we are given written notice;
- our bankruptcy, insolvency or reorganization; or
- any other Event of Default for that series of debt securities described
in the applicable prospectus supplement.
An Event of Default for a particular series of debt securities may, but
does not necessarily, constitute an Event of Default for any other series of
debt securities.
If an Event of Default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in aggregate principal
amount of the debt securities of the series may declare the entire principal of
all the debt securities of that series to be due and payable immediately. If
this happens, subject to certain exceptions, the holders of a majority of the
aggregate principal amount of the debt securities of that series can void the
declaration. (Section 502).
The indentures provide that a holder of a series of debt securities may not
file a lawsuit or otherwise institute proceedings under the indenture or appoint
a receiver or trustee unless the following happens:
- the holders give the trustee written notice;
- the holders of 25% of the series of debt securities also give such notice
and offer reasonable indemnification to the trustee;
- the holders of at least a majority of the aggregate principal amount of
the series of debt securities do not give an inconsistent notice; and
- the trustee does not institute the proceeding within 60 days of the
demand. (Section 507).
The four requirements listed above do not apply to proceedings instituted
by a holder of a series of debt securities to enforce the payment of principal,
premium or interest. (Section 508).
If we issue a series of debt securities with an original issue discount or
with a principal amount that is not fixed, the prospectus supplement will
describe the amount a holder of the debt securities is entitled to receive if
the series of debt securities is declared due and payable.
The trustee is not obligated to exercise any of its rights or powers under
an indenture at the request or direction of any holders, unless the holders
offer the trustee reasonable indemnity against costs, expenses and liabilities.
(Section 602). If they provide this reasonable indemnification, the holders of a
majority in aggregate principal amount of the outstanding debt securities of any
series may direct the time, method and place of conducting any proceeding or any
remedy available to the trustee, or exercising any power conferred upon the
trustee, for any series of debt securities. The trustee is not required to take
action which the trustee determines is prejudicial to the holders of the series
of debt securities who do not request the trustee to take the action, or which
may cause the trustee to have personal liability. (Sections 512 and 601).
Covenants
Under the indentures, we have agreed, among other things, to:
- pay the principal of and any interest and any premium on the debt
securities when due (Section 1001);
- maintain a place of payment (Section 1002);
- deposit sufficient funds with the paying agent on or before the due date
for any principal, interest or any premium payment or, if we act as our
own paying agent, segregate such funds and hold them in trust for the
benefit of the holders of the debt securities (Section 1003);
- make all payments on the debt securities to holders who are United States
aliens without withholding for any taxes or other governmental charges,
if the debt securities of a series so provides; provided that if we are
required to make any such withholding,
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we will pay the additional amount of such withholding to such holders
(Section 1004); and
- deliver a report to the trustee at the end of each fiscal year reviewing
our obligations under the indenture (Section 1006).
Consolidation, Merger or Sale
The indentures generally permit us to consolidate or merge with or sell,
transfer or lease all or substantially all of our assets to another entity if we
comply with the terms and conditions of the indentures relating to such a
transaction, which include the following:
- the remaining or acquiring entity (if other than us) must (i) be formed
in a U.S. jurisdiction and (ii) assume all of our responsibilities and
liabilities under the indentures including the payment of all amounts
payable on the debt securities and performance of all the covenants in
the indentures;
- the transaction must not cause a default or event of default to occur;
and
- we must deliver to the trustee a certificate signed by certain of our
officers and an opinion of counsel stating that the transaction complies
with the indentures.
The remaining or acquiring entity will be substituted for us in the
indentures with the same effect as if it had been an original party to the
indentures. Thereafter, our successor may exercise our rights and powers under
the indentures, in our name or in its own name. Any act or proceeding required
or permitted to be done by our board of directors or any of our officers may be
done by the board or officers of the successor entity. If we sell all or
substantially all of our assets, we will be released from all our liabilities
and obligations under the indentures and under the debt securities. (Sections
801 and 803).
Defeasance
When we use the term defeasance, we mean discharge from some or all of our
obligations under an indenture. The following discussion of legal defeasance and
covenant defeasance (Sections 1301 to 1306) will be applicable to a series of
debt securities (other than convertible subordinated debt securities) only if we
choose to have them apply to that series.
Legal Defeasance
If we provide in an applicable prospectus supplement, and as long as we
take steps to make sure that you receive all of your payments under the debt
securities of that series and are able to transfer the debt securities of that
series, we can elect to legally release ourselves from any obligations on such
series of debt securities (such a release is called "legal defeasance") other
than:
- the rights of holders of outstanding notes to receive payments in respect
of the principal of and premium and interest on the debt securities when
these payments are due;
- our obligation to replace any temporary debt securities, register the
transfer or exchange of any debt securities, replace mutilated, lost or
stolen debt securities, compensate and reimburse the trustee, remove and
appoint a successor trustee, maintain an office or agency for payments in
respect of the debt securities and qualify the indenture under the Trust
Indenture Act;
- the rights, powers, trusts, duties and immunities of the trustee; and
- the legal defeasance provisions of the indentures. (Section 1304)
In order for us to accomplish legal defeasance, the following must occur:
- We must irrevocably deposit with the trustee cash and/or U.S. government
and/or U.S. government agency securities that will generate enough cash
to make interest, principal and any other payments on such debt
securities on their various due dates.
- Such defeasance shall not cause the trustee to have a conflict of
interest.
- There must be a change in current U.S. federal tax law or an IRS ruling
that lets us make that deposit without causing you to be taxed on the
debt securities any differently than if we did not make the deposit and
just repaid the debt securities ourselves. Under current U.S. federal tax
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law, the deposit and our legal release from the securities would be
treated as though we took back your debt securities and gave you your
share of the cash and notes or bonds deposited in trust. In that event,
you could recognize gain or loss on the debt securities you give back to
us.
- We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change described above and that all of the conditions to
legal defeasance in the indenture have been satisfied.
We will not be able to achieve legal defeasance if there is a continuing
default or event of default under the indentures or if doing so would violate
any other material agreement to which we are a party. (Section 1304). If we ever
were to accomplish legal defeasance as described above, you would have to rely
solely on the trust deposit for repayment of the debt securities. You could not
look to us for repayment in the unlikely event of any shortfall.
Covenant Defeasance
Under current U.S. federal tax law, we can make the same type of deposit
described above and be released from certain covenants relating to a series of
debt securities. The release from these covenants is called covenant defeasance.
In that event, you would lose the protection of these covenants but would gain
the protection of having money and/or securities set aside in trust to repay the
series of debt securities. We may not defease an obligation, if any, to convert
a series of debt securities into shares of our common stock, preferred stock or
other securities as provided in the subordinated indenture. In order to achieve
covenant defeasance, we must do the following:
- We must deposit in trust for the benefit of all holders of the series of
debt securities cash and/or U.S. government or U.S. government agency
securities that will generate enough cash to make interest, principal and
any other payments on the debt securities on their various due dates.
- We must deliver to the trustee a legal opinion of our counsel confirming
that under current U.S. federal tax law we may make that deposit without
causing you to be taxed on the debt securities any differently than if we
did not make the deposit and just repaid the debt securities ourselves.
The opinion also must state that all of the conditions to covenant
defeasance in the indenture have been fulfilled.
Further, such defeasance may not cause the trustee to have a conflict of
interest.
We will not be able to achieve covenant defeasance if there is a continuing
default or event of default under the indenture or if doing so would violate any
other material agreements to which we are a party. The indenture describes the
types of covenants we may fail to comply with without causing an event of
default if we accomplish covenant defeasance. (Section 1303).
If we elect to make a deposit resulting in covenant defeasance, the amount
of money and/or U.S. government or U.S. government agency securities deposited
in trust should be sufficient to pay amounts due on the debt securities at the
time of their maturity. However, if the maturity of the debt securities is
accelerated due to the occurrence of an event of default, the amount in trust
may not be sufficient to pay all amounts due on the debt securities. We would
remain liable for the shortfall as described in the applicable indenture.
Form, Exchange, Registration and Transfer
We may issue debt securities of a series in definitive form solely as
registered securities, solely as bearer securities or as both registered
securities and bearer securities. Unless we otherwise indicate in an applicable
prospectus supplement, bearer securities will have interest coupons attached.
(Section 201) The indentures also provide that debt securities of a series may
be issuable in temporary or permanent global form. (Section 201)
Registered securities of any series will be exchangeable for other
registered securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if debt securities of
any series are issuable as both registered securities and bearer securities, at
the option of the holder, and subject to the terms of the applicable indenture,
bearer securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such series will be exchangeable for
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registered securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. Bearer securities surrendered in
exchange for registered securities between a regular record date or a special
record date and the relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest, and interest
accrued as of such date will not be payable in respect of the registered
security issued in exchange for such bearer security, but will be payable only
to the holder of such coupon when due in accordance with the terms of the
applicable indenture. Unless we otherwise provide with respect to any series of
debt securities, bearer securities will not be issued in exchange for registered
securities. (Section 305)
Debt securities may be presented for exchange as provided above, and
registered securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of the security
registrar or at the office of any transfer agent designated by us for such
purpose with respect to any series of debt securities and referred to in an
applicable prospectus supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the indentures. Such
transfer or exchange will be effected upon the security registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. The Trustee will serve initially
as security registrar for purposes of registering registered securities and
transfers of registered securities. (Section 305) If a prospectus supplement
refers to any transfer agents (in addition to the security registrar) initially
designated by us with respect to any series of debt securities, we may at any
time rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, except that, if debt
securities of a series are issuable solely as registered securities, we will be
required to maintain a transfer agent in each place of payment for such series
and, if debt securities of a series are also issuable as bearer securities, we
will be required to maintain (in addition to the security registrar) a transfer
agent in a place of payment for such series located outside the United States.
We may at any time designate additional transfer agents with respect to any
series of debt securities. (Section 1002)
In the event of any redemption in part, we shall not be required to
- issue, register the transfer of or exchange debt securities of any series
during a period beginning at the opening of business 15 days prior to the
selection of debt securities of that series for redemption and ending on
the close of business on (A) if debt securities of the series are
issuable only as registered securities, the day of mailing of the
relevant notice of redemption and (B) if debt securities of the series
are issuable as bearer securities, the date of the first publication of
the relevant notice of redemption, or if debt securities of the series
are also issuable as Registered Securities and there is no publication,
the mailing of the relevant notice of redemption, or
- register the transfer of or exchange any registered security, or portion
thereof, called for redemption, except the unredeemed portion of any
registered security being redeemed in part, or
- exchange any bearer security called for redemption, except that such a
bearer security may be exchanged for a registered security of that series
and like tenor, provided that such registered security shall be
simultaneously surrendered for redemption. (Section 305)
Payment and Paying Agents
Unless we otherwise indicate in an applicable prospectus supplement,
payment of principal of and any premium and interest on bearer securities will
be payable, subject to any applicable laws and regulations, at the offices of
such paying agents outside the United States as we may designate from time to
time, in the manner indicated in such prospectus supplement. (Section 1002)
Unless we otherwise indicate in an applicable prospectus supplement, payment of
interest on bearer securities on any interest payment date will be made only
against surrender to the paying agent of the coupon relating to such interest
payment date. (Section 1001) No payment with respect to any bearer security will
be made at any of our offices
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or agencies in the United States or by check mailed to any address in the United
States or by transfer to any account maintained with a bank located in the
United States. Notwithstanding the foregoing, payments of principal of and any
premium and interest on bearer securities denominated and payable in U.S.
dollars will be made at the office of our paying agent in New York City, if (but
only if) payment of the full amount thereof in U.S. dollars at all offices or
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Section 1002)
Unless we otherwise indicate in an applicable prospectus supplement,
payment of principal of and any premium and interest on registered securities
will be made at the office of such paying agent or paying agents as we may
designate from time to time, except that at our option payment of any interest
may be made by check mailed on or before the due date to the holder's registered
address or by wire transfer. (Section 307) Unless we otherwise indicate in an
applicable prospectus supplement, payment of any installment of interest on
registered securities will be made to the person in whose name such registered
security is registered at the close of business on the regular record date for
such interest. (Section 307)
Unless we otherwise indicate in an applicable prospectus supplement, the
trustee will act as its own paying agent for payments with respect to debt
securities which are issuable solely as registered securities, and we will
maintain a paying agent outside the United States for payments with respect to
debt securities (subject to limitations described above in the case of bearer
securities) which are issuable solely as bearer securities or as both registered
securities and bearer securities. We will name any paying agents outside the
United States and any other paying agents in the United States initially
designated by us for the debt securities in an applicable prospectus supplement.
We may at any time designate additional paying agents or rescind the designation
of any paying agent or approve a change in the office through which any paying
agent acts, except that, if debt securities of a series are issuable solely as
registered securities, we will be required to maintain a paying agent in each
place of payment for such series and, if debt securities of a series are
issuable as bearer securities, we will be required to maintain (i) a paying
agent in New York City for principal payments with respect to any registered
securities of the series (and for payments with respect to bearer securities of
the series in the circumstances described above, but not otherwise), and (ii) a
paying agent in a place of payment located outside the United States where debt
securities of such series and any coupons appertaining thereto may be presented
and surrendered for payment. (Section 1002)
All moneys paid by us to a paying agent for the payment of principal of and
any premium or interest on any debt security which remain unclaimed at the end
of one year after such principal, premium or interest shall have become due and
payable will (subject to applicable escheat laws) be repaid to us, and the
holder of such debt security or any coupon will thereafter look only to us for
payment thereof. (Section 1003)
Global Debt Securities
Debt securities of a series may be issued in whole or in part in the form
of one or more global debt securities that will be deposited with, or on behalf
of, a depository identified in the prospectus supplement relating to such
series. (Section 203) Unless and until it is exchanged in whole or in part for
the individual debt securities represented thereby, a global debt security may
not be transferred except as a whole by the depository for such global debt
security to a nominee of such depository or by a nominee of such depository to
such depository or another nominee of such depository or by the depository or
any nominee to a successor depository or any nominee of such successor. (Section
305)
We will describe the specific terms of the depository arrangement with
respect to a series of debt securities and the limitations and restrictions
relating to a series of bearer securities in the form of one or more global debt
securities will be described in the prospectus supplement relating to such
series.
Governing Law
New York law will govern the indenture and the debt securities.
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Notices
Except as otherwise provided in the indentures, notices to holders of
bearer securities will be given by publication at least twice in a daily
newspaper in New York City and in such other city or cities as may be specified
in such bearer securities. Notices to holders of registered securities will be
given by mail to the addresses of such holders as they appear in the security
register. (Section 106)
Title
Title to any bearer securities (including bearer securities in permanent
global form) and any coupons appertaining thereto will pass by delivery. We, the
trustee and any agent of ours or the trustee may treat the bearer of any bearer
security and the bearer of any coupon and the registered owner of any registered
security as the owner thereof (whether or not the debt security or coupon shall
be overdue and notwithstanding any notice to the contrary) for the purpose of
making payment and for all other purposes. (Section 308)
Replacement of Securities and Coupons
We will replace any mutilated debt security or a debt security with a
mutilated coupon appertaining thereto at the expense of the holder upon
surrender of the debt security to the trustee. We will replace debt securities
or coupons that became destroyed, stolen or lost at the expense of the holder
upon delivery to the trustee of the debt security and coupons or evidence of
destruction, loss or theft thereof satisfactory to us and the trustee; in the
case of any coupon which becomes destroyed, stolen or lost, we will replace such
coupon by issuance of a new debt security in exchange for the debt security to
which such coupon appertains. In the case of a destroyed, lost or stolen debt
security or coupon, an indemnity satisfactory to the trustee and us may be
required of the holder of such debt security or coupon before we will issue a
replacement debt security. (Section 306)
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Subordination
Under the subordinated indenture, payment of the principal, interest and
any premium on the subordinated debt securities will be subordinated and junior
in right of payment to the prior payment in full of certain of our senior
indebtedness. (Section 1701) The indebtedness that will be senior indebtedness
with respect to a series of subordinated debt securities is described in the
subordinated indenture as may be modified by the applicable supplemental
indenture.
The subordinated indenture provides that no payment of principal, interest
or premium may be made on the subordinated debt securities if:
- we fail to pay the principal, interest, any premium or other amounts when
due on any indebtedness described as specified senior indebtedness in the
subordinated indenture as may be modified by the applicable supplemental
indenture; or
- we default in performing any other covenant in any senior indebtedness if
the covenant default allows the holders of such specified senior
indebtedness to accelerate the maturity of the specified senior
indebtedness. (Section 1603)
A covenant default will prevent us from paying the subordinated debt
securities only for up to 179 days after the holders of the specified senior
indebtedness notify us and the trustee that a blockage period has begun. The
holders of specified senior indebtedness may only give one such notice during a
360 day period. (Section 1603)
The subordinated indenture does not affect our obligation, which is
absolute and unconditional, to pay, when due, principal of, premium, if any, and
interest on the subordinated debt securities. In addition, the subordinated
indenture does not prevent the occurrence of any default under the subordinated
indenture. (Section 1606)
The subordinated indenture will not limit the amount of senior debt that we
may incur. As a result of the subordination of the subordinated debt securities,
if we became insolvent, holders of subordinated debt securities may receive less
on a proportionate basis than other creditors.
Conversion
Under the subordinated indenture we may issue subordinated debt securities
which are convertible into or exchangeable for our common
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stock, preferred stock, debt securities, other securities or property or
securities or property issued by another entity. Convertible subordinated debt
securities will be convertible on terms and at a conversion price described in
the prospectus supplement. (Sections 301, 1501 and 1502) The subordinated
indenture will provide for adjustments in the conversion price if we make
changes to our capital structure. (Section 1504)
If the securities are convertible into our common stock, the conversion
price will be subject to change if any of the following events occur:
- we issue common stock as a dividend to our shareholders;
- we subdivide, combine or reclassify our common stock;
- we issue rights, which may be exercised for 45 days or less, to our
shareholders to purchase common stock at a price per share less than the
market price of the common stock at the time the rights are issued; or
- we distribute to our shareholders debt securities, equity securities or
assets, other than cash dividends paid from our surplus. (Section 1504)
Adjustments in the conversion price may have tax consequences. These tax
consequences, if applicable, will be described in the prospectus supplement. We
also will not issue fractional shares upon conversion, but will pay the value of
a fractional share to the person who would otherwise be entitled to receive such
payment. (Section 1503)
If we consolidate or merge with, or sell all or substantially all of our
assets to, another company, the convertible subordinated debt securities will be
convertible into the consideration that a holder of the convertible subordinated
debt securities would have received had the holder exercised the conversion
rights immediately before the consolidation, merger or sale. (Section 1505)
If a series of subordinated debt securities is convertible into anything
other than our common stock, the prospectus supplement will describe the
following:
- the events which will cause an adjustment in the conversion price;
- any related tax consequences of the adjustments in the conversion price;
- any special treatment of fractional shares; and
- the effect of a consolidation, merger or sale of all or substantially all
of our assets on the conversion rights.
DESCRIPTION OF CAPITAL STOCK
Selected provisions of our organizational documents are summarized below.
The summary is not complete. You should read the organizational documents, which
are filed as exhibits to the registration statement, for other provisions that
may be important to you. In addition, you should be aware that the summary below
does not give full effect to the terms of the provisions of statutory or common
law which may affect your rights as a stockholder.
We are authorized to issue 50 million shares of common stock and 10 million
shares of preferred stock. As of April 30, 2000, 17,600,635 shares of common
stock were outstanding and no shares of preferred stock were outstanding. As of
April 30, 2000, 5,000,000 shares of common stock were reserved for issuance
under our 1990 Stock Option Plan, 1993 Stock Incentive Plan and 1999 Stock
Incentive Plan.
COMMON STOCK
Listing
Our common stock is listed on the New York Stock Exchange, under the symbol
"NEV." Any additional common stock that we issue will also be listed on the New
York Stock Exchange, unless otherwise indicated in a prospectus supplement.
Dividends
Shareholders may receive dividends declared by our board of directors if,
as and when our board of directors declares any such dividends.
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The indenture for our existing subordinated debt and our loan agreements with
banks contain restrictions on our ability to pay dividends.
Fully Paid
All of our outstanding shares of common stock are fully paid and
non-assessable. Any additional shares of common stock will also be fully paid
and non-assessable.
Voting Rights
Each share of common stock is entitled to one vote in the election of
directors and other matters submitted to our stockholders. Holders of our common
stock do not have cumulative or preemptive rights.
Other Provisions
We will notify holders of common stock of any stockholders' meetings in
accordance with applicable law. If we liquidate, dissolve or wind-up, whether
voluntarily or not, our common stockholders will share equally in the assets
remaining after we pay our creditors and holders of any preferred stock we have
outstanding at the time of liquidation
Transfer Agent and Registrar
American Stock Transfer and Trust Company is the registrar and transfer
agent for our common stock.
STOCKHOLDER RIGHTS PLAN
Each share of common stock which is currently outstanding and, for so long
as we have a stockholder rights plan, each share of common stock issued in the
future will be issued with an attached preferred stock purchase right issued
under our stockholder rights plan. A summary of the rights and the stockholder
rights plan is set forth below. The summary is not complete. You should read the
Stockholder Rights Agreement dated as of March 5, 1997 between us and American
Stock Transfer and Trust Company plus any amendments to the Agreement for
provisions that may be important to you. A copy of the stockholder rights
agreement has been filed with the SEC and is available as described herein under
"Where You Can Find More Information."
Under our stockholder rights plan, we issued one preferred stock purchase
right for each of our outstanding shares of common stock. For each right, the
owner is entitled to purchase one-hundredth of one share of Series C Preferred
Stock for $150 per one-hundredth of a share, subject to adjustments. The rights,
however, may only be exercised after:
- a public announcement that, without our prior consent, a person or group
has acquired, or obtained the right to acquire, beneficial ownership of
15% or more of our outstanding shares of common stock; or
- the tenth business day following the commencement of, or the first public
announcement of an intention to make, a tender offer or exchange offer,
the consummation of which would result in the beneficial ownership by a
person or group of 15% or more of our outstanding shares of common stock.
Until the rights become exercisable, the rights will be transferred with
and only with the shares of common stock. Separate certificates for the rights
will be issued as soon as practicable after they become exercisable to holders
of record of our common stock as of the date the rights became exercisable. The
rights will then begin trading separately from our common stock.
In the event we are acquired in a merger or other business combination
transaction or 50% or more of our assets or earning power is sold, each holder
of a right will be entitled to purchase the number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the right. In the event that a person
or group acquires or obtains the right to acquire 15% of our outstanding common
stock, each holder of a right will be entitled to purchase that number of shares
of our common stock having a market price of two times the exercise price of the
right. The rights beneficially owned by the acquiring person will not be
entitled to purchase our common stock and will be void.
Generally, we may redeem each right for $0.01 at any time before a person
or group acquires or obtains the right to acquire 15% of our outstanding common
stock, without prior approval. After the date the rights become exercisable, the
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rights will not be issued with respect to common stock except under certain
circumstances.
The rights expire in 2007 unless earlier terminated by the board of
directors.
PREFERRED STOCK
The following description of the terms of the preferred stock sets forth
general terms and provisions of the preferred stock to which a prospectus
supplement may relate. Specific terms of any series of preferred stock offered
by a prospectus supplement will be described in the prospectus supplement
relating to such series. You should read the certificate of designations
establishing a particular series of preferred stock, which will be filed with
the SEC in connection with the offering of such series for other provisions that
may be important to you.
Our board of directors can, without approval of our shareholders, issue one
or more series of preferred stock. The board can also determine the number of
shares of each series and the rights, preferences, privileges and restrictions
including the dividend rights, voting rights, conversion rights, redemption
rights and any liquidation preferences of any series of preferred stock and the
terms and conditions of issue. In some cases, the issuance of preferred stock
could delay a change in the persons and entities controlling us and make it
harder to remove present management. Under certain circumstances, preferred
stock could also restrict dividend payments to holders of our common stock or
restrict our ability to repurchase or redeem shares while there is an arrearage
in the payment of dividends to the holders of preferred stock.
The preferred stock will, when issued, be fully paid and non-assessable.
The transfer agent, registrar and dividend disbursement agent for a series
of Preferred stock will be named in a prospectus supplement. The registrar for
preferred stock will send notices to shareholders of any meetings at which
holders of the preferred stock have the right to elect directors or to vote on
any other matter.
- If we offer preferred stock, the specific terms of a particular series
will be described in the prospectus supplement, and will include the
following:
- the maximum number of shares to constitute the series and the distinctive
designations of such series;
- the dividend rate, whether dividends will be paid in preference to
dividends on common stock, and whether dividends will be cumulative;
- whether and the manner in which the preferred stock will be redeemable;
- any liquidation preference applicable to the preferred stock;
- whether and the manner in which the preferred stock will be subject to a
retirement or sinking fund that requires us to repurchase the shares;
- any conversion rights applicable to the preferred stock;
- any restrictions on the ability to sell or transfer the preferred stock;
- any voting rights; and
- any other preferences or other special rights or limitations.
DELAWARE ANTI-TAKEOVER STATUTE
We are a Delaware corporation and are subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents us from
engaging in a business combination with an "interested stockholder" (generally,
a person owning 15% or more of our outstanding voting stock) for three years
following the time that person becomes a 15% stockholder unless either:
- before that person became a 15% stockholder, our board of directors
approved the transaction in which the stockholder became a 15%
stockholder or approved the business combination;
- upon completion of the transaction that resulted in the stockholder's
becoming a 15% stockholder, the stockholder owns at least 85% of our
voting stock outstanding at the time the transaction began (excluding
stock held by directors who are also officer and by employee stock plans
that do not provide employees with the right to deter-
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mine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer); or
- after the transaction in which that person became a 15% stockholder, the
business combination is approved by our board of directors and authorized
at a stockholder meeting by at least two-thirds of the outstanding voting
stock not owned by the 15% stockholder.
