<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CROSS TIMBERS OIL COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1311 75-2347769
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
----------------
810 HOUSTON STREET, SUITE 2000
FORT WORTH, TEXAS 76102
(817) 870-2800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
BOB R. SIMPSON
810 HOUSTON STREET, SUITE 2000
FORT WORTH, TEXAS 76102
(817) 870-2800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE OF PROCESS)
----------------
COPIES OF ALL COMMUNICATIONS TO:
F. RICHARD BERNASEK, ESQ. JAMES M. PRINCE, ESQ.
KELLY, HART & HALLMAN, P.C. ANDREWS & KURTH, L.L.P.
201 MAIN STREET, SUITE 2500 4200 TEXAS COMMERCE TOWER
FORT WORTH, TEXAS 76102 HOUSTON, TEXAS 77002
(817) 332-2500 (713) 220-4300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
8 3/4% Series B Senior
Subordinated Notes due
2009.................. $175,000,000 100% $175,000,000 $53,030.31
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 30, 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING
8 3/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 IN EXCHANGE FOR
8 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2009, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OF
LOGO CROSS TIMBERS OIL COMPANY
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1997, UNLESS EXTENDED.
----------
Cross Timbers Oil Company, a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange an aggregate principal amount of
up to $175,000,000 of its 8 3/4% Series B Senior Subordinated Notes due 2009
(the "New Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), for a like principal amount of its issued
and outstanding 8 3/4% Series A Senior Subordinated Notes due 2009 (the "Old
Notes" and, together with the New Notes, the "Notes") from the holders (the
"Holders") thereof. The terms of the New Notes are identical in all material
respects to the Old Notes, except for certain transfer restrictions and
registration rights relating to the Old Notes and except for certain provisions
providing for Liquidated Damages (as defined herein) on the Old Notes under
certain circumstances relating to the timing of the Exchange Offer.
On October 28, 1997, the Company issued $175,000,000 principal amount of Old
Notes. The Old Notes were issued pursuant to an offering exempt from
registration under the Securities Act and applicable state securities laws.
Interest on the Notes will be payable semi-annually on November 1 and May 1
of each year, commencing May 1, 1998. The Notes will mature on November 1,
2009. The Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after November 1, 2002, at the redemption prices set
forth herein, together with accrued and unpaid interest and Liquidated Damages
(as defined herein), if any, to the date of redemption. At any time prior to
November 1, 2000, the Company may, at its option, redeem up to 33 1/3% of the
aggregate principal amount of the Notes with the net cash proceeds from one or
more Public Equity Offerings (as defined herein) at a redemption price equal to
108 3/4% of the principal amount thereof, together with accrued and unpaid
interest and Liquidated Damages, if any, to the date of redemption, provided
that at least $116,700,000 of the principal amount of the Notes remains
outstanding after each such redemption. See "Description of the Notes--Certain
Covenants--Optional Redemption."
In the event of a Change of Control (as defined herein), each Holder will
have the right to require the Company to purchase all or any part of such
Holder's Notes at 101% of the aggregate principal amount thereof, together with
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase. See "Description of the Notes--Certain Covenants--Change of Control."
The Notes are general unsecured obligations of the Company and are
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined herein) of the Company. The Notes are also effectively subordinated
to all obligations of the Company's Subsidiaries (as defined herein) including,
without limitation, trade payables incurred in the ordinary course. The Notes
rank pari passu with any present and future senior subordinated Indebtedness
(as defined herein) of the Company, including the Company's $125,000,000 9 1/4%
senior subordinated notes due 2007, and will rank senior to all other
subordinated Indebtedness of the Company. At June 30, 1997, on a pro forma
basis, the Company would have had outstanding approximately $46.6 million of
Senior Indebtedness and $125 million of Indebtedness pari passu with the Notes.
For each Old Note accepted for exchange, the Holder thereof will receive a
New Note having a principal amount equal to that of the surrendered Old Note.
The New Notes will bear interest from the most recent date to which interest
has been paid on the Old Notes or, if no interest has been paid on the Old
Notes, from October 28, 1997. Old Notes accepted for exchange will cease to
accrue interest from and after the date of consummation of the Exchange Offer.
Holders of Old Notes whose Old Notes are accepted for exchange will not receive
any payment of accrued interest on such Old Notes.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement (as
defined herein). Based on existing interpretations by the staff of the
Securities and Exchange Commission (the "Commission") set forth in several no-
action letters to third parties, the Company believes that New Notes issued
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by a Holder thereof without further compliance with the
registration and prospectus delivery provisions of the Securities Act. However,
the staff of the Commission has not rendered a no-action letter with respect to
the Exchange Offer, and there can be assurance that the staff would make a
similar determination for the Exchange Offer as in such other circumstances.
Further, any purchaser of Old Notes who is an "affiliate" of the Company, who
is not acquiring the New Notes in the ordinary course of its business or who
intends to participate in the Exchange Offer for the purpose of distributing
the New Notes (1) will not be able to rely on the interpretations of the staff
of the Commission, (2) will not be able to tender its Old Notes in the Exchange
Offer and (3) must comply with the registration and prospectus delivery
provisions of the Securities Act in connection with any sale or transfer of the
Old Notes unless such sale or transfer is made pursuant to an exemption from
such requirements. Each Holder, other than a broker-dealer, must acknowledge
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes and has no arrangement or understanding to participate in a
distribution of New Notes. Each broker-dealer that receives New Notes for its
own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will be deemed not to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of up to 180 days after the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Date. In the event the Company terminates the Exchange Offer and
does not accept for exchange any Old Notes, the Company will promptly return
the Old Notes to the Holders thereof. See "The Exchange Offer."
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes.
Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, J.P. Morgan Securities
Inc. and NationsBanc Montgomery Securities, Inc. (the "Initial Purchasers")
have advised the Company that they currently intend to make a market in the New
Notes. The Initial Purchasers are not obligated to do so, however, and any
market-making with respect to the New Notes may be discontinued at any time
without notice. The Company does not intend to apply for listing or quotation
of the New Notes on any securities exchange or stock market.
SEE "RISK FACTORS" ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY HOLDERS OF OLD NOTES BEFORE DECIDING WHETHER TO TENDER SUCH
OLD NOTES IN THE EXCHANGE OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on Form
S-4 (together with all amendments, exhibits and supplements thereto, the
"Registration Statement") under the Securities Act with respect to the New
Notes offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the New Notes offered hereby, reference is made to
the Registration Statement. Any statements made in this Prospectus concerning
the provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such documents filed as an exhibit
to the Registration Statement or otherwise filed with the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Commission. Reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Suite 1400,
Northwestern Atrium Center, 14th Floor, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material may also be obtained at prescribed
rates by writing to the Commission, Public Reference Section, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and such information
may also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
reports, proxy and information statements and other information may be found
on the Commission's Web site address, http://www.sec.gov.
The Company is a Delaware corporation. Its principal executive offices are
located at 810 Houston Street, Suite 2000, Fort Worth, Texas 76102 and its
telephone number is (817) 870-2800.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference the following documents:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997; and
(c) All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to termination of the offering made hereby.
Any statement contained herein or in a document all or a portion of which is
incorporated by or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete and in each
instance reference is made to such contract or other document, copies of which
are available from the Company as described below, each such statement being
qualified in all respects by such reference.
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements (including the notes thereto)
appearing elsewhere in, or incorporated by reference into, this Prospectus.
Holders of Old Notes should carefully consider the matters discussed under the
caption "Risk Factors" before deciding whether to tender Old Notes in the
Exchange Offer. References in this Prospectus to the "Company" refer to Cross
Timbers Oil Company and its predecessors. Certain terms relating to the oil and
gas business are defined in "Glossary of Certain Oil and Gas Terms." Unless
otherwise stated herein, (i) all information provided in this Prospectus is as
of December 31, 1996 or for the fiscal year ended December 31 of the year
indicated and (ii) per share amounts relating to common stock of the Company
give effect to a three-for-two stock split effected March 19, 1997.
THE COMPANY
Cross Timbers Oil Company is a leading United States independent energy
company engaged in the acquisition, development, exploitation and exploration
of oil and natural gas properties, and in the production, processing, marketing
and transportation of oil and natural gas. The Company has consistently
increased proved reserves, production and cash flow since its inception in
1986, and believes it is one of the most efficient domestic onshore operators
in the industry. The Company has grown primarily through acquisitions of
reserves, followed by aggressive development and exploitation activities and
strategic acquisitions of additional interests in or near such reserves. The
Company's oil and gas reserves are principally located in relatively long-lived
fields with well-established production histories concentrated in western
Oklahoma, the Permian Basin of West Texas and New Mexico, the Hugoton Field of
Oklahoma and Kansas and the Green River Basin of Wyoming.
The Company has achieved substantial growth in proved reserves, production,
revenues and EBITDA over the last five years. The Company increased proved
reserves by 192% from 45.4 million BOE as of December 31, 1992 to 132.5 million
BOE as of December 31, 1996 at an average finding cost of $3.90 per BOE.
Production increased from 4.9 million BOE in 1992 to 9.7 million BOE in 1996,
and oil and gas revenues and EBITDA increased from $63.9 million and $30.2
million, respectively, in 1992 to $148.4 million and $85.5 million,
respectively, in 1996.
As of December 31, 1996, the Company's estimated proved oil and gas reserves
totaled 42.4 million Bbls of oil and 540.5 Bcf of natural gas, or a total of
132.5 million BOE. Approximately 83% of these reserves, on a BOE basis, were
proved developed reserves. The average reserve-to-production index for the
Company's oil and gas proved reserves at December 31, 1996 was 12.4 years. As
of December 31, 1996, the Company owned interests in 5,309 gross (1,695 net)
wells and was the operator of wells representing 81% of the present value of
cash flows before income taxes (discounted at 10%) from estimated proved
reserves. The discounted present value of cash flows before income taxes from
the Company's estimated proved reserves was $946.2 million at December 31,
1996, based on then current oil and gas prices of $24.25 per barrel and $3.02
per Mcf, respectively. Based on an oil price of $20.00 per barrel and a gas
price of $2.00 per Mcf, the discounted present value of cash flows before
income taxes of the Company's proved reserves as of December 31, 1996 would
have been $599.9 million. The Company has established a successful development
record and from 1992 to 1996 drilled 462 gross (189 net) development wells, of
which 449 gross (181.9 net) were commercially successful. The Company believes
that production and cash flow in 1997 and 1998 will increase significantly as a
result of acquisitions completed in 1996 and early 1997, the continued
development of existing properties and the drilling of certain higher-risk
prospects.
From inception in 1986 through December 31, 1996, the Company produced a
total of 55.4 million BOE. During this period, total proved reserves added due
to extensions, discoveries and revisions were approximately 135% of production.
Total development and exploitation costs incurred during this period were
approximately 54% of cash provided by operating activities. Over the last three
years, the Company increased, on a BOE basis,
1
<PAGE>
proved reserves per share from 2.10 at year end 1993 to 4.80 at year end 1996
while maintaining debt at approximately $2.20 per BOE of proved reserves. No
assurance can be given that this trend will continue. See "Risk Factors--
Substantial Indebtedness."
The following table sets forth the total amount spent by the Company to
acquire, exploit and develop its proved reserves, and the amount of such
reserves on a BOE basis, from inception in 1986 to December 31, 1996:
<TABLE>
<CAPTION>
AVERAGE COST
COSTS BOE (A) PER BOE
-------- ------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Acquisition of properties..................... $637,979 127,862 $4.99
Exploitation and development of properties.... 153,357 74,846 2.05
-------- -------
Total......................................... $791,336 202,708 3.90
======== =======
</TABLE>
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(a) Amounts set forth include proved reserves, on a BOE basis, acquired or
added through development since inception of the Company in 1986, and
therefore include proved reserves acquired, exploited or developed and
subsequently produced, distributed or sold.
RECENT DEVELOPMENTS
Amoco Properties Acquisition
On September 29, 1997, the Company entered into a definitive agreement with
Amoco Production Company, a subsidiary of Amoco Corporation ("Amoco"), to
acquire producing properties located in the San Juan Basin of northwestern New
Mexico (the "Amoco Properties") for $252 million and five-year warrants to
purchase 625,000 shares of Company common stock exercisable at $22.97 per
share. The Company has secured firm commitments to finance this acquisition
through an increase in borrowings available under the Company's senior credit
agreement. There can be no assurance, however, that the acquisition of the
Amoco Properties will be consummated or that all of such properties will be
purchased. The transaction is anticipated to close December 1, 1997 with an
effective date of November 1, 1997, and is subject to preferential purchase
rights and typical purchase price adjustments. Amoco has the option to accept,
in lieu of $15.7 million in cash at closing, certain properties owned by the
Company that are either located in the Panhandle of Texas or currently operated
by Amoco. See "Recent Developments--Amoco Properties Acquisition."
The Amoco Properties consist of interests in approximately 170,000 net acres
concentrated in San Juan and Rio Arriba counties of New Mexico. The Company's
internal engineers estimate proved reserves attributable to the acquisition to
be 258.6 Bcf of natural gas, 16.4 million Bbls of NGLs and 1.5 million Bbls of
oil, or a total of 61 million BOE. The Company estimates current net daily
production for the Amoco Properties at 49,000 Mcf of gas, 3,100 Bbls of NGLs
and 270 Bbls of oil from more than 2,600 gross (900 net) wells with a reserve-
to-production index of 14.5 years. Proved developed reserves represent 93% of
the present value of cash flows before income taxes (discounted at 10%) from
estimated proved reserves. All of the proved reserves are attributable to the
Dakota, Pictured Cliffs, Mesa Verde and Fruitland Coal formations. In addition,
the properties generate Section 29 income tax credits of approximately $2.5
million per year.
Average daily production from the Amoco Properties for the six months ended
June 30, 1997 was 49,597 Mcf of gas, 321 Bbls of oil and 3,409 Bbls of NGLs.
Estimated revenues, production expenses, production taxes, and revenues less
direct operating expenses for the six-month period were $23.3 million, $3.1
million, $2.4 million and $17.8 million, respectively, and average prices were
$19.44 per Bbl for oil, $1.73 per Mcf for gas and $10.72 per Bbl for NGL. The
discounted present value of cash flows before income taxes (discounted at 10%)
from estimated proved reserves of the Amoco Properties is $279.9 million at the
December 1, 1997 closing date, based on September 30, 1997 oil, gas and NGL
prices of $18.89 per Bbl, $2.88 per Mcf and $10.59 per Bbl, respectively. Based
on an oil price of $20.00 per Bbl, a gas price of $2.00 per Mcf and an NGL
price of $10.00 per Bbl, the discounted present value of cash flows before
income taxes (discounted at 10%) from the
2
<PAGE>
estimated proved reserves of the Amoco Properties at December 1, 1997 is $180.6
million. The estimated production data, revenues and direct operating expenses
included in this paragraph were based on information provided by Amoco and
remain subject to audit by the Company's independent public accountants.
Estimates of proved reserves of the Amoco Properties and the discounted present
value thereof were prepared by the Company's internal engineers and are subject
to revision by the Company's independent petroleum engineers.
Results of Operations for the Three and Nine Months Ended September 30, 1997
and 1996
On October 20, 1997, the Company announced third quarter 1997 earnings of
$2.8 million or 11 cents per share, compared to third quarter 1996 earnings of
$4.6 million or 18 cents per share (adjusted for the March 1997 3-for-2 split).
Strong production increases of 28% for gas and 10% for oil for the quarter were
offset by a decline in oil prices of $3.39 per barrel. Increased oil and gas
production is primarily attributable to property acquisitions and development
activity. Total revenues for the quarter were $44.1 million, a 12% increase
from third quarter 1996 revenues of $39.2 million. For the first nine months of
1997, earnings were $17.2 million or 65 cents per share, compared with earnings
of $11.1 million or 41 cents per share (adjusted for the March 1997 3-for-2
stock split) for the same 1996 period. Total revenues for the first nine months
of 1997 were $143.5 million, a 28% increase from revenues of $112 million for
the same 1996 period. Revenues for the first nine months of 1997 include gains
on sale of producing properties and facilities and equity securities of $3.5
million, and lawsuit settlement proceeds of $1.3 million. See "Recent
Developments -- Results of Operations for the Three and Nine Months Ended
September 30, 1997 and 1996."
COMPANY STRENGTHS
The Company believes that its historical success and future prospects are
directly related to its unique combination of strengths, including the
following:
QUALITY OF EXISTING PROPERTIES. The Company's properties are characterized by
relatively long reserve lives and highly predictable well production profiles.
Based on current production from 1,695 net producing wells, the average
reserve-to-production index for the Company's proved reserves at December 31,
1996 was 12.4 years. In general, these properties have extensive production
histories and contain significant reserves and production enhancement
opportunities. While the Company's properties are geographically diversified,
the producing fields are concentrated within each core area, allowing for
substantial economies of scale in production and cost-effective application of
reservoir management techniques gained from prior operations. Since the
Company's inception, approximately 54% of cash provided by operating activities
has been invested in exploitation and development opportunities.
INVENTORY OF DRILLING PROJECTS. The Company has generated a substantial
inventory of approximately 630 potential development drilling locations within
its existing properties (of which 156 have been attributed proved undeveloped
reserves), which should continue to support future net reserve additions. The
Company has increased its inventory of drilling projects consistently since its
inception and added more than 200 potential development drilling locations (of
which 54 have been attributed proved undeveloped reserves) through acquisitions
in 1996.
PROVEN ACQUISITION PROGRAM. The Company employs a disciplined acquisition
program refined by senior management over more than 20 years to augment its
core properties and expand its reserve base. The Company's 40 engineering and
geoscience professionals use their expertise and experience gained through the
management of existing core properties to target properties with similar
geological and reservoir characteristics for acquisition. Following an
acquisition, these professionals implement development programs based on such
expertise and experience to enhance production and reduce costs. Since its
inception, the Company has completed acquisitions for an aggregate purchase
price of $638 million, representing 127.9 million BOE of proved reserves.
Additionally, since its inception the Company has added through its
exploitation and development activities 74.8 million BOE, or 59%, of the proved
reserves that it has acquired. In 1995 and 1996 alone, the Company acquired 59
million BOE of proved reserves for an aggregate purchase price of $237 million.
The Company believes that its average acquisition cost of $4.04 per BOE of
proved reserves during 1995 and 1996 ranks it in the top quartile of
independent oil and gas producers over this period.
3
<PAGE>
EFFICIENT OPERATIONS. The Company believes that the nature of its properties,
along with the operating expertise and experience of its personnel in its
principal geographic regions, have allowed the Company to lower its average
lease operating expense ratios per BOE produced. The Company is the operator of
properties representing 81% of the present value of cash flows before income
taxes (discounted at 10%) from estimated proved reserves, allowing it to
control expenses, capital allocation and the timing of development and
exploitation activities in its fields. This control and the Company's operating
expertise have allowed it to reduce substantially production costs of acquired
properties. For example, in its Prentice Northeast Unit, the Company has
reduced direct lease operating expenses by 35%, from $8.44 per BOE produced for
the period from the Company's initial acquisition in the Unit in April 1993
through December 1993, to $5.50 per BOE produced for the year ended December
31, 1996.
EXPERIENCED MANAGEMENT AND TECHNICAL STAFF. Senior management of the Company
has worked together for over 20 years. They were co-founders of the Company in
1986 and previously served as executive officers of Southland Royalty Company,
one of the largest U.S. independent oil and gas producers prior to its
acquisition by Burlington Northern, Inc. in 1985. In addition, the Company has
40 engineering and geoscience professionals dedicated to its properties with an
average of 15 years of experience.
BUSINESS STRATEGY
ACQUIRING LONG-LIVED, OPERATED PROPERTIES. The Company seeks to acquire long-
lived, onshore operated producing properties that (i) contain complex multiple-
producing horizons with the potential for increases in reserves and production,
(ii) are in the Company's core operating areas or in areas with similar
geological and reservoir characteristics and (iii) present opportunities to
reduce expenses through more efficient operations. The Company believes that
the properties it acquires provide opportunities to increase production and
reserves through the implementation of mechanical and operational improvements,
workovers, behind-pipe completions, secondary-recovery operations, new
development wells and other exploitation activities. The Company also seeks to
acquire facilities related to gathering, processing, marketing and transporting
oil and gas in areas where it owns reserves. Such facilities can enhance
profitability, reduce gathering, processing, marketing and transportation
costs, provide marketing flexibility and give the Company access to additional
markets.
INCREASING PRODUCTION AND RESERVES. A principal component of the Company's
strategy is to increase production and reserves through aggressive management
of operations and exploitation and development drilling. The Company believes
that its principal properties possess geological and reservoir characteristics
that make them well suited for production increases through low-risk
exploitation and drilling programs. The Company has generated an inventory of
approximately 630 potential drilling locations for this program. Additionally,
the Company reviews operations and mechanical data on operated properties to
determine if actions can be taken to reduce operating costs or increase
production. Such actions include installing, repairing and upgrading lifting
equipment, redesigning downhole equipment to improve production from different
zones, modifying surface facilities and conducting restimulations and
recompletions. The Company may also initiate, upgrade or revise existing
secondary-recovery operations and drill development wells. As a result of its
efforts, reserves added by the Company through revisions, extensions and
discoveries have exceeded production by 135% since 1986.
EXPLORATION ACTIVITIES. The Company's strategy has evolved to include
allocation of 10% to 20% of its annual capital budget (excluding acquisitions)
to higher-risk projects, including step-out development drilling, trend
extensions and exploration. The Company attempts to select projects that it
believes will have the potential to add substantially to proved reserves and
cash flow. Although it has not historically engaged in significant exploratory
activities, the Company believes that it can prudently and successfully add
growth potential through exploratory activities given improved technology, its
experienced technical staff and its expanded base of operations.
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THE EXCHANGE OFFER
Securities Offered........ Up to $175,000,000 aggregate principal amount of
Series B 8 3/4% Senior Subordinated Notes due 2009,
which have been registered under the Securities
Act. The terms of the New Notes and the Old Notes
are identical in all material respects, except for
certain transfer restrictions and registration
rights relating to the Old Notes and except for
certain provisions providing for Liquidated Damages
(as defined herein) relating to the Old Notes
described below under "--Summary Description of the
New Notes."
The Exchange Offer........ The New Notes are being offered in exchange for a
like principal amount of Old Notes. The issuance of
the New Notes is intended to satisfy obligations of
the Company contained in the Registration Rights
Agreement, dated October 28, 1997, among the
Company and the Initial Purchasers (the
"Registration Rights Agreement").
Expiration Date; The Exchange Offer will expire at 5:00 p.m., New
Withdrawal Rights......... York City time, on , 1997, or such later date
and time to which it is extended. The tender of Old
Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
Any Old Note not accepted for exchange for any
reason will be returned without expense to the
tendering Holder thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer. See "The Exchange Offer--Terms of the
Exchange Offer; Period for Tendering Old Notes" and
"--Withdrawal Rights."
Procedures for Tendering Each Holder of Old Notes wishing to accept the
Old Notes................. Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together
with either certificates for such Old Notes, or a
Book-Entry Confirmation (as defined herein) of such
Old Notes into the Book-Entry Transfer Facility (as
defined herein) if such procedure is available, and
any other required documentation to the exchange
agent (the "Exchange Agent") at the address set
forth herein. By executing the Letter of
Transmittal, each Holder will represent to the
Company, among other things, that (i) the New Notes
acquired pursuant to the Exchange Offer by the
Holder and any other person are being obtained in
the ordinary course of business of the person
receiving such New Notes, (ii) neither the Holder
nor such other person is participating in, intends
to participate in or has an arrangement or
understanding with any person to participate in the
distribution of such New Notes and (iii) neither
the Holder nor such other person is an "affiliate,"
as defined in Rule 405 under the Securities Act, of
the Company. Each broker-dealer that receives New
Notes for its own account in exchange for Old
Notes, if such Old Notes were acquired by such
broker or dealer as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The
Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker or dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the
Securities Act. See "The Exchange Offer--Procedures
for Tendering Old Notes" and "Plan of
Distribution."
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Special Procedures for
Beneficial Owners........ Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered Holder
promptly and instruct such registered Holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's
own behalf, such owner must, prior to completing
and executing the Letter of Transmittal and
delivering its Old Notes, either make appropriate
arrangements to register ownership of the Old Notes
in such owner's name or obtain a properly completed
bond power from the registered Holder. The transfer
of registered ownership may take considerable time.
See "The Exchange Offer--Procedures for Tendering
Old Notes."
Guaranteed Delivery Holders of Old Notes who wish to tender their Old
Procedures................ Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes or
any other documents required by the Letter of
Transmittal to the Exchange Agent must tender their
Old Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
Federal Income Tax The exchange pursuant to the Exchange Offer should
Consequences.............. not result in gain or loss to the Holders or the
Company for federal income tax purposes. See "The
Exchange Offer--Certain Federal Income Tax
Considerations."
Use of Proceeds........... There will be no proceeds to the Company from the
Exchange Offer.
Exchange Agent............ The Bank of New York is serving as Exchange Agent
in connection with the Exchange Offer. See "The
Exchange Offer--Exchange Agent."
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate
that it will register Old Notes under the Securities Act. Based on existing
interpretations by the staff of the Commission set forth in several no-action
letters to third parties, the Company believes that New Notes issued pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by a Holder thereof without further compliance with the
registration and prospectus delivery provisions of the Securities Act. Any
purchaser of Notes, however, who is an "affiliate" of the Company, who is not
acquiring the New Notes in the ordinary course of its business, or who intends
to participate in the Exchange Offer for the purpose of distributing the New
Notes (1) will not be able to rely on the interpretations of the staff of the
Commission, (2) will not be able to tender its Old Notes in the Exchange Offer
and (3) must comply with the registration and prospectus delivery provisions of
the Securities Act in connection with any sale or transfer of the Old Notes
unless such sale or transfer is made pursuant to an exemption from such
requirements. However, the staff of the Commission has not rendered a no-action
letter with respect to the Exchange Offer, and there can be no assurance that
the staff would make a similar determination for the Exchange Offer as in such
other circumstances. Each Holder, other than a broker-dealer, must acknowledge
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes and has no arrangement or understanding to participate in a
distribution of New
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Notes. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes must acknowledge that such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any resale
of such New Notes. See "Plan of Distribution."
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except for certain transfer restrictions and registration rights
relating to the Old Notes and except for certain provisions providing for
Liquidated Damages (as defined herein) on the Old Notes under certain
circumstances relating to timing of the Exchange Offer, which rights will
terminate upon consummation of the Exchange Offer. The New Notes will bear
interest from the most recent date to which interest has been paid on the Old
Notes or, if no interest has been paid on the Old Notes, from October 28, 1997.
Accordingly, registered Holders of New Notes on the relevant record date for
the first interest payment date following the consummation of the Exchange
Offer will receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from October 28, 1997.
Old Notes accepted for exchange will cease to accrue interest from and after
the date of consummation of the Exchange Offer. Holders of Old Notes whose Old
Notes are accepted for exchange will not receive any payment of interest on
such Old Notes otherwise payable on any interest payment date the record date
for which occurs on or after the date of consummation of the Exchange Offer,
and rights to receive interest on such Old Notes will terminate upon
consummation of the Exchange Offer.
Notes Offered............. $175,000,000 aggregate principal amount of 8 3/4%
Series B Senior Subordinated Notes due 2009, which
have been registered under the Securities Act.
Maturity Date............. November 1, 2009.
Interest Payment Dates.... Interest on the Notes will be payable semi-annually
in arrears on May 1 and November 1 of each year,
commencing May 1, 1998.
Mandatory Redemption...... The Company will not be required to make mandatory
redemption or sinking fund payments with respect to
the Notes.
Optional Redemption....... The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after November 1, 2002, at the redemption prices
set forth herein, together with accrued and unpaid
interest and Liquidated Damages (as defined
herein), if any, to the date of redemption. In
addition, at any time on or prior to November 1,
2000, the Company may redeem up to 33 1/3% of the
Notes with the net cash proceeds of one or more
Public Equity Offerings by the Company, at a
redemption price equal to 108 3/4% of the principal
amount to be redeemed, together with accrued and
unpaid interest and Liquidated Damages, if any, to
the date of redemption, provided that at least
$116.7 million principal amount of the Notes
remains outstanding after each such redemption. See
"Description of the Notes--Redemption--Optional
Redemption."
Change of Control......... Upon the occurrence of a Change of Control, each
Holder may require the Company to purchase all or a
portion of such Holder's Notes at a purchase price
equal to 101% of the principal amount thereof,
together with accrued and unpaid interest and
Liquidated Damages, if any, to the date of
purchase. See "Description of the Notes--Certain
Covenants--Change of Control."
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<PAGE>
Ranking................... The Notes are general unsecured obligations of the
Company and are subordinated in right of payment to
all existing and future Senior Indebtedness (as
defined herein) of the Company. The Notes are also
effectively subordinated to all obligations of the
Company's Subsidiaries (as defined herein)
including, without limitation, trade payables
incurred in the ordinary course. The Notes rank
pari passu with any present and future senior
subordinated Indebtedness (as defined herein) of
the Company, including the Company's $125,000,000 9
1/4% senior subordinated notes due 2007, and rank
senior to all other subordinated Indebtedness of
the Company. None of the Company's Subsidiaries is
presently required to guarantee the Notes, although
under certain future circumstances the Company may
be required to cause one or more Restricted
Subsidiaries (as defined herein) to guarantee the
Notes on a senior subordinated basis. At June 30,
1997, on a pro forma basis, the Company would have
had outstanding approximately $46.6 million of
Senior Indebtedness and $125 million of
Indebtedness pari passu with the Notes. See
"Description of the Notes--Subordination" and "--
Subsidiary Guarantees of the Notes."
Certain Covenants......... The Indenture pursuant to which the Old Notes were,
and the New Notes will be, issued (the "Indenture")
contains certain covenants, including, without
limitation, covenants with respect to the following
matters: (i) limitation on indebtedness; (ii)
limitation on restricted payments; (iii) limitation
on issuances and sales of restricted subsidiary
stock; (iv) limitation on transactions with
affiliates; (v) limitation on liens;
(vi) limitation on disposition of proceeds of asset
sales; (vii) limitation on guarantees of
indebtedness by subsidiaries; (viii) limitation on
dividends and other payment restrictions affecting
subsidiaries; and (ix) limitation on mergers,
consolidations and transfers of assets. See
"Description of the Notes--Certain Covenants."
Use of Proceeds........... The Company will not receive any proceeds from the
Exchange Offer. The proceeds from the offering of
the Old Notes, which were approximately $169.9
million, were used to reduce indebtedness under the
Company's senior credit agreement.
Exchange Offer; Holders of New Notes (other than as set forth
Registration Rights....... below) are not entitled to any registration rights
with respect to the New Notes. Pursuant to the
Registration Rights Agreement, the Company agreed
to use its reasonable best efforts to file with the
Securities and Exchange Commission a registration
statement (the "Exchange Offer Registration
Statement") with respect to the Exchange Offer. The
Registration Statement of which this Prospectus is
a part constitutes the Exchange Offer Registration
Statement. See "Description of the Notes--
Registration Rights; Liquidated Damages."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF
OLD NOTES BEFORE DECIDING WHETHER TO TENDER SUCH OLD NOTES IN THE EXCHANGE
OFFER, SEE "RISK FACTORS."
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<PAGE>
RISK FACTORS
Holders of Old Notes should carefully review the information contained
elsewhere in, and incorporated by reference into, this Prospectus and should
particularly consider the following matters before deciding whether to tender
Old Notes in the Exchange Offer:
RESTRICTIONS ON RESALE
The Old Notes have not been registered under the Securities Act or any state
securities laws and, unless so registered, may not be offered or sold except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state
securities laws.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the Holders of the Old Notes. The Old
Notes were issued on October 28, 1997 to a small number of institutional
investors and are eligible for trading in the Private Offerings, Resale and
Trading through Automated Linkages ("PORTAL") market. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the trading market for
the remaining untendered Old Notes could be adversely affected. There is no
existing trading market for the New Notes, and there can be no assurance
regarding the future development of a market for the New Notes, or the ability
of Holders of New Notes to sell their New Notes or the price at which such
Holders may be able to sell their New Notes. If such a market were to develop,
the New Notes could trade at prices higher or lower than the initial offering
price of the Old Notes depending on many factors, including prevailing
interest rates, the Company's operating results and the market for similar
securities. The Company does not intend to apply for listing of the Notes on
any securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System. Although the Initial Purchasers
have informed the Company that they currently intend to make a market in the
Notes the Initial Purchasers are not obligated to do so, and any such market
making may be discontinued at any time without notice. The liquidity of any
market for the Notes will depend upon the number of Holders of the Notes, the
interest of securities dealers in making a market in the Notes and other
factors. Accordingly, there can be no assurance as to the development of
liquidity of any market for the Notes.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of
securities similar to the Notes. There can be no assurance that the market, if
any, for the Notes will not be subject to similar disruptions. Any such
disruptions may have an adverse effect on the Holders of the Notes.
FORWARD-LOOKING STATEMENTS
Certain statements contained in, or incorporated by reference into, this
Prospectus under the captions "Prospectus Summary," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Recent
Developments" and "Business and Properties" contained herein and in documents
incorporated herein by reference, in addition to certain statements contained
elsewhere in this Prospectus and in the documents that are incorporated herein
by reference, are "Forward-looking Statements" and are thus prospective. Such
statements include, among others, (a) statements regarding the Company's
future acquisition and development plans and objectives and related
expenditures, revenues and cash flows, including without limitation statements
regarding (1) production and cash flows, (2) number and location of planned
wells, (3) anticipated completion of the Company's plan regarding expenditures
for property acquisitions and repurchases of the Company's Common Stock, and
the anticipated source of the funds necessary to complete the plan and (4) the
Company's capital expenditure budgets for acquisition and development, and (b)
statements regarding the Company's anticipated aggregate annual dividends to
be paid on its Common Stock. Statements of assumptions related to or
underlying such forward-looking statements include, without limitation,
statements regarding (i) the quality of the Company's properties with regard
to, among other things, anticipated reserve and
9
<PAGE>
production enhancement opportunities and quantity of proved reserves, (ii) the
Company's ability to prudently add growth potential through exploration, (iii)
anticipated domestic hydrocarbon demand during 1997, (iv) the adequacy of the
Company's sources of liquidity during 1997, (v) the expected insignificant
impact on the Company's 1997 expenditures from regulatory compliance, (vi) the
expected insignificant impact on the Company's liquidity during 1997 from
production imbalances, (vii) the expected immaterial adverse impact of a loss
of any current oil or gas purchaser from the Company, (viii) regulatory
approval and the enactment of new legislation in Oklahoma to realize infill
drilling potential and (ix) similarity of the impact on the Company to the
impact on other oil and gas producers of rules promulgated by the Federal
Energy Regulatory Commission. Such forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from future results expressed or implied by such forward-
looking statements.
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<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes that are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on , 1997; provided, however, that if the Company, in
its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" shall mean the latest time and date
to which the Exchange Offer has been extended.
As of the date of this Prospectus, $175 million aggregate principal amount
of Old Notes is outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about , 1997, to all Holders of
Old Notes known to the Company. The Company's obligation to accept Old Notes
for exchange pursuant to the Exchange Offer is subject to certain conditions
as set forth under "--Certain Conditions to the Exchange Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the Holders thereof as described below.
During any such extension, all Old Notes previously tendered will remain
subject to the Exchange Offer and may be accepted for exchange by the Company.
Any Old Notes not accepted for exchange for any reason will be returned
without expense to the tendering Holder thereof as promptly as practicable
after the expiration or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 or any integral multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted
for exchange, upon the occurrence of any of the conditions of the Exchange
Offer specified below under "--Certain Conditions to the Exchange Offer." The
Company will give oral or written notice of any extension, amendment, non-
acceptance or termination to the Holders of the Old Notes as promptly as
practicable, such notice in the case of any extension to be issued by means of
a press release or other public announcement no later than 9:00 a.m., New York
City time, on the next business day following the previously scheduled
Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to
tender Old Notes for exchange pursuant to the Exchange Offer must transmit a
properly completed and duly executed Letter of Transmittal, including all
other documents required by such Letter of Transmittal, to The Bank of New
York (the "Exchange Agent") at the address set forth below under "Exchange
Agent" on or prior to the Expiration Date, accompanied by either (i)
certificates for such Old Notes or (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below. A Holder who is unable to timely comply with the
above-described procedure prior to the Expiration Date may effect a tender of
Old Notes by complying with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE
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<PAGE>
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on his own behalf, such beneficial owner
must, prior to completing and executing the Letter of Transmittal and
delivering Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such beneficial owner's name or obtain a
properly completed bond power from the registered Holder. The transfer of
registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange are
tendered (i) by a registered Holder of the Old Notes who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor
institution," including (as such terms are defined therein) (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association
(collectively, "Eligible Institutions"). If Old Notes are registered in the
name of a person other than a signatory of the Letter of Transmittal, the Old
Notes surrendered for exchange must be endorsed by, or be accompanied by a
written instrument or instruments of transfer or exchange, in satisfactory
form as determined by the Company in its sole discretion, duly executed by the
registered Holder with the signature thereon guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Note which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to
waive any defects or irregularities or conditions of the Exchange Offer as to
any particular Old Notes either before or after the Expiration Date (including
the right to waive the ineligibility of any Holder who seeks to tender Old
Notes in the Exchange Offer). The interpretation of the terms and conditions
of the Exchange Offer as to any particular Old Notes either before or after
the Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall
any of them incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Notes, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered Holder or Holders appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
By tendering, each Holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, and that neither the Holder
nor such other person has
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<PAGE>
any arrangement or understanding with any person to participate in the
distribution of the New Notes. In the case of a Holder that is not a broker-
dealer, each such Holder, by tendering, will also represent to the Company
that such Holder is not engaged in and does not intend to engage in, a
distribution of the New Notes. If any Holder or any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company,
or is engaged in or intends to engage in or has an arrangement or
understanding with any person to participate in a distribution of such New
Notes to be acquired pursuant to the Exchange Offer, such Holder or any such
other person (i) may not rely on the applicable interpretations of the staff
of the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-
dealer as a result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Notes. See "Plan
of Distribution." The Letter of Transmittal states that by so acknowledging
and by delivering such a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all conditions to the Exchange Offer, the
Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of
the Old Notes. See "--Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Company shall be deemed to have accepted
properly tendered Old Notes for exchange when, as and if the Company has given
oral or written notice thereof to the Exchange Agent, with written
confirmation of any oral notice to be given promptly thereafter.
For each Old Note accepted for exchange, the Holder will receive a New Note
having a principal amount equal to that of the surrendered Old Note. The New
Notes will bear interest from the most recent date to which interest has been
paid on the Old Notes or, if no interest has been paid on the Old Notes, from
October 28, 1997. Accordingly, Holders of New Notes on the relevant record
date for the first interest payment date following the consummation of the
Exchange Offer will receive interest accruing from the most recent date to
which interest has been paid or, if no interest has been paid, from October
28, 1997. Old Notes accepted for exchange will cease to accrue interest from
and after the date of consummation of the Exchange Offer. Holders of Old Notes
whose Old Notes are accepted for exchange will not receive any payment in
respect of accrued interest on such Old Notes otherwise payable on any
interest payment date the record date for which occurs on or after the date of
consummation of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes (or a timely Book-
Entry Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), a properly completed and duly executed Letter
of Transmittal and all other required documents. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Old Notes are submitted for a greater principal amount
than the Holder desires to exchange, such unaccepted or non-exchanged Old
Notes will be returned without expense to the tendering Holder (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry
procedures described below, such non-exchanged Old Notes will be credited to
an account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes
13
<PAGE>
into the Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures for transfer.
However, although delivery of Old Notes may be effected through book-entry
transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or
facsimile thereof, with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Exchange Agent at the address set forth below under "--Exchange Agent" on or
prior to the Expiration Date or in accordance with the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
If a Holder of the Old Notes desires to tender such Old Notes and the Old
Notes are not immediately available, or time will not permit such Holder's Old
Notes or other required documents to reach the Exchange Agent before the
Expiration Date, or the procedure for book-entry transfer cannot be completed
on a timely basis, a tender may be effected if (i) the tender is made through
an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
has received from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Company (by facsimile transmission, mail or hand delivery), setting forth
the name and address of the Holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within five New York Stock Exchange ("NYSE") trading days after the execution
of the Notice of Guaranteed Delivery the certificates for all physically
tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation,
as the case may be, the Letter of Transmittal and any other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution
with the Exchange Agent, and (iii) the certificates for all physically
tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation,
as the case may be, the Letter of Transmittal and all other documents required
by the Letter of Transmittal, are received by the Exchange Agent within five
NYSE trading days after the execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address or, in the case of Eligible
Institutions, at the facsimile number, set forth below under "--Exchange
Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
tendered the Old Notes to be withdrawn (the "Depositor"), (ii) identify the
Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Old Notes), (iii) contain a statement that such
person is withdrawing his election to have such Old Notes exchanged, (iv) be
signed by the person in the same manner as the original signature on the
Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer to
have the Trustee with respect to the Old Notes register the transfer of such
Old Notes in the name of the person withdrawing the tender and (v) specify the
name in which such Old Notes are registered, if different from that of the
Depositor. If Old Notes have been tendered pursuant to the procedure for book-
entry transfer described above, any notice of withdrawal must specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Old Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly re-tendered. Any Old
Notes that have been tendered for exchange but that are not exchanged for any
reason will be returned to the tendering Holder without cost to such Holder
(or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described above, such Old Notes will be
credited to an account maintained with the Book-Entry Transfer Facility for
the Old Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be re-
tendered by following the procedures described under "--Procedures for
Tendering Old Notes" above at any time on or prior to 5:00 p.m., New York City
time, on the Expiration Date.
