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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES UNDER THE
TRUST INDENTURE ACT OF 1939
Abraxas Petroleum Corporation
Canadian Abraxas Petroleum Limited
----------------------------------------------
(Name of applicant)
500 North Loop 1604 East, Suite 100, San Antonio,
Texas 78232 300 5th Avenue SW, # 1200, Calgary,
Alberta, Canada T2P 3C4
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(Address of principal executive offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
<TABLE>
<S> <C>
TITLE OF CLASS AMOUNT
----------------------- --------------
11 1/2% Senior Secured Notes due 2004, Series A $196,800,000
</TABLE>
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Approximate date of proposed public offering: As soon as practicable following
the qualification of the indenture covered hereby under the Trust Indenture Act
of 1939, as amended.
Name and address of agent for service:
Robert L. G. Watson
President and Chief Executive Officer
Abraxas Petroleum Corporation
500 North Loop 1604 East, Suite 100
San Antonio, Texas 78232.
With a copy to:
Cox & Smith Incorporated
112 East Pecan, Suite 1800
San Antonio, Texas 78205
Attn: Steven R. Jacobs.
The obligors hereby amend this application for qualification on such
date or dates as may be necessary to delay its effectiveness until (i) the 20th
day after the filing of a further amendment which specifically states that it
shall supersede this amendment, or (ii) such date as the Commission, acting
pursuant to Section 307(c) of the Act, may determine upon the written request
of the obligor.
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GENERAL
1. General information.
(a) Form of organization. Both Abraxas Petroleum Corporation
("Abraxas") and Canadian Abraxas Petroleum Limited ("Canadian
Abraxas" and, together with Abraxas, the ("Applicants") are
corporations.
(b) State or other sovereign power under the laws of which organized.
Abraxas is organized under the laws of the State of Nevada.
Canadian Abraxas is organized under the laws of Alberta, Canada.
2. Securities Act exemption applicable.
The Applicants are relying upon the exemption provided by Section
3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act"), in
claiming that registration of the Exchange Notes (as hereinafter defined) to be
issued by the Applicants in connection with the exchange offer hereinafter
described (the "Exchange Offer") is not required under the Securities Act. The
Exchange Offer will be made pursuant to the terms and provisions of an Offer to
Exchange and Consent Solicitation dated November 18, 1999 (the "Offer to
Exchange"), and the related Consent and Letter of Transmittal (the "Consent and
Letter of Transmittal"). Pursuant to the Offer to Exchange and the Consent and
Letter of Transmittal, the Applicants, as co-issuers, are offering to exchange
their 11 1/2% Senior Secured Notes due 2004, Series A (the "Exchange Notes"),
shares of Abraxas' common stock, par value $.01 per share ("Common Stock"), and
Contingent Value Rights (the "CVRs") for their 11 1/2% Senior Notes due 2004,
Series D (the "Old Notes") in the ratio of $700 principal amount of Exchange
Notes, approximately 59.6184 shares of Common Stock, and approximately 59.6184
CVRs each of which may result in the distribution of up to approximately 6.3889
shares of Common Stock for each $1,000 principal amount of Old Notes. As of
September 30, 1999, $274.0 million aggregate principal amount of the Old Notes
were outstanding. If 100% of the outstanding Old Notes are accepted for
exchange pursuant to the Exchange Offer, the Applicants will be required to
issue a total of (i) $196.8 million aggregate principal amount of Exchange
Notes; (ii) 16.3 million shares of Common Stock; and (iii) 16.3 million CVRs.
The holders of the Old Notes have not made, nor will they make, any cash
payments in connection with the Exchange Offer. Consummation of the Exchange
Offer is conditioned upon, among other things, the qualification of the
indenture (the "Indenture") for the Exchange Notes, a copy of which is filed as
an exhibit to this Form T-3, under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). There have not been, and there will not be, any
sales of the Exchange Notes, Common Stock or CVRs made by the Applicants (other
than those sales included within the Exchange Offer) or by or through an
underwriter at or about the same time as the Exchange Offer. The Applicants
will not pay any commission or other remuneration or consideration, directly or
indirectly, to any broker, dealer, salesman or other person for soliciting
exchanges of the Old Notes. The Applicants have appointed The Bank of New York
(the "Exchange Agent") as the exchange agent in connection with the Exchange
Offer. In such capacity, the Exchange Agent will perform services for the
Applicants in connection with the tender and withdrawal of Old Notes pursuant
to the Exchange Offer. The Applicants have agreed to pay the Exchange Agent
compensation for its services, to reimburse the Exchange Agent for its
reasonable out-of-pocket expenses in connection therewith and to indemnify the
Exchange Agent against any losses or claims incurred without negligence or bad
faith on the part of the Exchange Agent in connection with its duties under the
Exchange Offer. In addition, the Applicants will pay remuneration to their
financial, legal, and accounting counsel for the provision of advisory, legal,
and accountancy services, respectively.
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AFFILIATIONS
3. Affiliates.
(a) The following are subsidiaries of Abraxas with the percentages of
voting securities owned by Abraxas indicated in parenthesis:
(i) Canadian Abraxas Petroleum Limited (100%).
(ii) Wamsutter Holdings, Inc. (100%).
(iii) Sandia Oil & Gas Corp. (100%). (1)
(iv) Western Associated Energy Corp. (100%).
(v) Grey Wolf Exploration, Inc. (47.1%). (2)
(b) The following are subsidiaries of Canadian Abraxas with the
percentages of voting securities owned by Canadian Abraxas
indicated in parenthesis:
(i) New Cache Petroleums, Ltd. (100%).
(c) See Item 4 for "Directors and Officers" of the Applicants, some of
whom may be deemed to be affiliates of the Applicants by virtue of
their positions.
(1) Sandia Oil & Gas Corp. owns 100% of the voting securities of Sandia
Operating, Inc.
(2) Canadian Abraxas owns 1.6% of the voting securities of Grey Wolf
Exploration, Inc.
MANAGEMENT AND CONTROL
4. Directors and executive officers.
<TABLE>
<CAPTION>
NAME ADDRESS OFFICE
---- ------- ------
<S> <C> <C>
Robert L. G. Watson c/o Abraxas Petroleum Corporation Chairman of the Board, President and
500 North Loop 1604 East Chief Executive Officer of Abraxas;
Suite 100 Chairman of the Board, President and
San Antonio, Texas 78232 director of Canadian Abraxas
Chris E. Williford c/o Abraxas Petroleum Corporation Executive Vice President, Chief
500 North Loop 1604 East Financial Officer, Treasurer and
Suite 100 director of Abraxas; Vice President
San Antonio, Texas 78232 and Assistant Secretary of Canadian
Abraxas
Robert W. Carington, Jr. c/o Abraxas Petroleum Corporation Executive Vice President and director
500 North Loop 1604 East of Abraxas
Suite 100
San Antonio, Texas 78232
Franklin A. Burke c/o Abraxas Petroleum Corporation Director of Abraxas
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
</TABLE>
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<TABLE>
<S> <C> <C>
Harold D. Carter c/o Abraxas Petroleum Corporation Director of Abraxas
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
Robert D. Gershen c/o Abraxas Petroleum Corporation Director of Abraxas
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
Richard M. Kleberg, III c/o Abraxas Petroleum Corporation Director of Abraxas
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
James C. Phelps c/o Abraxas Petroleum Corporation Director of Abraxas
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
Paul A. Powell, Jr. c/o Abraxas Petroleum Corporation Director of Abraxas
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
Richard M. Riggs c/o Abraxas Petroleum Corporation Director of Abraxas
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
Roger L. Bruton c/o Abraxas Petroleum Corporation Executive Vice President and director
500 North Loop 1604 East of Canadian Abraxas
Suite 100
San Antonio, Texas 78232
Donald A. Engle c/o Abraxas Petroleum Corporation Secretary and director of Canadian
500 North Loop 1604 East Abraxas
Suite 100
San Antonio, Texas 78232
</TABLE>
5. Principal owners of voting securities. The following own 10% or more of the
voting securities of Canadian Abraxas:
<TABLE>
<CAPTION>
NAME AND COMPLETE TITLE OF CLASS AMOUNT % OF VOTING SECURITIES
MAILING ADDRESS OWNED OWNED OWNED
----------------- -------------- ------- ---------------------
<S> <C> <C> <C>
Abraxas Petroleum Corporation Common Stock 5,751 100%
500 North Loop 1604 East,
Suite 100
San Antonio, Texas 78232
</TABLE>
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UNDERWRITERS
6. Underwriters. (a) The name and complete mailing address of each person who,
within three years prior to the date of the filing this application, acted as
an underwriter of any securities of the Applicants which are outstanding on the
date of filing this application and the title of each class of the securities
underwritten follows:
<TABLE>
<CAPTION>
Class of Securities Underwriter Complete Mailing Address
------------------- ----------- ------------------------
<S> <C> <C>
12.875% Senior Secured Jefferies & Company, Inc. 909 Fannin, Suite 3100
Notes due 2003 Houston, Texas 77010
11 1/2% Senior Notes Jefferies & Company, Inc. 909 Fannin, Suite 3100
due 2004, Series D Houston, Texas 77010
</TABLE>
CAPITAL SECURITIES
7. Capitalization. (a) Authorized Classes of Securities.
As of November 18, 1999.
<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
-------------- ----------------- ------------------
<S> <C> <C>
Abraxas:
Common Stock, par value 50,000,000 6,352,672
$.01 per share (1)
Preferred Stock, par value 1,000,000 0
$.01 per share
11 1/2% Senior Notes due 2004, $275,000,000 $274,000,000
Series D
12.875% Senior Secured $63,500,000 $63,500,000
Notes due 2003
Canadian Abraxas (2)
Common Shares Unlimited 5,751
First Preferred Shares Unlimited 0
</TABLE>
(1) Abraxas has warrants ("Warrants") outstanding to purchase an aggregate
of 225,500 shares of Abraxas Common Stock. Associated Energy Managers,
Inc. ("AEM"), has Warrants to purchase 13,500 shares at an exercise
price of $7.00 per share. First Union National Bank of North Carolina
("First Union") has warrants to purchase 212,000 shares of Abraxas
Common Stock at an exercise price of $9.79 per share. These warrants
were issued to First Union in connection with Abraxas' credit
agreement. First Union and AEM have certain registration rights with
respect to shares of the Abraxas common stock issued pursuant to the
exercise of such Warrants.
All outstanding Warrants contain provisions that protect AEM and First
Union against dilution by adjusting the price at which the Warrants
are exercisable and the number of shares of the Abraxas Common Stock
issuable upon exercise thereof upon the occurrence of certain events,
including payment of stock dividends and distributions, stock splits,
recapitalizations, reclassifications, mergers, consolidations or the
issuance or sale of Common Stock or options, rights or securities
convertible into shares of the Common Stock, in the
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case of AEM, at less than the current market price or, in the case of
First Union, at a price less than the greater of the current market
price or the exercise price. A holder of Warrants has no rights as a
stockholder of Abraxas until the Warrants are exercised. All Warrants
are currently exercisable, although none have been exercised as of the
date hereof.
(2) Canadian Abraxas is a guarantor of Abraxas' 12.875% Senior Secured
Notes due 2003.
(b) Voting Rights.
(i) Holders of the Abraxas Common Stock are entitled to cast one vote
for each share held of record on all matters submitted to a vote of
stockholders and are not entitled to cumulate votes for the election of
directors. The Board of Directors of Abraxas is authorized, without any further
action by the stockholders, to determine the voting rights of any series of
Preferred Stock. No such series of Preferred Stock have been designated or
issued.
(ii) Holders of the Canadian Abraxas Common Shares and First Preferred
Shares are entitled to cast one vote for each share held of record on all
matters submitted to a vote of Shareholders.
INDENTURE SECURITIES
8. Analysis of Indenture provisions.
Defined terms used in this Item 8 that are not otherwise defined in
this application shall have the meanings given to such terms in the Indenture.
(A) Events of Default; Withholding of Notice.
An "Event of Default" means any of the following events:
(i) the failure to pay interest on any Exchange Notes when
the same becomes due and payable and such default continues for a
period of 30 days;
(ii) the failure to pay the principal of any Exchange Notes
when such principal becomes due and payable, at maturity, upon
redemption or otherwise (including the failure to make a payment to
purchase Exchange Notes tendered pursuant to a Change of Control Offer
or a Net Proceeds Offer);
(iii) a default in the observance or performance of any other
covenant or agreement contained in the Indenture which default
continues for a period of 30 days after either Issuer or any
Subsidiary Guarantor receives written notice specifying the default
(and demanding that such default be remedied) from the Trustee or the
Holders of at least 25% of the outstanding principal amount of the
Exchange Notes (except in the case of a default with respect to
observance or performance of any of the terms or provisions of the
Indenture covenants relating to Change of Control (Section 4.15),
Limitation on Asset Sales (Section 4.16) or Merger, Consolidation and
Sale of Assets (Section 5.01) which will constitute an Event of
Default with such notice requirement but without such passage of time
requirement);
(iv) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of Abraxas or any Restricted Subsidiary (or
the payment of which is guaranteed by Abraxas or any Restricted
Subsidiary), whether such Indebtedness now exists, or is created after
the Issue Date, which default (i) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness
after any applicable grace period provided in such Indebtedness (a
"payment default") or (ii) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
payment default or the maturity of which has been so accelerated,
aggregates $5,000,000 or more;
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(v) one or more judgments in an aggregate amount in excess of
$5,000,000 (unless covered by insurance by a reputable insurer as to
which the insurer has acknowledged coverage) shall have been rendered
against Abraxas or any of its Restricted Subsidiaries and such
judgments remain undischarged, unvacated, unpaid or unstayed for a
period of 60 days after such judgment or judgments become final and
non-appealable;
(vi) Abraxas or any of its Subsidiaries pursuant to or under
or within the meaning of any Bankruptcy Law (a) commences a voluntary
case or proceeding; (b) consents to the entry of an order for relief
against it in an involuntary case or proceeding; (c) consents to the
appointment of a Custodian of it or for all or substantially all of
its property; (d) makes a general assignment for the benefit of its
creditors; or (e) shall generally not pay its debts when such debts
become due or shall admit in writing its inability to pay its debts
generally;
(vii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (a) is for relief against Abraxas
or any Subsidiary of Abraxas in an involuntary case or proceeding, (b)
appoints a Custodian of Abraxas or any Subsidiary of Abraxas for all
or substantially all of its Properties, or (c) orders the liquidation
of Abraxas or any Subsidiary of Abraxas, and in each case the order or
decree remains unstayed and in effect for 60 days; or
(viii) any of the Guarantees or any of the Security Documents
ceases to be in full force and effect or any of the Guarantees or the
Security Documents is declared to be null and void or invalid and
unenforceable or any of the Subsidiary Guarantors denies or disaffirms
its liability under its Guarantee (other than by reason of release of
a Subsidiary Guarantor in accordance with the terms of the Indenture)
or any obligor or any Related Person denies or disaffirms its
liability under any Security Document to which it is party.
Upon the happening of any Event of Default, the Trustee or the holders of
at least 25% in principal amount of outstanding Exchange Notes may declare the
principal of, premium, if any, and accrued and unpaid interest on all the
Exchange Notes to be due and payable by notice in writing to the Issuers and
the Trustee specifying the Event of Default and that it is a "notice of
acceleration", and the same shall become immediately due and payable. If an
Event of Default described in clauses (vi) and (vii) above occurs and is
continuing, then all unpaid principal of, and premium, if any, and accrued and
unpaid interest on all of the outstanding Exchange Notes will be immediately
due and payable without any declaration or other act on the part of the Trustee
or any holder.
At any time after a declaration of acceleration with respect to the
Exchange Notes as described in the preceding paragraph, the holders of a
majority in principal amount of the Exchange Notes may rescind and cancel such
declaration (i) if the rescission would not conflict with any judgment or
decree; (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of such
acceleration; (iii) if, to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which have
become due otherwise than by such declaration of acceleration, has been paid;
(iv) if the Issuers have paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances; and (v)
if, in the event of the cure or waiver of an Event of Default of the type
described in clauses (vi) and (vii) above, the Trustee shall have received an
Officer's Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
Prior to the declaration of acceleration of the Exchange Notes, the holders
of a majority in principal amount of the Exchange Notes then outstanding by
written notice to the Trustee may waive any existing Default or Event of
Default under the Indenture, and its consequences, except a default in the
payment of the principal of or interest on any Exchange Notes or in respect of
any provision of the Indenture which cannot be modified or amended without the
consent of a Holder pursuant to Section 9.02 of the Indenture. When a Default
or Event of Default is so waived, it shall be deemed cured and shall cease to
exist.
If a Default or an Event of Default occurs and is continuing and if (i) the
Trustee receives written notice thereof or (ii) such default is an Event of
Default relating to the failure to pay principal of, or interest on, the
Exchange Notes, the Trustee shall mail to each Holder and to the First Lien
Notes Representative notice of the uncured Default
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or Event of Default within 90 days after obtaining knowledge thereof. Except in
the case of a Default or an Event of Default in payment of principal of, or
interest on, any Exchange Note, including an accelerated payment, a Default in
payment on the Change of Control Payment Date pursuant to a Change of Control
Offer or on the Net Proceeds Offer Payment Date pursuant to a Net Proceeds
Offer and a Default in compliance with the Indenture provisions regarding a
Merger, Consolidation and Sale of Assets, the Trustee may withhold the notice
if and so long as its Board of Directors, the executive committee of its Board
of Directors or a committee of its directors and/or Trust Officers in good
faith determines that withholding the notice is in the interest of the Holders.
(B) Authentication and Delivery; Application of Proceeds.
Two Officers, or an Officer and an Assistant Secretary of each Issuer and
each Subsidiary Guarantor, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each case, have been
duly authorized by all requisite corporate actions) shall attest to, the
Exchange Notes for the Issuers and the Guarantees for the Subsidiary Guarantors
by manual or facsimile signature. If an Officer or Assistant Secretary whose
signature is on an Exchange Note or a Guarantee was an Officer or Assistant
Secretary at the time of such execution but no longer holds that office or
position at the time the Trustee authenticates the Exchange Note, the Exchange
Note shall nevertheless be valid.
An Exchange Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Exchange Note.
The signature shall be conclusive evidence that the Exchange Note has been
authenticated under the Indenture.
The Trustee upon receipt of a written order in the form of an Officers'
Certificate shall authenticate Exchange Notes for original issue in the
aggregate principal amount not to exceed $196,800,000.00, in each case upon a
written order of the Issuers in the form of an Officers' Certificate of each
Issuer. Each such written order shall specify the amount of Exchange Notes to
be authenticated and the date on which the Exchange Notes are to be
authenticated, and whether the Exchange Notes are to be issued as Physical
Notes or Global Notes or such other information as the Trustee may reasonably
request.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Issuers to authenticate Exchange Notes.
Unless otherwise provided in the appointment set forth in the Indenture, an
Authenticating Agent may authenticate Exchange Notes whenever the Trustee may
do so.
The Exchange Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
The Exchange Notes are being issued in exchange for the Old Notes; as such,
there will be no proceeds to the Issuers from the issuance of the Exchange
Notes.
(C) Release and Substitution of Property Subject to the Lien of the Indenture.
Upon compliance by the Issuers with the conditions set forth below in
respect of any sale, transfer or other disposition, the Trustee shall release
the Released Interests (as defined below) from the Lien of the Indenture and
the Security Documents and reconvey the Released Interests to the Issuers or
the grantor of the Lien on such property. The Issuers will have the right to
obtain a release of items of Collateral (the "Released Interests") subject to
any sale, transfer or other disposition, or owned by a Restricted Subsidiary
the Capital Stock of which is sold in compliance with the terms of the
Indenture such that it ceases to be a Restricted Subsidiary, upon compliance
with the condition that such Issuers deliver to the Trustee the following:
(i) a written notice in the form of an Officers' Certificate from
Abraxas requesting the release of Released Interests:
(a) describing the proposed Released Interests,
(b) specifying the value of such Released Interests or such
Capital Stock, as the case may be, on a date within 60 days of the Abraxas
notice (the "Valuation Date"),
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(c) stating that the consideration to be received is at least
equal to the fair market value of the Released Interests,
(d) stating that the release of such Released Interests will
not interfere with the Trustee's ability to realize the value of the remaining
Collateral and will not impair the maintenance and operation of the remaining
Collateral,
(e) confirming the sale or exchange of, or an agreement to
sell or exchange, such Released Interests or such Capital Stock, as the case
may be, is a bona fide sale to or exchange with a Person that is not an
Affiliate of the Issuers or, in the event that such sale or exchange is to or
with a Person that is an Affiliate, confirming that such sale or exchange is
made in compliance the provisions of the Indenture relating to Limitation on
Transactions with Affiliates (Section 4.11),
(f) in the event there is to be a contemporaneous
substitution of property for the Collateral subject to the sale, transfer or
other disposition, specifying the property intended to be substituted for the
Collateral to be disposed of,
(ii) an Officers' Certificate of Abraxas stating that:
(a) such sale, transfer or other disposition complies with
the terms and conditions of the Indenture,
(b) all Net Cash Proceeds from the sale, transfer or other
disposition of any of the Released Interests or such Capital Stock, as the case
may be, will be applied pursuant to the provisions of the Indenture in respect
of the deposit of proceeds into the Collateral Account or with the First Lien
Notes Representative as contemplated by the Indenture and in respect of Asset
Sales, to the extent applicable,
(c) there is no Default or Event of Default in effect or
continuing on the date thereof or the date of such sale, transfer or other
disposition,
(d) the release of the Collateral will not result in a
Default or Event of Default under the Indenture,
(e) upon the delivery of such Officers' Certificate, all
conditions precedent in the Indenture relating to the release in question will
have been complied with,
(f) such sale, transfer or other disposition is not between
Abraxas and any of its Restricted Subsidiary or between Restricted
Subsidiaries, and
(g) such sale, transfer or other disposition is not a sale,
transfer or other disposition that is excluded from the definition of "Asset
Sale" because it was a sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of Abraxas in a transaction which
made in compliance with the provisions of the Indenture relating to Merger,
Consolidation and Sale of Assets (Section 5.01).
(iii) all documentation required by the TIA, if any, prior to the
release of Collateral by the Trustee and, in the event there is to be a
contemporaneous substitution of property for the Collateral subject to such
sale, transfer or other disposition, all documentation necessary to effect the
substitution of such new Collateral.
Notwithstanding the provisions described above, so long as no Event of
Default shall have occurred and be continuing, the Issuers may, without
satisfaction of the conditions described above, all to the extent consistent
with the provisions of the Indenture relating to Corporate Existence (Section
4.03), Maintenance of Properties and Insurance (Section 4.05) and Compliance
with Law (Section 4.07), (i) sell or otherwise dispose of any equipment or
inventory subject to the Lien of the Indenture and the Security Documents,
which may have become worn out or obsolete, (ii) abandon, terminate, cancel,
release or make alterations in or substitutions of any leases or contracts
subject to the Lien of the Indenture or any of the Security Documents, (iii)
surrender or modify any franchise,
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license or permit subject to the Lien of the Indenture or any of the Security
Documents which it may own or under which it may be operating, (iv) alter,
repair, replace, change the location or position of and add to its structures,
machinery, systems, equipment, fixtures and appurtenances, (v) demolish,
dismantle, tear down or scrap any obsolete Collateral or abandon any portion
thereof, (vi) grant farm-outs, leases or sub-leases in respect of real property
to the extent the foregoing does not constitute an Asset Sale, and (vii)
dispose of Hydrocarbons or other mineral products for value in the ordinary
course of business all in accordance with the terms of the TIA.
(D) Satisfaction and Discharge of the Indenture.
The Issuers and the Subsidiary Guarantors will have no further obligations
under the Indenture, the Security Documents and the Guarantees as to all
outstanding Exchange Notes, other than surviving rights of registration of
transfer or exchange of the Exchange Notes, when either (i) all the Exchange
Notes have been delivered to the Trustee for cancellation except lost, stolen
or destroyed Exchange Notes which have been replaced or paid and Exchange Notes
which the Issuers have deposited in trust or segregated and held in trust by
the Issuers and thereafter repaid to the Issuers or discharged from such trust,
or (ii) all Exchange Notes have become due and payable and the Issuers have
deposited with the Trustee funds in sufficient to pay and discharge the entire
Indebtedness on the Exchange Notes on their various due dates, the Issuers have
paid all other sums payable under the Indenture by the Issuers, and the Issuers
have delivered to the Trustee an officer's certificate and an opinion of
counsel stating that the Issuers have complied with all conditions precedent
under the Indenture relating to the satisfaction and discharge of the
Indenture.
As long as the Issuers take steps to make sure that holders receive all of
their payment under the Exchange Notes and are able to transfer the Exchange
Notes, the Issuers can elect to legally release themselves and any of the
Subsidiary Guarantors for any Obligations on the Exchange Notes (called "Legal
Defeasance") other than: (i) the rights of holders to receive payments in
respect of the principal of, premium, if any, and interest on the Exchange
Notes when such payments are due; (ii) the Issuers' obligations with respect to
the Exchange Notes to issue temporary Exchange Notes, register Exchange Notes,
replace mutilated, destroyed, lost or stolen Exchange Notes and the maintenance
of an office or agency for payments; the rights, powers, trust, duties and
immunities of the Trustee; and (iii) the Legal Defeasance provisions of the
Indenture.
In addition, the Issuers may, at their option and at any time, elect to
have the obligations of the Issuers and the Subsidiary Guarantors, if any,
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance"). In the event Covenant Defeasance occurs, certain
events (other than non-payment, bankruptcy, receivership, reorganization and
insolvency events) described under "Events of Default" will no longer
constitute an Event of Default with respect to the Exchange Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) the Issuers must irrevocably deposit with the Trustee, in trust,
for the benefit of the holders cash in U.S. dollars and/or non-callable U.S.
government obligations in such amounts as will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Exchange Notes on their
various due dates;
(ii) in the case of Legal Defeasance, the Issuers must deliver to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that:
(A) the Issuers have received from, or there has been published by,
the Internal Revenue Service a ruling, or
(B) since the Issue Date, there has been a change in the applicable
federal income tax law, in either case to the effect that the holders
will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had
not occurred;
(iii) in the case of Covenant Defeasance, the Issuers must deliver to
the Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the holders will not recognize income, gain
10
<PAGE> 11
or loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the Indenture or any
other agreement or instrument to which Abraxas or any of its Restricted
Subsidiaries is a party or by which Abraxas or any of its Restricted
Subsidiaries is bound;
(vi) the Issuers must deliver an officer's certificate to the Trustee
stating that the deposit was not made by the Issuers with the intent of
preferring the holders over any other creditors of the Issuers or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Issuers or others;
(vii) the Issuers must deliver an officer's certificate and an opinion
of counsel to the Trustee, each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant Defeasance, as the case
may be, have been complied with; and
(viii) the Issuers must deliver an opinion of counsel to the Trustee
to the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally.
(E) Evidence as to Compliance.
Upon any request or application by the Issuers to the Trustee to take any
action under the Indenture, the Issuers shall furnish to the Trustee: (i) an
Officers' Certificate, in form and substance satisfactory to the Trustee,
stating that, in the opinion of the signers, all conditions precedent to be
performed by the Issuers, if any, provided for in the Indenture relating to the
proposed action have been complied with; and (ii) an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent to be
performed by the Issuers, if any, provided for in the Indenture relating to the
proposed action have been complied with (which counsel, as to factual matters,
may rely on an Officers' Certificate).
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in the Indenture, other than the Officers'
Certificate submitted quarterly and discussed below, shall include: (i) a
statement that the Person making such certificate or opinion has read such
covenant or condition; (ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; (iii) a statement that, in the opinion
of such Person, he has made such examination or investigation as is reasonably
necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and (iv) a statement as to
whether or not, in the opinion of each such Person, such condition or covenant
has been complied with.
The Issuers shall deliver to the Trustee, within 105 days after the end of
each of their respective fiscal quarters, an Officers' Certificate of each of
the Issuers (provided, however, that one of the signatories to each such
Officers' Certificate shall be the respective Issuer's principal executive
officer, principal financial officer or principal accounting officer), as to
such Officers' knowledge, without independent investigation, of the Issuers'
compliance with all conditions and covenants under this Indenture (without
regard to any period of grace or requirement of notice provided hereunder) and
in the event any Default of the Issuers exists, such Officers shall specify the
nature of such Default. Each such Officers' Certificate shall also notify the
Trustee should such Issuer elect to change the manner in which it fixes its
fiscal year end.
So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, the annual financial statements
delivered pursuant to the Indenture shall be accompanied by a written report of
Abraxas' independent certified public accountants (who shall be a firm of
established national reputation) stating (A) that their audit examination has
included a review of the terms of the Indenture and the form of the
11
<PAGE> 12
Exchange Notes as they relate to accounting matters, and (B) whether, in
connection with their audit examination, any Default or Event of Default has
come to their attention and if such a Default or Event of Default has come to
their attention, specifying the nature and period of existence thereof.