Under Section 203, these restrictions also do not apply to business
combinations proposed by a 15% stockholder following the disclosure of an
extraordinary transaction with a person who was not a 15% stockholder during the
previous three years or who became a 15% stockholder with the approval of a
majority of our directors. This exception applies only if the extraordinary
transaction is approved or not opposed by a majority of our directors who were
directors before any person became a 15% stockholder in the previous three
years, or the successors of these directors.
LIMITATION ON DIRECTORS' LIABILITY
Delaware has adopted a law that allows corporations to limit or eliminate
the personal liability of directors to corporations and their stockholders for
monetary damages for breach of directors' fiduciary duty of care. The duty of
care requires that, when acting on behalf of the corporation, directors must
exercise an informed business judgment based on all material information
reasonably available to them. Absent the limitations allowed by the law,
directors are accountable to corporations and their stockholders for monetary
damages for acts of gross negligence. Although the Delaware law does not change
directors' duty of care, it allows corporations to limit available relief to
equitable remedies such as an injunction or rescission. Our certificate of
incorporation limits the liability of our directors to the fullest extent
permitted by this law. Specifically, our directors will not be personally liable
for monetary damages for any breach of their fiduciary duty as a director,
except for liability
- for any breach of their duty of loyalty to the company or our
stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- under provisions relating to unlawful payments of dividends or unlawful
stock repurchases or redemptions; or
- for any transaction from which the director derived an improper personal
benefit.
This limitation may have the effect of reducing the likelihood of
derivative litigation against directors, and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duty of care, even though such an action, if successful, might
otherwise have benefitted our stockholders.
DESCRIPTION OF SECURITIES WARRANTS
We may issue securities warrants entitling the holder to purchase our debt
securities, preferred stock or common stock as described in the prospectus
supplement relating to the issuance of the securities warrants. Securities
warrants may be issued independently or together with other of our securities
and may be attached to or separate from other securities. The securities
warrants will be issued under warrant agreements to be entered into between us
and a bank or trust company that acts as warrant agent. The warrant agent will
act solely as our agent in connection with securities warrants and will not
assume any obligation or relationship of agency or trust for or with any holders
of securities warrants or beneficial owners of securities warrants.
INTRODUCTION
The prospectus supplement will describe the specific terms of any
securities warrants offered, including the following:
- the amount of securities warrants to be registered and the purchase price
and manner of payment to acquire the securities warrants;
- a description, including amount, of the debt securities, preferred stock
or common stock which may be purchased upon exercise;
- the exercise price which must be paid to purchase the securities upon
exercise of a securities warrant and any provisions for
16
<PAGE> 21
changes or adjustments in the exercise price;
- any date on which the securities warrants and the related debt
securities, preferred stock or common stock will be separately
transferable;
- the dates on which the right to exercise the securities warrants shall
commence and expire;
- a discussion of certain U.S. federal income tax, accounting and other
special considerations, procedures and limitations relating to the
securities warrants; and
- any other material terms of the securities warrants.
Unless otherwise described in a prospectus supplement, holders of
securities warrants will not have any of the rights of holders of our debt
securities, preferred stock or common stock that may be purchased upon exercise
until they exercise the securities warrants and receive the underlying
securities. These rights include the right to receive payments of principal of,
any premium on, or any interest on, the debt securities purchasable upon such
exercise or to enforce the covenants in the indentures or to receive payments of
dividends on the preferred stock or common stock which may be purchased upon
exercise or to exercise any voting right.
EXERCISE OF SECURITIES WARRANTS
After the close of business on the expiration date described in the
prospectus supplement, securities warrants will expire and the holders will no
longer have the right to exercise the securities warrants and receive the
underlying securities. Securities warrants may be exercised by delivering a
properly completed certificate in the form attached to the securities warrants
and payment of the exercise price as provided in the prospectus supplement. We
will issue and deliver our debt securities, preferred stock or common stock as
soon as possible following receipt of the certificate and payment described
above. If less than all of the securities warrants represented by a certificate
are exercised, we will issue a new certificate for the remaining securities
warrants. The foregoing terms of exercise may be modified by us in a prospectus
supplement.
DESCRIPTION OF SECURITIES PURCHASE CONTRACTS
AND SECURITIES PURCHASE UNITS AND PREPAID SECURITIES
We may also issue securities purchase contracts which obligate the holder
of the contracts to purchase, and obligate us to sell, our common stock or
preferred stock at one or more times in the future. The prospectus supplement
will describe the terms of any securities purchase contracts, including the
following to the extent applicable:
- whether the holder is obligated to purchase our common stock or preferred
stock, and the dates on which such shares must be purchased;
- the purchase price of the common stock or preferred stock, which may be
fixed at the time of issuance or determined in the future by a formula;
- any periodic payments that we must make to the holders of the securities
purchase contracts, or any periodic payments that the holders must make
to us and whether these periodic payments are unsecured or prefunded in
some manner; and
- any collateral that a holder of securities purchase contracts is
obligated to pledge to secure the holder's obligations to purchase
securities and make periodic payments under the contract.
Securities purchase contacts may be issued with our debt securities,
preferred stock or other securities as a unit, referred to as a "securities
purchase unit." If securities purchase units are issued, the debt securities,
preferred stock or other securities which are part of the units may be pledged
to secure the holder's obligation to purchase the common stock or preferred
stock and to make any periodic payments provided for in the securities purchase
contract. A securities purchase unit may also provide for the substitution of
U.S. Treasury securities or securities of other persons for the debt securities,
preferred stock or
17
<PAGE> 22
other securities initially issued as part of the securities purchase units.
Securities purchase units may also give a financial institution or other person
the right to purchase the debt securities, preferred stock or other securities
which are part of the securities purchase units. We may also have the right or
obligation to deliver newly issued prepaid securities purchase contracts
("prepaid securities") upon release to a holder of any collateral securing the
holder's obligations under the original stock purchase contract. Any such
purchase rights will be described in a prospectus supplement.
PLAN OF DISTRIBUTION
We may sell the securities
(1) through underwriters or dealers;
(2) through agents;
(3) directly to purchasers;
(4) through remarketing firms; or
(5) through a combination of any such methods of sale.
Any such underwriter, dealer or agent may be deemed to be an underwriter
within the meaning of the Securities Act of 1933.
UNDERWRITERS OR DEALERS
If underwriters are utilized in the sale, the securities will be acquired
by the underwriters for their own account. The underwriters may sell the
securities in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The obligations of the underwriters to purchase the securities will be subject
to several conditions set forth in an agreement between us and the underwriters.
The underwriters will be obligated to purchase all of the securities offered if
any of the securities are purchased. Any public offering price and any discounts
or concessions allowed or re-allowed or paid to dealers may be changed from time
to time. We may grant underwriters who participate in the distribution of
securities an option to purchase additional securities if they sell more
securities than they purchased.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, in which selling concessions allowed
to syndicate members or other broker-dealers for the offered securities sold for
their account may be reclaimed by the syndicate if such offered securities are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
offered securities, which may be higher than the price that might otherwise
prevail in the open market. If commenced, these activities may be discontinued.
If we use dealers in the sale of securities, we will sell the securities to
them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale. We will include
in the prospectus supplement the names of the dealers and the terms of the
transaction.
AGENTS
We may designate agents who agree to use their reasonable efforts to
solicit purchasers for the period of their appointment or to sell securities on
a continuing basis.
DIRECT SALES
We may also sell securities directly to one or more purchasers without
using underwriters or agents.
REMARKETING FIRMS
The securities may be re-sold to the public following their redemption or
repayment by one or more remarketing firms. Remarketing firms may act as
principals for their own accounts or as agents for us.
RIGHTS OFFERINGS; CONVERSIONS
If we were to issue rights on a pro rata basis to our shareholders, we may
be able to use this
18
<PAGE> 23
prospectus to offer and sell the securities underlying the rights. We may also
be able to use the prospectus to offer and sell securities to be received upon
conversion of any convertible securities we may issue or upon exercise of
transferable warrants that may be issued by us or an affiliate.
GENERAL INFORMATION
Underwriters, dealers, agents and remarketing firms that participate in the
distribution of the securities may be underwriters as defined in the Securities
Act of 1933, and any discounts or commissions received by them from us and any
profit on the resale of the securities by them may be treated as underwriting
discounts and commissions under the Securities Act of 1933. Any underwriter,
dealer, agent or remarketing firm will be identified and the terms of the
transaction, including their compensation, will be described in a prospectus
supplement. We may have agreements with underwriters, dealers, agents or
remarketing firms to indemnify them against certain liabilities, including
liabilities under the Securities Act of 1933, or to contribute with respect to
payments which the underwriters, dealers or agents may be required to make.
Underwriters, dealers, agents or remarketing firms, or their affiliates may be
customers of, engage in transactions with or perform services for, us or our
subsidiaries in the ordinary course of their business.
All debt securities will be new issues of securities with no established
trading market. Any underwriters to whom debt securities are sold by us for
public offering and sale may make a market in such securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any debt securities.
We may use agents and underwriters to solicit offers by certain
institutions to purchase debt securities from us at the public offering price
set forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on the date stated in the prospectus
supplement. Delayed delivery contracts will be subject to only those conditions
set forth in the prospectus supplement. A commission indicated in the prospectus
supplement will be paid to underwriters and agents soliciting purchases of debt
securities pursuant to delayed delivery contracts accepted by us.
EXPERTS
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Nuevo Energy Company as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999 incorporated by reference in the prospectus and the
registration statement have been incorporated herein in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of such firm as experts in accounting and
auditing.
RESERVE ENGINEERS
The information incorporated by reference in this prospectus regarding our
quantities of oil and gas and future net cash flows and the present values
thereof from such reserves is based on estimates of such reserves and present
values prepared by Ryder Scott Company, L.P.
LEGAL MATTERS
The validity of the issuance of the securities will be passed upon for us
by our lawyers, Haynes and Boone, LLP. Counsel named in the prospectus
supplement will issue opinions about the validity of the securities for any
agents, dealers or underwriters.
19
<PAGE> 24
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 15, 2000
UP TO
$142,690,000
[NUEVO ENERGY LOGO] NUEVO ENERGY COMPANY
1021 Main, Suite 2100
Houston, Texas 77002
(800) 364-0206
9 1/2% SENIOR SUBORDINATED NOTES DUE 2008
---------------------
INVESTING IN THESE NOTES INVOLVES RISKS.
WE WILL PROVIDE SPECIFIC RISK FACTORS
IN SUPPLEMENTS TO THIS PROSPECTUS.
---------------------
Nuevo Energy Company's common stock is listed on the New York Stock
Exchange, under the symbol "NEV."
We entered into an indenture with State Street Bank and Trust Company for
the issuance of up to $400,000,000 principal amount of our 9 1/2% senior
subordinated notes. As of May 1, 2000, there was outstanding $257,310,000 of
these notes. This prospectus relates to the offer and sale of the remaining
$142,690,000 of notes under the indenture.
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
---------------------
This prospectus may not be used to consummate sales of securities unless we
also furnish you with a prospectus supplement describing the final terms of the
securities offered.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated , 2000
<PAGE> 25
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About This Prospectus....................................... E-1
Where You Can Find More Information......................... E-1
Disclosure Regarding Forward Looking Statements............. E-2
About Nuevo Energy Company.................................. E-2
Use of Proceeds............................................. E-2
Description of the Notes.................................... E-2
Plan of Distribution........................................ E-39
Experts..................................................... E-40
Legal Matters............................................... E-40
</TABLE>
i
<PAGE> 26
ABOUT THIS PROSPECTUS
In this prospectus, the words "Company," "we," "our," "ours" and "us" refer
to Nuevo Energy Company, and its subsidiaries, unless otherwise stated or the
context requires.
This prospectus is part of a registration statement that we have filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may sell the notes described in this prospectus in one or more offerings up to a
total dollar amount of $142,690,000. Any notes sold pursuant to this prospectus
will proportionately reduce the aggregate offerings under this shelf process.
This prospectus provides you with a general description of the notes we may
offer. We may also add, update or change information contained in this
prospectus through a supplement to this prospectus. You should read this
prospectus, any prospectus supplement and the information described under the
heading "Where You Can Find More Information."
We believe that we have included or incorporated by reference all
information material to investors in this prospectus, but certain details that
may be important for specific investment purposes have not been included. To see
more detail, you should read the exhibits filed with or incorporated by
reference into this registration statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file, including
the registration statement, at the SEC's public reference room located at 450
Fifth Street, N.W., Washington, D.C., 20549, or its public reference rooms
located in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for information on the operation of the public reference rooms.
Our SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov. They are located in the EDGAR database on that web site. You
may also obtain information about us from the New York Stock Exchange, where our
common stock is listed.
The SEC allows us to "incorporate by reference" information from the
documents we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we later file with the SEC will automatically update and
supersede this information. Specifically, we incorporate by reference the
documents listed below and any future filings we make with the SEC (including
any filings we make prior to the effectiveness of the registration statement)
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until the offering is terminated:
- Our Annual Report on Form 10-K for the year ended December 31, 1999;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000;
- Our Current Reports on Form 8-K filed on February 23, 2000 and March 6,
2000;
- The description of our common stock contained in the Registration
Statement on Form 8-A filed on May 15, 1990; and
- The description of our Series C Preferred Stock Purchase Rights contained
in the Registration Statement on Form 8-A filed on April 1, 1997.
This prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-46580).
You may request a copy of any of the information incorporated by reference,
at no cost, by writing or telephoning us at the following address:
Nuevo Energy Company
1021 Main, Suite 2100
Houston, Texas 77002
(800) 364-0206
Attention: Corporate Secretary
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date of those documents.
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<PAGE> 27
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference include
forward-looking statements. We can not assure you that the plans, intentions or
expectations upon which our forward-looking statements are based will occur. Our
forward-looking statements are subject to risks, uncertainties and assumptions,
including those discussed elsewhere in this prospectus and the documents that
are incorporated by reference into this prospectus. Some of these risks which
could affect our future results and could cause results to differ materially
from those expressed in our forward-looking statements include:
- the volatility of oil and gas prices;
- the uncertainty of estimates of oil and gas reserves;
- the prices of goods and services we use to explore for, develop and
produce our reserves;
- difficulties encountered during the exploration for and development and
production of oil and gas;
- the difficulties encountered in delivering oil and gas to commercial
markets;
- changes in the supply of or demand for oil and gas;
- the uncertainty of our ability to attract capital;
- changes in the extensive government regulations regarding the oil and gas
business; and
- compliance with environmental regulations.
The information contained in this prospectus and in the documents
incorporated by reference into this prospectus identify additional factors that
could affect our operating results and performance. We urge you to carefully
consider those factors.
ABOUT NUEVO ENERGY COMPANY
We are an independent oil and gas company. Our properties are concentrated
in California, where we are the largest independent producer, with properties
located both onshore and offshore. Our onshore California properties are located
primarily in the San Joaquin, Los Angeles and Ventura Basins. Our offshore
California properties are located in Santa Barbara Channel and offshore Long
Beach. We also own properties in the onshore Gulf Coast region and
internationally offshore the Republics of Congo and Ghana in West Africa and
onshore Tunisia in North Africa. Since our inception in 1990, we have expanded
our operations through a series of disciplined, low-cost acquisitions of oil and
gas properties and the subsequent exploitation and development of these
properties. We have complemented these efforts with strategic divestitures and
an opportunistic exploration program which provides exposure to prospects with
the potential to add substantially to the growth of our shareholder value.
USE OF PROCEEDS
Unless otherwise set forth in the applicable prospectus supplement,
proceeds from the sale of the notes sold by us will be used for general
corporate purposes. These purposes may include acquisitions, working capital,
capital expenditures, the repurchase of outstanding securities and the repayment
of indebtedness. Proceeds from the sale of notes may be temporarily invested in
short-term securities.
DESCRIPTION OF THE NOTES
We will issue the notes under an indenture entered into between us and
State Street Bank and Trust Company, as trustee, dated August 20, 1999. The
following description is a summary of
E-2
<PAGE> 28
selected provisions of the indenture and the notes. We have not restated the
indenture in its entirety. We will provide you a copy of the indenture for the
notes without charge if you request it from us. We urge you to read the
indenture because the indenture, and not this description, will control your
rights as a holder of notes. For purposes of this section of this prospectus,
references to the "Company," "Nuevo," "we," "us," "our" or "ours" means Nuevo
Energy Company, excluding our subsidiaries. The definitions of some of the terms
used in the following summary are set forth below under "-- Material
Definitions."
The indenture provides for the issuance of up to $400,000,000 of notes. As
of May 1, 2000 we have issued $257,310,000 principal amount of notes under the
indenture. We may issue a maximum additional principal amount of $142,690,000 of
notes. All issuances of the notes will be subject to the debt incurrence test
described under "-- Material Covenants -- Incurrence of Indebtedness." The notes
will be identical in all respects to all other notes issued under this indenture
other than the price at which we issue the notes and the date on which we issue
the notes.
PRINCIPAL, MATURITY AND INTEREST OF THE NOTES
The notes will be our general unsecured senior subordinated obligations.
The notes will mature on June 1, 2008, Interest on the notes will accrue at the
rate of 9 1/2% per annum and will be payable semiannually in arrears on June 1
and December 1. Interest payments will be made to the person in whose names the
notes are registered at the close of business on the May 15 or November 15
preceding the interest payment date. Interest on the notes will accrue from the
date of issuance for the first interest payment and from the most recent
interest payment date thereafter. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
Principal, interest and premium on the notes will be paid as described
under "-- Book-Entry, Delivery and Form" below.
SUBORDINATION
The payment of the principal of, and premium and interest on, the notes
will be subordinated in right of payment to the prior payment in full of Senior
Indebtedness (Section 14.1). The subordination provisions prohibit us from
making payments with respect to the notes if the events described below occur.
If triggered, the subordination provisions prohibit us from paying any amounts
with respect to the notes, including:
- payments of principal or interest;
- payments of any premium; and
- repurchases of the notes, including repurchases in connection with a
Change of Control or Asset Sale, as described under "-- Repurchase at the
Options of Holders -- Change of Control" and "-- Asset Sales."
If we:
- become subject to insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or similar case;
- liquidate, dissolve or otherwise wind-up our business; or
- make an assignment for the benefit of our creditors or marshal our assets
or liabilities;
the holders of Senior Indebtedness will be entitled to receive full payment
of all amounts owed to them prior to any payments being made to the holders
of notes. We will not be required to repay all Senior Indebtedness in full
in connection with our consolidation or merger or our liquidation or
dissolution following the disposition of all or substantially all of our
properties upon the terms described under the subheading "-- Material
Covenants -- Merger, Consolidation or Sale of Assets" as a condition to any
payments on the notes. If the trustee for the notes receives any payment
from us when the subordination provisions prohibit payment of amounts owed
on the notes, the trustee is required to return the payments to us or our
receiver or custodian for payment to holders of Senior Indebtedness. The
subordination provisions apply to payments of any nature, including
payments:
- of cash;
- of property, assets or securities; and
- by way of set-off.
E-3
<PAGE> 29
The subordination provisions, however, do not prohibit the payment of
principal, interest and premium on the notes if the payment is made in Permitted
Junior Securities.
Additionally, we may not make any payment in respect of the notes, other
than payments of Permitted Junior Securities, if a Payment Event of Default
occurs on our Specified Senior Indebtedness and the trustee receives written
notice of the default. We must resume payment in respect of the notes, including
any missed payments, when we cure or obtain a waiver of the Payment Event of
Default or it otherwise ceases to exist. We must also resume payment in respect
of the notes, including any missed payments, if we pay in full or discharge the
Specified Senior Indebtedness.
We also may not make any payment in respect of the notes, other than
payments of Permitted Junior Securities, for the period specified below
("Payment Blockage Period") if a Non-payment Event of Default occurs on our
Specified Senior Indebtedness and the trustee and we receive written notice of
the default from any holder of Specified Senior Indebtedness. The Payment
Blockage Period will commence upon the earlier of the date of receipt by the
trustee or us of such notice of the default (the "Payment Blockage Notice") and
will end on the earliest of:
- 179 days after it begins;
- the date on which the holders of Specified Senior Indebtedness notify the
trustee or us that the Non-payment Event of Default no longer exists or
that the Specified Senior Indebtedness has been discharged; and
- the date we or the trustee receives notice from the person initiating the
Payment Blockage Period that the period has been terminated.
We must resume making payments in respect of the notes after the Payment
Blockage Period ends, including any missed payments, unless we are otherwise
prohibited by the other subordination provisions of the indenture. No more than
one Payment Blockage Period may commence during any period of 360 consecutive
days. No Non-payment Event of Default that existed on the date of delivery of a
Payment Blockage Notice to the trustee can be made the basis for a subsequent
Payment Blockage Notice. (Section 14.3)
If we fail to make any payment on the notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions described above, the failure will constitute an Event of Default
under the indenture and will entitle the holders of the notes to exercise the
rights described under "-- Events of Default and Remedies." (Section 5.1)
As a result of such subordination provisions described above, in the event
of a distribution of assets upon our liquidation, receivership, reorganization
or insolvency, our creditors 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 we have paid all Senior Indebtedness 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."
SUBSIDIARY GUARANTEES OF NOTES
Currently, none of our subsidiaries guarantees the notes. However, if one
of our Restricted Subsidiaries was, in the future, to guarantee or secure any of
our Pari Passu Indebtedness or Subordinated Indebtedness, we would be required
to cause it to be bound by the terms of the indenture and to unconditionally
guarantee the performance of our obligations under the indenture and the notes.
(Sections 10.13 and 13.1)
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
contri-
E-4
<PAGE> 30
bution from each other Subsidiary Guarantor, if any, in a pro rata amount based
on the Adjusted Net Assets of each Subsidiary Guarantor. (Section 13.4)
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 us
or another Subsidiary Guarantor without limitation, except to the extent any
such transaction is subject to the "Merger, Consolidation or Sale or 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 us or another Subsidiary Guarantor, whether or not Affiliated
with the Subsidiary Guarantor, provided that:
- 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
- such transaction does not violate any of the covenants described under
the heading "-- Material Covenants" or result in a Default or Event of
Default immediately thereafter that is continuing. (Section 13.2)
Upon the sale or other disposition, by merger or otherwise, of a Subsidiary
Guarantor of all or substantially all of its assets to a Person other than us or
another Subsidiary Guarantor and pursuant to a transaction that is otherwise in
compliance with the 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. 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, our or our
Restricted Subsidiaries' other Indebtedness 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 our or our Restricted
Subsidiaries' other Indebtedness, excluding any Senior Indebtedness, shall also
terminate. (Section 13.3)
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. (Section 13.8)
REDEMPTION AT THE OPTION OF NUEVO
We may not redeem the notes at our option prior to June 1, 2003.
Thereafter, we may redeem the notes at our option, in whole or in part, at the
redemption prices expressed as percentages of principal amount set forth below.
If we redeem the notes at our option, we must also pay interest accrued and
unpaid to the applicable redemption date. The redemption prices during the
twelve-month period beginning on June 1 of the years indicated are set forth
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003............................... 104.750%
2004............................... 103.167%
2005............................... 101.583%
2006 and thereafter................ 100.000%
</TABLE>
In addition, prior to June 1, 2001 we may redeem up to 33 1/3% of the
aggregate principal amount of the notes originally issued at a redemption price
of 109.5% of the principal amount, plus accrued and unpaid interest to the date
of redemption, with the net proceeds of one or more Equity Offerings. We may not
cause a redemption from the proceeds of the Equity Offering unless:
- at least 66 2/3% of the aggregate principal amount of the notes
originally issued under the indenture at any time prior to such
redemption remain outstanding after the redemption; and
- the redemption occurs within 90 days after the closing of the Equity
Offering. (Section 11.1)
If we redeem less than all of the notes, selection of notes for redemption
will be made by
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the trustee on a pro rata basis. We will not, however, redeem notes in principal
amounts of less than $10. (Section 11.4) We will mail notice of a redemption at
least 30 and not more than 60 days before the redemption date. The notice will
describe the amount of notes being redeemed, if less than the entire principal
amount. (Section 11.5) Interest will cease to accrue on notes which are redeemed
on the redemption date. (Section 11.7)
MANDATORY REDEMPTION
We will not be required to make mandatory redemption or sinking fund
payments with. respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, we will be obligated to make an offer to
purchase all of the outstanding notes. The purchase price we are required to
offer is 101% of the aggregate principal amount plus accrued and unpaid interest
to the date of purchase. We are required to purchase all notes tendered under
the offer which are not withdrawn.
In order to effect a Change of Control offer, we must mail a notice of the
Change of Control to the trustee and each holder of notes no later than 30 days
after the Change of Control occurs. We are obligated to close the purchase of
notes tendered under the Change of Control offer no less than 30 and no more
than 60 days after the notice is mailed. The notice will describe the Change of
Control and the procedures that must be followed to participate in the offer.
Our bank credit facility states that events which constitute a Change of
Control constitute a default under the bank credit facility. In addition, our
bank credit facility prohibits the repurchase of the notes. Future agreements
relating to our Senior Indebtedness may contain similar provisions. In the event
a Change of Control occurs at a time when we are prohibited from purchasing
notes, we could seek the consent of our lenders to the purchase of notes or
could attempt to refinance the borrowings that contain a prohibition. If we do
not obtain a consent or repay the borrowings, we will be prohibited from
purchasing notes, which will constitute an Event of Default under the Indenture.
A default under the indenture for the notes will also be a default under the
bank credit facility and may be a default under other current and future
agreements to which we are or may become a party. In such circumstances, the
subordination provisions in the indenture may prevent payments to the holders of
notes required by the Change of Control.