14
<PAGE>
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes for exchange or the exchange of the
New Notes for such Old Notes, any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (ii) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Old Notes pursuant to the Exchange Offer; or any statute, rule,
regulation, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or any of
the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority,
agency or court, domestic or foreign, that in the sole judgment of the
Company might directly or indirectly result in any of the consequences
referred to in clauses (i) or (ii) above or, in the sole judgment of the
Company, might result in the holders of New Notes having obligations with
respect to resales and transfers of New Notes that are greater than those
described in the interpretation of the Commission referred to on the cover
page of this Prospectus, or would otherwise make it inadvisable to proceed
with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by a governmental agency or authority that may adversely affect the ability
of the Company to complete the transactions contemplated by the Exchange
Offer, (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation by any
governmental agency or authority that adversely affects the extension of
credit or (iv) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United States,
or, in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof; or
(c) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
sole judgment of the Company, is or may be adverse to the Company, or the
Company shall have become aware of facts that, in the sole judgment of the
Company, have or may have adverse significance with respect to the value of
the Old Notes or the New Notes; that in the sole judgment of the Company in
any case, and regardless of the circumstances (including any action by the
Company) giving rise to any such condition, makes it inadvisable to proceed
with the Exchange Offer and/or with such acceptance for exchange or with
such exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The Company's failure at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes,
if at such time any stop order shall be threatened or in effect with respect
to the Registration Statement of which this Prospectus constitutes a part or
the qualification of the Indenture under the Trust Indenture Act of 1939.
15
<PAGE>
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
The Bank of New York, Exchange Agent
By Hand or Overnight By Facsimile TransmissionBy Registered or Certified
Delivery: Mail:
(for Eligible Institutions only):
The Bank of New York (212) 571-3080 The Bank of New York
101 Barclay Street Attention: Mr. George Johnson101 Barclay Street, 7E
Corporate Trust Services To Confirm by Telephone New York, New York 10286
Window or for Information Call: Attention: Reorganization
Ground Level (212) 815-3687 Section,
Attention: George Johnson
Reorganization Section,
George Johnson
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The estimated cash expenses to
be incurred in connection with the Exchange Offer will be paid by the Company
and are estimated in the aggregate to be $115,000.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that Holders who instruct
the Company to register New Notes in the name of, or request that Old Notes
not tendered or not accepted in the Exchange Offer be returned to, a person
other than the registered tendering Holder will be responsible for the payment
of any applicable transfer tax.
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions
in the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the issuance of the Old Notes pursuant to exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold unless registered under, pursuant to an exemption
from or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register Old Notes under the Securities Act. Based on interpretations by the
staff of the Commission, as set forth in no-action letters issued to third
parties, the Company believes that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by Holders thereof (other than any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes were acquired
in the ordinary course of such Holders' business and such Holders have no
arrangement or understanding with any person to participate in the
distribution of such New Notes. However, the staff of the Commission has not
rendered a no-action letter with respect to the Exchange Offer, and there can
16
<PAGE>
be no assurance that the staff would make a similar determination for the
Exchange Offer as in such other circumstances. Each Holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If any Holder who
is an affiliate of the Company is engaged in or intends to engage in or has
any arrangement or understanding with respect to the distribution of the New
Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not
rely on the applicable interpretations of the staff of the Commission and (ii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes must
acknowledge that such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities and that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences associated with the exchange of Old Notes for New Notes and the
ownership and disposition of the New Notes by holders who acquired the New
Notes pursuant to the Exchange Offer. The summary is based upon current laws,
regulations, rulings and judicial decisions, all of which are subject to
change. The discussion below does not address all aspects of United States
federal income taxation that may be relevant to particular holders in the
context of their specific investment circumstances or certain types of holders
subject to special treatment under such laws (for example, financial
institutions, banks, tax-exempt organizations and insurance companies). In
addition, the discussion does not address any aspect of state, local or
foreign taxation and assumes that a holder of the New Notes (i) will hold them
as "capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code"), and (ii) will not own, directly or indirectly, 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote.
For purposes of the discussion, a "United States holder" is an individual
who is a citizen or resident of the United States, a corporation, partnership
or other entity created under the laws of the United States or any political
subdivision thereof, or an estate or trust that is subject to United States
federal income taxation without regard to the source of income and a "non-
United States holder" is any holder who is not a United States holder.
PROSPECTIVE PURCHASERS OF THE NEW NOTES ARE URGED TO CONSULT THEIR TAX
ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
ACQUIRING, OWNING AND DISPOSING OF THE NEW NOTES AS WELL AS THE APPLICATION OF
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
Exchange Offer
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not be treated as an exchange or other taxable event for U.S. federal
income tax purposes because under Treasury regulations, the New Notes should
not be considered to differ materially in kind or extent from the Old Notes.
Rather, the New Notes received by a holder should be treated as a continuation
of the Old Notes in the hands of such holder. As a result, there should be no
U.S. federal income tax consequences to holders who exchange Old Notes for New
Notes pursuant to the Exchange Offer and any such holder should have the same
tax basis and holding period in the New Notes as it had in the Old Notes
immediately before the exchange.
United States Holders
Interest payable on the New Notes will be includible in the income of a
United States holder in accordance with such holder's regular method of
accounting. If a New Note is redeemed, sold or otherwise disposed of, a United
States holder generally will recognize gain or loss equal to the difference
between the amount realized on the sale or other disposition of such New Note
(to the extent such amount does not represent accrued but unpaid
17
<PAGE>
interest) and such holder's tax basis in the New Note. Subject to the market
discount rules discussed below, such gain or loss will be capital gain or
loss. If the holder has held such New Notes for more than 12 months but less
than 18 months, any gain will be mid-term gain with a maximum federal income
tax rate of 28%. If the holder has held such New Notes for more than 18
months, the gain will be long-term gain with a maximum federal income tax rate
of 20%. Any capital loss will be short-term loss if the New Notes have been
held for 12 months or less and long-term loss if the New Notes have been held
for more than 12 months.
Under the market discount rules of the Code, a holder (other than a holder
who made the election described below) who purchased an Old Note with "market
discount" (generally defined as the amount by which the stated redemption
price at maturity exceeds the holder's purchase price) will be required to
treat any gain recognized on the redemption, sale or other disposition of the
New Note received in the disposition as ordinary income to the extent of the
market discount that accrued during the holding period of such New Note (which
would include the holding period of the Old Note). A holder who has elected
under applicable Code provisions to include market discount in income annually
as such discount accrues will not, however, be required to treat any gain
recognized as ordinary income under these rules. Holders should consult their
tax advisors as to the portion of any gain that would be taxable as ordinary
income under these provisions.
Non-United States Holders
An investment in the New Notes by a non-United States holder generally will
not give rise to any United States federal income tax consequences if the
interest received or any gain recognized on the sale, redemption or other
disposition of the New Notes by such holder is not treated as effectively
connected with the conduct by such holder of a trade or business in the United
States, and in the case of gains derived by an individual, such individual is
not present in the United States for 183 days or more and certain other
requirements are met. Under current Treasury regulations, in order to avoid
back-up withholding of 31% on payments of interest (i) a non-United States
holder of the New Notes generally must certify to the issuer or its agent,
under penalties of perjury, that it is not a United States person and complete
and provide the payor with a U.S. Treasury Form W-8 (or a suitable substitute
form), which includes its name and address, or (ii) a securities clearing
organization, bank or other financial organization that holds customers'
securities in the ordinary course of business (a "financial institution") and
holds the New Note, must certify under penalties of perjury that such a Form
W-8 (or suitable substitute form) has been received from the beneficial owner
of the New Notes by it or by a financial institution between it and the
beneficial owner, and must furnish the payor with a copy thereof.
On October 14, 1997, the Internal Revenue Service issued final and temporary
withholding regulations for payments to foreign persons which could affect the
procedures to be followed by a non-United States holder in establishing such
holder's status as a non-United States holder for purposes of the backup
withholding rules discussed above. The final and temporary regulations are
generally effective for payments made after December 31, 1998. Prospective
investors should consult their tax advisors concerning the potential effect of
the final and temporary regulations on an investment in the New Notes.
18
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table presents, as of the dates and for the periods indicated,
selected financial information for the Company. The financial information for
each of the five years in the period ended December 31, 1996 has been derived
from the Company's audited consolidated financial statements. The Company's
audited consolidated financial statements as of December 31, 1995 and 1996,
and for the years ended December 31, 1994, 1995 and 1996, and the Company's
unaudited consolidated financial statements as of June 30, 1997, and for the
six months ended June 30, 1996 and 1997, are incorporated herein by reference
and should be read in conjunction with this financial data.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------------------------------ ------------------
1992 1993 1994 1995 (a) 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA (b):
Revenues:
Oil.................... $ 31,921 $ 39,747 $ 53,324 $ 60,349 $ 75,013 $ 34,847 $ 38,583
Gas.................... 31,994 34,649 38,389 40,543 73,402 31,033 51,421
Gas gathering,
processing
and marketing......... 3,943 3,717 4,274 7,091 12,032 6,240 5,122
Other.................. (502)(c) 69 288 4,922 944 696 4,337
-------- -------- -------- -------- -------- -------- --------
Total revenues......... 67,356 78,182 96,275 112,905 161,391 72,816 99,463
-------- -------- -------- -------- -------- -------- --------
Expenses:
Production............. 21,744 29,223 32,368 35,338 39,365 19,169 21,130
Exploration............ -- -- -- -- -- -- 575(d)
Taxes on production and
property.............. 5,767 6,706 8,586 8,646 11,944 5,463 7,926
Depreciation, depletion
and amortization...... 19,979 25,108 31,709 36,892 37,858 17,847 22,517
Impairment (a)......... -- -- -- 20,280 -- -- --
General and
administrative........ 8,150 9,863 8,532 13,156 16,420 9,660 7,542
Gas gathering and
processing............ 1,316 1,492 1,646 2,528 6,905 2,778 4,157
Interest, net.......... 4,975 5,464 8,034 12,523 17,072 7,541 11,790
Trust development
costs................. 527 695 622 561 854 471 281
-------- -------- -------- -------- -------- -------- --------
Total expenses......... 62,458 78,551 91,497 129,924 130,418 62,929 75,918
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income tax and
extraordinary item.... 4,898 (369) 4,778 (17,019) 30,973 9,887 23,545
Income tax expense..... 154 3,643 1,730 (5,825) 10,669 3,409 8,270
-------- -------- -------- -------- -------- -------- --------
Net income (loss)
before
extraordinary item.... 4,744 (4,012) 3,048 (11,194) 20,304 6,478 15,275
Extraordinary item..... -- -- -- 656 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... 4,744 (4,012) 3,048 (10,538) 20,304 6,478 15,275
Preferred stock
dividends............. -- -- -- -- 514 -- 890
-------- -------- -------- -------- -------- -------- --------
Earnings (loss)
available to
common stock.......... $ 4,744 $ (4,012)(e) $ 3,048 $(10,538) $ 19,790 $ 6,478 $ 14,385
======== ======== ======== ======== ======== ======== ========
CONSOLIDATED BALANCE
SHEET DATA (b):
Property and equipment,
net................... $149,484 $228,551 $244,555 $364,474 $450,561 $349,662 $508,404
Total assets........... 176,831 258,019 292,451 402,675 523,070 401,776 562,649
Long-term debt......... 79,000 111,750 142,750 238,475 314,757 236,721 341,500
Owners' equity......... 76,056 115,168 113,333 130,700 142,668 122,806 160,658
OTHER FINANCIAL DATA
(b):
EBITDA (f)............. $ 30,150 $ 30,351 $ 44,777 $ 54,068 $ 85,541 $ 35,439 $ 56,962
Capital expenditures... 12,131 105,228 49,608 190,311 146,568 23,405 100,661
Ratio of earnings to
fixed charges (g)..... 1.8x 0.9x 1.5x -- 2.6x 2.2x 2.6x
Ratio of EBITDA to
interest expense...... 5.7x 5.4x 5.4x 4.2x 5.0x 4.6x 4.8x
Ratio of total debt to
annualized EBITDA..... 2.6x 3.7x 3.2x 4.4x 3.7x 3.3x 3.0x
</TABLE>
- --------
(a) Includes effect of a $20.3 million pre-tax, non-cash impairment charge
recorded upon adoption of Statement of Financial Accounting Standards No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of.
(b) Significant producing property acquisitions in 1993, 1994, 1995 and 1996
affect the comparability of period-to-period financial, operating and
other data.
(c) Includes a $2.4 million loss on sale of Units in the initial public
offering for the Cross Timbers Royalty Trust.
(d) Primarily includes geological and geophysical costs related to the 1997
exploration program. Exploration expenses were not material in prior
periods.
(e) Includes effect of a one-time, non-cash accounting charge of $4 million
for net deferred income tax liabilities recorded upon the Merger.
(f) Earnings before interest, income tax and depreciation, depletion,
amortization and impairment. EBITDA is not intended to represent cash flow
in accordance with generally accepted accounting principles and does not
represent the measure of cash available for distribution. EBITDA is not
intended as an alternative to earnings available to common stock or net
income.
(g) For purposes of calculating this ratio, earnings include income (loss)
from continuing operations before income tax and fixed charges. Fixed
charges include interest expense, preferred stock dividends and an imputed
interest expense on operating lease rentals (assumed as one-third of
rentals). Excluding the effect of the charge in (a) above in 1995, the
ratio of earnings to fixed charges would have been 1.3x.
19
<PAGE>
SELECTED RESERVE AND OPERATING DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- --------- ---------- ------- --------
(IN THOUSANDS EXCEPT PRODUCTION AND PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
PROVED RESERVES (a):
Oil (Bbls)............. 16,666 21,082 33,581 39,988 42,440 -- --
Gas (Mcf).............. 172,199 169,119 177,061 358,070 540,538 -- --
Barrels of oil
equivalent (BOE)...... 45,366 49,269 63,091 99,666 132,530 -- --
Estimated future net
cash flows, before
income tax............ $339,433 $309,244 $406,128 $ 712,907 $1,737,024 -- --
Present value of
estimated future net
cash flows, discounted
at 10%:
Before income tax...... $207,415 $189,968 $247,946 $ 405,706 $ 946,150 (b) -- --
After income tax....... 207,415 (c) 173,294 213,146 335,156 706,481 -- --
AVERAGE DAILY
PRODUCTION:
Oil (Bbls)............. 4,749 6,968 9,497 9,677 9,584 9,478 10,769
Gas (Mcf).............. 51,205 51,260 58,182 78,408 101,845 93,160 128,132
Barrels of oil
equivalent (BOE)...... 13,283 15,511 19,194 22,745 26,558 25,005 32,125
AVERAGE SALES PRICE (d):
Oil (per Bbl).......... $ 18.37 $ 15.63 $ 15.38 $ 17.09 $ 21.38 $ 20.20 $ 19.79
Gas (per Mcf).......... 1.71 1.85 1.81 1.42 1.97 1.83 2.22
Production costs (per
BOE)................... $ 4.47 $ 5.16 $ 4.62 $ 4.26 $ 4.05 $ 4.21 $ 3.63
Production and property
taxes (per BOE)........ 1.19 1.19 1.23 1.04 1.23 1.20 1.36
RESERVE ADDITIONS (BOE)
(a):
Acquisitions........... 434 12,351 4,486 31,508 27,118 -- --
Extensions, discoveries
and revisions......... 7,956 (2,744) 16,840 15,426 15,725 -- --
-------- -------- -------- --------- ----------
Total additions........ 8,390 9,607 21,326 46,934 42,843 -- --
======== ======== ======== ========= ==========
COSTS INCURRED:
Acquisitions........... $ 1,475 $ 87,064 $ 28,100 $ 131,342 $ 105,815 $ 9,656 $ 62,866
Development and
exploitation.......... 10,730 19,462 21,826 21,061 45,038 19,472 31,765
-------- -------- -------- --------- ---------- ------- --------
Total costs incurred... $ 12,205 $106,526 $ 49,926 $ 152,403 $ 150,853 $29,128 $ 94,631
======== ======== ======== ========= ========== ======= ========
</TABLE>
- --------
(a) Proved reserves are estimated annually using oil and gas prices and
production and development costs as of December 31 of each year, without
escalation. Such reserve information is not updated for interim periods.
(b) Based on an oil price of $20.00 per barrel and a gas price of $2.00 per
Mcf at December 31, 1996, the discounted present value of cash flows
before income taxes of the Company's proved reserves as of December 31,
1996 would have been $599.9 million.
(c) Since proved reserves were held by non-taxable predecessor entities before
May 18, 1993, no provision is included for federal income tax before that
date.
(d) Average sales price data includes the effects of hedging activities which
have not been significant.
20
<PAGE>
RECENT DEVELOPMENTS
AMOCO PROPERTIES ACQUISITION
On September 29, 1997, the Company entered into a definitive agreement with
Amoco Production Company, a subsidiary of Amoco Corporation ("Amoco"), to
acquire producing properties located in the San Juan Basin of northwestern New
Mexico (the "Amoco Properties") for $252 million and five-year warrants to
purchase 625,000 shares of Company common stock exercisable at $22.97 per
share. The Company has secured firm commitments to finance this acquisition
through an increase in borrowings available under the Company's senior credit
agreement. There can be no assurance, however, that the acquisition of the
Amoco Properties will be consummated or that all of such properties will be
purchased. The transaction is anticipated to close December 1, 1997 with an
effective date of November 1, 1997, and is subject to preferential purchase
rights and typical purchase price adjustments. Amoco has the option to accept,
in lieu of $15.7 million in cash at closing, certain properties owned by the
Company that are either located in the Panhandle of Texas or currently
operated by Amoco.
The Amoco Properties consist of interests in approximately 170,000 net acres
concentrated in San Juan and Rio Arriba counties of New Mexico. The Company's
internal engineers estimate proved reserves attributable to the acquisition to
be 258.6 Bcf of natural gas, 16.4 million Bbls of NGLs and 1.5 million Bbls of
oil, or a total of 61 million BOE. The Company estimates current net daily
production for the Amoco Properties at 49,000 Mcf of gas, 3,100 Bbls of NGLs
and 270 Bbls of oil from more than 2,600 gross (900 net) wells with a reserve-
to-production index of 14.5 years. Proved developed reserves represent 93% of
the present value of cash flows before income taxes (discounted at 10%) from
estimated proved reserves. Substantially all of the value of the proved
reserves are attributable to the Dakota, Pictured Cliffs, Mesa Verde and
Fruitland Coal formations. In addition, the properties generate Section 29
income tax credits of approximately $2.5 million per year.
The Company has identified more than 150 infill wellsites, primarily in the
Dakota and Fruitland Coal formations, relating to 6 million BOE of proved
undeveloped reserves that the Company expects will require approximately $10.6
million to drill and complete. In addition, the Company plans to evaluate more
than 200 potential infill wellsites over the next year. The Company believes
that opportunities for significant increases to production and reserves also
exist through recompletions, restimulations, and through lowering line
pressure within the gathering system with additional compression.
The San Juan Basin of northwest New Mexico and southwest Colorado contains
the largest reserves of natural gas in the Rocky Mountains and, within the
United States, is second in size only to the Hugoton Field of Oklahoma, Texas
and Kansas. It has a substantial gathering and processing infrastructure which
supports cost-efficient oil and gas operations. Extensive interstate pipeline
systems exist to transport gas to out-of-state markets. Recent pipeline
additions have expanded the available markets for San Juan gas to the Mid-
Continent, Gulf Coast and Northeast markets from what has historically been
solely a California market. As a result, the basis decrement for San Juan
Basin gas prices as compared to Henry Hub gas prices has narrowed to 25 cents
per Mcf from a historic basis decrement of 40 cents per Mcf and reflects a
typical gas basis across the nation.
Subject to voting provisions in applicable operating agreements, the Company
expects to operate more than 900 wells representing about 70% of the present
value of proved reserves (based upon Company internal estimates) of the Amoco
Properties. Conoco Inc., a working interest owner in approximately 30% of the
operated wells of the Amoco Properties, claims that it is entitled to assume
operations of these wells under the terms of the operating agreement and has
filed a declaratory judgment action in the 142nd District Court of Midland
County, Texas, seeking a judgment that it is entitled to operate such wells
and an injunction against the operation of such wells by the Company. The
Company believes that it has the right to operate such wells and, in any
event, does not believe that an adverse resolution of this dispute would
materially detract from the value of the Amoco Properties acquisition.
Certain of the properties are subject to preferential rights held by third
parties aggregating approximately $110 million. The purchase price will be
reduced by the allocated value of the preferential rights exercised. The
Company does not believe that the exercise of the preferential rights will
have an adverse impact on the economics of the acquisition.
21
<PAGE>
Average daily production from the Amoco Properties for the six months ended
June 30, 1997 was 49,597 Mcf of gas, 321 Bbls of oil and 3,409 Bbls of NGLs.
Estimated revenues, production expenses, production taxes, and revenues less
direct operating expenses for the six-month period were $23.3 million, $3.1
million, $2.4 million and $17.8 million, respectively, and average prices were
$19.44 per Bbl for oil, $1.73 per Mcf for gas and $10.72 per Bbl for NGLs. The
discounted present value of cash flows before income taxes (discounted at 10%)
from estimated proved reserves of the Amoco Properties is $279.9 million at
the December 1, 1997 closing date, based on September 30, 1997 oil, gas and
NGL prices of $18.89 per Bbl, $2.88 per Mcf and $10.59 per Bbl, respectively.
Based on an oil price of $20.00 per Bbl, a gas price of $2.00 per Mcf and an
NGL price of $10.00 per Bbl, the discounted present value of cash flows before
income taxes (discounted at 10%) from the estimated proved reserves of the
Amoco Properties at December 1, 1997 is $180.6 million. The estimated
production data, revenues and direct operating expenses included in this
paragraph were based on information provided by Amoco and remain subject to
audit by the Company's independent public accountants. Estimates of proved
reserves of the Amoco Properties and the discounted present value thereof were
prepared by the Company's internal engineers and are subject to revision by
the Company's independent petroleum engineers.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
AND 1996
The following are results of operations for the three and nine months ended
September 30, 1996, compared with results for the three and nine months ended
September 30, 1997, announced on October 20, 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------
1996 1997 1996 1997
--------- --------- -------- --------
(UNAUDITED)
(IN THOUSANDS EXCEPT PRODUCTION AND
PER UNIT DATA)
<S> <C> <C> <C> <C>
Revenues:
Oil.................................... $ 19,375 $ 17,887 $ 54,222 $ 56,470
Gas.................................... 17,090 23,293 48,123 74,714
Total Revenues......................... 39,201 44,086 112,017 143,549
Earnings available to common stock....... $ 4,647 $ 2,779 $ 11,125 $ 17,164
Earnings per share....................... $ 0.18 $ 0.11 $ 0.41 $ 0.65
Average sale prices:
Oil (per Bbl).......................... $ 21.56 $ 18.17 $ 20.67 $ 19.25
Gas (per Mcf).......................... $ 1.75 $ 1.86 $ 1.80 $ 2.09
Average daily production:
Oil (Bbls)............................. 9,767 10,700 9,575 10,746
Gas (Mcf).............................. 106,101 135,997 97,506 130,783
</TABLE>
Third quarter 1997 earnings were $2.8 million or 11 cents per share,
compared to third quarter 1996 earnings of $4.6 million or 18 cents per share
(adjusted for the March 1997 3-for-2 split). Strong production increases of
28% for gas and 10% for oil for the quarter were offset by a decline in oil
prices of $3.39 per barrel. Increased oil and gas production is primarily
attributable to property acquisitions and development activity. Total revenues
for the quarter were $44.1 million, a 12% increase from third quarter 1996
revenues of $39.2 million.
For the first nine months of 1997, earnings were $17.2 million or 65 cents
per share, compared with earnings of $11.1 million or 41 cents per share
(adjusted for the March 1997 3-for-2 stock split) for the same 1996 period.
Total revenues for the first nine months of 1997 were $143.5 million, a 28%
increase from revenues of $112 million for the same 1996 period. Revenues for
the first nine months of 1997 include gains on sale of producing properties
and facilities and equity securities of $3.5 million, and lawsuit settlement
proceeds of $1.3 million.
22
<PAGE>
DESCRIPTION OF THE NOTES
The Old Notes have been, and the New Notes will be, issued under an
indenture dated as of October 28, 1997 (the "Indenture") between the Company,
as issuer, and The Bank of New York, as trustee (the "Trustee"). The following
summary of the material provisions of the Indenture does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of the Indenture, including the definitions of certain terms
contained therein. A copy of the Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and is
incorporated herein by reference. The definitions of certain capitalized terms
used in the following summary are set forth below under "--Certain
Definitions."
The Old Notes and the New Notes constitute a single series of debt
securities under the Indenture. If the Exchange Offer is consummated, Holders
of Old Notes who do not exchange their Old Notes for New Notes will vote
together with Holders of the New Notes for all relevant purposes under the
Indenture. In that regard, the Indenture requires that certain actions by the
Holders thereunder (including acceleration following an Event of Default) must
be taken, and certain rights must be exercised, by specified minimum
percentages of the aggregate principal amount of the outstanding securities
issued under the Indenture. In determining whether Holders of the requisite
percentage in principal amount have given any notice, consent or waiver or
taken any other action permitted under the Indenture, any Old Notes that
remain outstanding after the Exchange Offer will be aggregated with the New
Notes, and the Holders of such Old Notes and the New Notes will vote together
as a single series for all such purposes. Accordingly, all references herein
to specified percentages in aggregate principal amount of the outstanding
Notes shall be deemed to mean, at any time after the Exchange Offer is
consummated, such percentages in aggregate principal amount of the Old Notes
and the New Notes then outstanding.
GENERAL
The Old Notes are, and the New Notes will be, unsecured senior subordinated
obligations of the Company limited to $175,000,000 aggregate principal amount.
Notes are issuable only in registered form, without coupons, in denominations
of $1,000 and integral multiples thereof. Principal of, premium, if any, on
and interest on the Notes is payable, and the Notes are transferable, at the
office or agency of the Company in the City of New York maintained for such
purposes, which currently is the corporate trust office or agency of the
Trustee maintained at New York, New York. In addition, interest may be paid,
at the option of the Company, by check mailed to the registered holders of the
Notes at their respective addresses as shown on the Note Register. No service
charge will be made for any transfer, exchange or redemption of Notes, but the
Company or the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge that may be payable in connection therewith.
For a discussion of the circumstances in which the interest rate on the Old
Notes may be temporarily increased, see "-- Registration Rights; Liquidated
Damages."
MATURITY, INTEREST AND PRINCIPAL PAYMENTS
The Notes will mature on November 1, 2009. Interest on the Notes accrues at
the rate of 8 3/4% per annum and is payable semiannually on May 1 and November
1 of each year, commencing May 1, 1998, to the Person in whose name the Note
is registered in the Note Register at the close of business on the April 15 or
October 15 next preceding such interest payment date. Interest is computed on
the basis of a 360-day year comprising twelve 30-day months.
REDEMPTION
Optional Redemption. The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after November 1, 2002, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on an interest payment date that is on or
prior to the redemption date), if redeemed during the 12-month period
beginning on November 1 of the years indicated below:
23
<PAGE>
<TABLE>
<CAPTION>
YEAR PRICE
---- -------
<S> <C>
2002............................................................. 104.375%
2003............................................................. 102.917%
2004............................................................. 101.458%
2005 and thereafter.............................................. 100.000%
</TABLE>
In addition, at any time and from time to time prior to November 1, 2000,
the Company may, at its option, redeem in the aggregate up to 33 1/3% of the
aggregate principal amount of the Notes originally issued under the Indenture
with the proceeds of one or more Public Equity Offerings by the Company at a
redemption price (expressed as a percentage of principal amount) of 108 3/4%,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date (subject to the right of Holders of Notes on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least $116.7 million aggregate principal amount of
the Notes must remain outstanding after each such redemption. In order to
effect the foregoing redemption, the Company must mail notice of redemption no
later than 60 days after the related Public Equity Offering and must
consummate such redemption within 90 days of the closing of the Public Equity
Offering.
Selection and Notice. In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes (or any portion thereof that is
an integral multiple of $1,000) for redemption will be made by the Trustee
from the outstanding Notes not previously called for redemption (or otherwise
purchased by the Company) on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate; provided, however, that no Note with
a principal amount of $1,000 or less shall be redeemed in part. Notice of
redemption shall be mailed by first-class mail at least 30 but not more than
60 days before the redemption date to each Holder of Notes to be redeemed at
its registered address. If any Note is to be redeemed in part only, the notice
of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in 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
redemption date, interest will cease to accrue on Notes or portions thereof
called for redemption and accepted for payment.
Offers to Purchase. As described below, (a) upon the occurrence of a Change
of Control, the Company is obligated to make an offer to purchase all
outstanding Notes at a purchase price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase and (b) upon the occurrence of an Asset Sale, the
Company may be obligated to make offers to purchase Notes with a portion of
the Net Cash Proceeds of such Asset Sale at a purchase price equal to 100% of
the principal amount thereof, together with accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase. See "--Certain
Covenants--Change of Control" and "--Limitation on Disposition of Proceeds of
Asset Sales."
SUBORDINATION
Payments of and distributions on or with respect to the Note Obligations are
subordinated, to the extent set forth in the Indenture, in right of payment to
the prior payment in full in cash or Cash Equivalents of all existing and
future Senior Indebtedness, which includes, without limitation, all Credit
Agreement Obligations of the Company. The Notes rank prior in right of payment
only to other Indebtedness of the Company which is, by its terms, expressly
subordinated in right of payment to the Notes. There is currently no
Indebtedness of the Company which would constitute such Subordinated
Indebtedness. In addition, the Note Obligations are effectively subordinated
to all of the creditors of the Company's Subsidiaries, including trade
creditors.
The Indenture provides that in the event of (a) any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relating to the Company
(or its creditors, as such) or its assets, or (b) any liquidation, dissolution
or other winding-up of the Company, whether voluntary or involuntary or (c)
any assignment for the benefit of creditors or other marshaling
24
<PAGE>
of assets or liabilities of the Company, all Senior Indebtedness of the
Company must be paid in full in cash or Cash Equivalents before any direct or
indirect payment or distribution, whether in cash, property or securities
(excluding certain permitted equity and subordinated debt securities referred
to in the Indenture as "Permitted Junior Securities"), is made on account of
the Note Obligations. In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Note receives any payment or distribution of
properties or assets of the Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, in respect of Note
Obligations before all Senior Indebtedness is paid or provided for in full,
then the Trustee or the Holders of Notes receiving any such payment or
distribution (other than a payment or distribution in the form of Permitted
Junior Securities) will be required to pay or deliver such payment or
distribution forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full.
During the continuance of any default in the payment when due (whether at
Stated Maturity, upon scheduled repayment, upon acceleration or otherwise) of
principal of or premium, if any, or interest on, or of unreimbursed amounts
under drawn letters of credit or fees relating to letters of credit
constituting, any Designated Senior Indebtedness (a "Payment Default"), no
direct or indirect payment or distribution by or on behalf of the Company of
any kind or character shall be made on account of the Note Obligations or any
obligation under any Subsidiary Guarantee unless and until such default has
been cured or waived or has ceased to exist or such Designated Senior
Indebtedness shall have been discharged or paid in full in cash or Cash
Equivalents.
In addition, during the continuance of any default other than a Payment
Default with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may then be accelerated (a "Non-payment Default"), after
receipt by the Trustee from the holders (or their representative) of such
Designated Senior Indebtedness of a written notice of such Non-payment
Default, no payment or distribution of any kind or character may be made by
the Company on account of the Senior Subordinated Note Obligations for the
period specified below (the "Payment Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of a
Non-payment Default by the Trustee from the holders (or their representative)
of Designated Senior Indebtedness stating that such notice is a payment
blockage notice pursuant to the Indenture and shall end on the earliest to
occur of the following events: (i) 179 days shall have elapsed since the
receipt by the Trustee of such notice; (ii) the date, as set forth in a
written notice to the Company or the Trustee from the holders (or their
representative) of the Designated Senior Indebtedness initiating such Payment
Blockage Period, on which such default is cured or waived or ceases to exist
(provided that no other Payment Default or Non-payment Default has occurred or
is then continuing after giving effect to such cure or waiver); (iii) the date
on which such Designated Senior Indebtedness is discharged or paid in full in
cash or Cash Equivalents; and (iv) the date, as set forth in a written notice
to the Company or the Trustee from the holders (or their representative) of
the Designated Senior Indebtedness initiating such Payment Blockage Period, on
which such Payment Blockage Period shall have been terminated by written
notice to the Company or the Trustee from the holders (or their
representative) of Designated Senior Indebtedness initiating such Payment
Blockage Period, after which the Company, subject to the subordination
provisions set forth above and the existence of another Payment Default, shall
promptly resume making any and all required payments in respect of the Notes,
including any missed payments. Only one Payment Blockage Period with respect
to the Notes may be commenced within any 360 consecutive day period. No Non-
payment Default with respect to Designated Senior Indebtedness that existed or
was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Designated Senior Indebtedness initiating such Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 360
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days (it being acknowledged that any subsequent
action, or any breach of any financial covenant for a period commencing after
the date of commencement of such Payment Blockage Period,
25
<PAGE>
that, in either case, would give rise to a Non-payment Default pursuant to any
provision under which a Non-payment Default previously existed or was
continuing shall constitute a new Non-payment Default for this purpose;
provided, however, that, in the case of a breach of a particular financial
covenant, the Company shall have been in compliance for at least one full 90
consecutive day period commencing after the date of commencement of such
Payment Blockage Period). In no event will a Payment Blockage Period extend
beyond 179 days from the date of the receipt by the Trustee of the notice, and
there must be a 181 consecutive day period in any 360-day period during which
no Payment Blockage Period is in effect. In the event that, notwithstanding
the foregoing, the Company makes any payment or distribution to the Trustee or
the Holder of any Note prohibited by the subordination provision of the
Indenture, then such payment or distribution will be required to be paid over
and delivered forthwith to the holders (or their representative) of Designated
Senior Indebtedness.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure will constitute an Event of Default
under the Indenture and will enable the Holders of the Notes to accelerate the
maturity thereof. See "--Events of Default."
By reason of such subordination, in the event of liquidation, receivership,
reorganization or insolvency, creditors of the Company who are holders of
Senior Indebtedness may recover more, ratably, than the Holders of the Notes,
and funds which would be otherwise payable to the Holders of the Notes will be
paid to the holders of the Senior Indebtedness to the extent necessary to pay
the Senior Indebtedness in full, and the Company may be unable to meet its
obligations in full with respect to the Notes.
As of June 30, 1997, after giving effect pro forma to the sale of the Old
Notes and the application of the net proceeds therefrom, the aggregate amount
of outstanding Senior Indebtedness would have been approximately $46.6
million. Although the Indenture contains limitations on the amount of
additional Indebtedness that the Company and the Restricted Subsidiaries may
incur, the amounts of such Indebtedness could be substantial and, in any case,
such Indebtedness could be Senior Indebtedness or Indebtedness of Subsidiaries
to which the Notes would be subordinated. The Indenture prohibits the
incurrence by the Company of Indebtedness that is contractually subordinated
in right of payment to any Senior Indebtedness of the Company and senior in
right of payment to the Notes. After giving effect to the issuance of the Old
Notes and the application of the net proceeds therefrom, there is no
Indebtedness of the Company that is subordinated in right of payment to the
Notes and there is $125 million principal amount of Indebtedness of the
Company which is pari passu in right of payment with the Notes.
SUBSIDIARY GUARANTEES OF THE NOTES
No Subsidiaries of the Company initially executed and delivered the
Indenture as a Subsidiary Guarantor. Under the circumstances described below,
however, the Company's payment obligations under the Notes may in the future
be jointly and severally guaranteed by existing or future Subsidiaries of the
Company as Subsidiary Guarantors. In the event that the Notes are guaranteed
in the future by Subsidiaries of the Company, each Subsidiary Guarantor will
guarantee, jointly and severally, to each Holder of Notes and the Trustee, the
full and prompt performance of the Company's obligations under the Indenture
and the Notes, including the payment of principal of (or premium, if any, on)
and interest on the Notes pursuant to its Subsidiary Guarantee. The Subsidiary
Guarantees will be subordinated to Guarantor Senior Indebtedness of the
Subsidiary Guarantors to the same extent and in the same manner as the Notes
are subordinated to Senior Indebtedness.
The obligations of each Subsidiary Guarantor will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities (including, but not limited to, Guarantor Senior Indebtedness) of
such Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent
26
<PAGE>
transfer under federal or state law. Each Subsidiary Guarantor that makes a
payment or distribution under a Subsidiary Guarantee shall be entitled to a
contribution from each other Subsidiary Guarantor (if any) in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor.
Each Subsidiary Guarantor may consolidate with or merge into or sell all,
substantially all or any portion of its assets to the Company or another
Subsidiary Guarantor without limitation, except to the extent any such
transaction is subject to the "Merger, Consolidation and Sale of Assets"
covenant of the Indenture. Each Subsidiary Guarantor may consolidate with or
merge into or sell all or substantially all of its assets to a corporation
other than the Company or another Subsidiary Guarantor (whether or not
affiliated with the Subsidiary Guarantor); provided, however, that (a) if the
surviving corporation is not the Subsidiary Guarantor, the surviving
corporation agrees to assume such Subsidiary Guarantor's Subsidiary Guarantee
and all its obligations pursuant to the Indenture (except to the extent the
following paragraph would result in the release of such Subsidiary Guarantee)
and (b) such transaction does not (i) violate any of the covenants described
below under "Certain Covenants" or in the Indenture or (ii) result in a
Default or Event of Default immediately thereafter that is continuing.
The Subsidiary Guarantee of any Restricted Subsidiary may be released upon
the terms and subject to the conditions described under paragraph (c) of
"Certain Covenants--Limitation on Non-Guarantor Restricted Subsidiaries." Each
Subsidiary Guarantor that is designated as an Unrestricted Subsidiary in
accordance with the Indenture shall be released from its Subsidiary Guarantee
and related obligations set forth in the Indenture for so long as it remains
an Unrestricted Subsidiary.
Although the Indenture does not contain any requirement that any Subsidiary
execute and deliver a Subsidiary Guarantee, certain covenants described below
require a Restricted Subsidiary in the future to execute and deliver a
Subsidiary Guarantee prior to the guarantee of other Indebtedness. See
"Certain Covenants--Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries."
CERTAIN COVENANTS
The Indenture contains, among others, the covenants described below.
Limitation on Indebtedness. (a) The Indenture provides that neither the
Company nor any Restricted Subsidiary will create, incur, issue, assume,
guarantee or in any manner become directly or indirectly liable for the
payment of (collectively "incur") any Indebtedness (including any Acquired
Indebtedness), other than Permitted Indebtedness and Permitted Subsidiary
Indebtedness, as the case may be; provided, however, that the Company and its
Restricted Subsidiaries that are Subsidiary Guarantors may incur Indebtedness
if (x) the Company's Consolidated Fixed Charge Coverage Ratio for the four
full fiscal quarters immediately preceding the incurrence of such Indebtedness
(and for which financial statements are available), taken as one period (at
the time of such incurrence, after giving pro forma effect to: (i) the
incurrence of such Indebtedness and (if applicable) the application of the net
proceeds therefrom, including to refinance other Indebtedness or to acquire
producing oil and gas properties, as if such Indebtedness had been incurred
and the application of such proceeds had occurred at the beginning of such
four-quarter period; (ii) the incurrence, repayment or retirement of any other
Indebtedness (including Permitted Indebtedness) by the Company or its
Restricted Subsidiaries since the first day of such four-quarter period
(including any other Indebtedness to be incurred concurrent with the
incurrence of such Indebtedness) as if such Indebtedness had been incurred,
repaid or retired at the beginning of such four-quarter period; and (iii)
notwithstanding clause (d) of the definition of Consolidated Net Income, the
acquisition (whether by purchase, merger or otherwise) or disposition (whether
by sale, merger or otherwise) of any Person acquired or disposed of by the
Company or its Restricted Subsidiaries, as the case may be, since the first
day of such four-quarter period, as if such acquisition or disposition had
occurred at the beginning of such four-quarter period), would have been equal
to at least 2.5 to 1.0 and (y) no Default or Event of Default shall have
occurred and be continuing at the time such additional Indebtedness is
incurred or would occur as a consequence of the incurrence of the additional
Indebtedness.