If any Default or Event of Default has occurred and is continuing or if any
Holder seeks to exercise any remedy under the Indenture with respect to a
claimed Default under the Indenture or the Exchange Notes, Abraxas shall
deliver to the Trustee an Officers' Certificate specifying such event, notice
or other action within 10 days of its becoming aware of such occurrence.
9. Other obligors.
The following subsidiaries of the Applicants are guarantors of the
Exchange Notes:
<TABLE>
<CAPTION>
NAME COMPLETE MAILING ADDRESS
---- ------------------------0
<S> <C>
Sandia Oil & Gas Corp. 500 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
New Cache Petroleums, Ltd. 300 5th Avenue SW, #1200
Calgary, Alberta, Canada T2P 3C4
Wamsutter Holdings, Inc. 500 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
</TABLE>
Contents of application for qualification. This application for qualification
comprises--
(a) Pages numbered 1 to 14, consecutively.
(b) The statement of eligibility and qualification of each trustee
under the Indenture to be qualified (filed previously as Exhibit
T3G).
(c) The following exhibits in addition to those filed as a part of the
statement of eligibility and qualification of each trustee:
(i) Exhibit T3A-1.1: Articles of Incorporation of Abraxas (Filed
as Exhibit 3.1 to Abraxas' Registration Statement on Form
S-4, No. 333-36565 (the "S-4 Registration Statement")).
Exhibit T3A-1.2: Articles of Amendment to the Articles of
Incorporation of Abraxas dated October 22, 1990 (Filed as
Exhibit 3.3 to the S-4 Registration Statement).
Exhibit T3A-1.3: Articles of Amendment to the Articles of
Incorporation of Abraxas dated December 18, 1990. (Filed as
Exhibit 3.4 to the S-4 Registration Statement).
Exhibit T3A-1.4: Articles of Amendment to the Articles of
Incorporation of Abraxas dated June 8, 1995 (Filed as Exhibit
3.4 to Abraxas' Registration Statement on Form S-3, No.
333-00398 (the "S-3 Registration Statement")).
Exhibit T3A-2: Articles of Incorporation of Canadian Abraxas
(Filed as Exhibit 3.7 to Abraxas and Canadian Abraxas'
Registration Statement on Form S-4, 333-18673, (the "Exchange
Offer Registration Statement")).
(ii) Exhibit T3B-1: Amended and Restated Bylaws of Abraxas. (Filed
as Exhibit 3.5 to the S-3 Registration Statement).
12
<PAGE> 13
<TABLE>
<S> <C>
Exhibit T3B-2: Bylaws of Canadian Abraxas (Filed as Exhibit
3.8 to the Exchange Offer Registration Statement).
(iii) Exhibit T3C: A copy of the Indenture to be qualified (filed
herewith).
(iv) Exhibit T3D: Not applicable.
(v) Exhibit T3E-1: A copy of the Offer to Exchange to be sent or
given to holders of the Applicants' 11 1/2% Senior Notes due
2004, Series D in connection with the Exchange Offer
(previously filed).
Exhibit T3E-2: A copy of the Consent and Letter of
Transmittal to be sent or given to holders of the Applicants'
11 1/2% Senior Notes due 2004, Series D in connection with
the Exchange Offer (previously filed).
(vi) Exhibit T3F: A cross reference sheet showing the location in
the Indenture of the provisions inserted therein pursuant to
Section 310 through 318(a), inclusive, of the Trust Indenture
Act, is incorporated by reference to the "Cross Reference
Table" of the Indenture set forth as Exhibit T3C hereof.
(vii) Exhibit T3G: A copy of the Trustee's Statement of Eligibility
on Form T-1 under the Trust Indenture Act (previously filed).
</TABLE>
13
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, Abraxas Petroleum Corporation, a corporation organized and existing
under the laws of the State of Nevada, has duly caused this application to be
signed on its behalf by the undersigned, thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the city of San Antonio, and
State of Texas, on the 14th day of December, 1999.
(SEAL)
ABRAXAS PETROLEUM CORPORATION
By: /s/ Robert L.G. Watson
----------------------------
Robert L.G. Watson,
President and Chief Executive Officer
ATTEST: /s/ Chris E. Williford
------------------------------------
Chris E. Williford, Executive Vice
President, Chief Financial Officer,
and Treasurer
Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, Canadian Abraxas Petroleum Limited, a corporation organized and
existing under the laws of Calgary, Alberta, has duly caused this application
to be signed on its behalf by the undersigned, thereunto duly authorized, and
its seal to be hereunto affixed and attested, all in the city of San Antonio,
and State of Texas, on the 14th day of December, 1999.
(SEAL)
CANADIAN ABRAXAS PETROLEUM LIMITED
By: /s/ Robert L.G. Watson
----------------------------------
Robert L.G. Watson,
President and Chief Executive Officer
ATTEST: /s/ Chris E. Williford
------------------------------------
Chris E. Williford, Vice President
and Assistant Secretary
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<S> <C>
(i) Exhibit T3A-1.1: Articles of Incorporation of Abraxas (Filed
as Exhibit 3.1 to Abraxas' Registration Statement on Form
S-4, No. 333-36565 (the "S-4 Registration Statement")).
Exhibit T3A-1.2: Articles of Amendment to the Articles of
Incorporation of Abraxas dated October 22, 1990 (Filed as
Exhibit 3.3 to the S-4 Registration Statement).
Exhibit T3A-1.3: Articles of Amendment to the Articles of
Incorporation of Abraxas dated December 18, 1990. (Filed as
Exhibit 3.4 to the S-4 Registration Statement).
Exhibit T3A-1.4: Articles of Amendment to the Articles of
Incorporation of Abraxas dated June 8, 1995 (Filed as Exhibit
3.4 to Abraxas' Registration Statement on Form S-3, No.
333-00398 (the "S-3 Registration Statement")).
Exhibit T3A-2: Articles of Incorporation of Canadian Abraxas
(Filed as Exhibit 3.7 to Abraxas and Canadian Abraxas'
Registration Statement on Form S-4, 333-18673, (the "Exchange
Offer Registration Statement")).
(ii) Exhibit T3B-1: Amended and Restated Bylaws of Abraxas. (Filed
as Exhibit 3.5 to the S-3 Registration Statement).
Exhibit T3B-2: Bylaws of Canadian Abraxas (Filed as Exhibit
3.8 to the Exchange Offer Registration Statement).
(iii) Exhibit T3C: A copy of the Indenture to be qualified (filed
herewith).
(iv) Exhibit T3D: Not applicable.
(v) Exhibit T3E-1: A copy of the Offer to Exchange to be sent or
given to holders of the Applicants' 11 1/2% Senior Notes due
2004, Series D in connection with the Exchange Offer
(previously filed).
Exhibit T3E-2: A copy of the Consent and Letter of
Transmittal to be sent or given to holders of the Applicants'
11 1/2% Senior Notes due 2004, Series D in connection with
the Exchange Offer (previously filed).
(vi) Exhibit T3F: A cross reference sheet showing the location in
the Indenture of the provisions inserted therein pursuant to
Section 310 through 318(a), inclusive, of the Trust Indenture
Act, is incorporated by reference to the "Cross Reference
Table" of the Indenture set forth as Exhibit T3C hereof.
(vii) Exhibit T3G: A copy of the Trustee's Statement of Eligibility
on Form T-1 under the Trust Indenture Act (previously filed).
</TABLE>
<PAGE> 1
================================================================================
ABRAXAS PETROLEUM CORPORATION
and
CANADIAN ABRAXAS PETROLEUM LIMITED
as Issuers,
THE SUBSIDIARY GUARANTORS PARTY HERETO
and
FIRSTAR BANK, NATIONAL ASSOCIATION,
as Trustee
----------
INDENTURE
Dated as of December [__], 1999
----------
$196,800,000.00
11-1/2% Senior Secured Notes due 2004, Series A
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1)...................................................................7.10
(a)(2)...................................................................7.10
(a)(3)...................................................................N.A.
(a)(4)...................................................................N.A.
(a)(5)...................................................................7.08; 7.10,
.........................................................................7.11
(b)......................................................................7.08; 7.10,
.........................................................................10.02
(c)......................................................................N.A.
311(a)......................................................................7.11
(b)......................................................................7.11
(c)......................................................................N.A.
312(a)......................................................................2.05
(b)......................................................................10.03
(c)......................................................................10.03
313(a)......................................................................7.06
(b)(1)...................................................................N.A.
(b)(2)...................................................................7.06
(c)......................................................................7.06; 10.02
(d)......................................................................7.06
314(a)......................................................................4.06; 4.08;
.........................................................................11.02
(b)......................................................................12.02
(c)(1)...................................................................7.02, 10.04
(c)(2)...................................................................7.02, 10.04
(c)(3)...................................................................N.A.
(d)......................................................................12.03
(e)......................................................................10.05
(f)......................................................................N.A.
315(a)......................................................................7.01(b)
(b)......................................................................7.05; 10.02
(c)......................................................................7.01(a)
(d)......................................................................7.01(c)
(e)......................................................................6.11
316(a)(last sentence).......................................................2.09
(a)(1)(A)................................................................6.05
(a)(1)(B)................................................................6.04
(a)(2)...................................................................N.A.
(b)......................................................................6.07
(c)......................................................................9.04
317(a)(1)...................................................................6.08
(a)(2)...................................................................6.09
(b)......................................................................2.04
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
318(a)......................................................................10.01
(c)......................................................................10.01
</TABLE>
- ----------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table is not and shall not, for any purpose, be
deemed to be a part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions..............................................................1
SECTION 1.02. Incorporation by Reference of TIA.......................................17
SECTION 1.03. Rules of Construction...................................................17
ARTICLE TWO
THE NOTES
SECTION 2.01. Principal Amount; Form and Dating.......................................18
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount................18
SECTION 2.03. Registrar and Paying Agent..............................................19
SECTION 2.04. Paying Agent To Hold Assets in Trust....................................19
SECTION 2.05. Holder Lists............................................................20
SECTION 2.06. Transfer and Exchange...................................................20
SECTION 2.07. Replacement Notes.......................................................20
SECTION 2.08. Outstanding Notes.......................................................20
SECTION 2.09. Treasury Notes..........................................................21
SECTION 2.10. Temporary Notes.........................................................21
SECTION 2.11. Cancellation............................................................21
SECTION 2.12. Defaulted Interest......................................................21
SECTION 2.13. CUSIP Number............................................................22
SECTION 2.14. Deposit of Monies.......................................................22
SECTION 2.15. Restrictive Legends.....................................................22
SECTION 2.16. Book-Entry Provisions for Global Security...............................23
SECTION 2.17. Special Transfer Provisions.............................................24
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee......................................................25
SECTION 3.02. Selection of Notes To Be Redeemed.......................................26
SECTION 3.03. Optional Redemption.....................................................26
SECTION 3.04. Notice of Redemption....................................................26
SECTION 3.05. Effect of Notice of Redemption..........................................27
SECTION 3.06. Deposit of Redemption Price.............................................27
SECTION 3.07. Notes Redeemed in Part..................................................27
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes........................................................28
SECTION 4.02. Maintenance of Office or Agency.........................................28
SECTION 4.03. Corporate Existence.....................................................28
SECTION 4.04. Payment of Taxes and Other Claims.......................................28
SECTION 4.05. Maintenance of Properties and Insurance.................................28
SECTION 4.06. Compliance Certificate; Notice of Default...............................29
SECTION 4.07. Compliance with Laws....................................................29
SECTION 4.08. Reports to Holders......................................................29
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.................................30
SECTION 4.10. Limitation on Restricted Payments.......................................30
SECTION 4.11. Limitation on Transactions with Affiliates..............................31
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.....................32
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.................................................32
SECTION 4.14. Limitation on Restricted and Unrestricted Subsidiaries..................33
SECTION 4.15. Change of Control.......................................................34
SECTION 4.16. Limitation on Asset Sales...............................................35
SECTION 4.17. Limitations with Respect to Capital Stock of Restricted Subsidiaries....37
SECTION 4.18. Limitation on Liens.....................................................38
SECTION 4.19. Limitation on Conduct of Business.......................................38
SECTION 4.20. Additional Subsidiary Guarantees........................................38
SECTION 4.21. Limitation on Restrictive Covenants.....................................38
SECTION 4.22. Impairment of Security Interest.........................................38
SECTION 4.23. Additional Amounts......................................................39
SECTION 4.24. Maintenance of Lien; Additional Collateral..............................40
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets................................40
SECTION 5.02. Successor Corporation Substituted.......................................41
ARTICLE SIX
REMEDIES
SECTION 6.01. Events of Default.......................................................41
SECTION 6.02. Acceleration............................................................43
SECTION 6.03. Other Remedies..........................................................43
SECTION 6.04. Waiver of Past Defaults.................................................43
SECTION 6.05. Control by Majority.....................................................43
</TABLE>
ii
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 6.06. Limitation on Suits.....................................................44
SECTION 6.07. Right of Holders To Receive Payment.....................................44
SECTION 6.08. Collection Suit by Trustee..............................................44
SECTION 6.09. Trustee May File Proofs of Claim........................................44
SECTION 6.10. Priorities..............................................................45
SECTION 6.11. Undertaking for Costs...................................................45
SECTION 6.12. Restoration of Rights and Remedies......................................45
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.......................................................45
SECTION 7.02. Rights of Trustee.......................................................46
SECTION 7.03. Individual Rights of Trustee............................................47
SECTION 7.04. Trustee's Disclaimer....................................................47
SECTION 7.05. Notice of Default.......................................................47
SECTION 7.06. Reports by Trustee to Holders...........................................48
SECTION 7.07. Compensation and Indemnity..............................................48
SECTION 7.08. Replacement of Trustee..................................................48
SECTION 7.09. Successor Trustee by Merger, Etc........................................49
SECTION 7.10. Eligibility; Disqualification...........................................49
SECTION 7.11. Preferential Collection of Claims Against Issuer........................49
SECTION 7.12. Other Capacities........................................................50
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of Issuer's Obligations.....................................50
SECTION 8.02. Application of Trust Money..............................................51
SECTION 8.03. Repayment to the Issuer.................................................51
SECTION 8.04. Reinstatement...........................................................52
SECTION 8.05. Acknowledgment of Discharge by Trustee..................................52
ARTICLE NINE
MODIFICATION OF INDENTURE
SECTION 9.01. Without Consent of Holders..............................................52
SECTION 9.02. With Consent of Holders.................................................52
SECTION 9.03. Compliance with TIA.....................................................53
SECTION 9.04. Revocation and Effect of Consents.......................................53
SECTION 9.05. Notation on or Exchange of Notes........................................53
SECTION 9.06. Trustee To Sign Amendments, Etc.........................................53
SECTION 9.07. Evidence of Amendments, Supplements, Waivers............................54
SECTION 9.08. Amendment of Standstill Provisions......................................54
</TABLE>
iii
<PAGE> 7
<TABLE>
<S> <C> <C>
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA Controls...........................................................54
SECTION 10.02. Notices................................................................54
SECTION 10.03. Communications by Holders with Other Holders...........................55
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.....................55
SECTION 10.05. Statements Required in Certificate or Opinion..........................55
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar..............................56
SECTION 10.07. Legal Holidays.........................................................56
SECTION 10.08. Governing Law..........................................................56
SECTION 10.09. No Adverse Interpretation of Other Agreements..........................56
SECTION 10.10. No Personal Liability..................................................56
SECTION 10.11. Successors.............................................................56
SECTION 10.12. Duplicate Originals....................................................56
SECTION 10.13. Severability...........................................................56
SECTION 10.14. Independence of Covenants..............................................56
SECTION 10.15. Currency Indemnity.....................................................57
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee................................................57
SECTION 11.02. Limitations on Guarantees..............................................58
SECTION 11.03. Execution and Delivery of Guarantee....................................58
SECTION 11.04. Release of a Subsidiary Guarantor......................................58
SECTION 11.05. Waiver of Subrogation..................................................59
SECTION 11.06. Immediate Payment......................................................59
SECTION 11.07. No Set-Off.............................................................59
SECTION 11.08. Obligations Absolute...................................................59
SECTION 11.09. Obligations Continuing.................................................60
SECTION 11.10. Obligations Not Reduced................................................60
SECTION 11.11. Obligations Reinstated.................................................60
SECTION 11.12. Obligations Not Affected...............................................60
SECTION 11.13. Waiver.................................................................61
SECTION 11.14. No Obligation To Take Action Against the Issuer........................61
SECTION 11.15. Dealing with the Issuer and Others.....................................61
SECTION 11.16. Default and Enforcement................................................62
SECTION 11.17. Acknowledgment.........................................................62
SECTION 11.18. Costs and Expenses.....................................................62
SECTION 11.19. No Merger or Waiver; Cumulative Remedies...............................62
SECTION 11.20. Guarantee in Addition to Other Obligations.............................63
</TABLE>
iv
<PAGE> 8
<TABLE>
<S> <C> <C>
ARTICLE TWELVE
SECURITY
SECTION 12.01. Grant of Security Interest; Remedies...................................63
SECTION 12.02. Recording and Opinions.................................................64
SECTION 12.03. Release of Collateral..................................................64
SECTION 12.04. Specified Releases of Collateral.......................................65
SECTION 12.05. Rights of Purchasers; Form and Sufficiency of Release..................66
SECTION 12.06. Authorization of Actions to Be Taken by the Trustee Under the
Security Documents.....................................................67
SECTION 12.07. Authorization of Receipt of Funds by the Trustee Under the Security
Documents..............................................................67
SECTION 12.08. Use of Trust Moneys....................................................67
Exhibit A - Form of Note...............................................................A-1
Exhibit B - Form of Additional Provisions in Form of Assignment
for Restricted Securities............................................................B-1
Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers to
Non-QIB Accredited Investors.......................................................C-1
Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers
Pursuant to Regulation S ............................................................D-1
Exhibit E - Guarantee..................................................................E-1
Exhibit F - Form of Supplemental Indenture.............................................F-1
</TABLE>
Note: This Table of Contents is not, and shall not, for any purpose, be deemed
to be part of the Indenture.
v
<PAGE> 9
THIS INDENTURE, dated as of December [__], 1999, is among Abraxas
Petroleum Corporation, a Nevada corporation ("Abraxas"), Canadian Abraxas
Petroleum Limited, an Alberta corporation and wholly owned subsidiary of Abraxas
("Canadian Abraxas", and, together with Abraxas, the "Issuers"), New Cache
Petroleums, Ltd., an Alberta corporation and wholly owned subsidiary of Canadian
Abraxas ("New Cache"), Sandia Oil & Gas Corporation, a Texas corporation and
wholly owned subsidiary of Abraxas ("Sandia"), Wamsutter Holdings, Inc., a
Wyoming corporation ("Wamsutter") and Firstar Bank, National Association, as
Trustee (the "Trustee").
The Issuers have duly authorized the creation of the 11-1/2% Senior
Secured Notes due 2004, Series A, and, to provide therefor, the Issuers have
duly authorized the execution and delivery of this Indenture. The Notes (as
defined herein) will be guaranteed on a junior secured basis by New Cache,
Sandia, Wamsutter and each of Abraxas' future Restricted Subsidiaries (as
defined herein) which become Subsidiary Guarantors as required in this
Indenture. All things necessary to make the Notes, when duly issued and executed
by the Issuers, and authenticated and delivered hereunder, the valid obligations
of the Issuers, and to make this Indenture a valid and binding agreement of the
Issuers, have been done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Abraxas" means Abraxas Petroleum Corporation, a Nevada corporation,
until a successor replaces it pursuant to this Indenture and thereafter means
such successor.
"Abraxas Properties" means all Properties, and equity, partnership or
other ownership interests therein, that are related or incidental to, or used or
useful in connection with, the conduct or operation of any business activities
of Abraxas or any of its Restricted Subsidiaries, which business activities are
not prohibited by the terms of this Indenture.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries (a) existing at the time such Person becomes a Restricted
Subsidiary or at the time it merges or consolidates with Abraxas or any of its
Restricted Subsidiaries, or (b) which becomes Indebtedness of Abraxas or a
Restricted Subsidiary in connection with the acquisition of assets from such
Person, in each case not incurred in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition, merger or consolidation.
"Additional Amounts" has the meaning provided in Section 4.23.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination: (1) the sum of: (A) discounted
future net revenues from proved oil and gas reserves of Abraxas and its
consolidated Restricted Subsidiaries, calculated in accordance with Commission
guidelines (before any state or federal income tax), as estimated by a
nationally recognized firm of independent petroleum engineers as of a date no
earlier than the date of Abraxas' latest annual consolidated financial
statements, as increased by, as of the date of determination, the estimated
discounted future net revenues from (i) estimated proved oil and gas reserves
acquired since the date of such year-end reserve report and (ii) estimated oil
and gas reserves attributable to upward revisions of estimates of proved oil and
gas reserves since the date of such year-end reserve report due to exploration,
development or exploitation activities, in each case calculated in accordance
with Commission guidelines (utilizing the prices utilized in such year-end
reserve report), and decreased by, as of the date of determination, the
estimated discounted future net revenues from (iii) estimated proved oil and gas
reserves produced or disposed of since the date of such year-end reserve report
and (iv) 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 changes in geological conditions or other factors which would, in
accordance with standard industry practice, cause such revisions, in each case
calculated in accordance with Commission guidelines (utilizing the prices
utilized in such year-end reserve report); provided, however, that, in the case
of each of the determinations made pursuant to clauses (i) through (iv), such
increases and decreases shall be as estimated by Abraxas' petroleum engineers,
unless in the event that there is a Material Change as a result of such
acquisitions, dispositions or revisions, then the discounted future net revenues
utilized for purposes of this
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clause (1)(A) shall be confirmed in writing, by a nationally recognized firm of
independent petroleum engineers (which may be Abraxas' independent petroleum
engineers who prepare Abraxas' annual reserve report), plus (B) the capitalized
costs that are attributable to oil and gas properties of Abraxas and its
consolidated Restricted Subsidiaries to which no proved oil and gas reserves are
attributable, based on Abraxas' books and records as of a date no earlier than
the date of Abraxas' latest annual or quarterly financial statements, plus (C)
the Net Working Capital on a date no earlier than the date of Abraxas' latest
consolidated annual or quarterly financial statements, plus (D) with respect to
each other tangible asset of Abraxas or its consolidated Restricted Subsidiaries
specifically including, but not to the exclusion of any other qualifying
tangible assets, Abraxas' or its consolidated Restricted Subsidiaries' gas
producing facilities and unproved oil and gas properties (less any remaining
deferred income taxes which have been allocated to such gas processing
facilities in connection with the acquisition thereof), land, equipment,
leasehold improvements, investments carried on the equity method, restricted
cash and the carrying value of marketable securities, the greater of (i) the net
book value of such other tangible asset on a date no earlier than the date of
Abraxas' latest consolidated annual or quarterly financial statements or (ii)
the appraised value, as estimated by a qualified Independent Advisor, of such
other tangible assets of Abraxas and its Restricted Subsidiaries, as of a date
no earlier than the date of Abraxas' latest audited financial statements minus
(2) minority interests and, to the extent not otherwise taken into account in
determining Adjusted Consolidated Net Tangible Assets, any gas balancing
liabilities of Abraxas and its consolidated Restricted Subsidiaries reflected in
Abraxas' latest audited financial statements.
In addition to, but without duplication of, the foregoing, for purposes
of this definition, "Adjusted Consolidated Net Tangible Assets" shall be
calculated after giving effect, on a pro forma basis, to: (1) any Investment not
prohibited by this Indenture, to and including the date of the transaction
giving rise to the need to calculate Adjusted Consolidated Net Tangible Assets
(the "Assets Transaction Date"), in any other Person that, as a result of such
Investment, becomes a Restricted Subsidiary of Abraxas, (2) the acquisition, to
and including the Assets Transaction Date (by merger, consolidation or purchase
of stock or assets), of any business or assets, including, without limitation,
Permitted Industry Investments, and (3) any sales or other dispositions of
assets permitted by this Indenture (other than sales of Hydrocarbons or other
mineral products in the ordinary course of business) occurring on or prior to
the Assets Transaction Date.
"Affiliate" means, with respect to any specified Person, (a) any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or under common control with, such specified Person, and
(b) any Related Person of such Person. For purposes of this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent, co-Registrar, authenticating
agent or securities custodian.
"Agent Members" has the meaning provided in Section 2.16.
"Asset Acquisition" means: (a) an Investment by Abraxas or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary, or shall be merged with or into Abraxas or any
Restricted Subsidiary, or (b) the acquisition by Abraxas or any Restricted
Subsidiary of the assets of any Person (other than a Restricted Subsidiary)
which constitute all or substantially all of the assets of such Person or
comprise any division or line of business of such Person or any other properties
or assets of such Person other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, exchange, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by Abraxas
or any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than Abraxas or a Restricted Subsidiary of: (a)
any Capital Stock of any Restricted Subsidiary, or (b) any other property or
assets (including any interests therein) of Abraxas or any Restricted
Subsidiary, including any disposition by means of a merger, consolidation or
similar transaction; provided, however, that the following will not be deemed to
be an Asset Sale: (i) the sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of Abraxas in a transaction which is
made in compliance with Article Five, (ii) any Investment in an Unrestricted
Subsidiary which is made in compliance with Section 4.10, (iii) disposals or
replacements of obsolete equipment in the ordinary course of business, (iv) the
sale, lease, conveyance, disposition or other transfer by Abraxas or any
Restricted Subsidiary of assets or property to Abraxas or one or more Wholly
Owned Restricted Subsidiaries, (v) any disposition of Hydrocarbons or other
mineral products for value in the ordinary
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course of business, (vi) the abandonment, surrender, termination, cancellation,
release, farmout, lease or sublease of undeveloped oil and gas properties in the
ordinary course of business or oil and gas properties which are not capable of
production in economic quantities, (vii) the contemporaneous trade or exchange
by Abraxas or any of its Restricted Subsidiaries of any oil and gas property or
interest therein owned or held by such Person for any oil and gas property or
interest therein owned or held by another Person which the Board of Directors of
Abraxas determines in good faith by resolution to be of approximately equal
value, including any cash or Cash Equivalents necessary in order to achieve an
exchange of equivalent value; provided that such cash and Cash Equivalents are
subject to Section 4.16; provided, further, to the extent not prohibited by the
terms of any instruments evidencing Acquired Indebtedness associated with the
property received, that the property received by Abraxas or such Restricted
Subsidiary is made subject to the Lien of this Indenture and the Security
Documents to the extent that such property traded or exchanged was subject to
such Lien, provided that any such property received that constitutes Oil and Gas
Assets shall be subject to such Lien in any event; and provided, further, that
to the extent the property traded or exchanged by Abraxas and/or a Restricted
Subsidiary contains proved reserves, the property received contains an
approximately equal value of proved reserves, including cash or Cash Equivalents
to achieve an exchange of equivalent value, or (viii) the sale, lease,
conveyance, disposition or other transfer by Abraxas or any Restricted
Subsidiary of assets or property in the ordinary course of business; provided,
however, that the aggregate amount (valued at the fair market value of such
assets or property at the time of such sale, lease, conveyance, disposition or
transfer) of all such assets and property so sold, leased, conveyed, disposed or
transferred since the Issue Date pursuant to this clause (viii) shall not exceed
$1,000,000 in any one year.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Available Proceeds Amount" means (a) the sum of all Collateral
Proceeds and all Non-Collateral Proceeds remaining after application to repay
any Indebtedness secured by the assets that are the subject of the Asset Sale
giving rise to such Non-Collateral Proceeds; and (b) for purposes of determining
whether a Net Proceeds Offer must be made as of any day and the amount of such
offer, an amount equal to: the amount set forth under clause (a) above minus the
aggregate amount of all such Asset Sale proceeds previously spent in compliance
with the terms of Section 12.08.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, as for any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in the City of New York are required or
authorized by law or other governmental action to be closed.
"Canadian Abraxas" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to this Indenture and
thereafter means such successor.
"Capitalized Lease Obligation" means, as to any Person, the discounted
present value of the rental obligations of such Person 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 at such date, determined in accordance with GAAP.
"Capital Stock" means: (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and including any
warrants, options or rights to acquire any of the foregoing and instruments
convertible into any of the foregoing, and (b) with respect to any Person that
is not a corporation, any and all partnership or other equity interests of such
Person.
"Cash Equivalents" means: (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of
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the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's; (c) commercial paper
maturing no more than one year from the date of creation thereof and, at the
time of acquisition, having a rating of at least A-1 from S&P or at least P-1
from Moody's; (d) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any United States branch of a foreign bank having at
the date of acquisition thereof combined capital and surplus of not less than
$250,000,000; (e) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (a) above entered
into with any bank meeting the qualifications specified in clause (d) above; and
(f) money market mutual or similar funds having assets in excess of
$100,000,000.