We will not be required to make a Change of Control offer 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 us and purchases the notes properly tendered and
not withdrawn. (Section 10.16)
Asset Sales
We may not, and may not permit our Restricted Subsidiaries to, engage in
any Asset Sale unless the consideration received equals the fair market value of
the assets and properties sold or otherwise disposed of as determined by our
board of directors, and the consideration is either:
- cash, Cash Equivalents, Liquid Securities or Exchanged Properties
("Permitted Consideration"); or
- the property or assets received that do not constitute Permitted
Consideration have an aggregate fair market value of no more than 10.0%
of our Adjusted Consolidated Net Tangible Assets.
If we do not invest the Net Cash Proceeds of Asset Sales which occur after
the date of the indenture in properties and assets that will be used in the Oil
and Gas Business within 365 days after the closing of the Asset Sale, we must
either:
- repay Indebtedness under the Credit Facility;
- repay or purchase other Indebtedness (other than Subordinated
Indebtedness or Pari Passu Indebtedness) of ourself or a Restricted
Subsidiary, provided that any related loan commitment is permanently
reduced by the amount of such Indebtedness repaid; or
- offer to repurchase notes as described below.
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The amount of Net Cash Proceeds from all Asset Sales which occur after the
date of the indenture not used for one of the purposes described in this
paragraph will constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds is equal to or more than $10
million:
- we must make an Offer to purchase the notes and any outstanding Pari
Passu Indebtedness required to be repurchased in connection with an Asset
Sale, provided that the amount of the Pari Passu Indebtedness repurchased
is permanently reduced;
- we must make an offer to purchase notes in the principal amount
calculated by multiplying the Excess Proceeds 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 plus any Pari Passu Indebtedness that we must offer to
repurchase;
- the offer price for the notes will be payable in cash in an amount equal
to 100% of the principal amount of the notes tendered, plus accrued and
unpaid interest to the date of payment; and
- if more notes are tendered than we have Excess Proceeds to purchase, we
will pro rate the notes tendered.
If the amount of notes tendered is less than the amount of notes we offered
to purchase, we may use the Excess Proceeds not used to repurchase notes for
general corporate purposes. The use of Excess Proceeds for general corporate
purposes must comply with the other provisions of the indenture, including the
covenant described under "-- Material Covenants -- Restricted Payments."
After we make an Excess Proceeds offer as described above, the amount of
Excess Proceeds will be reset to zero. We will not permit any of our Restricted
Subsidiaries to be a party to any agreement that would place any restriction on
our right to make an offer to repurchase notes following an Asset Sale. (Section
10.17)
Securities Law Compliance
We will comply with the requirements of Rule 14e-1 under the Securities
Exchange Act of 1934 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 or Asset Sale. These
rules require that we keep the offer open for 20 business days. They also
require that we notify holders of notes of changes in the offer and extend the
offer for specified time periods if we amend the offer. If the provisions of any
securities laws or regulations conflict with the provisions in the indenture
relating to a Change of Control or Asset Sale offer, we will comply with the
applicable securities laws and regulations and will not be deemed to have
breached our obligations under the indenture.
MATERIAL COVENANTS
Ownership of Capital Stock
We may not permit any Restricted Subsidiary to issue any Capital Stock
other than to us or a Wholly Owned Restricted Subsidiary. Also, we may not
permit any Person other than us or a Wholly Owned Restricted Subsidiary to own
any Capital Stock of a Restricted Subsidiary, except for:
- directors' qualifying shares;
- Capital Stock of a Restricted Subsidiary organized in a foreign
jurisdiction required to be owned by the government of the foreign
jurisdiction or citizens of the foreign jurisdiction in order for the
Restricted Subsidiary to transact business in the foreign jurisdiction;
- a sale of all or substantially all of the Capital Stock of a Restricted
Subsidiary effected in accordance with the "Asset Sales" covenant;
- Qualifying TECONS; and
- the Capital Stock of a Restricted Subsidiary owned by a Person at the
time the Restricted Subsidiary became a Restricted Subsidiary or which is
acquired by the Person in connection with the formation of the Restricted
Subsidiary.
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The Capital Stock owned by us or another Restricted Subsidiary will 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. (Section 10.14)
Restricted Payments
The indenture will define the following as Restricted Payments if done by
us or any of our Restricted Subsidiaries:
- the declaration or payment of any dividend or distribution on our Capital
Stock, including Eligible Convertible Securities and Qualifying TECONS,
other than dividends or distributions payable solely in shares of our
Qualified Capital Stock or in options, warrants or other rights to
purchase our Qualified Capital Stock;
- the purchase or acquisition of our Capital Stock, including Eligible
Convertible Securities and Qualifying TECONS, or that of our Affiliates,
other than Capital Stock issued by a Wholly Owned Restricted Subsidiary,
or any options, warrants or other rights to acquire such Capital Stock;
- making any principal payment on, or repurchase or other acquisition of,
any Subordinated Indebtedness prior to any scheduled principal payment,
scheduled sinking fund payment or maturity, except using the Excess
Proceeds remaining after compliance with the provisions described under
"-- Repurchase at the Option of Holders -- Asset Sales," and to the
extent required by the indenture or other agreement or instrument
pursuant to which such Subordinated Indebtedness was issued;
- the declaration or payment of any dividend or other distribution on
shares of Capital Stock of any Restricted Subsidiary, other than to us or
any Wholly Owned Restricted Subsidiary, or the purchase, redemption or
other acquisition or retirement of any Capital Stock of any Restricted
Subsidiary or any options, warrants or other rights to acquire any such
Capital Stock, other than for Capital Stock held by us or any Wholly
Owned Restricted Subsidiary; or
- making of any Investment, other than any Permitted Investment.
We may not make a Restricted Payment, unless at the time of and after
giving effect to the proposed Restricted Payment:
- no Default or Event of Default shall have occurred and be continuing,
- we could incur $1.00 of additional Indebtedness, other than Permitted
Indebtedness, in accordance with the covenant described under
"-- Incurrence of Indebtedness"; and
- the aggregate amount of all Restricted Payments declared or made after
June 8, 1999 shall not exceed the sum, without duplication, of the
following:
(1) 50% of our aggregate Consolidated Net Income accrued on a cumulative
basis during the period beginning on April 1, 1998 and ending on the
last day of our 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 or assets other than cash, received after June 8, 1998 by us
as capital contributions to us, other than from any Restricted
Subsidiary; plus
(3) the aggregate net cash proceeds or the fair market value of any
property or assets other than cash, received by us after June 8, 1998
from the issuance or sale, other than to any of our Restricted
Subsidiaries, of our Qualified Capital Stock or any option, warrants
or rights to purchase our Qualified Capital Stock; plus
(4) the aggregate net cash proceeds received after June 8, 1999 by us,
other than from any of our Restricted Subsidiaries, upon the exercise
of any options, warrants or rights to purchase our Qualified Capital
Stock; plus
(5) the aggregate net cash proceeds received after June 8, 1998 by us
from
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the issuance or sale, other than to any of our Restricted
Subsidiaries, of debt securities or shares of Redeemable Capital
Stock that have been converted into or exchanged for our Qualified
Capital Stock, together with the aggregate cash received by us at the
time of such conversion or exchange; plus
(6) the aggregate net cash proceeds or the fair market value of any
property or assets received after June 8, 1999 by us or our
Restricted Subsidiaries, computed on a consolidated basis,
constituting a return of capital on an Investment, other than a
Permitted Investment, made by us or any of our Restricted
Subsidiaries after June 8, 1998; plus
(7) $25.0 million.
However, we and our 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 the first clause below, and,
in the case of the sixth clause below, we could incur $1.00 of additional
Indebtedness, excluding Permitted Indebtedness, in accordance with the covenant
described under "-- Incurrence of Indebtedness":
- the payment of any dividend on any of our or any Restricted Subsidiary's
Capital Stock within 60 days after the date of declaration thereof, if at
such declaration date such declaration complied with the covenant, and
such payment shall be deemed to have been paid on such date of
declaration for purposes of making any calculation under this covenant;
- the repurchase or other acquisition or retirement of any shares of our or
of any of our Restricted Subsidiaries' Capital Stock, in exchange for, or
out of the aggregate net cash proceeds of, a substantially concurrent
issue and sale of our Qualified Capital Stock, other than a sale to a
Restricted Subsidiary;
- the repurchase 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 of our Qualified Capital Stock,
other than to a Restricted Subsidiary;
- the purchase 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:
(1) 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, 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 us as necessary to
accomplish such refinancing, plus the amount of our expenses incurred
in connection with such refinancing,
(2) such new Indebtedness is subordinated to the notes at least to the
same extent as such Indebtedness so purchased, acquired or retired,
(3) such new Indebtedness has an Average Life to Stated Maturity that is
longer than the Average Life to Stated Maturity of the notes, and
(4) 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;
- the repurchase or other acquisition or retirement for value of any of our
or our Subsidiaries' Qualified Capital Stock held
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by any of our or our Subsidiaries' current or former officers, directors
or employees pursuant to the terms of agreements, including employment
agreements, or plans approved by our board of directors, including any
such repurchase, acquisition or retirement 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, acquisitions and retirements shall not exceed the sum of:
(1) $1.0 million in any twelve-month period, and
(2) the aggregate net proceeds, if any, received by us during such
twelve-month period from any issuance of such Qualified Capital Stock
pursuant to such agreements or plans; and
- the repurchase or other acquisition of our Qualified Capital Stock in an
amount not to exceed 50% of the net after-tax gain from Specified
Property Sales.
The actions described in the first clause of this paragraph are Restricted
Payments that will be permitted to be taken in accordance with this paragraph
but shall reduce the amount that would otherwise be available for Restricted
Payments. The actions described in the second through the sixth clauses above
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph and will not reduce the amount that would otherwise be
available for Restricted Payments.
We or any of our Restricted Subsidiaries may make a Restricted Payment, if
at the time we first incurred a commitment for the Restricted Payment the
Restricted Payment could have been made, if all commitments incurred and
outstanding are treated as if they were Restricted Payments expended by us or a
Restricted Subsidiary at the time the commitments were incurred, except that
commitments incurred and outstanding which are treated as a Restricted Payment
and which are ultimately not made shall no longer be treated as a Restricted
Payment expended by us; 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 we must be able to incur $1.00 of additional Indebtedness, other
than Permitted Indebtedness, in accordance with the "Incurrence of Indebtedness"
covenant. (Section 10.10)
Incurrence of Indebtedness
We may not, and may not permit any of our 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:
- if such incurrence occurs on or before March 31, 2000, the Consolidated
Fixed Charge Coverage Ratio for the applicable period would have been at
least 2.0 to 1.0; and
- if such incurrence occurs after March 31, 2000, the Consolidated Fixed
Charge Coverage Ratio for the applicable period would have been at least
equal to 2.5 to 1.0. (Section 10.12)
Liens
We may not, and may 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 our or any Restricted Subsidiary's
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:
- 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
- if such secured Indebtedness is Subordinated Indebtedness, the Lien
securing such Subordinated Indebtedness shall be subordinate and junior
to the Lien securing
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<PAGE> 36
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 and was
not created, incurred or assumed in contemplation of such transaction. (Section
10.15)
Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries
We may not, and may 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:
- pay dividends, in cash or otherwise, or make any other distributions on
or in respect of its Capital Stock to us or any other Restricted
Subsidiary;
- pay any Indebtedness owed to us or any other Restricted Subsidiary;
- make an Investment in us or any other Restricted Subsidiary; or
- transfer any of its properties or assets to us or any other Restricted
Subsidiary.
However, with respect to the fourth clause of this paragraph only,
- our Restricted Subsidiaries may have 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
- our Restricted Subsidiaries may have customary restrictions contained in
asset sale agreements limiting the transfer of such assets pending the
closing of such sale.
In addition, the indenture will not prohibit the following encumbrances and
restrictions which exist pursuant to:
- the indenture, the Credit Facility or any other agreement in effect as of
the date of the indenture;
- any agreement or other instrument of a Person acquired by us or any
Restricted Subsidiary in existence at the time of such acquisition which
was not created in contemplation of the acquisition 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;
- customary restrictions in leases and licenses relating to the property
covered thereby and entered into in the ordinary course of business; or
- any agreement that extends, renews, refinances or replaces the agreements
containing the foregoing restrictions, if the terms and conditions of
those restrictions are not materially less favorable to the holders of
the notes than those under or pursuant to the agreements so extended,
renewed, refinanced or replaced. (Section 10.19)
Limitation on Layering Debt
We may not have any Indebtedness, including Acquired Indebtedness and
Permitted Indebtedness, that is subordinated in right of payment to Senior
Indebtedness, unless such Indebtedness also ranks equal with, or subordinated in
right of payment to, the notes pursuant to subordination provisions
substantially similar to those applicable to the notes. (Section 10.11)
Merger, Consolidation or Sale of Assets
We may 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 our and our
Restricted Subsidiaries' properties and assets on a consolidated basis to any
person or group of Affiliated Persons, and we may not permit any of our
Restricted Subsidiaries to enter into any such transaction or series of related
transactions if such transaction or series of related transactions would result
in such a disposition of all or substantially all of our and our Restricted
Subsidiaries' proper-
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ties and assets on a consolidated basis, unless at the time and after giving
effect thereto:
- either:
(1) if the transaction is a merger or consolidation, we are the surviving
Person of the merger or consolidation, or
(2) the Person formed by the consolidation or into which we are merged or
to which our or our Restricted Subsidiaries' properties and assets
are disposed of (referred to as the "Surviving Entity") is a
corporation organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia and,
in either case, expressly assumes by a supplemental indenture to the
indenture executed and delivered to the trustee, in form satisfactory
to the trustee, all of our obligations under the notes and the
indenture and the indenture remains in effect;
- immediately after giving effect to the transaction or series of
transactions on a pro forma basis and treating any Indebtedness not
previously an obligation of ours or our Restricted Subsidiaries in
connection with or as a result of such transaction as having been
incurred at the time of the transaction or series of transactions, no
Default or Event of Default shall have occurred and be continuing;
- except in the case of the consolidation or merger of any Restricted
Subsidiary with or into us, immediately after giving effect to the
transaction or series of transactions on a pro forma basis, our or the
Surviving Entity's Consolidated Net Worth is at least equal to our
Consolidated Net Worth immediately before such transaction or
transactions;
- except in the case of our consolidation or merger with or into a Wholly
Owned Restricted Subsidiary or any Restricted Subsidiary with or into us
or any of our Wholly Owned Restricted Subsidiaries, immediately after
giving effect to the transaction or transactions on a pro forma basis
assuming that the transaction or transactions occurred on the first day
of the relevant period of fiscal quarters under the "Incurrence of
Indebtedness" covenant ending immediately prior to the consummation of
the transaction or transactions, with the appropriate adjustments with
respect to the transaction or transactions being included in the pro
forma calculation, we or the Surviving Entity could incur $1.00 of
additional Indebtedness other than Permitted Indebtedness pursuant to
such covenant;
- if any of our or our Restricted Subsidiaries' properties or assets would
upon the 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; and
- if we are not the continuing obligor under the Indenture, then any
Subsidiary Guarantor, unless it is the Surviving Entity, shall have
confirmed that its Subsidiary Guarantee will continue to apply following
the transaction or transactions.
If we are not the continuing or surviving corporation following any of the
foregoing transaction or transactions, the Surviving Entity shall be substituted
for us under the indenture with the same effect as if the Surviving Entity had
been named as Nuevo therein, and thereafter we will be discharged from all
obligations and covenants under the indenture and the notes, except in the case
of a lease. (Article VIII)
Transactions with Affiliates
We may not, and may not permit any of our Restricted Subsidiaries to,
directly or indirectly, engage in any transaction or series of related
transactions with any of our Affiliates, other than us or a Restricted
Subsidiary, unless:
- such transaction or series of related transactions is on terms that are
no less favorable to us 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; and
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- with respect to a transaction or series of related transactions involving
payments in excess of $1.0 million in the aggregate, we deliver an
officers' certificate to the trustee certifying that such transaction
complies with the foregoing clause.
In addition, if the transaction or series of related transactions involves
payments in excess of $5.0 million in the aggregate, the officers' certificate
also must state that such transaction or series of related transactions has been
approved by a majority of our Disinterested Directors. If the transaction or
series of related transactions involves payments of $25.0 million or more in the
aggregate, we must also 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 us or our Restricted Subsidiary.
The foregoing restriction shall not apply to:
- the provision of services and payments under any of the existing
agreements with Torch Energy Advisors Incorporated or its subsidiaries so
long as each of the agreements, including any modifications or amendments
entered into on or after the date of the indenture, has been approved by
a majority of our Disinterested Directors;
- loans or advances to our or our Restricted Subsidiaries' officers,
directors and employees made in the ordinary course of business and
consistent with past practices in an aggregate amount not to exceed
$3,000,000 outstanding at any one time;
- the payment of reasonable and customary regular fees to our or our
Restricted Subsidiaries' directors who are not our employees or employees
of our Affiliates;
- our employee compensation and other benefit arrangements;
- indemnities of our and any Subsidiary's officers and directors consistent
with applicable bylaws and statutory provisions; or
- Restricted Payments permitted by the indenture. (Section 10.18)
Reports
We must file on a timely basis with the SEC, to the extent such filings are
accepted by the SEC and whether or not we have a class of securities registered
under the Exchange Act, the annual reports, quarterly reports and other
documents that we would be required to file if we were subject to Section 13 or
15 of the Exchange Act. These include an annual report on Form 10-K and
quarterly reports on Form 10-Q. We will also be required:
- to file with the trustee, with exhibits, and provide to each holder of
notes, without cost to such holder, copies of reports and documents,
without exhibits, within 30 days after the date on which we file the
reports and documents with the SEC or the date on which we would be
required to file the reports and documents if we were required to, and
- if filing such reports and documents with the SEC is not accepted by the
SEC or is prohibited under the Exchange Act, to supply at our cost copies
of such reports and documents, including any exhibits, to any holder of
notes, securities analyst or prospective investor promptly upon written
request. (Section 10.09)
EVENTS OF DEFAULT AND REMEDIES
Each of the following will be an "Event of Default":
- failure to pay interest on the notes when due for 30 days, whether or not
prohibited by the subordination provisions of the notes;
- failure to pay the principal of or premium on the notes, whether such
payment is due at Stated Maturity, upon redemption, upon repurchase
pursuant to a Change of Control offer or an Asset Sales offer, upon
acceleration or otherwise, whether or not prohibited by the subordination
provisions;
- failure to comply with the covenant described under "-- Material
Covenants -- Merger, Consolidation or Sale of Assets";
- failure to comply with the covenant described under "-- Repurchase at the
Option of Holders -- Change of Control";
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- failure to comply with the covenant described under "-- Repurchase at the
Option of Holders -- Asset Sales";
- failure by us or any Subsidiary Guarantor to comply with any other
covenant contained in the notes, any Subsidiary Guarantee or the
indenture for a period of 60 days after written notice of such failure
given to us by the trustee or to us and the trustee by the holders of at
least 25% in aggregate principal amount of the notes then outstanding;
- the occurrence and continuation beyond any applicable grace period of any
default in the payment of the principal of, premium, if any, on or
interest on any of our or any Restricted Subsidiary's Indebtedness, other
than the notes, for money borrowed when due, or any other default
resulting in acceleration of any of our or any Restricted Subsidiary's
Indebtedness for money borrowed, if the aggregate principal amount of
such Indebtedness exceeds $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;
- any Subsidiary Guarantor shall for any reason cease to be, or be asserted
by us or any Subsidiary Guarantor not to be, in full force and effect and
enforceable in accordance with its terms, except pursuant to the release
or termination of such Subsidiary Guarantee in accordance with the
indenture;
- final judgments or orders rendered against us 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:
(1) 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
(2) 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;
- the entry of a decree or order by a court having jurisdiction in the
premises:
(1) for relief in respect of us or any Material Subsidiary in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or
(2) adjudging us or any Material Subsidiary bankrupt or insolvent, or
approving a petition seeking reorganization, arrangement, adjustment
or composition of us 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 us or any Material Subsidiary or of a substantial
part of our or any Material Subsidiary's consolidated assets, or
ordering the winding up or liquidation of our or any Material
Subsidiary's 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
- the commencement by us 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 bankrupt or insolvent, or the consent by us or any Material
Subsidiary to the entry of a decree or order for relief in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the
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commencement of any bankruptcy or insolvency case or proceeding against
us or any Material Subsidiary, or the filing by us or any Material
Subsidiary of a petition or consent seeking reorganization or relief
under any applicable federal or state law, or the consent by us or any
Material Subsidiary 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, sequestrator or other similar official of
us or any Material Subsidiary or of any substantial part of our or any
Material Subsidiary's consolidated assets, or the making by us or any
Material Subsidiary of an assignment for the benefit of creditors under
any such law, or the admission by us or any Material Subsidiary in
writing of our or any Material Subsidiary's inability to pay debts
generally as they become due or the taking of corporate action by us or
any Material Subsidiary in furtherance of any such action. (Section 5.1)
If any Event of Default, other than those specified in the last two clauses
above, occurs and is continuing, the trustee, by written notice to us, or the
holders of at least 25% in aggregate principal amount of the notes then
outstanding, by notice to the trustee and us, 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 the last two clauses 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 us, any Subsidiary Guarantors and the
trustee, may rescind such declaration if:
- we or any Subsidiary Guarantor has paid or deposited with the trustee a
sum sufficient to pay
(1) 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,
(2) all overdue interest on all notes,
(3) 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
(4) 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 sub-
clause (2) or (3);
- the rescission would not conflict with any judgment or decree of a court
of competent jurisdiction; and
- all Events of Default, other than the nonpayment of principal of,
premium, if any, on or interest on the notes that has become due solely
by such declaration of acceleration, have been cured or waived. (Section
5.2)
No holder 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 or a continuing Event of Default,
- 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,
- the trustee has failed to institute such proceeding within 60 days after
receipt of such notice, and
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- 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. (Section 5.7)
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, premium or
interest on a note on or after the respective due dates expressed in the note.
(Section 5.8)
During the existence of an Event of Default, the trustee will be required
to exercise the 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.
(Sections 6.1 and 6.2) 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. (Section 5.12)
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, premium 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. (Section 6.13)
We will be required to deliver to the trustee annual and quarterly
statements regarding compliance with the indenture. We also will 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. (Section 10.8)
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Legal Defeasance
As long as we take steps to make sure that you receive all of your payments
under the notes and are able to transfer the notes, we can elect to legally
release ourselves and any of our Subsidiaries that may guarantee the notes from
any obligations on the notes (called "legal defeasance") other than:
- the, rights of holders of outstanding notes to receive payments in
respect of the principal of, premium on and interest on the notes when
these payments are due;
- our obligation to replace any temporary notes, register the transfer or
exchange of any notes, replace mutilated, lost or stolen notes,
compensate and reimburse the trustee, remove and appoint a successor
trustee, maintain an office or agency for payments in respect of the
notes and qualify the indenture under the Trust Indenture Act;
- the rights, powers, trusts, duties and immunities of the trustee, and
- the legal defeasance provisions of the indenture. (Section 12.2)
In order to accomplish legal defeasance, the following must occur:
- We or any Subsidiary Guarantor must irrevocably deposit with the trustee
cash and/or U.S. government and/or U.S. government agency securities that
will generate enough cash to make interest, principal and any other
payments on the notes on their various due dates.
- Such defeasance shall not cause the trustee to have a conflict of
interest.
- There must be a change in current U.S. federal tax law or an IRS ruling
that lets us make that deposit without causing you to be taxed on the
notes any differently than if we did not make the deposit and just repaid
the notes ourselves. Under current U.S. federal tax law, the deposit and
our legal defeasance from the notes
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would be treated as though we took back your notes and gave you your
share of the cash and/or securities deposited in trust. In that event,
you could recognize gain or loss on the notes you give back to us.
- We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change described above and that all of the conditions to
legal defeasance in the indenture have been fulfilled.
We will not be able to achieve legal defeasance if there is a continuing
Default or Event of Default under the indenture or if doing so would violate any
other material agreement to which we are a party. (Section 12.4) If we ever did
accomplish legal defeasance as described above, you would have to rely solely on
the trust deposit for repayment of the notes. You could not look to us for
repayment in the unlikely event of any shortfall.
Covenant Defeasance
Under current federal tax law, we can make the same type of deposit
described above and be released from covenants relating to the notes. The
release from these covenants is called covenant defeasance. In that event, you
would lose the protection of these covenants but would gain the protection of
having money and/or securities set aside in trust to repay the notes. In order
to achieve covenant defeasance, we must:
- Deposit in trust for the benefit of the holders of notes cash and/or U.S.
government or U.S. government agency securities that will generate enough
cash to make interest, principal and any other payments on the notes on
their various due dates.
- Deliver to the trustee a legal opinion of our counsel confirming that
under current U.S. federal tax law we may make that deposit without
causing you to be taxed on the notes any differently than if we did not
make the deposit and just repaid the notes ourselves. The opinion also
must state that all of the conditions to covenant defeasance in the
indenture have been fulfilled.
Further, such defeasance shall not cause the trustee to have a conflict of
interest.
We will not be able to achieve covenant defeasance if there is a continuing
Default or Event of Default under the indenture or if doing so would violate any
other material agreements to which we are a party. The indenture describes the
covenants we may fail to comply with without causing an Event of Default if we
accomplish covenant defeasance. (Sections 12.3 and 12.4)
If we elect to make a deposit resulting in covenant defeasance, the amount
of money and/or U.S. government or U.S. government agency securities deposited
in trust would be sufficient to pay amounts due on the notes at the time of
their maturity. However, if the maturity of the notes is accelerated due to the
occurrence of an Event of Default, the amount in trust may not be sufficient to
pay all amounts due on the notes. We would remain liable for the shortfall as
described in the indenture.