27
<PAGE>
Limitation on Restricted Payments. (a) The Indenture provides that the
Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, take the following actions:
(i) declare or pay any dividend on, or make any distribution to holders
of, any shares of the Company's Capital Stock (other than dividends or
distributions payable solely in shares of Qualified Capital Stock of the
Company, options, warrants or other rights to purchase Qualified Capital
Stock of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Affiliate thereof (other than any
Wholly Owned Restricted Subsidiary of the Company) or any options, warrants
or other rights to acquire such Capital Stock; provided, however, that the
Company may purchase, redeem or otherwise retire common stock of the
Company in an amount not to exceed $10,000,000 in the aggregate for all
such transactions after April 1, 1997, and; provided, further, that the
Company may make any payment of the applicable redemption price in
connection with a Qualified Redemption Transaction;
(iii) make any principal payment on or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or maturity, any Subordinated
Indebtedness; provided, however, that the Company may make any payment of
the applicable redemption price in connection with a Qualified Redemption
Transaction;
(iv) declare or pay any dividend on, or make any distribution to the
holders of, any shares of Capital Stock of any Restricted Subsidiary of the
Company (other than to the Company or any of its Wholly Owned Restricted
Subsidiaries) or purchase, redeem or otherwise acquire or retire for value
any Capital Stock of any Restricted Subsidiary or any options, warrants or
other rights to acquire any such Capital Stock (other than with respect to
any such Capital Stock held by the Company or any Wholly Owned Restricted
Subsidiary of the Company);
(v) make any Investment (other than a Permitted Investment);
(vi) in connection with the acquisition of any property or asset by the
Company or its Restricted Subsidiaries after the date of the Indenture,
which property or asset would secure or be subject to any Production
Payment obligations of the Company or its Restricted Subsidiaries, make any
investment (of cash, property or other assets) in such property or asset so
acquired in addition to the amount of Indebtedness (including Production
Payment obligations) incurred by the Company or its Restricted Subsidiaries
in connection with such acquisition; or
(vii) incur any guarantee of Indebtedness of any Affiliate (other than
(a) guarantees of Indebtedness of any Restricted Subsidiary by the Company
or (b) guarantees of Indebtedness of the Company by any Restricted
Subsidiary, in each case in accordance with the terms of the Indenture);
(such payments or other actions described in (but not excluded from) clauses
(i) through (vii) are collectively referred to as "Restricted Payments"),
unless at the time of and after giving effect to the proposed Restricted
Payment (with the amount of any such Restricted Payment, if other than cash,
being the amount determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a board resolution), (1) no
Default or Event of Default shall have occurred and be continuing, (2) the
Company could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) in accordance with the "Limitation on Indebtedness" covenant and
(3) the aggregate amount of all Restricted Payments declared or made after
April 1, 1997, shall not exceed the sum (without duplication) of the
following:
(A) 50% of the aggregate cumulative Consolidated Net Income of the
Company accrued on a cumulative basis during the period beginning on May 1,
1997, and ending on the last day of the Company's last fiscal quarter
ending prior to the date of such proposed Restricted Payment (or, if such
aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss), plus
(B) the aggregate net cash proceeds received after April 1, 1997, by the
Company as capital contributions to the Company (other than from any
Restricted Subsidiary), plus
(C) the aggregate net cash proceeds received after April 1, 1997, by the
Company from the issuance or sale (other than to any of its Restricted
Subsidiaries) of shares of Qualified Capital Stock of the Company or any
options, warrants or rights to purchase such shares of Qualified Capital
Stock of the Company, plus
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(D) the aggregate net cash proceeds received after April 1, 1997 by the
Company (other than from any of its Restricted Subsidiaries) upon the
exercise of any options, warrants or rights to purchase shares of Qualified
Capital Stock of the Company, plus
(E) the aggregate net cash proceeds received after April 1, 1997 by the
Company from the issuance or sale (other than to any of its Restricted
Subsidiaries) of debt securities or shares of Redeemable Capital Stock that
have been converted into or exchanged for Qualified Capital Stock of the
Company to the extent such debt securities were originally sold for cash,
together with the aggregate cash received by the Company at the time of
such conversion or exchange, plus
(F) To the extent not otherwise included in the Company's Consolidated
Net Income, the net reduction in Investments in Unrestricted Subsidiaries
resulting from the payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets, in each case
to the Company or a Restricted Subsidiary after April 1, 1997 from any
Unrestricted Subsidiary or from the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary (valued in each case as provided in
the definition of "Investment"), not to exceed in the case of any
Unrestricted Subsidiary the total amount of Investments (other than
Permitted Investments) in such Unrestricted Subsidiary made by the Company
and its Restricted Subsidiaries in such Unrestricted Subsidiary after April
1, 1997, plus
(G) $25,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take the following actions so long as (in the case of clauses
(ii), (iii) and (iv) below) no Default or Event of Default shall have occurred
and be continuing:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such declaration date such declaration complied
with the provisions of paragraph (a) above (and such payment shall be
deemed to have been paid on such date of declaration for purposes of any
calculation required by the provisions of paragraph (a) above);
(ii) the repurchase, redemption or other acquisition or retirement of any
shares of any class of Capital Stock of the Company or any Restricted
Subsidiary, in exchange for, or out of the aggregate net cash proceeds of,
a substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of shares of Qualified Capital Stock of the Company;
(iii) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of any Subordinated Indebtedness (other
than Redeemable Capital Stock) in exchange for or out of the aggregate net
cash proceeds of a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of shares of Qualified Capital Stock of the Company;
(iv) the purchase, redemption, repayment, defeasance or other acquisition
or retirement for value of Subordinated Indebtedness (other than Redeemable
Capital Stock) in exchange for, or out of the aggregate net cash proceeds
of, a substantially concurrent incurrence (other than to a Restricted
Subsidiary) of Subordinated Indebtedness of the Company so long as (A) the
principal amount of such new Indebtedness does not exceed the principal
amount (or, if such Subordinated Indebtedness being refinanced provides for
an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration thereof, such lesser amount as of the date of
determination) of the Subordinated Indebtedness being so purchased,
redeemed, repaid, defeased, acquired or retired, plus the amount of any
premium required to be paid in connection with such refinancing pursuant to
the terms of the Subordinated Indebtedness refinanced or the amount of any
premium reasonably determined by the Company as necessary to accomplish
such refinancing, plus the amount of expenses of the Company incurred in
connection with such refinancing, (B) such new Subordinated Indebtedness is
subordinated to the Notes at least to the same extent as such Subordinated
Indebtedness so purchased, redeemed, repaid, defeased, acquired or retired,
(C) such new Subordinated Indebtedness has an Average Life to Stated
Maturity that is longer than the Average Life to Stated Maturity of the
Notes and such new Subordinated Indebtedness has a Stated Maturity for its
final scheduled principal payment that is at least 91 days later than the
Stated Maturity for the final scheduled principal payment of the Notes; and
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(v) repurchases, acquisitions or retirements of shares of Qualified
Capital Stock of the Company deemed to occur upon the exercise of stock
options or similar rights issued under employee benefit plans of the
Company if such shares represent all or a portion of exercise price or are
surrendered in connection with satisfying any Federal income tax
obligation.
The actions described in clauses (i), (ii), (iii) and (v) of this paragraph
(b) shall be Restricted Payments that shall be permitted to be taken in
accordance with this paragraph (b) but shall reduce the amount that would
otherwise be available for Restricted Payments under clause (3) of paragraph
(a) (provided that any dividend paid pursuant to clause (i) of this paragraph
(b) shall reduce the amount that would otherwise be available under clause (3)
of paragraph (a) when declared, but not also when subsequently paid pursuant
to such clause (i)), and the actions described in clause (iv) of this
paragraph (b) shall be Restricted Payments that shall be permitted to be taken
in accordance with this paragraph and shall not reduce the amount that would
otherwise be available for Restricted Payments under clause (3) of paragraph
(a).
(c) In computing Consolidated Net Income of the Company under paragraph (a)
above, (1) the Company shall use audited financial statements for the portions
of the relevant period for which audited financial statements are available on
the date of determination and unaudited financial statements and other current
financial data based on the books and records of the Company for the remaining
portion of such period and (2) the Company shall be permitted to rely in good
faith on the financial statements and other financial data derived from the
books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment, would in the good faith determination
of the Company be permitted under the requirements of the Indenture, such
Restricted Payment shall be deemed to have been made in compliance with the
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the
Company for any period.
Limitation on Issuances and Sales of Restricted Subsidiary Stock. The
Indenture provides that the Company (i) will not permit any Restricted
Subsidiary to issue any Preferred Stock (other than to the Company or a Wholly
Owned Restricted Subsidiary) and (ii) will not permit any Person (other than
the Company and/or one or more Wholly Owned Restricted Subsidiaries) to own
any Capital Stock of any Restricted Subsidiary; provided, however, that this
covenant shall not prohibit (1) the issuance and sale of all, but not less
than all, of the issued and outstanding Capital Stock of any Restricted
Subsidiary owned by the Company or any of its Restricted Subsidiaries in
compliance with the other provisions of the Indenture, or (2) the ownership by
directors of directors' qualifying shares or the ownership by foreign
nationals of Capital Stock of any Restricted Subsidiary, to the extent
mandated by applicable law.
Limitation on Transactions with Affiliates. The Indenture provides that the
Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into or suffer to exist any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or the rendering of any services) with,
or for the benefit of, any Affiliate of the Company other than a Restricted
Subsidiary (each, other than a Restricted Subsidiary, being an "Interested
Person"), unless (i) such transaction or series of transactions is on terms
that are no less favorable to the Company or such Restricted Subsidiary, as
the case may be, than those that would be available in a comparable arm's
length transaction with unrelated third parties who are not Interested
Persons, (ii) with respect to any one transaction or series of transactions
involving aggregate payments in excess of $1,000,000, the Company delivers an
officer's certificate to the Trustee certifying that such transaction or
series of transactions complies with clause (i) above and such transaction or
series of transactions has been approved by the Board of Directors of the
Company and (iii) with respect to any one transaction or series of
transactions involving aggregate payments in excess of $10,000,000, the
officer's certificate referred to in clause (ii) above also certifies that
such transaction or series of transactions has been approved by a majority of
the Disinterested Directors or, in the event there are no such Disinterested
Directors, that the Company has obtained a written opinion from an independent
nationally recognized investment banking firm or appraisal firm, in either
case specializing or having a specialty in the type and subject matter of the
transaction or series of transactions at issue, which opinion shall be to the
effect set forth in clause (i) above or
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shall state that such transaction or series of transactions is fair from a
financial point of view to the Company or such Restricted Subsidiary;
provided, however, that this covenant will not restrict the Company from (1)
paying reasonable and customary regular compensation and fees to directors of
the Company who are not employees of the Company or any Restricted Subsidiary
or (2) paying dividends on, or making distributions with respect to, shares of
Capital Stock of the Company on a pro rata basis to the extent permitted by
the "Limitation on Restricted Payments" covenant.
Limitation on Liens. The Indenture provides that the Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume, affirm or suffer to exist or become effective any Lien of any
kind, except for Permitted Liens, on or with respect to any of its property or
assets (including any intercompany notes), whether owned at the date of the
Indenture or thereafter acquired, or any income, profits or proceeds
therefrom, or assign or otherwise convey any right to receive income thereon,
unless (x) in the case of any Lien securing Subordinated Indebtedness, the
Notes are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Lien and (y) in the case of any other Lien, the
Notes are directly secured equally and ratably with the obligation or
liability secured by such Lien. The incurrence of additional secured
Indebtedness by the Company or any Restricted Subsidiary is subject to further
limitations on the incurrence of Indebtedness as described under "--Limitation
on Indebtedness."
Change of Control. Upon the occurrence of a Change of Control, the Company
shall be obligated to make an offer to purchase all of the then outstanding
Notes (a "Change of Control Offer"), and shall purchase, on a business day
(the "Change of Control Purchase Date") not more than 70 nor less than 30 days
following the Change of Control, all of the then outstanding Notes validly
tendered pursuant to such Change of Control Offer at a purchase price (the
"Change of Control Purchase Price") equal to 101% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to
the Change of Control Purchase Date. The Change of Control Offer is required
to remain open for at least 20 Business Days and until the close of business
on the fifth business day prior to the Change of Control Purchase Date.
In order to effect such Change of Control Offer, the Company shall, not
later than the 30th day after the Change of Control, mail to each Noteholder a
notice of the Change of Control Offer, which notice shall govern the terms of
the Change of Control Offer and shall state, among other things, the
procedures that Noteholders must follow to accept the Change of Control Offer.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes delivered by Noteholders seeking to accept
the Change of Control Offer. If on a Change of Control Purchase Date the
Company does not have available funds sufficient to pay the Change of Control
Purchase Price or is prohibited from purchasing the Notes, an Event of Default
will occur under the Indenture. The definition of "Change of Control" includes
an event by which the Company sells, conveys, transfers or leases all or
substantially all of its properties to any Person; the phrase "all or
substantially all" is subject to applicable legal precedent and as a result in
the future there may be uncertainty as to whether a Change of Control has
occurred.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer at the
same purchase price, at the same times and otherwise in substantial compliance
with the requirements applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
The Company intends to comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder, if applicable, in the event
that a Change of Control occurs and the Company is required to purchase Notes
as described above. The existence of a Holder's right to require, subject to
certain conditions, the Company to repurchase its Notes upon a Change of
Control may deter a third party from acquiring the Company in a transaction
that constitutes, or results in, a Change of Control.
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Limitation on Disposition of Proceeds of Asset Sales. (a) The Indenture
provides that the Company will not, and will not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the fair market value of the assets and
properties sold or otherwise disposed of pursuant to the Asset Sale (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and evidenced by a board resolution) and (ii) at least 75% of
the consideration received by the Company or the Restricted Subsidiary, as the
case may be, in respect of such Asset Sale consists of cash, Cash Equivalents
or the assumption by the purchaser of liabilities of the Company (other than
liabilities of the Company that are by their terms subordinated to the Notes)
or any Restricted Subsidiary as a result of which the Company and its
remaining Restricted Subsidiaries are no longer liable.
(b) If the Company or any Restricted Subsidiary engages in an Asset Sale,
the Company may either (x) apply the Net Cash Proceeds thereof to permanently
reduce Senior Indebtedness or to permanently reduce Guarantor Senior
Indebtedness, or (y) invest all or any part of the Net Cash Proceeds thereof,
within 365 days after such Asset Sale, in properties and assets which replace
the properties and assets that were the subject of the Asset Sale or in
properties and assets that will be used in the business of the Company or its
Restricted Subsidiaries, as the case may be ("Replacement Assets"). The amount
of such Net Cash Proceeds not applied or invested as provided in this
paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$15,000,000, the Company shall make an offer to purchase, from all Holders of
the Notes and any then outstanding Pari Passu Indebtedness required to be
repurchased or repaid on a permanent basis in connection with an Asset Sale,
an aggregate principal amount of Notes and any then outstanding Pari Passu
Indebtedness equal to such Excess Proceeds as follows:
(i) (A) the Company shall make an offer to purchase (a "Net Proceeds
Offer") from all Holders of the Notes in accordance with the procedures set
forth in the Indenture the maximum principal amount (expressed as a
multiple of $1,000) of Notes that may be purchased out of an amount (the
"Payment Amount") equal to the product of such Excess Proceeds multiplied
by a fraction, the numerator of which is the outstanding principal amount
of the Notes and the denominator of which is the sum of the outstanding
principal amount of the Notes and such Pari Passu Indebtedness, if any
(subject to proration in the event such amount is less than the aggregate
Offered Price (as defined herein) of all Notes tendered), and (B) to the
extent required by such Pari Passu Indebtedness and provided there is a
permanent reduction in the principal amount of such Pari Passu
Indebtedness, the Company shall make an offer to purchase Pari Passu
Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu
Indebtedness Amount") equal to the excess of the Excess Proceeds over the
Payment Amount.
(ii) The offer price for the Notes shall be payable in cash in an amount
equal to 100% of the principal amount of the Notes tendered pursuant to a
Net Proceeds Offer, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date such Net Proceeds Offer is consummated (the
"Offered Price"), in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate Offered Price of the Notes
tendered pursuant to a Net Proceeds Offer is less than the Payment Amount
relating thereto or the aggregate amount of the Pari Passu Indebtedness
that is purchased or repaid pursuant to the Pari Passu Offer is less than
the Pari Passu Indebtedness Amount (such shortfall constituting a "Net
Proceeds Deficiency"), the Company may use such Net Proceeds Deficiency, or
a portion thereof, for general corporate purposes, subject to the
limitations of the "Limitation on Restricted Payments" covenant.
(iii) If the aggregate Offered Price of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Payment Amount, Notes to be
purchased will be selected on a pro rata basis. Upon completion of such Net
Proceeds Offer and Pari Passu Offer, the amount of Excess Proceeds shall be
reset to zero.
The Company will not permit any Subsidiary to enter into or suffer to exist
any agreement that would place any restriction of any kind (other than
pursuant to law or regulation) on the ability of the Company to make a Net
Proceeds Offer following any Asset Sale. The Company intends to comply with
Rule 14e-1 under the Exchange Act, and any other securities laws and
regulations thereunder, if applicable, in the event that an Asset Sale occurs
and the Company is required to purchase Notes as described above.
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Limitation on Non-Guarantor Restricted Subsidiaries. (a) The Indenture
provides that the Company will not permit any Restricted Subsidiary that is
not a Subsidiary Guarantor to guarantee the payment of any Indebtedness of the
Company unless (i)(A) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to the Indenture providing for a Subsidiary
Guarantee of the Notes by such Restricted Subsidiary which Subsidiary
Guarantee will be subordinated to Guarantor Senior Indebtedness (but no other
Indebtedness) to the same extent that the Notes are subordinated to Senior
Indebtedness and (B), with respect to any guarantee of Subordinated
Indebtedness by a Restricted Subsidiary, any such guarantee shall be
subordinated to such Restricted Subsidiary's Subsidiary Guarantee at least to
the same extent as such Subordinated Indebtedness is subordinated to the
Notes; (ii) such Restricted Subsidiary waives, and agrees not in any manner
whatsoever to claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee until such time as the
obligations guaranteed thereby are paid in full; and (iii) such Restricted
Subsidiary shall deliver to the Trustee an opinion of independent legal
counsel to the effect that such Subsidiary Guarantee has been duly executed
and authorized and constitutes a valid, binding and enforceable obligation of
such Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; provided that
this paragraph (a) shall not be applicable to (1) any guarantee of any
Restricted Subsidiary that (x) existed at the time such Person became a
Restricted Subsidiary of the Company and (y) was not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary of
the Company or (2) any guarantee of any Restricted Subsidiary of Indebtedness
of the Company described in clause (i) of the definition of Permitted
Indebtedness.
(b) The Indenture provides that the Company shall not, and shall not permit
any of its Restricted Subsidiaries to, transfer any assets, businesses,
divisions, real property or equipment to any Restricted Subsidiary (other than
sales of oil and gas production in the ordinary course of business at prices
under contracts in existence as of the date of the Indenture or on terms not
less favorable to the Subsidiary than would be obtainable at the time in
comparable transactions through arms-length dealings with Persons other than
Affiliates of the Company or any transfer that results in Permitted Subsidiary
Indebtedness) or acquire Capital Stock of a new Restricted Subsidiary that in
either case is not a Subsidiary Guarantor unless (i) such transferee or new
Restricted Subsidiary enters into a Subsidiary Guarantee by complying with
paragraph (a) of this covenant or (ii) the aggregate fair market value (as
determined in good faith by the Board of Directors), at the time of such
proposed transfer or acquisition, of such assets, businesses, divisions, real
property or equipment proposed to be transferred or Capital Stock of a new
Restricted Subsidiary proposed to be acquired, together with the aggregate
fair market value of all assets, businesses, divisions, real property or
equipment previously transferred pursuant to this clause (ii) and Capital
Stock previously acquired pursuant to this clause (ii) (in each case valued at
the time of transfer or acquisition) does not exceed (x) the greater of
$35,000,000 and 5% of Adjusted Consolidated Net Tangible Assets less (y) the
book value of total combined assets of all Subsidiaries of the Company at
December 31, 1996, as reflected in a consolidating balance sheet of the
Company prepared in accordance with GAAP (exclusive, in the case of each of
clauses (x) and (y), of intercompany receivables and liabilities due from the
Company and assets subject to any Sale/Leaseback Transaction treated as an
operating lease in the consolidated financial statements of the Company);
provided that, in the case of clause (ii), if the Restricted Subsidiary to
which such transfer was made or whose Capital Stock was acquired subsequently
enters into a Subsidiary Guarantee, such transfer or acquisition shall be
treated as having been made pursuant to clause (i).
(c) Notwithstanding the foregoing and the other provisions of the Indenture,
any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant to the
covenant shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person that is not an Affiliate of the Company, of all of the
Company's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary (which sale, exchange or transfer is not prohibited by
the Indenture), (ii) the merger of such Restricted Subsidiary into the Company
or any other Restricted Subsidiary (provided the surviving Restricted
Subsidiary assumes the Subsidiary Guarantee) or the liquidation and
dissolution of such
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Restricted Subsidiary (in each case to the extent not prohibited by the
Indenture), or (iii) (x) the release or discharge of all guarantees by such
Restricted Subsidiary of any Indebtedness other than the Note Obligations,
except a discharge or release by or as a result of payment under such
guarantees and (y) after giving effect to the proposed release and discharge,
the aggregate total combined assets of all Restricted Subsidiaries that are
not Subsidiary Guarantors (exclusive of intercompany receivables and
liabilities due from the Company and assets subject to any Sale/Leaseback
Transaction treated as an operating lease in the consolidated financial
statements of the Company) do not exceed the greater of $35,000,000 and 5% of
Adjusted Consolidated Net Tangible Assets.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock to the Company or any
Restricted Subsidiary, (b) pay any Indebtedness owed to the Company or any
Restricted Subsidiary, (c) make an Investment in the Company or any Restricted
Subsidiary or (d) transfer any of its properties or assets to the Company or
any Restricted Subsidiary, except for such encumbrances or restrictions (i)
pursuant to an agreement in effect or entered into on the date of the
Indenture, (ii) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance or
restriction is not applicable to any other Person, or the properties or assets
of any other Person, other than the Person, or the property or assets of the
Person, so acquired or (iii) existing under any agreement that extends,
renews, refinances or replaces the agreements containing the restrictions in
the foregoing clauses (i) and (ii), provided that the terms and conditions of
any such restrictions are not materially less favorable to the Holders of the
Notes than those under or pursuant to the agreement evidencing the
Indebtedness so extended, renewed, refinanced or replaced.
Limitation on Other Senior Subordinated Indebtedness. The Indenture provides
that the Company will not incur, directly or indirectly, any Indebtedness
which is expressly subordinate or junior in right of payment in any respect to
Senior Indebtedness unless such Indebtedness ranks pari passu in right of
payment with the Notes, or is expressly subordinated in right of payment to
the Notes.
Reports. The Indenture requires that the Company (and the Subsidiary
Guarantors, if applicable) file on a timely basis with the Commission, to the
extent such filings are accepted by the Commission and whether or not the
Company has a class of securities registered under the Exchange Act, the
annual reports, quarterly reports and other documents that the Company would
be required to file if it were subject to Section 13 or 15(d) of the Exchange
Act). The Company (and the Subsidiary Guarantors, if applicable) is also
required (a) to file with the Trustee, and provide to each holder of Notes,
without cost to such holder, copies of such reports and documents within 15
days after the date on which the Company files such reports and documents with
the Commission or the date on which the Company (and the Subsidiary
Guarantors, if applicable) would be required to file such reports and
documents if the Company (and the Subsidiary Guarantors, if applicable) were
so required and (b) if filing such reports and documents with the Commission
is not accepted by the Commission or is prohibited under the Exchange Act, to
furnish at the Company's cost copies of such reports and documents to any
holder of Notes promptly upon written request. The Company is obligated to
make available, upon request, to any Holder of Notes the information required
by Rule 144A(d)(4) under the Securities Act, during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act.
Future Designation of Restricted and Unrestricted Subsidiaries. The
foregoing covenants (including calculation of financial ratios and the
determination of limitations on the incurrence of Indebtedness and Liens) may
be affected by the designation by the Company of any existing or future
Subsidiary of the Company as an Unrestricted Subsidiary. Generally, a
Restricted Subsidiary includes any Subsidiary of the Company, whether existing
on or after the date of the Indenture, unless the Subsidiary of the Company is
designated as an Unrestricted Subsidiary pursuant to the terms of the
Indenture. The definition of "Unrestricted Subsidiary" set forth under the
caption "--Certain Definitions" describes the circumstances under which a
future Subsidiary of the Company may be designated as an Unrestricted
Subsidiary by the Board of Directors of the Company.
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MERGER, CONSOLIDATION AND SALE OF ASSETS, ETC.
The Company will not, in any single transaction or series of related
transactions, merge or consolidate with or into any other Person, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially
all of its properties and assets to any Person or group of Affiliated Persons,
and the Company will not permit any of its Restricted Subsidiaries to enter
into any such transaction or series of transactions if such transaction or
series of transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all
of the properties and assets of the Company and its Restricted Subsidiaries on
a consolidated basis to any other Person or group of Affiliated Persons,
unless at the time and after giving effect thereto (i) either (A) if the
transaction or transactions is a merger or consolidation, the Company shall be
the surviving Person of such merger or consolidation, or (B) the Person (if
other than the Company) formed by such consolidation or into which the Company
or such Restricted Subsidiary is merged or to which the properties and assets
of the Company or such Restricted Subsidiary, as the case may be, are sold,
assigned, conveyed, transferred, leased or otherwise disposed of (any such
surviving Person or transferee Person being the "Surviving Entity") shall be a
corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall, in either
case, expressly assume by a supplemental indenture to the Indenture executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Notes and the Indenture, and, in each
case, the Indenture shall remain in full force and effect; (ii) immediately
before and immediately after giving effect to such transaction or series of
transactions on a pro forma basis (and treating any Indebtedness not
previously an obligation of Company or any of its Restricted Subsidiaries in
connection with or as a result of such transaction as having been incurred at
the time of such transaction), no Default or Event of Default shall have
occurred and be continuing; (iii) except in the case of the consolidation or
merger of any Restricted Subsidiary with or into the Company, immediately
after giving effect to such transaction or transactions on a pro forma basis,
the Consolidated Net Worth of the Company (or the Surviving Entity if the
Company is not the continuing obligor under the Indenture) is at least equal
to the Consolidated Net Worth of the Company immediately before such
transaction or transactions; (iv) except in the case of the consolidation or
merger of any Restricted Subsidiary with or into the Company or any Wholly
Owned Restricted Subsidiary, immediately before and immediately after giving
effect to such transaction or transactions on a pro forma basis (on the
assumption that the transaction or transactions occurred on the first day of
the period of four fiscal quarters ending immediately prior to the
consummation of such transaction or transactions, with the appropriate
adjustments with respect to the transaction or transactions being included in
such pro forma calculation), the Company (or the Surviving Entity if the
Company is not the continuing obligor under the Indenture) could incur $1.00
of additional Indebtedness (excluding Permitted Indebtedness) pursuant to the
"Limitation on Indebtedness" covenant; (v) each Subsidiary Guarantor, unless
it is the other party to the transactions described above, shall have by
supplemental indenture to the Indenture confirmed that its Subsidiary
Guarantee of the Notes shall apply to such Person's obligations under the
Indenture and the Notes; and (vi) if any of the properties or assets of the
Company or any of its Restricted Subsidiaries would upon such transaction or
series of related transactions become subject to any Lien (other than a
Permitted Lien), the creation and imposition of such Lien shall have been in
compliance with the "Limitation on Liens" covenant.
In connection with any consolidation, merger, transfer, lease or other
disposition contemplated hereby, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to
the Trustee, an Officers' Certificate stating that such consolidation, merger,
transfer, lease or other disposition and the supplemental indenture in respect
thereto comply with the requirements under the Indenture and an Opinion of
Counsel stating that the requirements of clause (i) of the preceding paragraph
have been complied with. Upon any consolidation or merger or any sale,
assignment, transfer, lease or other disposition of all or substantially all
of the assets of the Company in accordance with the foregoing, in which the
Company is not the continuing corporation, the Surviving Entity shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Indenture with the same effect as if such successor
corporation had been named as the Company therein, and thereafter the Company,
except in the case of a lease, will be discharged from all obligations and
covenants under the Indenture and the Notes.
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EVENTS OF DEFAULT
The following constitute "Events of Default" under the Indenture:
(i) default in the payment of the principal of or premium, if any, on any
of the Notes, whether such payment is due at maturity, upon redemption,
upon repurchase pursuant to a Change of Control Offer or a Net Proceeds
Offer, upon acceleration or otherwise; or
(ii) default in the payment of any installment of interest and Liquidated
Damages, if any, on any of the Notes, when it becomes due and payable, and
the continuance of such default for a period of 30 days; or
(iii) default in the performance or breach of the provisions of the
"Merger, Consolidation and Sale of Assets" section of the Indenture, the
failure to make or consummate a Change of Control Offer in accordance with
the provisions of the "Change of Control" covenant or the failure to make
or consummate a Net Proceeds Offer in accordance with the provisions of the
"Limitation on Disposition of Proceeds of Asset Sales" covenant; or
(iv) the Company or any Subsidiary Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in the Notes, any
Subsidiary Guarantee or the Indenture (other than a default specified in
(i), (ii) or (iii) above) for a period of 30 days after written notice of
such failure requiring the Company to remedy the same shall have been given
(x) to the Company by the Trustee or (y) to the Company and the Trustee by
the holders of at least 25% in aggregate principal amount of the Notes then
outstanding; or
(v) the occurrence and continuation beyond any applicable grace period of
any default in the payment of the principal of (or premium, if any, on) or
interest on any Indebtedness of the Company (other than the Notes) or any
Restricted Subsidiary for money borrowed when due, or any other default
causing acceleration of any Indebtedness of the Company or any Restricted
Subsidiary for money borrowed, provided that the aggregate principal amount
of such Indebtedness shall exceed $5,000,000; provided further that if any
such default is cured or waived or any such acceleration rescinded, or such
debt is repaid, within a period of 10 days from the continuation of such
default beyond the applicable grace period or the occurrence of such
acceleration, as the case may be, such Event of Default under the Indenture
and any consequential acceleration of the Notes shall be automatically
rescinded, so long as such rescission does not conflict with any judgment
or decree; or
(vi) the commencement of proceedings, or the taking of any enforcement
action (including by way of set-off), by any holder of at least $5,000,000
in aggregate principal amount of Indebtedness of the Company or any
Restricted Subsidiary, after a default under such Indebtedness, to retain
in satisfaction of such Indebtedness or to collect or seize, dispose of or
apply in satisfaction of such Indebtedness, property or assets of the
Company or any Restricted Subsidiary having a fair market value (as
determined by the Board of Directors of the Company and evidenced by a
board resolution) in excess of $5,000,000 individually or in the aggregate,
provided that if any such proceedings or actions are terminated or
rescinded, or such Indebtedness is repaid, such Event of Default under the
Indenture and any consequential acceleration of the Notes shall be
automatically rescinded, so long as (a) such rescission does not conflict
with any judgment or decree and (b) the holder of such Indebtedness shall
not have applied any such property or assets in satisfaction of such
Indebtedness; or
(vii) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to
be, in full force and effect, enforceable in accordance with its terms
(except pursuant to the release of any such Subsidiary Guarantee in
accordance with the Indenture); or
(viii) certain events giving rise to ERISA liability; or
(ix) final judgments or orders rendered against the Company or any
Restricted Subsidiary that are unsatisfied and that require the payment in
money, either individually or in an aggregate amount, that is more than
$5,000,000 over the coverage under applicable insurance policies and either
(i) commencement by any creditor of an enforcement proceeding upon such
judgment (other than a judgment that is stayed by reason of pending appeal
or otherwise) or (ii) the occurrence of a 60-day period during which a stay
of such judgment or order, by reason of pending appeal or otherwise, was
not in effect; or
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(x) the entry of a decree or order by a court having jurisdiction in the
premises (A) for relief in respect of the Company or any Restricted
Subsidiary in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar
law or (B) adjudging the Company or any Restricted Subsidiary bankrupt or
insolvent, or approving a petition seeking reorganization, arrangement,
adjustment or composition of the Company or a Restricted Subsidiary under
any applicable federal or state law, or appointing under any such law a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Restricted Subsidiary or of a
substantial part of their consolidated assets, or ordering the winding up
or liquidation of their affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
(xi) the commencement by the Company or any Restricted Subsidiary of a
voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or any other
case or proceeding to be adjudicated bankrupt or insolvent, or the consent
by the Company or any Restricted Subsidiary to the entry of a decree or
order for relief in respect thereof in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by
the Company or any Restricted Subsidiary of a petition or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by it under any such law to the filing of any such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or other similar official)
of any of the Company or any Restricted Subsidiary or of any substantial
part of their consolidated assets, or the making by it of an assignment for
the benefit of creditors under any such law, or the admission by it in
writing of its inability to pay its debts generally as they become due or
taking of corporate action by the Company or any Restricted Subsidiary in
furtherance of any such action.
If an Event of Default (other than as specified in clause (x) or (xi) above)
shall occur and be continuing, the Trustee, by written notice to the Company,
or the holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by notice to the Trustee and the Company, may declare the
principal of, premium, if any, and accrued interest and Liquidated Damages, if
any, on all of the outstanding Notes due and payable immediately, upon which
declaration all amounts payable in respect of the Notes shall be immediately
due and payable. If an Event of Default specified in clause (x) or (xi) above
occurs and is continuing, then the principal of, premium, if any, and accrued
interest on all of the outstanding Notes shall ipso facto become and be
immediately due and payable without any declaration, notice or other act on
the part of the Trustee or any holder of Notes.
After a declaration of acceleration under the Indenture, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company and the Trustee, may
rescind such declaration if (a) the Company or any Subsidiary Guarantor has
paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid
or advanced by the Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, (ii) all overdue interest on all Notes, (iii) the principal of
and premium, if any, on any Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the
Notes, and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue principal at the rate borne by the
Notes which has become due otherwise than by such declaration of acceleration;
(b) the rescission would not conflict with any judgment or decree of a court
of competent jurisdiction; and (c) all Events of Default, other than the
nonpayment of principal of, premium, if any, and interest on the Notes that
has become due solely by such declaration of acceleration, have been cured or
waived.
Under certain circumstances described in the Indenture, in the event of a
declaration of acceleration in respect of the Notes because of an Event of
Default specified in clauses (v) or (vi) above shall have occurred and be
continuing, such declaration of acceleration and any consequential
acceleration shall be automatically
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rescinded if the Indebtedness that is the subject of such Event of Default has
been repaid, or if the default relating to such Indebtedness is waived or
cured and if such Indebtedness had been accelerated, then the holders thereof
have rescinded their declaration of acceleration in respect of such
Indebtedness.
The holders of not less than a majority in aggregate principal amount of the
outstanding Notes may on behalf of the holders of all the Notes waive any past
defaults under the Indenture, except a default in the payment of the principal
of, premium, if any, or interest on any Note, or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the holder of each Note outstanding.
No holder of any of the Notes has any right to institute any proceeding with
respect to the Indenture or any remedy thereunder, unless the holders of at
least 25% in aggregate principal amount of the outstanding Notes have made
written request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as Trustee under the Notes and the Indenture, the Trustee has
failed to institute such proceeding within 60 days after receipt of such
notice and offer of indemnity and the Trustee, within such 60-day period, has
not received directions inconsistent with such written request by holders of a
majority in aggregate principal amount of the outstanding Notes. Such
limitations do not apply, however, 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 in such
Note.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case an Event of Default shall occur and be continuing, the
Trustee under the Indenture is not under any obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
Noteholders unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee under the Indenture.
If a Default or an Event of Default occurs and is continuing and is known to
the Trustee, the Trustee shall mail to each holder of the Notes notice of the
Default or Event of Default within 60 days after the occurrence thereof;
provided, however, that in case of a Default of the type listed in clause (v)
above, no notice to Holders shall be given until at least 60 days after the
occurrence thereof. Except in the case of a Default or an Event of Default in
payment of principal of, premium, if any, or interest on any Notes, the
Trustee may withhold the notice to the holders of such Notes if a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interest of the Noteholders.
The Company is required to furnish to the Trustee annual and quarterly
statements as to the performance by the Company and the Subsidiary Guarantors
of its obligations under the Indenture and as to any default in such
performance. The Company is also required to notify the Trustee within ten
days of any Default.
LEGAL DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, terminate the obligations of
the Company and the Subsidiary Guarantors with respect to the outstanding
Notes ("legal defeasance"). Such legal defeasance means that the Company and
the Subsidiary Guarantors shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes, except for (i) the
rights of holders of outstanding Notes to receive payment in respect of the
principal of, premium, if any, on and interest and Liquidated Damages, if any,
on such Notes when such payments are due, (ii) the Company's obligations to
issue temporary Notes, register the transfer or exchange of any Notes, replace
mutilated, destroyed, lost or stolen Notes and maintain an office or agency
for payments in respect of the Notes, (iii) the rights, powers, trusts, duties
and immunities of the Trustee, and (iv) the defeasance provisions of the
Indenture. In addition, the Company may, at its option and at any time, elect
to terminate the obligations of the Company and any Subsidiary Guarantor with
respect to certain covenants that are set forth in the Indenture, some of
which are described under "--Certain Covenants" above, and any omission to
comply with such obligations shall not constitute a Default or an Event of
Default with respect to the Notes ("covenant defeasance").
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In order to exercise either legal defeasance or covenant defeasance, (i) the
Company or any Subsidiary Guarantor must irrevocably deposit, with the
Trustee, in trust, for the benefit of the holders of the Notes, cash in United
States dollars, U.S. Government Obligations (as defined in the Indenture), or
a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, on and interest and Liquidated Damages, if any,
on the outstanding Notes to redemption or maturity; (ii) the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such legal defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
legal defeasance or covenant defeasance had not occurred (in the case of legal
defeasance, such opinion must refer to and be based upon a published ruling of
the Internal Revenue Service or a change in applicable federal income tax
laws); (iii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit; (iv) such legal defeasance or covenant
defeasance shall not cause the Trustee to have a conflicting interest under
the Indenture or the Trust Indenture Act with respect to any securities of the
Company or any Subsidiary Guarantor, (v) such legal defeasance or covenant
defeasance shall not result in a breach or violation of, or constitute a
default under, any material agreement or instrument to which the Company or
any Subsidiary Guarantor is a party or by which it is bound; and (vi) the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel satisfactory to the Trustee, which, taken together, state
that all conditions precedent under the Indenture to either legal defeasance
or covenant defeasance, as the case may be, have been complied with and that
no violations under agreements governing any other outstanding Indebtedness
would result therefrom.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable or will become due and payable at
their Stated Maturity within one year, or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the serving
of notice of redemption by the Trustee in the name, and at the expense, of the
Company, and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in an amounts sufficient to pay and discharge the
entire indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of (and premium, if any, on) and interest and
Liquidated Damages, if any, on the Notes to the date of deposit (in the case
of Notes which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be, together with instructions from the
Company irrevocably directing the Trustee to apply such funds to the payment
thereof at maturity or redemption, as the case may be, (ii) the Company has
paid all other sums payable under the Indenture by the Company; and (iii) the
Company has delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel satisfactory to the Trustee, which, taken together, state that all
conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.
AMENDMENTS AND WAIVERS
From time to time, the Company and the Trustee may, without the consent of
the Noteholders, amend, waive or supplement the Indenture or the Notes for
certain specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies, qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act of 1939, or making any change that
does not adversely affect the rights of any Noteholder. Other amendments and
modifications of the Indenture or the Notes may be made by the Company, the
Subsidiary Guarantors and the Trustee with the consent of the holders of not
less than a majority of the aggregate principal
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amount of the outstanding Notes; provided, however, that no such modification
or amendment may, without the consent of the holder of each outstanding Note
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on any Note, (b) reduce the principal amount of (or
the premium, if any, on) or interest on any Note, (c) change the coin or
currency of payment of principal of (or the premium, if any, on) or interest
on, any Note, (d) impair the right to institute suit for the enforcement of
any payment on or with respect to any Note, (e) reduce the above-stated
percentage of aggregate principal amount of outstanding Notes necessary to
modify or amend the Indenture, (f) reduce the percentage of aggregate
principal amount of outstanding Notes necessary for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults,
(g) modify any provisions of the Indenture relating to the modification and
amendment of the Indenture or the waiver of past defaults or covenants, except
as otherwise specified, (h) modify any provision of the Indenture relating to
the Subsidiary Guarantees in a manner adverse to the Holders, or (i) amend,
change or modify the obligation of the Company to make and consummate a Change
of Control Offer in the event of a Change of Control or make and consummate
the Net Proceeds Offer with respect to any Asset Sale or modify any of the
provisions or definitions with respect thereto.
The Holders of a majority in aggregate principal amount of the outstanding
Notes may waive compliance by the Company with certain restrictive provisions
of the Indenture. The Holders of a majority in aggregate principal amount of
the outstanding Notes may waive any past default under the Indenture, except a
default in the payment of principal (or premium, if any, on) or interest on
the Notes.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent Person would exercise under the circumstances in the
conduct of such Person's own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as amended,
contain limitations on the rights of the Trustee thereunder, should it become
a creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received by it in respect of any such claims, as
security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined) it must eliminate such conflict or resign.
GOVERNING LAW
The Indenture, the Notes and the Subsidiary Guarantees provide that they
will be governed by the laws of the State of New York, without regard to the
principles of conflicts of law.
BOOK-ENTRY, DELIVERY AND FORM
A portion of the Old Notes was represented initially by a single global Note
(the "Global Old Note") that was deposited with, or on behalf of, The
Depository Trust Company ("DTC"). The Global Old Note is registered in the
name of Cede & Co., as nominee of the DTC, and beneficial interests in the
Global Old Note are shown on, and transfers thereof are effected only through,
records maintained by DTC and its participants. Except as provided below, the
New Notes also will be issued in the form of one or more global Notes (the
"Global New Notes" and, together with the Global Old Note, the "Global
Notes"). The Global New Notes will be deposited on the original date of
issuance of the New Notes with, or on behalf of, DTC and registered in the
name of Cede & Co., as nominee of DTC. The interest of beneficial owners of
Notes in the Global Notes will be represented through financial institutions
acting on their behalf as direct or indirect participants of DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the
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Global Notes will be shown on, and the transfer of these ownership interests
will be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with
respect to interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. In addition, no beneficial owner
of an interest in a Global Note will be able to transfer that interest except
in accordance with the applicable procedures of DTC and, if applicable, Cedel,
societe anonyme ("Cedel"), and Morgan Guaranty Trust Company of New York, as
operator of the Euroclear system ("Euroclear") (in addition to those under the
Indenture).
Payments on Global Notes will be made to DTC, or its nominee, as the
registered owner thereof. None of the Company, the Trustee or any paying agent
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. The Company expects that DTC
or its nominee, upon receipt of any payment in respect of a Global Note
representing any Notes held by it or its nominee, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note
for such Notes as shown on the records of DTC or its nominee. The Company also
expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. The laws of some states require that certain
Persons take physical delivery of securities in definitive form. Consequently,
the ability to transfer beneficial interests in a Global Note to such Persons
may be limited. Because DTC can only act on behalf of participants, who in
turn act on behalf of indirect participants (as defined below) and certain
banks, the ability of a Person having a beneficial interest in a Global Note
to pledge such interest to Persons that do not participate in the DTC system,
or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate of such interest.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities that its
participants deposit with DTC and facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a direct participant, either
directly or indirectly ("indirect participants"). The rules applicable to DTC
and its participants are on file with the Commission. Although DTC, Euroclear
and Cedel are expected to follow the foregoing procedures in order to
facilitate transfers of interests in the Global Notes among participants of
DTC, Euroclear and Cedel, they are under no obligation to perform or continue
to perform such procedures, and such procedures may be discontinued at any
time. Neither the Company nor the Trustee will have any responsibility for the
performance by DTC, Euroclear or Cedel or the participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED SECURITIES
Subject to certain conditions, any Person having a beneficial interest in a
Global Note may, upon request to the Company or the Trustee, exchange such
beneficial interest for Notes represented by Certificates in definitive
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form registered in the name of such Person or such Person's nominee
("Certificated Notes"). Upon any such issuance, the Trustee is required to
register such Notes in the name of, and cause the same to be delivered to,
such Person or Persons (or the nominee of any thereof). In addition, if (i)
DTC notifies the Company in writing that it is no longer willing or able to
act as a depositary and the Company is unable to locate a qualified successor
within 90 days or (ii) the Company, at its option, notifies the Trustee in
writing that it elects to cause the issuance of Notes in the form of
Certificated Notes under the Indenture, then, upon surrender by DTC of its
Global Note, Certificated Notes will be issued to each Person that DTC
identifies as the beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by DTC in
identifying the beneficial owners of the related Notes, and the Company and
the Trustee may conclusively rely on, and will be protected in relying on,
instructions from DTC for all purposes (including with respect to the
registration and delivery, and the respective principal amounts, of the Notes
to be issued).