"Change of Control" means the occurrence of one or more of the
following events: (a) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of Abraxas to any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act (a "Group") (whether or not otherwise in
compliance with the provisions of this Indenture); (b) the approval by the
holders of Capital Stock of Abraxas of any plan or proposal for the liquidation
or dissolution of Abraxas (whether or not otherwise in compliance with the
provisions of this Indenture); (c) any Person or Group shall become the owner,
directly or indirectly, beneficially or of record, of shares representing more
than 35% of the aggregate ordinary voting power represented by the issued and
outstanding Capital Stock of Abraxas; or (d) the replacement of a majority of
the Board of Directors of Abraxas over a two-year period from the directors who
constituted the Board of Directors of Abraxas at the beginning of such period
with directors whose replacement shall not have been approved (by
recommendation, nomination or election, as the case may be) by a vote of at
least a majority of the Board of Directors of Abraxas then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved.
"Change of Control Offer" has the meaning provided in Section 4.15.
"Change of Control Payment Date" has the meaning provided in Section
4.15.
"Collateral" means, collectively, all of the property and assets
(including, without limitation, Trust Moneys) that are from time to time subject
to, or purported to be subject to, the Lien of this Indenture or any of the
Security Documents.
"Collateral Account" shall have the meaning provided in Section 12.08.
"Collateral Proceeds" means any Net Cash Proceeds received from an
Asset Sale involving Collateral.
"Commission" means the SEC.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated EBITDA" means, for any period, the sum (without
duplication) of: (a) Consolidated Net Income, and (b) to the extent Consolidated
Net Income has been reduced thereby, (i) all income taxes of Abraxas and its
Restricted Subsidiaries paid or accrued in accordance with GAAP for such period
(other than income taxes attributable to extraordinary, unusual or nonrecurring
gains or losses or taxes attributable to sales or dispositions outside the
ordinary course of business), (ii) Consolidated Interest Expense, (iii) the
amount of any Preferred Stock dividends paid by Abraxas and its Restricted
Subsidiaries, and (iv) Consolidated Non-cash Charges, less any non-cash items
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for Abraxas and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated EBITDA Coverage Ratio" means, with respect to Abraxas,
the ratio of: (a) Consolidated EBITDA of Abraxas during the four full fiscal
quarters for which financial information in respect thereof is available (the
"Four Quarter Period") ending on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated EBITDA Coverage Ratio (the
"Transaction Date") to (b) Consolidated Fixed Charges of Abraxas for the Four
Quarter Period.
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For purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect (without duplication) on a pro
forma basis for the period of such calculation to: (a) the incurrence or
repayment of any Indebtedness of Abraxas or any of its Restricted Subsidiaries
(and the application of the proceeds thereof) giving rise to the need to make
such calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period, and (b) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of Abraxas or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being liable
for Acquired Indebtedness, and also including, without limitation, any
Consolidated EBITDA attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during
the Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption or liability for any
such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period. If Abraxas or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence shall give
effect to the incurrence of such guaranteed Indebtedness as if Abraxas or the
Restricted Subsidiary, as the case may be, had directly incurred or otherwise
assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated EBITDA Coverage Ratio": (i) interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (ii) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; (iii) notwithstanding clauses (i) and (ii) above, interest
on Indebtedness determined on a fluctuating basis, to the extent such interest
is covered by agreements relating to Interest Swap Obligations, shall be deemed
to accrue at the rate per annum resulting after giving effect to the operation
of such agreements.
"Consolidated Fixed Charges" means, with respect to Abraxas for any
period, the sum, without duplication, of: (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
Indebtedness of Abraxas and its Restricted Subsidiaries prior to the stated
maturity thereof pursuant to the agreements governing such Indebtedness), plus
(b) the product of (i) the amount of all dividend payments on any series of
Preferred Stock of Abraxas (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period times
(ii) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local
income tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to Abraxas for any
period, the sum of, without duplication: (a) the aggregate of the interest
expense of Abraxas and its Restricted Subsidiaries for such period determined on
a consolidated basis in accordance with GAAP, including without limitation, (i)
any amortization of original issue discount, (ii) the net costs under Interest
Swap Obligations, (iii) all capitalized interest and (iv) the interest portion
of any deferred payment obligation; and (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by Abraxas and its Restricted Subsidiaries during such period, as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to Abraxas for any
period, the aggregate net income (or loss) of Abraxas and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, however, that there shall be excluded therefrom: (a)
after-tax gains from Asset Sales or abandonments or reserves relating thereto,
(b) after-tax items classified as extraordinary or nonrecurring gains, (c) the
net income of any Person acquired in a "pooling of interests" transaction
accrued prior to the date it becomes a Restricted Subsidiary or is merged or
consolidated with Abraxas or any Restricted Subsidiary, (d) the net income (but
not loss) of any Restricted Subsidiary to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is restricted by charter, contract, operation of law or otherwise, (e) the net
income of any Person in which Abraxas has an interest, other than a Restricted
Subsidiary, except to the extent of cash dividends or distributions actually
paid to Abraxas or to a Restricted Subsidiary by such Person, (f) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), and (g) in the
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case of a successor to Abraxas by consolidation or merger or as a transferee of
Abraxas' assets, any net income (or loss) of the successor corporation prior to
such consolidation, merger or transfer of assets.
"Consolidated Net Worth" of any Person as of any date means the
consolidated stockholders' equity of such Person, determined on a consolidated
basis in accordance with GAAP, less (without duplication) amounts attributable
to Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to Abraxas, for any
period, the aggregate depreciation, depletion, amortization and other non-cash
expenses of Abraxas and its Restricted Subsidiaries reducing Consolidated Net
Income of Abraxas for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"consolidation" means, with respect to any Person, the consolidation of
the accounts of the Restricted Subsidiaries of such Person with those of such
Person, all in accordance with GAAP; provided, however, that "consolidation"
will not include consolidation of the accounts of any Unrestricted Subsidiary of
such Person with the accounts of such Person. The term "consolidated" has a
correlative meaning to the foregoing.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 101 East 5th Street, St. Paul, Minnesota 55101.
"Covenant Defeasance" has the meaning set forth in Section 8.01.
"Crude Oil and Natural Gas Business" means (i) the acquisition,
exploration, development, operation and disposition of interests in oil, gas and
other hydrocarbon properties located in North America, and (ii) the gathering,
marketing, treating, processing, storage, selling and transporting of any
production from such interests or properties of Abraxas or of others.
"Crude Oil and Natural Gas Hedge Agreements" means, with respect to any
Person, any oil and gas agreements and other agreements or arrangements or any
combination thereof entered into by such Person in the ordinary course of
business and that is designed to provide protection against oil and natural gas
price fluctuations.
"Crude Oil and Natural Gas Properties" means all Properties, including
equity or other ownership interests therein, owned by any Person which have been
assigned "proved oil and gas reserves" as defined in Rule 4-10 of Regulation S-X
of the Securities Act as in effect on the Issue Date.
"Crude Oil and Natural Gas Related Assets" means any Investment or
capital expenditure (but not including additions to working capital or
repayments of any revolving credit or working capital borrowings) by Abraxas or
any Restricted Subsidiary of Abraxas which is related to the business of Abraxas
and its Restricted Subsidiaries as it is conducted on the date of the Asset Sale
giving rise to the Net Cash Proceeds to be reinvested.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect Abraxas
or any Restricted Subsidiary of Abraxas against fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Default Interest Payment Date" has the meaning set forth in Section
2.12.
"Depository" means The Depository Trust Company, its nominees and
successors.
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"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is mandatorily redeemable at the sole option of the
holder thereof, in whole or in part, in either case, on or prior to the final
maturity of the Notes.
"Equity Offering" means an offering of Qualified Capital Stock of
Abraxas.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing seller and an informed and willing buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
Abraxas acting reasonably and in good faith and shall be evidenced by a Board
Resolution of Abraxas delivered to the Trustee; provided, however, that (a) if
the aggregate non-cash consideration to be received by Abraxas or any Restricted
Subsidiary from any Asset Sale shall reasonably be expected to exceed $5,000,000
or (b) if the net worth of any Restricted Subsidiary to be designated as an
Unrestricted Subsidiary shall reasonably be expected to exceed $10,000,000, then
fair market value shall be determined by an Independent Advisor.
"First Lien Indenture" means the Indenture dated March 26, 1999
executed by Abraxas, as issuer, and Norwest Bank Minnesota, National
Association, as trustee, or any successor or replacement agreement, whether by
the same or any other trustee, agent, note holder or group of note holders,
lender or group of lenders, together with the related documents (including,
without limitation, any guarantee agreements and security documents), in each
case as such indenture and documents have been or may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreements extended the maturity of, refinancing,
replacing or otherwise restructuring all or any portion of the Indebtedness
under such agreements.
"First Lien Notes" means the $63,500,000.00 12-7/8% Senior Notes due
2003 of Abraxas issued pursuant to the First Lien Indenture as such notes have
been or may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreements
extending the maturity of, refinancing, replacing or otherwise restructuring all
or any portion of the Indebtedness under such notes.
"First Lien Notes Representative" means the trustee under the First
Lien Indenture or any other Person designated to the Trustee in a First Lien
Notes Representative Change Notice.
"First Lien Notes Representative Change Notice" means a written notice
of a change in the identity and/or address of the First Lien Notes
Representative which certifies to the Trustee (a) with respect to such a notice
that gives notice of a new First Lien Notes Representative, that the Persons
executing such notice constitute the holders of at least 51% in aggregate
principal amount of Indebtedness under the First Lien Notes, or (b) with respect
to such a notice that only gives notice of a new address for the First Lien
Notes Representative, that the Person executing such notice is the then current
First Lien Notes Representative, and which sets forth the new identity (by name,
and by jurisdiction of organization as applicable) and/or the new address of the
First Lien Notes Representative.
"Foreclosure Action" has the meaning provided in Section 12.01.
"GAAP" means generally accepted accounting principles 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 as of any date of determination.
"Global Notes" has the meaning provided in Section 2.01.
"Grey Wolf" means Grey Wolf Exploration, Inc., an Alberta corporation.
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"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part) (but if in part, only to the extent thereof); provided,
however, that the term "guarantee" shall not include (A) endorsements for
collection or deposit in the ordinary course of business and (B) guarantees
(other than guarantees of Indebtedness) by Abraxas in respect of assisting one
or more Restricted Subsidiaries in the ordinary course of their respective
businesses, including without limitation guarantees of trade obligations and
operating leases, on ordinary business terms. The term "guarantee" used as a
verb has a corresponding meaning.
"Guarantees" has the meaning set forth in Section 11.01.
"Holder" means any Person holding a Note of record.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all constituents, elements or compounds thereof and products processed
therefrom.
"incur" means, with respect to any Indebtedness, to create, incur,
assume, guarantee, acquire, become liable, contingently or otherwise, with
respect to such Indebtedness, or otherwise become responsible for the payment
thereof.
"Indebtedness" means with respect to any Person, without duplication:
(a) all Obligations of such Person for borrowed money, (b) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all Capitalized Lease Obligations of such Person, (d) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable), (e) all Obligations for the
reimbursement of any obligor on a letter of credit, banker's acceptance or
similar credit transaction, (f) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (a) through (e) above and clause
(h) below, (g) all Obligations of any other Person of the type referred to in
clauses (a) through (f) above which are secured by any Lien on any property or
asset of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the amount of the
Obligation so secured, (h) all Obligations under Currency Agreements and
Interest Swap Obligations, and (i) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed redemption price or repurchase price.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of Abraxas.
The "amount" or "principal amount" of Indebtedness at any time of determination
as used herein represented by: (1) any Indebtedness issued at a price that is
less than the principal amount at maturity thereof shall be the face amount of
the liability in respect thereof, (2) any Capitalized Lease Obligation shall be
the amount determined in accordance with the definition thereof, (3) any
Interest Swap Obligations included in the definition of Permitted Indebtedness
shall be zero, (4) all other unconditional obligations shall be the amount of
the liability thereof determined in accordance with GAAP, and (5) all other
contingent obligations shall be the maximum liability at such date of such
Person.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent Advisor" means a reputable accounting, appraisal or
nationally recognized investment banking, engineering or consulting firm which:
(a) does not, and whose directors, officers and employees or Affiliates do not,
have
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<PAGE> 17
a direct or indirect material financial interest in Abraxas, and (b) in the
judgment of the Board of Directors of Abraxas, is otherwise disinterested,
independent and qualified to perform the task for which it is to be engaged.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest" when used with respect to any Note means the amount of all
interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Swap Obligation" 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 other 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.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or indirect:
(a) loan, advance or other extension of credit (including, without limitation, a
guarantee) or capital contribution (by means of any transfer of cash or other
property (valued at the fair market value thereof as of the date of transfer) to
others or any payment for property or services for the account or use of
others), (b) purchase or acquisition by such Person of any Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by any
other Person (whether by merger, consolidation, amalgamation or otherwise and
whether or not purchased directly from the issuer of such securities or
evidences of Indebtedness), (c) guarantee or assumption of the Indebtedness of
any other Person (other than the guarantee or assumption of Indebtedness of such
Person or a Restricted Subsidiary of such Person which guarantee or assumption
is made in compliance with Section 4.12), and (d) other items that would be
classified as investments on a balance sheet of such Person prepared in
accordance with GAAP. Notwithstanding the foregoing, "Investment" shall exclude
extensions of trade credit by Abraxas and its Restricted Subsidiaries on
commercially reasonable terms in accordance with normal trade practices of
Abraxas or such Restricted Subsidiary, as the case may be. The amount of any
Investment shall not be adjusted for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment. If Abraxas
or any Restricted Subsidiary sells or otherwise disposes of any Capital Stock of
any Restricted Subsidiary such that, after giving effect to any such sale or
disposition, it ceases to be a Subsidiary of Abraxas, Abraxas shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Capital Stock of such Restricted Subsidiary not sold or
disposed of.
"Issue Date" means the date of original issuance of the Notes.
"Issuers" means the parties named as such in the first paragraph of
this Indenture until successors replace them pursuant to this Indenture and
thereafter means such successors.
"Legal Defeasance" has the meaning set forth in Section 8.01.
"Legal Holiday" has the meaning provided in Section 10.07.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, floating or other charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof and any agreement to give any security interest).
"Material Change" means an increase or decrease of more than 10% during
a fiscal quarter in the discounted future net cash flows (excluding changes that
result solely from changes in prices) from proved oil and gas reserves of
Abraxas and consolidated Restricted Subsidiaries (before any state or federal
income tax); provided, however, that the following will be excluded from the
Material Change calculation: (i) any acquisitions during such fiscal quarter of
oil and gas reserves that have been estimated by independent petroleum engineers
and on which a report or reports exist, (ii) any disposition of
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<PAGE> 18
properties existing at the beginning of such fiscal quarter that have been
disposed of as provided in Section 4.16, and (iii) any reserves added during
such fiscal quarter attributable to the drilling or recompletion of wells not
included in previous reserve estimates, but which will be included in future
quarters.
"Maturity Date" means November 1, 2004.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Mortgage" means any mortgage, deed of trust, assignment of production,
security agreement, fixture filing, guarantee of debts and liabilities, general
security agreement, financing statement or other instrument executed and
delivered by Abraxas or any Restricted Subsidiary of Abraxas and granting a Lien
in favor of the Trustee for the benefit of the Trustee and the Holders, as the
same may be amended, supplemented or modified from time to time in accordance
with the terms thereof and of this Indenture.
"Net Cash Proceeds" means, with respect to any Asset Sale, sale,
transfer or other disposition, the proceeds 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 received by Abraxas or any of
its Restricted Subsidiaries from such Asset Sale, sale, transfer or other
disposition net of: (a) reasonable out-of-pocket expenses and fees relating to
such Asset Sale, sale, transfer or other disposition (including, without
limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) appropriate amounts (determined by the Chief
Financial Officer of Abraxas) to be provided by Abraxas or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any post closing adjustments or liabilities associated with such Asset Sale,
sale, transfer or other disposition and retained by Abraxas or any Restricted
Subsidiary, as the case may be, after such Asset Sale, sale, transfer or other
disposition 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, sale, transfer or other disposition (but excluding any payments which, by
the terms of the indemnities will not, be made during the term of the Notes),
and (d) the aggregate amount of cash and Cash Equivalents so received which is
used to retire any then existing Indebtedness (other than Indebtedness under the
First Lien Notes, the Old Notes or the Notes) of Abraxas or such Restricted
Subsidiary which is secured by a Lien on the property subject of the Asset Sale,
sale, transfer or other disposition.
"Net Cash Proceeds Application Period" has the meaning set forth in
Section 4.16.
"Net Proceeds Offer" has the meaning set forth in Section 4.16.
"Net Proceeds Offer Payment Date" has the meaning set forth in Section
4.16.
"Net Working Capital" means: (a) all current assets of Abraxas and its
consolidated Subsidiaries, minus (b) all current liabilities of Abraxas and its
consolidated Subsidiaries, except current liabilities included in Indebtedness,
in each case as set forth in financial statements of Abraxas prepared in
accordance with GAAP.
"New Cache" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter means such successor.
"Non-Collateral Proceeds" has the meaning set forth in Section 4.16.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which: (a) the sole legal recourse for
collection of principal and interest on such Indebtedness is against the
specific property identified in the instruments evidencing or securing such
Indebtedness and such property was acquired with the proceeds of such
Indebtedness or such Indebtedness was incurred within 90 days after the
acquisition of such property, and (b) no other assets of such Person may be
realized upon in collection of principal or interest on such Indebtedness;
provided, however, that any such Indebtedness shall not cease to be
"Non-Recourse Indebtedness" solely as a result of the instrument governing such
Indebtedness containing terms pursuant to which such Indebtedness becomes
recourse upon: (i) fraud or misrepresentation by the Person in connection with
such Indebtedness, (ii) such Person failing to pay taxes or other charges that
result in the creation of Liens on any portion of the specific property securing
such Indebtedness or failing to maintain any insurance on such property required
under the instruments securing such Indebtedness, (iii) the conversion of any of
the collateral for such
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<PAGE> 19
Indebtedness, (iv) such Person failing to maintain any of the collateral for
such Indebtedness in the condition required under the instruments securing the
Indebtedness, (v) any income generated by the specific property securing such
Indebtedness being applied in a manner not otherwise allowed in the instruments
securing such Indebtedness, (vi) the violation of any applicable law or
ordinance governing hazardous materials or substances or otherwise affecting the
environmental condition of the specific property securing the Indebtedness, or
(vii) the rights of the holder of such Indebtedness to the specific property
becoming impaired, suspended or reduced by any act, omission or
misrepresentation of such Person; provided, further, that upon the occurrence of
any of the foregoing clauses (i) through (vii) above, any such Indebtedness
which shall have ceased to be "Non-Recourse Indebtedness" shall be deemed to
have been Indebtedness incurred by such Person at such time.
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
in Regulation S.
"Notes" means the 11-1/2% Senior Secured Notes due 2004, Series A, of
the Issuers, as amended or supplemented from time to time in accordance with the
terms hereof, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offer to Exchange and Consent Solicitation" means the confidential
Offer to Exchange and Consent Solicitation dated November 18, 1999 of the
Issuers relating to the offering of the Notes, as amended or supplemented.
"Officer" means, with respect to any Person, the Chairman of the Board
of Directors, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.
"Officers' Certificate" means a certificate signed by two Officers of
Abraxas and/or Canadian Abraxas, as appropriate, complying with the requirements
of Sections 10.04 and 10.05, as they relate to the giving of an Officers'
Certificate.
"Oil and Gas Assets" means the Crude Oil and Natural Gas Properties and
natural gas processing facilities of Abraxas and/or any of Abraxas' Restricted
Subsidiaries.
"Old Indenture" means the Indenture dated January 27, 1998 executed by
the Issuers and IBJ Schroder Bank & Trust Company, or any successor or
replacement agreement, whether by the same or any other trustee, agent, note
holder or group of note holders, lender or group of lenders, together with the
related documents (including, without limitation, any guarantee agreements and
security documents), in each case as such indenture and documents have been or
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreements extended the
maturity of, refinancing, replacing or otherwise restructuring all or any
portion of the Indebtedness under such agreements.
"Old Notes" means the $275,000,000.00 11-1/2% Senior Notes due 2004,
Series D, of Abraxas issued pursuant to the Old Indenture, as such notes have
been or may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreements
extending the maturity of, refinancing, replacing or otherwise restructuring all
or any portion of the Indebtedness under such notes.
"Opinion of Counsel" means a written opinion addressed to the Trustee
from legal counsel who is reasonably acceptable to the Trustee complying with
the requirements of Sections 10.04 and 10.05, as they relate to the giving of an
Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03, and includes
any additional Paying Agent.
"Payment Restriction" shall have the meaning set forth in Section 4.13.
"Permitted Indebtedness" means, without duplication, each of the
following: (a) Indebtedness under the Notes, this Indenture, the Guarantees and
the Security Documents; (b) Interest Swap Obligations of Abraxas or a Restricted
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<PAGE> 20
Subsidiary covering Indebtedness of Abraxas or any of its Restricted
Subsidiaries; provided, however, that such Interest Swap Obligations are entered
into to protect Abraxas and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with this Indenture to the
extent the notional principal amount of such Interest Swap Obligations does not
exceed the principal amount of the Indebtedness to which such Interest Swap
Obligation relates; (c) Indebtedness of a Restricted Subsidiary to Abraxas or to
a Wholly Owned Restricted Subsidiary for so long as such Indebtedness is held by
Abraxas or a Wholly Owned Restricted Subsidiary, in each case subject to no Lien
held by a Person other than Abraxas or a Wholly Owned Restricted Subsidiary;
provided, however, that if as of any date any Person other than Abraxas or a
Wholly Owned Restricted Subsidiary owns or holds any such Indebtedness or holds
a Lien in respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness; (d) Indebtedness of Abraxas to a Wholly Owned Restricted
Subsidiary for so long as such Indebtedness is held by a Wholly Owned Restricted
Subsidiary, in each case subject to no Lien; provided, however, that (i) any
Indebtedness of Abraxas to any Wholly Owned Restricted Subsidiary that is not a
Subsidiary Guarantor is unsecured and subordinated, pursuant to a written
agreement, to Abraxas' Obligations under this Indenture and the Notes and (ii)
if as of any date any Person other than a Wholly Owned Restricted Subsidiary
owns or holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness by Abraxas; (e) Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within two Business Days of
incurrence; (f) Indebtedness of Abraxas or any of its Restricted Subsidiaries
represented by letters of credit for the account of Abraxas or such Restricted
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business; (g) Refinancing
Indebtedness; (h) Capitalized Lease Obligations of Abraxas outstanding on the
Issue Date; (i) Capitalized Lease Obligations and Purchase Money Indebtedness of
Abraxas or any of its Restricted Subsidiaries not to exceed $5,000,000 at any
one time outstanding; (j) Permitted Operating Obligations; (k) Obligations
arising in connection with Crude Oil and Natural Gas Hedge Agreements of Abraxas
or a Restricted Subsidiary; (l) Non-Recourse Indebtedness; (m) Indebtedness
under Currency Agreements; provided, however, that in the case of Currency
Agreements which relate to Indebtedness, such Currency Agreements do not
increase the Indebtedness of Abraxas and its Restricted Subsidiaries outstanding
other than as a result of fluctuations in foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder; (n) additional
Indebtedness of Abraxas or any of its Restricted Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed the sum of (i) $5,000,000
plus (ii) 5% of Adjusted Consolidated Net Tangible Assets; and (o) Indebtedness,
including, but not limited to, the First Lien Notes and the Old Notes,
outstanding on the Issue Date (to the extent the Indebtedness thereunder is not
taken up by the Notes).
"Permitted Industry Investments" means: (a) capital expenditures,
including, without limitation, acquisitions of the Abraxas Properties and
interests therein; (b) (i) entry into operating agreements, joint ventures,
working interests, royalty interests, mineral leases, unitization agreements,
pooling arrangements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the oil and gas business, and (ii) exchanges of the
Abraxas Properties for other Abraxas Properties of at least equivalent value as
determined in good faith by the Board of Directors of Abraxas; and (c)
Investments of operating funds on behalf of co-owners of Crude Oil and Natural
Gas Properties of Abraxas or the Subsidiaries pursuant to joint operating
agreements.
"Permitted Investments" means: (a) Investments by Abraxas or any
Restricted Subsidiary in any Person that is or will become immediately after
such Investment a Restricted Subsidiary or that will merge or consolidate into
Abraxas or a Restricted Subsidiary that is not subject to any Payment
Restriction; (b) Investments in Abraxas by any Restricted Subsidiary; provided,
however, that any Indebtedness evidencing any such Investment held by a
Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and
subordinated, pursuant to a written agreement, to Abraxas' Obligations under the
Notes and this Indenture; (c) investments in cash and Cash Equivalents; (d)
Investments made by Abraxas or its Restricted Subsidiaries as a result of
consideration received in connection with an Asset Sale made in compliance with
Section 4.16; and (e) Permitted Industry Investments.
"Permitted Liens" means each of the following types of Liens: (a) Liens
arising under this Indenture or the First Lien Indenture, or under the Security
Documents or the security documents securing the First Lien Notes; (b) Liens
securing the Notes and the Guarantees or securing the First Lien Notes or any
guarantee of the First Lien Notes; (c) Liens for taxes, assessments or
governmental charges or claims either (i) not delinquent or (ii) contested in
good faith by appropriate proceedings and as to which Abraxas or a Restricted
Subsidiary, as the case may be, shall have set aside on its books such
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<PAGE> 21
reserves as may be required pursuant to GAAP; (d) statutory and contractual
Liens of landlords to secure rent arising in the ordinary course of business to
the extent such Liens relate only to the tangible property of the lessee which
is located on such property and Liens of carriers, warehousemen, mechanics,
builders, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof; (e) Liens
incurred on deposits made in the ordinary course of business: (i) in connection
with workers' compensation, unemployment insurance and other types of social
security, including any Lien securing letters of credit issued in the ordinary
course of business consistent with past practice in connection therewith, or
(ii) to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (f) easements, rights-of-way, zoning
restrictions, restrictive covenants, minor imperfections in title and other
similar charges or encumbrances in respect of real property not interfering in
any material respect with the ordinary conduct of the business of Abraxas or any
of its Restricted Subsidiaries; (g) any interest or title of a lessor under any
Capitalized Lease Obligation; provided that such Liens do not extend to any
Property which is not leased Property subject to such Capitalized Lease
Obligation; (h) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof; (i) Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of Abraxas or any of its
Restricted Subsidiaries, including rights of offset and set-off; (j) Liens
securing Interest Swap Obligations which Interest Swap Obligations relate to
Indebtedness that is otherwise permitted under this Indenture and Liens securing
Crude Oil and Natural Gas Hedge Agreements; (k) Liens on pipeline or pipeline
facilities, Hydrocarbons or Properties of Abraxas and its Subsidiaries which
arise out of operation of law; (l) royalties, overriding royalties, revenue
interests, net revenue interests, net profit interests, revisionary interests,
production payments, production sales contracts, operating agreements and other
similar interests, properties, arrangements and agreements, all as ordinarily
exist with respect to Properties of Abraxas and its Subsidiaries or otherwise as
are customary in the oil and gas business; (m) with respect to any Properties of
Abraxas and its Subsidiaries, Liens arising under, or in connection with, or
related to, farm-out, farm-in, joint operation, area of mutual interest
agreements and/or other similar or customary arrangements, agreements or
interests that Abraxas or any Subsidiary determines in good faith to be
necessary for the economic development of such Property; (n) any (i) interest or
title of a lessor or sublessor under any lease, (ii) restriction or encumbrance
that the interest or title of such lessor or sublessor may be subject to
(including, without limitation, ground leases or other prior leases of the
demised premises, mortgages, mechanics' Liens, builders' Liens, tax Liens, and
easements), or (iii) subordination of the interest of the lessee or sublessee
under such lease to any restrictions or encumbrance referred to in the preceding
clause (ii); (o) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or instruments of
Abraxas or any Restricted Subsidiary on deposit with or in possession of such
bank; (p) Liens securing Non-recourse Indebtedness; (q) judgment and attachment
Liens not giving rise to an Event of Default; (r) Liens securing Acquired
Indebtedness incurred in accordance with Section 4.12; provided, however, that
(i) such Liens secured such Acquired Indebtedness at the time of and prior to
the incurrence of such Acquired Indebtedness by Abraxas or a Restricted
Subsidiary and were not granted in connection with, or in anticipation of, the
incurrence of such Acquired Indebtedness by Abraxas or a Restricted Subsidiary
and (ii) such Liens do not extend to or cover any property or assets of Abraxas
or of any of its Restricted Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of Abraxas or a Restricted Subsidiary and are no more
favorable to the lienholders than those securing the Acquired Indebtedness prior
to the incurrence of such Acquired Indebtedness by Abraxas or a Restricted
Subsidiary; (s) Liens existing on the Issue Date; (t) Liens securing Refinancing
Indebtedness which is incurred to Refinance any Indebtedness permitted under
this Indenture and which has been secured by a Lien permitted under this
Indenture and which has been incurred in accordance with the provisions of this
Indenture; provided, however, that such Liens (i) are no less favorable to the
Holders and are not more favorable to the lienholders with respect to such Liens
than the Liens in respect of the Indebtedness being Refinanced and (ii) do not
extend to or cover any Property of Abraxas or any of its Restricted Subsidiaries
not securing the Indebtedness so Refinanced; and (u) Liens securing Indebtedness
of Abraxas or any of its Restricted Subsidiaries in an aggregate principal
amount at any time outstanding not to exceed the sum of (i) $5,000,000 plus (ii)
5% of Adjusted Consolidated Net Tangible Assets.