SATISFACTION AND DISCHARGE OF THE INDENTURE
We will have no further obligations under the indenture as to all
outstanding notes, other than surviving rights of registration of transfers of
the notes, when:
- all notes have been delivered to the trustee for cancellation, except
lost, stolen or destroyed notes that we have replaced or paid or notes
for which we have deposited in trust money and/or U.S. government
obligations; or all notes have become due and payable or, within one
year, will become due and payable or be redeemed and we have deposited
with the trustee funds sufficient to pay interest, principal and any
other payments on all outstanding notes on their various due dates;
- we have paid all other sums then due and payable under the indenture by
us; and
- we have delivered to the trustee an officers' certificate and an opinion
of counsel, which, taken together, state that we have complied with all
conditions precedent under the indenture relating to the satisfaction and
discharge of the indenture. (Section 4.1)
AMENDMENT AND WAIVER
We generally may amend the indenture with the written consent of the
holders of at least a
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majority in aggregate principal amount of the outstanding notes. The holders of
at least a majority in aggregate principal amount also may waive our compliance
with most covenants. (Section 10.20) We must, however, obtain the consent of
each holder of notes affected by an amendment or waiver which does any of the
following:
- reduces the principal amount of notes that must consent to an amendment
or waiver;
- reduces the principal of or changes 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";
- reduces the rate of or changes the time for payment of interest on any
note;
- waives a Default or Event of Default in the payment of principal of,
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;
- makes any note payable in money other than that stated in the notes;
- makes 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, premium, if any, on or interest on the notes;
- waives 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";
- reduces the relative ranking of the notes or any Subsidiary Guarantees;
or
- makes any change in the foregoing amendment and waiver provisions.
(Section 9.2)
In addition, without the consent of any holder of notes we and the trustee
may amend the indenture:
- 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 our 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;
- to add any additional Events of Default;
- to appoint a successor trustee;
- to secure the notes; or
- to comply with requirements of the SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act. (Section
9.1)
We may not change the indenture in a manner that would adversely affect the
rights of the holders of Senior Indebtedness under the subordination provisions
described under "-- Subordination" or the holders of Guarantor Senior
Indebtedness under the subordination provisions described under "-- Subsidiary
Guarantees of Notes," unless we obtain the consent of such holders that are
required to consent to such change pursuant to the agreements evidencing such
Senior Indebtedness or Guarantor Senior Indebtedness. (Section 9.8)
CONCERNING THE TRUSTEE
State Street Bank and Trust Company will serve as trustee under the
indenture. State Street Bank and Trust Company currently serves as trustee under
the indentures for our 9 1/2% Senior Subordinated Notes due 2006 and our 9 1/2%
Senior Subordinated Notes due 2008. Such bank also maintains normal banking
relationships with us and may perform services for and transact other business
with us from time to time in the ordinary course of business.
The indenture and the provisions of the Trust Indenture Act incorporated by
reference into the indenture will contain limitations on the rights of the
trustee, should it become a creditor of ours, to obtain payment of claims or to
realize on certain property received by it in respect of any such
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claims, as security or otherwise. The indenture will permit the trustee to
engage in other transactions. If the trustee acquires any conflicting interest
as defined in the Trust Indenture Act it must eliminate such conflict or resign.
(Sections 6.8 and 6.9)
GOVERNING LAW
The Indenture, the notes and any Subsidiary Guarantees will be governed by
the laws of the State of New York. (Section 15.10)
BOOK-ENTRY, DELIVERY AND FORM
Any notes issued will be issued in the form of one or more fully registered
global certificates. Each global certificate will be deposited with the trustee
who will hold the global certificate for The Depository Trust Company ("DTC").
Each global certificate will be registered in the name of DTC or its nominee.
Except as set forth below, a global certificate may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. (Section 3.6)
DTC has advised us as follows: It is a limited-purpose trust company which
was created to hold securities for its participating organizations and to
facilitate the clearance and settlement of transactions in such securities
between its participants through electronic book-entry changes in accounts of
its participants. Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC'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. Persons who are
not participants may beneficially own securities held by DTC only through
participants or indirect participants.
DTC has also advised that pursuant to procedures established by it,
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 DTC, with respect to participants' interests, the participants and
the indirect participants.
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 DTC or its nominee is the registered owner of a global
certificate, DTC 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 a 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. (Section 3.6)
Neither us, the trustee, the paying agent nor the registrar of the notes
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 DTC or its nominee will be made by us, either directly or through a
paying agent, to DTC or its nominee as the registered owner of such global
certificate. Under the terms of the indenture, we and the trustee will treat the
persons in whose names the notes are registered as the owners of those notes for
the purpose of receiving payments of principal and interest on those notes and
for all other purposes whatsoever, (Section 3.8) Therefore, neither us, 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. DTC has advised us 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 DTC. 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 cast with securities held for the accounts of customers
in bearer form or registered in "street name" and
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will be the responsibility of such participants or indirect participants.
As long as the notes are represented by a global certificate, DTC'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 DTC in accordance
with its procedures on a form required by DTC and provided to participants. In
order to ensure that DTC'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 DTC of its desire to exercise a
right to repayment. Different firms have different 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 cutoff time by which such
an instruction must be given in order for timely notice to be delivered to DTC.
We will not be liable for any delay in delivery of notices of the exercise
of the option to elect repayment.
CERTIFICATED NOTES
We will issue notes in definitive form in exchange for a global certificate
if, and only if, either:
- DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by us within 90 days; or
- an Event of Default has occurred and is continuing and the notes
registrar has received a request from DTC 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 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 denomination of $10 and integral multiples thereof and will be
issued in registered form only, without coupons. (Section 3.6)
MATERIAL DEFINITIONS
Set forth below are definitions of some of the terms used in the indenture
which we believe are material to an understanding of the indenture.
"Acquired Indebtedness" means Indebtedness of a Person:
- assumed in connection with an acquisition of properties or assets from
such Person; or
- outstanding at the time such Person becomes a Subsidiary of any other
Person.
Acquired Indebtedness does not include Indebtedness incurred in connection
with, or in contemplation of, such acquisition or such Person becoming 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, the sum of:
- Discounted future net cash flows from our and our Restricted
Subsidiaries' proved oil and gas reserves 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 our most recently completed
fiscal year. Discounted future net cash flows will be increased pursuant
to clauses (1) and (2) below and decreased pursuant to clauses (3) and
(4) below, as of the date of determination, by the estimated discounted
future net cash flows, calculated in accordance with SEC guidelines but
before any state or federal income
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taxes and utilizing the prices utilized in such year-end reserve report,
from:
(1) estimated proved oil and gas reserves acquired since the date of such
year-end reserve report;
(2) 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;
(3) estimated proved oil and gas reserves produced or disposed of since
the date of such year-end reserve report; and
(4) 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 the case of each of the determinations made pursuant to clauses (1)
through (4) above, such increases and decreases shall be as estimated by our
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 cash flows utilized for purposes of this clause shall be confirmed in
writing by a nationally recognized firm of independent petroleum engineers.
- The capitalized costs that are attributable to our and our Restricted
Subsidiaries' oil and gas properties to which no proved oil and gas
reserves are attributable, based on our books and records as of a date no
earlier than the date of our latest annual or quarterly financial
statements.
- The Net Working Capital on a date no earlier than the date of our latest
annual or quarterly financial statements.
- The greater of:
(1) the net book value on a date no earlier than the date of our latest
annual or quarterly financial statements, or
(2) the appraised value, as estimated by independent appraisers, of our
or our Restricted Subsidiaries' other tangible assets, including,
without duplication, Investments in unconsolidated Restricted
Subsidiaries, as of the date no earlier than the date of our latest
audited financial statements.
Minus the sum of:
- Minority interests, other than a minority interest in a Finance Person.
- Any of our or our Restricted Subsidiaries' net gas balancing liabilities
reflected in our latest audited financial statements.
- To the extent included in the first clause of this definition, the
discounted future net cash flows, 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 our and our Restricted Subsidiaries' obligations with respect to
Volumetric Production Payments on the schedules specified with respect
thereto.
- The discounted future net cash flows, 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 cash flows specified in the first
clause of this definition, would be necessary to fully satisfy our and
our Restricted Subsidiaries' payment obligations 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
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Guarantee, of such Subsidiary Guarantor at such date.
"Affiliate" of any specified Person means:
- any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person; or
- any other Person who is a director or executive officer of:
(1) such specified Person; or
(2) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person.
For the purposes of this definition, "control," 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 us or any of our 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:
- any Capital Stock of any Restricted Subsidiary held by us 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;
- all or substantially all of our or any of our Restricted Subsidiaries'
properties and assets; or
- any other of our or any of our Restricted Subsidiaries' properties or
assets other than:
(1) a disposition of hydrocarbons or other mineral products, inventory,
accounts receivable, cash, Cash Equivalents or other property in the
ordinary course of business;
(2) any lease, abandonment, disposition, relinquishment or farm-out of
any oil and gas property in the ordinary course of business;
(3) the liquidation of property or assets received in settlement of debts
owing to us or any Restricted Subsidiary as a result of foreclosure,
perfection or enforcement of any Lien or debt, which debts were owing
to us or any Restricted Subsidiary in the ordinary course of our or
such Restricted Subsidiary's business; or
(4) 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:
- any transfer of properties or assets that is governed by, and made in
accordance with, the provisions described under "-- Material
Covenants -- Merger, Consolidation or Sale of Assets";
- any transfer of properties or assets to an Unrestricted Subsidiary, if
permitted under the "Restricted Payments" covenant of the indenture; or
- 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:
- The sum of the products of:
(1) the number of years, and any portion thereof, from the date of
determination to the date or dates of each successive scheduled
principal payment, including, without limitation, any sinking fund or
mandatory redemption payment requirements, of such Indebtedness,
multiplied by
(2) the amount of each such principal payment; by
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- 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 that do not constitute Eligible
Convertible Securities, warrants or options exercisable for, exchangeable for or
convertible into such an equity interest in such Person. Our Capital Stock
includes any Qualifying TECONS and any Eligible Convertible Securities.
"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:
- 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;
- 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;
- commercial paper with a maturity of 180 days or less issued by a
corporation that is not an Affiliate of us and is organized under the
laws of any state of the United States or the District or Columbia and
rated at least A-1 by S&P or at least P-1 by Moody's;
- repurchase obligations with a term of not more than seven days for
underlying securities of the types described in the first clause above
entered into with any commercial bank meeting the specifications of the
second clause above;
- overnight bank deposits and bankers' acceptances at any commercial bank
meeting the qualifications specified in the second clause above;
- deposits available for withdrawal on demand with any commercial bank not
meeting the qualifications specified in the second clause above but which
is organized under the laws of any country in which we or any Restricted
Subsidiary maintains an office or is engaged in the Oil and Gas Business,
provided that:
(1) all such deposits am required to be made in such accounts in the
ordinary course of business,
(2) such deposits do not at any one time exceed $5,000,000 in the
aggregate, and
(3) no funds so deposited remain on deposit in such bank for more than 30
days;
- deposits available for withdrawal on demand with any commercial bank not
meeting the qualifications specified in the second clause above but which
is a lending bank under any of our 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
- investments in money market funds substantially all of whose assets
comprise securities of the types described in any of the first five
clauses above.
"Change of Control" means the occurrence of any of the following events:
- 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 our total Voting Stock;
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<PAGE> 49
- we are merged with or into or consolidated with another Person and,
immediately after giving effect to the merger or consolidation:
(1) 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 our stockholders immediately prior to such merger or
consolidation, and
(2) 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;
- we, either individually or in conjunction with one or more Restricted
Subsidiaries, sell, assign, convey, transfer, lease or otherwise dispose
of, or the Restricted Subsidiaries sell, assign, convey, transfer, lease
or otherwise dispose of, all or substantially all of our and the
Restricted Subsidiaries' properties and assets, 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 us or a
Wholly Owned Restricted Subsidiary;
- during any consecutive two-year period, individuals who at the beginning
of such period constituted our board of directors, together with any new
directors whose election by such board of directors or whose nomination
for election by our stockholders 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
our board of directors then in office;
- our liquidation or dissolution; or
- so long as any Existing Notes are outstanding any other event
constituting a Change of Control pursuant to Indentures 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, our and our
Restricted Subsidiaries' exploration expenses 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:
- the sum of our and our Restricted Subsidiaries' 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, on a
consolidated basis, all determined in accordance with GAAP, decreased, to
the extent included in determining Consolidated Net Income, by the sum
of:
(1) the amount of deferred revenues that are amortized during such period
and are attributable to reserves that are subject to Volumetric
Production Payments, and
(2) amounts recorded in accordance with GAAP as repayments of principal
and interest pursuant to Dollar-Denominated Production Payments; to
- the sum of such Consolidated Interest Expense for such period.
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<PAGE> 50
Provided, however, that:
- the Consolidated Fixed Charge Coverage Ratio shall be calculated on the
assumption that:
(1) the Indebtedness to be incurred and all other Indebtedness incurred
after the first day of the relevant period of fiscal quarters under
the covenant described under "-- Material 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 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
(2) any acquisition or disposition by us or any Restricted Subsidiary of
any properties or assets outside the ordinary course of business, or
any repayment of any principal amount of any of our or any Restricted
Subsidiary's Indebtedness prior to the Stated Maturity thereof, in
either case since the first day of such period through and including
the date of determination, had been consummated on such first day of
such period;
- 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
"-- Material Covenants -- Incurrence of Indebtedness" and:
(1) 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
(2) which was not outstanding during the period for which the computation
is being made but which bears, at our option, a fixed or floating
rate of interest, shall be computed by applying, at our option,
either the fixed or floating rate;
- 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 under "-- Material 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,
- notwithstanding the second and third clauses 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;
- in making such calculation, Consolidated Interest Expense shall exclude
interest attributable to Dollar-Denominated Production Payments; and
- if after the first day of the period referred to in the first clause of
this definition, we have retired any Indebtedness out of the net cash
proceeds of the issue and sale of our Qualified Capital Stock 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.
For the purpose of the covenant described under "-- Material
Covenants -- Incurrence of In-
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<PAGE> 51
debtedness," if we incur Indebtedness, including Acquired Indebtedness but
excluding Permitted Indebtedness:
- on any date which is on or before March 31, 2000, we will determine our
Consolidated Fixed Charge Coverage Ratio for the full fiscal quarter or
quarters, as the case may be, commencing on April 1, 1999 and ending on
or prior to such date; and
- on any date which is after March 31, 2000, we will determine our
Consolidated Fixed Charge Coverage Ratio for the four full fiscal
quarters immediately preceding such date.
"Consolidated Income Tax Expense" means, for any period, the provision for
our and our Restricted Subsidiaries' federal, state, local and foreign income
taxes, including any state franchise taxes accounted for as income taxes in
accordance with GAAP, for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of:
- our and our Restricted Subsidiaries' interest expense for such period as
determined on a consolidated basis in accordance with GAAP, including,
without limitation, to the extent attributable to such period:
(1) any amortization of debt discount,
(2) the net cost under Interest Rate Protection Obligations, including
any amortization of discounts,
(3) the interest portion of any deferred payment obligation constituting
Indebtedness,
(4) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, and
(5) all accrued interest;
- to the extent any Indebtedness of any Person other than us or a
Restricted Subsidiary is guaranteed by us 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;
- 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 us and our Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP; and
- the aggregate amount of dividends paid, to the extent not accrued in a
prior period, or accrued on our and our Restricted Subsidiaries'
Redeemable Capital Stock, to the extent such Redeemable Capital Stock is
owned by Persons other than us or our Restricted Subsidiaries, and to the
extent such dividends are not paid in Common Stock.
The following shall not be included in the calculation of Consolidated
Interest Expense:
- fees and expenses associated with the exchange offer, consent
soliciations and related transactions in connection with the exchange of
our 9 1/2% Senior Subordinated Notes due 2008 for our then existing and
outstanding Senior Subordinated Notes, to the extent deducted in
determining consolidated net income (or loss);
- Amortization of our and our Restricted Subsidiaries' capitalized debt
issuance costs during such period;
- dividends on Qualifying TECONS; and
- non-cash interest on Eligible Convertible Securities.
"Consolidated Net Income" means, for any period, our and our Restricted
Subsidiaries' consolidated net income (or loss) for such period as determined in
accordance with GAAP, adjusted by excluding:
- net after-tax extraordinary gains or losses, less all fees and expenses
relating thereto;
- net after-tax gains or losses, less all fees and expenses relating
thereto, attributable to Asset Sales;
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<PAGE> 52
- the net income (or net loss) of any Person, other than us or any of our
Restricted Subsidiaries, in which we or any of our 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 us or any of our 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;
- net income (or net loss) of any Person combined with us of any of our
Restricted Subsidiaries on a "pooling of interests" basis attributable to
any period prior to the date of combination;
- 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;
- dividends paid on Qualifying TECONS;
- non-cash interest on Eligible Convertible Securities, to the extent
deducted in determining consolidated net income (or loss);
- Consolidated Exploration Expenses and any writedowns or impairments of
noncurrent 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; and
- for purposes of calculating the Consolidated Fixed Charge Coverage Ratio
at any time, net gains or losses on oil and natural gas price hedging
arrangements during periods ending on or prior to March 31, 2000.
"Consolidated Net Worth" means, at any date, our and our Restricted
Subsidiaries' consolidated stockholders' equity less the amount of such
stockholders' equity attributable to our and our Restricted Subsidiaries'
Redeemable Capital Stock or treasury stock, as determined in accordance with
GAAP.
"Consolidated Non-Cash Charges" means, for any period, our and our
Restricted Subsidiaries' aggregate depreciation, depletion, amortization and
other non-cash expenses reducing Consolidated Net Income for such period,
determined on a consolidated basis in accordance with GAAP, excluding any such
non-cash charge to the extent required as an accrual of or reserve for cash
charges for any future period.
"Credit Facility" means that certain Second Restated Credit Agreement among
us, certain of our Subsidiaries, Bank of America, 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 or time or the giving
of notice or both would be an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which our board of directors is required to
deliver a resolution of the board of directors under the indenture, a member of
our board of directors who does not have any material direct or indirect
financial interest other than an interest arising solely from the beneficial
ownership of our Capital Stock 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.
"Eligible Convertible Securities" means any security issued by us that:
- is subordinated in right of payment to the notes,
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<PAGE> 53
- has a final Stated Maturity at least 91 days after the final Stated
Maturity of the notes, and
- by its terms or by the terms of any security into which it is convertible
or by contract or otherwise requires no scheduled payments, including
principal, premium, interest and fees, prior to its final Stated
Maturity, other than payments payable only in shares of our Common Stock
or in options, warrants or other rights to purchase our Common Stock.
"Equity Offering" means a bona fide underwritten sale to the public of our
Common Stock 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
ours, that is declared effective by the SEC following the Issue Date.
"Event of Default" has the meaning set forth above under the caption
"-- Events of Default and Remedies."
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor act thereto.
"Exchanged Properties" means properties or assets used or useful in the Oil
and Gas Business received by us or a Restricted Subsidiary, whether directly or
indirectly through the acquisition of the Capital Stock of a Person holding such
assets so that such Person becomes our Wholly Owned Restricted Subsidiary, in
trade or as a portion of the total consideration for such other properties or
assets.
"Existing TECONS" means our Obligated Mandatorily Redeemable Convertible
Preferred Securities issued by Nuevo Financing I, a statutory business trust
wholly owned by us, on December 23, 1996, in an aggregate liquidation amount of
$115.0 million.
"Finance Person" means a Subsidiary of ours, the Common Stock of which is
owned by us, that does not engage In any activity other than:
- 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;
- the issuance of Qualifying TECONS and Common Stock and/or debt
securities; and
- 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 were
effective as of June 8, 1998.
The term "guarantee" means, as applied to any obligation:
- 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
- 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;
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, premium, if any,
on, 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 evidenc-
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<PAGE> 54
ing 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:
- Indebtedness of such Subsidiary Guarantor evidenced by its Subsidiary
Guarantee;
- 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;
- Indebtedness of such Subsidiary Guarantor to the extent incurred in
violation of the "Incurrence of Indebtedness" covenant of the indenture;
- Indebtedness of such Subsidiary Guarantor to us or any of our other
Subsidiaries or to any Affiliate of us or any Subsidiary of such
Affiliate; and
- 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:
- 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 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;
- 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;
- 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;
- all Capitalized Lease Obligations of such Person;
- 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);
- 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;
- all Redeemable Capital Stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued
dividends; and
- all obligations of such Person under or in respect of currency exchange
contracts, oil
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<PAGE> 55
or natural gas price hedging arrangements and Interest Rate Protection
Obligations.
Indebtedness shall not include either Eligible Convertible Securities or
Qualifying TECONS and Indebtedness, including guarantees thereof, relating to
Qualifying TECONS and held by a Finance Person; provided, however, Indebtedness
shall include Existing TECONS and, for purposes of the seventh clause under
"-- Events of Default and Remedies" only, debt securities issued in connection
with Eligible Convertible Securities and debt securities issued in connection
with Qualifying TECONS shall be deemed to be Indebtedness. Subject to the sixth
clause of the first sentence of this definition, neither Dollar-Denominated
Production Payments nor Volumetric Production Payments shall be deemed to be
Indebtedness.
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.
"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 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 us in such Unrestricted Subsidiary at such
time, and the designation of any Unrestricted Subsidiary as a Restricted
Subsidiary shall result in a return of an "Investment" in an amount not to
exceed the lesser of (x) the book value of the Investments previously made in
such Unrestricted Subsidiary that were treated as Restricted Payments, and (y)
the fair market value of such Unrestricted Subsidiary. "Investments" shall
exclude:
- 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;
- 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;
- bonds, notes, debentures or other securities received in compliance with
the "Asset Sales" covenant; and
- endorsements of negotiable instruments and documents for collection in
the ordinary course of business.
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<PAGE> 56
"Issue Date" means the date on which the notes were first issued under the
indenture.
"Lien" means any mortgage, charge, pledge, statutory or other, lien,
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:
- of an issuer that is not an Affiliate of us; and
- 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.
Securities meeting the requirements of the two preceding clauses shall be
treated as Liquid Securities from the date of receipt thereof until and only
until the earlier of :
- 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
- 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 we or a Restricted Subsidiary received the securities was in
compliance with the provisions of the indenture described under "-- Repurchase
at the Option or Holders -- Asset Sales," 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 cash flows from our and our Restricted
Subsidiaries' proved oil and gas reserves, calculated in accordance with the
first clause of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change:
- 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
- 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 "-- Repurchase at the Option of Holders -- Asset Sales."
"Material Subsidiary" means, at any particular time, as shown on our and
our Restricted Subsidiaries' consolidated financial statements for our most
recently completed fiscal year, any Restricted Subsidiary that, together with
its Subsidiaries:
- accounted for more than 5% of our and our Restricted Subsidiaries'
consolidated revenues for such fiscal year; or
- was the owner of more than 5% of our and our Restricted Subsidiaries'
consolidated assets at the end of such fiscal year.
"Maturity" means, with respect to any new note, the date on which any
principal of such note becomes due and payable as provided therein or in the
indenture, 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
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or 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 us or any
Restricted Subsidiary, net of:
- brokerage commissions and other fees and expenses, including fees and
expenses of legal counsel and investment banks related to such Asset
Sale;
- provisions for all taxes payable as a result of such Asset Sale;
- amounts required to be paid to any Person other than us or any Restricted
Subsidiary owning a beneficial interest in the assets subject to the
Asset Sale; and
- appropriate amounts to be provided by us 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 us 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, as set forth in our consolidated financial
statements prepared in accordance with GAAP:
- all of our and our Restricted Subsidiaries' current assets, less
- all of our and our Restricted Subsidiaries' current liabilities, except
current liabilities included in Indebtedness.
"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, entities one or more Persons to accelerate the maturity of any Specified
Senior Indebtedness.
"Non-Recourse Purchase Money Indebtedness" means:
- our and any Restricted Subsidiary's Indebtedness, other than Capital
Lease Obligations, incurred in connection with the acquisition by us 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 us or such Restricted Subsidiary in
conducting our or its operations; and
- any renewals and refinancings of such Indebtedness.
For Indebtedness described in the two preceding clauses to qualify as
Non-Recourse Purchase Money Indebtedness, the holders of such Indebtedness must
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 we nor any Restricted
Subsidiary may;
(1) be directly or indirectly liable for such Indebtedness; or
(2) provide 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 us in which we
shall provide for the registration of the notes and of transfer of the notes.
"Oil and Gas Business" means:
- the acquisition, exploration, development, operation and disposition of
interests in oil, gas and other hydrocarbon properties;
- the gathering, marketing, treating, processing, storage, selling and
transporting of any production from such interests or properties;
- any business relating to or arising from exploration for or development,
production, treatment, processing, storage, transportation or marketing
of oil, gas and other
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minerals and products produced in association therewith;
- 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 we or our Restricted Subsidiaries
participate; and
- any activity necessary, appropriate or incidental to the activities
described in the foregoing clauses 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 of our Indebtedness that is pari passu
in right of payment to the notes, including, without limitation our 9 1/2%
Senior Subordinate Notes due 2006 and our 9 1/2% Senior Subordinated Notes due
2008.