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
In connection with the initial issuance and sale of the Old Notes, the
Company entered into the Registration Rights Agreement pursuant to which the
Company agreed to file with the Commission the Exchange Offer Registration
Statement on the appropriate form under the Securities Act with respect to the
New Notes. If (i) the Company is not permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy, (ii) any Noteholder notifies the Company prior to the 20th
day following consummation of the Exchange Offer that (A) it is prohibited by
law or Commission policy from participating in the Exchange Offer or (B) that
it may not resell the New Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales or (C) that it is a broker-dealer and owns Old Notes acquired directly
from the Company or an affiliate of the Company, (iii) for any other reason
the Exchange Offer Registration Statement is not declared effective within 120
days after the original issuance of the Old Notes (the "Closing Date") or the
Exchange Offer is not consummated within 30 business days after the
effectiveness of the Exchange Offer Registration Statement or (iv) at the
request of Lehman Brothers Inc. under certain conditions, then the Company
will file with the Commission a Shelf Registration Statement to cover resales
of the Old Notes by the Holders thereof who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement. The Company will use its reasonable best efforts to
cause the applicable registration statement to be declared effective as
promptly as possible by the Commission.
The Registration Rights Agreement provides that to the extent permitted by
applicable law or Commission policy, the Company will use its reasonable best
efforts to (i) file an Exchange Offer Registration Statement with the
Commission on or prior to 60 days after the Closing Date, (ii) have the
Exchange Offer Registration Statement declared effective by the Commission on
or prior to 120 days after the Closing Date, (iii) consummate the Exchange
Offer on the earliest practicable date after the Exchange Offer Registration
Statement is declared effective by the Commission, but not later than 30
business days thereafter and (iv) if obligated to file the Shelf Registration
Statement, file the Shelf Registration Statement with the Commission as
promptly as practicable, cause the Shelf Registration Statement to be declared
effective by the Commission on or prior to 90 days after such obligation
arises and keep the Shelf Registration Statement effective for two years or
such shorter period ending when all of the Notes have been sold thereunder. If
(a) the Company fails to file any of the Registration Statements required by
the Registration Rights Agreement on or before the date specified above for
such filing, (b) any of such Registration Statements is not declared effective
by the Commission on or prior to the date specified for such effectiveness
(the "Effectiveness Target Date"), (c) the Company fails to consummate the
Exchange Offer within 30 business days of the Effectiveness Target Date with
respect to the Exchange Offer Registration Statement, or (d) the Shelf
Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or use of the
prospectus is suspended in connection with resales of Old Notes during the
periods specified in the Registration Rights Agreement (each such event
referred to in clauses (a) through (d) above a "Registration Default"), then
the Company will pay Liquidated Damages to each Holder of Old Notes with
respect to the first 90-day period immediately following the occurrence of the
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first Registration Default in an amount equal to $.05 per week per $1,000
principal amount of Old Notes held by such Holder. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Old Notes with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 principal amount of Old Notes;
provided that Liquidated Damages will not accrue for more than one
Registration Default at any given time. All accrued Liquidated Damages will be
paid by the Company on each Interest Payment Date to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Old Notes by wire transfer to the accounts specified
by them or by mailing checks to their registered addresses if no such accounts
have been specified. Following the cure of all Registration Defaults, the
accrual of Liquidated Damages will cease.
Noteholders will be required to make certain representations to the Company
(as described in the Registration Rights Agreement) in order to participate in
the Exchange Offer and will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on
the Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Notes included in the
Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Asset Acquisition from such Person, (b) outstanding at the
time such Person becomes a Subsidiary of any other Person (other than any
Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such Person becoming such a Subsidiary) or (c) any renewals,
extensions, substitutions, refinancings or replacements (each, for purposes of
this clause, a "refinancing") by the Company of any Indebtedness described in
clause (a) or (b) of this definition, including any successive refinancings,
so long as (A) any such new Indebtedness shall be in a principal amount that
does not exceed the principal amount (or, if such Indebtedness being
refinanced provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration thereof, such lesser amount
as of the date of determination) so refinanced plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms
of the Indebtedness refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing, plus
the amount of expenses of the Company incurred in connection with such
refinancing, and (B) in the case of any refinancing of Subordinated
Indebtedness, such new Indebtedness is made subordinate to the Notes at least
to the same extent as the Indebtedness being refinanced and (C) such new
Indebtedness has an Average Life longer than the Average Life of the Notes and
a final Stated Maturity later than the final Stated Maturity of the Notes.
"Adjusted Consolidated Net Tangible Assets" means (without duplication), as
of the date of determination, (a) the sum of (i) discounted future net
revenues from proved oil and gas reserves of the Company and its Restricted
Subsidiaries calculated in accordance with SEC guidelines before any state or
federal income taxes, as estimated by a nationally recognized firm of
independent petroleum engineers in a reserve report prepared as of the end of
the Company's most recently completed fiscal year, as increased by, as of the
date of determination, the estimated discounted future net revenues from (A)
estimated proved oil and gas reserves acquired since the date of such year-end
reserve report, and (B) estimated oil and gas reserves attributable to 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 SEC 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 (C) estimated proved oil and gas reserves produced or disposed
of since the date of such year-end reserve report and (D) estimated oil and
gas reserves attributable to downward revisions of estimates of proved oil and
gas reserves since the date of such year-end reserve report due to 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 SEC guidelines (utilizing the prices utilized in such year-end
reserve report); provided that, in the case of each of the determinations made
pursuant to clauses (A) through
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(D), such increases and decreases shall be as estimated by the Company's
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 clause (a)(i) shall be
confirmed in writing by a nationally recognized firm of independent petroleum
engineers, (ii) the capitalized costs that are attributable to oil and gas
properties of the Company and its Restricted Subsidiaries to which no proved
oil and gas reserves are attributable, based on the Company's books and
records as of a date no earlier than the date of the Company's latest annual
or quarterly financial statements, (iii) the Net Working Capital on a date no
earlier than the date of the Company's latest annual or quarterly financial
statements and (iv) the greater of (A) the net book value on a date no earlier
than the date of the Company's latest annual or quarterly financial statements
or (B) the appraised value, as estimated by independent appraisers, of other
tangible assets (including, without duplication, Investments in unconsolidated
Restricted Subsidiaries) of the Company and its Restricted Subsidiaries, as of
the date no earlier than the date of the Company's latest audited financial
statements, minus (b) the sum of (i) minority interests (other than a minority
interest in a Subsidiary that is a business trust or similar entity formed for
the primary purpose of issuing preferred securities the proceeds of which are
loaned to the Company or a Restricted Subsidiary), (ii) any net gas balancing
liabilities of the Company and its Restricted Subsidiaries reflected in the
Company's latest audited financial statements, (iii) to the extent included in
(a)(i) above, the discounted future net revenues, calculated in accordance
with SEC guidelines (utilizing the prices utilized in the Company's year-end
reserve report), attributable to reserves which are required to be delivered
to third parties to fully satisfy the obligations of the Company and its
Restricted Subsidiaries with respect to Volumetric Production Payments on the
schedules specified with respect thereto and (iv) the discounted future net
revenues, calculated in accordance with SEC guidelines, attributable to
reserves subject to Dollar-Denominated Production Payments which, based on the
estimates of production and price assumptions included in determining the
discounted future net revenues specified in (a)(i) above, would be necessary
to fully satisfy the payment obligations of the Company and its Restricted
Subsidiaries with respect to Dollar-Denominated Production Payments on the
schedules specified with respect thereto. If the Company changes its method of
accounting from the successful efforts method to the full cost method or a
similar method of accounting, "Adjusted Consolidated Net Tangible Assets" will
continue to be calculated as if the Company were still using the successful
efforts method of accounting.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any Person, means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of this definition, beneficial ownership of 10% or
more of the voting common equity (on a fully diluted basis) or options or
warrants to purchase such equity (but only if exercisable at the date of
determination or within 60 days thereof) of a Person shall be deemed to
constitute control of such Person. No Person shall be deemed an Affiliate of
an oil and gas royalty trust solely by virtue of ownership of units of
beneficial interest in such trust.
"Asset Acquisition" means (a) an Investment by the Company or any Restricted
Subsidiary in any other Person pursuant to which such Person shall become a
Restricted Subsidiary or any Restricted Subsidiary shall be merged with or
into the Company or any Restricted Subsidiary or (b) the acquisition by the
Company or any Restricted Subsidiary of the assets of any Person which
constitute all or substantially all of the assets of such Person or any
division or line of business of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by means of a Sale/Leaseback
Transaction or by way of merger or consolidation) (collectively, for purposes
of this definition, a "transfer"), directly or indirectly, in one or a series
of related transactions, of (a) any Capital Stock of any Restricted Subsidiary
held by the Company or any Restricted Subsidiary; (b) all or substantially all
of the properties and assets of any division or line of business of the
Company or any of its Restricted Subsidiaries; or
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(c) any other properties or assets of the Company or any of its Restricted
Subsidiaries other than a disposition of hydrocarbons or other mineral
products in the ordinary course of business. For the purposes of this
definition, the term "Asset Sale" shall not include (i) any transfer of
properties or assets that is governed by, and made in accordance with, the
provisions described under "Merger, Consolidation and Sale of Assets, Etc.;"
(ii) any transfer of properties or assets to an Unrestricted Subsidiary, if
permitted under the provisions described under "Limitation on Restricted
Payments"; (iii) any trade or exchange of oil and gas properties or shares of
Capital Stock in any corporation in the Oil and Gas Business owned by the
Company or any Restricted Subsidiary for oil and gas properties owned or held
by another Person provided that (x) the fair market value of the properties or
shares traded or exchanged by the Company or such Restricted Subsidiary
(including any cash or Cash Equivalents, not to exceed 15% of such fair market
value, to be delivered by the Company or such Restricted Subsidiary) is
reasonably equivalent to the fair market value of the properties (together
with any cash or Cash Equivalents, not to exceed 15% of such fair market
value) to be received by the Company or such Restricted Subsidiary as
determined in good faith by (A) any officer of the Company if such fair market
value is less than $5,000,000 and (B) the Board of Directors of the Company as
certified by a certified resolution delivered to the Trustee if such fair
market value is equal to or in excess of $5,000,000; provided that if such
resolution indicates that such fair market value is equal to or in excess of
$10,000,000 such resolution shall be accompanied by a written appraisal by a
nationally recognized investment banking firm or appraisal firm, in each case
specializing or having a speciality in oil and gas properties, and (y) such
exchange is approved by a majority of the Disinterested Directors of the
Company; or (iv) any transfer of properties or assets having a fair market
value of less than $2,000,000.
"Attributable Indebtedness" means, with respect to any particular lease
under which any Person is at the time liable and at any date as of which the
amount thereof is to be determined, the present value of the total net amount
of rent required to be paid by such Person under the lease during the primary
term thereof, without giving effect to any renewals at the option of the
lessee, discounted from the respective due dates thereof to such date of
determination at the rate of interest per annum implicit in the terms of the
lease. As used in the preceding sentence, the "net amount of rent" under any
lease for any such period shall mean the sum of rental and other payments
required to be paid with respect to such period by the lessee thereunder,
excluding any amounts required to be paid by such lessee on account of
maintenance and repairs, insurance, taxes, assessments, water rates or similar
charges. In the case of any lease which is terminable by the lessee upon
payment of a penalty, such net amount of rent shall also include the amount of
such penalty, but no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so terminated.
"Average Life" means, with respect to any Indebtedness, as at any date of
determination, the quotient obtained by dividing (a) the sum of the products
of (i) the number of years (and any portion thereof) from the date of
determination to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund or mandatory
redemption payment requirements) of such Indebtedness multiplied by (ii) the
amount of each such principal payment by (b) the sum of all such principal
payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options
exercisable for, exchangeable for or convertible into such an equity interest
in such Person.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purpose of the Indenture, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with
GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with a maturity of
365 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America is pledged in
support thereof); (ii) demand
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and time deposits and certificates of deposit or acceptances with a maturity
of 365 days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided
profits of not less than $500,000,000; (iii) commercial paper with a maturity
of 365 days or less issued by a corporation that is not an Affiliate of the
Company and is organized under the laws of any state of the United States or
the District of Columbia and rated at least A-1 by S&P or at least P-1 by
Moody's; (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any commercial bank meeting the specifications of clause (ii) above;
and (v) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in clause (ii) above.
"Change of Control" means the occurrence of any of the following events: (a)
any "person" or "group" (as such terms are used in Sections 13(d)(3) or
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than
40% of the total voting power of the outstanding Voting Stock of the Company;
(b) the Company is merged with or into or consolidated with another Person
and, immediately after giving effect to the merger or consolidation, (A) less
than 50% of the total voting power of the outstanding Voting Stock of the
surviving or resulting Person is then "beneficially owned" (within the meaning
of Rule 13d-3 under the Exchange Act) in the aggregate by (x) the stockholders
of the Company immediately prior to such merger or consolidation, or (y) if a
record date has been set to determine the stockholders of the Company entitled
to vote with respect to such merger or consolidation, the stockholders of the
Company as of such record date and (B) any "person" or "group" (as such terms
are used in Sections 13(d)(3) or 14(d)(2) of the Exchange Act) has become the
direct or indirect "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 40% of the total voting power of the Voting Stock
of the surviving or resulting Person; (c) the Company, either individually or
in conjunction with one or more Restricted Subsidiaries, sells, conveys,
transfers or leases, or the Restricted Subsidiaries sell, convey, transfer or
lease, all or substantially all of the assets of the Company and the
Restricted Subsidiaries, taken as a whole (either in one transaction or a
series of related transactions), including Capital Stock of the Restricted
Subsidiaries, to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary); (d) during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by
such Board of Directors or whose nomination for election by the stockholders
of the Company was approved by a vote of 66 2/3% of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then
in office; or (e) the liquidation or dissolution of the Company.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of (a) the sum of Consolidated Net Income, Consolidated Interest Expense,
Consolidated Income Tax Expense and Consolidated Non-cash Charges deducted in
computing Consolidated Net Income, in each case, for such period, of the
Company and its Restricted Subsidiaries on a consolidated basis, all
determined in accordance with GAAP, decreased (to the extent included in
determining Consolidated Net Income) by the sum of (x) the amount of deferred
revenues that are amortized during such period and are attributable to
reserves that are subject to Volumetric Production Payments and (y) amounts
recorded in accordance with GAAP as repayments of principal and interest
pursuant to Dollar-Denominated Production Payments, to (b) the sum of such
Consolidated Interest Expense for such period; provided that (i) in making
such computation, the Consolidated Interest Expense attributable to interest
on any Indebtedness required to be computed on a pro forma basis in accordance
with clause (x) of the "Limitation on Indebtedness" covenant and bearing a
floating interest rate shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period, (ii) in
making such computation, the Consolidated Interest Expense attributable to
interest on any Indebtedness under a revolving credit facility required to be
computed on a pro forma basis in accordance with clause (x) of the
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"Limitation on Indebtedness" covenant shall be computed based upon the average
daily balance of such Indebtedness during the applicable period, provided that
such average daily balance shall be reduced by the amount of any repayment of
Indebtedness under a revolving credit facility during the applicable period,
which repayment permanently reduced the commitments or amounts available to be
reborrowed under such facility, (iii) notwithstanding clauses (i) and (ii) of
this proviso, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to Interest Rate
Protection Obligations, shall be deemed to have accrued at the rate per annum
resulting after giving effect to the operation of such agreements and (iv) in
making such calculation, Consolidated Interest Expense shall exclude interest
attributable to Dollar-Denominated Production Payments.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries for such period as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of (i) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net cost under Interest Rate Protection Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and (e) all accrued interest, in each case to the extent
attributable to such period, (ii) to the extent any Indebtedness of any Person
(other than the Company or a Restricted Subsidiary) is guaranteed by the
Company or any Restricted Subsidiary, the aggregate amount of interest paid or
accrued by such other Person during such period attributable to any such
Indebtedness, in each case to the extent attributable to that period, (iii)
the aggregate amount of the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the
Company and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP and (iv) the aggregate amount of
dividends paid or accrued on Redeemable Capital Stock or Preferred Stock of
the Company and its Restricted Subsidiaries, to the extent such Redeemable
Capital Stock or Preferred Stock is owned by Persons other than Restricted
Subsidiaries.
"Consolidated Net Income" means, for any period, the consolidated net income
(or loss) of the Company and its Restricted Subsidiaries for such period as
determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto),
(b) net after-tax gains or losses (less all fees and expenses relating
thereto) attributable to Asset Sales, (c) the net income (or net loss) of any
Person (other than the Company or any of its Restricted Subsidiaries), in
which the Company or any of its Restricted Subsidiaries has an ownership
interest, except to the extent of the amount of dividends or other
distributions actually paid to the Company or its Restricted Subsidiaries in
cash by such other Person during such period (regardless of whether such cash
dividends, distributions or interest on indebtedness is attributable to net
income (or net loss) of such Person during such period or during any prior
period), (d) net income (or net loss) of any Person combined with the Company
or any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (e) the net
income of any Restricted Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary is
not at the date of determination permitted, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (f) income resulting from transfers
of assets received by the Company or any Restricted Subsidiary from an
Unrestricted Subsidiary and (g) any write-downs of non-current assets;
provided, however, that any ceiling limitation write-downs under SEC
guidelines shall be treated as capitalized costs, as if such write-downs had
not occurred.
"Consolidated Net Worth" means, at any date, the consolidated stockholders'
equity of the Company less the amount of such stockholders' equity
attributable to Redeemable Capital Stock or treasury stock of the Company and
its Restricted Subsidiaries, as determined in accordance with GAAP.
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"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization, impairment and other non-cash expenses
(including any exploration expense) of the Company and its Restricted
Subsidiaries reducing Consolidated Net Income for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such non-cash charge
which requires an accrual of or reserve for cash charges for any future
period).
"Credit Agreement" means the Revolving Credit Agreement dated May 28, 1997
among the Company and Morgan Guaranty Trust Company of New York and
NationsBank of Texas, N.A., as co-agents, and the other banks specified
therein, as such agreement may be amended, modified, supplemented, extended,
restated, replaced (including replacement after the termination of such
agreement), restructured, increased, renewed or refinanced from time to time
in one or more credit agreements, loan agreements, instruments or similar
agreements, as such may be further amended, modified, supplemented, extended,
restated, replaced (including replacement after the termination of such
agreement), restructured, increased, renewed or refinanced from time to time.
"Credit Agreement Obligations" means all monetary obligations of every
nature of the Company or a Restricted Subsidiary, including, without
limitation, obligations to pay principal and interest, reimbursement
obligations under letters of credit, fees, expenses and indemnities, from time
to time owed to the lenders or any agent under or in respect of the Credit
Agreement.
"Default" means any event, act or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness
constituting Credit Agreement Obligations and (ii) any other Senior
Indebtedness which (a) at the time of incurrence equals or exceeds $10,000,000
in aggregate principal amount and (b) is specifically designated by the
Company in the instrument evidencing such Senior Indebtedness as "Designated
Senior Indebtedness" for purpose of the Indenture.
"Disinterested Director" means, with respect to any transaction or series of
transactions in respect of which the Board of Directors of the Company is
required to deliver a resolution of the Board of Directors under the
Indenture, a member of the Board of Directors of the Company who does not have
any material direct or indirect financial interest (other than an interest
arising solely from the beneficial ownership of Capital Stock of the Company)
in or with respect to such transaction or series of transactions.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Event of Default" has the meaning set forth above under the caption "Events
of Default."
"GAAP" means generally accepted accounting principles, consistently applied,
that are set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as may be approved by a
significant segment of the accounting profession of the United States of
America, which are applicable as of the date of the Indenture.
"Guarantee" means, as applied to any obligation, (i) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (ii) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. When used as a verb,
"guarantee" shall have a corresponding meaning.
"Guarantor Senior Indebtedness" means all Indebtedness of a Subsidiary
Guarantor created, incurred, assumed or guaranteed by such Subsidiary
Guarantor (and all renewals, substitutions, refinancings or
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replacements thereof) (including the principal of, interest on and fees,
premiums, expenses (including costs of collection), indemnities and other
amounts payable in connection with, such Indebtedness) (and including, in the
case of the Credit Agreement, interest accruing after the filing of a petition
by or against such Subsidiary Guarantor under any bankruptcy law, in
accordance with and at the rate, including any default rate, specified with
respect to such Indebtedness, whether or not a claim for such interest is
allowed as a claim after such filing in any proceeding under such bankruptcy
law), unless the instrument governing such Indebtedness expressly provides
that such Indebtedness is not senior in right of payment to its Subsidiary
Guarantee. Notwithstanding the foregoing, Guarantor Senior Indebtedness of a
Subsidiary Guarantor will not include (i) Indebtedness of such Subsidiary
Guarantor evidenced by its Subsidiary Guarantee, (ii) Indebtedness of such
Subsidiary Guarantor that is expressly subordinated or junior in right of
payment to any Guarantor Senior Indebtedness of such Subsidiary Guarantor or
its Subsidiary Guarantee, (iii) Indebtedness which, when incurred and without
respect to any election under Section 1111(b) of Title 11 United States Code,
is by its terms without recourse to such Subsidiary Guarantor, (iv) any
repurchase, redemption or other obligation in respect of Redeemable Capital
Stock of such Subsidiary Guarantor, (v) to the extent it might constitute
Indebtedness, any liability for federal, state, local or other taxes owed or
owing by such Subsidiary Guarantor, (vi) Indebtedness of such Subsidiary
Guarantor to the Company or any of the Company's other Subsidiaries or any
other Affiliate of the Company or any of such Affiliate's Subsidiaries, and
(vii) that portion of any Indebtedness of such Subsidiary Guarantor which at
the time of issuance is issued in violation of the Indenture (but, as to any
such Indebtedness, no such violation shall be deemed to exist for purposes of
this clause (vii) if the holder(s) of such Indebtedness or their
representative or such Subsidiary Guarantor shall have furnished to the
Trustee an opinion of counsel unqualified in all material respects of
independent legal counsel, addressed to the Trustee (which legal counsel may,
as to matters of fact, rely upon a certificate of such Subsidiary Guarantor)
to the effect that the incurrence of such Indebtedness does not violate the
provisions of such Indenture); provided that the foregoing exclusions shall
not affect the priorities of any Indebtedness arising solely by operation of
law in any case or proceeding or similar event described in clause (a), (b) or
(c) of the second paragraph of "--Subordination."
"Holder" or "Noteholder" means a Person in whose name a Note is registered
in the Note Register and, after the Exchange Offer, a person in whose name an
Exchange Note is registered in the Note Register.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade accounts payable and other
accrued current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of
such Person in connection with any letters of credit, bankers' acceptance or
other similar credit transaction and in connection with any agreement to
purchase, redeem, exchange, convert or otherwise acquire for value any Capital
Stock of such Person, or any warrants, rights or options to acquire such
Capital Stock, now or hereafter outstanding, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (b) all obligations of such Person evidenced
by bonds, notes, debentures or other similar instruments, if, and to the
extent, any of the foregoing would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, (c) all Indebtedness of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even if the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), but excluding
trade accounts payable arising in the ordinary course of business, (d) all
Capitalized Lease Obligations of such Person, (e) the Attributable
Indebtedness (in excess of any related Capitalized Lease Obligations) related
to any Sale/Leaseback Transaction of such Person, (f) all Indebtedness
referred to in the preceding clauses of other Persons and all dividends of
other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness (the amount of
such obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (g) all guarantees by such
Person of Indebtedness referred to in this definition (including, with respect
to any Production Payment, any warranties or guaranties of production or
payment by such Person with respect
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to such Production Payment but excluding other contractual obligations of such
Person with respect to such Production Payment), (h) all Redeemable Capital
Stock of such Person valued at the greater of its voluntary or involuntary
maximum fixed repurchase price plus accrued dividends, (i) all obligations of
such Person under or in respect of currency exchange contracts and Interest
Rate Protection Obligations and (j) any amendment, supplement, modification,
deferral, renewal, extension or refunding of any liability of such Person of
the types referred to in clauses (a) through (i) above. For purposes hereof,
the "maximum fixed repurchase price" of any Redeemable Capital Stock which
does not have a fixed repurchase price shall be calculated in accordance with
the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based upon, or
measured by, the fair market value of such Redeemable Capital Stock, such fair
market value shall be determined in good faith by the board of directors of
the issuer of such Redeemable Capital Stock, provided, however, that if such
Redeemable Capital Stock is not at the date of determination permitted or
required to be repurchased, the "maximum fixed repurchase price" shall be the
book value of such Redeemable Capital Stock. Subject to clause (g) of the
first sentence of this definition, neither Dollar-Denominated Production
Payments nor Volumetric Production Payments shall be deemed to be
Indebtedness.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and includes, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to
protect against or manage such Person's and any of its Subsidiaries' exposure
to fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or
capital contribution to (by means of any transfer of cash or other property or
assets to others or any payment for property, assets or services for the
account or use of others), or any purchase or acquisition by such Person of
any Capital Stock, bonds, notes, debentures or other securities (including
derivatives) or evidences of Indebtedness issued by, any other Person. In
addition, the fair market value of the net assets of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary shall be deemed to be an "Investment" made by the Company in such
Unrestricted Subsidiary at such time. "Investments" shall exclude (a)
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices and (b) Interest Rate Protection Obligations entered
into in the ordinary course of business or as required by any Permitted
Indebtedness or any Indebtedness incurred in compliance with the "Limitation
on Indebtedness" covenant, but only to the extent that the notional principal
amount of such Interest Rate Protection Obligations does not exceed 105% of
the principal amount of such Indebtedness to which such Interest Rate
Protection Obligations relate and (c) bonds, notes, debentures or other
securities received in compliance with the "Limitation on Disposition of
Proceeds of Asset Sales" covenant.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance or similar agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any agreement to give or grant a Lien or any lease, conditional
sale or other title retention agreement having substantially the same economic
effect as any of the foregoing) upon or with respect to any property of any
kind. A Person shall be deemed to own subject to a Lien any property which
such Person has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.
"Liquidated Damages" has the meaning set forth under the caption
"Registration Rights; Liquidated Damages."
"Material Change" means an increase or decrease (excluding changes that
result solely from changes in prices) of more than 50% during a fiscal quarter
in the estimated discounted future net cash flows from proved oil and gas
reserves of the Company and its Restricted Subsidiaries, calculated in
accordance with clause (a) (i)
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of the definition of Adjusted Consolidated Net Tangible Assets; provided,
however, that the following will be excluded from the calculation of Material
Change: (i) any acquisitions during the quarter of oil and gas reserves that
have been estimated by a nationally recognized firm of independent petroleum
engineers and on which a report or reports exist and (ii) any disposition of
properties held at the beginning of such quarter that have been disposed of as
provided in the "Limitation on Disposition of Proceeds of Asset Sales"
covenant.
"Maturity" means, with respect to any Note, the date on which any principal
of such Note becomes due and payable as provided therein or in the Indenture,
whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary), net of (i)
brokerage commissions and other fees and expenses (including fees and expenses
of legal counsel and investment banks) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) amounts
required to be paid to any Person (other than the Company or any Restricted
Subsidiary) owning a beneficial interest in the assets subject to the Asset
Sale and (iv) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve required in accordance
with GAAP consistently applied against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as the
case may be, after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as reflected in an Officers' Certificate
delivered to the Trustee; provided, however, that any amounts remaining after
adjustments, revaluations or liquidations of such reserves shall constitute
Net Cash Proceeds.
"Net Working Capital" means (i) all current assets of the Company and its
Restricted Subsidiaries, minus (ii) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in financial statements of the Company
prepared in accordance with GAAP.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or a Restricted Subsidiary incurred in connection
with the acquisition by the Company or a Restricted Subsidiary of any property
or assets and as to which (a) the holders of such Indebtedness agree that they
will look solely to the property or assets so acquired and securing such
Indebtedness for payment on or in respect of such Indebtedness and (b) no
default with respect to such Indebtedness would permit (after notice or
passage of time or both), according to the terms thereof, any holder of any
Indebtedness of the Company or a Restricted Subsidiary to declare a default on
such Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.
"Note Register" means the register maintained by or for the Company in which
the Company shall provide for the registration of the Notes and, after the
Exchange Offer, the Exchange Notes and of transfer of the Notes and the
Exchange Notes.
"Note Obligations" means any principal of, premium, if any, and interest on,
and any other amounts (including, without limitation, any payment obligations
with respect to the Notes as a result of any Asset Sale, Change of Control or
redemption) owing in respect of, the Notes payable pursuant to the terms of
the Notes or the Indenture or upon acceleration of the Notes.
"Oil and Gas Business" means (i) the acquisition, exploration, development,
operation and disposition of interests in oil, gas and other hydrocarbon
properties, (ii) the gathering, marketing, treating, processing, storage,
refining, selling and transporting of any production from such interests or
properties, (iii) any business relating
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to or arising from exploration for or development, production, treatment,
processing, storage, refining, transportation or marketing of oil, gas and
other minerals and products produced in association therewith, and (iv) any
activity necessary, appropriate or incidental to the activities described in
the foregoing clauses (i) through (iii) of this definition.
"Pari Passu Indebtedness" means any Indebtedness of the Company that is pari
passu in right of payment to the Notes.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness of the Company under one or more bank credit or
revolving credit facilities in an aggregate principal amount at any one
time outstanding not to exceed the greater of (A) $410,000,000 and (B) an
amount equal to the sum of (x) $200,000,000 and (y) 20% of Adjusted
Consolidated Net Tangible Assets determined as of the date of the
incurrence of such Indebtedness (such greater amount being referred to as
the "Adjusted Maximum Credit Amount") (plus interest and fees under such
facilities), less any amounts derived from Asset Sales and applied to the
required permanent reduction of Senior Indebtedness (and a permanent
reduction of the related commitment to lend or amount available to be
reborrowed in the case of a revolving credit facility) under such credit
facilities as contemplated by the "Limitation on Disposition of Proceeds of
Asset Sales" covenant (the "Maximum Credit Amount") (with the Maximum
Credit Amount to be an aggregate maximum amount for the Company and all
Restricted Subsidiaries, pursuant to clause (i) of the definition of
"Permitted Subsidiary Indebtedness"), and any renewals, amendments,
extensions, supplements, modifications, deferrals, refinancings or
replacements (each, for purposes of this clause, a "refinancing") thereof
by the Company, including any successive refinancings thereof by the
Company, so long as the aggregate principal amount of any such new
Indebtedness, together with the aggregate principal amount of all other
Indebtedness outstanding pursuant to this clause (i) (and clause (i) of the
definition of "Permitted Subsidiary Indebtedness"), shall not at any one
time exceed the Maximum Credit Amount;
(ii) Indebtedness of the Company under the Notes;
(iii) Indebtedness of the Company outstanding on the date of the
Indenture (and not repaid or defeased with the proceeds of the offering of
the Old Notes);
(iv) obligations of the Company pursuant to Interest Rate Protection
Obligations, but only to the extent such obligations do not exceed 105% of
the aggregate principal amount of the Indebtedness covered by such Interest
Rate Protection Obligations; obligations under currency exchange contracts
entered into in the ordinary course of business; and hedging arrangements
that the Company enters into in the ordinary course of business for the
purpose of protecting its production against fluctuations in oil or natural
gas prices;
(v) Indebtedness of the Company to any Restricted Subsidiaries;
(vi) in-kind obligations relating to net gas balancing positions arising
in the ordinary course of business and consistent with past practice;
(vii) Indebtedness in respect of bid, performance or surety bonds issued
or other reimbursement obligations for the account of the Company or any
Restricted Subsidiary in the ordinary course of business, including
guarantees and letters of credit supporting such bid, performance, surety
bonds or other reimbursement obligations (in each case other than for an
obligation for money borrowed);
(viii) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the
Company of any Indebtedness of the Company other than Indebtedness incurred
pursuant to clauses (iv), (vii) and (viii) of this definition, including
any successive refinancings by the Company, so long as (A) any such new
Indebtedness shall be in a principal amount that does not exceed the
principal amount (or, if such Indebtedness being refinanced provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of the date of
determination) so refinanced plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of
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any premium reasonably determined by the Company as necessary to accomplish
such refinancing, plus the amount of expenses of the Company incurred in
connection with such refinancing, and (B) in the case of any refinancing of
Subordinated Indebtedness, such new Indebtedness is made subordinate to the
Notes at least to the same extent as the Indebtedness being refinanced and
(C) such new Indebtedness has an Average Life equal to or longer than the
Average Life of the Indebtedness being refinanced and a final Stated
Maturity equal to or later than the final Stated Maturity of the
Indebtedness being refinanced;
(ix) Non-Recourse Indebtedness; and
(x) other Indebtedness of the Company in an aggregate principal amount
not in excess of $25,000,000 at any one time outstanding.
"Permitted Investments" means any of the following: (i) Investments in Cash
Equivalents; (ii) Investments in the Company or any of its Restricted
Subsidiaries; (iii) Investments in an amount not to exceed 5% of Adjusted
Consolidated Net Tangible Assets determined as of the date of the making or
incurrence of such Permitted Investment at any one time outstanding; (iv)
Investments by the Company or any of its Restricted Subsidiaries in another
Person, if as a result of such Investment (A) such other Person becomes a
Restricted Subsidiary of the Company or (B) such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its assets to, the Company or a Restricted Subsidiary; (v) entry into
operating agreements, joint ventures, partnership agreements, working
interests; royalty interests, mineral leases, processing agreements, farm-out
agreements, contracts for the sale, transportation or exchange of oil and
natural gas, unitization agreements, pooling arrangements, area of mutual
interest agreements or other similar or customary agreements, transactions,
properties, interests or arrangements, and Investments and expenditures in
connection therewith or pursuant thereto, in each case made or entered into in
the ordinary course of the Oil and Gas Business; (vi) entry into any hedging
arrangements in the ordinary course of business for the purpose of protecting
the Company's or any Restricted Subsidiary's production against fluctuations
in oil or natural gas prices; (vii) Investments in units of any oil and gas
royalty trust; or (viii) entry into a joint venture or partnership agreement
in connection with ownership and operation of office and building real estate
and related assets owned by the Company or any Restricted Subsidiary and
contribution of such assets to such entity.
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the date the Old Notes were first issued;
(b) Liens securing the Notes;
(c) Liens in favor of the Company or a Subsidiary Guarantor;
(d) Liens securing Senior Indebtedness or Guarantor Senior Indebtedness;
(e) Liens for taxes, assessments and governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(f) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(g) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety and appeal bonds,
bids, leases, government contracts and leases, performance and return of
money bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money but including lessee or operator obligations
under statutes, governmental regulations or instruments related to the
ownership, exploration and production of oil, gas and minerals on state,
federal or foreign lands or waters);
(h) judgment Liens not giving rise to an Event of Default so long as any
appropriate legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated or the
period within which such proceeding may be initiated shall not have
expired;
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(i) easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Restricted
Subsidiaries;
(j) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(k) Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of defeasing Indebtedness of the
Company or any of the Subsidiaries;
(l) Liens securing obligations under hedging agreements that the Company
or any Restricted Subsidiary enters into in the ordinary course of business
for the purpose of protecting its production against fluctuations in oil or
natural gas prices;
(m) Liens upon specific items of inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(n) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(o) Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of the Company or its Restricted
Subsidiaries relating to such property or assets;
(p) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and set-
off;
(q) Liens securing Interest Rate Protection Obligations which Interest
Rate Protection Obligations relate to Indebtedness that is secured by Liens
otherwise permitted under this Indenture;
(r) Liens on, or related to, properties or assets to secure all or part
of the costs incurred in the ordinary course of business for the
exploration, drilling, development or operation thereof;
(s) Liens on pipeline or pipeline facilities which arise out of operation
of law;
(t) Liens arising under operating agreements, joint venture agreements,
partnership agreements, oil and gas leases, farm-out agreements, division
orders, contracts for the sale, transportation or exchange of oil and
natural gas, unitization and pooling declarations and agreements, area of
mutual interest agreements and other agreements which are customary in the
Oil and Gas Business;
(u) Liens reserved in oil and gas mineral leases for bonus or rental
payments and for compliance with the terms of such leases;
(v) Liens constituting survey exceptions, encumbrances, easements, or
reservations of, or rights to others for, rights-of-way, zoning or other
restrictions as to the use of real properties, and minor defects of title
which, in the case of any of the foregoing, were not incurred or created to
secure the payment of borrowed money or the deferred purchase price of
Property or services, and in the aggregate do not materially adversely
affect the value of Property of the Company and the Restricted
Subsidiaries, taken as a whole, or materially impair the use of such
Properties for the purposes for which such Properties are held by the
Company or any Restricted Subsidiaries; and
(w) Liens securing Non-Recourse Indebtedness; provided, however, that the
related Non-Recourse Indebtedness shall not be secured by any property or
assets of the Company or any Restricted Subsidiary other than the property
and assets acquired by the Company with the proceeds of such Non-Recourse
Indebtedness.
Notwithstanding anything in clauses (a) through (w) of this definition, the
term "Permitted Liens" does not include any Liens resulting from the creation,
incurrence, issuance, assumption or guarantee of any Production Payments other
than Production Payments that are created, incurred, issued, assumed or
guaranteed in connection with the financing of, and within 30 days after, the
acquisition of the properties or assets that are subject thereto.
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"Permitted Subsidiary Indebtedness" means any of the following:
(i) Indebtedness of any Restricted Subsidiary under one or more bank
credit or revolving credit facilities (and "refinancings" thereof) in an
amount at any one time outstanding not to exceed the Maximum Credit Amount
(in the aggregate for all Restricted Subsidiaries and the Company, pursuant
to clause (i) of the definition of "Permitted Indebtedness");
(ii) Indebtedness of any Restricted Subsidiary outstanding on the date of
the Indenture;
(iii) obligations of any Restricted Subsidiary pursuant to Interest Rate
Protection Obligations, but only to the extent such obligations do not
exceed 105% of the aggregate principal amount of the Indebtedness covered
by such Interest Rate Protection Obligations; and hedging arrangements that
any Restricted Subsidiary enters into in the ordinary course of business
for the purpose of protecting its production against fluctuations in oil or
natural gas prices;
(iv) the Subsidiary Guarantees (and any assumption of the obligations
guaranteed thereby);
(v) Indebtedness of any Restricted Subsidiary relating to guarantees by
such Restricted Subsidiary of Permitted Indebtedness pursuant to clause (i)
of the definition of "Permitted Indebtedness;"
(vi) in-kind obligations relating to net gas balancing positions arising
in the ordinary course of business and consistent with past practice;
(vii) Indebtedness in respect of bid, performance or surety bonds or
other reimbursement obligations issued for the account of any Restricted
Subsidiary in the ordinary course of business, including guarantees and
letters of credit supporting such bid, performance, surety bonds or other
reimbursement obligations (in each case other than for an obligation for
money borrowed);
(viii) Indebtedness of any Restricted Subsidiary to any other Restricted
Subsidiary or to the Company;
(ix) Indebtedness relating to guarantees by any Restricted Subsidiary
permitted to be incurred pursuant to paragraph (a) of the "Limitation on
Non-Guarantor Restricted Subsidiaries" covenant;
(x) Non-Recourse Indebtedness; and
(xi) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by any
Restricted Subsidiary of any Indebtedness of such Restricted Subsidiary,
including any successive refinancings by such Restricted Subsidiary, so
long as (x) any such new Indebtedness shall be in a principal amount that
does not exceed the principal amount (or, if such Indebtedness being
refinanced provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration thereof, such lesser
amount as of the date of determination) so refinanced plus the amount of
any premium required to be paid in connection with such refinancing
pursuant to the terms of the Indebtedness refinanced or the amount of any
premium reasonably determined by such Restricted Subsidiary as necessary to
accomplish such refinancing, plus the amount of expenses of such Subsidiary
incurred in connection with such refinancing and (y) such new Indebtedness
has an Average Life equal to or longer than the Average Life of the
Indebtedness being refinanced and a final Stated Maturity equal to or later
than the final Stated Maturity of the Indebtedness being refinanced.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued
after the date of the Indenture, including, without limitation, all classes
and series of preferred or preference stock of such Person.
"Production Payments" means, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.
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"Public Equity Offering" means an underwritten public offering for cash by
the Company of its Qualified Capital Stock pursuant to a registration
statement that has been declared effective by the Commission (other than a
registration statement on Form S-8 or any successor form or otherwise relating
to equity securities issuable under any employee benefit plan of the Company).
"Public Market" exists at any time with respect to the Qualified Capital
Stock of the Company if such Qualified Capital Stock of the Company is then
(a) registered with the Commission pursuant to Section 12(b) or 12(g) of the
Exchange Act and (b) traded either on a national securities exchange or on the
NASDAQ Stock Market.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Qualified Redemption Transaction" means a call for redemption of any
Capital Stock or Subordinated Indebtedness (including any Subordinated
Indebtedness accounted for as a minority interest of the Company that is held
by a Subsidiary that is a business trust or similar entity formed for the
primary purpose of issuing preferred securities the proceeds of which are
loaned to the Company or a Restricted Subsidiary) that by its terms is
convertible into common stock of the Company if on the date of notice of such
call for redemption (A) a Public Market exists in the shares of common stock
of the Company and (B) the average closing price on the Public Market for
shares of common stock of the Company for the twenty trading days immediately
preceding the date of such notice exceeds 120% of the conversion price per
share (determined by reference to the redemption price) of common stock of the
Company issuable upon conversion of the Capital Stock or Subordinated
Indebtedness called for redemption.
"Redeemable Capital Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to 91 days
after the final Stated Maturity of the Notes or is redeemable at the option of
the holder thereof at any time prior to 91 days after such final Stated
Maturity, or is convertible into or exchangeable for debt securities at any
time prior to 91 days after such final Stated Maturity.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of the Indenture, unless such Subsidiary of the
Company is an Unrestricted Subsidiary or is designated as an Unrestricted
Subsidiary pursuant to the terms of the Indenture.
"S&P" means Standard and Poor's Rating Group, a division of McGraw Hill,
Inc., and its successors.
"Sale/Leaseback Transaction" means, with respect to any Person, any direct
or indirect arrangement pursuant to which properties or assets are sold or
transferred by such Person or a Subsidiary of such Person and are thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Subsidiaries.