"Permitted Operating Obligations" means Indebtedness of Abraxas or any
Restricted Subsidiary in respect of one or more standby letters of credit, bid,
performance or surety bonds, or other reimbursement obligations, issued for the
account of, or entered into by, Abraxas or any Restricted Subsidiary in the
ordinary course of business (excluding obligations related to the purchase by
Abraxas or any Restricted Subsidiary of Hydrocarbons for which Abraxas or such
Restricted Subsidiary has contracts to sell), or in lieu of any thereof or in
addition to any thereto, guarantees and letters of credit supporting any such
obligations and Indebtedness (in each case, other than for an obligation for
borrowed money, other than
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<PAGE> 22
borrowed money represented by any such letter of credit, bid, performance or
surety bond, or reimbursement obligation itself, or any guarantee and letter of
credit related thereto).
"Person" means an individual, partnership, corporation, unincorporated
organization, limited liability company, trust, estate, or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Plan of Liquidation" means, with respect to any Person, a plan
(including by operation of law) that provides for, contemplates or the
effectuation of which is preceded or accompanied by (whether or not
substantially contemporaneously) (i) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of such Person otherwise
than as an entirety or substantially as an entirety and (ii) the distribution of
all or substantially all of the proceeds of such sale, lease, conveyance or
other disposition and all or substantially all of the remaining assets of such
Person to holders of Capital Stock of such Person.
"Pledge Agreement" means those certain Security Agreements (Pledge)
dated as of the Issue Date pursuant to which the Capital Stock of Grey Wolf
owned by Abraxas and/or the Restricted Subsidiaries of Abraxas is pledged to the
Trustee for the benefit of the Holders, as the same may be amended, modified or
supplemented from time to time.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on the
Notes constituting Restricted Securities in the form set forth in the initial
paragraph of Section 2.15.
"pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of Abraxas in consultation with its independent public
accountants.
"Property" or "property" means, with respect to any Person, any
interests of such Person in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
Capital Stock, partnership interests and other equity or ownership interests in
any other Person.
"Purchase Money Indebtedness" means Indebtedness the net proceeds of
which are used to finance the cost (including the cost of construction) of
property or assets acquired in the normal course of business by the Person
incurring such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Record Date" means the record dates specified in the Notes.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price fixed for such redemption, including principal and premium, if
any, pursuant to this Indenture and the Notes.
"Reference Date" has the meaning set forth in Section 4.10.
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"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by Abraxas or any
Restricted Subsidiary of Abraxas of Indebtedness incurred in accordance with
Section 4.12 (other than pursuant to clause (b), (c), (d), (e), (f), (i), (j),
(k), (m) or (n) of the definition of Permitted Indebtedness), in each case that
does not: (1) result in an increase in the aggregate principal amount of
Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable expenses incurred
by Abraxas and its Restricted Subsidiaries in connection with such Refinancing),
or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is
less than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced or (B) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided, however, that (a) if such Indebtedness
being Refinanced is Indebtedness of Abraxas or a Subsidiary Guarantor, then such
Refinancing Indebtedness shall be Indebtedness solely of Abraxas and/or such
Subsidiary Guarantor and (b) if such Indebtedness being Refinanced is
subordinate or junior to the Notes or a Guarantee, then such Refinancing
Indebtedness shall be subordinate to the Notes or such Guarantee, as the case
may be, at least to the same extent and in the same manner as the Indebtedness
being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Regulation S" means Regulation S under the Securities Act.
"Related Person" of any Person means any other Person directly or
indirectly owning 10% or more of the outstanding voting Common Stock of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person).
"Released Interests" has the meaning provided in Section 12.04.
"Replacement Assets" has the meaning provided in Section 4.16.
"Restricted Payment" shall have the meaning set forth in Section 4.10.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of Abraxas (including,
without limitation, Canadian Abraxas, New Cache, Sandia and Wamsutter) that has
not been designated by the Board of Directors of Abraxas, by a Board Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with Section 4.14. Any such designation may be revoked by a Board
Resolution of Abraxas delivered to the Trustee, subject to the provisions of
such Section.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Rating Services, a division of The McGraw
Hill Companies, Inc., and its successors.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to Abraxas or a Restricted Subsidiary of any Property, whether
owned by Abraxas or any Restricted Subsidiary at the Issue Date or later
acquired which has been or is to be sold or transferred by Abraxas or such
Restricted Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such Property.
"Sandia" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to this Indenture and
thereafter such successor.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Security Documents" means, collectively, the Mortgages, the Pledge
Agreement and all security agreements, mortgages, deeds of trust, collateral
assignments or other instruments evidencing or creating any security interests
in favor of the Trustee in all or any portion of the Collateral, in each case as
amended, supplemented or modified from time to time in accordance with their
terms and the terms of this Indenture.
"Standstill Period" has the meaning provided in Section 12.01.
"Standstill Period Commencement Notice" has the meaning provided in
Section 12.01.
"Subordinated Indebtedness" means Indebtedness of Abraxas or a
Subsidiary Guarantor that is subordinated or junior in right of payment to the
Notes, the relevant Guarantee and the Security Documents, as applicable,
pursuant to a written agreement to that effect.
"Subsidiary," with respect to any Person, means: (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person, or (b) any
other Person of which at least a majority of the voting interests under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantor" means New Cache, Sandia, Wamsutter and each of
Abraxas' Restricted Subsidiaries that in the future executes a supplemental
indenture in which such Restricted Subsidiary agrees to be bound by the terms of
this Indenture as a Subsidiary Guarantor; provided, however, that any Person
constituting a Subsidiary Guarantor as described above shall cease to constitute
a Subsidiary Guarantor when its Guarantee is released in accordance with the
terms of this Indenture.
"Surviving Entity" shall have the meaning set forth in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.03.
"Trust Officer" means any officer or assistant officer within the
Corporate Trust Office of the Trustee (or any successor group of the Trustee)
assigned by the Trustee or successor Trustee to administer this Indenture, or in
the case of a successor trustee, an officer assigned to the department, division
or group performing the corporation trust work of such successor and assigned to
administer this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of Article Seven of this
Indenture and thereafter means such successor.
"Trust Moneys" means all cash or Cash Equivalents received by the
Trustee: (a) upon the release of Collateral from the Lien of this Indenture and
the Security Documents, including investment earnings thereon; or (b) pursuant
to the provisions of any Mortgage; or (c) as proceeds of any other sale or other
disposition of all or any part of the Collateral by or on behalf of the Trustee
or any collection, recovery, receipt, appropriation or other realization of or
from all or any part of the Collateral pursuant to this Indenture or any of the
Security Documents or otherwise; or (d) for application under this Indenture as
provided for in this Indenture or the Security Documents, or whose disposition
is not elsewhere specifically provided for in this Indenture or in the Security
Documents; provided, however, that Trust Moneys shall not include any property
deposited with the Trustee pursuant to any Change of Control Offer, Net Proceeds
Offer or redemption or defeasance of any Notes.
"U.S. Government Obligations" mean direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
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"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Unrestricted Subsidiary" means any Subsidiary of Abraxas designated as
such pursuant to and in compliance with Section 4.14; provided, however, that
Unrestricted Subsidiaries shall initially include Western and Grey Wolf, to the
extent, if any, it now or hereafter constitutes a "Subsidiary". Any such
designation may be revoked by a Board Resolution of Abraxas delivered to the
Trustee, subject to the provisions of such Section 4.14.
"Valuation Date" has the meaning provided in Section 12.04.
"Wamsutter" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to this Indenture and
thereafter means such successor.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing: (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying: (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Western" means Western Associated Energy Corporation, a Texas
corporation.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of
which all the outstanding voting securities normally entitled to vote in the
election of directors are owned by Abraxas or another Wholly Owned Restricted
Subsidiary.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means Abraxas, Canadian Abraxas,
any Subsidiary Guarantor or any other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP of any date of determination;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
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(5) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(6) any reference to a statute, law or regulation means that
statute, law or regulation as amended and in effect from time to time
and includes any successor statute, law or regulation; provided,
however, that any reference to the Bankruptcy Law shall mean the
Bankruptcy Law as applicable to the relevant case.
ARTICLE TWO
THE NOTES
SECTION 2.01. Principal Amount; Form and Dating.
(a) Principal Amount.
The aggregate principal amount of Notes which may be originally issued,
executed and authenticated under this Indenture is $196,800,000.00.
(b) Form and Dating.
The Notes and the Trustee's certificate of authentication relating
thereto shall be substantially in the form of Exhibit A hereto. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Issuers and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its issuance and shall show the date of its authentication.
Each Note shall have an executed Guarantee endorsed thereon substantially in the
form of Exhibit E hereto.
The terms and provisions contained in the Notes, annexed hereto as
Exhibit A, shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Issuers and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Notes offered and originally issued in reliance on Section 3(a)(9) of
the Securities Act shall be issued in the form of one or more permanent global
Notes in registered form, substantially in the form set forth in Exhibit A (the
"Global Notes"), deposited with the Trustee, as custodian for the Depository,
duly executed by the Issuers (and having an executed Guarantee endorsed thereon)
and authenticated by the Trustee as hereinafter provided and shall bear the
legend set forth in the second paragraph of Section 2.15. The aggregate
principal amount of the Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided. Notes issued in exchange for interests
in a Global Note pursuant to Section 2.16 may be issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit A (the "Physical Notes").
Notes offered and originally issued other than in reliance on Section
3(a)(9) of the Securities Act shall be issued in the form of one or more
Physical Notes, substantially in the form set forth in Exhibit A, duly executed
by the Issuers (and having an executed Guarantee endorsed thereon) and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in the initial paragraph of Section 2.15.
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary of each Issuer
and each Subsidiary Guarantor, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each case, have been
duly authorized by all requisite corporate actions) shall attest to, the Notes
for the Issuers and the Guarantees for the Subsidiary Guarantors by manual or
facsimile signature.
If an Officer or Assistant Secretary whose signature is on a Note or a
Guarantee was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
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A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee upon receipt of a written order in the form of an Officers'
Certificate shall authenticate Notes for original issue in the aggregate
principal amount not to exceed $196,800,000.00, in each case upon a written
order of the Issuers in the form of an Officers' Certificate of each Issuer.
Each such written order shall specify the amount of Notes to be authenticated
and the date on which the Notes are to be authenticated, and whether the Notes
are to be issued as Physical Notes or Global Notes or such other information as
the Trustee may reasonably request. The aggregate principal amount of Notes
outstanding at any time may not exceed $196,800,000.00, except as provided in
Sections 2.07 and 2.08.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Issuers to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Issuers or with any Affiliate of the Issuers.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Issuers shall maintain an office or agency where (a) Notes may be
presented or surrendered for registration of transfer or for exchange
("Registrar") which shall initially be the Corporate Trust Office, (b) Notes may
be presented or surrendered for payment ("Paying Agent") which shall initially
be the agency of the Trustee located in the Borough of Manhattan in the City of
New York, State of New York, and (c) notices and demands to or upon the Issuers
in respect of the Notes and this Indenture or to or upon the Subsidiary
Guarantors in respect of their Guarantee and this Indenture may be served which
shall initially be the office of the Paying Agent or the Corporate Trust Office.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Issuers, upon prior written notice to the Trustee, may have one or
more co-Registrars and one or more additional Paying Agents reasonably
acceptable to the Trustee. The Issuers may act as their own Paying Agent, except
that for the purposes of payments on the Notes pursuant to Sections 4.15 and
4.16, neither the Issuers nor any Affiliate of the Issuers may act as Paying
Agent; provided that any such co-Registrar or Paying Agent shall deliver a
certificate to the Trustee certifying that it agrees to perform its duties in
accordance with the procedures established by the Trustee and with the terms of
this Indenture.
The Issuers shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Issuers shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Issuers fail to maintain a Registrar or Paying
Agent, or fail to give the foregoing notice, the Trustee shall act as such.
The Issuers and the Subsidiary Guarantors initially appoint the Trustee
as Registrar, Paying Agent and agent for service of demands and notices in
connection with the Notes and the Guarantees, until such time as the Trustee has
resigned or a successor has been appointed. Any of the Registrar, the Paying
Agent or any other agent may resign upon 30 days' notice to the Issuers.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Issuers or any other obligor on the Notes),
and the Issuers and the Paying Agent shall notify the Trustee of any Default by
the Issuers (or any other obligor on the Notes) in making any such payment. The
Issuers at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Issuers to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
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SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Issuers shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06. Transfer and Exchange.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes or other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Issuers, the Trustee and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registration of transfers and exchanges, the Issuers shall execute and the
Trustee shall authenticate Notes and the Subsidiary Guarantors shall execute
Guarantees thereon at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Issuers may require payment of a sum sufficient to cover any transfer tax, fee
or similar governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.04, 4.15, 4.16 or 9.05, in which event
the Issuers shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Note may be effected only through a book entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry system.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims that the Note has been lost, destroyed or wrongfully taken and
submits evidence thereof satisfactory to the Trustee, the Issuers shall issue
and the Trustee, upon receipt of a written order in the form of an Officers'
Certificate, shall authenticate a replacement Note and the Subsidiary Guarantors
shall execute a Guarantee thereon if the Trustee's requirements are met. If
required by the Trustee or the Issuers, such Holder must provide an indemnity
bond or other indemnity of reasonable tenor, sufficient in the reasonable
judgment of the Issuers, the Subsidiary Guarantors and the Trustee, to protect
the Issuers, the Subsidiary Guarantors, the Trustee or any Agent from any loss
which any of them may suffer if a Note is replaced. Every replacement Note shall
constitute an additional obligation of the Issuers and the Subsidiary
Guarantors.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Issuers or any of their Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date, the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal, premium, if any, and interest due on the Notes payable on that
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date and is not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that date such Notes
shall be deemed not to be outstanding and interest on them shall cease to
accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Issuers or an Affiliate of the Issuers shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a Trust Officer of the Trustee actually knows are so owned
shall be so considered. The Issuers shall notify the Trustee, in writing, when
they or, to their knowledge, any of their Affiliates repurchase or otherwise
acquire Notes, of the aggregate principal amount of such Notes so repurchased or
otherwise acquired and such other information as the Trustee may reasonably
request and the Trustee shall be entitled to rely thereon.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Issuers may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Issuers in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Issuers consider appropriate for temporary Notes and so indicate in the
Officers' Certificate. Without unreasonable delay, the Issuers shall prepare,
the Trustee shall authenticate and the Subsidiary Guarantors shall execute
Guarantees on, upon receipt of a written order of the Issuers pursuant to
Section 2.02, definitive Notes in exchange for temporary Notes.
SECTION 2.11. Cancellation.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Issuers, shall dispose,
in its customary manner, of all Notes surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Issuers may not issue new
Notes to replace Notes that have been paid or delivered to the Trustee for
cancellation. If the Issuers shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
The Issuers will pay interest on overdue principal from time to time on
demand at the rate of interest then borne by the Notes. The Issuers shall, to
the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
If the Issuers default in a payment of interest on the Notes, they
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Issuers for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Issuers shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default Interest Payment Date"), and at the same time the Issuers shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; provided, however, that in no event shall the Issuers deposit
monies proposed to be paid in respect of defaulted interest later than 11:00
a.m. New York City time of the proposed Default Interest Payment Date. At least
15 days before the subsequent special record date, the Issuers shall mail (or
cause to be mailed) to each Holder, as of a recent date selected by the Issuers,
with a copy to the Trustee, a notice that states the subsequent special record
date, the Default Interest Payment Date and the amount of defaulted interest,
and interest payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which
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is paid prior to the expiration of the 30-day period set forth in Section
6.01(a) shall be paid to Holders as of the regular record date for the Interest
Payment Date for which interest has not been paid. Notwithstanding the
foregoing, the Issuers may make payment of any defaulted interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange.
SECTION 2.13. CUSIP Number.
The Issuers in issuing the Notes may use one or more "CUSIP" numbers,
and, if so, the Trustee shall use the appropriate CUSIP number in notices of
redemption or exchange as a convenience to Holders; provided, however, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of a CUSIP number contained in a notice or on the Notes, and that
reliance may be placed only on the other identification numbers contained on the
Notes. The Issuers shall promptly notify the Trustee in writing of any change in
a CUSIP number.
SECTION 2.14. Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Payment Date and Net Proceeds
Offer Payment Date, the Issuers shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, as the case may be.
SECTION 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
face thereof, and the assignment form that is part of such Note shall include
the additional provisions set forth in Exhibit B, until after the second
anniversary of the later of the Issue Date and the last date on which an Issuer
or any Affiliate of either Issuer was the owner of such Note (or any predecessor
security) (or such shorter period of time as permitted by Rule 144(k) under the
Securities Act or any successor provision thereunder or such longer period of
time as may be required under the Securities Act or applicable state securities
laws in the opinion of counsel for the Issuers), unless otherwise agreed by the
Issuers and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT), (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO AN ISSUER THEREOF OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT (PROVIDED THAT ANY SUCH SALE OR TRANSFER IN CANADA OR TO
OR FOR THE BENEFIT OF A CANADIAN RESIDENT MUST BE EFFECTED PURSUANT TO
AN EXEMPTION FROM THE PROSPECTUS AND REGISTRATION REQUIREMENTS UNDER
APPLICABLE
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CANADIAN SECURITIES LAWS), (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
ISSUERS SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS ANY
OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
Each Global Note shall bear the following legend on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH
NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH
SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO AN ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF THIS INDENTURE.
SECTION 2.16. Book-Entry Provisions for Global Security.
(a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
the second paragraph of Section 2.15.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Notes, and the Depository may be treated by the Issuers, the Trustee and
any Agent of the Issuers or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Issuers, the Trustee or any Agent of the Issuers or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may be transferred or exchanged
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for Physical Notes in accordance with the rules and procedures of the Depository
and the provisions of Section 2.17. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Global Note if (i) the Depository notifies the Issuers that it is unwilling
or unable to continue as Depository for the Global Notes and a successor
depositary is not appointed by the Issuers within 90 days of such notice or (ii)
an Event of Default has occurred and is continuing and the Registrar has
received a written request from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Issuers shall execute,
the Subsidiary Guarantors shall execute Guarantees on, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b), such Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuers shall execute,
the Subsidiary Guarantors shall execute Guarantees on and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.15.
(f) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the Issue Date (provided, however, that neither
of the Issuers nor any Affiliate of either of the Issuers has held any
beneficial interest in such Note, or portion thereof, at any time on or
prior to the second anniversary of the Issue Date) or (y) (1) in the
case of a transfer to an Institutional Accredited Investor which is not
a QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit C hereto or (2) in the case of a transfer to a Non-U.S. Person,
the proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
written instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Issuers shall execute, the Subsidiary Guarantors shall
execute the Guarantees on and the Trustee shall authenticate and deliver one or
more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
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<PAGE> 33
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of assignment in Exhibit B hereto stating, or has
otherwise advised the Issuers and the Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
assignment in Exhibit B hereto stating, or has otherwise advised the
Issuers and the Registrar in writing, that it is purchasing the Note
for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a QIB
within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Issuers as it has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in a Global Note, upon receipt by
the Registrar of written instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of such Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the requested transfer is after the second anniversary of the Issue
Date (provided, however, that neither of the Issuers nor any Affiliate of either
of the Issuers has held any beneficial interest in such Note, or portion
thereof, at any time prior to or on the second anniversary of the Issue Date),
or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Issuers and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Issuers shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
(e) Transfers of Notes Held by Affiliates. Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of either of the
Issuers within two years after the Issue Date, as evidenced by a notation on the
assignment form for such transfer or in the representation letter delivered in
respect thereof or (ii) evidencing a Note that has been acquired from an
Affiliate (other than by an Affiliate) in a transaction or a chain of
transactions not involving any public offering, shall, until two years after the
last date on which either of the Issuers or any Affiliate of either of the
Issuers was an owner of such Note, in each case, bear a legend in substantially
the form set forth in the initial paragraph of Section 2.15 hereof, unless
otherwise agreed by the Issuers (with written notice thereof to the Trustee).
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If Abraxas elects to redeem Notes pursuant to Section 3.03, it shall
notify the Trustee and the Paying Agent in writing of the Redemption Date and
the principal amount of the Notes to be redeemed.
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Abraxas shall give each notice provided for in this Section 3.01 not
less than 5, but not more than 30, days (unless a shorter notice period shall be
satisfactory to the Trustee, as evidenced in a writing signed on behalf of the
Trustee) before the intended mailing date of the Notice of Redemption relating
thereto, together with an Officers' Certificate stating that such redemption
shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes, or portions thereof, for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such other method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part; and provided, further, that if a partial redemption is made
with the proceeds of an Equity Offering, selection of the Notes or portions
thereof for redemption shall be made by the Trustee only on a pro rata basis or
on as nearly a pro rata basis as is practicable (subject to the procedures of
the Depository), unless such method is otherwise prohibited. Notice of
redemption shall be mailed by first-class mail in accordance with the provisions
of Section 3.04. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the applicable Redemption Date,
interest will cease to accrue on Notes or portions thereof called for redemption
as long as the Issuers have deposited with the Paying Agent for the Notes funds
in satisfaction of the applicable Redemption Price plus accrued and unpaid
interest, if any, thereon to the Redemption Date.
SECTION 3.03. Optional Redemption.
The Notes will be redeemable, at the Issuers' option, in whole at any
time or in part from time to time, on and after December 1, 2000 at the
following Redemption Prices (expressed as percentages of the principal amount
thereof) if redeemed during the twelve-month period commencing on December 1 of
the years set forth below, plus, in each case, accrued and unpaid interest, if
any, thereon to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000.................................. 105.750%
2001.................................. 102.875%
2002 and thereafter................... 100.000%
</TABLE>
At any time, or from time to time, prior to December 1, 2000, the
Issuers may, at their option, use all or a portion of the net cash proceeds of
one or more Equity Offerings to redeem up to 50% of the aggregate original
principal amount of the Notes at a Redemption Price equal to 111.500% of the
aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid
interest, if any, thereon to the date of redemption; provided, however, that at
least 50% of the aggregate original principal amount of the Notes remains
outstanding immediately after giving effect to any such redemption (it being
expressly agreed that for purposes of determining whether this condition is
satisfied, Notes owned by either Issuer or any of their Affiliates shall be
deemed not to be outstanding). In order to effect the foregoing redemption with
the proceeds of any Equity Offering, the Issuers shall make such redemption not
more than 60 days after the consummation of any such Equity Offering.
SECTION 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Issuers shall mail or cause to be mailed a notice of redemption by first
class mail to each Holder of Notes to be redeemed at its registered address,
with a copy to the Trustee and any Paying Agent. At the Issuers' request, the
Trustee shall give the notice of redemption in the Issuers' name and at the
Issuers' expense.
Each notice of redemption shall identify (including the CUSIP number)
the Notes to be redeemed and shall state:
(1) the Redemption Date;
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(2) the Redemption Price and the amount of accrued interest,
if any, to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such
redemption is being made;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued interest,
if any;
(6) that, unless the Issuers default in making the redemption
payment, interest on Notes or applicable portions thereof called for
redemption ceases to accrue on and after the Redemption Date, and the
only remaining right of the Holders of such Notes is to receive payment
of the Redemption Price plus accrued interest as of the Redemption
Date, if any, upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes
in the aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.04,
such notice of redemption shall be irrevocable and Notes called for redemption
become due and payable on the Redemption Date at the Redemption Price plus
accrued interest as of such date, if any. Upon surrender to the Trustee or
Paying Agent, such Notes called for redemption shall be paid at the Redemption
Price plus accrued interest thereon to the Redemption Date, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant record
dates referred to in the Notes. Interest shall accrue on or after the Redemption
Date and shall be payable only if the Issuers default in payment of the
Redemption Price plus any accrued and unpaid interest as of the Redemption Date.
SECTION 3.06. Deposit of Redemption Price.
On or before the Redemption Date and in accordance with Section 2.14,
the Issuers shall deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the Redemption Price plus accrued interest, if any, of all Notes to be
redeemed on that date. The Paying Agent shall promptly return to the Issuers any
U.S. Legal Tender so deposited which is not required for that purpose, except
with respect to monies owed as obligations to the Trustee pursuant to Article
Seven.
Unless the Issuers fail to comply with the preceding paragraph and
default in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
SECTION 3.07. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
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ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
(a) The Issuers shall pay the principal of, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture.
(b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
an Issuer or any of its Affiliates) holds, prior to 11:00 a.m. New York City
time on that date, U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture or the Notes.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Issuers may, to the extent they are required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
The Issuers shall maintain the office or agency required under Section
2.03. The Issuers shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 10.02.
SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five, each Issuer shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect their respective corporate existence and the
corporate existence of each of their Restricted Subsidiaries in accordance with
the respective organizational documents of each such Restricted Subsidiary and
the material rights (charter and statutory) and franchises of the Issuers and
each such Restricted Subsidiary; provided, however, that the Issuers shall not
be required to preserve, with respect to themselves, any material right or
franchise and, with respect to any of their Restricted Subsidiaries, any such
existence, material right or franchise, if the Board of Directors of Abraxas
shall determine in good faith that the preservation thereof is no longer
desirable in the conduct of the business of the Issuers and their Subsidiaries,
taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims.
The Issuers shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon either of them or any of their
Subsidiaries or their properties or any of their Subsidiaries' properties and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a Lien upon the property of the Issuers or any of
their Subsidiaries; provided, however, that the Issuers shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate negotiations or proceedings properly instituted and
diligently conducted for which adequate reserves, to the extent required under
GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) Each Issuer shall, and shall cause each of its Restricted
Subsidiaries to, maintain all properties used or useful in the conduct of its
business in good working order and condition (subject to ordinary wear and tear)
and make all necessary repairs, renewals, replacements, additions, betterments
and improvements thereto and actively conduct and carry on its business;
provided, however, that nothing in this Section 4.05 shall prevent an Issuer or
any of its Restricted Subsidiaries from discontinuing the operation and
maintenance of any of its properties, if such discontinuance is (i) in the
ordinary course of business pursuant to customary business terms or (ii) in the
good faith judgment of the respective Boards of Directors or other governing
body of such Issuer or Restricted Subsidiary, as the case may be, desirable in
the conduct of their respective businesses and is not disadvantageous in any
material respect to the Holders.
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(b) The Issuers shall provide or cause to be provided, for themselves
and each of the Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of Abraxas, is adequate and appropriate for the conduct of the business
of the Issuers and their Restricted Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States of America,
Canada or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the good faith
judgment of Abraxas, for companies similarly situated in the industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Issuers shall deliver to the Trustee, within 105 days after the
end of each of their respective fiscal quarters, an Officers' Certificate of
each of the Issuers (provided, however, that one of the signatories to each such
Officers' Certificate shall be the respective Issuer's principal executive
officer, principal financial officer or principal accounting officer), as to
such Officers' knowledge, without independent investigation, of the Issuers'
compliance with all conditions and covenants under this Indenture (without
regard to any period of grace or requirement of notice provided hereunder) and
in the event any Default of the Issuers exists, such Officers shall specify the
nature of such Default. Each such Officers' Certificate shall also notify the
Trustee should such Issuer elect to change the manner in which it fixes its
fiscal year end.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of Abraxas' independent certified public accountants (who shall be a firm
of established national reputation) stating (A) that their audit examination has
included a review of the terms of this Indenture and the form of the Notes as
they relate to accounting matters, and (B) whether, in connection with their
audit examination, any Default or Event of Default has come to their attention
and if such a Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; provided, however, that,
without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, Abraxas shall
deliver to the Trustee, at its address set forth in Section 10.02 hereof, by
registered or certified mail or by facsimile transmission followed by hard copy
by registered or certified mail an Officers' Certificate specifying such event,
notice or other action within 10 days of its becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
The Issuers shall comply, and shall cause each of their Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as could not singly or in the
aggregate reasonably be expected to have a material adverse effect on the
financial condition, business, prospects or results of operations of Abraxas and
its Subsidiaries taken as a whole.
SECTION 4.08. Reports to Holders.
Abraxas will deliver to the Trustee within 15 days after filing the
same with the Commission, copies of the quarterly and annual reports and of the
information, documents and other reports, if any, which Abraxas is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that Abraxas may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, Abraxas will file with the Commission,
to the extent permitted, and provide the Trustee and Holders with such annual
reports and such information, documents and other reports specified in Sections
13 and 15(d) of the Exchange Act. Abraxas will also comply with the other
provisions of Section 314(a) of the TIA.