"Payment Event of Default" means any default in the payment or required
prepayment of principal of, 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:
- Indebtedness under the Credit Facility in an aggregate principal amount
at any one time outstanding not to exceed the greater of:
(1) $400,000,000, less any amounts of principal of such Indebtedness
repaid using the Net Cash Proceeds of an Asset Sale pursuant to the
covenant described under "-- Repurchase at the Option of
Holders -- Asset Sales" and any amounts of principal of such
Indebtedness that could only be refinanced pursuant to the tenth
clause of this definition; or
(2) the borrowing base thereunder,
provided, both subclauses (1) and (2) 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;
- Indebtedness under the existing notes issued under the indenture and any
Subsidiary Guarantees relating thereto or to any notes;
- Indebtedness outstanding on June 8, 1998, including, without limitation
our 9 1/2% Senior Subordinate Notes due 2006 and additional Indebtedness
permitted to be incurred pursuant to commitments existing under the OPIC
Facility on June 8, 1998;
- our and our Restricted Subsidiaries' obligations 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 we or a Restricted Subsidiary enter into in the
ordinary course of business for the purpose of protecting our or its
production against fluctuations in oil or natural gas prices;
- our Indebtedness to a Wholly Owned Restricted Subsidiary or a Finance
Person and Indebtedness of a Restricted Subsidiary to us 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, any other subsequent
transfer of any such Indebtedness except to us or a Wholly Owned
Restricted Subsidiary or Finance Person, such Indebtedness shall be
deemed,
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in each case, to be incurred and shall be treated as an incurrence for
purposes of the "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;
- in-kind obligations relating to net gas balancing positions arising in
the ordinary course of business and consistent with past practice;
- Indebtedness in respect of bid, performance or surety bonds issued for
our or any Restricted Subsidiary's account 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;
- any guarantee of Senior Indebtedness or Guarantor Senior Indebtedness,
incurred in compliance with the "Incurrence of Indebtedness" covenant, by
us or a Restricted Subsidiary;
- Non-Recourse Purchase Money Indebtedness,
- any renewals substitutions, exchanges, refinancings or replacements
(each, for purposes of this clause, a "refinancing") by us or a
Restricted Subsidiary of any Indebtedness incurred pursuant to the
provisions of the "Incurrence of Indebtedness" covenant or pursuant to
clause one, two or three of this definition, including any successive
refinancings by us or such Restricted Subsidiary, so long as:
(1) 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 us or such Restricted Subsidiary as necessary to
accomplish such refinancing, plus the amount of our or such
Restricted Subsidiary's expenses incurred in connection with such
refinancing,
(2) in the case or any refinancing of our Indebtedness 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,
(3) in the case of any refinancing of our Indebtedness pursuant to clause
one, such new Indebtedness is either Pari Passu Indebtedness or
Subordinated Indebtedness and has a final Stated Maturity at least 91
days after the final Stated Maturity of the notes, and
(4) 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;
- any additional Indebtedness in an aggregate principal amount not to
exceed $25.0 million.
"Permitted Investments" means any of the following:
- Investments in Cash Equivalents;
- Investments in us or any of our Restricted Subsidiaries;
- Investments in any amount not to exceed $10,000,000 at any one time
outstanding;
- Investments by us or any of our Restricted Subsidiaries in another
Person, if as a result of such Investment:
(1) such other Person becomes a Restricted Subsidiary, or
(2) such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all of its
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properties and assets to, us or a Restricted Subsidiary;
- 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, 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:
(1) ownership interests in oil and gas properties or gathering systems,
and
(2) 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,
general or limited partnership agreements, subscription agreements,
stock purchase agreements and other similar agreements with third
parties, including Unrestricted Subsidiaries;
- entry into any hedging arrangements in the ordinary course of business
for the purpose of protecting our or any Restricted Subsidiary's
production against fluctuations in oil or natural gas prices;
- entry into any currency exchange contract in the ordinary course of
business;
- Investments in obligations or securities received as a result of any
Asset Sale;
- advances and loans to officers, directors and employees in the ordinary
course of business;
- Investments pursuant to any agreement or obligation in effect on June 8,
1998;
- Investments in obligations or securities received in settlement of debts
owing to us or a Restricted Subsidiary as a result of bankruptcy or
insolvency proceeding or upon the foreclosure, perfection or enforcement
of any Lien in favor of us or a Restricted Subsidiary, in each case as to
debt owing to us or a Restricted Subsidiary that arose in the ordinary
course of our or any such Restricted Subsidiary's business; and
- contributions to Unrestricted Subsidiaries of our interests in 24
undeveloped federal leases offshore California, known as the COOGER
acreage, included in seven units, Bonita, Sword, Point Sal, Gato Canyon,
Lion Rock, Purisina Point and Santa Maria.
"Permitted Junior Securities" means any of our or any successor obligor's
equity securities or subordinated debt securities 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:
- Liens existing as of Juno 8, 1998, 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,
- Liens securing the notes or the Subsidiary Guarantees relating thereto;
and
- Liens in favor of us.
"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
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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, provided that, with respect to
us, Qualified Capital Stock includes, without limitation, any Qualifying TECONS
and any Eligible Convertible Securities.
"Qualifying TECONS" means preferred trust securities or similar securities
issued by a Finance Person after June 8, 1998.
"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; provided, however,
that Redeemable Capital Stock shall not include any security by virtue of the
fact that it may be exchanged or converted at the option of the holder or at our
option for our Common Stock,
"Restricted Subsidiary" means any Subsidiary of ours, whether existing on
or after the date of the indenture, unless such Subsidiary 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 Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Senior Indebtedness" means the principal of, premium, if any, on, 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 of our Indebtedness, 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:
- Indebtedness evidenced by the notes;
- our Indebtedness that is Pari Passu Indebtedness or is expressly
subordinated in right of payment to any other of our Indebtedness;
- Indebtedness that is represented by Redeemable Capital Stock,
- our Indebtedness to the extent incurred in violation of the covenant
described under "-- Material Covenants -- Incurrence of Indebtedness;"
- our Indebtedness to any of our Subsidiaries or any other Affiliate of
ours or any subsidiary of such Affiliate; and
- Indebtedness which when incurred and without regard to any election under
Section 1111(b) of the Federal Bankruptcy Code is without recourse to us.
"Specified Property Sales" means the sales of any of our and our Restricted
Subsidiaries'
- East Texas Oil and gas properties sold in January 1999 and described
under "Summary -- Recent Developments;" and
- real properties, other than our or our Restricted Subsidiaries' mineral
interests, owned on the date of the indenture and located in the Counties
of Fresno, Kern, Kings, Los Angeles, Orange, Santa Barbara, and Ventura
in the State of California.
"Specified Senior Indebtedness" means:
- all of our Senior Indebtedness in respect of the Credit Facility and any
renewals, amendments, extensions, supplements, modifications, deferrals,
refinancings, or
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replacements (each, for purposes of this definition, a "refinancing")
thereof by us, including any successive refinancings thereof by us; and
- any other Senior Indebtedness and any refinancings thereof by us 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 "-- Material
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 new 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 our Indebtedness which is expressly
subordinated in right of payment to the notes.
"Subsidiary" means, with respect to any Person:
- 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
- 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, trustees 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:
- any Subsidiary of ours that at the time of determination will be
designated an Unrestricted Subsidiary by our board of directors as
provided below; and
- any Subsidiary of an Unrestricted Subsidiary.
Our board of directors may designate any Subsidiary of ours as an
Unrestricted Subsidiary so long as:
- neither we nor any Restricted Subsidiary is directly or indirectly liable
pursuant to the terms of any Indebtedness of such Subsidiary;
- no default with respect to any Indebtedness of such Subsidiary would
permit, upon notice, lapse of time or otherwise, any holder of any of our
or any Restricted Subsidiary's other Indebtedness to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity;
- neither we nor any Restricted Subsidiary has made an Investment in such
Subsidiary unless such Investment was made pursuant to, and in accordance
with, the "Restricted
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Payments" covenant, other than Investments of the type described in the
fourth and twelfth clauses of the definition of Permitted Investment; and
- such designation shall not result in the creation or imposition of any
Lien on any of our or any Restricted Subsidiary's properties, other than
any Permitted Lien or any Lien the creation or imposition of which shall
have been in compliance with the "Liens" covenant.
With respect to the first clause of the second paragraph of this
definition, we or a Restricted Subsidiary may be liable for Indebtedness of an
Unrestricted Subsidiary if:
- 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
- the liability would be a Permitted Investment at the time of designation
of such Subsidiary as an Unrestricted Subsidiary.
Any such designation by our board of directors shall be evidenced to the
trustee by filing a board resolution with the trustee giving effect to such
designation. Our board of directors may designate any Unrestricted Subsidiary as
a Restricted Subsidiary if, immediately after giving effect to such designation:
- no Default or Event of Default shall have occurred and be continuing;
- we could incur $1.00 of additional Indebtedness, other than Permitted
Indebtedness, under the "Incurrence of Indebtedness" covenant; and
- if any of our or any of our Restricted Subsidiaries' properties or assets
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:
- 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 us; or
- 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 we, directly or indirectly,
own the remaining Capital Stock or ownership interest in such Restricted
Subsidiary and, by contract or otherwise, control the management and
business of such Restricted Subsidiary and derive the economic benefits
of ownership of such Restricted Subsidiary to substantially the same
extent as if such Restricted Subsidiary were a wholly owned Subsidiary.
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PLAN OF DISTRIBUTION
We may sell the notes:
(1) through underwriters or dealers;
(2) through agents;
(3) directly to purchasers;
(4) through remarketing firms; or
(5) through a combination of any such methods of sale.
Any such underwriter, dealer or agent may be deemed to be an underwriter
within the meaning of the Securities Act of 1933.
UNDERWRITERS OR DEALERS
If underwriters are utilized in the sale, the notes will be acquired by the
underwriters for their own account. The underwriters may sell the notes in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the notes will be subject to several
conditions set forth in an agreement between us and the underwriters. The
underwriters will be obligated to purchase all of the notes offered if any of
the notes are purchased. Any public offering price and any discounts or
concessions allowed or re-allowed or paid to dealers may be changed from time to
time. We may grant underwriters who participate in the distribution of notes an
option to purchase additional notes if they sell more notes than they purchased.
During and after an offering through underwriters, the underwriters may
purchase and sell the notes in the open market. These transactions may include
overallotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. The underwriters may
also impose a penalty bid, in which selling concessions allowed to syndicate
members or other broker-dealers for the offered notes sold for their account may
be reclaimed by the syndicate if such offered notes are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the offered notes,
which may be higher than the price that might otherwise prevail in the open
market. If commenced, these activities may be discontinued.
If we use dealers in the sale of notes, we will sell the notes to them as
principals. They may then resell those notes to the public at varying prices
determined by the dealers at the time of resale. We will include in the
prospectus supplement the names of the dealers and the terms of the transaction.
AGENTS
We may designate agents who agree to use their reasonable efforts to
solicit purchasers for the period of their appointment or to sell the notes on a
continuing basis.
DIRECT SALES
We may also sell the notes directly to one or more purchasers without using
underwriters or agents.
REMARKETING FIRMS
The securities may be re-sold to the public following their redemption or
repayment by one or more remarketing firms. Remarketing firms may act as
principals for their own accounts or as agents for us.
GENERAL INFORMATION
Underwriters, dealers, agents and remarketing firms that participate in the
distribution of the notes may be underwriters as defined in the Securities Act
of 1933, and any discounts or commissions received by them from us and any
profit on the resale of the notes by them may be treated as underwriting
discounts and commissions under the Securities Act of 1933.
Any underwriter, dealer, agent or remarketing firm will be identified and
the terms of the transaction, including their compensation, will be described in
a prospectus supplement. We may have agreements with underwriters, dealers,
agents or remarketing firms to indemnify them against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute with
respect to payments which the underwriters, dealers or agents may be required to
make. Underwriters, dealers, agents or remarketing firms, or their affiliates
may be customers of, engage in transactions with or perform services for, us or
our
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subsidiaries in the ordinary course of their business.
The notes will be new issues of securities with no established trading
market. Any underwriters to whom the notes are sold by us for public offering
and sale may make a market in such securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
any notes.
We may use agents and underwriters to solicit offers by certain
institutions to purchase the notes from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on the date stated in the prospectus
supplement. Delayed delivery contracts will be subject to only those conditions
set forth in the prospectus supplement. A commission indicated in the prospectus
supplement will be paid to underwriters and agents soliciting purchases of debt
securities pursuant to delayed delivery contracts accepted by us.
EXPERTS
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Nuevo Energy Company as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999 incorporated by reference in the prospectus and the
registration statement have been incorporated herein in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of such firm as experts in accounting and
auditing.
RESERVE ENGINEERS
The information incorporated by reference in this prospectus regarding our
quantities of oil and gas and future net cash flows and the present values
thereof from such reserves is based on estimates of such reserves and present
values prepared by Ryder Scott Company, L.P.
LEGAL MATTERS
The validity of the issuance of the securities will be passed upon for us
by our lawyers, Haynes and Boone, LLP. Counsel named in the prospectus
supplement will issue opinions about the validity of the securities for any
agents, dealers or underwriters.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 15, 2000
UP TO
$150,000,000
[NUEVO ENERGY LOGO] NUEVO ENERGY COMPANY
1021 Main, Suite 2100
Houston, Texas 77002
(800) 364-0206
9 3/8% SENIOR SUBORDINATED NOTES DUE 2010
---------------------
INVESTING IN THESE NOTES INVOLVES RISKS.
WE WILL PROVIDE SPECIFIC RISK FACTORS
IN SUPPLEMENTS TO THIS PROSPECTUS.
---------------------
Nuevo Energy Company's common stock is listed on the New York Stock
Exchange, under the symbol "NEV."
We entered into an indenture with State Street Bank and Trust Company for
the issuance of up to $300,000,000 principal amount of our 9 3/8% senior
subordinated notes. As of September 30, 2000, there was outstanding $150,000,000
of these notes. This prospectus relates to the offer and sale of the remaining
$150,000,000 of notes under the indenture.
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
---------------------
This prospectus may not be used to consummate sales of securities unless we
also furnish you with a prospectus supplement describing the final terms of the
securities offered.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated December , 2000
<PAGE> 67
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About This Prospectus....................................... F-1
Where You Can Find More Information......................... F-1
Disclosure Regarding Forward Looking Statements............. F-2
About Nuevo Energy Company.................................. F-2
Use of Proceeds............................................. F-2
Description of the Notes.................................... F-2
Plan of Distribution........................................ F-39
Experts..................................................... F-40
Legal Matters............................................... F-40
</TABLE>
i
<PAGE> 68
ABOUT THIS PROSPECTUS
In this prospectus, the words "Company," "we," "our," "ours" and "us" refer
to Nuevo Energy Company, and its subsidiaries, unless otherwise stated or the
context requires.
This prospectus is part of a registration statement that we have filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may sell the notes described in this prospectus in one or more offerings up to a
total dollar amount of $150,000,000. Any notes sold pursuant to this prospectus
will proportionately reduce the aggregate offerings under this shelf process.
This prospectus provides you with a general description of the notes we may
offer. We may also add, update or change information contained in this
prospectus through a supplement to this prospectus. You should read this
prospectus, any prospectus supplement and the information described under the
heading "Where You Can Find More Information."
We believe that we have included or incorporated by reference all
information material to investors in this prospectus, but certain details that
may be important for specific investment purposes have not been included. To see
more detail, you should read the exhibits filed with or incorporated by
reference into this registration statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file, including
the registration statement, at the SEC's public reference room located at 450
Fifth Street, N.W., Washington, D.C., 20549, or its public reference rooms
located in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for information on the operation of the public reference rooms.
Our SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov. They are located in the EDGAR database on that web site. You
may also obtain information about us from the New York Stock Exchange, where our
common stock is listed.
The SEC allows us to "incorporate by reference" information from the
documents we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we later file with the SEC will automatically update and
supersede this information. Specifically, we incorporate by reference the
documents listed below and any future filings we make with the SEC (including
any filings we make prior to the effectiveness of the registration statement)
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until the offering is terminated:
- Our Annual Report on Form 10-K for the year ended December 31, 1999;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000;
- Our Current Reports on Form 8-K filed on February 23, 2000 and March 6,
2000;
- The description of our common stock contained in the Registration
Statement on Form 8-A filed on May 15, 1990; and
- The description of our Series C Preferred Stock Purchase Rights contained
in the Registration Statement on Form 8-A filed on April 1, 1997.
This prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-46580).
You may request a copy of any of the information incorporated by reference,
at no cost, by writing or telephoning us at the following address:
Nuevo Energy Company
1021 Main, Suite 2100
Houston, Texas 77002
(800) 364-0206
Attention: Corporate Secretary
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date of those documents.
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<PAGE> 69
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference include
forward-looking statements. We can not assure you that the plans, intentions or
expectations upon which our forward-looking statements are based will occur. Our
forward-looking statements are subject to risks, uncertainties and assumptions,
including those discussed elsewhere in this prospectus and the documents that
are incorporated by reference into this prospectus. Some of these risks which
could affect our future results and could cause results to differ materially
from those expressed in our forward-looking statements include:
- the volatility of oil and gas prices;
- the uncertainty of estimates of oil and gas reserves;
- the prices of goods and services we use to explore for, develop and
produce our reserves;
- difficulties encountered during the exploration for and development and
production of oil and gas;
- the difficulties encountered in delivering oil and gas to commercial
markets;
- changes in the supply of or demand for oil and gas;
- the uncertainty of our ability to attract capital;
- changes in the extensive government regulations regarding the oil and gas
business; and
- compliance with environmental regulations.
The information contained in this prospectus and in the documents
incorporated by reference into this prospectus identify additional factors that
could affect our operating results and performance. We urge you to carefully
consider those factors.
ABOUT NUEVO ENERGY COMPANY
We are an independent oil and gas company. Our properties are concentrated
in California, where we are the largest independent producer, with properties
located both onshore and offshore. Our onshore California properties are located
primarily in the San Joaquin, Los Angeles and Ventura Basins. Our offshore
California properties are located in Santa Barbara Channel and offshore Long
Beach. We also own properties in the onshore Gulf Coast region and
internationally offshore the Republics of Congo and Ghana in West Africa and
onshore Tunisia in North Africa. Since our inception in 1990, we have expanded
our operations through a series of disciplined, low-cost acquisitions of oil and
gas properties and the subsequent exploitation and development of these
properties. We have complemented these efforts with strategic divestitures and
an opportunistic exploration program which provides exposure to prospects with
the potential to add substantially to the growth of our shareholder value.
USE OF PROCEEDS
Unless otherwise set forth in the applicable prospectus supplement,
proceeds from the sale of the notes sold by us will be used for general
corporate purposes. These purposes may include acquisitions, working capital,
capital expenditures, the repurchase of outstanding securities and the repayment
of indebtedness. Proceeds from the sale of notes may be temporarily invested in
short-term securities.
DESCRIPTION OF THE NOTES
We will issue the notes under an indenture entered into between us and
State Street Bank and Trust Company, as trustee, dated September 26, 2000. The
following description is a summary of selected provisions of the indenture and
the notes. We have not restated the indenture in its entirety. We will provide
you a copy of the indenture for the notes without charge if you request it from
us. We urge you to read the indenture because the indenture, and not this
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description, will control your rights as a holder of notes. For purposes of this
section of this prospectus, references to the "Company," "Nuevo," "we," "us,"
"our" or "ours" means Nuevo Energy Company, excluding our subsidiaries. The
definitions of some of the terms used in the following summary are set forth
below under "-- Material Definitions."
The indenture provides for the issuance of up to $300,000,000 of notes. As
of September 30, 2000 we have issued $150,000,000 principal amount of notes
under the indenture. We may issue a maximum additional principal amount of
$150,000,000 of notes. All issuances of the notes will be subject to the debt
incurrence test described under "-- Material Covenants -- Incurrence of
Indebtedness." The notes will be identical in all respects to all other notes
issued under this indenture other than the price at which we issue the notes and
the date on which we issue the notes.
PRINCIPAL, MATURITY AND INTEREST OF THE NOTES
The notes will be our general unsecured senior subordinated obligations.
The notes will mature on October 1, 2010, Interest on the notes will accrue at
the rate of 9 3/8% per annum and will be payable semiannually in arrears on
April 1 and October 1. Interest payments will be made to the person in whose
names the notes are registered at the close of business on the March 15 or
September 15 preceding the interest payment date. Interest on the notes will
accrue from the date of issuance for the first interest payment and from the
most recent interest payment date thereafter. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
Principal, interest and premium on the notes will be paid as described
under "-- Book-Entry, Delivery and Form" below.
SUBORDINATION
The payment of the principal of, and premium and interest on, the notes
will be subordinated in right of payment to the prior payment in full of Senior
Indebtedness (Section 14.1). The subordination provisions prohibit us from
making payments with respect to the notes if the events described below occur.
If triggered, the subordination provisions prohibit us from paying any amounts
with respect to the notes, including:
- payments of principal or interest;
- payments of any premium; and
- repurchases of the notes, including repurchases in connection with a
Change of Control or Asset Sale, as described under "-- Repurchase at the
Options of Holders -- Change of Control" and "-- Asset Sales."
If we:
- become subject to insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or similar case;
- liquidate, dissolve or otherwise wind-up our business; or
- make an assignment for the benefit of our creditors or marshal our assets
or liabilities;
the holders of Senior Indebtedness will be entitled to receive full payment
of all amounts owed to them prior to any payments being made to the holders
of notes. We will not be required to repay all Senior Indebtedness in full
in connection with our consolidation or merger or our liquidation or
dissolution following the disposition of all or substantially all of our
properties upon the terms described under the subheading "-- Material
Covenants -- Merger, Consolidation or Sale of Assets" as a condition to any
payments on the notes. If the trustee for the notes receives any payment
from us when the subordination provisions prohibit payment of amounts owed
on the notes, the trustee is required to return the payments to us or our
receiver or custodian for payment to holders of Senior Indebtedness. The
subordination provisions apply to payments of any nature, including
payments:
- of cash;
- of property, assets or securities; and
- by way of set-off.
The subordination provisions, however, do not prohibit the payment of
principal, interest and
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premium on the notes if the payment is made in Permitted Junior Securities.
Additionally, we may not make any payment in respect of the notes, other
than payments of Permitted Junior Securities, if a Payment Event of Default
occurs on our Specified Senior Indebtedness and the trustee receives written
notice of the default. We must resume payment in respect of the notes, including
any missed payments, when we cure or obtain a waiver of the Payment Event of
Default or it otherwise ceases to exist. We must also resume payment in respect
of the notes, including any missed payments, if we pay in full or discharge the
Specified Senior Indebtedness.
We also may not make any payment in respect of the notes, other than
payments of Permitted Junior Securities, for the period specified below
("Payment Blockage Period") if a Non-payment Event of Default occurs on our
Specified Senior Indebtedness and the trustee and we receive written notice of
the default from any holder of Specified Senior Indebtedness. The Payment
Blockage Period will commence upon the earlier of the date of receipt by the
trustee or us of such notice of the default (the "Payment Blockage Notice") and
will end on the earliest of:
- 179 days after it begins;
- the date on which the holders of Specified Senior Indebtedness notify the
trustee or us that the Non-payment Event of Default no longer exists or
that the Specified Senior Indebtedness has been discharged; and
- the date we or the trustee receives notice from the person initiating the
Payment Blockage Period that the period has been terminated.
We must resume making payments in respect of the notes after the Payment
Blockage Period ends, including any missed payments, unless we are otherwise
prohibited by the other subordination provisions of the indenture. No more than
one Payment Blockage Period may commence during any period of 360 consecutive
days. No Non-payment Event of Default that existed on the date of delivery of a
Payment Blockage Notice to the trustee can be made the basis for a subsequent
Payment Blockage Notice. (Section 14.3)
If we fail to make any payment on the notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions described above, the failure will constitute an Event of Default
under the indenture and will entitle the holders of the notes to exercise the
rights described under "-- Events of Default and Remedies." (Section 5.1)
As a result of such subordination provisions described above, in the event
of a distribution of assets upon our liquidation, receivership, reorganization
or insolvency, our creditors 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 we have paid all Senior Indebtedness 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."
SUBSIDIARY GUARANTEES OF NOTES
Currently, none of our subsidiaries guarantees the notes. However, if one
of our Restricted Subsidiaries was, in the future, to guarantee or secure any of
our Pari Passu Indebtedness or Subordinated Indebtedness, we would be required
to cause it to be bound by the terms of the indenture and to unconditionally
guarantee the performance of our obligations under the indenture and the notes.
(Sections 10.13 and 13.1)
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. (Section 13.4)
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<PAGE> 72
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 us
or another Subsidiary Guarantor without limitation, except to the extent any
such transaction is subject to the "Merger, Consolidation or Sale or 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 us or another Subsidiary Guarantor, whether or not Affiliated
with the Subsidiary Guarantor, provided that:
- 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
- such transaction does not violate any of the covenants described under
the heading "-- Material Covenants" or result in a Default or Event of
Default immediately thereafter that is continuing. (Section 13.2)
Upon the sale or other disposition, by merger or otherwise, of a Subsidiary
Guarantor of all or substantially all of its assets to a Person other than us or
another Subsidiary Guarantor and pursuant to a transaction that is otherwise in
compliance with the 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. 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, our or our
Restricted Subsidiaries' other Indebtedness 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 our or our Restricted
Subsidiaries' other Indebtedness, excluding any Senior Indebtedness, shall also
terminate. (Section 13.3)
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. (Section 13.8)
REDEMPTION AT THE OPTION OF NUEVO
We may not redeem the notes at our option prior to October 1, 2005.
Thereafter, we may redeem the notes at our option, in whole or in part, at the
redemption prices expressed as percentages of principal amount set forth below.
If we redeem the notes at our option, we must also pay interest accrued and
unpaid to the applicable redemption date. The redemption prices during the
twelve-month period beginning on October 1 of the years indicated are set forth
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2005.............................. 104.6875%
2006.............................. 103.1250%
2007.............................. 101.5625%
2008 and thereafter............... 100.0000%
</TABLE>
In addition, prior to October 1, 2003 we may redeem up to 33 1/3% of the
aggregate principal amount of the notes originally issued at a redemption price
of 109.375% of the principal amount, plus accrued and unpaid interest to the
date of redemption, with the net proceeds of one or more Equity Offerings. We
may not cause a redemption from the proceeds of the Equity Offering unless:
- at least 66 2/3% of the aggregate principal amount of the notes
originally issued under the indenture at any time prior to such
redemption remain outstanding after the redemption; and
- the redemption occurs within 90 days after the closing of the Equity
Offering. (Section 11.1)
If we redeem less than all of the notes, selection of notes for redemption
will be made by the trustee on a pro rata basis. We will not, however, redeem
notes in principal amounts of less than $1,000. (Section 11.4) We will mail
notice of a redemption at least 30 and not more
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<PAGE> 73
than 60 days before the redemption date. The notice will describe the amount of
notes being redeemed, if less than the entire principal amount. (Section 11.5)
Interest will cease to accrue on notes which are redeemed on the redemption
date. (Section 11.7)
MANDATORY REDEMPTION
We will not be required to make mandatory redemption or sinking fund
payments with. respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, we will be obligated to make an offer to
purchase all of the outstanding notes. The purchase price we are required to
offer is 101% of the aggregate principal amount plus accrued and unpaid interest
to the date of purchase. We are required to purchase all notes tendered under
the offer which are not withdrawn.