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of the Company (including, in the case of the Credit
Agreement, interest accruing after the filing of a petition by or against the
Company under any bankruptcy law, in accordance with and at the rate,
including any default rate, specified with respect to such indebtedness,
whether or not a claim for such interest is allowed as a claim after such
filing in any proceeding under such bankruptcy law), whether outstanding on
the date of the Indenture or thereafter created, incurred or assumed, unless,
in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Notwithstanding the foregoing, "Senior Indebtedness" shall not include
(a) Indebtedness evidenced by the Notes, (b) Indebtedness that is expressly
subordinate or junior in right of payment to any Senior Indebtedness of the
Company, (c) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11 United States Code, is by its terms
without recourse to the Company, (d) any repurchase, redemption or other
obligation in respect of Redeemable Capital Stock of the
56
<PAGE>
Company, (e) to the extent it might constitute Indebtedness, any liability for
federal, state, local or other taxes owed or owing by the Company, (f)
Indebtedness of the Company to a Subsidiary of the Company or any other
Affiliate of the Company or any of such Affiliate's Subsidiaries, and (g) that
portion of any Indebtedness of the Company which at the time of issuance is
issued in violation of the Indenture (but, as to any such Indebtedness, no
such violation shall be deemed to exist for purposes of this clause (g) if the
holder(s) of such Indebtedness or their representative or the Company shall
have furnished to the Trustee an opinion of counsel unqualified in all
material respects of independent legal counsel, addressed to the Trustee
(which legal counsel may, as to matters of fact, rely upon a certificate of
the Company) to the effect that the incurrence of such Indebtedness does not
violate the provisions of such Indenture); provided that the foregoing
exclusions shall not affect the priorities of any Indebtedness arising solely
by operation of law in any case or proceeding or similar event described in
clause (a), (b) or (c) of the second paragraph of "--Subordination."
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is
due and payable, and, when used with respect to any other Indebtedness or any
installment of interest thereon, means the date specified in the instrument
evidencing or governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or such installment of interest is due and
payable.
"Subordinated Indebtedness" means Indebtedness of the Company which is
expressly subordinated in right of payment to the Notes.
"Subsidiary" means, with respect to any Person, (i) a corporation a majority
of whose Voting Stock is at the time, directly or indirectly, owned by such
Person, by one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries thereof or (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Person
performing similar functions).
"Subsidiary Guarantee" means any guarantee of the Notes by (i) any
Subsidiary Guarantor in accordance with the provisions set forth in
"Subsidiary Guarantees of the Notes" and (ii) any Restricted Subsidiary in
accordance with the provisions set forth in the "Limitation on Non-Guarantor
Restricted Subsidiaries" covenant.
"Subsidiary Guarantor" means (i) each of the Company's Restricted
Subsidiaries that becomes a guarantor of the Notes in compliance with the
provisions described under "--Subsidiary Guarantees of the Notes" or the
provisions of the "Limitation on Non-Guarantor Restricted Subsidiaries"
covenant and (ii) each of the Company's Subsidiaries executing a supplemental
indenture in which such Subsidiary agrees to be bound by the terms of the
Indenture and to guarantee on an unsubordinated basis the payment of the Notes
pursuant to the provisions described under "--Subsidiary Guarantees of the
Notes."
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may
designate any Subsidiary of the Company as an Unrestricted Subsidiary so long
as (a) neither the Company nor any Restricted Subsidiary is directly or
indirectly liable pursuant to the terms of any Indebtedness of such
Subsidiary, (b) no default with respect to any Indebtedness of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default
on such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity, (c) neither the Company nor any
Restricted Subsidiary has made an Investment in such Subsidiary unless such
Investment was made pursuant to, and in accordance with, the "Limitation on
Restricted Payments" covenant (other than Investments of the type described in
clause (iv) of the definition of Permitted Investments), and (d) such
designation shall not result in the creation or imposition of any Lien on any
of the Properties of the Company or any Restricted Subsidiary (other than any
Permitted Lien or any Lien the creation or imposition of
57
<PAGE>
which shall have been in compliance with the "Limitation on Liens" covenant);
provided, however, that with respect to clause (a), the Company or a
Restricted Subsidiary may be liable for Indebtedness of an Unrestricted
Subsidiary if (x) such liability constituted a Permitted Investment or a
Restricted Payment permitted by the "Limitation on Restricted Payments"
covenant, in each case at the time of incurrence, or (y) the liability would
be a Permitted Investment at the time of designation of such Subsidiary as an
Unrestricted Subsidiary. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing a board resolution with
the Trustee giving effect to such designation. The Board of Directors of the
Company may designate any Unrestricted Subsidiary as a Restricted Subsidiary
if, immediately after giving effect to such designation, (i) no Default or
Event of Default shall have occurred and be continuing, (ii) the Company could
incur $1.00 of additional Indebtedness (not including the incurrence of
Permitted Indebtedness) under the first paragraph of the "Limitation on
Indebtedness" covenant and (iii) if any of the Properties of the Company or
any of its Restricted Subsidiaries would upon such designation become subject
to any Lien (other than a Permitted Lien), the creation or imposition of such
Lien shall have been in compliance with the "Limitation on Liens" covenant.
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees
of any Person (irrespective of whether or not, at the time, stock of any other
class or classes shall have, or might have, voting power by reason of the
happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent all of the Capital Stock or other ownership interests in such
Restricted Subsidiary, other than any directors qualifying shares mandated by
applicable law, is owned directly or indirectly by the Company.
58
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes if
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 180 days
after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until , 1998 (90 days from the date of this
Prospectus), all dealers effecting transactions in the New Notes may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such New Notes. Any broker-
dealer that resells New Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of New Notes
and any commission or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the
Letter of Transmittal. The Company has agreed to pay all expenses incident to
the Exchange Offer (including the expenses of one counsel for the holders of
the Notes) other than commissions or concessions of any brokers or dealers and
will indemnify the Holders of the Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
The Company has agreed that, without the prior written consent of Lehman
Brothers Inc. on behalf of the Initial Purchasers, it will not, directly or
indirectly, issue, sell, offer to sell, grant any option for the sale of or
otherwise dispose of any debt securities of the Company (other than the New
Notes) on or before , 1998.
LEGAL MATTERS
Certain legal matters with respect to the New Notes offered hereby will be
passed on for the Company by Kelly, Hart & Hallman, a professional
corporation, Fort Worth, Texas.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of Cross Timbers Oil Company as of
December 31, 1996 and 1995, and for the three years in the period ended
December 31, 1996, incorporated by reference in this Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto, and are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports.
59
<PAGE>
GLOSSARY OF CERTAIN OIL AND GAS TERMS
Wherever used herein, the following terms shall have the meanings specified.
Bbl--One stock tank barrel, or 42 US gallons liquid volume, used herein in
reference to crude oil or other liquid hydrocarbons.
BOE--Barrels of oil equivalent (converting six Mcf of natural gas to one Bbl
of oil).
Bcf--One billion cubic feet, used herein in reference to natural gas or
carbon dioxide.
Btu--British Thermal Unit.
Developed Acreage--Acres which are allocated or assignable to producing
wells or wells capable of production.
Development Well--A well drilled within the proved area of an oil and
natural gas reservoir to the depth of a stratigraphic horizon known to be
productive.
Dry Well--A well found to be incapable of producing either oil or natural
gas in sufficient quantities to justify completion as an oil or natural gas
well.
EBITDA--Earnings (excluding discontinued operations and charges resulting
from changes in accounting) before interest expense, income taxes, depletion,
depreciation and amortization, and the provision for impairment of oil and
natural gas properties. EBITDA is not a measure of cash flow as determined by
generally accepted accounting principles. EBITDA information has been included
in this Offering Memorandum because EBITDA is a measure used by certain
investors in determining historical ability to service indebtedness. EBITDA
should not be considered as an alternative to, or more meaningful than, net
income or cash flows as determined in accordance with generally accepted
accounting principles as an indicator of operating performance or liquidity.
Exploratory Well--A well drilled to find and produce oil or natural gas on
an unproved area, to find a new reservoir in a field previously found to be
productive of oil or natural gas in another reservoir, or to extend a known
reservoir.
Gross Acres or Gross Wells--The total acres or wells, as the case may be, in
which a working interest is owned.
Infill Well--A well drilled between known producing wells to better exploit
the reservoir.
MBOE--One thousand barrels of oil equivalent.
Mcf--One thousand cubic feet, used herein in reference to natural gas or
carbon dioxide.
MMcf--One million cubic feet, used herein in reference to natural gas or
carbon dioxide.
Net Acres or Net Wells--The sum of the fractional working interests owned in
gross acres or gross wells.
NGL--Natural gas liquids.
NYMEX--New York Mercantile Exchange.
Oil and Natural Gas Lease--An instrument by which a mineral fee owner grants
to lessee the right for a specific period of time to explore for oil and
natural gas underlying the lands covered by the lease and the right to produce
any oil and natural gas so discovered generally for so long as there is
production in economic quantities from such lands.
60
<PAGE>
Overriding Royalty Interest--A fractional undivided interest in an oil and
natural gas property entitling the owner to a share of oil and natural gas
production, in addition to the usual royalty paid to the owner, free of costs
of production.
PDNP--Proved developed, nonproducing or behind the pipe reserves.
Productive Well--A well that is producing oil or natural gas or that is
capable of production.
Proved Developed Reserves--Reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.
Proved Reserves--The estimated quantities of crude oil, natural gas and
natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions.
Proved Undeveloped Reserves or PUD--Reserves that are expected to be
recovered from new wells on undrilled acreage, or from existing wells where a
relatively major expenditure is required for completion.
PV10%--The discounted future net cash flows for proved oil and natural gas
reserves computed on the same basis as the Standardized Measure, but without
deducting income taxes, which is not in accordance with generally accepted
accounting principles. PV10% is an important financial measure for evaluating
the relative significance of oil and natural gas properties and acquisitions,
but should not be construed as an alternative to the Standardized Measure (as
determined in accordance with generally accepted accounting principles).
Recompletion--The completion for production of an existing well bore in
another formation from that in which the well has been previously completed.
Royalty Interest--An interest in an oil and natural gas property entitling
the owner to a share of oil and natural gas production free of costs of
production.
SEC--Securities and Exchange Commission.
Secondary Recovery--A method of oil and natural gas extraction in which
energy sources extrinsic to the reservoir are utilized.
Standardized Measure--The estimated future net cash flows from proved oil
and natural gas reserves computed using prices and costs, at the dates
indicated, after income taxes and discounted at 10%.
Undeveloped Acreage--Lease acreage on which wells have not been drilled or
completed to a point that would permit the production of commercial quantities
of oil and natural gas regardless of whether such acreage contains proved
reserves.
Waterflood--The injection of water into a reservoir to fill pores vacated by
produced fluids, thus maintaining reservoir pressure and assisting production.
Working Interest--The operating interest which gives the owner the right to
drill, produce and conduct operating activities on the property and a share of
production, subject to all royalties, overriding royalties and other burdens
and to all costs of exploration, development and operations and all risks in
connection therewith.
Workover--Operations on a producing well to restore or increase production.
61
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECU-
RITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECU-
RITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 1
Risk Factors............................................................... 9
The Exchange Offer......................................................... 11
Selected Historical Financial Data......................................... 19
Selected Reserve and Operating Data........................................ 20
Recent Developments........................................................ 21
Description of the Notes................................................... 23
Plan of Distribution....................................................... 59
Legal Matters.............................................................. 59
Independent Public Accountants............................................. 59
Glossary of Certain Oil and Gas Terms...................................... 60
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$175,000,000
EXCHANGE OFFER
LOGO
CROSS TIMBERS OIL COMPANY
8 3/4% SENIOR SUBORDINATED NOTES DUE 2009
----------------
PROSPECTUS
----------------
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meanings assigned to them in the Prospectus which
forms a part of this Registration Statement.
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated in Delaware. Under Section 145 of the
Delaware General Corporation Law (the "DGCL"), a Delaware corporation has the
power, under specified circumstances, to indemnify its directors, officers,
employees and agents in connection with actions, suits or proceedings brought
against them by a third party or in the right of the corporation, by reason of
the fact that they were or are such directors, officers, employees or agents,
against expenses and liabilities incurred in any such action, suit or
proceeding so long as they acted in good faith and in a manner that they
reasonably believed to be in, or not opposed to, the best interests of such
corporation, and with respect to any criminal action, that they had no
reasonable cause to believe their conduct was unlawful. With respect to suits
by or in the right of such corporation, however, indemnification is generally
limited to attorneys' fees and other expenses and is not available if such
person is adjudged to be liable to such corporation unless the court
determines that indemnification is appropriate. A Delaware corporation also
has the power to purchase and maintain insurance for such persons. Article
Nine of the Restated Certificate of Incorporation of the Registrant permits
indemnification of directors and officers to the fullest extent permitted by
Section 145 of the DGCL. Reference is made to the Restated Certificate of
Incorporation of the Registrant.
Additionally, the Company has acquired directors and officers insurance in
the amount of $10,000,000, which includes coverage for liability under the
federal securities laws.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director provided that such provisions may not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or dividends on, capital stock)
of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit. Article Ten of the Registrant's Restated
Certificate of Incorporation contains such a provision.
The above discussion of the Registrant's Restated Certificate of
Incorporation and Sections 102(b)(7) and 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by such Restated Certificate of
Incorporation and statutes.
ITEM 21(A). EXHIBITS.
<TABLE>
<C> <S>
4.1 --Indenture, dated as of October 28, 1997, between the Company and The
Bank of New York, as Trustee.
4.2 --Form of 8 3/4% Series A Senior Subordinated Notes due 2009.
4.3 --Form of 8 3/4% Series B Senior Subordinated Notes due 2009.
5.1 --Opinion of Kelly, Hart & Hallman, P.C. as to the legality of the Notes.
12.1 --Statement re: Computation of Ratios (incorporated by reference to
Exhibit 12.1 to Annual Report on Form 10-K for the year ended December
31, 1996).
15.1 --Awareness Letter of Arthur Andersen LLP.
23.1 --Consent of Arthur Andersen LLP.
23.2 --Consent of Kelly, Hart & Hallman, P.C. (set forth in their opinion
filed as Exhibit 5.1).
23.3 --Consent of Miller and Lents, Ltd.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
24.1 --Powers of attorney (set forth on the signature page hereof).
25.1 --Form T-1 Statement of Eligibility of Trustee under the Trust Indenture
Act of 1939, as amended, of The Bank of New York.
99.1 --Form of Letter of Transmittal.
99.2 --Form of Notice of Guaranteed Delivery.
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned hereby undertakes:
(a) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in the documents filed subsequent to
the effective date of the Registration Statement through the date of
responding to the request.
(c) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
(d) that, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF FORT WORTH, STATE OF
TEXAS, ON OCTOBER 30, 1997.
Cross Timbers Oil Company
By: /s/ Bob R. Simpson
--------------------------------
BOB R. SIMPSON
CHAIRMAN OF THE BOARD
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. EACH PERSON WHOSE SIGNATURE APPEARS
BELOW HEREBY AUTHORIZES AND APPOINTS BOB R. SIMPSON, J. RICHARD SEEDS AND
LOUIS G. BALDWIN, AND EACH OF THEM, ANY ONE OF WHOM MAY ACT WITHOUT THE
JOINDER OF THE OTHERS, AS HIS ATTORNEY-IN-FACT TO SIGN ON HIS BEHALF
INDIVIDUALLY AND IN THE CAPACITY STATED BELOW ALL AMENDMENTS AND POST-
EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT AS SUCH ATTORNEY-IN-FACT
MAY DEEM NECESSARY OR APPROPRIATE.
/s/ Bob R. Simpson Director and October 30,
- ------------------------------------- Chairman of the 1997
BOB R. SIMPSON Board (Principal
Executive Officer)
/s/ Steffen E. Palko Director, Vice October 30,
- ------------------------------------- Chairman of the 1997
STEFFEN E. PALKO Board and President
(Principal
Executive Officer)
/s/ J. Richard Seeds Director, Executive October 30,
- ------------------------------------- Vice President 1997
J. RICHARD SEEDS
/s/ J. Luther King, Jr. Director October 30,
- ------------------------------------- 1997
J. LUTHER KING, JR.
/s/ Jack P. Randall Director October 30,
- ------------------------------------- 1997
JACK P. RANDALL
/s/ Scott G. Sherman Director October 30,
- ------------------------------------- 1997
SCOTT G. SHERMAN
/s/ Louis G. Baldwin Senior Vice October 30,
- ------------------------------------- President and Chief 1997
LOUIS G. BALDWIN Financial Officer
(Principal
Financial Officer)
/s/ Bennie G. Kniffen Senior Vice October 30,
- ------------------------------------- President and 1997
BENNIE G. KNIFFEN Controller
(Principal
Accounting Officer)
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.1 --Indenture, dated as of October 28, 1997, between the Company and The
Bank of New York, as Trustee.
4.2 --Form of 8 3/4% Series A Senior Subordinated Notes due 2009.
4.3 --Form of 8 3/4% Series B Senior Subordinated Notes due 2009.
5.1 --Opinion of Kelly, Hart & Hallman, P.C. as to the legality of the
Notes.
12.1 --Statement re: Computation of Ratios (incorporated by reference to
Exhibit 12.1 to Annual Report on Form 10-K for the year ended
December 31, 1996).
15.1 --Awareness Letter of Arthur Andersen LLP.
23.1 --Consent of Arthur Andersen LLP.
23.2 --Consent of Kelly, Hart & Hallman, P.C. (set forth in their opinion
filed as Exhibit 5.1).
23.3 --Consent of Miller and Lents, Ltd.
24.1 --Powers of attorney (set forth on the signature page hereof).
25.1 --Form T-1 Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939, as amended, of The Bank of New York.
99.1 --Form of Letter of Transmittal.
99.2 --Form of Notice of Guaranteed Delivery.
</TABLE>
<PAGE>
EXHIBIT 4.1
________________________________________________________________________________
CROSS TIMBERS OIL COMPANY
AND
THE BANK OF NEW YORK
Trustee
______________________
Indenture
Dated as of October 28, 1997
______________________
$175,000,000
8 3/4% Series A Senior Subordinated Notes due 2009
and
8 3/4% Series B Senior Subordinated Notes due 2009
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions......................................................... 1
SECTION 1.2 Other Definitions................................................... 30
SECTION 1.3 Incorporation by Reference of Trust Indenture Act................... 31
SECTION 1.4 Rules of Construction............................................... 32
ARTICLE II
THE SECURITIES
SECTION 2.1 Forms Generally.................................................... 32
SECTION 2.2 Title and Terms.................................................... 34
SECTION 2.3 Denominations...................................................... 34
SECTION 2.4 Execution, Authentication, Delivery and Dating..................... 35
SECTION 2.5 Temporary Securities............................................... 36
SECTION 2.6 Security Register and Depositary................................... 36
SECTION 2.7 Transfer and Exchange.............................................. 37
SECTION 2.8 Additional Provisions for Global Securities........................ 44
SECTION 2.9 Mutilated, Destroyed, Lost and Stolen Securities................... 45
SECTION 2.10 Payment of Interest; Interest Rights Preserved..................... 46
SECTION 2.11 Persons Deemed Owners.............................................. 47
SECTION 2.12 Cancellation....................................................... 47
SECTION 2.13 Computation of Interest............................................ 47
SECTION 2.14 CUSIP Numbers...................................................... 47
ARTICLE III
SATISFACTION AND DISCHARGE
SECTION 3.1 Satisfaction and Discharge of Indenture............................. 48
SECTION 3.2 Application of Trust Money.......................................... 49
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ARTICLE IV
REMEDIES
SECTION 4.1 Events of Default................................................... 49
SECTION 4.2 Acceleration of Maturity; Rescission and Annulment.................. 52
SECTION 4.3 Collection of Indebtedness and Suits for Enforcement by Trustee..... 54
SECTION 4.4 Trustee May File Proofs of Claim.................................... 55
SECTION 4.5 Trustee May Enforce Claims Without Possession of Securities......... 55
SECTION 4.6 Application of Money Collected...................................... 56
SECTION 4.7 Limitation on Suits................................................. 56
SECTION 4.8 Unconditional Right of Holders to Receive Principal, Premium
and Interest........................................................ 57
SECTION 4.9 Restoration of Rights and Remedies.................................. 57
SECTION 4.10 Rights and Remedies Cumulative...................................... 57
SECTION 4.11 Delay or Omission Not Waiver........................................ 57
SECTION 4.12 Control by Holders.................................................. 58
SECTION 4.13 Waiver of Past Defaults............................................. 58
SECTION 4.14 Waiver of Stay, Extension or Usury Laws............................. 58
SECTION 4.15 Undertaking for Costs............................................... 59
ARTICLE V
THE TRUSTEE
SECTION 5.1 Notice of Defaults.................................................. 59
SECTION 5.2 Certain Rights of Trustee........................................... 59
SECTION 5.3 Trustee Not Responsible for Recitals or Issuance of Securities...... 61
SECTION 5.4 May Hold Securities................................................. 61
SECTION 5.5 Money Held in Trust................................................. 61
SECTION 5.6 Compensation and Reimbursement...................................... 61
SECTION 5.7 Corporate Trustee Required; Eligibility............................. 62
SECTION 5.8 Conflicting Interests............................................... 63
SECTION 5.9 Resignation and Removal; Appointment of Successor................... 63
SECTION 5.10 Acceptance of Appointment by Successor.............................. 64
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business......... 64
SECTION 5.12 Preferential Collection of Claims Against Company................... 65
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ARTICLE VI
HOLDERS' LISTS AND REPORTS BY TRUSTEE
SECTION 6.1 Disclosure of Names and Addresses of Holders........................ 65
SECTION 6.2 Reports By Trustee.................................................. 65
ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1 Company May Consolidate, etc., Only on Certain Terms................ 66
SECTION 7.2 Successor Substituted............................................... 67
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures without Consent of Holders.................. 68
SECTION 8.2 Supplemental Indentures with Consent of Holders..................... 69
SECTION 8.3 Execution of Supplemental Indentures................................ 70
SECTION 8.4 Effect of Supplemental Indentures................................... 70
SECTION 8.5 Conformity with Trust Indenture Act................................. 70
SECTION 8.6 Reference in Securities to Supplemental Indentures.................. 70
SECTION 8.7 Notice of Supplemental Indentures................................... 71
ARTICLE IX
COVENANTS
SECTION 9.1 Payment of Principal, Premium, if any, and Interest................. 71
SECTION 9.2 Maintenance of Office or Agency..................................... 71
SECTION 9.3 Money for Security Payments to Be Held in Trust..................... 72
SECTION 9.4 Corporate Existence................................................. 73
SECTION 9.5 Payment of Taxes and Other Claims................................... 73
SECTION 9.6 Maintenance of Properties........................................... 73
SECTION 9.7 Insurance........................................................... 74
SECTION 9.8 Statement by Officers as to Default................................. 74
SECTION 9.9 Reports............................................................. 75
SECTION 9.10 Limitation on Restricted Payments................................... 75
SECTION 9.11 Limitation on Indebtedness.......................................... 79
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SECTION 9.12 Limitation on Non-Guarantor Restricted Subsidiaries................ 80
SECTION 9.13 Limitation on Issuances and Sales of Restricted Subsidiary Stock... 82
SECTION 9.14 Limitation on Liens................................................ 82
SECTION 9.15 Change of Control.................................................. 82
SECTION 9.16 Limitation on Disposition of Proceeds of Asset Sales............... 84
SECTION 9.17 Limitation on Transactions with Affiliates......................... 86
SECTION 9.18 Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries............................................ 87
SECTION 9.19 Limitation on Other Senior Subordinated Indebtedness............... 87
SECTION 9.20 Limitation on Conduct of Business.................................. 87
SECTION 9.21 Registration Rights Agreement...................................... 88
SECTION 9.22 Waiver of Certain Covenants........................................ 88
ARTICLE X
REDEMPTION OF SECURITIES
SECTION 10.1 Right of Redemption................................................ 88
SECTION 10.2 Applicability of Article........................................... 89
SECTION 10.3 Election to Redeem; Notice to Trustee.............................. 89
SECTION 10.4 Selection by Trustee of Securities to Be Redeemed.................. 89
SECTION 10.5 Notice of Redemption............................................... 89
SECTION 10.6 Deposit of Redemption Price........................................ 90
SECTION 10.7 Securities Payable on Redemption Date.............................. 90
SECTION 10.8 Securities Redeemed in Part........................................ 91
ARTICLE XI
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 11.1 Company's Option to Effect Defeasance or Covenant Defeasance....... 91
SECTION 11.2 Defeasance and Discharge........................................... 91
SECTION 11.3 Covenant Defeasance................................................ 92
SECTION 11.4 Conditions to Defeasance or Covenant Defeasance.................... 92
SECTION 11.5 Deposited Money and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions........................... 94
SECTION 11.6 Reinstatement...................................................... 95
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ARTICLE XII
GUARANTEES
SECTION 12.1 Unconditional Guarantee 95
SECTION 12.2 Subsidiary Guarantors May Consolidate, etc. on Certain Terms..... 96
SECTION 12.3 Release of a Subsidiary Guarantor................................ 97
SECTION 12.4 Limitation of Subsidiary Guarantor's Liability................... 98
SECTION 12.5 Contribution..................................................... 98
SECTION 12.6 Execution and Delivery of Notation of Subsidiary Guarantee....... 98
SECTION 12.7 Severability..................................................... 99
SECTION 12.8 Subsidiary Guarantees Subordinated to Guarantor Senior
Indebtedness..................................................... 99
SECTION 12.9 Subsidiary Guarantors Not to Make Payments with Respect to
Subsidiary Guarantees in Certain Circumstances................... 99
SECTION 12.10 Subsidiary Guarantees Subordinated to Prior Payment.............. 99
of All Guarantor Senior Indebtedness upon Dissolution, etc
SECTION 12.11 Holders to be Subrogated to Rights of Holders of................. 101
Guarantor Senior Indebtedness.................................... 102
SECTION 12.12 Obligations of the Subsidiary Guarantors
Unconditional.................................................... 103
SECTION 12.13 Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice............................................ 103
SECTION 12.14 Application by Trustee of Money Deposited with it................ 104
SECTION 12.15 Subordination Rights Not Impaired by Acts or Omissions
of Subsidiary Guarantors or Holders of Guarantor Senior
Indebtedness..................................................... 104
SECTION 12.16 Holders Authorize Trustee to Effectuate Subordination
of Subsidiary Guarantees......................................... 105
SECTION 12.17 Right of Trustee to Hold Guarantor Senior Indebtedness........... 105
SECTION 12.18 Article XII Not to Prevent Events of Default..................... 105
SECTION 12.19 Payment.......................................................... 106
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1 Securities Subordinate to Senior Indebtedness.................... 106
SECTION 13.2 Payment Over of Proceeds upon Dissolution, etc................... 106
SECTION 13.3 Suspension of Payment When Senior Indebtedness in Default........ 108
SECTION 13.4 Trustee's Relation to Senior Indebtedness........................ 109
SECTION 13.5 Subrogation to Rights of Holders of Senior Indebtedness.......... 110
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SECTION 13.6 Provisions Solely To Define Relative Rights...................... 110
SECTION 13.7 Trustee To Effectuate Subordination.............................. 111
SECTION 13.8 No Waiver of Subordination Provisions............................ 111
SECTION 13.9 Notice to Trustee................................................ 112
SECTION 13.10 Reliance on Judicial Order or Certificate of
Liquidating Agent................................................ 113
SECTION 13.11 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights................................. 113
SECTION 13.12 Article Applicable to Paying Agents.............................. 113
SECTION 13.13 No Suspension of Remedies........................................ 113
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Compliance Certificates and Opinions............................. 114
SECTION 14.2 Form of Documents Delivered to Trustee........................... 114
SECTION 14.3 Acts of Holders.................................................. 115
SECTION 14.4 Notices, etc. to Trustee, Company and Subsidiary Guarantors...... 116
SECTION 14.5 Notice to Holders; Waiver........................................ 117
SECTION 14.6 Effect of Headings and Table of Contents......................... 117
SECTION 14.7 Successors and Assigns........................................... 117
SECTION 14.8 Separability Clause.............................................. 117
SECTION 14.9 Benefits of Indenture............................................ 118
SECTION 14.10 Governing Law; Trust Indenture Act Controls...................... 118
SECTION 14.11 Legal Holidays................................................... 118
SECTION 14.12 No Recourse Against Others....................................... 119
SECTION 14.13 Duplicate Originals.............................................. 119
SECTION 14.14 No Adverse Interpretation of Other Agreements.................... 119
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EXHIBIT A FORM OF SECURITY.................................................... A-1
EXHIBIT B FORM OF NOTATION RELATING TO SUBSIDIARY
GUARANTEES.......................................................... B-1
EXHIBIT C CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES........................... C-1
EXHIBIT D TRANSFEREE LETTER OF REPRESENTATIONS................................ D-1
EXHIBIT E FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO
REGULATIONS......................................................... E-1
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NOTE: THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE
DEEMED TO BE A PART OF THE INDENTURE.
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of October 28, 1997
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C>
(S) 310(a)(1).............................................. 5.7
(a)(2).............................................. 5.7
(b)................................................. 5.7, 5.8
(S) 312(c)................................................. 6.1
(S) 313.................................................... 6.2
(S) 314(a)................................................. 6.3
(a)(4).............................................. 9.8(a)
(c)(1).............................................. 14.1
(c)(2).............................................. 14.1
(e)................................................. 14.1
(S) 315(b)................................................. 5.1
(S) 316(a) (last
sentence)........................................... 1.1 ("Outstanding")
(a)(1)(A)........................................... 4.2, 4.12
(a)(1)(B)........................................... 4.13
(b)................................................. 4.8
(c)................................................. 14.3(d)
(S) 317(a)(1).............................................. 4.3
(a)(2).............................................. 4.4
(b)................................................. 9.3
(S) 318(a)................................................. 14.10(b)
</TABLE>
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
INDENTURE, dated as of October 28, 1997 between CROSS TIMBERS OIL COMPANY,
a Delaware corporation (hereinafter called the "Company") and The Bank of New
York, a New York banking corporation, trustee (hereinafter called the
"Trustee").
RECITALS OF THE COMPANY
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Company's 8 3/4% Series A
Senior Subordinated Notes due 2009 (the "Series A Securities") and the Company's
8 3/4% Series B Senior Subordinated Notes due 2009 (the "Series B Securities"
and, collectively with the Series A Securities, the "Securities" or each, a
"Security").
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, that are required to be part of this Indenture and shall, to
the extent applicable, be governed by such provisions.
All things necessary have been done to make the Securities, when executed
by the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company and the Trustee, in accordance with their and its
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Asset Acquisition from such Person, (b) outstanding at the
time such Person becomes a Subsidiary of any other Person (other than any
Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such Person becoming such a Subsidiary) or (c) any renewals,
extensions, substitutions, refinancings or replacements (each, for purposes of
this clause, a "refinancing") by the Company of any Indebtedness described in
clause (a) or (b) of this definition, including any successive refinancings, so
long as (A) any such new Indebtedness shall be in a principal amount that does
not exceed the principal amount (or, if such Indebtedness being
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refinanced provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration thereof, such lesser amount
as of the date of determination) so refinanced plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
the Indebtedness refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing, plus the amount of
expenses of the Company incurred in connection with such refinancing, and (B) in
the case of any refinancing of Subordinated Indebtedness, such new Indebtedness
is made subordinate to the Securities at least to the same extent as the
Indebtedness being refinanced and (C) such new Indebtedness has an Average Life
longer than the Average Life of the Securities and a final Stated Maturity later
than the final Stated Maturity of the Securities.
"Act," when used with respect to any Holder, has the meaning specified in
Section 14.3.
"Adjusted Consolidated Net Tangible Assets" means (without duplication), as
of the date of determination, (a) the sum of (i) discounted future net revenues
from proved oil and gas reserves of the Company and its Restricted Subsidiaries
calculated in accordance with SEC guidelines before any state or federal income
taxes, as estimated by a nationally recognized firm of independent petroleum
engineers in a reserve report prepared as of the end of the Company's most
recently completed fiscal year, as increased by, as of the date of
determination, the estimated discounted future net revenues from (A) estimated
proved oil and gas reserves acquired since the date of such year-end reserve
report, and (B) estimated oil and gas reserves attributable to 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 SEC 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 (C) estimated
proved oil and gas reserves produced or disposed of since the date of such year-
end reserve report and (D) estimated oil and gas reserves attributable to
downward revisions of estimates of proved oil and gas reserves since the date of
such year-end reserve report due to 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 SEC guidelines (utilizing
the prices utilized in such year-end reserve report); provided that, in the case
of each of the determinations made pursuant to clauses (A) through (D), such
increases and decreases shall be as estimated by the Company's 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 clause (a)(i) shall be confirmed in
writing by a nationally recognized firm of independent petroleum engineers, (ii)
the capitalized costs that are attributable to oil and gas properties of the
Company and its Restricted Subsidiaries to which no proved oil and gas reserves
are attributable, based on the Company's books and records as of a date no
earlier than the date of the Company's latest annual or quarterly financial
statements, (iii) the Net Working Capital on a date no earlier than the date of
the Company's latest annual or quarterly financial statements and (iv) the
greater of (A) the net book value on a date no earlier than the date of the
Company's latest annual or quarterly financial statements or (B) the appraised
value, as estimated by independent appraisers, of other tangible assets
(including, without duplication, Investments in unconsolidated Restricted
Subsidiaries) of the
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Company and its Restricted Subsidiaries, as of the date no earlier than the date
of the Company's latest audited financial statements, minus (b) the sum of (i)
minority interests (other than a minority interest in a Subsidiary that is a
business trust or similar entity formed for the primary purpose of issuing
preferred securities the proceeds of which are loaned to the Company or a
Restricted Subsidiary), (ii) any net gas balancing liabilities of the Company
and its Restricted Subsidiaries reflected in the Company's latest audited
financial statements, (iii) to the extent included in (a)(i) above, the
discounted future net revenues, calculated in accordance with SEC guidelines
(utilizing the prices utilized in the Company's year-end reserve report),
attributable to reserves which are required to be delivered to third parties to
fully satisfy the obligations of the Company and its Restricted Subsidiaries
with respect to Volumetric Production Payments on the schedules specified with
respect thereto and (iv) the discounted future net revenues, calculated in
accordance with SEC guidelines, attributable to reserves subject to Dollar-
Denominated Production Payments which, based on the estimates of production and
price assumptions included in determining the discounted future net revenues
specified in (a)(i) above, would be necessary to fully satisfy the payment
obligations of the Company and its Restricted Subsidiaries with respect to
Dollar-Denominated Production Payments on the schedules specified with respect
thereto. If the Company changes its method of accounting from the successful
efforts method to the full cost method or a similar method of accounting,
"Adjusted Consolidated Net Tangible Assets" will continue to be calculated as if
the Company was still using the successful efforts method of accounting.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
amount by which the fair value of the Properties of such Subsidiary Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
the Subsidiary Guarantee, of such Subsidiary Guarantor at such date.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of this definition, beneficial ownership of 10% or more of the voting
common equity (on a fully diluted basis) or options or warrants to purchase such
equity (but only if exercisable at the date of determination or within 60 days
thereof) of a Person shall be deemed to constitute control of such Person. No
Person shall be deemed an Affiliate of an oil and gas royalty trust solely by
virtue of ownership of units of beneficial interest in such trust.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or any Restricted Subsidiary shall be merged with
or into the Company or any Restricted Subsidiary or (b) the acquisition by the
Company or any Restricted Subsidiary of the assets of any Person which
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<PAGE>
constitute all or substantially all of the assets of such Person or any division
or line of business of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without limitation, by means of a Sale/Leaseback
Transaction or by way of merger or consolidation) (collectively, for purposes of
this definition, a "transfer"), directly or indirectly, in one or a series of
related transactions, of (a) any Capital Stock of any Restricted Subsidiary held
by the Company or any Restricted Subsidiary; (b) all or substantially all of the
properties and assets of any division or line of business of the Company or any
of its Restricted Subsidiaries; or (c) any other properties or assets of the
Company or any of its Restricted Subsidiaries other than a disposition of
hydrocarbons or other mineral products in the ordinary course of business. For
the purposes of this definition, the term "Asset Sale" shall not include (i) any
transfer of properties or assets that is governed by, and made in accordance
with, the provisions of Article VII hereof; (ii) any transfer of properties or
assets to an Unrestricted Subsidiary, if permitted under Section 9.10 hereof;
(iii) any trade or exchange of oil and gas Properties or shares of Capital Stock
in any corporation in the Oil and Gas Business owned by the Company or any
Restricted Subsidiary for oil and gas properties owned or held by another Person
provided that (x) the Fair Market Value of the Properties or shares traded or
exchanged by the Company or such Restricted Subsidiary (including any cash or
Cash Equivalents, not to exceed 15% of such Fair Market Value, to be delivered
by the Company or such Restricted Subsidiary) is reasonably equivalent to the
Fair Market Value of the Properties (together with any cash or Cash Equivalents,
not to exceed 15% of such Fair Market Value) to be received by the Company or
such Restricted Subsidiary as determined in good faith by (A) any officer of the
Company if such Fair Market Value is less than $5,000,000 and (B) the Board of
Directors of the Company as certified by a certified resolution delivered to the
Trustee if such Fair Market Value is equal to or in excess of $5,000,000,
provided that if such resolution indicates that such Fair Market Value is equal
to or in excess of $10,000,000 such resolution shall be accompanied by a written
appraisal by a nationally recognized investment banking firm or appraisal firm,
in each case specializing or having a speciality in oil and gas Properties, and
(y) such exchange is approved by a majority of the Disinterested Directors of
the Company; or (iv) any transfer of Properties having a Fair Market Value of
less than $2,000,000.
"Attributable Indebtedness" means, with respect to any particular lease
under which any Person is at the time liable and at any date as of which the
amount thereof is to be determined, the present value of the total net amount of
rent required to be paid by such Person under the lease during the primary term
thereof, without giving effect to any renewals at the option of the lessee,
discounted from the respective due dates thereof to such date of determination
at the rate of interest per annum implicit in the terms of the lease. As used in
the preceding sentence, the "net amount of rent" under any lease for any such
period shall mean the sum of rental and other payments required to be paid with
respect to such period by the lessee thereunder, excluding any amounts required
to be paid by such lessee on account of maintenance and repairs, insurance,
taxes, assessments, water rates or similar charges. In the case of any lease
which is terminable by the lessee upon payment of a penalty, such net amount of
rent shall also include the amount of such penalty, but no rent shall
4
<PAGE>
be considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated.
"Average Life" means, with respect to any Indebtedness, as at any date of
determination, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years (and any portion thereof) from the date of determination
to the date or dates of each successive scheduled principal payment (including,
without limitation, any sinking fund or mandatory redemption payment
requirements) of such Indebtedness multiplied by (ii) the amount of each such
principal payment by (b) the sum of all such principal payments.
"Bank Co-agents" mean Morgan Guaranty Trust Company of New York and
NationsBank of Texas, N.A. as co-agents or any successor or replacement agents
under the Credit Agreement.
"Board of Directors" means, with respect to the Company, either the board
of directors of the Company or any duly authorized committee of such board of
directors, and, with respect to any Restricted Subsidiary, either the board of
directors of such Restricted Subsidiary or any duly authorized committee of that
board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by its Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee, and with respect to a Restricted
Subsidiary, a copy of a resolution certified by the Secretary or an Assistant
Secretary of such Restricted Subsidiary to have been duly adopted by its Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the Borough of Manhattan,
The City of New York, New York, or the city in which the Trustee's Corporate
Trust Office is located, are authorized or obligated by law or executive order
to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options exercisable
for, exchangeable for or convertible into such an equity interest in such
Person.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for the purpose of
this Indenture, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means (a) any evidence of Indebtedness with a maturity
of 365 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency
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<PAGE>
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof); (b) demand and time
deposits and certificates of deposit or acceptances with a maturity of 365 days
or less of any financial institution that is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not less
than $500,000,000; (c) commercial paper with a maturity of 365 days or less
issued by a corporation that is not an Affiliate of the Company and is organized
under the laws of any state of the United States or the District of Columbia and
rated at least A-1 by S&P or at least P-1 by Moody's; (d) 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 commercial bank meeting the
specifications of clause (b) above; and (e) overnight bank deposits and bankers'
acceptances at any commercial bank meeting the qualifications specified in
clause (b) above.
"Cedel Bank" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d)(3) or
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 40%
of the total voting power of the outstanding Voting Stock of the Company; (b)
the Company is merged with or into or consolidated with another Person and,
immediately after giving effect to the merger or consolidation, (i) less than
50% of the total voting power of the outstanding Voting Stock of the surviving
or resulting Person is then "beneficially owned" (within the meaning of Rule
13d-3 under the Exchange Act) in the aggregate by (A) the stockholders of the
Company immediately prior to such merger or consolidation, or (B) if a record
date has been set to determine the stockholders of the Company entitled to vote
with respect to such merger or consolidation, the stockholders of the Company as
of such record date and (ii) any "person" or "group" (as such terms are used in
Sections 13(d)(3) or 14(d)(2) of the Exchange Act) has become the direct or
indirect "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 40% of the total voting power of the Voting Stock of the surviving or
resulting Person; (c) the Company, either individually or in conjunction with
one or more Restricted Subsidiaries, sells, conveys, transfers or leases, or the
Restricted Subsidiaries sell, convey, transfer or lease, all or substantially
all of the assets of the Company and the Restricted Subsidiaries, taken as a
whole (either in one transaction or a series of related transactions), including
Capital Stock of the Restricted Subsidiaries, to any Person (other than the
Company or a Wholly Owned Restricted Subsidiary); (d) during any consecutive
two-year period, individuals who at the beginning of such period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of 66 2/3% of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the Company
then in office; or (e) the liquidation or dissolution of the Company .
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"Code" shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder issued by the Internal Revenue Service.