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SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
The Issuers and each Subsidiary Guarantor covenant (to the extent that
they may lawfully do so) that they will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Issuers or such Subsidiary Guarantor from paying all or any portion of the
principal of or interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may lawfully do so)
the Issuers and each Subsidiary Guarantor hereby expressly waive all benefit or
advantage of any such law, and covenant that they will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.10. Limitation on Restricted Payments.
Abraxas will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other
than dividends or distributions payable solely in Qualified
Capital Stock of Abraxas) on or in respect of shares of
Abraxas' Capital Stock to holders of such Capital Stock,
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of Abraxas or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock
other than through the exchange therefor solely of Qualified
Capital Stock of Abraxas or warrants, rights or options to
purchase or acquire shares of Qualified Capital Stock of
Abraxas,
(c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value,
prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Indebtedness
of an Issuer or a Subsidiary Guarantor that is subordinate or
junior in right of payment to the Notes or such Subsidiary
Guarantor's Guarantee, as the case may be, or
(d) make any Investment (other than a Permitted Investment)
(each of the foregoing actions set forth in clauses (a) through (d) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto,
(i) a Default or an Event of Default shall have occurred and be
continuing,
(ii) Abraxas is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance
with Section 4.12, or
(iii) the aggregate amount of Restricted Payments (including such
proposed Restricted Payment) made subsequent to the Issue Date
(the amount expended for such purposes, if other than in cash,
being the fair market value of such property as determined
reasonably and in good faith by the Board of Directors of
Abraxas) shall exceed the sum of:
(A) 50% of the cumulative Consolidated Net Income (or if
cumulative Consolidated Net Income shall be a loss,
minus 100% of such loss) of Abraxas earned subsequent
to the Issue Date and on or prior to the last date of
Abraxas' fiscal quarter immediately preceding such
Restricted Payment (the "Reference Date") (treating
such period as a single accounting period), plus
(B) 100% of the aggregate net cash proceeds received by
Abraxas from any Person (other than a Restricted
Subsidiary of Abraxas) from the issuance and sale
subsequent to the Issue Date and on or prior to the
Reference Date of Qualified Capital Stock of Abraxas,
plus
(C) without duplication of any amounts included in clause
(iii)(B) above, 100% of the aggregate net cash
proceeds of any equity contribution received by
Abraxas from a holder of Abraxas' Capital Stock
(excluding, in the case of clauses (iii)(B) and this
clause (iii)(C), any net cash proceeds from an Equity
Offering to the extent used to redeem the Notes),
plus
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(D) an amount equal to the net reduction in Investments
in Unrestricted Subsidiaries resulting from
dividends, interest payments, repayments of loans or
advances, or other transfers of cash, in each case to
Abraxas or to any Restricted Subsidiary of Abraxas
from Unrestricted Subsidiaries (but without
duplication of any such amount included in
calculating cumulative Consolidated Net Income of
Abraxas), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (in each case
valued as provided in Section 4.14), not to exceed,
in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by Abraxas or
any Restricted Subsidiary in such Unrestricted
Subsidiary and which was treated as a Restricted
Payment under this Indenture, plus
(E) without duplication of the immediately preceding
subclause (D), an amount equal to the lesser of the
cost or net cash proceeds received upon the sale or
other disposition of any Investment made after the
Issue Date which had been treated as a Restricted
Payment (but without duplication of any such amount
included in calculating cumulative Consolidated Net
Income of Abraxas).
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit:
(1) the payment of any dividend or redemption payment within 60
days after the date of declaration of such dividend or the
applicable redemption if the dividend or redemption payment,
as the case may be, would have been permitted on the date of
declaration,
(2) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any shares of Capital Stock of
Abraxas, either (A) solely in exchange for shares of Qualified
Capital Stock of Abraxas or (B) through the application of net
proceeds of a substantially concurrent sale for cash (other
than to a Restricted Subsidiary of Abraxas) of shares of
Qualified Capital Stock of Abraxas,
(3) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any Indebtedness of Abraxas or
a Subsidiary Guarantor that is subordinate or junior in right
of payment to the Notes or such Subsidiary Guarantor's
Guarantee, as the case may be, either (A) solely in exchange
for shares of Qualified Capital Stock of Abraxas, or (B)
through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Restricted
Subsidiary of Abraxas) of (I) shares of Qualified Capital
Stock of Abraxas or (II) Refinancing Indebtedness, and
(4) the initial designation of Western and Grey Wolf as
Unrestricted Subsidiaries under this Indenture.
In determining the aggregate amount of Restricted Payments made subsequent to
the Issue Date in accordance with clause (iii) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1) and (2)(B) of this paragraph
shall be included in such calculation.
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) Abraxas will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into, amend or permit
or suffer to exist any transaction or series of related transactions (including,
without limitation, the purchase, sale, lease or exchange of any property, the
guaranteeing of any Indebtedness or the rendering of any service) with, or for
the benefit of, any of their respective Affiliates (each an "Affiliate
Transaction"), other than (i) Affiliate Transactions permitted under Section
4.11(b) and (ii) Affiliate Transactions that are on terms that are fair and
reasonable to Abraxas or the applicable Restricted Subsidiary and are no less
favorable to Abraxas or the applicable Restricted Subsidiary than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate of Abraxas or such
Restricted Subsidiary. All Affiliate Transactions (and each series of related
Affiliate Transactions which are similar or part of a common plan) involving
aggregate payments or other property with a fair market value in excess of
$1,000,000 shall be approved by the Board of Directors of Abraxas, such approval
to be evidenced by a Board Resolution stating that the Board of Directors has
determined that such transaction complies with the foregoing provisions. If
Abraxas or any Restricted Subsidiary enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that involves
an aggregate fair market value of more than $10,000,000, Abraxas shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness of such
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transaction or series of related transactions to Abraxas or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view, from
an Independent Advisor and file the same with the Trustee.
(b) The restrictions set forth in Section 4.11(a) shall not apply to
(i) reasonable fees and compensation paid to and indemnity provided on behalf
of, officers, directors, employees or consultants of Abraxas or any Restricted
Subsidiary as determined in good faith by the Board of Directors or senior
management of Abraxas or such Restricted Subsidiary, as the case may be; (ii)
transactions exclusively between or among Abraxas and any of its Restricted
Subsidiaries or exclusively between or among such Restricted Subsidiaries;
provided, however, that such transactions are not otherwise prohibited by this
Indenture; and (iii) Restricted Payments permitted by this Indenture.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
Other than Permitted Indebtedness, Abraxas will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, incur
any Indebtedness; provided, however, that if no Default or Event of Default
shall have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Issuers and the Subsidiary Guarantors
or any of them may incur Indebtedness (including, without limitation, Acquired
Indebtedness), in each case, if on the date of the incurrence of such
Indebtedness, after giving pro forma effect to the incurrence thereof and the
receipt and application of the proceeds therefrom, both (i) Abraxas'
Consolidated EBITDA Coverage Ratio would have been at least equal to 2.5 to 1.0
and (ii) Abraxas' Adjusted Consolidated Net Tangible Assets are equal to or
greater than 150% of the aggregate consolidated Indebtedness of Abraxas and its
Restricted Subsidiaries.
For purposes of determining any particular amount of Indebtedness under
this Section 4.12, guarantees of Indebtedness otherwise included in the
determination of such amount shall not also be included.
Indebtedness of a Person existing at the time such Person becomes a
Restricted Subsidiary (whether by merger, consolidation, acquisition of Capital
Stock or otherwise) or is merged with or into Abraxas or any Restricted
Subsidiary or which is secured by a Lien on an asset acquired by Abraxas or a
Restricted Subsidiary (whether or not such Indebtedness is assumed by the
acquiring Person) shall be deemed incurred at the time the Person becomes a
Restricted Subsidiary or at the time of the asset acquisition, as the case may
be.
The Issuers will not, and will not permit any Subsidiary Guarantor to,
incur any Indebtedness which by its terms (or by the terms of any agreement
governing such Indebtedness) is subordinated in right of payment to any other
Indebtedness of such Issuer or such Subsidiary Guarantor unless such
Indebtedness is also by its terms (or by the terms of any agreement governing
such Indebtedness) made expressly subordinate in right of payment to the Notes
or the Guarantee of such Subsidiary Guarantor, as the case may be, pursuant to
subordination provisions that are substantively identical to the subordination
provisions of such Indebtedness (or such agreement) that are most favorable to
the holders of any other Indebtedness of such Issuer or such Subsidiary
Guarantor, as the case may be.
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
Abraxas will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) pay dividends or make any other distributions on or in respect
of its Capital Stock,
(b) make loans or advances to, or pay any Indebtedness or other
obligation owed to, Abraxas or any other Restricted
Subsidiary,
(c) guarantee any Indebtedness or any other obligation of Abraxas
or any Restricted Subsidiary, or
(d) transfer any of its property or assets to Abraxas or any other
Restricted Subsidiary (each such encumbrance or restriction, a
"Payment Restriction").
The preceding will not apply, however, to encumbrances or restrictions
existing under or by reason of the following (which are excluded from the term
"Payment Restriction"): (i) applicable law, (ii) this Indenture, the Old
Indenture,
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the First Lien Indenture or any Security Document, (iii) customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of any Restricted Subsidiary, (iv) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to such
Restricted Subsidiary, or the properties or assets of such Restricted
Subsidiary, other than the Person or the properties or assets of the Person so
acquired, (v) agreements existing on the Issue Date to the extent and in the
manner such agreements were in effect on the Issue Date, (vi) customary
restrictions with respect to a Restricted Subsidiary of Abraxas pursuant to an
agreement that has been entered into for the sale or disposition of Capital
Stock or assets of such Restricted Subsidiary to be consummated in accordance
with the terms of this Indenture solely in respect of the assets or Capital
Stock to be sold or disposed of, (vii) any instrument governing a Permitted
Lien, to the extent and only to the extent such instrument restricts the
transfer or other disposition of assets subject to such Permitted Lien, or
(viii) an agreement governing Refinancing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clause (ii), (iv) or (v) above; provided, however, that the provisions relating
to such encumbrance or restriction contained in any such Refinancing
Indebtedness are no less favorable to the Holders in any material respect as
determined by the Board of Directors of Abraxas in its reasonable and good faith
judgment than the provisions relating to such encumbrance or restriction
contained in the applicable agreement referred to in such clause (ii), (iv) or
(v).
SECTION 4.14. Limitation on Restricted and Unrestricted Subsidiaries.
The Board of Directors of Abraxas may, if no Default or Event of
Default shall have occurred and be continuing or would arise therefrom,
designate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that (i) any such redesignation shall be deemed to be an incurrence as
of the date of such redesignation by Abraxas and its Restricted Subsidiaries of
the Indebtedness (if any) of such redesignated Subsidiary for purposes of
Section 4.12, (ii) unless such redesignated Subsidiary shall not have any
Indebtedness outstanding, other than Indebtedness which would be Permitted
Indebtedness, no such designation shall be permitted if immediately after giving
effect to such redesignation and the incurrence of any such additional
Indebtedness, Abraxas could not incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.12 and (iii) such Subsidiary
assumes by execution of a supplemental indenture, substantially in the form of
Exhibit F hereto, all of the obligations of a Subsidiary Guarantor under a
Guarantee.
The Board of Directors of Abraxas also may, if no Default or Event of
Default shall have occurred and be continuing or would arise therefrom,
designate any Restricted Subsidiary none of whose properties are subject to any
Liens of the Security Documents to be an Unrestricted Subsidiary if (i) such
designation is at that time permitted under Section 4.10 and (ii) immediately
after giving effect to such designation, Abraxas could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12.
Any such designation or redesignation by such Board of Directors shall
be evidenced to the Trustee by the filing with the Trustee of a certified copy
of the resolution of the Board of Directors giving effect to such designation or
redesignation and an Officers' Certificate certifying that such designation or
redesignation complied with the foregoing conditions and setting forth in
reasonable detail the underlying calculations. In the event that any Restricted
Subsidiary is designated an Unrestricted Subsidiary in accordance with this
Section 4.14, such Restricted Subsidiary's Guarantee will be released.
For purposes of Section 4.10, (i) an "Investment" shall be deemed to
have been made at the time any Restricted Subsidiary is designated as an
Unrestricted Subsidiary in an amount (proportionate to Abraxas' equity interest
in such Subsidiary) equal to the net worth of such Restricted Subsidiary at the
time that such Restricted Subsidiary is designated as an Unrestricted
Subsidiary; (ii) at any date the aggregate amount of all Restricted Payments
made as Investments since the Issue Date shall exclude and be reduced by an
amount (proportionate to Abraxas' equity interest in such Subsidiary) equal to
the net worth of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary, not to exceed, in the case of
any such redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary,
the amount of Investments previously made by Abraxas and the Restricted
Subsidiaries in such Unrestricted Subsidiary (in each case (i) and (ii) "net
worth" to be calculated based upon the fair market value of the assets of such
Subsidiary as of any such date of designation); and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
Notwithstanding the foregoing, such Board of Directors may not
designate any Subsidiary of Abraxas to be an Unrestricted Subsidiary if, after
such designation, (a) Abraxas or any Restricted Subsidiary (i) provides credit
support for,
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or a guarantee of, any Indebtedness of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness) or (ii) is
directly or indirectly liable for any Indebtedness of such Subsidiary or (b)
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, any Restricted Subsidiary which is not a Subsidiary of the
Subsidiary to be so designated.
Notwithstanding the foregoing, the provisions set forth above will not
prohibit the initial designation of each of Grey Wolf and Western as
Unrestricted Subsidiaries.
Subsidiaries of Abraxas that are not designated by the Board of
Directors as Restricted or Unrestricted Subsidiaries will be deemed to be
Restricted Subsidiaries. All Subsidiaries of an Unrestricted Subsidiary will be
Unrestricted Subsidiaries.
SECTION 4.15. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Issuers repurchase all or a portion of such
Holder's Notes pursuant to the offer described below (the "Change of Control
Offer"), at a purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, thereon to the date of purchase.
(b) Within 30 days following the date upon which the Change of Control
occurred, the Issuers must send, by first class mail, a notice to each Holder at
such Holder's last registered address, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control Offer. The notice to the Holders
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer. Such notice shall state:
(i) that the Change of Control Offer is being made pursuant
to this Section 4.15, that all Notes tendered and not withdrawn will be
accepted for payment and that the Change of Control Offer shall remain
open for a period of 20 Business Days or such longer period as may be
required by law;
(ii) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than
as may be required by law) (the "Change of Control Payment Date");
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Issuers default in making payment
therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that Holders electing to have a Note purchased pursuant
to a Change of Control Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day prior to the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day
prior to the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Notes the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such
Notes purchased;
(vii) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided, however, that each Note
purchased and each new Note issued shall be in an original principal
amount of $1,000 or integral multiples thereof; and
(viii) the circumstances and relevant facts regarding such
Change of Control.
On or before the Change of Control Payment Date, the Issuers shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent in accordance with Section
2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes so tendered and (iii) deliver to
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the Trustee Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof being purchased by the Issuers. Upon receipt by the
Paying Agent of the monies specified in clause (ii) above and a copy of the
Officers' Certificate specified in clause (iii) above, the Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price plus accrued interest, if any, and the Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so accepted shall be
promptly mailed by Abraxas to the Holder thereof. For purposes of this Section
4.15, the Trustee shall act as the Paying Agent.
The Issuers shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer at
the Change of Control Purchase Price, at the same times and otherwise in
compliance with the requirements applicable to a Change of Control Offer made by
the Issuers and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.
Neither the Board of Directors of Abraxas nor the Trustee may waive the
provisions of this Section 4.15 relating to Abraxas' obligation to make a Change
of Control Offer.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.15, the Issuers shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached their
obligations under the provisions of this Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales.
(a) Abraxas will not, and will not cause or permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:
(i) Abraxas or the applicable Restricted Subsidiary, as the
case may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by Abraxas' Board of Directors
or senior management of Abraxas); and
(ii) at least 75% of the consideration received by Abraxas or
the Restricted Subsidiary, as the case may be, from such Asset Sale
shall be in the form of cash or Cash Equivalents and is received at the
time of such disposition.
(b) Within 180 days after the receipt of any Net Cash Proceeds from an
Asset Sale plus such additional time as may be necessary to complete a net
proceeds offer under the terms of the First Lien Indenture with respect to such
Asset Sale ("Net Cash Proceeds Application Period"), Abraxas or such Restricted
Subsidiary shall apply the Net Cash Proceeds of such Asset Sale as follows:
(i) to the extent such Net Cash Proceeds are received from an
Asset Sale not involving the sale, transfer or disposition of
Collateral ("Non-Collateral Proceeds"), to repay any Indebtedness
secured by the assets involved in such Asset Sale together with a
concomitant permanent reduction in the amount of such Indebtedness so
repaid; and
(ii) with respect to any Non-Collateral Proceeds remaining
after application pursuant to the preceding clause (i) and any Net Cash
Proceeds received from an Asset Sale involving Collateral, Abraxas
shall make an offer within such Net Cash Proceeds Application Period to
purchase (the "Net Proceeds Offer") from all Holders up to a maximum
principal amount (expressed as an integral multiple of $1,000) of Notes
equal to the Available Proceeds Amount at a purchase price equal to
100% of the principal amount thereof plus accrued and unpaid interest
thereon to the date of purchase (the "Net Proceeds Offer Payment
Date"); provided that Abraxas will not be required to apply pursuant to
this clause (ii) Net Cash Proceeds received from any Asset Sale if, and
only to the extent that such Net Cash Proceeds are applied to, within
the Net Cash Proceeds Application Period for such Asset Sale, (A) to
repay or prepay any Indebtedness outstanding under the First Lien Notes
or the First Lien Indenture, (B) to repay or prepay any Indebtedness of
Abraxas that is secured by a Lien permitted to be incurred pursuant to
Section 4.18, (C) to pay interest on the Notes in an aggregate amount
not to exceed 5.75%
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of the aggregate original principal amount of the Notes, (D) an
investment or investments in Crude Oil and Natural Gas Related Assets
or (E) an investment or investments in properties or assets that
replace the properties or assets that were the subject of such Asset
Sale or in properties or assets that will be used in the Crude Oil and
Natural Gas Business of Abraxas and its Restricted Subsidiaries
("Replacement Assets"), and the properties or assets constituting such
Crude Oil and Natural Gas Related Assets or Replacement Assets and any
non-cash consideration received are made subject to the Lien of this
Indenture and the Security Documents in the manner contemplated in this
Indenture to the extent the Net Cash Proceeds used to purchase such
properties or assets arose from the sale of properties or assets that
were subject to such Lien, provided that any such properties or assets
that are Oil and Gas Assets shall be made subject to such Lien in any
event; further provided, however, that if at the end of the Net Cash
Proceeds Application Period for such Asset Sale referred to above,
Abraxas or one of its Restricted Subsidiaries has delivered to the
Trustee an Officers' Certificate (1) otherwise in compliance with the
terms of this Indenture, (2) stating that attached thereto is a
definitive, executed purchase and sale agreement for a Crude Oil and
Natural Gas Related Assets investment or for Replacement Assets, and
(3) setting forth the aggregate cash consideration to be paid in
connection with such purchase from the Available Proceeds Amount, then
Abraxas shall have an additional period of time during which it may
defer making a Net Proceeds Offer with respect to the Available
Proceeds Amount the subject of such purchase and sale, such additional
period of time ending on the earlier of (y) 90 days after the end of
such Net Cash Proceeds Application Period and (z) the date such
purchase and sale agreement is terminated or cancelled.
If at any time any consideration (other than cash or Cash Equivalents)
received by Abraxas or any Restricted Subsidiary of Abraxas, as the case may be,
in connection with any Asset Sale is converted into or sold or otherwise
disposed of for cash, then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this Section 4.16.
Abraxas may defer the Net Proceeds Offer until there is an aggregate
unutilized Available Proceeds Amount equal to or in excess of $5,000,000
resulting from one or more Asset Sales (at which time the entire unutilized
Available Proceeds Amount, and not just the amount in excess of $5,000,000,
shall be applied as required pursuant to this Section 4.16). To the extent the
Net Proceeds Offer is not fully subscribed to by Holders, Abraxas may obtain a
release of the unutilized portion of the Collateral Proceeds from the Lien of
this Indenture and the Security Documents.
Notwithstanding the terms of the four preceding paragraphs above,
Abraxas and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with such paragraphs to the extent (a) the consideration
for such Asset Sale constitutes Replacement Assets and/or Crude Oil and Natural
Gas Related Assets and (b) such Asset Sale is for fair market value; provided,
however, that any consideration not constituting Replacement Assets and Crude
Oil and Natural Gas Related Assets received by Abraxas or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
this Section 4.16; further provided, however, that, to the extent that the
property transferred or conveyed constitutes an Oil and Gas Asset, the property
received in exchange therefor constitutes an Oil and Gas Asset.
All Collateral Proceeds delivered to the Trustee shall constitute Trust
Moneys and all Collateral Proceeds shall be delivered by Abraxas (A) so long as
any Indebtedness under the First Lien Notes remains outstanding, to the First
Lien Notes Representative, and (B) otherwise to the Trustee, and all Collateral
Proceeds delivered to the Trustee shall be deposited in the Collateral Account
in accordance with this Indenture. Collateral Proceeds so deposited may be
withdrawn from the Collateral Account for application by Abraxas in accordance
with clause (ii) above or otherwise pursuant to this Indenture in accordance
with Section 12.08.
In the event of the transfer of substantially all (but not all) of the
consolidated assets of Abraxas as an entirety to a Person in a transaction
permitted under Section 5.01, the successor corporation shall be deemed to have
sold the consolidated assets of Abraxas not so transferred for purposes of this
covenant, and shall comply with the provisions of this Section 4.16 with respect
to such deemed sale as if it were an Asset Sale. In addition, the fair market
value of such consolidated assets of Abraxas deemed to be sold shall be deemed
to be Net Cash Proceeds for purposes of this Section 4.16.
(c) Each notice of a Net Proceeds Offer pursuant to this Section 4.16
shall be mailed or caused to be mailed, by first class mail, by the Issuers not
less than 30 days nor more than 60 days before the Net Proceeds Offer Payment
Date to all Holders at their last registered addresses, with a copy to the
Trustee. The notice shall contain all instructions and
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materials necessary to enable such Holders to tender Notes pursuant to the Net
Proceeds Offer and shall state the following terms:
(i) that the Net Proceeds Offer is being made pursuant to
Section 4.16, that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes
tendered in a Net Proceeds Offer plus accrued interest at the Net
Proceeds Offer Payment Date exceeds the aggregate amount of the Net
Proceeds Offer, the Issuers shall purchase the Notes on a pro rata
basis (with such adjustments as may be deemed appropriate by the
Issuers so that only Notes in denominations of $1,000 or multiples
thereof shall be purchased) and that the Net Proceeds Offer shall
remain open for a period of 20 Business Days or such longer period as
may be required by law;
(ii) the purchase price (including the amount of accrued
interest) and the Net Proceeds Offer Payment Date;
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Issuers default in making payment
therefor, any Note accepted for payment pursuant to the Net Proceeds
Offer shall cease to accrue interest after the Net Proceeds Offer
Payment Date;
(v) that Holders electing to have a Note purchased pursuant
to a Net Proceeds Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day
prior to the Net Proceeds Offer Payment Date;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the third Business Day
prior to the Net Proceeds Offer Payment Date, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Notes the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such
Note purchased; and
(vii) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided, however, that each Note
purchased and each new Note issued shall be in an original principal
amount of $1,000 or integral multiples thereof.
On or before the Net Proceeds Offer Payment Date, the Issuers shall (A)
accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (c)(i) above,
(B) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal
Tender sufficient to pay the purchase price plus accrued interest, if any, of
all Notes to be purchased and (C) deliver to the Trustee all Notes so accepted
together with an Officers' Certificate stating the Notes or portions thereof
being purchased by the Issuers. The Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price
plus accrued interest, if any. For purposes of this Section 4.16, the Trustee
shall act as the Paying Agent.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.16, the Issuers shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached their obligations under
the provisions of this Section 4.16 by virtue thereof.
SECTION 4.17. Limitations with Respect to Capital Stock of Restricted
Subsidiaries.
Abraxas will not cause or permit any of its Restricted Subsidiaries to
issue any Preferred Stock (other than to Abraxas or to a Wholly Owned Restricted
Subsidiary) or permit any Person (other than Abraxas or a Wholly Owned
Restricted Subsidiary) to own any Preferred Stock of any Restricted Subsidiary.
Abraxas will not, and will not cause or permit any of its Restricted
Subsidiaries to, sell or otherwise dispose of any shares of Capital Stock of any
Restricted Subsidiary, and shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to issue or sell or otherwise dispose of any of its
Capital Stock except: (a) to Abraxas or a Wholly Owned Restricted Subsidiary of
Abraxas, or (b) if all shares of Capital Stock of such Restricted Subsidiary
owned by Abraxas and its Restricted Subsidiary are sold or otherwise
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disposed of. In connection with any sale or disposition of Capital Stock of any
Restricted Subsidiary of Abraxas under clause (b), Abraxas will be required to
comply with Section 4.16 and the Guarantee given by such Restricted Subsidiary,
if any, as well as all Collateral owned by such Person shall be released.
SECTION 4.18. Limitation on Liens.
Abraxas will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist or remain in effect any Liens:
(a) upon any item of Collateral other than the Liens created by
this Indenture and the Security Documents and the Liens
expressly permitted by the applicable Security Documents, and
any Liens securing the First Lien Notes or any other
Indebtedness under the First Lien Indenture; and
(b) upon any other Properties of Abraxas or of any of its
Restricted Subsidiaries, whether owned on the Issue Date or
acquired after the Issue Date, or on any income or profits
therefrom, or assign or otherwise convey any right to receive
income or profits thereon other than, with respect to this
clause (b): (i) Liens existing on the Issue Date to the extent
and in the manner such Liens are in effect on the Issue Date,
(ii) Permitted Liens, and (iii) and any Liens securing the
First Lien Notes or any other Indebtedness under the First
Lien Indenture.
SECTION 4.19. Limitation on Conduct of Business.
Abraxas will not, and will not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the Crude Oil
and Natural Gas Business.
SECTION 4.20. Additional Subsidiary Guarantees.
If Abraxas or any of its Restricted Subsidiaries transfers or causes to
be transferred, in one transaction or a series of related transactions, any
property to any Restricted Subsidiary that is not a Subsidiary Guarantor, or if
Abraxas or any of its Restricted Subsidiaries shall organize, acquire or
otherwise invest in or hold an Investment in another Restricted Subsidiary
having total consolidated assets with a book value in excess of $500,000 that is
not a Subsidiary Guarantor, then such transferee or acquired or other Restricted
Subsidiary shall (a) execute and deliver to the Trustee a supplement to this
Indenture substantially in the form of Exhibit F, pursuant to which such
Restricted Subsidiary shall unconditionally guarantee all of the Issuers'
obligations under the Notes and this Indenture on the terms set forth in this
Indenture, (b) grant to the Trustee a second priority Lien on substantially all
its Oil and Gas Assets, subject only to Permitted Liens, pursuant to such
Security Documents as the Trustee may require for such purpose, and (c) deliver
to the Trustee an Opinion of Counsel and an Officers' Certificate, stating that
no Event of Default shall occur as a result of such supplemental indenture or
Security Documents, that each such instrument complies with the terms of this
Indenture and that each such instrument has been duly authorized, executed and
delivered by such Restricted Subsidiary and constitutes a legal, valid, binding
and enforceable obligation of such Restricted Subsidiary. Thereafter, such
Restricted Subsidiary shall be a Subsidiary Guarantor for all purposes of this
Indenture.
SECTION 4.21. Limitation on Restrictive Covenants.
Notwithstanding any other provisions of this Indenture, the restrictive
covenants set forth herein for so long as the Old Indenture and the First Lien
Indenture remain in effect, shall be and shall be deemed limited to the extent
necessary so that the creation, existence and effectiveness of such restrictive
covenant shall not result in a breach of the covenant of the Old Indenture or of
the First Lien Indenture relating to "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries."
SECTION 4.22. Impairment of Security Interest.
Neither Abraxas nor any of its Subsidiaries will take or omit to take
any action which action or omission would have the result of adversely affecting
or impairing any Lien granted in favor of the Trustee, for its benefit and the
benefit of the Holders, with respect to the Collateral, and neither Abraxas nor
any of its Subsidiaries shall grant to any Person, or suffer any Person (other
than Abraxas and its Restricted Subsidiaries) to have (other than to the Trustee
on behalf of the Trustee
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and the Holders) any interest whatsoever in the Collateral other than Permitted
Liens. Neither Abraxas nor any of its Subsidiaries will enter into any agreement
or instrument that by its terms requires the proceeds received from any sale of
Collateral to be applied to repay, redeem, defease or otherwise acquire or
retire any Indebtedness, other than Indebtedness under the First Lien Notes or
under the First Lien Indenture, and other than pursuant to this Indenture and
the Security Documents. This Section shall not, however, be construed as
requiring Abraxas or any of its Subsidiaries to interfere with the enforcement
of rights and remedies with respect to the Collateral pursuant to the First Lien
Indenture.