In order to effect a Change of Control offer, we must mail a notice of the
Change of Control to the trustee and each holder of notes no later than 30 days
after the Change of Control occurs. We are obligated to close the purchase of
notes tendered under the Change of Control offer no less than 30 and no more
than 60 days after the notice is mailed. The notice will describe the Change of
Control and the procedures that must be followed to participate in the offer.
Our bank credit facility states that events which constitute a Change of
Control constitute a default under the bank credit facility. In addition, our
bank credit facility prohibits the repurchase of the notes. Future agreements
relating to our Senior Indebtedness may contain similar provisions. In the event
a Change of Control occurs at a time when we are prohibited from purchasing
notes, we could seek the consent of our lenders to the purchase of notes or
could attempt to refinance the borrowings that contain a prohibition. If we do
not obtain a consent or repay the borrowings, we will be prohibited from
purchasing notes, which will constitute an Event of Default under the Indenture.
A default under the indenture for the notes will also be a default under the
bank credit facility and may be a default under other current and future
agreements to which we are or may become a party. In such circumstances, the
subordination provisions in the indenture may prevent payments to the holders of
notes required by the Change of Control.
We will not be required to make a Change of Control offer 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 us and purchases the notes properly tendered and
not withdrawn. (Section 10.16)
Asset Sales
We may not, and may not permit our Restricted Subsidiaries to, engage in
any Asset Sale unless the consideration received equals the fair market value of
the assets and properties sold or otherwise disposed of as determined by our
board of directors, and the consideration is either:
- cash, Cash Equivalents, Liquid Securities or Exchanged Properties
("Permitted Consideration"); or
- the property or assets received that do not constitute Permitted
Consideration have an aggregate fair market value of no more than 10.0%
of our Adjusted Consolidated Net Tangible Assets.
If we do not invest the Net Cash Proceeds of Asset Sales which occur after
the date of the indenture in properties and assets that will be used in the Oil
and Gas Business within 365 days after the closing of the Asset Sale, we must
either:
- repay Indebtedness under the Credit Facility;
- repay or purchase other Indebtedness (other than Subordinated
Indebtedness or Pari Passu Indebtedness) of ourself or a Restricted
Subsidiary, provided that any related loan commitment is permanently
reduced by the amount of such Indebtedness repaid; or
- offer to repurchase notes as described below.
The amount of Net Cash Proceeds from all Asset Sales which occur after the
date of the indenture not used for one of the purposes
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<PAGE> 74
described in this paragraph will constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds is equal to or more than $10
million:
- we must make an Offer to purchase the notes and any outstanding Pari
Passu Indebtedness required to be repurchased in connection with an Asset
Sale, provided that the amount of the Pari Passu Indebtedness repurchased
is permanently reduced;
- we must make an offer to purchase notes in the principal amount
calculated by multiplying the Excess Proceeds 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 plus any Pari Passu Indebtedness that we must offer to
repurchase;
- the offer price for the notes will be payable in cash in an amount equal
to 100% of the principal amount of the notes tendered, plus accrued and
unpaid interest to the date of payment; and
- if more notes are tendered than we have Excess Proceeds to purchase, we
will pro rate the notes tendered.
If the amount of notes tendered is less than the amount of notes we offered
to purchase, we may use the Excess Proceeds not used to repurchase notes for
general corporate purposes. The use of Excess Proceeds for general corporate
purposes must comply with the other provisions of the indenture, including the
covenant described under "-- Material Covenants -- Restricted Payments."
After we make an Excess Proceeds offer as described above, the amount of
Excess Proceeds will be reset to zero. We will not permit any of our Restricted
Subsidiaries to be a party to any agreement that would place any restriction on
our right to make an offer to repurchase notes following an Asset Sale. (Section
10.17)
Securities Law Compliance
We will comply with the requirements of Rule 14e-1 under the Securities
Exchange Act of 1934 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 or Asset Sale. These
rules require that we keep the offer open for 20 business days. They also
require that we notify holders of notes of changes in the offer and extend the
offer for specified time periods if we amend the offer. If the provisions of any
securities laws or regulations conflict with the provisions in the indenture
relating to a Change of Control or Asset Sale offer, we will comply with the
applicable securities laws and regulations and will not be deemed to have
breached our obligations under the indenture.
MATERIAL COVENANTS
Ownership of Capital Stock
We may not permit any Restricted Subsidiary to issue any Capital Stock
other than to us or a Wholly Owned Restricted Subsidiary. Also, we may not
permit any Person other than us or a Wholly Owned Restricted Subsidiary to own
any Capital Stock of a Restricted Subsidiary, except for:
- directors' qualifying shares;
- Capital Stock of a Restricted Subsidiary organized in a foreign
jurisdiction required to be owned by the government of the foreign
jurisdiction or citizens of the foreign jurisdiction in order for the
Restricted Subsidiary to transact business in the foreign jurisdiction;
- a sale of all or substantially all of the Capital Stock of a Restricted
Subsidiary effected in accordance with the "Asset Sales" covenant;
- Qualifying TECONS; and
- the Capital Stock of a Restricted Subsidiary owned by a Person at the
time the Restricted Subsidiary became a Restricted Subsidiary or which is
acquired by the Person in connection with the formation of the Restricted
Subsidiary.
The Capital Stock owned by us or another Restricted Subsidiary will be
treated as an Investment for purposes of the "Restricted Payments" covenant, if
the amount of such Capital Stock
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represents less than a majority of the Voting Stock of such Restricted
Subsidiary. (Section 10.14)
Restricted Payments
The indenture will define the following as Restricted Payments if done by
us or any of our Restricted Subsidiaries:
- the declaration or payment of any dividend or distribution on our Capital
Stock, including Eligible Convertible Securities and Qualifying TECONS,
other than dividends or distributions payable solely in shares of our
Qualified Capital Stock or in options, warrants or other rights to
purchase our Qualified Capital Stock;
- the purchase or acquisition of our Capital Stock, including Eligible
Convertible Securities and Qualifying TECONS, or that of our Affiliates,
other than Capital Stock issued by a Wholly Owned Restricted Subsidiary,
or any options, warrants or other rights to acquire such Capital Stock;
- making any principal payment on, or repurchase or other acquisition of,
any Subordinated Indebtedness prior to any scheduled principal payment,
scheduled sinking fund payment or maturity, except using the Excess
Proceeds remaining after compliance with the provisions described under
"-- Repurchase at the Option of Holders -- Asset Sales," and to the
extent required by the indenture or other agreement or instrument
pursuant to which such Subordinated Indebtedness was issued;
- the declaration or payment of any dividend or other distribution on
shares of Capital Stock of any Restricted Subsidiary, other than to us or
any Wholly Owned Restricted Subsidiary, or the purchase, redemption or
other acquisition or retirement of any Capital Stock of any Restricted
Subsidiary or any options, warrants or other rights to acquire any such
Capital Stock, other than for Capital Stock held by us or any Wholly
Owned Restricted Subsidiary; or
- making of any Investment, other than any Permitted Investment.
We may not make a Restricted Payment, unless at the time of and after
giving effect to the proposed Restricted Payment:
- no Default or Event of Default shall have occurred and be continuing,
- we could incur $1.00 of additional Indebtedness, other than Permitted
Indebtedness, in accordance with the covenant described under
"-- Incurrence of Indebtedness"; and
- 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:
(1) 50% of our aggregate Consolidated Net Income accrued on a cumulative
basis during the period beginning on July 1, 2000 and ending on the
last day of our 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 or assets other than cash, received after the date of the
indenture by us as capital contributions to us, other than from any
Restricted Subsidiary; plus
(3) the aggregate net cash proceeds or the fair market value of any
property or assets other than cash, received by us after the date of
the indenture from the issuance or sale, other than to any of our
Restricted Subsidiaries, of our Qualified Capital Stock or any
option, warrants or rights to purchase our Qualified Capital Stock;
plus
(4) the aggregate net cash proceeds received after the date of the
indenture by us, other than from any of our Restricted Subsidiaries,
upon the exercise of any options, warrants or rights to purchase our
Qualified Capital Stock; plus
(5) the aggregate net cash proceeds received after the date of the
indenture by us from the issuance or sale, other than to any of our
Restricted Subsidi-
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aries, of debt securities or shares of Redeemable Capital Stock that
have been converted into or exchanged for our Qualified Capital
Stock, together with the aggregate cash received by us at the time of
such conversion or exchange; plus
(6) the aggregate net cash proceeds or the fair market value of any
property or assets received after the date of the indenture by us or
our Restricted Subsidiaries, computed on a consolidated basis,
constituting a return of capital on an Investment, other than a
Permitted Investment, made by us or any of our Restricted
Subsidiaries after the date of the indenture; plus
(7) $25.0 million.
However, we and our 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 the first clause below, and,
in the case of the sixth clause below, we could incur $1.00 of additional
Indebtedness, excluding Permitted Indebtedness, in accordance with the covenant
described under "-- Incurrence of Indebtedness":
- the payment of any dividend on any of our or any Restricted Subsidiary's
Capital Stock within 60 days after the date of declaration thereof, if at
such declaration date such declaration complied with the covenant, and
such payment shall be deemed to have been paid on such date of
declaration for purposes of making any calculation under this covenant;
- the repurchase or other acquisition or retirement of any shares of our or
of any of our Restricted Subsidiaries' Capital Stock, in exchange for, or
out of the aggregate net cash proceeds of, a substantially concurrent
issue and sale of our Qualified Capital Stock, other than a sale to a
Restricted Subsidiary;
- the repurchase 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 of our Qualified Capital Stock,
other than to a Restricted Subsidiary;
- the purchase 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:
(1) 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, 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 us as necessary to
accomplish such refinancing, plus the amount of our expenses incurred
in connection with such refinancing,
(2) such new Indebtedness is subordinated to the notes at least to the
same extent as such Indebtedness so purchased, acquired or retired,
(3) such new Indebtedness has an Average Life to Stated Maturity that is
longer than the Average Life to Stated Maturity of the notes, and
(4) 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;
- the repurchase or other acquisition or retirement for value of any of our
or our Subsidiaries' Qualified Capital Stock held by any of our or our
Subsidiaries' current or former officers, directors or employees
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pursuant to the terms of agreements, including employment agreements, or
plans approved by our board of directors, including any such repurchase,
acquisition or retirement 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,
acquisitions and retirements shall not exceed the sum of:
(1) $1.0 million in any twelve-month period, and
(2) the aggregate net proceeds, if any, received by us during such
twelve-month period from any issuance of such Qualified Capital Stock
pursuant to such agreements or plans; and
- the repurchase or other acquisition of our Qualified Capital Stock in an
amount not to exceed 50% of the net after-tax gain from Specified
Property Sales, less the aggregate purchase price of Qualified Capital
Stock purchased by the Company and its Restricted Subsidiaries since June
8, 1998.
The actions described in the first clause of this paragraph are Restricted
Payments that will be permitted to be taken in accordance with this paragraph
but shall reduce the amount that would otherwise be available for Restricted
Payments. The actions described in the second through the sixth clauses above
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph and will not reduce the amount that would otherwise be
available for Restricted Payments.
We or any of our Restricted Subsidiaries may make a Restricted Payment, if
at the time we first incurred a commitment for the Restricted Payment the
Restricted Payment could have been made, if all commitments incurred and
outstanding are treated as if they were Restricted Payments expended by us or a
Restricted Subsidiary at the time the commitments were incurred, except that
commitments incurred and outstanding which are treated as a Restricted Payment
and which are ultimately not made shall no longer be treated as a Restricted
Payment expended by us; 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 we must be able to incur $1.00 of additional Indebtedness, other
than Permitted Indebtedness, in accordance with the "Incurrence of Indebtedness"
covenant. (Section 10.10)
Incurrence of Indebtedness
We may not, and may not permit any of our 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. (Section 10.12)
Liens
We may not, and may 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 our or any Restricted Subsidiary's
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:
- 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
- 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.
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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 and was
not created, incurred or assumed in contemplation of such transaction. (Section
10.15)
Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries
We may not, and may 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:
- pay dividends, in cash or otherwise, or make any other distributions on
or in respect of its Capital Stock to us or any other Restricted
Subsidiary;
- pay any Indebtedness owed to us or any other Restricted Subsidiary;
- make an Investment in us or any other Restricted Subsidiary; or
- transfer any of its properties or assets to us or any other Restricted
Subsidiary.
However, with respect to the fourth clause of this paragraph only,
- our Restricted Subsidiaries may have 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
- our Restricted Subsidiaries may have customary restrictions contained in
asset sale agreements limiting the transfer of such assets pending the
closing of such sale.
In addition, the indenture will not prohibit the following encumbrances and
restrictions which exist pursuant to:
- the indenture, the Credit Facility or any other agreement in effect as of
the date of the indenture;
- any agreement or other instrument of a Person acquired by us or any
Restricted Subsidiary in existence at the time of such acquisition which
was not created in contemplation of the acquisition 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;
- customary restrictions in leases and licenses relating to the property
covered thereby and entered into in the ordinary course of business; or
- any agreement that extends, renews, refinances or replaces the agreements
containing the foregoing restrictions, if the terms and conditions of
those restrictions are not materially less favorable to the holders of
the notes than those under or pursuant to the agreements so extended,
renewed, refinanced or replaced. (Section 10.19)
Limitation on Layering Debt
We may not have any Indebtedness, including Acquired Indebtedness and
Permitted Indebtedness, that is subordinated in right of payment to Senior
Indebtedness, unless such Indebtedness also ranks equal with, or subordinated in
right of payment to, the notes pursuant to subordination provisions
substantially similar to those applicable to the notes. (Section 10.11)
Merger, Consolidation or Sale of Assets
We may 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 our and our
Restricted Subsidiaries' properties and assets on a consolidated basis to any
person or group of Affiliated Persons, and we may not permit any of our
Restricted Subsidiaries to enter into any such transaction or series of related
transactions if such transaction or series of related transactions would result
in such a disposition of all or substantially all of our and our Restricted
Subsidiaries' properties and assets on a consolidated basis, unless at the time
and after giving effect thereto:
- either:
(1) if the transaction is a merger or consolidation, we are the surviving
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Person of the merger or consolidation, or
(2) the Person formed by the consolidation or into which we are merged or
to which our or our Restricted Subsidiaries' properties and assets
are disposed of (referred to as the "Surviving Entity") is a
corporation organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia and,
in either case, expressly assumes by a supplemental indenture to the
indenture executed and delivered to the trustee, in form satisfactory
to the trustee, all of our obligations under the notes and the
indenture and the indenture remains in effect;
- immediately after giving effect to the transaction or series of
transactions on a pro forma basis and treating any Indebtedness not
previously an obligation of ours or our Restricted Subsidiaries in
connection with or as a result of such transaction as having been
incurred at the time of the transaction or series of transactions, no
Default or Event of Default shall have occurred and be continuing;
- except in the case of the consolidation or merger of any Restricted
Subsidiary with or into us, immediately after giving effect to the
transaction or series of transactions on a pro forma basis, our or the
Surviving Entity's Consolidated Net Worth is at least equal to our
Consolidated Net Worth immediately before such transaction or
transactions;
- except in the case of our consolidation or merger with or into a Wholly
Owned Restricted Subsidiary or any Restricted Subsidiary with or into us
or any of our Wholly Owned Restricted Subsidiaries, immediately after
giving effect to the transaction or transactions on a pro forma basis
assuming that the transaction or transactions occurred on the first day
of the applicable period under the "Incurrence of Indebtedness" covenant
ending immediately prior to the consummation of the transaction or
transactions, with the appropriate adjustments with respect to the
transaction or transactions being included in the pro forma calculation,
we or the Surviving Entity could incur $1.00 of additional Indebtedness
other than Permitted Indebtedness pursuant to such covenant;
- if any of our or our Restricted Subsidiaries' properties or assets would
upon the 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; and
- if we are not the continuing obligor under the Indenture, then any
Subsidiary Guarantor, unless it is the Surviving Entity, shall have
confirmed that its Subsidiary Guarantee will continue to apply following
the transaction or transactions.
If we are not the continuing or surviving corporation following any of the
foregoing transaction or transactions, the Surviving Entity shall be substituted
for us under the indenture with the same effect as if the Surviving Entity had
been named as Nuevo therein, and thereafter we will be discharged from all
obligations and covenants under the indenture and the notes, except in the case
of a lease. (Article VIII)
Transactions with Affiliates
We may not, and may not permit any of our Restricted Subsidiaries to,
directly or indirectly, engage in any transaction or series of related
transactions with any of our Affiliates, other than us or a Restricted
Subsidiary, unless:
- such transaction or series of related transactions is on terms that are
no less favorable to us 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; and
- with respect to a transaction or series of related transactions involving
payments in excess of $1.0 million in the aggregate, we deliver an
officers' certificate to the trustee certifying that such transaction
complies with the foregoing clause.
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In addition, if the transaction or series of related transactions involves
payments in excess of $5.0 million in the aggregate, the officers' certificate
also must state that such transaction or series of related transactions has been
approved by a majority of our Disinterested Directors. If the transaction or
series of related transactions involves payments of $25.0 million or more in the
aggregate, we must also 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 us or our Restricted Subsidiary.
The foregoing restriction shall not apply to:
- the provision of services and payments under any of the existing
agreements with Torch Energy Advisors Incorporated or its subsidiaries so
long as each of the agreements, including any modifications or amendments
entered into on or after the date of the indenture, has been approved by
a majority of our Disinterested Directors;
- loans or advances to our or our Restricted Subsidiaries' officers,
directors and employees made in the ordinary course of business and
consistent with past practices in an aggregate amount not to exceed
$3,000,000 outstanding at any one time;
- the payment of reasonable and customary regular fees to our or our
Restricted Subsidiaries' directors who are not our employees or employees
of our Affiliates;
- our employee compensation and other benefit arrangements;
- indemnities of our and any Subsidiary's officers and directors consistent
with applicable bylaws and statutory provisions; or
- Restricted Payments permitted by the indenture. (Section 10.18)
Reports
We must file on a timely basis with the SEC, to the extent such filings are
accepted by the SEC and whether or not we have a class of securities registered
under the Exchange Act, the annual reports, quarterly reports and other
documents that we would be required to file if we were subject to Section 13 or
15 of the Exchange Act. These include an annual report on Form 10-K and
quarterly reports on Form 10-Q. We will also be required:
- to file with the trustee, with exhibits, and provide to each holder of
notes, without cost to such holder, copies of reports and documents,
without exhibits, within 30 days after the date on which we file the
reports and documents with the SEC or the date on which we would be
required to file the reports and documents if we were required to, and
- if filing such reports and documents with the SEC is not accepted by the
SEC or is prohibited under the Exchange Act, to supply at our cost copies
of such reports and documents, including any exhibits, to any holder of
notes, securities analyst or prospective investor promptly upon written
request. (Section 10.09)
EVENTS OF DEFAULT AND REMEDIES
Each of the following will be an "Event of Default":
- failure to pay interest on the notes when due for 30 days, whether or not
prohibited by the subordination provisions of the notes;
- failure to pay the principal of or premium on the notes, whether such
payment is due at Stated Maturity, upon redemption, upon repurchase
pursuant to a Change of Control offer or an Asset Sales offer, upon
acceleration or otherwise, whether or not prohibited by the subordination
provisions;
- failure to comply with the covenant described under "-- Material
Covenants -- Merger, Consolidation or Sale of Assets";
- failure to comply with the covenant described under "-- Repurchase at the
Option of Holders -- Change of Control";
- failure to comply with the covenant described under "-- Repurchase at the
Option of Holders -- Asset Sales";
- failure by us or any Subsidiary Guarantor to comply with any other
covenant contained in the notes, any Subsidiary Guaran-
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tee or the indenture for a period of 60 days after written notice of such
failure given to us by the trustee or to us and the trustee by the
holders of at least 25% in aggregate principal amount of the notes then
outstanding;
- the occurrence and continuation beyond any applicable grace period of any
default in the payment of the principal of, premium, if any, on or
interest on any of our or any Restricted Subsidiary's Indebtedness, other
than the notes, for money borrowed when due, or any other default
resulting in acceleration of any of our or any Restricted Subsidiary's
Indebtedness for money borrowed, if the aggregate principal amount of
such Indebtedness exceeds $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;
- any Subsidiary Guarantor shall for any reason cease to be, or be asserted
by us or any Subsidiary Guarantor not to be, in full force and effect and
enforceable in accordance with its terms, except pursuant to the release
or termination of such Subsidiary Guarantee in accordance with the
indenture;
- final judgments or orders rendered against us 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:
(1) 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
(2) 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;
- the entry of a decree or order by a court having jurisdiction in the
premises:
(1) for relief in respect of us or any Material Subsidiary in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or
(2) adjudging us or any Material Subsidiary bankrupt or insolvent, or
approving a petition seeking reorganization, arrangement, adjustment
or composition of us 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 us or any Material Subsidiary or of a substantial
part of our or any Material Subsidiary's consolidated assets, or
ordering the winding up or liquidation of our or any Material
Subsidiary's 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
- the commencement by us 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 bankrupt or insolvent, or the consent by us or any Material
Subsidiary to the entry of a decree or order for relief 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 us or any
Material Subsidiary, or the filing by us or any Material Subsidiary of a
petition or consent seeking reorganization or relief
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under any applicable federal or state law, or the consent by us or any
Material Subsidiary 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, sequestrator or other similar official of
us or any Material Subsidiary or of any substantial part of our or any
Material Subsidiary's consolidated assets, or the making by us or any
Material Subsidiary of an assignment for the benefit of creditors under
any such law, or the admission by us or any Material Subsidiary in
writing of our or any Material Subsidiary's inability to pay debts
generally as they become due or the taking of corporate action by us or
any Material Subsidiary in furtherance of any such action. (Section 5.1)
If any Event of Default, other than those specified in the last two clauses
above, occurs and is continuing, the trustee, by written notice to us, or the
holders of at least 25% in aggregate principal amount of the notes then
outstanding, by notice to the trustee and us, 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 the last two clauses 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 us, any Subsidiary Guarantors and the
trustee, may rescind such declaration if:
- we or any Subsidiary Guarantor has paid or deposited with the trustee a
sum sufficient to pay
(1) 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,
(2) all overdue interest on all notes,
(3) 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
(4) 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 sub-
clause (2) or (3);
- the rescission would not conflict with any judgment or decree of a court
of competent jurisdiction; and
- all Events of Default, other than the nonpayment of principal of,
premium, if any, on or interest on the notes that has become due solely
by such declaration of acceleration, have been cured or waived. (Section
5.2)
No holder 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 or a continuing Event of Default,
- 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,
- 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. (Section 5.7)
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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, premium or
interest on a note on or after the respective due dates expressed in the note.
(Section 5.8)
During the existence of an Event of Default, the trustee will be required
to exercise the 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.
(Sections 6.1 and 6.2) 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. (Section 5.12)
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, premium 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. (Section 6.13)
We will be required to deliver to the trustee annual and quarterly
statements regarding compliance with the indenture. We also will 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. (Section 10.8)
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Legal Defeasance
As long as we take steps to make sure that you receive all of your payments
under the notes and are able to transfer the notes, we can elect to legally
release ourselves and any of our Subsidiaries that may guarantee the notes from
any obligations on the notes (called "legal defeasance") other than:
- the, rights of holders of outstanding notes to receive payments in
respect of the principal of, premium on and interest on the notes when
these payments are due;
- our obligation to replace any temporary notes, register the transfer or
exchange of any notes, replace mutilated, lost or stolen notes,
compensate and reimburse the trustee, remove and appoint a successor
trustee, maintain an office or agency for payments in respect of the
notes and qualify the indenture under the Trust Indenture Act;
- the rights, powers, trusts, duties and immunities of the trustee, and
- the legal defeasance provisions of the indenture. (Section 12.2)
In order to accomplish legal defeasance, the following must occur:
- We or any Subsidiary Guarantor must irrevocably deposit with the trustee
cash and/or U.S. government and/or U.S. government agency securities that
will generate enough cash to make interest, principal and any other
payments on the notes on their various due dates.
- Such defeasance shall not cause the trustee to have a conflict of
interest.
- There must be a change in current U.S. federal tax law or an IRS ruling
that lets us make that deposit without causing you to be taxed on the
notes any differently than if we did not make the deposit and just repaid
the notes ourselves. Under current U.S. federal tax law, the deposit and
our legal defeasance from the notes would be treated as though we took
back your notes and gave you your share of the cash and/or securities
deposited in trust. In that event, you could recognize gain or loss on
the notes you give back to us.
- We must deliver to the trustee a legal opinion of our counsel confirming
the tax
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law change described above and that all of the conditions to legal
defeasance in the indenture have been fulfilled.
We will not be able to achieve legal defeasance if there is a continuing
Default or Event of Default under the indenture or if doing so would violate any
other material agreement to which we are a party. (Section 12.4) If we ever did
accomplish legal defeasance as described above, you would have to rely solely on
the trust deposit for repayment of the notes. You could not look to us for
repayment in the unlikely event of any shortfall.