"Commission" or "SEC" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of (a) the sum of Consolidated Net Income, Consolidated Interest Expense,
Consolidated Income Tax Expense and Consolidated Non-cash Charges deducted in
computing Consolidated Net Income, in each case, for such period, of the Company
and its Restricted Subsidiaries on a consolidated basis, all determined in
accordance with GAAP, decreased (to the extent included in determining
Consolidated Net Income) by the sum of (x) the amount of deferred revenues that
are amortized during such period and are attributable to reserves that are
subject to Volumetric Production Payments and (y) amounts recorded in accordance
with GAAP as repayments of principal and interest pursuant to Dollar-Denominated
Production Payments, to (b) the sum of such Consolidated Interest Expense for
such period; provided that (i) in making such computation, the Consolidated
Interest Expense attributable to interest on any Indebtedness required to be
computed on a pro forma basis in accordance with clause (x) of Section 9.11
hereof and bearing a floating interest rate shall be computed as if the rate in
effect on the date of computation had been the applicable rate for the entire
period, (ii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
required to be computed on a pro forma basis in accordance with clause (x) of
Section 9.11 hereof shall be computed based upon the average daily balance of
such Indebtedness during the applicable period, provided that such average daily
balance shall be reduced by the amount of any repayment of Indebtedness under a
revolving credit facility during the applicable period, which repayment
permanently reduced the commitments or amounts available to be reborrowed under
such facility, (iii) notwithstanding clauses (i) and (ii) of this proviso,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by
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agreements relating to Interest Rate Protection Obligations, shall be deemed to
have accrued at the rate per annum resulting after giving effect to the
operation of such agreements and (iv) in making such calculation, Consolidated
Interest Expense shall exclude interest attributable to Dollar-Denominated
Production Payments.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i) any amortization of debt discount,
(ii) the net cost under Interest Rate Protection Obligations (including any
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and (v) all
accrued interest, in each case to the extent attributable to such period, (b) to
the extent any Indebtedness of any Person (other than the Company or a
Restricted Subsidiary) is guaranteed by the Company or any Restricted
Subsidiary, the aggregate amount of interest paid or accrued by such other
Person during such period attributable to any such Indebtedness, in each case to
the extent attributable to that period, (c) the aggregate amount of the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by the Company and its Restricted Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP and (d) the
aggregate amount of dividends paid or accrued on Redeemable Capital Stock or
Preferred Stock of the Company and its Restricted Subsidiaries, to the extent
such Redeemable Capital Stock or Preferred Stock is owned by Persons other than
Restricted Subsidiaries.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto), (b)
net after-tax gains or losses (less all fees and expenses relating thereto)
attributable to Asset Sales, (c) the net income (or net loss) of any Person
(other than the Company or any of its Restricted Subsidiaries), in which the
Company or any of its Restricted Subsidiaries has an ownership interest, except
to the extent of the amount of dividends or other distributions actually paid to
the Company or its Restricted Subsidiaries in cash by such other Person during
such period (regardless of whether such cash dividends, distributions or
interest on indebtedness is attributable to net income (or net loss) of such
Person during such period or during any prior period), (d) net income (or net
loss) of any Person combined with the Company or any of its Restricted
Subsidiaries on a "pooling of interests" basis attributable to any period prior
to the date of combination, (e) the net income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary is not at the date of determination permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its
8
<PAGE>
stockholders, (f) income resulting from transfers of assets received by the
Company or any Restricted Subsidiary from an Unrestricted Subsidiary and (g) any
write-downs of non-current assets; provided, however, that any ceiling
limitation write-downs under SEC guidelines shall be treated as capitalized
costs, as if such write-downs had not occurred.
"Consolidated Net Worth" means, at any date, the consolidated stockholders'
equity of the Company less the amount of such stockholders' equity attributable
to Redeemable Capital Stock or treasury stock of the Company and its Restricted
Subsidiaries, as determined in accordance with GAAP.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization, impairment and other non-cash expenses
(including any exploration expense) of the Company and its Restricted
Subsidiaries reducing Consolidated Net Income for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such non-cash charge
which requires an accrual of or reserve for cash charges for any future period).
"Corporate Trust Office" means the principal corporate trust office of the
Trustee, at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at 101 Barclay Street, Floor 21 West, New York, New York 10286, Attention:
Corporate Trust Administration.
"Credit Agreement" means the Revolving Credit Agreement dated May 28, 1997
among the Company and Morgan Guaranty Trust Company of New York and NationsBank
of Texas, N.A., as co-agents, and the other banks specified therein, including
any notes and guarantees executed in connection therewith, as such agreement may
be amended, modified, supplemented, extended, restated, replaced (including
replacement after the termination of such agreement), restructured, increased,
renewed or refinanced from time to time in one or more credit agreements, loan
agreements, instruments or similar agreements, whether or not with the same
lenders or agents, as such may be further amended, modified, supplemented,
extended, restated, replaced (including replacement after the termination of
such agreement), restructured, increased, renewed or refinanced from time to
time.
"Credit Agreement Obligations" means all monetary obligations of every
nature of the Company or a Restricted Subsidiary, including without limitation,
obligations to pay principal and interest, reimbursement obligations under
letters of credit, fees, expenses and indemnities, from time to time owed to the
lenders or any agent under or in respect of the Credit Agreement.
"Default" means any event, act or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 2.10 hereof.
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"Definitive Securities" means certificated Securities that are in the form
set forth in Exhibit A-1 attached hereto (but without including the text
referred to in footnote 1 and footnote 2 thereto).
"Depositary" means with respect to the Securities issuable or issued in
whole or in part in global form, the Person specified in Section 2.6 hereof as
the Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Designated Guarantor Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, (a) all Guarantor Senior Indebtedness of such Subsidiary
Guarantor under the Credit Agreement Obligations and (b) any other Guarantor
Senior Indebtedness which (i) at the time of incurrence equals or exceeds
$10,000,000 in aggregate principal amount and (ii) is specifically designated by
such Subsidiary Guarantor in the instrument evidencing such Guarantor Senior
Indebtedness as "Designated Guarantor Senior Indebtedness" for purposes of this
Indenture.
"Designated Senior Indebtedness" means (a) all Senior Indebtedness
constituting Credit Agreement Obligations and (b) any other Senior Indebtedness
which (i) at the time of incurrence equals or exceeds $10,000,000 in aggregate
principal amount and (ii) is specifically designated by the Company in the
instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" for purpose of this Indenture.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a resolution of the Board of Directors under this Indenture,
a member of the Board of Directors of the Company who does not have any material
direct or indirect financial interest (other than an interest arising solely
from the beneficial ownership of Capital Stock of the Company) in or with
respect to such transaction or series of transactions.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations thereof issued by the Internal Revenue Service or the Department
of Labor thereunder.
"ERISA Affiliate" shall mean any subsidiary or trade or business (whether
or not incorporated) which is a member of a group of which the Company is a
member and which is under common control within the meaning of Section 414 of
the Code (such rules and regulations shall also be deemed to apply to foreign
corporations and entities).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
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"Event of Default" has the meaning specified in Section 4.1 hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor act thereto.
"Exchange Offer" means the offer by the Company to the Holders of all
outstanding Transfer Restricted Securities to exchange all such outstanding
Transfer Restricted Securities held by such Holders for Series B Securities, in
an aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.
"Fair Market Value" means the fair market value of a Property (including
shares of Capital Stock) or Redeemable Capital Stock as determined by a Board
Resolution of the Company adopted in good faith, which determination shall be
conclusive for purposes of this Indenture; provided, however, that unless
otherwise specified herein, the Board of Directors shall be under no obligation
to obtain any valuation or assessment from any investment banker, appraiser or
other third party.
"Federal Bankruptcy Code" means the United States Bankruptcy Code of Title
11 of the United States Code, as amended from time to time.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States of America, which are
applicable as of the date of this Indenture.
"Global Security" means a Security that is issued in global form in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of the Depositary, and that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
Security attached hereto as Exhibit A.
"Guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or any
part of such obligation, including, without limiting the foregoing, the payment
of amounts drawn down by letters of credit. When used as a verb, "guarantee"
shall have a corresponding meaning.
"Guarantor Senior Indebtedness" means all Indebtedness of a Subsidiary
Guarantor (present and future) created, incurred, assumed or guaranteed by such
Subsidiary Guarantor (and all renewals, substitutions, refinancings or
replacements thereof) (including the principal of, interest on and fees,
premiums, expenses (including costs of collection), indemnities and other
amounts payable in
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connection with such Indebtedness) (and including, in the case of the Credit
Agreement, interest accruing after the filing of a petition by or against such
Subsidiary Guarantor under any bankruptcy law, in accordance with and at the
rate, including any default rate, specified with respect to such indebtedness,
whether or not a claim for such interest is allowed as a claim after such filing
in any proceeding under such bankruptcy law), unless the instrument governing
such Indebtedness expressly provides that such Indebtedness is not senior in
right of payment to its Subsidiary Guarantee. Notwithstanding the foregoing,
Guarantor Senior Indebtedness of a Subsidiary Guarantor will not include (a)
Indebtedness of such Subsidiary Guarantor evidenced by its Subsidiary Guarantee,
(b) Indebtedness of such Subsidiary Guarantor that is expressly subordinated or
junior in right of payment to any Guarantor Senior Indebtedness of such
Subsidiary Guarantor or its Subsidiary Guarantee, (c) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11
United States Code, is by its terms without recourse to such Subsidiary
Guarantor, (d) any repurchase, redemption or other obligation in respect of
Redeemable Capital Stock of such Subsidiary Guarantor, (e) to the extent it
might constitute Indebtedness, any liability for federal, state, local or other
taxes owed or owing by such Subsidiary Guarantor, (f) Indebtedness of such
Subsidiary Guarantor to the Company or any of the Company's other Subsidiaries
or any other Affiliate of the Company or any of such Affiliate's Subsidiary, and
(g) that portion of any Indebtedness of such Subsidiary Guarantor which at the
time of issuance is issued in violation of this Indenture (but, as to any such
Indebtedness, no such violation shall be deemed to exist for purposes of this
clause (g) if the holder(s) of such Indebtedness or their representative or such
Subsidiary Guarantor shall have furnished to the Trustee an opinion of counsel
unqualified in all material respects of independent legal counsel, addressed to
the Trustee (which legal counsel may, as to matters of fact, rely upon a
certificate of such Subsidiary Guarantor) to the effect that the incurrence of
such Indebtedness does not violate the provisions of such Indenture); provided
that the foregoing exclusions shall not affect the priorities of any
Indebtedness arising solely by operation of law in any case or proceeding or
similar event described in clause (a), (b) or (c) of the definition of
"Insolvency or Liquidation Proceedings."
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade accounts payable and other
accrued current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
Person in connection with any letters of credit, bankers' acceptance or other
similar credit transaction and in connection with any agreement to purchase,
redeem, exchange, convert or otherwise acquire for value any Capital Stock of
such Person, or any warrants, rights or options to acquire such Capital Stock,
now or hereafter outstanding, if, and to the extent, any of the foregoing would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (c) all Indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person
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<PAGE>
(even if the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business, (d)
all Capitalized Lease Obligations of such Person, (e) the Attributable
Indebtedness (in excess of any related Capitalized Lease Obligations) related to
any Sale/Leaseback Transaction of such Person, (f) all Indebtedness referred to
in the preceding clauses of other Persons and all dividends of other Persons,
the payment of which is secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (g) all guarantees by such Person of Indebtedness
referred to in this definition (including, with respect to any Production
Payment, any warranties or guaranties of production or payment by such Person
with respect to such Production Payment but excluding other contractual
obligations of such Person with respect to such Production Payment), (h) all
Redeemable Capital Stock of such Person valued at the greater of its voluntary
or involuntary maximum fixed repurchase price plus accrued dividends, (i) all
obligations of such Person under or in respect of currency exchange contracts
and Interest Rate Protection Obligations and (j) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of such
Person of the types referred to in clauses (a) through (i) above. For purposes
hereof, the "maximum fixed repurchase price" of any Redeemable Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Redeemable Capital Stock as if such Redeemable Capital
Stock were purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such fair
market value shall be determined in good faith by the board of directors of the
issuer of such Redeemable Capital Stock, provided, however, that if such
Redeemable Capital Stock is not at the date of determination permitted or
required to be repurchased, the "maximum fixed repurchase price" shall be the
book value of such Redeemable Capital Stock. Subject to clause (g) of the first
sentence of this definition, neither Dollar-Denominated Production Payments nor
Volumetric Production Payments shall be deemed to be Indebtedness.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Initial Purchasers" means Lehman Brothers Inc., Morgan Stanley & Co.
Incorporated, J.P. Morgan Securities, Inc. and NationsBanc Montgomery
Securities, Inc., as initial purchasers in the Offering.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
(a) an insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization proceeding or other similar case or proceeding in
connection therewith, relating to such Person or to its creditors, as such, or
its assets, (b) any liquidation, dissolution or other winding-up of such Person,
whether
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voluntary or involuntary, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of such Person.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and includes, without limitation, interest rate swaps, caps,
floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's and any of its Subsidiaries' exposure to
fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other property or assets to
others or any payment for property, assets or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the Fair
Market Value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary shall be
deemed to be an "Investment" made by the Company in such Unrestricted Subsidiary
at such time. "Investments" shall exclude (a) extensions of trade credit on
commercially reasonable terms in accordance with normal trade practices and (b)
Interest Rate Protection Obligations entered into in the ordinary course of
business or as required by any Permitted Indebtedness or any Indebtedness
incurred in compliance with Section 9.11 hereof, but only to the extent that the
notional principal amount of such Interest Rate Protection Obligations does not
exceed 105% of the principal amount of such Indebtedness to which such Interest
Rate Protection Obligations relate and (c) bonds, notes, debentures or other
securities received as a result of Asset Sales permitted under Section 9.16
hereof.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing) upon or with respect to any property of any kind. A Person shall be
deemed to own subject to a Lien any property which such Person has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 2(e) of the Registration Rights Agreement.
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"Material Change" means an increase or decrease (excluding changes that
result solely from changes in prices) of more than 50% during a fiscal quarter
in the estimated discounted future net cash flows from proved oil and gas
reserves of the Company and its Restricted Subsidiaries, calculated in
accordance with clause (a) (i) of the definition of Adjusted Consolidated Net
Tangible Assets; provided, however, that the following will be excluded from the
calculation of Material Change: (a) any acquisitions during the quarter of oil
and gas reserves that have been estimated by a nationally recognized firm of
independent petroleum engineers and on which a report or reports exist and (b)
any disposition of properties held at the beginning of such quarter that have
been disposed of as provided in Section 9.16 hereof.
"Maturity" means, with respect to any Security, the date on which any
principal of such Security becomes due and payable as provided therein or
herein, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of ERISA
(or any similar type of plan established or regulated under the laws of any
foreign country) to which the Company or any ERISA Affiliate is making or
accruing or has made or accrued an obligation to make contributions.
"Multiple Employer Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA, other than a Multiemployer Plan, subject to
Title IV of ERISA, to which the Company or any ERISA Affiliate and an employer
other than an ERISA Affiliate or the Company contribute and which is subject to
Section 4064 of ERISA.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary), net of (a) brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel and investment banks) related to such Asset Sale, (b) provisions for all
taxes payable as a result of such Asset Sale, (c) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (d) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve required in accordance with GAAP consistently applied
against any liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee; provided,
however, that any amounts remaining after adjustments, revaluations or
liquidations of such reserves shall constitute Net Cash Proceeds.
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"Net Working Capital" means (a) all current assets of the Company and its
Restricted Subsidiaries, minus (b) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in financial statements of the Company
prepared in accordance with GAAP.
"Non-payment Default" means, for purposes of Article XIII hereof, any event
(other than a Payment Default) the occurrence of which entitles one or more
persons to act to accelerate the maturity of any Designated Senior Indebtedness.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of the Company or a Restricted Subsidiary incurred in connection
with the acquisition by the Company or a Restricted Subsidiary of any property
or assets and as to which (a) the holders of such Indebtedness agree that they
will look solely to the property or assets so acquired and securing such
Indebtedness for payment on or in respect of such Indebtedness and (b) no
default with respect to such Indebtedness would permit (after notice or passage
of time or both), according to the terms thereof, any holder of any Indebtedness
of the Company or a Restricted Subsidiary to declare a default on such
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Note Obligations" means any principal of, premium, if any, and interest
on, and any other amounts (including, without limitation, any payment
obligations with respect to the Securities as a result of any Asset Sale, Change
of Control or redemption) owing in respect of, the Securities payable pursuant
to the terms of the Securities or this Indenture or upon acceleration of the
Securities.
"Offering" means the Offering of the Series A Securities pursuant to the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum of the Company, dated
October 21, 1997, relating to the Offering.
"Officer" means, with respect to any Person, the Chairman of the Board, the
President, any Vice President, the Chief Financial Officer or the Treasurer of
such Person.
"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Oil and Gas Business" means (a) the acquisition, exploration, development,
operation and disposition of interests in oil, gas and other hydrocarbon
properties, (b) the gathering, marketing, treating, processing, storage,
refining, selling and transporting of any production from such interests or
Properties, (c) any business relating to or arising from exploration for or
development, production, treatment, processing, storage, refining,
transportation or marketing of oil, gas and other minerals
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and products produced in association therewith, and (d) any activity necessary,
appropriate or incidental to the activities described in the foregoing clauses
(a) through (c) of this definition.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company (or any Subsidiary Guarantor, if applicable), including an
employee of the Company (or any Subsidiary Guarantor, if applicable), and who
shall be reasonably acceptable to the Trustee.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(a) theretofore canceled by the Trustee or delivered to the Trustee
for cancellation;
(b) Securities or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in Sections 11.2 and
11.3 hereof, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article XI hereof; and
(d) Securities which have been paid pursuant to Section 2.9 hereof or
in exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands the
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities owned
by the Company, any Subsidiary Guarantor, or any other obligor upon the
Securities or any Affiliate of the Company, any Subsidiary Guarantor, or such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, consent, notice or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company, any Subsidiary Guarantor, or any other obligor upon the
Securities or any Affiliate of the Company, any Subsidiary Guarantor, or such
other obligor.
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"Pari Passu Indebtedness" means any Indebtedness of the Company that is
pari passu in right of payment to the Securities.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (and premium, if any,
on) or interest on any Securities on behalf of the Company.
"Payment Default" means any default in the payment when due (whether at
Stated Maturity, upon scheduled repayment, upon acceleration or otherwise) of
principal of or premium, if any, or interest on, or of unreimbursed amounts
under drawn letter of credit or fees relating to letter of credit constituting,
any Designated Senior Indebtedness.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PBGC Plan" shall mean any employee pension benefit plan as defined in
Section 3(2) of ERISA sponsored by the Company or an ERISA Affiliate (excluding
any Multiemployer Plan and any Multiple Employer Plan) and which is subject to
Title IV of ERISA or Section 412 of the Code.
"Permitted Guarantor Junior Securities" means with respect to any
Subsidiary Guarantor, so long as the effect of any exclusion employing this
definition is not to cause such Subsidiary Guarantee to be treated in any case
or proceeding or similar event described in clause (a), (b) or (c) of the
definition of Insolvency or Liquidation Proceeding as part of the same class of
claims as Guarantor Senior Indebtedness of such Subsidiary Guarantor or any
class of claims pari passu with, or senior to, Guarantor Senior Indebtedness of
such Subsidiary Guarantor, for any payment or distribution, debt or equity
securities of such Subsidiary Guarantor or any successor corporation provided
for or by a plan of reorganization or readjustment that are subordinated at
least to the same extent that such Subsidiary Guarantee is subordinated to the
payment of all Guarantor Senior Indebtedness of such Subsidiary Guarantor when
outstanding; provided that (i) if a new corporation results from such
reorganization or readjustment, such corporation assumes any Guarantor Senior
Indebtedness of such Subsidiary Guarantor not paid in full in cash or Cash
Equivalents in connection with such reorganization or readjustment and (ii) the
rights of the holders of such Guarantor Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment.
"Permitted Indebtedness" means any of the following:
(a) Indebtedness of the Company under one or more bank credit or
revolving credit facilities in an aggregate principal amount at any one time
outstanding not to exceed the greater of (i) $410 million and (ii) an amount
equal to the sum of (A) $200 million and (B) 20% of Adjusted Consolidated Net
Tangible Assets determined as of the date of the incurrence of such Indebtedness
(such greater amount being referred to as the "Adjusted Maximum Credit Amount")
(plus interest and fees under such facilities), less any amounts derived from
Asset Sales and applied to the required permanent reduction of Senior
Indebtedness (and a permanent reduction of the related
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commitment to lend or amount available to be reborrowed in the case of a
revolving credit facility) under such credit facilities as contemplated by
Section 9.16(b)(i) (the "Maximum Credit Amount") (with the Maximum Credit Amount
to be an aggregate maximum amount for the Company and all Restricted
Subsidiaries, pursuant to clause (a) of the definition of "Permitted Subsidiary
Indebtedness"), and any renewals, amendments, extensions, supplements,
modifications, deferrals, refinancings or replacements (each, for purposes of
this clause, a "refinancing") thereof by the Company, including any successive
refinancings thereof by the Company, so long as the aggregate principal amount
of any such new Indebtedness, together with the aggregate principal amount of
all other Indebtedness outstanding pursuant to this clause (a) (and clause (a)
of the definition of "Permitted Subsidiary Indebtedness"), shall not at any one
time exceed the Maximum Credit Amount;
(b) Indebtedness of the Company under the Securities;
(c) Indebtedness of the Company outstanding on the date of this
Indenture (and not repaid or defeased with the proceeds of the Offering);
(d) obligations of the Company pursuant to Interest Rate Protection
Obligations, but only to the extent such obligations do not exceed 105% of the
aggregate principal amount of the Indebtedness covered by such Interest Rate
Protection Obligations; obligations under currency exchange contracts entered
into in the ordinary course of business; and hedging arrangements that the
Company enters into in the ordinary course of business for the purpose of
protecting its production against fluctuations in oil or natural gas prices;
(e) Indebtedness of the Company to any Restricted Subsidiaries;
(f) in-kind obligations relating to net gas balancing positions
arising in the ordinary course of business and consistent with past practice;
(g) Indebtedness in respect of bid, performance or surety bonds
issued for the account of the Company or any Restricted Subsidiary in the
ordinary course of business, including guarantees and letters of credit
supporting such bid, performance, surety or other reimbursement obligations (in
each case other than for an obligation for money borrowed);
(h) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by the Company
of any Indebtedness of the Company other than Indebtedness incurred pursuant to
clauses (d), (g) and (h) of this definition, including any successive
refinancings by the Company, so long as (i) any such new Indebtedness shall be
in a principal amount that does not exceed the principal amount (or, if such
Indebtedness being refinanced provides for an amount less than the principal
amount thereof to be due and payable upon a declaration of acceleration thereof,
such lesser amount as of the date of determination) so refinanced plus the
amount of any premium required to be paid in connection with such refinancing
pursuant to the terms of the Indebtedness refinanced or the amount of any
premium reasonably
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determined by the Company as necessary to accomplish such refinancing, plus the
amount of expenses of the Company incurred in connection with such refinancing,
and (ii) in the case of any refinancing of Subordinated Indebtedness, such new
Indebtedness is made subordinate to the Securities at least to the same extent
as the Indebtedness being refinanced and (iii) such new Indebtedness has an
Average Life equal to or longer than the Average Life of the Indebtedness being
refinanced and a final Stated Maturity equal to or later than the final Stated
Maturity of the Indebtedness being refinanced;
(i) Non-Recourse Indebtedness; and
(j) other Indebtedness of the Company in an aggregate principal
amount not in excess of $25,000,000 at any one time outstanding.
"Permitted Investments" means any of the following: (a) Investments in Cash
Equivalents; (b) Investments in the Company or any of its Restricted
Subsidiaries; (c) Investments in an amount not to exceed 5% of Adjusted
Consolidated Net Tangible Assets determined as of the date of the making or
incurrence of such Permitted Investment at any one time outstanding; (d)
Investments by the Company or any of its Restricted Subsidiaries in another
Person, if as a result of such Investment (i) such other Person becomes a
Restricted Subsidiary of the Company or (ii) such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its assets to, the Company or a Restricted Subsidiary; (e) entry into operating
agreements, joint ventures, partnership agreements, working interests; royalty
interests, mineral leases, processing agreements, farm-out agreements, contracts
for the sale, transportation or exchange of oil and natural gas, unitization
agreements, pooling arrangements, area of mutual interest agreements or other
similar or customary agreements, transactions, properties, interests or
arrangements, and Investments and expenditures in connection therewith or
pursuant thereto, in each case made or entered into in the ordinary course of
the Oil and Gas Business; (f) entry into any hedging arrangements in the
ordinary course of business for the purpose of protecting the Company's or any
Restricted Subsidiary's production against fluctuations in oil or natural gas
prices; (g) Investments in units of any oil and gas royalty trust; or (h) entry
into a joint venture or partnership agreement in connection with ownership and
operation of office and building real estate and related assets owned by the
Company or any Restricted Subsidiary and contribution of such assets to such
entity.
"Permitted Junior Securities" means, so long as the effect of any exclusion
employing this definition is not to cause the Securities to be treated in any
case or proceeding or similar event described in clause (a), (b) or (c) of the
definition of Insolvency or Liquidation Proceeding as part of the same class of
claims as Senior Indebtedness or any class of claims pari passu with, or senior
to, Senior Indebtedness, for any payment or distribution, debt or equity
securities of the Company or any successor corporation provided for or by a plan
of reorganization or readjustment that are subordinated at least to the same
extent that the Securities are subordinated to the payment of all Senior
Indebtedness when outstanding; provided that (i) if a new corporation results
from such reorganization or readjustment, such corporation assumes any Senior
Indebtedness not paid in full in cash or Cash Equivalents in connection with
such reorganization or readjustment and (ii) the
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rights of the holders of such Senior Indebtedness are not, without the consent
of such holders, altered by such reorganization or readjustment.
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the date the Securities are first issued;
(b) Liens securing the Securities;
(c) Liens in favor of the Company or a Subsidiary Guarantor;
(d) Liens securing Senior Indebtedness or Guarantor Senior
Indebtedness;
(e) Liens for taxes, assessments and governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries shall
have set aside on its books such reserves as may be required pursuant to GAAP;
(f) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof;
(g) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety and appeal bonds, bids,
leases, government contracts and leases, performance and return of money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money but including lessee or operator obligations under statutes,
governmental regulations or instruments related to the ownership, exploration
and production of oil, gas and minerals on state, federal or foreign lands or
waters);
(h) judgment Liens not giving rise to an Event of Default so long as
any appropriate legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated or the period
within which such proceeding may be initiated shall not have expired;
(i) easements, rights-of-way, restrictions and other similar charges
or encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Restricted Subsidiaries;
(j) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
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(k) Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of defeasing Indebtedness of the Company
or any of the Subsidiaries;
(l) Liens securing obligations under hedging agreements that the
Company or any Restricted Subsidiary enters into in the ordinary course of
business for the purpose of protecting its production against fluctuations in
oil or natural gas prices;
(m) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(n) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(o) Liens encumbering property or assets under construction arising
from progress or partial payments by a customer of the Company or its Restricted
Subsidiaries relating to such property or assets;
(p) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and set-off;
(q) Liens securing Interest Rate Protection Obligations which
Interest Rate Protection Obligations relate to Indebtedness that is secured by
Liens otherwise permitted under this Indenture;
(r) Liens on, or related to, properties or assets to secure all or
part of the costs incurred in the ordinary course of business for the
exploration, drilling, development or operation thereof;
(s) Liens on pipeline or pipeline facilities which arise out of
operation of law;
(t) Liens arising under operating agreements, joint venture
agreements, partnership agreements, oil and gas leases, farm-out agreements,
division orders, contracts for the sale, transportation or exchange of oil and
natural gas, unitization and pooling declarations and agreements, area of mutual
interest agreements and other agreements which are customary in the Oil and Gas
Business;
(u) Liens reserved in oil and gas mineral leases for bonus or rental
payments and for compliance with the terms of such leases;
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(v) Liens constituting survey exceptions, encumbrances, easements, or
reservations of, or rights to others for, rights-of-way, zoning or other
restrictions as to the use of real properties, and minor defects of title which,
in the case of any of the foregoing, were not incurred or created to secure the
payment of borrowed money or the deferred purchase price of Property or
services, and in the aggregate do not materially adversely affect the value of
Property of the Company and the Restricted Subsidiaries, taken as a whole, or
materially impair the use of such Properties for the purposes for which such
Properties are held by the Company or any Restricted Subsidiaries; and
(w) Liens securing Non-Recourse Indebtedness; provided, however, that
the related Non-Recourse Indebtedness shall not be secured by any property or
assets of the Company or any Restricted Subsidiary other than the property and
assets acquired by the Company with the proceeds of such Non-Recourse
Indebtedness.
Notwithstanding anything in clauses (a) through (w) of this definition, the term
"Permitted Liens" does not include any Liens resulting from the creation,
incurrence, issuance, assumption or guarantee of any Production Payments other
than Production Payments that are created, incurred, issued, assumed or
guaranteed in connection with the financing of, and within 30 days after, the
acquisition of the properties or assets that are subject thereto.
"Permitted Subsidiary Indebtedness" means any of the following:
(a) Indebtedness of any Restricted Subsidiary under one or more bank
credit or revolving credit facilities (and "refinancings" thereof) in an amount
at any one time outstanding not to exceed the Maximum Credit Amount (in the
aggregate for all Restricted Subsidiaries and the Company, pursuant to clause
(a) of the definition of "Permitted Indebtedness");
(b) Indebtedness of any Restricted Subsidiary outstanding on the date
of this Indenture;
(c) obligations of any Restricted Subsidiary pursuant to Interest
Rate Protection Obligations, but only to the extent such obligations do not
exceed 105% of the aggregate principal amount of the Indebtedness covered by
such Interest Rate Protection Obligations; and hedging arrangements that any
Restricted Subsidiary enters into in the ordinary course of business for the
purpose of protecting its production against fluctuations in oil or natural gas
prices;
(d) the Subsidiary Guarantees (and any assumption of the obligations
guaranteed thereby);
(e) Indebtedness of any Restricted Subsidiary relating to guarantees
by such Restricted Subsidiary of Permitted Indebtedness pursuant to clause (a)
of the definition of "Permitted Indebtedness;"
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(f) in-kind obligations relating to net gas balancing positions
arising in the ordinary course of business and consistent with past practice;
(g) Indebtedness in respect of bid, performance or surety bonds or
other reimbursement obligations issued for the account of any Restricted
Subsidiary in the ordinary course of business, including guarantees and letters
of credit supporting such bid, performance, surety bonds or other reimbursement
obligations (in each case other than for an obligation for money borrowed);
(h) Indebtedness of any Restricted Subsidiary to any other Restricted
Subsidiary or to the Company;
(i) Indebtedness relating to guarantees by any Restricted Subsidiary
permitted to be incurred pursuant to Section 9.12(a) hereof;
(j) Non-Recourse Indebtedness; and
(k) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") by any
Restricted Subsidiary of any Indebtedness of such Restricted Subsidiary,
including any successive refinancings by such Restricted Subsidiary, so long as
(i) any such new Indebtedness shall be in a principal amount that does not
exceed the principal amount (or, if such Indebtedness being refinanced provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration thereof, such lesser amount as of the date of
determination) so refinanced plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined by such Restricted
Subsidiary as necessary to accomplish such refinancing, plus the amount of
expenses of such Subsidiary incurred in connection with such refinancing and
(ii) such new Indebtedness has an Average Life equal to or longer than the
Average Life of the Indebtedness being refinanced and a final Stated Maturity
equal to or later than the final Stated Maturity of the Indebtedness being
refinanced.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.9 hereof in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Security shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference
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stock, whether now outstanding or issued after the date of this Indenture,
including, without limitation, all classes and series of preferred or preference
stock of such Person.
"Production Payments" means, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other Person.
"Public Equity Offering" means an underwritten public offering for cash by
the Company of its Qualified Capital Stock pursuant to a registration statement
that has been declared effective by the Commission (other than a registration
statement on Form S-8 or any successor form or otherwise relating to equity
securities issuable under any employee benefit plan of the Company).
"Public Market" exists at any time with respect to the Qualified Capital
Stock of the Company if such Qualified Capital Stock of the Company is then (a)
registered with the Securities and Exchange Commission pursuant to Section 12(b)
or 12(g) of the Exchange Act and (b) traded either on a national securities
exchange or on the NASDAQ Stock Market.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A of
the Securities Act.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Qualified Redemption Transaction" means a call for redemption of any
Capital Stock or Subordinated Indebtedness (including any Subordinated
Indebtedness accounted for as a minority interest of the Company that is held by
a Subsidiary that is a business trust or similar entity formed for the primary
purpose of issuing preferred securities the proceeds of which are loaned to the
Company or a Restricted Subsidiary) that by its terms is convertible into common
stock of the Company if on the date of notice of such call for redemption (a) a
Public Market exists in the shares of common stock of the Company and (b) the
average closing price on the Public Market for shares of common stock of the
Company for the twenty trading days immediately preceding the date of such
notice exceeds 120% of the conversion price per share (determined by reference
to the redemption price) of common stock of the Company issuable upon conversion
of the Capital Stock or Subordinated Indebtedness called for redemption.
"Redeemable Capital Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to 91 days
after the final Stated Maturity of the Securities or is redeemable at the option
of the holder thereof at any time prior to 91 days after such final Stated
Maturity, or is
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convertible into or exchangeable for debt securities at any time prior to 91
days after such final Stated Maturity.
"Redemption Date," when used with respect to any Security to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registrable Securities" shall have the meaning assigned to such term in
the Registration Rights Agreement.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated as of October 28, 1997, among the Company and the Initial
Purchasers.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent Global Note in the
form of Exhibit A-2 hereto containing the information set forth in footnote 1
and footnote 3, and deposited with or on behalf of and registered in the name of
the Depositary or its nominee, issued in a denomination equal to the outstanding
principal amount of the Regulation S Temporary Note upon expiration of the
Restricted Period.
"Regulation S Temporary Global Note" means a temporary Global Note in the
form of Exhibit A-2 hereto containing the information set forth in footnote 1,
footnote 2 and footnote 3, and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Securities initially sold in reliance on
Rule 903 of Regulation S.
"Reportable Event" shall mean any event described in Section 4043
(excluding subsections (b)(7) and (b)(9)) of ERISA and the regulations issued
thereunder (other than a Reportable Event not subject to the provision for
thirty-day notice to the PBGC under such regulations).
"Responsible Officer," when used with respect to the Trustee, means any
officer in the corporate trust department of the Trustee, and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
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"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of this Indenture, unless such Subsidiary of the
Company is an Unrestricted Subsidiary or is designated as an Unrestricted
Subsidiary pursuant to the terms of this Indenture.
"Rule 144A Global Note" means the Global Security in the form of Exhibit A-
1 hereto and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Securities sold in reliance on Rule 144A.
"S&P" means Standard and Poor's Corporation and its successors.
"Sale/Leaseback Transaction" means, with respect to any Person, any direct
or indirect arrangement pursuant to which properties or assets are sold or
transferred by such Person or a Subsidiary of such Person and are thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Subsidiaries.
"Securities," means the Series A Securities and the Series B Securities
treated as a single class of Securities. For purposes of this Indenture, the
term "Securities" shall, except where the context otherwise requires, include
the Subsidiary Guarantees, if any.
"Securities Act" means the Securities of 1933, as amended, and any
successor statute.
"Security Custodian means the Trustee, as custodian with respect to the
Securities in global form, or any successor entity thereto.
"Security Register" and "Securities Registrar" shall have the meanings
specified in Section 2.6 hereof.
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of the Company (including, in the case of the Credit
Agreement, interest accruing after the filing of a petition by or against the
Company under any bankruptcy law, in accordance with and at the rate, including
any default rate, specified with respect to such indebtedness, whether or not a
claim for such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law), whether outstanding on the date of this
Indenture or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (a)
Indebtedness evidenced by the Securities, (b) Indebtedness that is expressly
subordinate or junior in right of payment to any Senior Indebtedness of the
Company, (c) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11 United States Code, is by its terms
without recourse to the Company, (d) any repurchase,
27
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redemption or other obligation in respect of Redeemable Capital Stock of the
Company, (e) to the extent it might constitute Indebtedness, any liability for
federal, state, local or other taxes owed or owing by the Company, (f)
Indebtedness of the Company to a Subsidiary of the Company or any other
Affiliate of the Company or any of such Affiliate's Subsidiaries, and (g) that
portion of any Indebtedness of the Company which at the time of issuance is
issued in violation of this Indenture (but, as to any such Indebtedness, no such
violation shall be deemed to exist for purposes of this clause (g) if the
holder(s) of such Indebtedness or their representative or the Company shall have
furnished to the Trustee an opinion of counsel unqualified in all material
respects of independent legal counsel, addressed to the Trustee (which legal
counsel may, as to matters of fact, rely upon a certificate of the Company) to
the effect that the incurrence of such Indebtedness does not violate the
provisions of such Indenture); provided that the foregoing exclusions shall not
affect the priorities of any Indebtedness arising solely by operation of law in
any case or proceeding or similar event described in clause (a), (b) or (c) of
the definition of "Insolvency or Liquidation Proceeding."
"Senior Representative" means the Bank Co-agents or any other
representatives designated in writing to the Trustee of the holders of any class
or issue of Designated Senior Indebtedness; provided that, in the absence of a
representative of the type described above, any holder or holders of a majority
of the principal amount outstanding of any class or issue of Designated Senior
Indebtedness may collectively act as Senior Representative for such class or
issue, subject to the provisions of any agreements relating to such Designated
Senior Indebtedness.
"Series A Securities" means the Company's 8 3/4% Series A Senior Notes due
2009 to be issued pursuant to this Indenture.
"Series B Securities" means the Company's 8 3/4% Series B Senior Notes due
2009 to be issued pursuant to this Indenture in the Exchange Offer.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.10 hereof.
"Stated Maturity" means, when used with respect to any Security or any
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable, and, when used with respect to any other
Indebtedness or any installment of interest thereon, means the date specified in
the instrument evidencing or governing such Indebtedness as the fixed date on
which the principal of such Indebtedness or such installment of interest is due
and payable.
"Subordinated Indebtedness" means Indebtedness of the Company which is
expressly subordinated in right of payment to the Securities.
"Subsidiary" means, with respect to any Person, (a) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (b) any other Person (other
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than a corporation), including, without limitation, a joint venture, in which
such Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Person performing
similar functions).
"Subsidiary Guarantee" means any guarantee of the Securities by any
Subsidiary Guarantor in accordance with the provisions of Section 12.1 hereof.
"Subsidiary Guarantor" means (a) each of the Company's Restricted
Subsidiaries that becomes a guarantor of the Securities in compliance with the
provisions of Section 9.12 or Section 12.1 hereof and (b) each of the Company's
Subsidiaries executing a supplemental indenture in which such Subsidiary agrees
to be bound by the terms of this Indenture and to guarantee on an unsubordinated
basis the payment of the Securities pursuant to the provisions of Article XII
hereof.
"Transfer Restricted Securities" means the Registrable Securities under the
Registration Rights Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended and in force at the date as of which this Indenture was executed, except
as provided in Section 8.5 hereof.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below and (b) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors of the Company may designate any
Subsidiary of the Company as an Unrestricted Subsidiary so long as (i) neither
the Company nor any Restricted Subsidiary is directly or indirectly liable
pursuant to the terms of any Indebtedness of such Subsidiary, (ii) no default
with respect to any Indebtedness of such Subsidiary would permit (upon notice,
lapse of time or otherwise) any holder of any other Indebtedness of the Company
or any Restricted Subsidiary to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity, (iii) neither the Company nor any Restricted Subsidiary has made an
Investment in such Subsidiary unless such Investment was made pursuant to, and
in accordance with, Section 9.10 hereof (other than Investments of the type
described in clause (d) of the definition of Permitted Investments), and (iv)
such designation shall not result in the creation or imposition of any Lien on
any of the Properties of the Company or any Restricted Subsidiary (other than
any Permitted Lien or any Lien the creation or imposition of which shall have
been in compliance with Section 9.14 hereof); provided, however, that with
respect to clause (i), the Company or a Restricted Subsidiary may be liable for
Indebtedness of an Unrestricted Subsidiary if (A) such liability constituted a
Permitted Investment or a Restricted Payment permitted by Section 9.10 hereof,
in each case at the time of incurrence, or (B) the liability would be a
Permitted Investment at the time of designation
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of such Subsidiary as an Unrestricted Subsidiary. Any such designation by the
Board of Directors of the Company shall be evidenced to the Trustee by filing a
Board Resolution with the Trustee giving effect to such designation. The Board
of Directors of the Company may designate any Unrestricted Subsidiary as a
Restricted Subsidiary if, immediately after giving effect to such designation,
(x) no Default or Event of Default shall have occurred and be continuing, (y)
the Company could incur $1.00 of additional Indebtedness (not including the
incurrence of Permitted Indebtedness) under Section 9.11(a) hereof and (z) if
any of the Properties of the Company or any of its Restricted Subsidiaries would
upon such designation become subject to any Lien (other than a Permitted Lien),
the creation or imposition of such Lien shall have been in compliance with
Section 9.14 hereof.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent all of the Capital Stock or other ownership interests in such Restricted
Subsidiary, other than any directors qualifying shares mandated by applicable
law, is owned directly or indirectly by the Company.
Section 1.2 Other Definitions.
<TABLE>
<CAPTION>
Defined
Term in Section
---- ----------
<S> <C>
"Agent Members................................. 2.8(b)
"Change of Control Notice"..................... 9.15(c)
"Change of Control Offer"...................... 9.15(a)
"Change of Control Purchase Date".............. 9.15(c)
"Change of Control Purchase Price"............. 9.15(a)
"Defaulted Interest"........................... 2.10
"Funding Guarantor"............................ 12.5
"Excess Proceeds".............................. 9.16(b)
"Net Proceeds Deficiency"...................... 9.16(c)
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
"Net Proceeds Offer"................................... 9.16(c)
"Net Proceeds Payment Date"............................ 9.16(c)
"Offered Price"........................................ 9.16(c)
"Pari Passu Indebtedness Amount"....................... 9.16(c)
"Pari Passu Offer"..................................... 9.16(c)
"Payment Amount"....................................... 9.16(b)
"Payment Blockage Notice".............................. 13.3(b)
"Payment Blockage Period".............................. 13.3(b)
"Permitted Payments"................................... 9.10(b)
"Purchase Notice"...................................... 9.16(c)
"Restricted Payment"................................... 9.10(a)
"Subsidiary Guarantor Non-payment Default"............. 12.9(b)
"Subsidiary Guarantor Payment Default"................. 12.9(a)
"Subsidiary Guarantor Payment Notice".................. 12.9(b)
"Surviving Entity"..................................... 7.1(a)
"Trigger Date"......................................... 9.16(c)
"U.S. Government Obligations".......................... 11.4(a)
</TABLE>
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities,
"indenture security holder" means a Holder,
"indenture to be qualified" means this Indenture,
"indenture trustee" or "institutional trustee" means the Trustee, and
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
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Section 1.4 Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(d) unless the context otherwise requires, the word "or" is not
exclusive;
(e) provisions apply to successive events and transactions; and
(f) references to agreements and other instruments include subsequent
amendments and waivers but only to the extent not prohibited by this Indenture.