SECTION 4.23. Additional Amounts.
All payments made by Canadian Abraxas or any Subsidiary Guarantor under
or with respect to the Notes or any Guarantee will be made free and clear of,
and without withholding or deduction for or on account of, any present or future
tax, duty, levy, impost, assessment or other governmental charge imposed or
levied by or on behalf of the Government of Canada or of any province or
territory thereof or by any authority or agency therein or thereof having power
to tax (or the jurisdiction of incorporation of any successor of Canadian
Abraxas or any Subsidiary Guarantor) (hereunder "Taxes"), unless Canadian
Abraxas or the applicable Subsidiary Guarantor, or any successor, as the case
may be, is required to withhold or deduct Taxes by law or by the interpretation
or administration thereof by the relevant governmental authority or agency. If
Canadian Abraxas or any Subsidiary Guarantor or any successor, as the case may
be, is so required to withhold or deduct any amount for or on account of Taxes
from any payment made under or with respect to the Notes or any Guarantee,
Canadian Abraxas or such Subsidiary Guarantor, as the case may be, will pay such
additional amounts ("Additional Amounts") as may be necessary so that the net
amount received by each Holder (including Additional Amounts) after such
withholding or deduction will not be less than the amount the Holder would have
received if such Taxes had not been withheld or deducted; provided that no
Additional Amounts will be payable with respect to a payment made to a Holder
(an "Excluded Holder") in respect of a beneficial owner (a) with which the
Issuers or such Subsidiary Guarantor does not deal at arm's-length (within the
meaning of the Income Tax Act (Canada)) at the time of making such payment or
(b) which is subject to such Taxes by reason of its being connected with Canada
or any province or territory thereof otherwise than by the mere acquisition,
holding or disposition of the Notes or the receipt of payments thereunder.
Canadian Abraxas and the Subsidiary Guarantors will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or withheld to
the relevant governmental authority in accordance with applicable law. Canadian
Abraxas and the Subsidiary Guarantors will furnish to the Holders, within 30
days after the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment. Canadian Abraxas and
the Subsidiary Guarantors will, jointly and severally, indemnify and hold
harmless each Holder (other than an Excluded Holder) and upon written request
reimburse each such Holder for the amount of (A) any Taxes so levied or imposed
on and paid by such Holder as a result of payments made under or with respect to
the Notes or any Guarantee, (B) any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, and (C) any Taxes imposed
with respect to any reimbursement under (A) or (B) so that the net amount
received by such Holder after such reimbursement will not be less than the net
amount the Holder would have received if Taxes on such reimbursement had not
been imposed. At least 30 days prior to each date on which any payment under or
with respect to the Notes is due and payable, if Canadian Abraxas or a
Subsidiary Guarantor will be obligated to pay Additional Amounts with respect to
such payment, Canadian Abraxas or such Subsidiary Guarantor, as the case may be,
will deliver to the Trustee an Officers' Certificate stating the fact that such
Additional Amounts will be payable, the amounts so payable and will set forth
such other information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date. Whenever in this Indenture there is
mentioned, in any context, the payment of principal (and premium, if any),
redemption price, Change of Control payment, purchase price, interest or any
other amount payable under or with respect to any Note, such mention shall be
deemed to include mention of the payment of Additional Amounts to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof.
The Issuers will pay any present or future stamp, court or documentary taxes
or any other excise or property taxes, charges or similar levies that arise in
any jurisdiction from the execution, delivery, enforcement or registration of
the Notes or any other document or instrument in relation thereto, or from the
receipt of any payments with respect to the Notes, excluding such taxes, charges
or similar levies imposed by any jurisdiction outside of Canada, the
jurisdiction of incorporation of any successor of either of the Issuers or any
jurisdiction in which a Paying Agent is located, and hereby agree to indemnify
the Holders for any such taxes paid by such Holders.
The foregoing obligations shall survive any termination, defeasance or
discharge of this Indenture and the payment of all amounts owing under or with
respect to the Notes and any Guarantee.
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SECTION 4.24. Maintenance of Lien; Additional Collateral.
(a) If, after the Issue Date, Abraxas or any of its Restricted
Subsidiaries shall (i) acquire any material Oil and Gas Assets or (ii) engage in
successful drilling and exploration activities resulting in the creation of new
material Crude Oil and Natural Gas Properties, then Abraxas shall, and shall
cause each of its Restricted Subsidiaries to, execute and file in the
appropriate filing offices mortgages, deeds of trust, security agreements,
financing statements and other instruments granting to the Trustee for the
benefit of the Holders a second priority Lien, subject only to Permitted Liens,
as is necessary or appropriate to ensure that the Lien of this Indenture and the
Security Documents covers such new Oil and Gas Assets.
(b) Without limitation of clause (a) of this Section 4.24, on the date
any Replacement Assets shall be acquired pursuant to Section 4.16 and on the
date of any Oil and Gas Assets are received in exchange or trade for other
properties as contemplated by clause (vii) of the definition of "Asset Sale,"
Abraxas shall, and shall cause each of its Restricted Subsidiaries to, execute
and file in the appropriate filing offices mortgages, deeds of trust, security
agreements, financing statements and other instruments granting to the Trustee,
for the benefit of the Holders, a second priority Lien, subject only to
Permitted Liens, on substantially all of such material Replacement Assets or
other material Oil and Gas Assets received in exchange or trade.
(c) In connection with any Security Documents executed and filed under
clause (a) or (b) of this Section 4.24, Abraxas shall also comply with the terms
of Section 12.02 to the extent applicable.
(d) On March 15th in each year, beginning with March 15, 2000, Abraxas
shall review its and its Restricted Subsidiaries' Oil and Gas Assets to
ascertain whether or not substantially all of such assets are then subject to
the Lien of this Indenture and the Security Documents. If a substantial portion
of such assets are not then subject to the Lien of this Indenture and the
Security Documents, then Abraxas shall, and shall cause its Restricted
Subsidiaries, to execute and file in the appropriate filing offices mortgages,
deeds of trust, security agreements, financing statements and other instruments
granting to the Trustee for the benefit of the Holders a second priority Lien,
subject only to Permitted Liens, as is necessary or appropriate to accomplish
such objective.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
Neither Issuer will, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of such Issuer's assets (determined on a
consolidated basis for such Issuer and its Restricted Subsidiaries), whether as
an entirety or substantially as an entirety to any Person unless: (a) either (i)
such Issuer or such Restricted Subsidiary, as the case may be, shall be the
surviving or continuing corporation or (ii) the Person (if other than such
Issuer) formed by such consolidation or into which such Issuer is merged or the
Person which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the assets of such Issuer and its Restricted Subsidiaries
substantially as an entirety (the "Surviving Entity") (x) shall be a corporation
organized and validly existing under the laws of the United States or any state
thereof or the District of Columbia (or, if such Issuer is Canadian Abraxas,
such Surviving Entity may be a corporation organized and validly existing under
the laws of Canada or any province or territory thereof) and (y) shall expressly
assume, by supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and punctual payment of
the principal of, premium, if any, and interest on all of the Notes and the
performance of every covenant of the Notes, this Indenture and the Security
Documents on the part of such Issuer to be performed or observed; (b)
immediately after giving effect to such transaction and the assumption
contemplated by clause (a)(ii)(y) above (including giving effect to any
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of such transaction), such Issuer or such
Surviving Entity, as the case may be, (i) shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of such Issuer immediately
prior to such transaction and (ii) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.12 hereof; (c) immediately before and immediately
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after giving effect to such transaction and the assumption contemplated by
clause (a)(ii)(y) above (including, without limitation, giving effect to any
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and (d) such Issuer or the
Surviving Entity, as the case may be, shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
hereof and that all conditions precedent in this Indenture relating to such
transaction have been satisfied; provided, however, that such counsel may rely,
as to matters of fact, on a certificate or certificates of officers of either
Issuer.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the assets of one or more Restricted Subsidiaries the
Capital Stock of which constitutes all or substantially all of the assets of an
Issuer, shall be deemed to be the transfer of all or substantially all of the
assets of such Issuer.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with the provisions
of this Indenture described under this Section 5.01) will not, and Abraxas will
not cause or permit any Subsidiary Guarantor to, consolidate with or merge with
or into any Person other than an Issuer or another Subsidiary Guarantor that is
a Wholly Owned Restricted Subsidiary unless: (a) the entity formed by or
surviving any such consolidation or merger (if other than the Subsidiary
Guarantor) is a corporation organized and existing under the laws of the United
States or any state thereof or the District of Columbia (or if such Restricted
Subsidiary was formed under the laws of Canada or any province or territory
thereof, such Surviving Entity shall be a corporation organized and validly
existing under the laws of Canada or any province or territory thereof); (b)
such entity assumes by execution of a supplemental indenture all of the
obligations of the Subsidiary Guarantor under its Guarantee; (c) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; and (d) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis,
Abraxas could satisfy the provisions of clause (b) of the first paragraph of
this Section 5.01. Any merger or consolidation of a Subsidiary Guarantor with
and into an Issuer (with such Issuer being the Surviving Entity) or another
Subsidiary Guarantor that is a Wholly Owned Restricted Subsidiary need only
comply with clause (d) of the first paragraph of this Section 5.01.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of an Issuer in accordance with the foregoing,
in which such Issuer is not the Surviving Entity, the Surviving Entity formed by
such consolidation or into which such Issuer is merged or to which such transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, such Issuer under this Indenture and the Notes with the same
effect as if such Surviving Entity had been named as such, and thereafter
(except in the case of a lease), the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture and the Notes.
ARTICLE SIX
REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" means any of the following events:
(a) the failure to pay interest on any Notes when the same
becomes due and payable and such default continues for a period of 30
days;
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(b) the failure to pay the principal of any Notes when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds
Offer);
(c) a default in the observance or performance of any other
covenant or agreement contained in this Indenture which default
continues for a period of 30 days after either Issuer or any Subsidiary
Guarantor receives written notice specifying the default (and demanding
that such default be remedied) from the Trustee or the Holders of at
least 25% of the outstanding principal amount of the Notes (except in
the case of a default with respect to observance or performance of any
of the terms or provisions of Section 4.15, 4.16 or 5.01 which will
constitute an Event of Default with such notice requirement but without
such passage of time requirement);
(d) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of Abraxas or any Restricted Subsidiary (or
the payment of which is guaranteed by Abraxas or any Restricted
Subsidiary), whether such Indebtedness now exists, or is created after
the Issue Date, which default (i) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness after
any applicable grace period provided in such Indebtedness (a "payment
default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount
of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a payment default or
the maturity of which has been so accelerated, aggregates $5,000,000 or
more;
(e) one or more judgments in an aggregate amount in excess of
$5,000,000 (unless covered by insurance by a reputable insurer as to
which the insurer has acknowledged coverage) shall have been rendered
against Abraxas or any of its Restricted Subsidiaries and such
judgments remain undischarged, unvacated, unpaid or unstayed for a
period of 60 days after such judgment or judgments become final and
non-appealable;
(f) Abraxas or any of its Subsidiaries pursuant to or under or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of
it or for all or substantially all of its property;
(iv) makes a general assignment for the benefit of
its creditors; or
(v) shall generally not pay its debts when such
debts become due or shall admit in writing its inability to
pay its debts generally;
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against Abraxas or any Subsidiary
of Abraxas in an involuntary case or proceeding,
(ii) appoints a Custodian of Abraxas or any
Subsidiary of Abraxas for all or substantially all of its
Properties, or
(iii) orders the liquidation of Abraxas or any
Subsidiary of Abraxas,
and in each case the order or decree remains unstayed and in effect for
60 days; or
(h) any of the Guarantees or any of the Security Documents
ceases to be in full force and effect or any of the Guarantees or the
Security Documents is declared to be null and void or invalid and
unenforceable
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or any of the Subsidiary Guarantors denies or disaffirms its liability
under its Guarantee (other than by reason of release of a Subsidiary
Guarantor in accordance with the terms of this Indenture) or any
obligor or any Related Person denies or disaffirms its liability under
any Security Document to which it is party.
SECTION 6.02. Acceleration.
Upon the happening of any Event of Default specified in Section 6.01,
the Trustee may, or the holders of at least 25% in aggregate principal amount of
outstanding Notes may, declare the principal of, premium, if any, and accrued
and unpaid interest on all the Notes to be due and payable by notice in writing
to the Issuers and the Trustee specifying the respective Event of Default and
that it is a "notice of acceleration" and the same shall become immediately due
and payable. If an Event of Default of the type described in clause (f) or (g)
above occurs and is continuing, then such amount will ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
aggregate principal amount of the Notes then outstanding by written notice to
the Issuers and the Trustee may rescind and cancel such declaration and its
consequences (a) if the rescission would not conflict with any judgment or
decree, (b) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of such
acceleration, (c) to the extent the payment of such interest is lawful, interest
on overdue installments of interest and overdue principal, which have become due
otherwise than by such declaration of acceleration, has been paid, (d) if the
Issuers have paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances, and (e) in the event of
the cure or waiver of an Event of Default of the type described in clause (f) or
(g) of the description of Events of Default above, the Trustee shall have
received an Officers' Certificate and an Opinion of Counsel that such Event of
Default has been cured or waived; provided, however, that such counsel may rely,
as to matters of fact, on a certificate or certificates of officers of Abraxas.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies.
Subject to Section 12.01(c), if an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of the principal of, premium, if any, or
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
All rights of action and claims under this Indenture or the Notes may
be enforced by the Trustee even if it does not possess any of the Notes or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative to the extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Prior to the declaration of acceleration of the Notes, the Holders of
not less than a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may, on behalf of the Holders of
all the Notes, waive any existing Default or Event of Default and its
consequences under this Indenture, except a Default or Event of Default
specified in Section 6.01(a) or (b) or in respect of any provision hereof which
cannot be modified or amended without the consent of the Holder so affected
pursuant to Section 9.02. When a Default or Event of Default is so waived, it
shall be deemed to be cured and shall cease to exist. This Section 6.04 shall be
in lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the
TIA is hereby expressly excluded from this Indenture and the Notes, as permitted
by the TIA.
SECTION 6.05. Control by Majority.
Holders of the Notes may not enforce this Indenture or the Notes except
as provided in this Article Six and under the TIA. Subject to Section 12.01(c),
the Holders of not less than a majority in aggregate principal amount of the
outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided, however, that the Trustee
may refuse to follow any direction (a) that conflicts with any rule of law or
this Indenture, (b) that the Trustee determines may be unduly
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prejudicial to the rights of another Holder, or (c) that may expose the Trustee
to personal liability for which reasonable security and indemnity provided to
the Trustee against such liability shall be inadequate; provided, further,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction or this Indenture. This Section
6.05 shall be in lieu of Section 316(a)(1)(A) of the TIA, and such Section
316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.
SECTION 6.06. Limitation on Suits.
No Holder of any Notes shall have any right to institute any proceeding
with respect to this Indenture, the Notes, any Guarantee or any Security
Document or any remedy hereunder or thereunder, unless the Holders of at least
25% in aggregate principal amount of the outstanding Notes have made written
request, and offered reasonable security and indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and this Indenture, the
institution of such proceeding is consistent with Section 12.01(c), the Trustee
has failed to institute such proceeding within 60 days after receipt of such
notice, request and offer of security and indemnity and the Trustee, within such
60-day period, has not received directions inconsistent with such written
request by Holders of not less than a majority in aggregate principal amount of
the outstanding Notes.
Subject to Section 12.01(c), the foregoing limitations shall not apply
to a suit instituted by a Holder of a Note for the enforcement of the payment of
the principal of, premium, if any, or interest on, such Note on or after the
respective due dates expressed or provided for in such Note.
A Holder may not use this Indenture to prejudice the rights of any
other Holders or to obtain priority or preference over such other Holders.
SECTION 6.07. Right of Holders To Receive Payment.
Notwithstanding any provision in this Indenture other than Section
12.01(c) (to which this provision is subject), the right of any Holder of a Note
to receive payment of the principal of, premium, if any, and interest on such
Note, on or after the respective due dates expressed or provided for in such
Note, or to bring suit for the enforcement of any such payment on or after the
respective due dates, is absolute and unconditional and shall not be impaired or
affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against either Issuer, or any other obligor on
the Notes for the whole amount of the principal of, premium, if any, and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum provided for by the
Notes and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, fees, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, fees, expenses,
disbursements and advances of the Trustee, its agents, counsel, accountants and
experts) and the Holders allowed in any judicial proceedings relative to the
Issuers, any Subsidiary Guarantor or Restricted Subsidiary (or any other obligor
upon the Notes), their creditors or their property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, fees, expenses, disbursements
and advances of the Trustee, its agent and counsel, and any other amounts due
the Trustee under Section 7.07. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or
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the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article Six it shall
pay out such money in the following order:
First: to the Trustee (including any predecessor Trustee) for
amounts due under Section 7.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Notes for interest;
Third: to Holders for the principal amounts (including any
premium) owing under the Notes, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for
the principal (including any premium); and
Fourth: the balance, if any, to the Issuers.
The Trustee, upon prior written notice to the Issuers, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may in its discretion require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to any suit by the Trustee, any suit by a
Holder pursuant to Section 6.06, or a suit by a Holder or Holders of more than
10% in aggregate principal amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture, any Guarantee or any Note and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Issuers, the Subsidiary Guarantors, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the
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Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate security and indemnity against such risk or
liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.
(f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Issuers.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the
Issuers, personally or by agent or attorney.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to Sections
10.04 and 10.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action that it
takes or omits to take in good faith which it reasonably believes to be
authorized or within the discretion, rights or powers conferred upon it
by this Indenture.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent,
order, bond, debenture, or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice to the Issuers, to examine the books,
records, and premises
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of the Issuers, personally or by agent or attorney and to consult with
the officers and representatives of the Issuers, including the Issuers'
accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered, and if
requested, provided to the Trustee security and indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which may be
incurred by it in compliance with such request, order, direction or
exercise.
(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder.
(h) Delivery of reports, information and documents to the
Trustee under Section 4.08 is for informational purposes only and the
Trustee's receipt of the foregoing shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Issuers' and any
Subsidiary Guarantor's compliance with any of their covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
(i) No permissive right of the Trustee to act hereunder shall
be construed as a duty.
(j) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate, a written Opinion of Counsel, or both.
(k) Except with respect to Section 4.01 hereof, the Trustee
shall have no duty to inquire as to the performance of the Issuers'
covenants in Article Four hereof. In addition, the Trustee shall not be
deemed to have knowledge of any Default or Event of Default except (i)
any Event of Default occurring pursuant to Sections 6.01(a) and 6.01(b)
hereof or (ii) any Default or Event of Default of which the Trustee
shall have received written notification or obtained actual knowledge.
(l) The Trustee shall not be deemed to have notice or
knowledge of any matter unless a Trust Officer has actual knowledge
thereof or unless written notice thereof is received by the Trustee at
the Corporate Trust Office of the Trustee and such notice references
the Notes generally, the Issuers or this Indenture.
(m) The Trustee shall be authorized to exercise its rights and
remedies under this Indenture and the Security Documents through one or
more agents.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuers, any of their
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture, the Guarantees or the Notes, and it shall not be accountable for
the Issuers' use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuers in this Indenture or the Notes other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if (i)
the Trustee receives written notice thereof or (ii) such default is an Event of
Default under Section 6.01(a) or (b), the Trustee shall mail to each Holder and
to the First Lien Notes Representative notice of the uncured Default or Event of
Default within 90 days after obtaining knowledge thereof. Except in the case of
a Default or an Event of Default in payment of principal of, or interest on, any
Note, including
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an accelerated payment, a Default in payment on the Change of Control Payment
Date pursuant to a Change of Control Offer or on the Net Proceeds Offer Payment
Date pursuant to a Net Proceeds Offer and a Default in compliance with Article
Five hereof, the Trustee may withhold the notice if and so long as its Board of
Directors, the executive committee of its Board of Directors or a committee of
its directors and/or Trust Officers in good faith determines that withholding
the notice is in the interest of the Holders. The foregoing sentence of this
Section 7.05 shall be in lieu of the proviso to Section 315(b) of the TIA and
such proviso to Section 315(b) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after May 15 of each year beginning with 2000, the
Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Holder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Issuers and filed with the Commission and each stock exchange, if
any, on which the Notes are listed.
The Issuers shall promptly notify the Trustee if the Notes become
listed on any stock exchange and the Trustee shall comply with TIA Section
313(d).
SECTION 7.07. Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time such
compensation for its services as has been agreed to by the Issuers and the
Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuers shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it in connection with the performance of its duties under this Indenture.
Such expenses shall include the reasonable fees and expenses of the Trustee's
agents, counsel, accountants and experts.
The Issuers and the Subsidiary Guarantors shall jointly and severally
indemnify each of the Trustee (or any predecessor Trustee) and its agents,
employees, stockholders, Affiliates and directors and officers for, and hold
them each harmless against, any and all loss, liability, damage, claim or
expense (including reasonable fees and expenses of counsel), including taxes
(other than taxes based on the income of the Trustee) incurred by them except
for such actions to the extent caused by any negligence, bad faith or willful
misconduct on their part, relating to or arising out of or in connection with
(i) the acceptance or administration of this trust including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder, or (ii) the validity, invalidity, adequacy or inadequacy of
this Indenture, the Subsidiary Guarantees, the Notes, the Security Documents and
the Offer to Exchange and Consent Solicitation. The Trustee shall notify the
Issuers promptly of any claim asserted against the Trustee for which it intends
to seek indemnity. At the Trustee's sole discretion, the Issuers shall defend
the claim and the Trustee shall cooperate and may participate in the defense;
provided, however, that any settlement of a claim shall be approved in writing
by the Trustee if such settlement would result in an admission of liability by
the Trustee or if such settlement would not be accompanied by a full release of
the Trustee for all liability arising out of the events giving rise to such
claim. Alternatively, the Trustee may at its option have separate counsel of its
own choosing and the Issuers shall pay the reasonable fees and expenses of such
counsel.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Issuers. The
Holders of a majority in aggregate principal amount of the outstanding Notes may
remove the Trustee and appoint a successor Trustee with the Issuers' consent, by
so notifying the Issuers and the Trustee. The Issuers may remove the Trustee if:
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(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. The Issuers shall mail notice of
such successor Trustee's appointment to each Holder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee pursuant
to this Section 7.08, the Issuers' obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided, however, that
such corporation shall be otherwise qualified and eligible under this Article
Seven.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case
of a Trustee that is a corporation included in a bank holding company system,
the related bank holding company) shall have a combined capital and surplus of
at least $150 million as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Issuers are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Issuers and the Subsidiary Guarantors, as
obligors of the Notes.
SECTION 7.11. Preferential Collection of Claims Against Issuers.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Issuers and the
Subsidiary Guarantors, as obligors on the Notes.
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SECTION 7.12. Other Capacities.
All references in this Indenture to the Trustee shall be deemed to
refer to the Trustee in its capacity as Trustee and in its capacities as any
Agent, to the extent acting in such capacities, and every provision of this
Indenture relating to the conduct or affecting the liability or offering
protection, immunity or indemnity to the Trustee shall be deemed to apply with
the same force and effect to the Trustee acting in its capacities as any Agent.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of Issuers' Obligations.
This Indenture, the Guarantees and the Security Documents will be
discharged and will cease to be of further effect (except as to surviving rights
of registration of transfer or exchange of the Notes, as expressly provided for
in this Indenture) as to all outstanding Notes when (a) either (i) all Notes,
theretofore authenticated and delivered (except lost, stolen or destroyed Notes
which have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Issuers and thereafter repaid to the Issuers or discharged from such trust) have
been delivered to the Trustee for cancellation or (ii) all Notes not theretofore
delivered to the Trustee for cancellation have become due and payable and the
Issuers have irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Notes to the date of deposit
together with irrevocable written instructions in the form of an Officers'
Certificate from the Issuers directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be; (b) the Issuers
have paid all other sums payable under this Indenture by the Issuers; and (c)
the Issuers have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel stating that all conditions precedent under this Indenture
relating to the satisfaction and discharge of this Indenture have been complied
with; provided, however, that such counsel may rely, as to matters of fact, on a
certificate or certificates of officers of the Issuers.
The Issuers may, at their option and at any time, elect to have their
obligations and the corresponding obligations of the Subsidiary Guarantors
discharged with respect to the outstanding Notes ("Legal Defeasance"). Such
Legal Defeasance means that the Issuers and the Subsidiary Guarantors shall be
deemed to have paid and discharged the entire indebtedness represented by the
outstanding Notes, and satisfied all of their obligations with respect to the
Notes, except for (a) the rights of Holders to receive payments in respect of
the principal of, premium, if any, and interest on the Notes when such payments
are due, (b) the Issuers' obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, replacement of mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payments, (c) the rights, powers, trust, duties and immunities of the Trustee
and the Issuers' obligations in connection therewith and (d) the Legal
Defeasance provisions of this Section 8.01. In addition, the Issuers may, at
their option and at any time, elect to have the obligations of the Issuers and
the Subsidiary Guarantors, if any, released with respect to covenants contained
in Sections 4.04, 4.05, 4.06(b), 4.07, 4.08 and 4.10 through 4.20 and 4.22 and
Article Five ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Notes. In the event of Covenant Defeasance, those events described under
Section 6.01 (except those events described in Section 6.01(a),(b),(f) and (g))
will no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders U.S. Legal Tender, non-callable
U.S. Government Obligations, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if
any, and interest on the Notes on the stated date for payment thereof
or on the applicable Redemption Date, as the case may be;
(b) in the case of Legal Defeasance, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Issuers
have received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the Issue Date, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders will not recognize income, gain or loss for federal
income tax
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purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of Covenant Defeasance, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
under Section 6.01(f) or (g) from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under this
Indenture or any other agreement or instrument to which Abraxas or any
of its Restricted Subsidiaries is a party or by which Abraxas or any of
its Restricted Subsidiaries is bound;
(f) the Issuers shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Issuers with the intent of preferring the Holders over any other
creditors of either Issuer or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Issuers or others;
(g) the Issuers shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied
with; provided, however, that such counsel may rely, as to matters of
fact, on a certificate or certificates of officers of the Issuers; and
(h) the Issuers shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
SECTION 8.02. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations except as it may agree in
writing with the Issuers.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Legal Tender or U.S. Government
Obligations deposited pursuant to Section 8.01 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Notes. The provisions of
this Section 8.02 shall survive the termination of this Indenture.
SECTION 8.03. Repayment to the Issuers.
Subject to Section 8.01, the Trustee and the Paying Agent shall
promptly pay to the Issuers upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Issuers upon receipt of a written order in the form of an
Officers' Certificate requesting any money held by them for the payment of
principal or interest that remains unclaimed for one year; provided, however,
that the Trustee or such Paying Agent, before being required to make any
payment, may at the expense of the Issuers cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such
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money then remaining will be repaid to the Issuers. After payment to the
Issuers, Holders entitled to such money must look to the Issuers for payment as
general creditors unless an applicable law designates another Person.
SECTION 8.04. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.01 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.01; provided, however, that if the Issuers have made any payment
of interest on or principal of any Notes because of the reinstatement of its
obligations, the Issuers shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.
SECTION 8.05. Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.01 have been satisfied, (ii) the
Issuers have paid or caused to be paid all other sums payable hereunder by the
Issuers and (iii) each of the Issuers has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written
request of the Issuers in the form of an Officers' Certificate shall acknowledge
in writing the discharge of the Issuers' obligations under this Indenture except
for those surviving obligations specified in Sections 7.07 and 8.02.
ARTICLE NINE
MODIFICATION OF INDENTURE
SECTION 9.01. Without Consent of Holders.
The Issuers, the Subsidiary Guarantors and the Trustee may amend, waive
or supplement this Indenture, the Notes, the Guarantees or any Security Document
without notice to or consent of any Holder: (a) to cure any ambiguity, defect or
inconsistency; (b) to comply with Section 4.20 or 5.01 of this Indenture; (c) to
provide for uncertificated Notes in addition to certificated Notes; (d) to
comply with any requirements of the Commission in order to effect or maintain
the qualification of this Indenture under the TIA; or (e) to make any change
that would provide any additional benefit or rights to the Holders or that does
not adversely affect the rights of any Holder. Notwithstanding the foregoing,
the Trustee and the Issuers may not make any change that adversely affects the
rights of any Holder under this Indenture or any Security Document without the
consent of such Holder. In formulating its opinion on such matters, the Trustee
will be entitled to rely on such evidence as it deems appropriate, including,
without limitation, solely on an Opinion of Counsel; provided, however, that in
delivering such Opinion of Counsel, such counsel may rely as to matters of fact,
on a certificate or certificates of officers of Abraxas.