Covenant Defeasance
Under current federal tax law, we can make the same type of deposit
described above and be released from covenants relating to the notes. The
release from these covenants is called covenant defeasance. In that event, you
would lose the protection of these covenants but would gain the protection of
having money and/or securities set aside in trust to repay the notes. In order
to achieve covenant defeasance, we must:
- Deposit in trust for the benefit of the holders of notes cash and/or U.S.
government or U.S. government agency securities that will generate enough
cash to make interest, principal and any other payments on the notes on
their various due dates.
- Deliver to the trustee a legal opinion of our counsel confirming that
under current U.S. federal tax law we may make that deposit without
causing you to be taxed on the notes any differently than if we did not
make the deposit and just repaid the notes ourselves. The opinion also
must state that all of the conditions to covenant defeasance in the
indenture have been fulfilled.
Further, such defeasance shall not cause the trustee to have a conflict of
interest.
We will not be able to achieve covenant defeasance if there is a continuing
Default or Event of Default under the indenture or if doing so would violate any
other material agreements to which we are a party. The indenture describes the
covenants we may fail to comply with without causing an Event of Default if we
accomplish covenant defeasance. (Sections 12.3 and 12.4)
If we elect to make a deposit resulting in covenant defeasance, the amount
of money and/or U.S. government or U.S. government agency securities deposited
in trust would be sufficient to pay amounts due on the notes at the time of
their maturity. However, if the maturity of the notes is accelerated due to the
occurrence of an Event of Default, the amount in trust may not be sufficient to
pay all amounts due on the notes. We would remain liable for the shortfall as
described in the indenture.
SATISFACTION AND DISCHARGE OF THE INDENTURE
We will have no further obligations under the indenture as to all
outstanding notes, other than surviving rights of registration of transfers of
the notes, when:
- all notes have been delivered to the trustee for cancellation, except
lost, stolen or destroyed notes that we have replaced or paid or notes
for which we have deposited in trust money and/or U.S. government
obligations; or all notes have become due and payable or, within one
year, will become due and payable or be redeemed and we have deposited
with the trustee funds sufficient to pay interest, principal and any
other payments on all outstanding notes on their various due dates;
- we have paid all other sums then due and payable under the indenture by
us; and
- we have delivered to the trustee an officers' certificate and an opinion
of counsel, which, taken together, state that we have complied with all
conditions precedent under the indenture relating to the satisfaction and
discharge of the indenture. (Section 4.1)
AMENDMENT AND WAIVER
We generally may amend the indenture with the written consent of the
holders of at least a majority in aggregate principal amount of the outstanding
notes. The holders of at least a majority in aggregate principal amount also may
waive our compliance with most covenants. (Section 10.20) We must, however,
obtain the consent
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of each holder of notes affected by an amendment or waiver which does any of the
following:
- reduces the principal amount of notes that must consent to an amendment
or waiver;
- reduces the principal of or changes 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";
- reduces the rate of or changes the time for payment of interest on any
note;
- waives a Default or Event of Default in the payment of principal of,
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;
- makes any note payable in money other than that stated in the notes;
- makes 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, premium, if any, on or interest on the notes;
- waives 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";
- reduces the relative ranking of the notes or any Subsidiary Guarantees;
or
- makes any change in the foregoing amendment and waiver provisions.
(Section 9.2)
In addition, without the consent of any holder of notes we and the trustee
may amend the indenture:
- 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 our 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;
- to add any additional Events of Default;
- to appoint a successor trustee;
- to secure the notes; or
- to comply with requirements of the SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act. (Section
9.1)
We may not change the indenture in a manner that would adversely affect the
rights of the holders of Senior Indebtedness under the subordination provisions
described under "-- Subordination" or the holders of Guarantor Senior
Indebtedness under the subordination provisions described under "-- Subsidiary
Guarantees of Notes," unless we obtain the consent of such holders that are
required to consent to such change pursuant to the agreements evidencing such
Senior Indebtedness or Guarantor Senior Indebtedness. (Section 9.8)
CONCERNING THE TRUSTEE
State Street Bank and Trust Company will serve as trustee under the
indenture. State Street Bank and Trust Company currently serves as trustee under
the indentures for our 9 1/2% Senior Subordinated Notes due 2006, our 9 1/2%
Senior Subordinated Notes due 2008 and our 9 3/8% Senior Subordinated Notes due
2010. Such bank also maintains normal banking relationships with us and may
perform services for and transact other business with us from time to time in
the ordinary course of business.
The indenture and the provisions of the Trust Indenture Act incorporated by
reference into the indenture will contain limitations on the rights of the
trustee, should it become a creditor of ours, to obtain payment of claims 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. If the trustee acquires any conflicting interest as defined in the
Trust Indenture Act it must
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eliminate such conflict or resign. (Sections 6.8 and 6.9)
GOVERNING LAW
The Indenture, the notes and any Subsidiary Guarantees will be governed by
the laws of the State of New York. (Section 15.10)
BOOK-ENTRY, DELIVERY AND FORM
Any notes issued will be issued in the form of one or more fully registered
global certificates. Each global certificate will be deposited with the trustee
who will hold the global certificate for The Depository Trust Company ("DTC").
Each global certificate will be registered in the name of DTC or its nominee.
Except as set forth below, a global certificate may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. (Section 3.6)
DTC has advised us as follows: It is a limited-purpose trust company which
was created to hold securities for its participating organizations and to
facilitate the clearance and settlement of transactions in such securities
between its participants through electronic book-entry changes in accounts of
its participants. Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC'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. Persons who are
not participants may beneficially own securities held by DTC only through
participants or indirect participants.
DTC has also advised that pursuant to procedures established by it,
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 DTC, with respect to participants' interests, the participants and
the indirect participants.
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 DTC or its nominee is the registered owner of a global
certificate, DTC 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 a 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. (Section 3.6)
Neither us, the trustee, the paying agent nor the registrar of the notes
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 DTC or its nominee will be made by us, either directly or through a
paying agent, to DTC or its nominee as the registered owner of such global
certificate. Under the terms of the indenture, we and the trustee will treat the
persons in whose names the notes are registered as the owners of those notes for
the purpose of receiving payments of principal and interest on those notes and
for all other purposes whatsoever, (Section 3.8) Therefore, neither us, 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. DTC has advised us 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 DTC. 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 cast 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, DTC's nominee
will be the
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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 DTC in accordance
with its procedures on a form required by DTC and provided to participants. In
order to ensure that DTC'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 DTC of its desire to exercise a
right to repayment. Different firms have different 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 cutoff time by which such
an instruction must be given in order for timely notice to be delivered to DTC.
We will not be liable for any delay in delivery of notices of the exercise
of the option to elect repayment.
CERTIFICATED NOTES
We will issue notes in definitive form in exchange for a global certificate
if, and only if, either:
- DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by us within 90 days; or
- an Event of Default has occurred and is continuing and the notes
registrar has received a request from DTC 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 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 denomination of $1,000 and integral multiples thereof and will
be issued in registered form only, without coupons. (Section 3.6)
MATERIAL DEFINITIONS
Set forth below are definitions of some of the terms used in the indenture
which we believe are material to an understanding of the indenture.
"Acquired Indebtedness" means Indebtedness of a Person:
- assumed in connection with an acquisition of properties or assets from
such Person; or
- outstanding at the time such Person becomes a Subsidiary of any other
Person.
Acquired Indebtedness does not include Indebtedness incurred in connection
with, or in contemplation of, such acquisition or such Person becoming 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, the sum of:
- Discounted future net cash flows from our and our Restricted
Subsidiaries' proved oil and gas reserves 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 our most recently completed
fiscal year. Discounted future net cash flows will be increased pursuant
to clauses (1) and (2) below and decreased pursuant to clauses (3) and
(4) below, as of the date of determination, by the estimated discounted
future net cash flows, 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, from:
(1) estimated proved oil and gas reserves acquired since the date of such
year-end reserve report;
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(2) 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;
(3) estimated proved oil and gas reserves produced or disposed of since
the date of such year-end reserve report; and
(4) 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 the case of each of the determinations made pursuant to clauses (1)
through (4) above, such increases and decreases shall be as estimated by our
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 cash flows utilized for purposes of this clause shall be confirmed in
writing by a nationally recognized firm of independent petroleum engineers.
- The capitalized costs that are attributable to our and our Restricted
Subsidiaries' oil and gas properties to which no proved oil and gas
reserves are attributable, based on our books and records as of a date no
earlier than the date of our latest annual or quarterly financial
statements.
- The Net Working Capital on a date no earlier than the date of our latest
annual or quarterly financial statements.
- The greater of:
(1) the net book value on a date no earlier than the date of our latest
annual or quarterly financial statements, or
(2) the appraised value, as estimated by independent appraisers, of our
or our Restricted Subsidiaries' other tangible assets, including,
without duplication, Investments in unconsolidated Restricted
Subsidiaries, as of the date no earlier than the date of our latest
audited financial statements.
Minus the sum of:
- Minority interests, other than a minority interest in a Finance Person.
- Any of our or our Restricted Subsidiaries' net gas balancing liabilities
reflected in our latest audited financial statements.
- To the extent included in the first clause of this definition, the
discounted future net cash flows, 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 our and our Restricted Subsidiaries' obligations with respect to
Volumetric Production Payments on the schedules specified with respect
thereto.
- The discounted future net cash flows, 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 cash flows specified in the first
clause of this definition, would be necessary to fully satisfy our and
our Restricted Subsidiaries' payment obligations 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:
- any other Person directly or indirectly controlling or controlled by or
under direct
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or indirect common control with such specified Person; or
- any other Person who is a director or executive officer of:
(1) such specified Person; or
(2) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person.
For the purposes of this definition, "control," 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 us or any of our 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:
- any Capital Stock of any Restricted Subsidiary held by us 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;
- all or substantially all of our or any of our Restricted Subsidiaries'
properties and assets; or
- any other of our or any of our Restricted Subsidiaries' properties or
assets other than:
(1) a disposition of hydrocarbons or other mineral products, inventory,
accounts receivable, cash, Cash Equivalents or other property in the
ordinary course of business;
(2) any lease, abandonment, disposition, relinquishment or farm-out of
any oil and gas property in the ordinary course of business;
(3) the liquidation of property or assets received in settlement of debts
owing to us or any Restricted Subsidiary as a result of foreclosure,
perfection or enforcement of any Lien or debt, which debts were owing
to us or any Restricted Subsidiary in the ordinary course of our or
such Restricted Subsidiary's business; or
(4) 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:
- any transfer of properties or assets that is governed by, and made in
accordance with, the provisions described under "-- Material
Covenants -- Merger, Consolidation or Sale of Assets";
- any transfer of properties or assets to an Unrestricted Subsidiary, if
permitted under the "Restricted Payments" covenant of the indenture; or
- 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:
- The sum of the products of:
(1) the number of years, and any portion thereof, from the date of
determination to the date or dates of each successive scheduled
principal payment, including, without limitation, any sinking fund or
mandatory redemption payment requirements, of such Indebtedness,
multiplied by
(2) the amount of each such principal payment; by
- 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
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into an equity interest that do not constitute Eligible Convertible Securities,
warrants or options exercisable for, exchangeable for or convertible into such
an equity interest in such Person. Our Capital Stock includes any Qualifying
TECONS and any Eligible Convertible Securities.
"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:
- 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;
- 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;
- commercial paper with a maturity of 180 days or less issued by a
corporation that is not an Affiliate of us and is organized under the
laws of any state of the United States or the District or Columbia and
rated at least A-1 by S&P or at least P-1 by Moody's;
- repurchase obligations with a term of not more than seven days for
underlying securities of the types described in the first clause above
entered into with any commercial bank meeting the specifications of the
second clause above;
- overnight bank deposits and bankers' acceptances at any commercial bank
meeting the qualifications specified in the second clause above;
- deposits available for withdrawal on demand with any commercial bank not
meeting the qualifications specified in the second clause above but which
is organized under the laws of any country in which we or any Restricted
Subsidiary maintains an office or is engaged in the Oil and Gas Business,
provided that:
(1) all such deposits am required to be made in such accounts in the
ordinary course of business,
(2) such deposits do not at any one time exceed $5,000,000 in the
aggregate, and
(3) no funds so deposited remain on deposit in such bank for more than 30
days;
- deposits available for withdrawal on demand with any commercial bank not
meeting the qualifications specified in the second clause above but which
is a lending bank under any of our 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
- investments in money market funds substantially all of whose assets
comprise securities of the types described in any of the first five
clauses above.
"Change of Control" means the occurrence of any of the following events:
- 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 our total Voting Stock;
- we are merged with or into or consolidated with another Person and,
immediately after giving effect to the merger or consolidation:
(1) 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
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our stockholders immediately prior to such merger or consolidation,
and
(2) 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;
- we, either individually or in conjunction with one or more Restricted
Subsidiaries, sell, assign, convey, transfer, lease or otherwise dispose
of, or the Restricted Subsidiaries sell, assign, convey, transfer, lease
or otherwise dispose of, all or substantially all of our and the
Restricted Subsidiaries' properties and assets, 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 us or a
Wholly Owned Restricted Subsidiary;
- during any consecutive two-year period, individuals who at the beginning
of such period constituted our board of directors, together with any new
directors whose election by such board of directors or whose nomination
for election by our stockholders 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
our board of directors then in office;
- our liquidation or dissolution; or
- so long as any Existing Notes are outstanding any other event
constituting a Change of Control pursuant to Indentures 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, our and our
Restricted Subsidiaries' exploration expenses 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:
- the sum of our and our Restricted Subsidiaries' 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, on a
consolidated basis, all determined in accordance with GAAP, decreased, to
the extent included in determining Consolidated Net Income, by the sum
of:
(1) the amount of deferred revenues that are amortized during such period
and are attributable to reserves that are subject to Volumetric
Production Payments, and
(2) amounts recorded in accordance with GAAP as repayments of principal
and interest pursuant to Dollar-Denominated Production Payments; to
- the sum of such Consolidated Interest Expense for such period.
Provided, however, that:
- the Consolidated Fixed Charge Coverage Ratio shall be calculated on the
assumption that:
(1) the Indebtedness to be incurred and all other Indebtedness incurred
after the first day of the period of four full fiscal quarters under
the covenant described under "-- Material 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 Indebt-
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edness, 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
(2) any acquisition or disposition by us or any Restricted Subsidiary of
any properties or assets outside the ordinary course of business, or
any repayment of any principal amount of any of our or any Restricted
Subsidiary's Indebtedness prior to the Stated Maturity thereof, in
either case since the first day of such four quarter period through
and including the date of determination, had been consummated on such
first day of such four quarter period;
- 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
"-- Material Covenants -- Incurrence of Indebtedness" and:
(1) 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
(2) which was not outstanding during the period for which the computation
is being made but which bears, at our option, a fixed or floating
rate of interest, shall be computed by applying, at our option,
either the fixed or floating rate;
- 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 under "-- Material 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,
- notwithstanding the second and third clauses 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;
- in making such calculation, Consolidated Interest Expense shall exclude
interest attributable to Dollar-Denominated Production Payments; and
- if after the first day of the period referred to in the first clause of
this definition, we have retired any Indebtedness out of the net cash
proceeds of the issue and sale of our Qualified Capital Stock 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
our and our Restricted Subsidiaries' federal, state, local and foreign income
taxes, including any state franchise taxes accounted for as income taxes in
accordance with GAAP, for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of:
- our and our Restricted Subsidiaries' interest expense for such period as
determined on a consolidated basis in accordance with
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GAAP, including, without limitation, to the extent attributable to such
period:
(1) any amortization of debt discount,
(2) the net cost under Interest Rate Protection Obligations, including
any amortization of discounts,
(3) the interest portion of any deferred payment obligation constituting
Indebtedness,
(4) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, and
(5) all accrued interest;
- to the extent any Indebtedness of any Person other than us or a
Restricted Subsidiary is guaranteed by us 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;
- 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 us and our Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP; and
- the aggregate amount of dividends paid, to the extent not accrued in a
prior period, or accrued on our and our Restricted Subsidiaries'
Redeemable Capital Stock, to the extent such Redeemable Capital Stock is
owned by Persons other than us or our Restricted Subsidiaries, and to the
extent such dividends are not paid in Common Stock.
The following shall not be included in the calculation of Consolidated
Interest Expense:
- fees and expenses associated with the exchange offer, consent
soliciations and related transactions in connection with the exchange of
our 9 1/2% Senior Subordinated Notes due 2008 for our then existing and
outstanding Senior Subordinated Notes, to the extent deducted in
determining consolidated net income (or loss);
- Amortization of our and our Restricted Subsidiaries' capitalized debt
issuance costs during such period;
- dividends on Qualifying TECONS; and
- non-cash interest on Eligible Convertible Securities.
"Consolidated Net Income" means, for any period, our and our Restricted
Subsidiaries' consolidated net income (or loss) for such period as determined in
accordance with GAAP, adjusted by excluding:
- net after-tax extraordinary gains or losses, less all fees and expenses
relating thereto;
- net after-tax gains or losses, less all fees and expenses relating
thereto, attributable to Asset Sales;
- the net income (or net loss) of any Person, other than us or any of our
Restricted Subsidiaries, in which we or any of our 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 us or any of our 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;
- net income (or net loss) of any Person combined with us of any of our
Restricted Subsidiaries on a "pooling of interests" basis attributable to
any period prior to the date of combination;
- 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 appli-
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cable to that Restricted Subsidiary or its stockholders;
- dividends paid on Qualifying TECONS;
- non-cash interest on Eligible Convertible Securities, to the extent
deducted in determining consolidated net income (or loss);
- Consolidated Exploration Expenses and any writedowns or impairments of
noncurrent 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; and
- for purposes of calculating the Consolidated Fixed Charge Coverage Ratio
at any time, net gains or losses on oil and natural gas price hedging
arrangements during periods ending on or prior to March 31, 2000.
"Consolidated Net Worth" means, at any date, our and our Restricted
Subsidiaries' consolidated stockholders' equity less the amount of such
stockholders' equity attributable to our and our Restricted Subsidiaries'
Redeemable Capital Stock or treasury stock, as determined in accordance with
GAAP.
"Consolidated Non-cash Charges" means, for any period, our and our
Restricted Subsidiaries' aggregate depreciation, depletion, amortization and
other non-cash expenses reducing Consolidated Net Income for such period,
determined on a consolidated basis in accordance with GAAP, excluding any such
non-cash charge to the extent required as an accrual of or reserve for cash
charges for any future period.
"Credit Facility" means that certain Third Restated Credit Agreement among
us, certain of our Subsidiaries, Bank of America, 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 or time or the giving
of notice or both would be an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which our board of directors is required to
deliver a resolution of the board of directors under the indenture, a member of
our board of directors who does not have any material direct or indirect
financial interest other than an interest arising solely from the beneficial
ownership of our Capital Stock 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.
"Eligible Convertible Securities" means any security issued by us that:
- is subordinated in right of payment to the notes,
- has a final Stated Maturity at least 91 days after the final Stated
Maturity of the notes, and
- by its terms or by the terms of any security into which it is convertible
or by contract or otherwise requires no scheduled payments, including
principal, premium, interest and fees, prior to its final Stated
Maturity, other than payments payable only in shares of our Common Stock
or in options, warrants or other rights to purchase our Common Stock.
"Equity Offering" means a bona fide underwritten sale to the public of our
Common Stock 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
ours, that is declared effective by the SEC following the Issue Date.
"Event of Default" has the meaning set forth above under the caption
"-- Events of Default and Remedies."
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor act thereto.
"Exchanged Properties" means properties or assets used or useful in the Oil
and Gas Business received by us or a Restricted Subsidiary, whether directly or
indirectly through the acquisition of the
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<PAGE> 95
Capital Stock of a Person holding such assets so that such Person becomes our
Wholly Owned Restricted Subsidiary, in trade or as a portion of the total
consideration for such other properties or assets.
"Existing TECONS" means our Obligated Mandatorily Redeemable Convertible
Preferred Securities issued by Nuevo Financing I, a statutory business trust
wholly owned by us, on December 23, 1996, in an aggregate liquidation amount of
$115.0 million.
"Finance Person" means a Subsidiary of ours, the Common Stock of which is
owned by us, that does not engage In any activity other than:
- 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;
- the issuance of Qualifying TECONS and Common Stock and/or debt
securities; and
- 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 were
effective as of the date of the indenture.
The term "guarantee" means, as applied to any obligation:
- 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
- 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;
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, premium, if any,
on, 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:
- Indebtedness of such Subsidiary Guarantor evidenced by its Subsidiary
Guarantee;
- 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;
- Indebtedness of such Subsidiary Guarantor to the extent incurred in
violation of the "Incurrence of Indebtedness" covenant of the indenture;
- Indebtedness of such Subsidiary Guarantor to us or any of our other
Subsidiaries or to any Affiliate of us or any Subsidiary of such
Affiliate; and
- 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.
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"Holder" means a Person in whose name a note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person, without duplication:
- 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 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;
- 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;
- 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;
- all Capitalized Lease Obligations of such Person;
- 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);
- 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;
- all Redeemable Capital Stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued
dividends; and
- 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.
Indebtedness shall not include either Eligible Convertible Securities or
Qualifying TECONS and Indebtedness, including guarantees thereof, relating to
Qualifying TECONS and held by a Finance Person; provided, however, Indebtedness
shall include Existing TECONS and, for purposes of the seventh clause under
"-- Events of Default and Remedies" only, debt securities issued in connection
with Eligible Convertible Securities and debt securities issued in connection
with Qualifying TECONS shall be deemed to be Indebtedness. Subject to the sixth
clause of the first sentence of this definition, neither Dollar-Denominated
Production Payments nor Volumetric Production Payments shall be deemed to be
Indebtedness.
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;
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<PAGE> 97
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.
"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 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 us in such Unrestricted Subsidiary at such
time, and the designation of any Unrestricted Subsidiary as a Restricted
Subsidiary shall result in a return of an "Investment" in an amount not to
exceed the lesser of (x) the book value of the Investments previously made in
such Unrestricted Subsidiary that were treated as Restricted Payments, and (y)
the fair market value of such Unrestricted Subsidiary. "Investments" shall
exclude:
- 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;
- 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;
- bonds, notes, debentures or other securities received in compliance with
the "Asset Sales" covenant; and
- endorsements of negotiable instruments and documents for collection in
the ordinary course of business.
"Issue Date" means the date on which the notes were first issued under the
indenture.
"Lien" means any mortgage, charge, pledge, statutory or other, lien,
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:
- of an issuer that is not an Affiliate of us; and
- 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.
Securities meeting the requirements of the two preceding clauses shall be
treated as Liquid
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<PAGE> 98
Securities from the date of receipt thereof until and only until the earlier
of:
- 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
- 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 we or a Restricted Subsidiary received the securities was in
compliance with the provisions of the indenture described under "-- Repurchase
at the Option or Holders -- Asset Sales," 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 cash flows from our and our Restricted
Subsidiaries' proved oil and gas reserves, calculated in accordance with the
first clause of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change:
- 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
- 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 "-- Repurchase at the Option of Holders -- Asset Sales."
"Material Subsidiary" means, at any particular time, as shown on our and
our Restricted Subsidiaries' consolidated financial statements for our most
recently completed fiscal year, any Restricted Subsidiary that, together with
its Subsidiaries:
- accounted for more than 5% of our and our Restricted Subsidiaries'
consolidated revenues for such fiscal year; or
- was the owner of more than 5% of our and our Restricted Subsidiaries'
consolidated assets at the end of such fiscal year.
"Maturity" means, with respect to any new note, the date on which any
principal of such note becomes due and payable as provided therein or in the
indenture, 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 us or any Restricted Subsidiary, net of:
- brokerage commissions and other fees and expenses, including fees and
expenses of legal counsel and investment banks related to such Asset
Sale;
- provisions for all taxes payable as a result of such Asset Sale;
- amounts required to be paid to any Person other than us or any Restricted
Subsidiary owning a beneficial interest in the assets subject to the
Asset Sale; and
- appropriate amounts to be provided by us 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 us 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'
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<PAGE> 99
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, as set forth in our consolidated financial
statements prepared in accordance with GAAP:
- all of our and our Restricted Subsidiaries' current assets, less
- all of our and our Restricted Subsidiaries' current liabilities, except
current liabilities included in Indebtedness.
"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, entities one or more Persons to accelerate the maturity of any Specified
Senior Indebtedness.
"Non-Recourse Purchase Money Indebtedness" means:
- our and any Restricted Subsidiary's Indebtedness, other than Capital
Lease Obligations, incurred in connection with the acquisition by us 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 us or such Restricted Subsidiary in
conducting our or its operations; and
- any renewals and refinancings of such Indebtedness.
For Indebtedness described in the two preceding clauses to qualify as
Non-Recourse Purchase Money Indebtedness, the holders of such Indebtedness must
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 we nor any Restricted
Subsidiary may;
(1) be directly or indirectly liable for such Indebtedness; or
(2) provide 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.
"Oil and Gas Business" means:
- the acquisition, exploration, development, operation and disposition of
interests in oil, gas and other hydrocarbon properties;
- the gathering, marketing, treating, processing, storage, selling and
transporting of any production from such interests or properties;
- 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;
- 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 we or our Restricted Subsidiaries
participate; and
- any activity necessary, appropriate or incidental to the activities
described in the foregoing clauses of this definition.
"Pari Passu Indebtedness" means any of our Indebtedness that is pari passu
in right of payment to the notes, including, without limitation our 9 1/2%
Senior Subordinated Notes due 2006 and our 9 1/2% Senior Subordinated Notes due
2008.