ARTICLE II
THE SECURITIES
Section 2.1 Forms Generally.
Certificates for Securities shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities or notations of Subsidiary Guarantees,
as the case may be, as evidenced by their execution of such Securities or
notations of Subsidiary Guarantees, as the case may be.
Securities (including the notations thereon relating to the Subsidiary
Guarantees and the Trustees certificate of authentication) offered and sold to
QIBs shall be issued initially in the form of the Rule 144A Global Note
substantially in the form set forth in Exhibit A-1 attached hereto deposited
with the Trustee, as custodian for the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. Subject to the
limitation set forth in Section 2.2, the principal amount of the Rule 144A
Global Note may be increased or decreased from time to time by adjustments made
on the records of the Trustee as custodian for the Depositary, as hereinafter
provided.
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Securities offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Note, which shall be
deposited on behalf of the purchasers of the Securities represented thereby with
the Trustee, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank. Within a reasonable time
after expiration of the Restricted Period, the Regulation S Temporary Global
Notes will be exchanged for the Regulation S Permanent Global Notes upon the
receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any beneficial owners thereof who acquired an
interest therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a Global Security pursuant to Section 2.7 hereof), and
(ii) an Officers' Certificate from the Company. Following such period,
beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in the Regulation S Permanent Global Notes
pursuant to the applicable rules and procedures of the Depositary, Euroclear and
Cedel Bank. Simultaneously with the authentication of Regulation S Permanent
Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note.
The aggregate principal amount of the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes may from time to time be increased or
decreased in connection with transfers of interest pursuant to Section 2.7
hereof.
Securities (including the notations thereon relating to any Subsidiary
Guarantees and the Trustees certificate of authentication) offered and sold
other than as described in the preceding paragraphs shall be issued in the form
of Definitive Securities in registered form in substantially the form set forth
in Exhibit A-1.
The Securities, the notations thereon relating to any Subsidiary Guarantees
and the Trustee's certificate of authentication shall be in substantially the
forms set forth in Exhibit A-1 or Exhibit A-2 attached hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities
or notations of Subsidiary Guarantees, as the case may be, as evidenced by their
execution of the Securities or notations of Subsidiary Guarantees, as the case
may be. Any portion of the text of any Security may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Security. The
Securities may also have set forth on the reverse side thereof a form of
assignment and forms to elect purchase by the Company pursuant to Sections 9.15
and 9.16 hereof.
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Section 2.2 Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to $175,000,000 except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 2.5, 2.7, 2.9, 8.6,
9.15, 9.16 or 10.8 hereof.
The Securities shall be known and designated as the "8 3/4% Series A Senior
Subordinated Notes due 2009" and the "8 3/4% Series B Senior Subordinated Notes
due 2009" of the Company. Their Stated Maturity shall be November 1, 2009, and
they shall bear interest at the rate of 8 3/4% per annum from October 28, 1997,
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, payable semiannually on May 1 and November 1 in each year,
commencing May 1, 1998, and at said Stated Maturity, until the principal thereof
is paid or duly provided for.
The principal of (and premium, if any, on) and interest on the Securities
shall be payable at the office or agency of the Company maintained for such
purpose in The City of New York, or at such other office or agency of the
Company as may be maintained for such purpose; provided, however, that, at the
option of the Company, interest may be paid (i) by check mailed to addresses of
the Persons entitled thereto as such addresses shall appear on the Security
Register, or (ii) with respect to any Holder owning Securities in the principal
amount of $500,000 or more, by wire transfer to an account maintained by the
Holder located in the United States, as specified in a written notice to the
Trustee, received prior to the relevant Regular Record Date, by any such Holder
requesting payment by wire transfer and specifying the account to which transfer
is requested.
The Securities shall be redeemable as provided in Article X hereof.
The Securities shall be subject to defeasance at the option of the Company
as provided in Article XI hereof.
The Securities shall be guaranteed by the Subsidiary Guarantors as provided
in Article XII hereof.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII hereof.
Section 2.3 Denominations.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
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<PAGE>
Section 2.4 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman,
its President or one of its Vice Presidents, under its corporate seal reproduced
thereon (which may be by facsimile) and attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile signatures of the present or any future such
authorized officer and may be imprinted or otherwise reproduced on the
Securities.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company and, if
guaranteed by a Subsidiary Guarantor, having the notation of Subsidiary
Guarantees executed by the Subsidiary Guarantors to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with such Company
Order shall authenticate and deliver such Securities with the notation of
Subsidiary Guarantees, if any, thereon as provided in this Indenture.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.
In case the Company, pursuant to and in compliance with Article VII hereof,
shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its Properties substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article VII hereof, any of the
Securities authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Securities executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and
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<PAGE>
delivered in any new name of a successor Person pursuant to this Section in
exchange or substitution for or upon registration of transfer of any Securities,
such successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time Outstanding for
Securities authenticated and delivered in such new name.
Section 2.5 Temporary Securities.
Pending the preparation of Definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the Definitive Securities in lieu of which they are issued and having the
notations of Subsidiary Guarantees, if any, thereon and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities and notations of Subsidiary Guarantees may determine,
as conclusively evidenced by their execution of such Securities and notations of
Subsidiary Guarantees.
If temporary Securities are issued, the Company will cause Definitive
Securities to be prepared without unreasonable delay. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 9.2
hereof, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
Definitive Securities of authorized denominations having notations of Subsidiary
Guarantees, if any, thereon. Until so exchanged, the temporary Securities shall
in all respects be entitled to the same benefits under this Indenture as
Definitive Securities.
Section 2.6 Security Register and Depositary.
The Company shall cause to be kept at the Corporate Trust Office a register
(the register maintained in such office and in any other office or agency
designated pursuant to Section 9.2 hereof being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities. The Security Register shall be in written form or
any other form capable of being converted into written form within a reasonable
time. At all reasonable times and during normal business hours, the Security
Register shall be open to inspection by the Trustee. The Trustee is hereby
initially appointed as security registrar (the "Security Registrar") for the
purpose of registering Securities and transfers of Securities as herein
provided.
The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Global Security.
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Section 2.7 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Securities Registrar with the request:
(x) to register the transfer of the Definitive Securities, or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Securities Registrar shall register the transfer or make the exchange as
requested if its requirement for such transactions are met; provided, however,
that the Definitive Securities presented or surrendered for registration of
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Securities Registrar
duly executed by the Holder thereof or by his attorney, duly authorized in
writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the following additional
information and documents, as applicable, upon which the Securities
Registrar may conclusively rely:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder to
that effect (in substantially the form of Exhibit C hereto); or
(B) if such Transfer Restricted Securities are being
transferred (1) to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance with Rule 144A under
the Securities Act or (2) pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act or (3) pursuant
to an effective registration statement under the Securities Act, a
certification to that effect from such Holder (in substantially the
form of Exhibit C hereto); or
(C) if such Transfer Restricted Securities are being
transferred to an institutional "accredited investor," within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
pursuant to a private placement exemption from the registration
requirements of the Securities Act, a certification to that effect
from such Holder (in substantially the form of Exhibit C hereto), a
certification from the applicable transferee (in substantially the
form of Exhibit D hereto) and, if such transfer is in respect of an
aggregate principal amount of Transfer Restricted
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Securities less than $250,000, an opinion of counsel acceptable to the
Company that such transfer is in compliance with the Securities Act;
(D) if such Transfer Restricted Securities are being
transferred pursuant to an exemption from registration in accordance
with Rule 904 under the Securities Act, certifications to that effect
from such Holder (in substantially the form of Exhibits C and E
hereto); or
(E) if such Transfer Restricted Securities are being
transferred in reliance on another exemption from the registration
requirements of the Securities Act (based upon an opinion of counsel
acceptable to the Company), a certification to that effect from such
Holder (in substantially the form of Exhibit C hereto).
(b) Restriction on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form of Exhibit C hereto,
upon which the Trustee may conclusively rely, that such Definitive Security
is being transferred to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance with Rule 144A under the
Securities Act; or
(ii) if such Definitive Security is a Transfer Restricted
Security and is being transferred pursuant to an exemption from
registration in accordance with Rule 904 under the Securities Act,
certifications to that effect from such Holder (in substantially the form
of Exhibits C and E hereto); and
(iii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to make, or
direct the Security Custodian to make, an endorsement on the Global
Security to reflect an increase in the aggregate principal amount of the
Securities represented by the Global Security;
then the Trustee shall cancel such Definitive Security in accordance with
Section 2.12 hereof and cause, or direct the Security Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Security Custodian, the aggregate principal amount of
Securities represented by the Global Security to be increased accordingly. If
no Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate a new Global Security in the appropriate principal
amount.
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(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor, which shall include restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any Person having a beneficial interest in a Global Security
may upon request to the Trustee exchange such beneficial interest for a
Definitive Security. Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the Depositary, from
the Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security, and in the case of a Transfer Restricted
Security, the following additional information and documents (all of which
may be submitted by facsimile), upon which the Trustee may conclusively
rely:
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification from such Person to that effect (in substantially the
form of Exhibit C hereto); or
(B) if such beneficial interest is being transferred (1) to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act
or (2) pursuant to an exemption from registration in accordance with
Rule 144 under the Securities Act or (3) pursuant to an effective
registration statement under the Securities Act, a certification to
that effect from the transferor (in substantially the form of Exhibit
C hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor," within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act pursuant to a
private placement exemption from the registration requirements of the
Securities Act, a certification to that effect from such transferor
(in substantially the form of Exhibit C hereto), a certification from
the applicable transferee (in substantially the form of Exhibit D
hereto) and if such transfer is in respect of an aggregate principal
amount of the Transfer Restricted Securities less than $250,000, an
opinion of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act; or
(D) if such beneficial interest is being transferred
pursuant to an exemption from registration in accordance with Rule 904
under the Securities Act, certifications to that effect from such
transferor (in substantially the form of Exhibits C and E hereto);
provided, however, a beneficial interest in the Regulation S Temporary
Global Note may not be (A) exchanged for a Definitive Security prior
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to (X) the expiration of the Restricted Period and (y) the receipt by
the Securities Registrar of any certificates determined by the Company
to be required pursuant to Rule 903(c)(3)(B) under the Securities Act
or (B) transferred to a Person who takes delivery thereof in the form
of a Definitive Security prior to satisfaction of the conditions set
forth in clause (A) above or unless the transfer is pursuant to an
exemption from the registration requirements of the Securities Act
other than Rule 903 or Rule 904; or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act (and based upon an opinion of counsel acceptable to
the Company), a certification to that effect from such transferor (in
substantially the form of Exhibit C hereto);
the Trustee or the Security Custodian, at the direction of the Trustee, shall,
in accordance with the standing instructions and procedures existing between the
Depositary and the Security Custodian, cause the aggregate principal amount of
Global Securities to be reduced accordingly and, following such reduction, the
Company shall execute and the Trustee shall authenticate and deliver to the
transferee a Definitive Security in the appropriate principal amount.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.7(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the Persons in whose names such
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.7), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of Depositary.
If at any time:
(i) the Depositary for the Securities notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for the
Global Securities and a successor Depositary for the Global Securities is
not appointed by the Company within 90 days after delivery of such notice;
(ii) an Event of Default has occurred and is continuing and the
Security Registrar has received a request from the Depositary to issue
Definitive Securities in lieu of
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all or a portion of the Global Security (in which case the Company shall
deliver Definitive Securities within 30 days of such request); or
(iii) the Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Securities
under this Indenture,
then the Company will execute, and the Trustee will authenticate and deliver
Definitive Securities, in an aggregate principal amount equal to the principal
amount of the Global Securities, in exchange for such Global Securities and
registered in such names as the Depositary shall instruct the Trustee or the
Company in writing.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS PERMITTED BY
REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB") OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI") OR (C) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (F) IN
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ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING."
Each Security certificate evidencing the Global Securities also shall bear the
paragraph referred to in footnote 1 in the form of Security attached hereto as
Exhibit A.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is
a Definitive Security, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legend set forth in (i) above and
rescind any restriction on the transfer of such Transfer Restricted
Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Security, such Transfer Restricted Security
shall not be required to bear the legend set forth in (i) above if all
other interests in such Global Security have been or are concurrently
being sold or transferred pursuant to Rule 144 under the Securities
Act or pursuant to an effective registration statement under the
Securities Act, but such Transfer Restricted Security shall continue
to be subject to the provisions of Section 2.7(c) hereof; provided,
however, that with respect to any request for an exchange of a
Transfer Restricted Security that is represented by a Global Security
for a Definitive Security that does not bear a legend set forth in (i)
above, which request is made in reliance upon Rule 144 under the
Securities Act, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule 144 under
the Securities Act (such certification to be substantially in the form
of Exhibit C hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.4 hereof, the Trustee
shall authenticate Series B Securities in exchange for
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Series A Securities accepted for exchange in the Exchange Offer, which
Series B Securities shall not bear the legend set forth in (i) above, and
the Registrar shall rescind any restriction on the transfer of such
Securities, in each case unless the Holder of such Series A Securities is
either (A) a broker-dealer, (B) a Person participating in the distribution
of the Series A Securities or (C) a Person who is an affiliate (as defined
in Rule 144 under the Securities Act) of the Company. The Company shall
identify to the Trustee such Holders of the Securities in a written
certification signed by an Officer of the Company and, absent certification
from the Company to such effect, the Trustee shall assume that there are no
such Holders.
(h) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to or retained and cancelled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Security Custodian, at the direction of the Trustee to reflect such
reduction.
(i) General Provisions with respect to Transfer and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption of Securities (except as
otherwise expressly permitted herein), but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than such transfer tax or
similar governmental charge payable upon exchanges pursuant to the last
paragraph of Section 2.4 or Sections 2.5, 8.6 or 10.8 hereof).
(iii) The Trustee shall authenticate Definitive Securities and
Global Securities in accordance with the provisions of Section 2.4 hereof.
(iv) Notwithstanding any other provisions of this Indenture to
the contrary, the Company shall not be required to register the transfer or
exchange of a Security between the record date and the next succeeding
Interest Payment Date.
(v) Neither the Company nor the Trustee will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, Securities by the Depositary, or for
maintaining, supervising or reviewing any records of the Depositary
relating to such Securities. Neither the Company nor the Trustee shall be
liable for any delay
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by the related Global Security Holder or the Depositary in identifying the
beneficial owners of the related Securities and each such Person may
conclusively rely on, and shall be protected in relying on, instructions
from such Global Security Holder or the Depositary for all purposes
(including with respect to the registration and delivery, and the
respective principal amounts, of the Securities to be issued).
(vi) Neither the Trustee, the Security Registrar nor the
Company shall be required (a) to issue, register the transfer of or
exchange any Security during a period beginning at the opening of business
15 days before the mailing of a notice of redemption of Securities selected
for redemption under Section 10.4 hereof and ending at the close of
business on the day of such mailing of the relevant notice of redemption,
or (b) to register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
(vii) All Securities and the Subsidiaries Guarantees, if any,
noted thereon issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company and the respective
Subsidiary Guarantors, if any, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
(viii) Each Holder of a Security agrees to indemnify the Company
and the Trustee against any liability that may result from the transfer,
exchange or assignment of such Holder's Security in violation of any
provision of this Indenture and/or applicable federal or state securities
law.
(ix) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security other than to require delivery of
such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms of,
this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof and to refuse to register
the transfer of any Securities in violation of this Section 2.7.
Section 2.8 Additional Provisions for Global Securities.
(a) The Global Security initially shall be registered in the
name of the Depositary for such Global Security or the nominee of such
Depositary and be delivered to the Trustee as custodian for such Depositary.
(b) Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary, or the Trustee as its custodian, or
under the Global Security, and the Depositary may be
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treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.
(c) The registered holder of the Global Security may grant proxies
and otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
Section 2.9 Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee or (b) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute, any Subsidiary Guarantors shall execute the notations of
Subsidiary Guarantees, and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, having the notations of Subsidiary Guarantees, if any, thereon bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and the respective Subsidiary
Guarantors, if any, whether or not the mutilated, destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
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Section 2.10 Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest at the office or
agency of the Company maintained for such purpose pursuant to Section 9.2
hereof.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of having been such
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Securities (such defaulted interest
and interest thereon herein collectively called "Defaulted Interest") may be
paid by the Company, at its election in each case, as provided in clause (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited shall be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date, and in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given in the
manner provided for in Section 14.5 hereof, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been so given, such Defaulted
Interest shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
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Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 2.11 Persons Deemed Owners.
Prior to the due presentment of a Security for registration of transfer,
the Company, the Subsidiary Guarantors, if any, the Security Registrar, the
Trustee and any agent of the Company, the Subsidiary Guarantors or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and premium,
if any, on) and (subject to Section 2.10 hereof) interest on such Security and
for all other purposes whatsoever, whether or not such Security be overdue, and
none of the Company, the Subsidiary Guarantors, if any, the Security Registrar,
the Trustee or any agent of the Company, the Subsidiary Guarantors or the
Trustee shall be affected by notice to the contrary.
Section 2.12 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities held
by the Trustee shall be delivered to the Company.
Section 2.13 Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Section 2.14 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
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ARTICLE III
SATISFACTION AND DISCHARGE
Section 3.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of
Securities, as expressly provided for in this Indenture) as to all Outstanding
Securities, and the Trustee, at the expense of the Company, shall, upon payment
of all amounts due the Trustee under Section 5.6 hereof, execute proper
instruments acknowledging satisfaction and discharge of this Indenture when
(a) either
(i) all Securities theretofore authenticated and delivered
(other than (A) Securities which have been mutilated, destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.9
hereof and (B) Securities for whose payment money or United States
governmental obligations of the type described in clause (a) of the
definition of Cash Equivalents has theretofore been deposited in trust with
the Trustee or any Paying Agent or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust,
as provided in Section 9.3 hereof) have been delivered to the Trustee for
cancellation, or
(ii) all such Securities not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity
within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (ii)(A), (ii)(B) or (ii)(C) above, has
irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest and Liquidated
Damages, if any, to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be, together with instructions from the Company irrevocably
directing the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be;
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(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each satisfactory in form to the Trustee, which, taken
together, state that all conditions precedent herein relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.6 hereof and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of clause
(a)(i) of this Section, the obligations of the Trustee under Section 3.2 hereof
and the last paragraph of Section 9.3 hereof shall survive.
Section 3.2 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 9.3 hereof, all
money deposited with the Trustee pursuant to Section 3.1 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
ARTICLE IV
REMEDIES
Section 4.1 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of the principal of or premium, if any, on
any of the Securities, whether such payment is due at maturity, upon redemption,
upon repurchase pursuant to a Change of Control Offer or a Net Proceeds Offer,
upon acceleration or otherwise; or
(b) default in the payment of any installment of interest and
Liquidated Damages, if any, on any of the Securities, when it becomes due and
payable, and the continuance of such default for a period of 30 days; or
(c) default in the performance or breach of the provisions of Article
VII hereof, the failure to make or consummate a Change of Control Offer in
accordance with Section 9.15 hereof
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or the failure to make or consummate a Net Proceeds Offer in accordance with the
provisions of Section 9.16 hereof; or
(d) the Company or any Subsidiary Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in the Securities, any
Subsidiary Guarantee or this Indenture (other than a default specified in (a),
(b) or (c) above) for a period of 30 days after written notice of such failure
requiring the Company to remedy the same shall have been given (i) to the
Company by the Trustee or (ii) to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the Securities then outstanding;
or
(e) the occurrence and continuation beyond any applicable grace period
of any default in the payment of the principal of (or premium, if any, on) or
interest on any Indebtedness of the Company (other than the Securities) or any
Restricted Subsidiary for money borrowed when due, or any other default causing
acceleration of any Indebtedness of the Company or any Restricted Subsidiary for
money borrowed; provided that the aggregate principal amount of such
Indebtedness shall exceed $5,000,000; provided further that if any such default
is cured or waived or any such acceleration rescinded, or such debt is repaid,
within a period of 10 days from the continuation of such default beyond the
applicable grace period or the occurrence of such acceleration, as the case may
be, such Event of Default under this Indenture and any consequential
acceleration of the Securities shall be automatically rescinded, so long as such
rescission does not conflict with any judgment or decree; or
(f) the commencement of proceedings, or the taking of any enforcement
action (including by way of set-off), by any holder of at least $5,000,000 in
aggregate principal amount of Indebtedness of the Company or any Restricted
Subsidiary, after a default under such Indebtedness, to retain in satisfaction
of such Indebtedness or to collect or seize, dispose of or apply in satisfaction
of such Indebtedness, property or assets of the Company or any Restricted
Subsidiary having a Fair Market Value in excess of $5,000,000 individually or in
the aggregate; provided that if any such proceedings or actions are terminated
or rescinded, or such Indebtedness is repaid, such Event of Default under this
Indenture and any consequential acceleration of the Securities shall be
automatically rescinded, so long as (i) such rescission does not conflict with
any judgment or decree and (ii) the holder of such Indebtedness shall not have
applied any such property or assets in satisfaction of such Indebtedness; or
(g) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to be,
in full force and effect, enforceable in accordance with its terms (except
pursuant to the release of any such Subsidiary Guarantee in accordance with this
Indenture); or
(h) if (i) any material "accumulated funding deficiency" (as defined
in Section 302 of ERISA or Section 412 of the Code), shall exist with respect to
any PBGC Plan or Multiple Employer Plan (unless a waiver or extension is
obtained under Section 412(d) or (e) of the Code and Sections 303 and 304 of
ERISA), if such accumulated funding deficiency would give rise to a
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material liability of the Company, (ii) a Reportable Event shall occur with
respect to any PBGC Plan or Multiple Employer Plan, which Reportable Event is
likely to result in the termination of such PBGC Plan or Multiple Employer Plan
for purposes of Title IV of ERISA and to give rise to a material liability of
the Company, (iii) proceedings to have a trustee appointed shall commence, or a
trustee shall be appointed to terminate or administer a PBGC Plan or Multiple
Employer Plan, which proceeding is likely to result in the termination of such
PBGC Plan or Multiple Employer Plan and to give rise to a material liability of
the Company with respect to such termination, (iv) a notice of intent to
terminate a PBGC Plan or Multiple Employer Plan in a distress termination under
Section 4041(c) of ERISA is furnished to participants, (v) any Multiemployer
Plan is in reorganization or is insolvent and the circumstances are such that
such reorganization or insolvency will likely result in a material liability to
the Company, (vi) there is a complete or partial withdrawal from a Multiemployer
Plan under circumstances that would likely subject the Company to material
liability, or (vii) any event or condition described in (i) through (vi) above
(determined without regard to whether the event or condition taken alone would
or could result in a material liability) shall occur or exist with respect to a
PBGC Plan, Multiple Employer Plan or Multiemployer Plan which in combination
with one or more of any events described in (i) through (vi) above (determined
without regard to whether the event or condition taken alone would or could
result in a material liability) that has occurred or exists, would likely
subject the Company, any Subsidiary Guarantor or any other Restricted Subsidiary
to any material tax, penalty or other liability (for purposes of this paragraph
(i) the term "material" and "material liability" shall mean any tax, penalty or
liability in excess of $5,000,000); or
(i) final judgments or orders rendered against the Company or any
Restricted Subsidiary that are unsatisfied and that require the payment in
money, either individually or in an aggregate amount, that is more than
$5,000,000 over the coverage under applicable insurance policies and either (i)
commencement by any creditor of an enforcement proceeding upon such judgment
(other than a judgment that is stayed by reason of pending appeal or otherwise)
or (ii) the occurrence of a 60-day period during which a stay of such judgment
or order, by reason of pending appeal or otherwise, was not in effect; or
(j) the entry of a decree or order by a court having jurisdiction in
the premises (i) for relief in respect of the Company or any Restricted
Subsidiary in an involuntary case or proceeding under the Federal Bankruptcy
Code or any other applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) adjudging the Company or any
Restricted Subsidiary bankrupt or insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of the Company or a
Restricted Subsidiary under the Federal Bankruptcy Code or any other applicable
federal or state law, or appointing under any such law a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or any Subsidiary Guarantor or any other Restricted Subsidiary or of a
substantial part of their consolidated assets, or ordering the winding up or
liquidation of their affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or
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(k) the commencement by the Company or any Restricted Subsidiary of a
voluntary case or proceeding under the Federal Bankruptcy Code or any other
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or any other case or proceeding to be adjudicated bankrupt or
insolvent, or the consent by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary to the entry of a decree or order for relief in
respect thereof in an involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary of a petition or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it under any such law to the filing of any such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of any of the
Company or any Subsidiary Guarantor or any other Restricted Subsidiary or of any
substantial part of their consolidated assets, or the making by it of an
assignment for the benefit of creditors under any such law, or the admission by
it in writing of its inability to pay its debts generally as they become due or
taking of corporate action by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary in furtherance of any such action.
Section 4.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
4.1(j) or (k) hereof) shall occur and be continuing, the Trustee, by written
notice to the Company, or the holders of at least 25% in aggregate principal
amount of the Securities then outstanding, by notice to the Trustee and the
Company, may declare all unpaid principal of, premium, if any, and accrued
interest and Liquidated Damages, if any, on all of the Securities to be due and
payable immediately, upon which declaration all amounts payable in respect of
the Securities shall be immediately due and payable. If an Event of Default
specified in Section 4.1(j) or (k) occurs and is continuing, then the principal
of, premium, if any, and accrued interest on all of the Securities shall ipso
facto become and be immediately due and payable without any declaration, notice
or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article provided, the Holders of a majority in aggregate
principal amount of the Securities Outstanding, by written notice to the Company
and the Trustee, may rescind such declaration and its consequences if
(a) the Company or any Subsidiary Guarantor has paid or deposited
with the Trustee a sum sufficient to pay
(i) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel,
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(ii) all overdue interest on all Outstanding Securities,
(iii) all unpaid principal of (and premium, if any, on) any
Outstanding Securities which has become due otherwise than by such
declaration of acceleration including any securities required to have been
purchased on a Change of Control Date or Net Proceeds Payment Date pursuant
to a Change of Control Offer or a Net Proceeds Offer, as applicable, and
interest and Liquidated Damages, if any, on such unpaid principal at the
rate borne by the Securities, and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue principal at the rate borne by
the Securities which has become due otherwise than by such declaration of
acceleration (without duplication of any amount deposited pursuant to
clauses (ii) and (iii) above);
(b) the rescission would not conflict with any judgment or decree of
a court of competent jurisdiction; and
(c) all Events of Default, other than the nonpayment of principal of
(or premium, if any, on), and interest on Securities that has become due solely
by such declaration of acceleration, have been cured or waived as provided in
Section 4.13 hereof.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the foregoing, in the event of a declaration of
acceleration in respect of the Securities because of an Event of Default
specified in (A) Section 4.1(e) hereof shall have occurred and be continuing,
such declaration of acceleration and any consequential acceleration shall be
automatically rescinded if the Indebtedness that is the subject of such Event of
Default has been repaid, or if the default relating to such Indebtedness is
waived or cured and if such Indebtedness has been accelerated, then the holders
thereof have rescinded their declaration of acceleration in respect of such
Indebtedness (provided, in each case, that such repayment, waiver, cure or
rescission is effected within a period of 10 days from the continuation of such
default beyond the applicable grace period or the occurrence of such
acceleration), or (B) Section 4.1(f) hereof shall have occurred and be
continuing, such declaration and any consequential acceleration shall be
automatically rescinded if the proceedings or enforcement action with respect to
the Indebtedness that is the subject of such Event of Default are terminated or
rescinded, or such Indebtedness has been repaid and only so long as the holder
of such Indebtedness shall not have applied any Property referenced in such
Section 4.1(f) hereof in satisfaction of such Indebtedness, and, in the case of
both (A) and (B) above, written notice of such repayment, or cure or waiver and
rescission, as the case may be, shall have been given to the Trustee by the
Company and countersigned by the holders of such Indebtedness or a trustee,
fiduciary or agent for such holders or other evidence satisfactory to the
Trustee of such events is provided to the Trustee, within 30 days after such
declaration of acceleration in respect of the Securities, and no other Event of
Default has occurred during such 30-day period which has not been cured or
waived during such period, and so long as such recision of the declaration of
acceleration
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of the Securities does not conflict with any judgement or decree as certified to
the Trustee by the Company.
Section 4.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
Subject to Article XIII, the Company covenants that if
(a) default is made in the payment of any installment of interest and
Liquidated Damages, if any, on any Security when such interest and Liquidated
Damages, if any, becomes due and payable and such default continues for a period
of 30 days, or
(b) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof or with respect to any Security
required to have been purchased by the Company on the Change of Control Purchase
Date or the Net Proceeds Payment Date pursuant to a Change of Control Offer or a
Net Proceeds Offer, as applicable,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and Liquidated
Damages, if any, and interest on any overdue principal (and premium, if any)
and, to the extent that payment of such interest shall be legally enforceable,
upon any overdue installment of interest, at the rate borne by the Securities,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the Property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in any provision of the Securities,
this Indenture or the Registration Rights Agreement in aid of the exercise of
any power granted therein or herein, or to enforce any other proper remedy.
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Section 4.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, any Subsidiary Guarantor or any
other obligor upon the Securities or the Property of the Company, any Subsidiary
Guarantor or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company, any Subsidiary Guarantor or
such other obligor for the payment of overdue principal, premium, if any, or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest and Liquidated Damages, if any, owing and unpaid
in respect of the Securities and to file such other papers or documents and take
any other actions including participation as a full member of any creditor or
other committee as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other Property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 5.6 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or any Subsidiary Guarantees or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 4.5 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities or
any Subsidiary Guarantees may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name and as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation,
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expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
Section 4.6 Application of Money Collected.
Subject to Sections 12.8, 12.9 and 12.10 and Article XIII, any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in the case of
the distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 5.6
hereof;
SECOND: To the payment of the amounts then due and unpaid for principal of
(and premium, if any, on) and interest on the Securities in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal (and premium, if any) and interest and Liquidated
Damages, if any, respectively; and
THIRD: The balance, if any, to the Company.
Section 4.7 Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority or
more in principal amount of the Outstanding Securities;
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it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 4.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, under Article XI hereof)
and in such Security of the principal of (and premium, if any, on) and (subject
to Section 2.10 hereof) interest and Liquidated Damages, if any, on such
Security on the respective Stated Maturities expressed in such Security (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
Section 4.9 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, any Subsidiary Guarantors, the Trustee and the
Holders shall be restored severally and respectively to their former positions
hereunder and thereunder and all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
Section 4.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
2.9 hereof, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 4.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by
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this Article or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
Section 4.12 Control by Holders.
The Holders of not less than a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders not joining therein.
Section 4.13 Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the outstanding Securities may on behalf of the Holders of all the Securities
waive any existing Default or Event of Default hereunder and its consequences,
except a Default or Event of Default
(a) in respect of the payment of the principal of, premium, if any,
or interest and Liquidated Damages, if any, on any Security, or
(b) in respect of a covenant or provision hereof which under Article
VIII hereof cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such Default or Event of Default shall cease to exist
for every purpose under this Indenture, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
Section 4.14 Waiver of Stay, Extension or Usury Laws.
The Company covenants, and each Subsidiary Guarantor shall covenant, (to
the extent that each may lawfully do so) that it will not at any time insist
upon, plead or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension, or usury law or other law, which would prohibit or
forgive the Company or any Subsidiary Guarantor from paying all or any portion
of the principal of (premium, if any, on) and/or interest and Liquidated
Damages, if any, on the
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Securities 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 it may lawfully do so) the Company hereby
expressly waives, and each Subsidiary Guarantor shall expressly waive all
benefit or advantage of any such law, and the Company covenants and each
subsidiary Guarantor shall covenant that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
Section 4.15 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 a
Trustee, a court in its discretion may 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 attorney's fees and
expenses, 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 4.15 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 4.8 hereof, or a suit by Holders of more than 10% in
principal amount of the then Outstanding Securities.
ARTICLE V
THE TRUSTEE
Section 5.1 Notice of Defaults.
Within 60 days after the occurrence of any Default hereunder, the Trustee
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice of such Default hereunder known to the Trustee, unless such Default shall
have been cured or waived; provided, however, that, except in the case of a
Default in the payment of the principal of (or premium, if any, on) or interest
and Liquidated Damages, if any, on any Security, the Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders; and provided, further, that in the
case of any Default of the character specified in Section 4.1(e) hereof, no such
notice to Holders shall be given until at least 60 days after the occurrence
thereof.
Section 5.2 Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction,
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consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection, and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; and
(i) the Trustee shall not be deemed to have notice of any Event of
Default unless a Responsible Officer of the Trustee has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture.
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The Trustee shall not be required to advance, expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 5.3 Trustee Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities and the notations of
Subsidiary Guarantees thereon, except for the Trustee's certificates of
authentication, shall be taken as the statements of the Company or the
Subsidiary Guarantors, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities, except that
the Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its obligations hereunder,
and that the statements made by it in a Statement of Eligibility on Form T-1
supplied to the Company are true and accurate, subject to the qualifications set
forth herein. The Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof.
Section 5.4 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other agent of
the Company, any Subsidiary Guarantor or of the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Securities and, subject
to TIA Sections 310(b) and 311, may otherwise deal with the Company and any
Subsidiary Guarantor with the same rights it would have if it were not the
Trustee, Paying Agent, Security Registrar or such other agent.
Section 5.5 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company or any Subsidiary Guarantor.
Section 5.6 Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time such compensation as
shall be agreed in writing from time to time between the Company and the Trustee
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
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(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel, except any such expense, disbursement
or advance as may be attributable to the Trustee's negligence or bad faith); and
(c) to indemnify the Trustee or any predecessor Trustee for, and to
hold it harmless against, any and all loss, liability, damage, claim or expense,
including taxes (other than taxes based on the income of the Trustee) incurred
without negligence or bad faith on its part, (i) arising out of or in connection
with the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder or (ii) in
connection with enforcing this indemnification provision.
The obligations of the Company under this Section 5.6 to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture or any other termination under any Insolvency or
Liquidation Proceeding. As security for the performance of such obligations of
the Company, the Trustee shall have a claim and lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for payment of principal of (and premium, if any, on) or
interest on particular Securities. Such lien shall survive the satisfaction and
discharge of this Indenture or any other termination under any Insolvency or
Liquidation Proceeding.
When the Trustee incurs expenses or renders services after the occurrence
of an Event of Default specified in paragraphs (j) or (k) of Section 4.1 of this
Indenture, such expenses and the compensation for such services are intended to
constitute expenses of administration under any Insolvency or Liquidation
Proceeding.
Section 5.7 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50,000,000. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 5.7, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
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Section 5.8 Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b) of the Trust
Indenture Act.
Section 5.9 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 5.10 hereof.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 5.10 hereof shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company. If the instrument of acceptance by
a successor Trustee required by Section 5.10 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of removal, the
Trustee being removed may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(i) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(ii) the Trustee shall cease to be eligible under Section 5.7
hereof and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security for
at least six months, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company, by a Board Resolution, may remove the
Trustee, or (B) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee. Such
successorship may, but need not be, evidenced by a supplemental indenture.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Securities in the manner provided for in Section 13.5 hereof. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
Section 5.10 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of all amounts due it under
Section 5.6 hereof, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities
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shall have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities; and in case at that time any of the Securities
shall not have been authenticated, any successor Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor Trustee; and in all such cases such certificates shall have the full
force which it is anywhere in the Securities or in this Indenture; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate Securities in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 5.12 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company or any such other obligor.
ARTICLE VI
HOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 6.1 Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company, the Subsidiary Guarantors, if any, the Security Registrar and the
Trustee that none of the Company, the Subsidiary Guarantors, the Security
Registrar or the Trustee, or any agent of either of them, shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with TIA Section 312, regardless of
the source from which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material pursuant to a request
made under TIA Section 312(b).
Section 6.2 Reports By Trustee.
Within 60 days after May 15 of each year commencing with May 15, 1998, the
Trustee shall transmit by mail to the Holders, as their names and addresses
appear in the Security Register, a brief report dated as of such May 15 in
accordance with and to the extent required under TIA Section 313(a). The Trustee
shall also comply with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Securities
become listed on any stock exchange or automatic quotation system.
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A copy of each Trustee's report, at the time of its mailing to Holders of
Securities, shall be mailed to the Company and filed with the Commission and
each stock exchange, if any, on which the Securities are listed.
ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 7.1 Company May Consolidate, etc., Only on Certain Terms.
The Company shall not, in any single transaction or a series of related
transactions, merge or consolidate with or into any other Person, or sell,
assign, convey, transfer or lease or otherwise dispose of all or substantially
all its Properties to any Person or group of Affiliated Persons, and the Company
shall not permit any of its Restricted Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any other Person or group of Affiliated Persons, unless at the time and
after giving affect thereto:
(a) either (i) if the transaction or transactions is a merger or
consolidation, the Company shall be the surviving Person of such merger or
consolidation, or (ii) the Person (if other than the Company) formed by such
consolidation or into which the Company or such Restricted Subsidiary is merged
or to which the Properties of the Company or such Restricted Subsidiary, as the
case may be, are sold, assigned, conveyed, transferred, leased or otherwise
disposed of (any such surviving Person or transferee Person being the "Surviving
Entity") shall be a corporation organized and existing under the laws of the
United States of America, any state thereof or the District of Columbia and
shall, in either case, expressly assume by a supplemental indenture to this
Indenture executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company for the due and punctual payment of
the principal of (and premium, if any, on) and interest on all the Securities
and the performance and observance of every covenant of this Indenture on the
part of the Company to be performed or observed, and this Indenture shall remain
in full force and effect;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
Indebtedness not previously an obligation of the Company or any of its
Restricted Subsidiaries which becomes the obligation of the Company or any of
its Restricted Subsidiaries in connection with or as a result of such
transaction or transactions as having been incurred at the time of such
transaction or transactions), no Default or Event of Default shall have occurred
and be continuing;
(c) except in the case of the consolidation or merger of any
Restricted Subsidiary with or into the Company, immediately after giving effect
to such transaction or transactions on a
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pro forma basis, the Consolidated Net Worth of the Company (or the Surviving
Entity if the Company is not the continuing obligor under this Indenture) is at
least equal to the Consolidated Net Worth of the Company immediately before such
transaction or transactions (calculated in each case, in accordance with GAAP);
(d) except in the case of the consolidation or merger of any
Restricted Subsidiary with or into the Company or any Wholly Owned Restricted
Subsidiary, immediately before and after giving effect to such transaction or
transactions on a pro forma basis (on the assumption that the transaction or
transactions occurred on the first day of the period of four full fiscal
quarters ending immediately prior to the consummation of such transaction or
transactions with the appropriate adjustments with respect to the transaction or
transactions being included in such pro forma calculation) the Company (or the
Surviving Entity if the Company is not the continuing obligor under this
Indenture) could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) under Section 9.11(a) hereof;
(e) each Subsidiary Guarantor unless it is the party to the
transactions described above, shall have by supplemental indenture confirmed
that its Subsidiary Guarantee shall apply to such Person's obligations under
this Indenture and the Securities;
(f) if any of the Properties of the Company or any of its Restricted
Subsidiaries would upon such transaction or series of related transactions
become subject to any Lien (other than a Permitted Lien), the creation or
imposition of such Lien shall have been in compliance with Section 9.14 hereof;
and
(g) the Company or such Person shall have delivered to the Trustee
(i) an Officers' Certificate in form and substance reasonably acceptable to the
Trustee, stating that such consolidation, merger, conveyance, transfer, lease or
other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture, complies with this Indenture
and that all conditions precedent herein relating to such transaction or
transactions have been satisfied and (ii) an Opinion of Counsel stating that the
requirements of Section 7.1(a) hereof have been complied with.
Section 7.2 Successor Substituted.
Upon any consolidation of the Company with or merger of the Company with or
into any other corporation or any sale, assignment, lease, conveyance, transfer
or other disposition of all or substantially all of the Properties of the
Company to any Person in accordance with Section 7.1 hereof, the successor
Person formed by such consolidation or into which the Company is merged or to
which such sale, assignment, conveyance, transfer or other disposition (other
than by lease) is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and in the event of any such sale, assignment, lease, conveyance, transfer or
other disposition, the Company (which term shall for this purpose mean the
Person named as the
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"Company" in the first paragraph of this Indenture or any successor Person which
shall theretofore become such in the manner described in Section 7.1 hereof),
except in the case of a lease, shall be discharged of all obligations and
covenants under this Indenture and the Securities and the Company may be
dissolved and liquidated and such dissolution and liquidation shall not cause a
Change of Control under clause (e) of the definition thereof to occur unless the
merger, or the sale, assignment, lease, conveyance, transfer or other
disposition of all or substantially all of the Properties of the Company to any
Person otherwise results in a Change of Control.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, any Subsidiary Guarantors, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company contained
herein and in the Securities; or
(b) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company; or
(c) to add any additional Events of Default; or
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Sections 5.9
and 5.10 hereof; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to qualify, or maintain the qualification of, the Indenture under the TIA or
to make any other provisions with respect to matters or questions arising under
this Indenture or the Registration Rights Agreement; provided that such action
shall not adversely affect the interests of the Holders in any material respect;
or
(f) to secure the Securities pursuant to the requirements of Section
9.14 hereof or otherwise; or
(g) to add any Person as a Subsidiary Guarantor as provided in
Section 12.1 hereof or as contemplated by the definition of "Permitted
Subsidiary Indebtedness" to evidence the succession of another Person to any
Subsidiary Guarantor and the assumption by any such successor
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of the covenants and agreements of such Subsidiary Guarantor contained herein,
in the Securities and in the Subsidiary Guarantee; or
(h) to release a Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 9.12 hereof; or
(i) to provide for uncertificated Securities in addition to or in
place of certificated Securities.