SECTION 9.02. With Consent of Holders.
All other amendments, supplements or waivers of this Indenture, the
Notes, the Guarantees or any Security Document may be made with the consent of
the Holders of not less than a majority of the then outstanding principal amount
of the then outstanding Notes, except that, without the consent of each Holder
of the Notes affected thereby, no amendment, supplement or waiver may, directly
or indirectly: (i) reduce the amount of Notes whose Holders must consent to any
amendment; (ii) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes; (iii)
reduce the principal of or change the fixed maturity of any Notes, or change the
date on which any Notes may be subject to redemption or repurchase, or reduce
the redemption or repurchase price therefor; (iv) make any Notes payable in
currency other than that stated in the Notes; (v) make any change in provisions
of this Indenture protecting the right of each Holder of a Note to receive
payment of principal of and interest on such Note on or after the due date
thereof or to bring suit to enforce such payment or permitting Holders of a
majority in aggregate principal amount of the then outstanding Notes to waive
Defaults or Events of Default; (vi) amend, change or modify in any material
respect the obligation of the Issuers to make and consummate a Change of Control
Offer in the event of a Change of Control
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or make and consummate a Net Proceeds Offer with respect to any Asset Sale that
has been consummated or modify any of the provisions or definitions with respect
thereto; (vii) modify or change any provision of this Indenture, any Security
Document or Section 1.01 affecting the ranking of the Notes or any Guarantee in
a manner which adversely affects the Holders; or (viii) release any Subsidiary
Guarantor from any of its obligations under its Guarantee or this Indenture
otherwise than in accordance with the terms of this Indenture.
SECTION 9.03. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect; provided, however, that this
Section 9.03 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Issuers received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver. An amendment, supplement
or waiver becomes effective upon receipt by the Trustee of such Officers'
Certificate and evidence of consent by the Holders of the requisite percentage
in principal amount of outstanding Notes.
The Issuers may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which Record Date shall be at least 30 days prior to the
first solicitation of such consent. If a Record Date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such Record Date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date unless consents from Holders of the requisite percentage
in principal amount of outstanding Notes required hereunder for the
effectiveness of such consents shall have also been given and not revoked within
such 90 day period.
SECTION 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Issuers or the Trustee so
determines, the Issuers in exchange for the Note shall issue and the Trustee
upon receipt of a written order in the form of an Officers' Certificate shall
authenticate a new Note that reflects the changed terms.
SECTION 9.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver approved
by the Board of Directors of each of the Issuers and authorized pursuant to this
Article Nine; provided, however, that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture. In executing
such amendment, supplement or waiver the Trustee shall be entitled to receive
security and indemnity satisfactory to it, and shall be fully protected in
relying upon an Opinion of Counsel and an Officers' Certificate of each Issuer,
each stating that (a) no Event of Default shall occur as a result of such
amendment, supplement or waiver, (b) such amendment, supplement or waiver has
been approved by the Board of Directors of each Issuer and (c) the execution of
any amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture, provided the legal counsel delivering
such Opinion of Counsel may rely as to matters of fact on one or more Officers'
Certificates of the Issuers. Such Opinion of Counsel shall not be an expense of
the Trustee.
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SECTION 9.07. Evidence of Amendments, Supplements, Waivers. This
Indenture, the Notes, the Guarantees and the Security Documents may only be
amended, supplemented or waived by a written instrument duly signed as
contemplated in Section 9.01 or 9.02.
SECTION 9.08. Amendment of Standstill Provisions. The provisions of
Section 12.01(c) concerning Standstill Periods and the provisions of Section
7.05 concerning the giving of notices of a Default or an Event of Default to the
First Lien Notes Representative cannot be amended without the written consent of
the First Lien Notes Representative.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control; provided, however, that this Section 10.01
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.
SECTION 10.02. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Issuers or any Subsidiary Guarantor:
c/o Abraxas Petroleum Corporation
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
Telecopier Number: (210) 490-8816
Attn: Chief Executive Officer
if to the Trustee:
Firstar Bank, National Association
101 East 5th Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Department
Telecopier Number: (651) 229-6415
if to the First Lien Notes Representative:
Norwest Bank Minnesota, National Association
Sixth and Marquette
Minneapolis, Minnesota 55479-0069
Attn: Corporate Trust Department
Telecopier Number: (612) 667-9825
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Each of the Issuers, the Subsidiary Guarantors and the Trustee by
written notice to the others may designate additional or different addresses for
notices to such Person. A different identity and/or address for the First Lien
Notes Representative may be designated by the Trustee being given a First Lien
Notes Representative Change Notice setting forth such different identity and/or
address. Any notice or communication to the Issuers, the Subsidiary Guarantors,
the Trustee or the First Lien Notes Representative shall be deemed to have been
given or made as of the date so delivered if hand delivered; when receipt is
acknowledged, if faxed; and five (5) calendar days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar ten (10) days prior to such mailing and
shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it, except for notices or communications
to the Trustee which shall be effective only upon actual receipt thereof.
SECTION 10.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Issuers, the Subsidiary Guarantors, the Trustee, the Registrar and any other
Person shall have the protection of TIA Section 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to take
any action under this Indenture, the Issuers shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent to be performed by the Issuers, if
any, provided for in this Indenture relating to the proposed action
have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Issuers,
if any, provided for in this Indenture relating to the proposed action
have been complied with (which counsel, as to factual matters, may rely
on an Officers' Certificate).
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is reasonably necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
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SECTION 10.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 10.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment is
a Saturday, a Sunday or a day on which banking institutions in New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 10.08. Governing Law.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Each of the
parties hereto agrees to submit to the jurisdiction of the courts of the State
of New York in any action or proceeding arising out of or relating to this
Indenture.
SECTION 10.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Issuers, any Subsidiary Guarantor or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 10.10. No Personal Liability.
No director, officer, employee or stockholder, as such, of the Issuers
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Issuers or any Subsidiary Guarantor under the Notes, this
Indenture, the Security Documents or the Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
of Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
SECTION 10.11. Successors.
All agreements of the Issuers and the Subsidiary Guarantors in this
Indenture, the Notes and the Guarantees shall bind their successors. Except as
permitted under Article Five, neither the Issuers nor any Subsidiary Guarantor
may assign any or all of its rights hereunder. All agreements of the Trustee in
this Indenture shall bind its successors.
SECTION 10.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 10.13. Severability.
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
SECTION 10.14. Independence of Covenants.
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
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SECTION 10.15. Currency Indemnity. This is an international loan
transaction in which the specification of U.S. Legal Tender is of the essence,
and the stipulated currency shall in each instance be the currency of account
and payment in all instances. A payment obligation in U.S. Legal Tender
hereunder or under the Notes or Guarantees (the "Original Currency") shall not
be discharged by an amount paid in another currency (the "Other Currency"),
whether pursuant to any judgment expressed in or converted into any Other
Currency or in another place except to the extent that such tender or recovery
results in the effective receipt by the Holders of the full amount of the
Original Currency payable to it under this Indenture or the Notes or Guarantees.
If for the purpose of obtaining judgment in any court it is necessary to convert
a sum due hereunder in the Original Currency into the Other Currency, the rate
of exchange that shall be applied shall be that at which in accordance with
normal banking procedures the Trustee could purchase Original Currency at its
principal office with the Other Currency on the Business Day next preceding the
day on which such judgment is rendered. The obligation of the Issuers and the
Subsidiary Guarantors in respect of any such sum due from them to the Trustee or
any Holder hereunder or under any other document (in this Section 10.15 called
an "Entitled Person") shall, notwithstanding the rate of exchange actually
applied in rendering such judgment, be discharged only to the extent that on the
Business Day following receipt by such Entitled Person of any sum adjudged to be
due hereunder in the Other Currency such Entitled Person may in accordance with
normal banking procedures purchase and transfer the Original Currency to New
York with the amount of the judgment currency so adjudged to be due; and the
Issuers and the Subsidiary Guarantors each hereby, as a separate obligation and
notwithstanding any such judgment, agrees jointly and severally to indemnify
such Entitled Person against, and to pay such Entitled Person on demand, in the
Original Currency, the amount (if any) by which the sum originally due to such
Entitled Person in the Original Currency hereunder exceeds the amount of the
Original Currency so purchased and transferred.
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee.
Subject to the provisions of this Article Eleven, each Subsidiary
Guarantor, if any, hereby, jointly and severally, unconditionally and
irrevocably guarantees, on a senior basis (such guarantee to be referred to
herein as a "Guarantee") to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity and enforceability of this Indenture, the Notes, the Security
Documents or the obligations of the Issuers or any Subsidiary Guarantor to the
Holders or the Trustee hereunder or thereunder, that: (a) the principal of,
premium, if any, and interest on the Notes shall be duly and punctually paid in
full when due, whether at maturity, upon redemption at the option of Holders
pursuant to the provisions of the Notes relating thereto, by acceleration or
otherwise, and interest on the overdue principal and (to the extent permitted by
law) interest, if any, on the Notes and all other obligations of the Issuers or
the Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder
(including amounts due the Trustee under Section 7.07 hereof) and all other
obligations shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, the same shall
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed, or failing performance of
any other obligation of the Issuers to the Holders under this Indenture or under
the Notes, for whatever reason, each Subsidiary Guarantor shall be obligated
jointly or severally to pay or to perform, or cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall entitle
the Holders of Notes to accelerate the obligations of the Subsidiary Guarantors
hereunder in the same manner and to the same extent as the obligations of the
Issuers.
Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes, the Security Documents or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, any release of
any other Subsidiary Guarantor, the recovery of any judgment against the
Issuers, any action to enforce the same, whether or not a Guarantee is affixed
to any particular Note, or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Each of the
Subsidiary Guarantors hereby waives the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Issuers, any right to require a proceeding first against the
Issuers, protest, notice and all demands whatsoever and covenants that its
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes, this
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Indenture and this Guarantee. This Guarantee is a guarantee of payment and not
of collection. If any Holder or the Trustee is required by any court or
otherwise to return to the Issuers or to any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Issuers or such Subsidiary Guarantor, any amount paid by the Issuers or such
Subsidiary Guarantor to the Trustee or such Holder, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor further agrees that, as between it, on the one hand,
and the Holders of Notes and the Trustee, on the other hand, (a) subject to this
Article Eleven, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six hereof for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (b) in
the event of any acceleration of such obligations as provided in Article Six
hereof, such obligations (whether or not due and payable) shall forthwith become
due and payable by the Subsidiary Guarantors for the purpose of this Guarantee.
No stockholder, officer, director, employee or incorporator, past,
present or future, or any Subsidiary Guarantor, as such, shall have any personal
liability under this Guarantee solely by reason of his, her or its status as
such stockholder, officer, director, employee or incorporator.
Each Subsidiary Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in a prorata amount based on the net assets of such Subsidiary
Guarantor, determined in accordance with GAAP.
SECTION 11.02. Limitations on Guarantees.
The obligations of each Subsidiary Guarantor in the United States under
its Guarantee will be limited to the maximum amount which, after giving effect
to all other contingent and fixed liabilities of such Subsidiary Guarantor and
after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Guarantee or pursuant to its contribution
obligations under this Indenture, will result in the obligations of such
Subsidiary Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.
SECTION 11.03. Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Guarantee,
substantially in the form of Exhibit E herein, shall be endorsed on each Note
authenticated and delivered by the Trustee. Such Guarantee shall be executed on
behalf of each Subsidiary Guarantor by either manual or facsimile signature of
an Officer of each Subsidiary Guarantor, who, in each case, shall have been duly
authorized to so execute by all requisite corporate action. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is not
affixed to any particular Note.
Each of the Subsidiary Guarantors hereby agrees that its Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.
If an Officer of a Subsidiary Guarantor whose signature is on this
Indenture or a Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee is endorsed or at any time
thereafter, such Subsidiary Guarantor's Guarantee of such Note shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of each Subsidiary Guarantor.
SECTION 11.04. Release of a Subsidiary Guarantor.
(a) If no Default exists or would exist under this Indenture, upon the
sale or disposition of all of the Capital Stock of a Subsidiary Guarantor by the
Issuers or a Restricted Subsidiary of the Issuers in a transaction constituting
an Asset Sale the Net Cash Proceeds of which are applied in accordance with
Section 4.16, such Subsidiary Guarantor and each Subsidiary of such Subsidiary
Guarantor that is also a Subsidiary Guarantor shall be deemed released from all
obligations under this Article Eleven without any further action required on the
part of the Trustee or any Holder and all Collateral owned by such Person shall
be released
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to the extent set forth in Section 12.04; provided, however, that each such
Subsidiary Guarantor is sold or disposed of in accordance with this Indenture.
Any Subsidiary Guarantor not so released shall remain or be liable under its
Guarantee as provided in this Article Eleven.
(b) The Trustee shall deliver to the Issuers an appropriate instrument
evidencing the release of a Subsidiary Guarantor under its Guarantee endorsed on
the Notes and under this Article Eleven upon receipt of a written request by the
Issuers or such Subsidiary Guarantor accompanied by an Officers' Certificate and
an Opinion of Counsel certifying as to the compliance with this Section 11.04,
provided the legal counsel delivering such Opinion of Counsel may rely as to
matters of fact on one or more Officers' Certificates of the Issuers.
Except as set forth in Articles Four and Five and this Section 11.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Issuers or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Issuers or another Subsidiary Guarantor.
SECTION 11.05. Waiver of Subrogation.
Until this Indenture is discharged and all of the Notes are discharged
and paid in full, each Subsidiary Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Issuers that arise from the existence, payment, performance or
enforcement of the Issuers' obligations under the Notes or this Indenture and
such Subsidiary Guarantor's obligations under its Guarantee and this Indenture,
in any such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders against the Issuers, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Issuers, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Subsidiary Guarantor in violation of
the preceding sentence and any amounts owing to the Trustee or the Holders of
Notes under or in connection with the Notes, this Indenture, or any other
document or instrument delivered under or in connection with such agreements or
instruments, shall not have been paid in full, such amount shall have been
deemed to have been paid to such Subsidiary Guarantor for the benefit of, and
held in trust for the benefit of, the Trustee or the Holders and shall forthwith
be paid to the Trustee for the benefit of itself or such Holders to be credited
and applied to the obligations in favor of the Trustee or the Holders, as the
case may be, whether matured or unmatured, in accordance with the terms of this
Indenture. Each Subsidiary Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated by this
Indenture and that the waiver set forth in this Section 11.05 is knowingly made
in contemplation of such benefits.
SECTION 11.06. Immediate Payment.
Each Subsidiary Guarantor agrees to make immediate payment to the
Trustee on behalf of the Holders of all Obligations owing or payable to the
respective Holders upon receipt of a demand for payment therefor by the Trustee
to such Subsidiary Guarantor in writing.
SECTION 11.07. No Set-Off.
Each payment to be made by a Subsidiary Guarantor hereunder in respect
of the Obligations guaranteed by it shall be payable in the currency or
currencies in which such Obligations are denominated, and shall be made without
set-off, counterclaim, reduction or diminution of any kind or nature.
SECTION 11.08. Obligations Absolute.
The obligations of each Subsidiary Guarantor hereunder are and shall be
absolute and unconditional and any monies or amounts expressed to be owing or
payable by each Subsidiary Guarantor hereunder which may not be recoverable
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from such Subsidiary Guarantor on the basis of a Guarantee shall be recoverable
from such Subsidiary Guarantor as a primary obligor and principal debtor in
respect thereof.
SECTION 11.09. Obligations Continuing.
The obligations of each Subsidiary Guarantor hereunder shall be
continuing and shall remain in full force and effect until all the Obligations
of the Issuers under this Indenture and the Notes have been paid and satisfied
in full. Each Subsidiary Guarantor agrees with the Trustee that it will from
time to time deliver to the Trustee suitable written acknowledgments of its
continued liability hereunder and under any other instrument or instruments in
such form as counsel to the Trustee may advise and as will prevent any action
brought against it in respect of any default hereunder being barred by any
statute of limitations now or hereafter in force and, in the event of the
failure of a Subsidiary Guarantor so to do, it hereby irrevocably appoints the
Trustee the attorney and agent of such Subsidiary Guarantor to make, execute and
deliver such written acknowledgment or acknowledgments or other instruments as
may from time to time become necessary or advisable, in the judgment of the
Trustee on the advice of counsel, to fully maintain and keep in force the
liability of such Subsidiary Guarantor hereunder; provided, however, that
notwithstanding anything herein to the contrary, nothing in this Section 11.09
shall be construed to obligate the Trustee to take any action not otherwise
allowed by this Indenture or the TIA, and under no circumstances shall Trustee
be required to take any actions in compliance with this Section 11.09 which
would incur any liability whatsoever under the terms of this Indenture or
otherwise except to the extent that it is provided with security or indemnity
satisfactory to it, nor shall Trustee's actions hereunder be deemed to be a
breach of any other provision of this Indenture.
SECTION 11.10. Obligations Not Reduced.
The obligations of each Subsidiary Guarantor hereunder shall not be
satisfied, reduced or discharged solely by the payment of such principal,
premium, if any, interest, fees and other monies or amounts as may at any time
prior to discharge of this Indenture pursuant to Article Eight be or become
owing or payable under or by virtue of or otherwise in connection with the Notes
or this Indenture.
SECTION 11.11. Obligations Reinstated.
The obligations of each Subsidiary Guarantor hereunder shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced the obligations of any Subsidiary
Guarantor hereunder (whether such payment shall have been made by or on behalf
of the Issuers or by or on behalf of a Subsidiary Guarantor) is rescinded or
reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation
or reorganization of either Issuer or any Subsidiary Guarantor or otherwise, all
as though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Issuers is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of either Issuer, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Subsidiary Guarantor as provided herein.
SECTION 11.12. Obligations Not Affected.
The obligations of each Subsidiary Guarantor hereunder shall not be
affected, impaired or diminished in any way by any act, omission, matter or
thing whatsoever, occurring before, upon or after any demand for payment
hereunder (and whether or not known or consented to by any Subsidiary Guarantor
or any of the Holders) which, but for this provision, might constitute a whole
or partial defense to a claim against any Subsidiary Guarantor hereunder or
might operate to release or otherwise exonerate any Subsidiary Guarantor from
any of its obligations hereunder or otherwise affect such obligations, whether
occasioned by default of any of the Holders or otherwise, including, without
limitation:
(a) any limitation of status or power, disability, incapacity
or other circumstance relating to either Issuer or any other Person,
including any insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, winding-up or other proceeding
involving or affecting either Issuer or any other Person;
(b) any irregularity, defect, unenforceability or invalidity
in respect of any indebtedness or other obligation of either Issuer or
any other Person under this Indenture, the Notes or any other document
or instrument;
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(c) any failure of the Issuers, whether or not without fault
on their part, to perform or comply with any of the provisions of this
Indenture, any Security Document or the Notes, or to give notice
thereof to a Subsidiary Guarantor;
(d) the taking or enforcing or exercising or the refusal or
neglect to take or enforce or exercise any right or remedy from or
against the Issuers or any other Person or their respective assets or
the release or discharge of any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Issuers or any other Person;
(f) any change in the time, manner or place of payment of, or
in any other term of, any of the Notes, or any other amendment,
variation, supplement, replacement or waiver of, or any consent to
departure from, any of the Notes, any Security Document or this
Indenture, including, without limitation, any increase or decrease in
the principal amount of or premium, if any, or interest on any of the
Notes;
(g) any change in the ownership, control, name, objects,
businesses, assets, capital structure or constitution of either Issuer
or a Subsidiary Guarantor;
(h) any merger or amalgamation of either Issuer or a
Subsidiary Guarantor with any Person or Persons, except as provided in
Section 11.04;
(i) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction by any present or future
action of any governmental authority or court amending, varying,
reducing or otherwise affecting, or purporting to amend, vary, reduce
or otherwise affect, any of the Obligations of the Issuers under this
Indenture or the Notes or the obligations of a Subsidiary Guarantor
under its Guarantee; and
(j) any other circumstance, other than the release of the
Subsidiary Guarantor pursuant to Section 11.04 or irrevocable payment
of such Obligations, that might otherwise constitute a legal or
equitable discharge or defense of the Issuers under this Indenture or
the Notes or of a Subsidiary Guarantor in respect of its Guarantee
hereunder.
SECTION 11.13. Waiver.
Without in any way limiting the provisions of Section 11.01 hereof,
each Subsidiary Guarantor hereby waives notice of acceptance hereof, notice of
any liability of any Subsidiary Guarantor hereunder, notice or proof of reliance
by the Holders upon the obligations of any Subsidiary Guarantor hereunder, and
diligence, presentment, demand for payment on the Issuers, protest, notice of
dishonor or non-payment of any of the Obligations of the Issuers under this
Indenture or the Notes, or other notice or formalities to the Issuers or any
Subsidiary Guarantor of any kind whatsoever.
SECTION 11.14. No Obligation To Take Action Against the Issuers.
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations of the Issuers under this Indenture or the Notes or
against the Issuers or any other Person or any Property of the Issuers or any
other Person before the Trustee is entitled to demand payment and performance by
any or all Subsidiary Guarantors of their liabilities and obligations under
their Guarantees or under this Indenture.
SECTION 11.15. Dealing with the Issuers and Others.
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Subsidiary
Guarantor hereunder and without the consent of or notice to any Subsidiary
Guarantor, may
(a) grant time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Issuers or any other Person;
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(b) take or abstain from taking security or collateral from
the Issuers or any other Person or from perfecting security or
collateral of the Issuers or any other Person;
(c) release, discharge, compromise, realize, enforce or
otherwise deal with or do any act or thing in respect of (with or
without consideration) any and all collateral, mortgages or other
security given by the Issuers or any third party with respect to the
obligations or matters contemplated by this Indenture or the Notes;
(d) accept compromises or arrangements from the Issuers;
(e) apply all monies at any time received from the Issuers or
from any security upon such part of the Obligations of the Issuers
under this Indenture and the Notes as the Holders may see fit or change
any such application in whole or in part from time to time as the
Holders may see fit; and
(f) otherwise deal with, or waive or modify their right to
deal with, the Issuers and all other Persons and any security as the
Holders or the Trustee may see fit.
SECTION 11.16. Default and Enforcement.
Subject to Section 12.01(c), if any Subsidiary Guarantor fails to pay
in accordance with Section 11.06 hereof, the Trustee may proceed in its name as
trustee hereunder in the enforcement of the Guarantee of any such Subsidiary
Guarantor and such Subsidiary Guarantor's obligations thereunder and hereunder
by any remedy provided by law, whether by legal proceedings or otherwise, and to
recover from such Subsidiary Guarantor the obligations.
SECTION 11.17. Acknowledgment.
Each Subsidiary Guarantor hereby acknowledges communication of the
terms of this Indenture and the Notes and consents to and approves of the same.
SECTION 11.18. Costs and Expenses.
Each Subsidiary Guarantor shall pay on demand by the Trustee any and
all costs, fees and expenses (including, without limitation, legal fees on a
solicitor and client basis) incurred by the Trustee, its agents, advisors and
counsel or any of the Holders in enforcing any of their rights under any
Guarantee.
SECTION 11.19. No Merger or Waiver; Cumulative Remedies.
No Guarantee shall operate by way of merger of any of the obligations
of a Subsidiary Guarantor under any other agreement, including, without
limitation, this Indenture. No failure to exercise and no delay in exercising,
on the part of the Trustee or the Holders, any right, remedy, power or privilege
hereunder or under this Indenture or the Notes, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or under this Indenture or the Notes preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Guarantee and
under this Indenture, the Notes and any other document or instrument between a
Subsidiary Guarantor and/or either Issuer and the Trustee are cumulative and not
exclusive of any rights, remedies, powers and privilege provided by law.
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SECTION 11.20. Guarantee in Addition to Other Obligations.
The obligations of each Subsidiary Guarantor under its Guarantee and
this Indenture are in addition to and not in substitution for any other
obligations to the Trustee or to any of the Holders in relation to this
Indenture or the Notes and any guarantees or security at any time held by or for
the benefit of any of them.
ARTICLE TWELVE
SECURITY
SECTION 12.01. Grant of Security Interest; Remedies; Standstill.
(a) In order to secure the obligations of the Issuers hereunder, the
Issuers hereby covenant to, and to cause each Subsidiary Guarantor owning Oil
and Gas Assets to, execute and deliver on or before the Issue Date one or more
Mortgages and other Security Documents, as reasonably determined by the Trustee
to obtain a Lien on substantially all of the Oil and Gas Assets of the Issuers
and the Subsidiary Guarantors as of the Issue Date and on the Capital Stock of
Grey Wolf owned by the Issuers, such Lien being junior to the Liens securing the
First Lien Notes. Each such Security Document, when executed and delivered,
shall be deemed hereby incorporated by reference herein to the same extent and
as fully as if set forth in their entirety at this place, and reference is made
hereby to each such Security Document for a more complete description of the
terms and provisions thereof. Each Holder, by accepting a Note, agrees to all of
the terms and provisions of each Security Document and the Trustee agrees to all
of the terms and provisions of each Security Document.
(b) If (i) the Notes become due and payable prior to the Maturity Date
or are not paid in full at the Maturity Date or (ii) an Event of Default has
occurred and is continuing, the Trustee may take all actions it deems necessary
or appropriate, including, but not limited to, foreclosing upon the Collateral
in accordance with the Security Documents and applicable law. The proceeds
received from the sale of any Collateral that is the subject of a foreclosure or
collection suit shall be applied in accordance with the priorities set forth in
Section 6.10. The Trustee has the power to institute and maintain such suits and
proceedings as it may deem expedient to prevent impairment of, or to preserve or
protect its and the Holders' interest in, the Collateral in the manner set forth
in this Indenture.
(c) Notwithstanding the foregoing, if an Event of Default has occurred,
the Trustee or a Holder, as the case may be, must give the First Lien Notes
Representative written notice (a "Standstill Period Commencement Notice") prior
to taking any action to enforce its foreclosure rights with respect to any of
the Collateral (a "Foreclosure Action") in connection with such Event of
Default, with such notice stating that an Event of Default has occurred under
this Indenture and stating that such notice is being given to commence a
Standstill Period under Section 12.01 of this Indenture. The Trustee or such
Holder, as the case may be, shall not take a Foreclosure Action with respect to
such Event of Default until 180 days have elapsed since the date such Standstill
Period Commencement Notice is given by the Trustee or such Holder, as the case
may be, to the First Lien Notes Representative (a "Standstill Period"), unless
the First Lien Notes Representative consents to the taking of such Foreclosure
Action and the First Lien Notes Representative has authority to give such
consent on behalf of the holders of the First Lien Notes pursuant to the First
Lien Indenture. The provisions of this clause (c) shall cease to be applicable
upon the payment in full of all Indebtedness under the First Lien Notes and the
First Lien Indenture. Nothing in this clause (c) shall be construed as limiting
any right of the Trustee and/or the Holders of the Notes to assert any rights
they may have to any proceeds arising from any foreclosure or other such
realization on the Collateral by the First Lien Notes Representative, by any
holder or holders of any of the First Lien Notes or by any trustee or other
Person acting for or on behalf of the First Lien Notes Representative or any
holder or holders of any of the First Lien Notes.
(d) Unless an Event of Default shall have occurred and be continuing,
the Issuers and the Subsidiary Guarantors will have the right to remain in
possession and retain exclusive control of the Collateral securing the Notes
(other than any cash, securities, obligations and Cash Equivalents constituting
part of the Collateral and deposited with the Trustee
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in the Collateral Account or with the First Lien Notes Representative and other
than as set forth in the Security Documents), to freely operate the Collateral
and to collect, invest and dispose of any income thereon or therefrom.
SECTION 12.02. Recording and Opinions.
(a) The Issuers shall take or cause to be taken all action required to
perfect, maintain, preserve and protect the Lien in the Collateral granted by
the Security Documents, including, without limitation, the filing of financing
statements, continuation statements and any instruments of further assurance, in
such manner and in such places as may be required by law fully to preserve and
protect the rights of the Holders and the Trustee under this Indenture and the
Security Documents to all property comprising the Collateral. The Issuers shall
from time to time promptly pay all financing and continuation statement
recording and/or filing fees, charges and taxes relating to this Indenture, the
Security Documents, any amendments thereto and any other instruments of further
assurance required pursuant to the Security Documents.