"Payment Event of Default" means any default in the payment or required
prepayment of principal of, 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:
- Indebtedness under the Credit Facility in an aggregate principal amount
at any one time outstanding not to exceed the greater of:
(1) $400,000,000, less any amounts of principal of such Indebtedness
repaid
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using the Net Cash Proceeds of an Asset Sale pursuant to the covenant
described under "-- Repurchase at the Option of Holders -- Asset
Sales" and any amounts of principal of such Indebtedness that could
only be refinanced pursuant to the tenth clause of this definition;
or
(2) the borrowing base thereunder,
provided, both subclauses (1) and (2) 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;
- Indebtedness under the existing notes issued under the indenture and any
Subsidiary Guarantees relating thereto or to any notes;
- Indebtedness outstanding on the date of the indenture, including, without
limitation our 9 1/2% Senior Subordinated Notes due 2006 and our 9 1/2%
Senior Subordinated Notes due 2008;
- our and our Restricted Subsidiaries' obligations 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 we or a Restricted Subsidiary enter into in the
ordinary course of business for the purpose of protecting our or its
production against fluctuations in oil or natural gas prices;
- our Indebtedness to a Wholly Owned Restricted Subsidiary or a Finance
Person and Indebtedness of a Restricted Subsidiary to us 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, any other subsequent
transfer of any such Indebtedness except to us or a Wholly Owned
Restricted Subsidiary or Finance Person, such Indebtedness shall be
deemed, in each case, to be incurred and shall be treated as an
incurrence for purposes of the "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;
- in-kind obligations relating to net gas balancing positions arising in
the ordinary course of business and consistent with past practice;
- Indebtedness in respect of bid, performance or surety bonds issued for
our or any Restricted Subsidiary's account 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;
- any guarantee of Senior Indebtedness or Guarantor Senior Indebtedness,
incurred in compliance with the "Incurrence of Indebtedness" covenant, by
us or a Restricted Subsidiary;
- Non-Recourse Purchase Money Indebtedness,
- any renewals substitutions, exchanges, refinancings or replacements
(each, for purposes of this clause, a "refinancing") by us or a
Restricted Subsidiary of any Indebtedness incurred pursuant to the
provisions of the "Incurrence of Indebtedness" covenant or pursuant to
clause one, two or three of this definition, including any successive
refinancings by us or such Restricted Subsidiary, so long as:
(1) 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
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<PAGE> 101
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 us or such Restricted Subsidiary as
necessary to accomplish such refinancing, plus the amount of our or
such Restricted Subsidiary's expenses incurred in connection with
such refinancing,
(2) in the case or any refinancing of our Indebtedness 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,
(3) in the case of any refinancing of our Indebtedness pursuant to clause
one, such new Indebtedness is either Pari Passu Indebtedness or
Subordinated Indebtedness and has a final Stated Maturity at least 91
days after the final Stated Maturity of the notes, and
(4) 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;
- any additional Indebtedness in an aggregate principal amount not to
exceed $25.0 million.
"Permitted Investments" means any of the following:
- Investments in Cash Equivalents;
- Investments in us or any of our Restricted Subsidiaries;
- Investments in any amount not to exceed $10,000,000 at any one time
outstanding;
- Investments by us or any of our Restricted Subsidiaries in another
Person, if as a result of such Investment:
(1) such other Person becomes a Restricted Subsidiary, or
(2) such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all of its properties and
assets to, us or a Restricted Subsidiary;
- 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, 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:
(1) ownership interests in oil and gas properties or gathering systems,
and
(2) 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,
general or limited partnership agreements, subscription agreements,
stock purchase agreements and other similar agreements with third
parties, including Unrestricted Subsidiaries;
- entry into any hedging arrangements in the ordinary course of business
for the purpose of protecting our or any Restricted Subsidiary's
production against fluctuations in oil or natural gas prices;
- entry into any currency exchange contract in the ordinary course of
business;
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- Investments in obligations or securities received as a result of any
Asset Sale;
- advances and loans to officers, directors and employees in the ordinary
course of business;
- Investments pursuant to any agreement or obligation in effect on
September 26, 2000;
- Investments in obligations or securities received in settlement of debts
owing to us or a Restricted Subsidiary as a result of bankruptcy or
insolvency proceeding or upon the foreclosure, perfection or enforcement
of any Lien in favor of us or a Restricted Subsidiary, in each case as to
debt owing to us or a Restricted Subsidiary that arose in the ordinary
course of our or any such Restricted Subsidiary's business; and
- contributions to Unrestricted Subsidiaries of our interests in 24
undeveloped federal leases offshore California, known as the COOGER
acreage, included in seven units, Bonita, Sword, Point Sal, Gato Canyon,
Lion Rock, Purisina Point and Santa Maria.
"Permitted Junior Securities" means any of our or any successor obligor's
equity securities or subordinated debt securities 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:
- Liens existing as of the Issue Date, 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,
- Liens securing the notes or the Subsidiary Guarantees relating thereto;
and
- Liens in favor of us.
"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, provided that, with respect to
us, Qualified Capital Stock includes, without limitation, any Qualifying TECONS
and any Eligible Convertible Securities.
"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; provided, however,
that Redeemable Capital Stock shall not include any security by virtue of the
fact that it may be exchanged or converted at the option of the holder or at our
option for our Common Stock,
"Restricted Subsidiary" means any Subsidiary of ours, whether existing on
or after the date of the indenture, unless such Subsidiary is an Unrestricted
Subsidiary or is designated as an Unrestricted Subsidiary pursuant to the terms
of the indenture.
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<PAGE> 103
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Security Register" means the register maintained by or for us in which we
shall provide for the registration of the Securities and of transfer of the
Securities.
"Senior Indebtedness" means the principal of, premium, if any, on, 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 of our Indebtedness, 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:
- Indebtedness evidenced by the notes;
- our Indebtedness that is Pari Passu Indebtedness or is expressly
subordinated in right of payment to any other of our Indebtedness;
- Indebtedness that is represented by Redeemable Capital Stock,
- our Indebtedness to the extent incurred in violation of the covenant
described under "-- Material Covenants -- Incurrence of Indebtedness;"
- our Indebtedness to any of our Subsidiaries or any other Affiliate of
ours or any subsidiary of such Affiliate; and
- Indebtedness which when incurred and without regard to any election under
Section 1111(b) of the Federal Bankruptcy Code is without recourse to us.
"Specified Property Sales" means the sales of any of our and our Restricted
Subsidiaries'
- East Texas Oil and gas properties sold in January 1999 and described
under "Summary -- Recent Developments;" and
- real properties, other than our or our Restricted Subsidiaries' mineral
interests, owned on the date of the indenture and located in the Counties
of Fresno, Kern, Kings, Los Angeles, Orange, Santa Barbara, and Ventura
in the State of California.
"Specified Senior Indebtedness" means:
- all of our Senior Indebtedness 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 us, including any successive refinancings
thereof by us; and
- any other Senior Indebtedness and any refinancings thereof by us 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 "-- Material
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 new 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.
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<PAGE> 104
"Subordinated Indebtedness" means our Indebtedness which is expressly
subordinated in right of payment to the notes.
"Subsidiary" means, with respect to any Person:
- 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
- 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, trustees 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:
- any Subsidiary of ours that at the time of determination will be
designated an Unrestricted Subsidiary by our board of directors as
provided below; and
- any Subsidiary of an Unrestricted Subsidiary.
Our board of directors may designate any Subsidiary of ours as an
Unrestricted Subsidiary so long as:
- neither we nor any Restricted Subsidiary is directly or indirectly liable
pursuant to the terms of any Indebtedness of such Subsidiary;
- no default with respect to any Indebtedness of such Subsidiary would
permit, upon notice, lapse of time or otherwise, any holder of any of our
or any Restricted Subsidiary's other Indebtedness to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity;
- neither we 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 the fourth and twelfth clauses of the definition of
Permitted Investment; and
- such designation shall not result in the creation or imposition of any
Lien on any of our or any Restricted Subsidiary's properties, other than
any Permitted Lien or any Lien the creation or imposition of which shall
have been in compliance with the "Liens" covenant.
With respect to the first clause of the second paragraph of this
definition, we or a Restricted Subsidiary may be liable for Indebtedness of an
Unrestricted Subsidiary if:
- 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
- the liability would be a Permitted Investment at the time of designation
of such Subsidiary as an Unrestricted Subsidiary.
Any such designation by our board of directors shall be evidenced to the
trustee by filing a board resolution with the trustee giving effect to such
designation. Our board of directors may designate any Unrestricted Subsidiary as
a Restricted Subsidiary if, immediately after giving effect to such designation:
- no Default or Event of Default shall have occurred and be continuing;
- we could incur $1.00 of additional Indebtedness, other than Permitted
Indebtedness,
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<PAGE> 105
under the "Incurrence of Indebtedness" covenant; and
- if any of our or any of our Restricted Subsidiaries' properties or assets
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:
- 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 us; or
- 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 we, directly or indirectly,
own the remaining Capital Stock or ownership interest in such Restricted
Subsidiary and, by contract or otherwise, control the management and
business of such Restricted Subsidiary and derive the economic benefits
of ownership of such Restricted Subsidiary to substantially the same
extent as if such Restricted Subsidiary were a wholly owned Subsidiary.
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<PAGE> 106
PLAN OF DISTRIBUTION
We may sell the notes:
(1) through underwriters or dealers;
(2) through agents;
(3) directly to purchasers;
(4) through remarketing firms; or
(5) through a combination of any such methods of sale.
Any such underwriter, dealer or agent may be deemed to be an underwriter
within the meaning of the Securities Act of 1933.
UNDERWRITERS OR DEALERS
If underwriters are utilized in the sale, the notes will be acquired by the
underwriters for their own account. The underwriters may sell the notes in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the notes will be subject to several
conditions set forth in an agreement between us and the underwriters. The
underwriters will be obligated to purchase all of the notes offered if any of
the notes are purchased. Any public offering price and any discounts or
concessions allowed or re-allowed or paid to dealers may be changed from time to
time. We may grant underwriters who participate in the distribution of notes an
option to purchase additional notes if they sell more notes than they purchased.
During and after an offering through underwriters, the underwriters may
purchase and sell the notes in the open market. These transactions may include
overallotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. The underwriters may
also impose a penalty bid, in which selling concessions allowed to syndicate
members or other broker-dealers for the offered notes sold for their account may
be reclaimed by the syndicate if such offered notes are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the offered notes,
which may be higher than the price that might otherwise prevail in the open
market. If commenced, these activities may be discontinued.
If we use dealers in the sale of notes, we will sell the notes to them as
principals. They may then resell those notes to the public at varying prices
determined by the dealers at the time of resale. We will include in the
prospectus supplement the names of the dealers and the terms of the transaction.
AGENTS
We may designate agents who agree to use their reasonable efforts to
solicit purchasers for the period of their appointment or to sell the notes on a
continuing basis.
DIRECT SALES
We may also sell the notes directly to one or more purchasers without using
underwriters or agents.
REMARKETING FIRMS
The securities may be re-sold to the public following their redemption or
repayment by one or more remarketing firms. Remarketing firms may act as
principals for their own accounts or as agents for us.
GENERAL INFORMATION
Underwriters, dealers, agents and remarketing firms that participate in the
distribution of the notes may be underwriters as defined in the Securities Act
of 1933, and any discounts or commissions received by them from us and any
profit on the resale of the notes by them may be treated as underwriting
discounts and commissions under the Securities Act of 1933.
Any underwriter, dealer, agent or remarketing firm will be identified and
the terms of the transaction, including their compensation, will be described in
a prospectus supplement. We may have agreements with underwriters, dealers,
agents or remarketing firms to indemnify them against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute with
respect to payments which the underwriters, dealers or agents may be required to
make. Underwriters, dealers, agents or remarketing firms, or their affiliates
may be customers of, engage in transactions with or perform services for, us or
our
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<PAGE> 107
subsidiaries in the ordinary course of their business.
The notes will be new issues of securities with no established trading
market. Any underwriters to whom the notes are sold by us for public offering
and sale may make a market in such securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
any notes.
We may use agents and underwriters to solicit offers by certain
institutions to purchase the notes from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on the date stated in the prospectus
supplement. Delayed delivery contracts will be subject to only those conditions
set forth in the prospectus supplement. A commission indicated in the prospectus
supplement will be paid to underwriters and agents soliciting purchases of debt
securities pursuant to delayed delivery contracts accepted by us.
EXPERTS
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Nuevo Energy Company as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999 incorporated by reference in the prospectus and the
registration statement have been incorporated herein in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of such firm as experts in accounting and
auditing.
RESERVE ENGINEERS
The information incorporated by reference in this prospectus regarding our
quantities of oil and gas and future net cash flows and the present values
thereof from such reserves is based on estimates of such reserves and present
values prepared by Ryder Scott Company, L.P.
LEGAL MATTERS
The validity of the issuance of the securities will be passed upon for us
by our lawyers, Haynes and Boone, LLP. Counsel named in the prospectus
supplement will issue opinions about the validity of the securities for any
agents, dealers or underwriters.
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<PAGE> 108
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth expenses payable by Nuevo Energy Company
(the "Company" or "Registrant") in connection with the issuance and distribution
of the securities being registered. All amounts shown are estimates, except the
registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $132,000
Printing Expenses........................................... 15,000
Legal Fees and Expenses..................................... 50,000
Accounting Fees and Expenses................................ 25,000
Fees and Expenses of Trustee and Counsel.................... 10,000
Miscellaneous Fees.......................................... 50,000
--------
Total............................................. $282,000
========
</TABLE>
ITEM 15. 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,
officers, employees and agents (or persons serving at the request of the Company
as a director, officer, employee or agent of another entity) 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, officers, employees and agents
(or persons serving at the request of the Company as a director, officer,
employee or agent of another entity) 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, as amended, and Article
VII of the Bylaws of the Company, as amended, provide, in general, that the
Company may indemnify its directors, officers, employees and agents (or persons
serving at the request of the Company as a director, officer, employee or agent
of another entity) to the full extent of Delaware law.
The Company has purchased directors and officers liability insurance policy
which insures, among other things, (i) the officers and directors of the Company
from any claim arising out of an alleged wrongful act by such persons while
acting as directors and officers of the Company and (ii) the Company to the
extent that the Company has indemnified the directors and officers for such
loss.
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<PAGE> 109
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(1) UNDERWRITING AGREEMENT
**1.1 Form of Underwriting Agreement.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
4.1 Certificate of Incorporation of Nuevo Energy Company.
(Incorporated by reference from Exhibit 3.1 to the Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1999).
4.2 Certificate of Amendment to the Certificate of Incorporation
of Nuevo Energy Company. (Incorporated by reference from
Exhibit 3.2 to the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1999).
4.3 Bylaws of Nuevo Energy Company. (Incorporated by reference
from Exhibit 3.3 to the Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1999).
4.4 Amendment to Section 3.1 of the Bylaws of Nuevo Energy
Company. (Incorporated by reference from Exhibit 3.4 to the
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999).
4.5 Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to Registration Statement on Form S-4 (No.
33-33873) filed under the Securities Act of 1933).
4.6 Shareholder Rights Plan, dated March 5, 1997, between Nuevo
Energy Company and American Stock Transfer & Trust Company,
as Rights Agent (incorporated by reference to Exhibit 1 to
the Company's Form 8-A filed on April 1, 1997).
4.7 Indenture dated April 1, 1996 among Nuevo Energy Company as
Issuer, various Subsidiaries as the Guarantors, and State
Street Bank and Trust Company as the Trustee -- 9 1/2%
Senior Subordinated Notes due 2006. (Incorporated by
reference from Form S-3 (No. 333-1504).
4.8 Form of Amended and Restated Declaration of Trust dated
December 23, 1996, among the Company, as Sponsor, Wilmington
Trust Company, as Institutional Trustee and Delaware
Trustee, and Michael D. Watford, Robert L. Gerry, III and
Robert M. King, as Regular Trustees. (Incorporated by
reference from Exhibit 4.1 to Form 8-K filed on December 23,
1996).
4.9 Form of Subordinated Indenture dated as of November 25,
1996, between the Company and Wilmington Trust Company, as
Indenture Trustee. (Incorporated by reference from Exhibit
4.2 to Form 8-K filed on December 23, 1996).
4.10 Form of First Supplemental Indenture dated December 23,
1996, between the Company and Wilmington Trust Company, as
Indenture Trustee. (Incorporated by reference from Exhibit
4.3 to Form 8-K filed on December 23, 1996).
4.11 Form of Preferred Securities Guarantee Agreement dated as of
December 23, 1996, between the Company and Wilmington Trust
Company, as Guarantee Trustee. (Incorporated by reference
from Exhibit 4.4 to Form 8-K filed on December 23, 1996).
4.12 Form of Certificate representing TECONS. (Incorporated by
reference from Exhibit 4.5 to Form 8-K filed on December 23,
1996).
4.13 Release and Termination of Subsidiary Guarantees with
respect to the 9 1/2% Senior Subordinated Notes due 2006.
(Incorporated by reference to Exhibit 4.11 to Form 10-K for
the year ended December 31, 1997.)
</TABLE>
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<PAGE> 110
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.14 Second Supplemental Indenture to the Indenture dated April
1, 1996, dated August 9, 1999 between Nuevo Energy Company
and State Street Bank and Trust Company -- 9 1/2% Senior
Subordinated Notes due 2006. (Incorporated by reference from
Exhibit 4.10 to Form S-4 (No. 333-90235) filed on November
3, 1999).
4.15 Indenture, dated as of August 20, 1999, between Nuevo Energy
Company and State Street Bank and Trust Company, as Trustee.
(Incorporated by reference from Exhibit 4.11 to Form S-4
(No. 333-90235) filed on November 3, 1999).
4.16 Registration Agreement dated August 20, 1999, between Nuevo
Energy Company, Banc of America Securities LLC and Salomon
Smith Barney Inc.(Incorporated by reference from Exhibit
4.12 to Form S-4 (No. 333-90235 ) filed on November 3,
1999).
*4.17 Form of Senior Indenture.
*4.18 Form of Subordinated Indenture.
(5) OPINION REGARDING LEGALITY
*5.1 Opinion of Haynes and Boone, L.L.P.
(12) STATEMENTS REGARDING COMPUTATION OF RATIOS
***12.1 Computation of ratio of earnings to fixed charges.
(23) CONSENTS OF EXPERTS AND COUNSEL
*23.1 Consent of Haynes and Boone, L.L.P. (included in Exhibit
5.1).
*23.2 Consent of KPMG LLP.
*23.3 Consent of Ryder Scott Company, L.P.
(24) POWER OF ATTORNEY
24.1 Powers of Attorney (included on the signature page of the
Registration Statement)
(25) STATEMENT OF ELIGIBILITY OF TRUSTEE
**25.1 Statement of Eligibility and Qualification on Form T-1 of
Trustee.
</TABLE>
---------------
* Previously Filed.
** To be filed as an exhibit to Nuevo Energy Company's Current Report on Form
8-K in connection with a specific offering.
***Filed herewith:
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Commission
pursuant to Rule 424(b) if, in the
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<PAGE> 111
aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event 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 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 Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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<PAGE> 112
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 4th day of December,
2000.
NUEVO ENERGY COMPANY
/s/ DOUGLAS L. FOSHEE
------------------------------------
Douglas L. Foshee
Chairman of the Board, Chief
Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons on
behalf of the Registrant in the capacities and on the 4th day of December, 2000:
<TABLE>
<CAPTION>
SIGNATURE CAPACITIES DATE
--------- ---------- ----
<S> <C> <C>
/s/ DOUGLAS L. FOSHEE Chairman of the Board, December 4, 2000
----------------------------------------------------- Chief Executive Officer
Douglas L. Foshee and President
(Principal Executive
Officer)
/s/ ROBERT M. KING* Senior Vice President and December 4, 2000
----------------------------------------------------- Chief Financial Officer
Robert M. King (Principal Accounting and
Financial Officer)
/s/ ISAAC ARNOLD, JR.* Director December 4, 2000
-----------------------------------------------------
Isaac Arnold, Jr.
/s/ THOMAS D. BARROW* Director December 4, 2000
-----------------------------------------------------
Thomas D. Barrow
/s/ DAVID H. BATCHELDER* Director December 4, 2000
-----------------------------------------------------
David H. Batchelder
/s/ CHARLES M. ELSON* Director December 4, 2000
-----------------------------------------------------
Charles M. Elson
/s/ ROBERT L. GERRY III* Director December 4, 2000
-----------------------------------------------------
Robert L. Gerry III
/s/ GARY R. PETERSEN* Director December 4, 2000
-----------------------------------------------------
Gary R. Petersen
</TABLE>
II-5
<PAGE> 113
<TABLE>
<CAPTION>
SIGNATURE CAPACITIES DATE
--------- ---------- ----
<S> <C> <C>
/s/ DAVID ROSS III* Director December 4, 2000
-----------------------------------------------------
David Ross III
/s/ ROBERT W. SHOWER* Director December 4, 2000
-----------------------------------------------------
Robert W. Shower
</TABLE>
*By: /s/ DOUGLAS L. FOSHEE
-----------------------------
Douglas L. Foshee
Pursuant to a previously
filed
power of attorney
II-6
<PAGE> 114
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(1) UNDERWRITING AGREEMENT
**1.1 Form of Underwriting Agreement.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
4.1 Certificate of Incorporation of Nuevo Energy Company.
(Incorporated by reference from Exhibit 3.1 to the Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1999).
4.2 Certificate of Amendment to the Certificate of Incorporation
of Nuevo Energy Company. (Incorporated by reference from
Exhibit 3.2 to the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1999).
4.3 Bylaws of Nuevo Energy Company. (Incorporated by reference
from Exhibit 3.3 to the Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1999).
4.4 Amendment to Section 3.1 of the Bylaws of Nuevo Energy
Company. (Incorporated by reference from Exhibit 3.4 to the
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999).
4.5 Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to Registration Statement on Form S-4 (No.
33-33873) filed under the Securities Act of 1933).
4.6 Shareholder Rights Plan, dated March 5, 1997, between Nuevo
Energy Company and American Stock Transfer & Trust Company,
as Rights Agent (incorporated by reference to Exhibit 1 to
the Company's Form 8-A filed on April 1, 1997).
4.7 Indenture dated April 1, 1996 among Nuevo Energy Company as
Issuer, various Subsidiaries as the Guarantors, and State
Street Bank and Trust Company as the Trustee -- 9 1/2%
Senior Subordinated Notes due 2006. (Incorporated by
reference from Form S-3 (No. 333-1504).
4.8 Form of Amended and Restated Declaration of Trust dated
December 23, 1996, among the Company, as Sponsor, Wilmington
Trust Company, as Institutional Trustee and Delaware
Trustee, and Michael D. Watford, Robert L. Gerry, III and
Robert M. King, as Regular Trustees. (Incorporated by
reference from Exhibit 4.1 to Form 8-K filed on December 23,
1996).
4.9 Form of Subordinated Indenture dated as of November 25,
1996, between the Company and Wilmington Trust Company, as
Indenture Trustee. (Incorporated by reference from Exhibit
4.2 to Form 8-K filed on December 23, 1996).
4.10 Form of First Supplemental Indenture dated December 23,
1996, between the Company and Wilmington Trust Company, as
Indenture Trustee. (Incorporated by reference from Exhibit
4.3 to Form 8-K filed on December 23, 1996).
4.11 Form of Preferred Securities Guarantee Agreement dated as of
December 23, 1996, between the Company and Wilmington Trust
Company, as Guarantee Trustee. (Incorporated by reference
from Exhibit 4.4 to Form 8-K filed on December 23, 1996).
4.12 Form of Certificate representing TECONS. (Incorporated by
reference from Exhibit 4.5 to Form 8-K filed on December 23,
1996).
4.13 Release and Termination of Subsidiary Guarantees with
respect to the 9 1/2% Senior Subordinated Notes due 2006.
(Incorporated by reference to Exhibit 4.11 to Form 10-K for
the year ended December 31, 1997.)
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.14 Second Supplemental Indenture to the Indenture dated April
1, 1996, dated August 9, 1999 between Nuevo Energy Company
and State Street Bank and Trust Company -- 9 1/2% Senior
Subordinated Notes due 2006. (Incorporated by reference from
Exhibit 4.10 to Form S-4 (No. 333-90235) filed on November
3, 1999).
4.15 Indenture, dated as of August 20, 1999, between Nuevo Energy
Company and State Street Bank and Trust Company, as Trustee
with respect to 9 1/2% Senior Subordinated Notes due 2008.
(Incorporated by reference from Exhibit 4.11 to Form S-4
(No. 333-90235) filed on November 3, 1999).
4.16 Registration Agreement dated August 20, 1999, between Nuevo
Energy Company, Banc of America Securities LLC and Salomon
Smith Barney Inc.(Incorporated by reference from Exhibit
4.12 to Form S-4 (No. 333-90235 ) filed on November 3,
1999).
*4.17 Form of Senior Indenture.
*4.18 Form of Subordinated Indenture.
4.19 Indenture, dated as of September 2000, between Nuevo Energy
Company and State Street Bank and Trust Company as Trustee
with respect to the 9 3/8% Senior Subordinated Notes due
2010. (Incorporated by reference to...
(5) OPINION REGARDING LEGALITY
*5.1 Opinion of Haynes and Boone, L.L.P.
(12) STATEMENTS REGARDING COMPUTATION OF RATIOS
***12.1 Computation of ratio of earnings to fixed charges.
(23) CONSENTS OF EXPERTS AND COUNSEL
*23.1 Consent of Haynes and Boone, L.L.P. (included in Exhibit
5.1).
*23.2 Consent of KPMG LLP.
*23.3 Consent of Ryder Scott Company, L.P.
(24) POWER OF ATTORNEY
24.1 Powers of Attorney (included on the signature page of the
Registration Statement)
(25) STATEMENT OF ELIGIBILITY OF TRUSTEE
**25.1 Statement of Eligibility and Qualification on Form T-1 of
Trustee.
</TABLE>
---------------
* Previously filed.
** To be filed as an exhibit to Nuevo Energy Company's Current Report on Form
8-K in connection with a specific offering.
***Filed herewith.