(b) The Issuers shall, to the extent required by the TIA, furnish to
the Trustee, at closing and at such other time as required by Section 314(b) of
the TIA, Opinion(s) of Counsel either (i) substantially to the effect that, in
the opinion of such counsel, this Indenture and the grant of a Lien in the
Collateral intended to be made by the Security Documents and all other
instruments of further assurance, including, without limitation, financing
statements, have been properly recorded and filed to the extent necessary to
perfect the Lien in the Collateral created by the Security Documents (other than
as stated in such opinion) and reciting the details of such action, and stating
that as to the Lien created pursuant to the Security Documents, such recordings
and filings are the only recordings and filings necessary to give notice thereof
and that no re-recordings or refilings are necessary to maintain such notice
(other than as stated in such opinion), or (ii) to the effect that, in the
opinion of such counsel, no such action is necessary to perfect such Lien. In
rendering such opinions, legal counsel may rely on certificates of officers of
the Issuers and/or the Restricted Subsidiaries with respect to factual matters.
(c) The Issuers shall furnish to the Trustee on March 15th in each
year, beginning with March 15, 2000, an Opinion of Counsel, dated as of such
date, either (i)(A) stating that, in the opinion of such counsel, all required
action has been taken with respect to the recording, filing, re-recording and
refiling of all supplemental indentures, financing statements, continuation
statements and other documents as is necessary to maintain the Lien of this
Indenture and the Security Documents (other than as stated in such opinion) and
reciting with respect to the Lien in the Collateral the details of such action
or referring to prior Opinions of Counsel in which such details are given, and
(B) stating that, based on relevant laws as in effect on the date of such
Opinion of Counsel, all financing statements, continuation statements and other
documents have been executed and filed that are necessary as of such date and
during the succeeding 24 months fully to maintain the Lien of the Holders and
the Trustee hereunder and under the Security Documents with respect to the
Collateral (other than as stated in such opinion), or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Lien. In
rendering such opinions, legal counsel may rely on certificates of officers of
the Issuers and/or the Restricted Subsidiaries with respect to factual matters.
SECTION 12.03. Release of Collateral.
(a) The Trustee, in its capacity as secured party under the
Security Documents, shall not at any time release Collateral from the Lien
created by this Indenture and the Security Documents unless such release is in
accordance with the provisions of this Indenture and the Security Documents.
(b) At any time when an Event of Default shall have occurred
and be continuing, the Trustee shall not release any Liens granted for the
benefit of the Holders and no release of Collateral given at such time pursuant
to the provisions of this Indenture and the Security Documents shall be
effective as against the Holders of the Notes.
(c) The release of any Collateral from the terms of the
Security Documents shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to this Indenture and the Security Documents. To
the extent applicable, the Issuers shall cause TIA Section 314(d) relating to
the release of property from the Lien of the Security Documents and relating to
the substitution therefor of any property to be subjected to the Lien of the
Security Documents to be complied with. Any certificate or opinion required by
TIA Section 314(d) may be made by an Officer of Abraxas, except in cases where
TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee. A Person is "independent" if
such Person (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in either Issuer, any of
their Subsidiaries or in any
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Affiliate of the Issuers and (c) is not an officer, employee, promoter,
underwriter, trustee, partner or director or Person performing similar functions
to any of the foregoing for either Issuer or any of its Subsidiaries. The
Trustee shall be entitled to receive and rely upon a certificate provided by any
such Person confirming that such Person is independent within the foregoing
definition.
SECTION 12.04. Specified Releases of Collateral.
(a) The Issuers and the Subsidiary Guarantors shall be
entitled to obtain a full release of all of the Collateral from the Lien of this
Indenture and of the Security Documents upon compliance with the conditions
precedent set forth in Section 8.01 for satisfaction and discharge of this
Indenture or for Legal Defeasance or Covenant Defeasance pursuant to Section
8.01. Upon delivery by the Issuers to the Trustee of an Officers' Certificate
and an Opinion of Counsel, each to the effect that such conditions precedent
have been complied with (and which may be the same Officers' Certificate and
Opinion of Counsel required by Article Eight), the Trustee shall forthwith take
all necessary action (at the request of and the expense of the Issuers) to
release and reconvey to the relevant Person all of the Collateral, and shall
deliver such Collateral in its possession to the Issuers, including, without
limitation, the execution and delivery of releases and satisfactions wherever
required.
(b) Upon compliance by the Issuers with the conditions set
forth below in respect of any sale, transfer or other disposition, the Trustee
shall release the Released Interests from the Lien of this Indenture and the
Security Documents and reconvey the Released Interests to the Issuers or the
grantor of the Lien on such property. The Issuers will have the right to obtain
a release of items of Collateral (the "Released Interests") subject to any sale,
transfer or other disposition, or owned by a Restricted Subsidiary the Capital
Stock of which is sold in compliance with the terms of this Indenture such that
it ceases to be a Restricted Subsidiary, upon compliance with the condition that
such Issuers deliver to the Trustee the following:
(i) a written notice in the form of an Officers' Certificate from
Abraxas requesting the release of Released Interests:
(A) describing the proposed Released Interests,
(B) specifying the value of such Released Interests or such
Capital Stock, as the case may be, on a date within 60 days of the Abraxas
notice (the "Valuation Date"),
(C) stating that the consideration to be received is at least
equal to the fair market value of the Released Interests,
(D) stating that the release of such Released Interests will
not interfere with the Trustee's ability to realize the value of the remaining
Collateral and will not impair the maintenance and operation of the remaining
Collateral,
(E) confirming the sale or exchange of, or an agreement to
sell or exchange, such Released Interests or such Capital Stock, as the case may
be, is a bona fide sale to or exchange with a Person that is not an Affiliate of
the Issuers or, in the event that such sale or exchange is to or with a Person
that is an Affiliate, confirming that such sale or exchange is made in
compliance with the provisions set forth in Section 4.11,
(F) in the event there is to be a contemporaneous substitution
of property for the Collateral subject to the sale, transfer or other
disposition, specifying the property intended to be substituted for the
Collateral to be disposed of,
(ii) an Officers' Certificate of Abraxas stating that:
(A) such sale, transfer or other disposition complies with the
terms and conditions of this Indenture, including the provisions set forth in
Sections 4.10, 4.11, 4.14 and 4.16, to the extent any of the foregoing are
applicable,
(B) all Net Cash Proceeds from the sale, transfer or other
disposition of any of the Released Interests or such Capital Stock, as the case
may be, will be applied pursuant to the provisions of this Indenture in respect
of the deposit
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of proceeds into the Collateral Account or with the First Lien Notes
Representative as contemplated by this Indenture and in respect of Asset Sales,
to the extent applicable,
(C) there is no Default or Event of Default in effect or
continuing on the date thereof or the date of such sale, transfer or other
disposition,
(D) the release of the Collateral will not result in a Default
or Event of Default under this Indenture,
(E) upon the delivery of such Officers' Certificate, all
conditions precedent in this Indenture relating to the release in question will
have been complied with,
(F) such sale, transfer or other disposition is not between
Abraxas and any of its Restricted Subsidiary or between Restricted Subsidiaries,
and
(G) such sale, transfer or other disposition is not a sale,
transfer or other disposition that is excluded from the definition of "Asset
Sale" because it was a sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of Abraxas in a transaction which made in
compliance with the provisions of Section 5.01.
(iii) all documentation required by the TIA, if any, prior to the
release of Collateral by the Trustee and, in the event there
is to be a contemporaneous substitution of property for the
Collateral subject to such sale, transfer or other
disposition, all documentation necessary to effect the
substitution of such new Collateral.
(c) Notwithstanding the provisions of Section 12.04(b), so long as no
Event of Default shall have occurred and be continuing, the Issuers may, without
satisfaction of the conditions set forth in Section 12.04(b) above, all to the
extent consistent with Sections 4.03, 4.05 and 4.07: (i) sell or otherwise
dispose of any equipment or inventory subject to the Lien of this Indenture and
the Security Documents, which may have become worn out or obsolete, (ii)
abandon, terminate, cancel, release or make alterations in or substitutions of
any leases or contracts subject to the Lien of this Indenture or any of the
Security Documents, (iii) surrender or modify any franchise, license or permit
subject to the Lien of this Indenture or any of the Security Documents which it
may own or under which it may be operating, (iv) alter, repair, replace, change
the location or position of and add to its structures, machinery, systems,
equipment, fixtures and appurtenances, (v) demolish, dismantle, tear down or
scrap any obsolete Collateral or abandon any portion thereof, (vi) grant
farm-outs, leases or sub-leases in respect of real property to the extent the
foregoing does not constitute an Asset Sale, and (vii) dispose of Hydrocarbons
or other mineral products for value in the ordinary course of business all in
accordance with the terms of the TIA.
SECTION 12.05. Rights of Purchasers; Form and Sufficiency of Release.
No purchaser or grantee of any property or rights purporting to be
released herefrom shall be bound to ascertain the authority of the Trustee to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Issuers or any Restricted Subsidiary be under any
obligation to ascertain or inquire into the authority of the Issuers or such
Restricted Subsidiary to make such sale or other disposition. In the event that
any Person has sold, exchanged, or otherwise disposed of or proposes to sell,
exchange or otherwise dispose of any portion of the Collateral that may be sold,
exchanged or otherwise disposed of, and Abraxas or any Restricted Subsidiary
makes written request to the Trustee to furnish a written disclaimer, release or
quit-claim of any interest in such property or rights under this Indenture and
the Security Documents, the Trustee, in its capacity as secured party under the
Security Documents, shall execute, acknowledge and deliver to Abraxas or such
Restricted Subsidiary (in proper form) such an instrument promptly after
satisfaction of the conditions set forth herein for delivery of any such
release. Notwithstanding the preceding sentence, all purchasers and grantees of
any property or rights purporting to be released herefrom shall be entitled to
rely upon any release executed by the Trustee hereunder as sufficient for the
purpose of this Indenture and the Security Documents and as constituting a good
and valid release of the property therein described from the Lien of this
Indenture or of the Security Documents.
66
<PAGE> 75
SECTION 12.06. Authorization of Actions to Be Taken by the Trustee
Under the Security Documents.
Subject to the provisions of the applicable Security Document and to
Section 12.01(c), (a) the Trustee may, in its sole discretion and without the
consent of the Holders, take all actions it deems necessary or appropriate in
order to (i) enforce any of the terms of the Security Documents and (ii) collect
and receive any and all amounts payable in respect of the Obligations of the
Issuers hereunder and (b) the Trustee shall have power to institute and to
maintain such suits and proceedings as it may deem expedient to prevent any
impairment of the Collateral by any act that may be unlawful or in violation of
the Security Documents or this Indenture, and such suits and proceedings as the
Trustee may deem expedient to preserve or protect its interests and the
interests of the Holders in the Collateral (including the power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest thereunder or
be prejudicial to the interests of the Holders or of the Trustee).
SECTION 12.07. Authorization of Receipt of Funds by the Trustee Under
the Security Documents.
The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders in accordance with the provisions of
Section 6.10 and the other provisions of this Indenture.
SECTION 12.08. Use of Trust Moneys.
The Net Cash Proceeds associated with any Asset Sale and any Net Cash
Proceeds associated with any sale, transfer or other disposition of Collateral,
to the extent such sale, transfer or other disposition is not an "Asset Sale" by
virtue of clause (viii) of the definition thereof, insurance proceeds and
condemnation (or similar) proceeds shall be deposited (A) so long as any
Indebtedness under the First Lien Notes remains outstanding, with the First Lien
Notes Representative, and (B) otherwise into a securities account maintained by
the Trustee at its Corporate Trust Office or at any securities intermediary
selected by the Trustee having a combined capital and surplus of at least
$250,000,000 and having a long-term debt rating of at least "A3" by Moody's and
at least "A-" by S&P styled the "Abraxas Collateral Account" (such account being
the "Collateral Account") which shall be under the exclusive dominion and
control of the Trustee. All amounts on deposit in the Collateral Account shall
be treated as financial assets and cash funds on deposit in the Collateral
Account may be invested by the Trustee, at the written direction of the Issuers,
in Cash Equivalents; provided, however, in no event shall the Issuers have the
right to withdraw funds or assets from the Collateral Account except in
compliance with the terms of this Indenture, and all assets credited to the
Collateral Account shall be subject to a Lien in favor of the Trustee and the
Holders.
Any such funds deposited with the Trustee may be released to the Issuers by
their delivering to the Trustee an Officers' Certificate stating:
(1) no Event of Default has occurred and is continuing as of the date of
the proposed release; and
(2) (A) if such Trust Moneys represent Collateral Proceeds in respect of
an Asset Sale, that such funds are otherwise being applied in accordance
with Section 4.16, or (B) if such Trust Moneys represent proceeds in respect
of a casualty, expropriation or taking, that such funds will be applied to
repair or replace property subject of a casualty or condemnation or
reimburse the Issuers for amounts spent to repair or replace such property
and that attached thereto are invoices or other evidence reflecting the
amounts spent or to be spent, or (C) if such Trust Moneys represent proceeds
derived from any other manner, that such amounts are being utilized in
connection with business of Abraxas and its Restricted Subsidiaries in
compliance with the terms of this Indenture; and
(3) all conditions precedent in this Indenture relating to the release
in question have been complied with; and
(4) all documentation required by the TIA, if any, prior to the release
of such Trust Moneys by the Trustee has been delivered to the Trustee.
Notwithstanding the foregoing, (A) if the maturity of the Notes has been
accelerated, which acceleration has not been rescinded as permitted by this
Indenture, the Trustee shall apply the Trust Moneys credited to the Collateral
Account in the manner specified in Section 6.10 to the extent of such Trust
Moneys, (B) if the Issuers so elects, by giving written notice to the Trustee,
the Trustee shall apply Trust Moneys credited to the Collateral Account to the
payment of interest due on any interest payment date, and (C) if the
67
<PAGE> 76
Issuers so elect, by giving written notice to the Trustee, the Trustee shall
apply Trust Moneys credited to the Collateral Account to the payment of the
principal of, and premium, if any, and accrued and unpaid interest on any Notes
on the Maturity Date or upon redemption or to the purchase of Notes upon tender
or in the open market or at private sale or upon any exchange or in any one or
more of such ways, in each case in compliance with this Indenture.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
68
<PAGE> 77
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
ABRAXAS PETROLEUM CORPORATION, as an Issuer
By:
------------------------------------------------
Name:
Title:
CANADIAN ABRAXAS PETROLEUM LIMITED, as an
Issuer
By:
------------------------------------------------
Name:
Title:
NEW CACHE PETROLEUMS, LTD., as a Subsidiary
Guarantor
By:
------------------------------------------------
Name:
Title:
SANDIA OIL & GAS CORPORATION, as a Subsidiary
Guarantor
By:
------------------------------------------------
Name:
Title:
WAMSUTTER HOLDINGS, INC., as a Subsidiary Guarantor
By:
------------------------------------------------
Name:
Title:
FIRSTAR BANK, NATIONAL ASSOCIATION, as Trustee
By:
------------------------------------------------
Name:
Title:
69
<PAGE> 78
EXHIBIT A
CUSIP No.: [ ]
ABRAXAS PETROLEUM CORPORATION
CANADIAN ABRAXAS PETROLEUM LIMITED
11-1/2% SENIOR SECURED NOTE DUE 2004, SERIES A
No. [ ] $[ ]
ABRAXAS PETROLEUM CORPORATION, a Nevada corporation and CANADIAN
ABRAXAS PETROLEUM CORPORATION LIMITED, an Alberta corporation (the "Issuers",
which term includes any successor entities), for value received, jointly and
severally promise to pay to [ ] or registered assigns the principal sum of [ ]
Dollars on November 1, 2004.
Interest Payment Dates: May 1 and November 1, commencing May 1, 2000
Record Dates: April 15 and October 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, each of the Issuers has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
ABRAXAS PETROLEUM CORPORATION
ATTEST:
By:
- ------------------------------- -------------------------------------
Secretary Name:
--------------------------------
Title:
-------------------------------
CANADIAN ABRAXAS PETROLEUM LIMITED
ATTEST:
By:
- ------------------------------- -------------------------------------
Secretary Name:
--------------------------------
Title:
-------------------------------
Dated:
Certificate of Authentication
This is one of the 11-1/2% Senior Secured Notes due 2004, Series A,
referred to in the within-mentioned Indenture.
FIRSTAR BANK, NATIONAL ASSOCIATION,
as Trustee
By:
-------------------------------------
Authorized Signatory
Date of Authentication:
A-1
<PAGE> 79
(REVERSE OF SECURITY)
11-1/2% Senior Secured Note due 2004, Series A
(1) Interest. ABRAXAS PETROLEUM CORPORATION, a Nevada corporation and
CANADIAN ABRAXAS PETROLEUM LIMITED, an Alberta corporation (the "Issuers"),
jointly and severally, promise to pay interest on the principal amount of this
Note at the rate per annum shown above. Interest on the Indebtedness evidenced
by the Notes will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from November 1, 1999. The Issuers will
pay interest semi-annually in arrears on each Interest Payment Date, commencing
May 1, 2000. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Issuers shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Issuers shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Issuers may pay principal and interest by check payable in such U.S. Legal
Tender. The Issuers may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, Firstar Bank, National
Association (the "Trustee") will act as Paying Agent and Registrar. Abraxas may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders.
4. Indenture. The Issuers issued the Notes under an Indenture, dated as
of December [__], 1999 (the "Indenture"), among the Issuers, the Subsidiary
Guarantors and the Trustee. This Note is one of a duly authorized issue of Notes
of the Issuers designated as its 11-1/2% Senior Secured Notes due 2004, Series A
(the "Notes"). The Notes are limited in aggregate principal amount to
$196,800,000.00. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and said Act for a statement of them. The Notes are
general obligations of the Issuers secured by a second lien on the Collateral,
subject, however, to the Permitted Liens.
5. Indenture. Each Holder, by accepting a Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time in accordance with its terms.
6. Redemption. The Notes will be redeemable, at the Issuers' option, in
whole at any time or in part from time to time, on and after December 1, 2000,
upon not less than 30 nor more than 60 days' notice, at the following Redemption
Prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on December 1 of the years set forth
below, plus, in each case, accrued and unpaid interest, if any, thereon to the
date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000............................................. 105.750%
2001............................................. 102.875%
2002 and thereafter.............................. 100.000%
</TABLE>
A-2
<PAGE> 80
At any time, or from time to time, prior to December 1, 2000, the
Issuers may, at their option, use all or a portion of the net cash proceeds of
one or more Equity Offerings (as defined in the Indenture) to redeem up to 50%
of the aggregate original principal amount of the Notes at a Redemption Price
equal to 111.500% of the aggregate principal amount of the Notes to be redeemed,
plus accrued and unpaid interest, if any, thereon to the date of redemption;
provided, however, that at least 50% of the aggregate original principal amount
of the Notes remains outstanding immediately after giving effect to any such
redemption (it being expressly agreed that for purposes of determining whether
this condition is satisfied, Notes owned by either Issuer or any of their
Affiliates shall be deemed not to be outstanding). In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Issuers shall
make such redemption not more than 60 days after the consummation of any such
Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at such Holder's registered address. Notes in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Issuers default in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, pursuant to Net Proceeds Offers (as defined in the Indenture) in
connection with certain Asset Sales (as defined in the Indenture) and upon the
occurrence of a Change of Control (as defined in the Indenture), and subject to
further limitations contained therein, the Issuers will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered form,
without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer or
exchange of any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee and the Paying Agent will pay the
money back to the Issuers. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Issuers at any
time deposit with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Issuers will be discharged from certain provisions of the Indenture and the
Notes (including certain covenants, but including, under certain circumstances,
their obligation to pay the principal of and interest on the Notes but without
affecting the rights of the Holders to receive such amounts from such deposits).
13. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture, the Guarantees, the Security Documents or
the Notes may be amended or supplemented with the written consent of the Holders
of not less than a majority in aggregate principal amount of the Notes then
outstanding, and any past Default or Event of Default or noncompliance with any
provision may be waived with the written consent of the Holders of not less than
a majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture, the Guarantees, the Security Documents or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes,
A-3
<PAGE> 81
comply with any requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the TIA or comply with Article Five of
the Indenture or make any other change that does not adversely affect the rights
of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of each of Abraxas and the Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, make certain Investments, create or incur Liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Restricted Subsidiaries, issue Preferred Stock of its
Restricted Subsidiaries, and on the ability of the Issuers and their Restricted
Subsidiaries to merge or consolidate with any other Person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
Abraxas' and its Restricted Subsidiaries' assets or adopt a plan of liquidation.
Such limitations are subject to a number of important qualifications and
exceptions. Pursuant to Section 4.06 of the Indenture, the Issuers must annually
report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received security and indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest when due, for any
reason or a Default in compliance with Article Five of the Indenture) if it
determines that withholding notice is in its interest. Foreclosure under the
Security Documents is subject to a 180 day standstill period in favor of the
holders of the First Lien Notes as provided in the Indenture.
17. Trustee Dealings with Issuers. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuers, their Subsidiaries or their respective
Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No partner, director, officer, employee
or stockholder, as such, of either Issuer or any Subsidiary Guarantor, as such,
shall have any liability for any obligations of either Issuer or any Subsidiary
Guarantor under the Notes, the Indenture, the Security Documents or the
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or its creation. Each Holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Guarantees and Collateral. This Note will be entitled to the
benefits of certain Guarantees, if any, made for the benefit of the Holders and
of Security Documents given to secure Obligations under the Notes and the
Indenture. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Subsidiary Guarantors, the Trustee and the Holders.
20. Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
21. Governing Law. This Note and the Indenture shall be governed by and
construed in accordance with the laws of the State of New York. Each of the
parties to the Indenture agrees to submit to the jurisdiction of the courts of
the State of New York in any action or proceeding arising out of or relating to
this Note.
A-4
<PAGE> 82
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Issuers will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note.
Requests may be made to: Abraxas Petroleum Corporation, 500 North Loop 1604
East, Suite 100, San Antonio, Texas 78232.
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _______________, agent to transfer this Note on the
books of the Issuers. The agent may substitute another to act for him.
Dated: Signed:
-------------------- ----------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
------------------------------------------------------------
A-5
<PAGE> 83
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Issuers pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$
-------------------
Dated:
--------------- ---------------------------------------------------------
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in every
particular without alteration or
enlargement or any change
whatsoever and be guaranteed.
Signature Guarantee:
------------------------------------------------------------
A-6
<PAGE> 84
EXHIBIT B
Form of Additional Provisions In Assignment Form
For Restricted Securities
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) December [__], 2001, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
[Check One]
(1) [ ] to an Issuer or a Subsidiary thereof; or
(2) [ ] pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) [ ] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
as amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) [ ] outside the United states to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of
1933, as amended; or
(5) [ ] pursuant to the exemption from registration provided by Rule
144 under the Securities Act of 1933, as amended; or
(6) [ ] pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) [ ] pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Issuers as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
o The transferee is an Affiliate of the Issuer.
Unless one of the items is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than the
registered Holder thereof; provided, however, that if item (3), (4), (5) or (7)
is checked, the Issuers or the Trustee may require, prior to registering any
such transfer of the Notes, in its sole discretion, such written legal opinions,
certifications (including an investment letter in the case of box (3) or (4))
and other information as the Trustee or the Issuers have reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, as amended.
B-1
<PAGE> 85
If none of the foregoing items are checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: Signed:
--------------- --------------------------------------------------
(Sign exactly as name
appears on the other side
of this Note)
Signature Guarantee:
--------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuers as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------- ----------------------------------------
NOTICE: To be executed by
an executive officer
B-2
<PAGE> 86
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
[ ], [ ]
[ ]
[ ]
[ ]
Ladies and Gentlemen:
In connection with our proposed purchase of 11-1/2% Senior Secured
Notes due 2004, Series A (the "Notes") of Abraxas Petroleum Corporation
("Abraxas") and Canadian Abraxas Petroleum Limited ("Canadian Abraxas"), we
confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture relating to the Notes (the "Indenture") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer
the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act"), and
all applicable State securities laws.
2. We understand that the offer and sale of the Notes to us or
our predecessors have not been registered under the Securities Act, and
that the Notes may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. Persons except as permitted
in the following sentence. We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we
should sell any Notes, we will do so only (i) to Abraxas, Canadian
Abraxas or any subsidiary thereof, (ii) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A promulgated under the
Securities Act) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the Trustee (as
defined in the Indenture) a signed letter containing certain
representations and agreements relating to the restrictions on transfer
of the Notes (the form of which letter can be obtained from the
Trustee), (iii) outside the United States in accordance with Rule 904
of Regulation S promulgated under the Securities Act (provided that any
such sale or transfer in Canada or to or for the benefit of a Canadian
resident must be effected pursuant to an exemption from the prospectus
and registration requirements under applicable Canadian securities
laws), (iv) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act (if available), or (v) pursuant to an
effective registration statement under the Securities Act, and we
further agree to provide to any Person purchasing any of the Notes from
us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee, Abraxas and Canadian
Abraxas such certification, legal opinions and other information as the
Trustee, Abraxas or Canadian Abraxas may reasonably require to confirm
that
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<PAGE> 87
the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the
foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You, Abraxas, Canadian Abraxas, the Trustee and others are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
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<PAGE> 88
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[ ], [ ]
[ ]
[ ]
[ ]
[ ]
Re: Abraxas Petroleum Corporation
Canadian Abraxas Petroleum Limited (the "Issuers")
11-1/2% Senior Secured Notes due 2004, Series A (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $[ ] aggregate principal amount
of the Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any Person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any Person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Issuers and counsel for the Issuers are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------------------
Authorized Signature
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<PAGE> 89
EXHIBIT E
GUARANTEE
For value received, the undersigned hereby unconditionally guarantees,
as principal obligor and not only as a surety, to the Holder of this Note the
cash payments in United States dollars of principal of, premium, if any, and
interest on this Note (and including Additional Interest payable thereon) in the
amounts and at the times when due and interest on the overdue principal,
premium, if any, and interest, if any, of this Note, if lawful, and the payment
or performance of all other obligations of the Issuers under the Indenture or
the Notes, to the Holder of this Note and the Trustee, all in accordance with
and subject to the terms and limitations of this Note, Article Eleven of the
Indenture and this Guarantee. This Guarantee will become effective in accordance
with Article Eleven of the Indenture and its terms shall be evidenced therein.
The validity and enforceability of any Guarantee shall not be affected by the
fact that it is not affixed to any particular Note. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Indenture
dated as of December [__], 1999, among Abraxas Petroleum Corporation, a Nevada
corporation, and Canadian Abraxas Petroleum Limited, an Alberta corporation, as
issuers (the "Issuers"), the Subsidiary Guarantors party thereto, and Firstar
Bank, National Association, as trustee (the "Trustee"), as amended or
supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. Each Subsidiary Guarantor hereby agrees to
submit to the jurisdiction of the courts of the State of New York in any action
or proceeding arising out of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
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<PAGE> 90
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused its Guarantee
to be duly executed.
Date:
------------------
NEW CACHE PETROLEUMS, LTD., as Guarantor
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SANDIA OIL & GAS CORPORATION, as Guarantor
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
WAMSUTTER HOLDINGS, INC., as Guarantor
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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<PAGE> 91
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") is dated as of
, among [SUBSIDIARY GUARANTOR] (the "New Subsidiary Guarantor"), a
subsidiary of Abraxas Petroleum Corporation, a Nevada corporation ("Abraxas"),
Canadian Abraxas Petroleum Corporation, an Alberta corporation ("Canadian
Abraxas", and together with Abraxas, the "Issuers"), and Firstar Bank, National
Association, as trustee under the Indenture referred to below (the "Trustee").
RECITALS:
WHEREAS the Issuers, New Cache Petroleums, Ltd., an Alberta corporation
("New Cache"), Sandia Oil & Gas Corporation, a Texas corporation ("Sandia"), and
Wamsutter Holdings, Inc., a Wyoming corporation ("Wamsutter" and together with
New Cache and Sandia, the "Subsidiary Guarantors") have heretofore executed and
delivered to the Trustee an Indenture (the "Indenture") dated as of December
[__], 1999, providing for the issuance of an aggregate principal amount of up to
$196,800,000.00 of 11-1/2% Senior Secured Notes due 2004, Series A (the
"Notes"); and
WHEREAS Section 4.20 of the Indenture provides that under certain
circumstances the Issuers are required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally guarantee all the Issuers'
obligations under the Notes and the Indenture pursuant to a Guarantee on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Issuers and the Trustee mutually covenant and agree
for the equal and ratable benefit of the Holders as follows:
1. Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees
to unconditionally guarantee the Issuers' obligations under the Notes and the
Indenture on the terms and subject to the conditions set forth in Article XI of
the Indenture and to be bound by all other applicable provisions of the
Indenture.
2. Ratification of Indenture; Supplemental Indenture Part of Indenture.
The Indenture, as supplemented hereby, is in all respects ratified and confirmed
and all the terms, conditions and provisions thereof shall remain in full force
and effect. This Supplemental Indenture shall form a part of the Indenture for
all purposes, and every holder of Notes heretofore or hereafter authenticated
and delivered shall be bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
4. Trustee Makes No Representation. The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction thereof.
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<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ABRAXAS PETROLEUM CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
CANADIAN ABRAXAS PETROLEUM LIMITED
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
FIRSTAR BANK, NATIONAL ASSOCIATION,
as Trustee
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
F-2