Section 8.2 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, any
Subsidiary Guarantors, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount thereof
or the rate of interest thereon or any premium payable upon the redemption
thereof, or change the coin or currency in which any Security or any premium or
the interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof (or, in the
case of redemption, on or after the Redemption Date); or
(b) reduce the percentage of aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture; or
(c) modify any of the provisions of this Section or Sections 4.13 and
9.22 hereof, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
(d) modify Section 9.12 hereof or any provisions of this Indenture
relating to any Subsidiary Guarantees in a manner adverse to the Holders
thereof; or
(e) amend, change or modify the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control,
or to make and
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consummate a Net Proceeds Offer with respect to any Asset Sale or modify any of
the provisions or definitions with respect thereto.
It shall not be necessary for any Act of the Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 8.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 8.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 8.6 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company, with the notations of Subsidiary Guarantees thereon executed by the
Subsidiary Guarantors, if any, and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
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Section 8.7 Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2 hereof, the
Company shall give notice thereof to the Holders of each Outstanding Security
affected, in the manner provided for in Section 14.5 hereof, setting forth in
general terms the substance of such supplemental indenture.
ARTICLE IX
COVENANTS
Section 9.1 Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually pay the principal of (and premium, if any, on) and
interest and Liquidated Damages, if any, on the Securities in accordance with
the terms of the Securities and this Indenture. The Company shall pay interest
(including post-petition interest in any proceeding under the Federal Bankruptcy
Code or any similar state bankruptcy law) on overdue principal, and premium, if
any, at the rate borne by the Securities to the extent lawful; and it shall pay
interest (including post-petition interest in any proceeding under the Federal
Bankruptcy Code or any similar state bankruptcy law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
Section 9.2 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities, the Subsidiary Guarantees and this Indenture may be served. The
office of The Bank of New York, located at 101 Barclay Street, Floor 21 West,
New York, New York 10286, Attention: Corporate Trust Administration shall be
such office or agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such purposes. The
Company will give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the aforementioned office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its
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obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such other office or agency.
Section 9.3 Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it shall, on
or before each due date of the principal of (and premium, if any, on) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or before 11:00 A.M., New York City time, on each due
date of the principal of (and premium, if any, on), or interest on, any
Securities, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or interest,
and (unless such Paying Agent is the Trustee) the Company shall promptly notify
the Trustee of such action or any failure so to act.
The Company shall cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal
(and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any,
on) or interest on any Security and
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remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 9.4 Corporate Existence.
Except as expressly permitted by Article VII hereof, Section 9.16 hereof or
other provisions of this Indenture, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and each
Restricted Subsidiary; provided, however, that the Company shall not be required
to preserve any such existence of its Restricted Subsidiaries, right or
franchise, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
disadvantageous in any material respect to the Holders.
Section 9.5 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or Property of the Company or any
Restricted Subsidiary and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the Property of the
Company or any Restricted Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which
appropriate provision has been made in accordance with GAAP.
Section 9.6 Maintenance of Properties.
The Company shall cause all material Properties owned by the Company or any
Restricted Subsidiary and used or held for use in the conduct of its business or
the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted), all as in
the judgment of the Company may be necessary so that its business may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section
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shall prevent the Company from discontinuing the maintenance of any of such
Properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Restricted Subsidiary and
not disadvantageous in any material respect to the Holders. Notwithstanding the
foregoing, nothing contained in this Section 9.6 shall limit or impair in any
way the right of the Company and its Restricted Subsidiaries to sell, divest and
otherwise to engage in transactions that are otherwise permitted by this
Indenture.
Section 9.7 Insurance.
The Company shall at all times keep all of its and its Restricted
Subsidiaries' Properties which are of an insurable nature insured with insurers,
believed by the Company to be responsible, against loss or damage to the extent
that property of similar character is usually so insured by corporations
similarly situated and owning like properties.
The Company may adopt such other plan or method of protection, in lieu of
or supplemental to insurance with insurers, whether by the establishment of an
insurance fund or reserve to be held and applied to make good losses from
casualties, or otherwise, conforming to the systems of self-insurance maintained
by corporations similarly situated and owning like properties, as may be
determined by the Board of Directors.
Section 9.8 Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company and within 45 days of the end of each
of the first, second and third quarters of each fiscal year of the Company, an
Officers' Certificate, one of the signers of which shall be the principal
executive officer, principal financial officer or principal accounting officer
of the Company, stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal quarter or fiscal year, as applicable,
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of such Officer's knowledge the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which such Officer may have knowledge and what action the
Company is taking or proposes to take with respect thereto). Such Officers'
Certificate shall comply with TIA Section 314(a)(4). For purposes of this
Section 9.8(a), such compliance shall be determined without regard to any period
of grace or requirement of notice under this Indenture.
(b) The Company and any Subsidiary Guarantors shall, so long as any
of the Securities are outstanding, deliver to the Trustee forthwith upon any
Officer becoming aware of any Default or Event of Default or default in the
performance of any covenant, agreement or condition contained in this Indenture,
an Officers' Certificate specifying such Default or Event of Default and
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what action the Company or any Subsidiary Guarantor proposes to take with
respect thereto within 10 days of its occurrence.
Section 9.9 Reports.
The Company and any Subsidiary Guarantors shall file on a timely basis with
the Commission, to the extent such filings are accepted by the Commission and
whether or not the Company has a class of securities registered under the
Exchange Act, the annual reports, quarterly reports and other documents that the
Company would be required to file if it were subject to Section 13 or 15(d) of
the Exchange Act). The Company (and the Subsidiary Guarantors, if applicable)
will also be required (a) to file with the Trustee, and provide to each holder
of Securities, without cost to such holder, copies of such reports and documents
within 15 days after the date on which the Company files such reports and
documents with the Commission or the date on which the Company (and any
Subsidiary Guarantors, if applicable) would be required to file such reports and
documents if the Company (and any Subsidiary Guarantors, if applicable) were so
required, and (b) if filing such reports and documents with the Commission is
not accepted by the Commission or is prohibited under the Exchange Act, to
furnish at the Company's cost copies of such reports and documents to any holder
of Securities promptly upon written request. The Company is obligated to make
available, upon request, to any Holder of Securities the information required by
Rule 144A(d)(4) under the Securities Act, during any period in which the Company
is not subject to Section 13 or 15(d) of the Exchange Act and, for so long as
any Transfer Restricted Securities remain outstanding, the Company shall furnish
to all Holders and prospective purchasers of the Securities designated by the
Holders of Transfer Restricted Securities, promptly upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) of the
Securities Act. The Company and each Subsidiary Guarantor also shall comply
with other provisions of TIA Section 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 9.10 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, take the following actions:
(i) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Company's Capital Stock (other than dividends
or distributions payable solely in shares of Qualified Capital Stock of the
Company, options, warrants or other rights to purchase Qualified Capital
Stock of the Company);
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(ii) purchase, redeem or otherwise acquire or retire for value
any Capital Stock of the Company or any Affiliate thereof (other than any
Wholly Owned Restricted Subsidiary of the Company) or any options, warrants
or other rights to acquire such Capital Stock; provided, however, that the
Company may purchase, redeem or otherwise retire common stock of the
Company in an amount not to exceed $10,000,000 in the aggregate for all
such transactions after April 1, 1997, and; provided, further, that the
Company may make any payment of the applicable redemption price in
connection with a Qualified Redemption Transaction;
(iii) make any principal payment on or repurchase, redeem,
defease or otherwise acquire or retire for value, prior to any scheduled
principal payment, scheduled sinking fund payment or maturity, any
Subordinated Indebtedness, provided, however, that the Company may make any
payment of the applicable redemption price in connection with a Qualified
Redemption Transaction;
(iv) declare or pay any dividend on, or make any distribution
to the holders of, shares of Capital Stock of any Restricted Subsidiary of
the Company (other than to the Company or any of its Wholly Owned
Restricted Subsidiaries) or purchase, redeem or otherwise acquire or retire
for value any Capital Stock of any Restricted Subsidiary or any options,
warrants or other rights to acquire any such Capital Stock (other than with
respect to any such Capital Stock held by the Company or any Wholly Owned
Restricted Subsidiary of the Company);
(v) make any Investment (other than a Permitted Investment);
(vi) in connection with the acquisition of any property or
asset by the Company or its Restricted Subsidiaries after the date of this
Indenture, which property or asset would secure or be subject to any
Production Payment obligations of the Company or its Restricted
Subsidiaries, make any investment (of cash, property or other assets) in
such property or asset so acquired in addition to the amount of
Indebtedness (including Production Payment obligations) incurred by the
Company or its Restricted Subsidiaries in connection with such acquisition;
or
(vii) incur any guarantee of Indebtedness of any Affiliate
(other than (A) guarantees of Indebtedness of any Restricted Subsidiary by
the Company or (B) guarantees of Indebtedness of the Company by any
Restricted Subsidiary, in each case in accordance with the terms of this
Indenture);
(such payments or other actions described in (but not excluded from)
clauses (i) through (vii) are collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to the proposed
Restricted Payment (with the amount of any such Restricted Payment, if
other than cash, being the amount determined by the Board of Directors of
the Company, whose determination shall be conclusive and evidenced by a
Board Resolution), (1) no
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Default or Event of Default shall have occurred and be continuing, (2) the
Company could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) in accordance with Section 9.11 hereof and (3) the aggregate
amount of all Restricted Payments declared or made after April 1, 1997
shall not exceed the sum (without duplication) of the following:
(I) 50% of the aggregate cumulative Consolidated Net
Income of the Company accrued on a cumulative basis during the period
beginning on May 1, 1997, and ending on the last day of the Company's
last fiscal quarter ending prior to the date of such proposed
Restricted Payment (or, if such aggregate cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss), plus
(II) the aggregate net cash proceeds received after April
1, 1997 by the Company as capital contributions to the Company (other
than from any Restricted Subsidiary), plus
(III) the aggregate net cash proceeds received after April
1, 1997 by the Company from the issuance or sale (other than to any of
its Restricted Subsidiaries) of shares of Qualified Capital Stock of
the Company or any options, warrants or rights to purchase such shares
of Qualified Capital Stock of the Company, plus
(IV) the aggregate net cash proceeds received after April
1, 1997 by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options, warrants or rights to
purchase shares of Qualified Capital Stock of the Company, plus
(V) the aggregate net cash proceeds received after April
1, 1997 by the Company from the issuance or sale (other than to any of
its Restricted Subsidiaries) of debt securities or shares of
Redeemable Capital Stock that have been converted into or exchanged
for Qualified Capital Stock of the Company to the extent such debt
securities were originally sold for cash, together with the aggregate
cash received by the Company at the time of such conversion or
exchange, plus
(VI) To the extent not otherwise included in the Company's
Consolidated Net Income, the net reduction in Investments in
Unrestricted Subsidiaries resulting from the payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or a Restricted
Subsidiary after April 1, 1997 from any Unrestricted Subsidiary or
from the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary (valued in each case as provided in the definition of
"Investment"), not to exceed in the case of any Unrestricted
Subsidiary the total amount of Investments (other than Permitted
Investments) in such Unrestricted Subsidiary made by the
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Company and its Restricted Subsidiaries in such Unrestricted
Subsidiary after April 1, 1997 plus
(VII) $25,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its
Restricted Subsidiaries may take the following actions so long as (in the case
of clauses (ii), (iii) and (iv) below) no Default or Event of Default shall have
occurred and be continuing:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at such declaration date such declaration
complied with the provisions of paragraph (a) above (and such payment shall
be deemed to have been paid on such date of declaration for purposes of any
calculation required by the provisions of paragraph (a) above);
(ii) the repurchase, redemption or other acquisition or
retirement of any shares of any class of Capital Stock of the Company or
any Restricted Subsidiary, in exchange for, or out of the aggregate net
cash proceeds of, a substantially concurrent issue and sale (other than to
a Restricted Subsidiary) of shares of Qualified Capital Stock of the
Company;
(iii) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of any Subordinated Indebtedness (other
than Redeemable Capital Stock) in exchange for or out of the aggregate net
cash proceeds of a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of shares of Qualified Capital Stock of the Company;
(iv) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of Subordinated Indebtedness (other
than Redeemable Capital Stock) in exchange for, or out of the aggregate net
cash proceeds of, a substantially concurrent incurrence (other than to a
Restricted Subsidiary) of Subordinated Indebtedness of the Company so long
as (A) the principal amount of such new Indebtedness does not exceed the
principal amount (or, if such Subordinated Indebtedness being refinanced
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof, such lesser amount as
of the date of determination) of the Subordinated Indebtedness being so
purchased, redeemed, repaid, defeased, acquired or retired, plus the amount
of any premium required to be paid in connection with such refinancing
pursuant to the terms of the Subordinated Indebtedness refinanced or the
amount of any premium reasonably determined by the Company as necessary to
accomplish such refinancing, plus the amount of expenses of the Company
incurred in connection with such refinancing, (B) such new Subordinated
Indebtedness is subordinated to the Securities at least to the same extent
as such Subordinated Indebtedness so purchased, redeemed, repaid, defeased,
acquired or retired, (C) such new Subordinated Indebtedness has an Average
Life to Stated Maturity
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that is longer than the Average Life to Stated Maturity of the Securities
and such new Subordinated Indebtedness has a Stated Maturity for its final
scheduled principal payment that is at least 91 days later than the Stated
Maturity for the final scheduled principal payment of the Securities; and
(v) repurchases, acquisitions or retirements of shares of
Qualified Capital Stock of the Company deemed to occur upon the exercise of
stock options or similar rights issued under employee benefit plans of the
Company if such shares represent all or a portion of exercise price or are
surrendered in connection with satisfying any Federal income tax
obligation.
The actions described in clauses (i), (ii), (iii) and (v) of this paragraph
(b) shall be Restricted Payments that shall be permitted to be taken in
accordance with this paragraph (b) but shall reduce the amount that would
otherwise be available for Restricted Payments under clause (3) of
paragraph (a) (provided that any dividend paid pursuant to clause (i) of
this paragraph (b) shall reduce the amount that would otherwise be
available under clause (3) of paragraph (a) when declared, but not also
when subsequently paid pursuant to such clause (i)), and the actions
described in clause (iv) of this paragraph (b) shall be Restricted Payments
that shall be permitted to be taken in accordance with this paragraph and
shall not reduce the amount that would otherwise be available for
Restricted Payments under clause (3) of paragraph (a).
(c) In computing Consolidated Net Income of the Company under
paragraph (a) above, (i) the Company shall use audited financial statements for
the portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (ii) the Company shall be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of this Indenture, such
Restricted Payment shall be deemed to have been made in compliance with this
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the Company
for any period.
Section 9.11 Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, create, incur, issue, assume, guarantee or in any manner become
directly or indirectly liable for the payment of (collectively "incur") any
Indebtedness (including any Acquired Indebtedness), other than Permitted
Indebtedness and Permitted Subsidiary Indebtedness, as the case may be;
provided, however, that the Company and its Restricted Subsidiaries that are
Subsidiary Guarantors may incur Indebtedness if (i) the Company's Consolidated
Fixed Charge Coverage Ratio for the four full fiscal quarters immediately
preceding the incurrence of such Indebtedness (and for which financial
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statements are available), taken as one period (at the time of such incurrence,
after giving pro forma effect to: (x) the incurrence of such Indebtedness and
(if applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness or to acquire producing oil and gas Properties, as
if such Indebtedness had been incurred and the application of such proceeds had
occurred at the beginning of such four-quarter period; (y) the incurrence,
repayment or retirement of any other Indebtedness (including Permitted
Indebtedness) by the Company or its Restricted Subsidiaries since the first day
of such four-quarter period (including any other Indebtedness to be incurred
concurrent with the incurrence of such Indebtedness) as if such Indebtedness had
been incurred, repaid or retired at the beginning of such four-quarter period;
and (z) notwithstanding clause (d) of the definition of Consolidated Net Income,
the acquisition (whether by purchase, merger or otherwise) or disposition
(whether by sale, merger or otherwise) of any Person acquired or disposed of by
the Company or its Restricted Subsidiaries, as the case may be, since the first
day of such four-quarter period, as if such acquisition or disposition had
occurred at the beginning of such four-quarter period), would have been equal to
at least 2.5 to 1.0 and (ii) no Default or Event of Default shall have occurred
and be continuing at the time such additional Indebtedness is incurred or would
occur as a consequence of the incurrence of the additional Indebtedness.
Section 9.12 Limitation on Non-Guarantor Restricted Subsidiaries.
(a) The Company shall not permit any Restricted Subsidiary that is
not a Subsidiary Guarantor to guarantee the payment of any Indebtedness of the
Company unless (i)(A) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to this Indenture providing for a Subsidiary
Guarantee of the Securities by such Restricted Subsidiary which Subsidiary
Guarantee will be subordinated to Guarantor Senior Indebtedness (but no other
Indebtedness) to the same extent that the Securities are subordinated to Senior
Indebtedness and (B), with respect to any guarantee of Subordinated Indebtedness
by a Restricted Subsidiary, any such guarantee shall be subordinated to such
Restricted Subsidiary's Subsidiary Guarantee at least to the same extent as such
Subordinated Indebtedness is subordinated to the Securities; (ii) such
Restricted Subsidiary waives, and agrees not in any manner whatsoever to claim
or take the benefit or advantage of, any rights of reimbursement, indemnity or
subrogation or any other rights against the Company or any other Restricted
Subsidiary as a result of any payment by such Restricted Subsidiary under its
Subsidiary Guarantee until such time as the obligations guaranteed thereby are
paid in full; and (iii) such Restricted Subsidiary shall deliver to the Trustee
an Opinion of Counsel to the effect that such Subsidiary Guarantee has been duly
executed and authorized and constitutes a valid, binding and enforceable
obligation of such Restricted Subsidiary, except insofar as enforcement thereof
may be limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; provided that
this paragraph (a) shall not be applicable to (x) any guarantee of any
Restricted Subsidiary that (1) existed at the time such Person became a
Restricted Subsidiary of the Company and (2) was not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary of
the Company or (y) any guarantee of any Restricted Subsidiary of Indebtedness of
the Company described in clause (a) of the definition of Permitted Indebtedness.
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(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, transfer any assets, businesses, divisions, real property or
equipment to any Restricted Subsidiary (other than sales of oil and gas
production in the ordinary course of business at prices under contracts in
existence as of the date of this Indenture or on terms not less favorable to the
Subsidiary than would be obtainable at the time in comparable transactions
through arms-length dealings with Persons other than Affiliates of the Company
or any transfer that results in Permitted Subsidiary Indebtedness) or acquire
Capital Stock of a new Restricted Subsidiary that in either case is not a
Subsidiary Guarantor unless (i) such transferee or new Restricted Subsidiary
enters into a Subsidiary Guarantee by complying with Section 9.12(a) hereof or
(ii) the aggregate Fair Market Value at the time of such proposed transfer or
acquisition, of such assets, businesses, divisions, real property or equipment
proposed to be transferred or Capital Stock of a new Restricted Subsidiary
proposed to be acquired, together with the aggregate fair market value of all
assets, businesses, divisions, real property or equipment previously transferred
pursuant to this clause (ii) and Capital Stock previously acquired pursuant to
this clause (ii) (in each case valued at the time of transfer or acquisition)
does not exceed (x) the greater of $35,000,000 and 5% of Adjusted Consolidated
Net Tangible Assets less (y) the book value of total combined assets of all
Subsidiaries of the Company at December 31, 1996, as reflected in a
consolidating balance sheet of the Company prepared in accordance with GAAP
(exclusive, in the case of each of clauses (x) and (y), of intercompany
receivables and liabilities due from the Company and assets subject to any
Sale/Leaseback Transaction treated as an operating lease in the consolidated
financial statements of the Company); provided that, in the case of clause (ii),
if the Restricted Subsidiary to which such transfer was made or whose Capital
Stock was acquired subsequently enters into a Subsidiary Guarantee, such
transfer or acquisition shall be treated as having been made pursuant to clause
(i).
(c) Notwithstanding the foregoing and the other provisions of this
Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant
to this Section 9.12 shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person that is not an Affiliate of the Company, of all of the
Company's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary (which sale, exchange or transfer is not prohibited by
this Indenture), (ii) the merger of such Restricted Subsidiary into the Company
or any other Restricted Subsidiary (provided the surviving Restricted Subsidiary
assumes the Subsidiary Guarantee) or the liquidation and dissolution of such
Restricted Subsidiary (in each case to the extent not prohibited by this
Indenture), or (iii) (x) the release or discharge of all guarantees by such
Restricted Subsidiary of any Indebtedness other than Note Obligations, except a
discharge or release by or as a result of payment under such guarantees and (y)
after giving effect to the proposed release and discharge, the aggregate total
combined assets of all Restricted Subsidiaries that are not Subsidiary
Guarantors (exclusive of intercompany receivables and liabilities due from the
Company and assets subject to any Sale/Leaseback Transaction treated as an
operating lease in the consolidated financial statements of the Company) do not
exceed the greater of $35,000,000 and 5% of Adjusted Consolidated Net Tangible
Assets.
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Section 9.13 Limitation on Issuances and Sales of Restricted Subsidiary Stock.
The Company (a) shall not permit any Restricted Subsidiary to issue any
Preferred Stock (other than to the Company or a Wholly Owned Restricted
Subsidiary) and (b) shall not permit any Person (other than the Company and/or
one or more Wholly Owned Restricted Subsidiaries) to own any Capital Stock of
any Restricted Subsidiary; provided, however, that this covenant shall not
prohibit (i) the issuance and sale of all, but not less than all, of the issued
and outstanding Capital Stock of any Restricted Subsidiary owned by the Company
or any of its Restricted Subsidiaries in compliance with the other provisions of
this Indenture, or (ii) the ownership by directors of directors' qualifying
shares or the ownership by foreign nationals of Capital Stock of any Restricted
Subsidiary, to the extent mandated by applicable law.
Section 9.14 Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume, affirm or suffer to exist or
become effective any Lien of any kind, except for Permitted Liens, on or with
respect to any of its property or assets (including any intercompany notes),
whether owned at the date of this Indenture or thereafter acquired, or any
income, profits or proceeds therefrom, or assign or otherwise convey any right
to receive income thereon, unless (a) in the case of any Lien securing
Subordinated Indebtedness, the Securities are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Lien and (b) in
the case of any other Lien, the Securities are directly secured equally and
ratably with the obligation or liability secured by such Lien.
Section 9.15 Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase (a "Change of Control Offer") all of the
then outstanding Securities, in whole or in part, from the Holders of such
Securities in integral multiples of $1,000, at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the aggregate principal amount of such
Securities, plus accrued and unpaid interest and Liquidated Damages, if any, to
the Change of Control Purchase Date (as defined below), in accordance with the
procedures set forth in paragraphs (b), (c) and (d) of this Section. The Company
shall, subject to the provisions described below, be required to purchase all
Securities properly tendered into the Change of Control Offer and not withdrawn.
The Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer at the same
purchase price, at the same times and otherwise in substantial compliance with
the requirements applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
(b) The Change of Control Offer is required to remain open for at
least 20 Business Days and until the close of business on the fifth Business Day
prior to the Change of Control Purchase Date (as defined below).
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(c) Not later than the 30th day following any Change of Control, the
Company shall give to the Trustee in the manner provided in Section 14.4 and
each Holder of the Securities in the manner provided in Section 14.5, a notice
(the "Change of Control Notice") stating:
(1) that a Change in Control has occurred and that
such Holder has the right to require the Company to repurchase such
Holder's Securities, or portion thereof, at the Change of Control
Purchase Price;
(2) any information regarding such Change of Control
required to be furnished pursuant to Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder;
(3) a purchase date (the "Change of Control Purchase
Date") which shall be on a Business Day and no earlier than 30 days
nor later than 70 days from the date the Change of Control occurred;
(4) that any Security, or portion thereof, not
tendered or accepted for payment will continue to accrue interest;
(5) that unless the Company defaults in depositing
money with the Paying Agent in accordance with the last paragraph of
clause (d) of this Section 9.15, or payment is otherwise prevented,
any Security, or portion thereof, accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control Purchase Date; and
(6) the instructions a Holder must follow in order to
have its Securities repurchased in accordance with paragraph (d) of
this Section.
(d) Holders electing to have Securities purchased will be required to
surrender such Securities to the Company at the address specified in the
Change of Control Notice at least five Business Days prior to the Change of
Control Purchase Date. Holders will be entitled to withdraw their election
if the Company receives, not later than three Business Days prior to the
Change of Control Purchase Date, a facsimile transmission or letter setting
forth the name of the Holder, the certificate number(s) and principal
amount of the Securities delivered for purchase by the Holder as to which
his election is to be withdrawn and a statement that such Holder is
withdrawing his election to have such Securities purchased. Holders whose
Securities are purchased only in part will be issued new Securities equal
in principal amount to the unpurchased portion of the Securities
surrendered.
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Section 9.16 Limitation on Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the Properties sold
or otherwise disposed of pursuant to the Asset Sale and (ii) at least 75% of the
consideration received by the Company or the Restricted Subsidiary, as the case
may be, in respect of such Asset Sale consists of cash, Cash Equivalents or the
assumption by the purchaser of liabilities of the Company (other than
liabilities of the Company that are by their terms subordinated to the
Securities) or any Restricted Subsidiary as a result of which the Company and
its remaining Restricted Subsidiaries are no longer liable.
(b) If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may either (i) apply the Net Cash Proceeds thereof to
permanently reduce Senior Indebtedness or to permanently reduce Guarantor Senior
Indebtedness, or (ii) invest all or any part of the Net Cash Proceeds thereof,
within 365 days after such Asset Sale, in Properties which replace the
Properties that were the subject of the Asset Sale or in Properties that will be
used in the business of the Company or its Restricted Subsidiaries, as the case
may be ("Replacement Assets"). The amount of such Net Cash Proceeds not applied
or invested as provided in this paragraph constitutes "Excess Proceeds," subject
to disposition as provided below.
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$15,000,000 (the "Trigger Date") the Company shall make an offer to purchase,
from all Holders of the Securities and any then outstanding Pari Passu
Indebtedness required to be repurchased or repaid on a permanent basis in
connection with an Asset Sale, an aggregate principal amount of Securities and
any then outstanding Pari Passu Indebtedness equal to such Excess Proceeds as
follows:
(i) (A) No later than the 30th day following the Trigger Date,
the Company shall give to the Trustee in the manner provided in Section
14.4 hereof and each Holder of the Securities in the manner provided in
Section 14.5 hereof, notice (a "Purchase Notice") offering to purchase (a
"Net Proceeds Offer") from all Holders of the Securities the maximum
principal amount (expressed as a multiple of $1,000) of Securities that may
be purchased out of an amount (the "Payment Amount") equal to the product
of such Excess Proceeds multiplied by a fraction, the numerator of which is
the outstanding principal amount of the Securities and the denominator of
which is the sum of the outstanding principal amount of the Securities and
such Pari Passu Indebtedness, if any (subject to proration in the event
such amount is less than the aggregate Offered Price (as defined herein) of
all Securities tendered), and (B) to the extent required by such Pari Passu
Indebtedness and provided there is a permanent reduction in the principal
amount of such Pari Passu Indebtedness, the Company shall make an offer to
purchase Pari Passu Indebtedness (a "Pari Passu Offer") in an amount (the
"Pari Passu Indebtedness Amount") equal to the excess of the Excess
Proceeds over the Payment Amount.
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(ii) The offer price for the Securities shall be payable in
cash in an amount equal to 100% of the principal amount of the Securities
tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest
and Liquidated Damages, if any, to the date such Net Proceeds Offer is
consummated (the "Offered Price"), in accordance with paragraph (d) of this
Section. To the extent that the aggregate Offered Price of the Securities
tendered pursuant to a Net Proceeds Offer is less than the Payment Amount
relating thereto or the aggregate amount of the Pari Passu Indebtedness
that is purchased or repaid pursuant to the Pari Passu Offer is less than
the Pari Passu Indebtedness Amount (such shortfall constituting a "Net
Proceeds Deficiency"), the Company may use such Net Proceeds Deficiency, or
a portion thereof, for general corporate purposes, subject to the
limitations of Section 9.10 hereof.
(iii) If the aggregate Offered Price of Securities validly
tendered and not withdrawn by Holders thereof exceeds the Payment Amount,
Securities to be purchased will be selected on a pro rata basis. Upon
completion of such Net Proceeds Offer and Pari Passu Offer, the amount of
Excess Proceeds shall be reset to zero.
(iv) The Purchase Notice shall set forth a purchase date (the
"Net Proceeds Payment Date"), which shall be on a Business Day no earlier
than 30 days nor later than 70 days from the Trigger Date. The Purchase
Notice shall also state (i) that a Trigger Date with respect to one or more
Asset Sales has occurred and that such Holder has the right to require the
Company to repurchase such Holders Securities at the Offered Price, subject
to the limitations described in the forgoing paragraph (iii), (ii) any
information regarding such Net Proceeds Offer required to be furnished
pursuant to Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder, (iii) that any Security, or portion thereof,
not tendered or accepted for payment will continue to accrue interest, (iv)
that, unless the Company defaults in depositing money with the Paying Agent
in accordance with the last paragraph of clause (d) of this Section 9.16,
or payment is otherwise prevented, any Security, or portion thereof,
accepted for payment pursuant to the Net Proceeds Offer shall cease to
accrue interest after the Net Proceeds Payment Date, and (v) the
instructions a Holder must follow in order to have its Securities
repurchased in accordance with paragraph (d) of this Section.
(d) Holders electing to have Securities purchased will be required to
surrender such Securities to the Company at the address specified in the
Purchase Notice at least five Business Days prior to the Net Proceeds Payment
Date. Holders will be entitled to withdraw their election if the Company
receives, not later than three Business Days prior to the Net Proceeds Payment
Date, a facsimile transmission or letter setting forth the name of the Holder,
the certificate number(s) and principal amount of the Securities delivered for
purchase by the Holder as to which his election is to be withdrawn and a
statement that such Holder is withdrawing his election to have such Securities
purchased. Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
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On the Net Proceeds Payment Date, the Company shall (i) accept for payment
Securities or portions thereof tendered pursuant to a Net Proceeds Offer in an
aggregate principal amount equal to the Payment Amount or such lesser amount of
Securities as has been tendered, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Securities or portions thereof so
tendered in an aggregate principal amount equal to the Payment Amount or such
lesser amount and (iii) deliver or cause to be delivered to the Trustee the
Securities so accepted. The Paying Agent shall promptly mail or deliver to
Holders of the Securities so accepted payment in an amount equal to the purchase
price, and the Company shall execute and the Trustee will promptly authenticate
and mail or make available for delivery to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security which any such
Holder did not surrender for purchase. Any Securities not so accepted will be
promptly mailed or delivered to the Holder thereof. The Company shall announce
the results of a Net Proceeds Offer on or as soon as practicable after the Net
Proceeds Payment Date. For purposes of this Section 9.16, the Trustee will act
as the Paying Agent.
(e) The Company shall not permit any Subsidiary to enter into or
suffer to exist any agreement that would place any restriction of any kind
(other than pursuant to law or regulation) on the ability of the Company to make
a Net Proceeds Offer following any Asset Sale.
Section 9.17 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into or suffer to exist any transaction or series
of related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or the rendering of any services) with, or
for the benefit of, any Affiliate of the Company other than a Restricted
Subsidiary (each, other than a Restricted Subsidiary, being an "Interested
Person"), unless (a) such transaction or series of transactions is on terms that
are no less favorable to the Company or such Restricted Subsidiary, as the case
may be, than those that would be available in a comparable arm's length
transaction with unrelated third parties who are not Interested Persons, (b)
with respect to any one transaction or series of transactions involving
aggregate payments in excess of $1,000,000, the Company delivers an officer's
certificate to the Trustee certifying that such transaction or series of
transactions complies with clause (a) above and such transaction or series of
transactions has been approved by the Board of Directors of the Company and (c)
with respect to any one transaction or series of transactions involving
aggregate payments in excess of $10,000,000, the officer's certificate referred
to in clause (b) above also certifies that such transaction or series of
transactions has been approved by a majority of the Disinterested Directors or,
in the event there are no such Disinterested Directors, that the Company has
obtained a written opinion from an independent nationally recognized investment
banking firm or appraisal firm, in either case specializing or having a
specialty in the type and subject matter of the transaction or series of
transactions at issue, which opinion shall be to the effect set forth in clause
(a) above or shall state that such transaction or series of transactions is fair
from a financial point of view to the Company or such Restricted Subsidiary;
provided, however, that this covenant will not restrict the Company from (i)
paying reasonable and customary regular compensation and fees to directors of
the Company who are not employees of the Company or any Restricted Subsidiary or
(ii) paying dividends on, or making distributions with
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respect to, shares of Capital Stock of the Company on a pro rata basis to the
extent permitted by Section 9.10 hereof.
Section 9.18 Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make
any other distributions on or in respect of its Capital Stock to the Company or
any Restricted Subsidiary, (b) pay any Indebtedness owed to the Company or any
Restricted Subsidiary, (c) make an Investment in the Company or any Restricted
Subsidiary or (d) transfer any of its properties or assets to the Company or any
Restricted Subsidiary, except for such encumbrances or restrictions (i) pursuant
to an agreement in effect or entered into on the date of this Indenture, (ii)
any agreement or other instrument of a Person acquired by the Company or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any other Person, or the properties or assets of any other Person,
other than the Person, or the property or assets of the Person, so acquired or
(iii) existing under any agreement that extends, renews, refinances or replaces
the agreements containing the restrictions in the foregoing clauses (i) and
(ii), provided that the terms and conditions of any such restrictions are not
materially less favorable to the Holders of the Securities than those under or
pursuant to the agreement evidencing the Indebtedness so extended, renewed,
refinanced or replaced.
Section 9.19 Limitation on Other Senior Subordinated Indebtedness.
The Company shall not incur, directly or indirectly, any Indebtedness which
is expressly subordinate or junior in right of payment in any respect to Senior
Indebtedness unless such Indebtedness ranks pari passu in right of payment with
the Securities, or is expressly subordinated in right of payment to the
Securities.
Section 9.20 Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the Oil and
Gas Business, except that the Company and the Restricted Subsidiaries may engage
in any business other than the Oil and Gas Business; provided that the
consolidated assets of the Company and the Restricted Subsidiaries used in such
business shall not exceed, at any time, 10% of Adjusted Consolidated Net
Tangible Assets.
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Section 9.21 Registration Rights Agreement.
The Company shall perform its obligations under the Registration Rights
Agreement and shall comply in all material respects with the terms and
conditions contained therein including, without limitation, the payment of
Liquidated Damages as described in Section 2(e) of the Registration Rights
Agreement.
Section 9.22 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 9.5 through 9.11, Sections 9.13 and
9.14 and Sections 9.17 through 9.20 hereof if, before or after the time for such
compliance, the Holders of at least a majority in principal amount of the
Outstanding Securities and the Subsidiary Guarantors, by act of such Holders and
written agreement of the Subsidiary Guarantors, waive such compliance in such
instance with such term, provision or condition, but no such waiver shall extend
to or affect such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
ARTICLE X
REDEMPTION OF SECURITIES
Section 10.1 Right of Redemption.
The Securities may be redeemed, at the option of the Company, in whole or
in part, at any time on or after November 1, 2002, upon not less than 30 or more
than 60 days' notice to each Holder of Securities to be redeemed, subject to the
conditions and at the Redemption Prices (expressed as percentages of principal
amount) specified in the form of Security, together with accrued and unpaid
interest and Liquidated Damages, if any, to the Redemption Date. In addition, at
any time and from time to time prior to November 1, 2000, the Company may, at
its option, redeem Securities in an amount in the aggregate equal to up to
33 1/3% of the aggregate principal amount of Securities originally issued under
this Indenture with the net proceeds of one or more Public Equity Offerings by
the Company at a Redemption Price (expressed as a percentage of principal
amount) of 108.75%, plus accrued and unpaid interest and Liquidated Damages, if
any, to the applicable Redemption Date (subject to the right of Holders of
Securities on the relevant record date to receive interest due on the relevant
Interest Payment Date); provided, however, that at least $116,700,000 aggregate
principal amount of the Securities must remain outstanding after each such
redemption. In order to effect the foregoing redemption, the Company must mail
notice of redemption under Section 10.5 hereof no later than 60 days after the
related Public Equity Offering and must consummate such redemption within 90
days of the closing of the Public Equity Offering.
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Section 10.2 Applicability of Article.
Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 10.3 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to Section
10.1 hereof shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section 10.4 hereof. Any election to
redeem Securities shall be revocable until the Company gives a notice of
redemption pursuant to Section 10.5 hereof to the Holders of Securities to be
redeemed.
Section 10.4 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not less than 30 days nor more than
60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, pro rata, by lot or by any
other method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions of the principal of
Securities; provided, however, that any such partial redemption shall be in
integral multiples of $1,000.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
Section 10.5 Notice of Redemption.
Notice of redemption shall be given in the manner provided for in Section
14.5 hereof not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Securities to be redeemed.
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All notices of redemption shall identify the Securities to be redeemed
(including CUSIP number) and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of a partial redemption, the principal amounts)
of the particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price (together with
accrued interest and Liquidated Damages, if any, to the Redemption Date payable
as provided in Section 10.7 hereof) will become due and payable upon each such
Security, or the portion thereof, to be redeemed, and that, unless the Company
shall default in the payment of the Redemption Price and any applicable accrued
interest and Liquidated Damages, if any, interest thereon will cease to accrue
on and after said date; and
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. Failure to give such
notice by mailing to any Holder of Securities or any defect therein shall not
affect the validity of any proceedings for the redemption of other Securities.
Section 10.6 Deposit of Redemption Price.
On or before 11:00 A.M., New York City time, on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 9.3 hereof) an amount of money sufficient to pay the
Redemption Price of, and accrued and unpaid interest and Liquidated Damages, if
any, on, all the Securities which are to be redeemed on such Redemption Date.
Section 10.7 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued and unpaid interest
and Liquidated Damages, if any, to the Redemption Date), and from and after such
date (unless the Company shall default in the payment of the Redemption Price
and accrued and unpaid interest and Liquidated Damages, if any) such Securities
shall cease to bear interest and Liquidated Damages. Upon surrender of any such
Security for redemption in accordance with said notice, such Security shall be
paid by the Company at the Redemption Price,
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together with accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 2.10 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Securities.
Section 10.8 Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
the office or agency of the Company maintained for such purpose pursuant to
Section 9.2 hereof (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal amount of the Security so
surrendered.
ARTICLE XI
DEFEASANCE AND COVENANT DEFEASANCE
Section 11.1 Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 11.2 or Section 11.3
hereof be applied to all Outstanding Securities upon compliance with the
conditions set forth below in this Article XI.
Section 11.2 Defeasance and Discharge.
Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.2, the Company shall be deemed to have been
discharged from its obligations with respect to all Outstanding Securities on
the date the conditions set forth in Section 11.4 hereof are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance
means that the Company and the Subsidiary Guarantors shall be deemed (a) to have
paid and discharged their respective obligations under the Outstanding
Securities; provided, however that the Securities shall continue to be deemed to
be "Outstanding" for purposes of Section 11.5 hereof and the other Sections of
this Indenture referred to in clauses (i) and (ii) below, and (b) to have
satisfied all their
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other obligations under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of Outstanding Securities to receive, solely from the trust
fund described in Section 11.4 hereof and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any, on) and
interest and Liquidated Damages, if any, on such Securities when such payments
are due (or at such time as the Securities would be subject to redemption at the
option of the Company in accordance with this Indenture), (ii) the respective
obligations of the Company and any Subsidiary Guarantors under Sections 2.4,
2.5, 2.6, 2.7, 2.8, 2.9, 4.8, 4.14, 5.6, 5.9, 5.10, 9.1, 9.2, 9.3, 9.4, 12.1 (to
the extent it relates to the foregoing Sections and Article XI hereof), 12.4 and
12.5 hereof, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, and (iv) the obligations of the Company and any Subsidiary
Guarantors under this Article XI. Subject to compliance with this Article XI,
the Company may exercise its option under this Section 11.2 notwithstanding the
prior exercise of its option under Section 11.3 hereof with respect to the
Securities.
Section 11.3 Covenant Defeasance.
Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.3, the Company shall be released from its
obligations under any covenant contained in Article VII and in Sections 9.6
through 9.20 hereof with respect to the Outstanding Securities on and after the
date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Securities shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the Outstanding Securities, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Sections 4.1(c) or 4.1(d) hereof, but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected thereby.
Section 11.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 11.2
or Section 11.3 hereof to the Outstanding Securities:
(a) The Company or any Subsidiary Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 5.7 hereof who shall agree to comply with
the provisions of this Article XI applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Securities, (i)
cash in U.S. Dollars in an
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amount, or (ii) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in an
amount, or (iii) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of (and premium, if any, on) and interest and
Liquidated Damages, if any, on the Outstanding Securities on the Stated Maturity
(or Redemption Date, if applicable) of such principal (and premium, if any) or
installment of interest and Liquidated Damages, if any; provided that the
Trustee shall have been irrevocably instructed in writing by the Company to
apply such money or the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities. Before such a deposit, the Company may
give to the Trustee, in accordance with Section 10.3 hereof, a notice of its
election to redeem all of the Outstanding Securities at a future date in
accordance with Article X hereof, which notice shall be irrevocable. Such
irrevocable redemption notice, if given, shall be given effect in applying the
foregoing. For this purpose, "U.S. Government Obligations" means securities that
are (x) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.
(b) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit.
(c) Such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest under this Indenture or the Trust
Indenture Act with respect to any securities of the Company.
(d) Such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under any other material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound, as evidenced to the Trustee in an Officers'
Certificate delivered to the Trustee concurrently with such deposit.
(e) In the case of an election under Section 11.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or
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there has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of this Indenture there has been a change in the applicable
Federal income tax laws; in either case providing that the Holders of the
Outstanding Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such legal defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such legal defeasance had not occurred (it being
understood that (x) such Opinion of Counsel shall also state that such ruling or
applicable law is consistent with the conclusions reached in such Opinion of
Counsel and (y) the Trustee shall be under no obligation to investigate the
basis of correctness of such ruling).
(f) In the case of an election under Section 11.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had not
occurred.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the legal defeasance under Section
11.2 hereof or the covenant defeasance under Section 11.3 (as the case may be)
have been complied with.
Section 11.5 Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 9.3 hereof, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee--collectively for purposes of this
Section 11.5, the "Trustee") pursuant to Section 11.4 hereof in respect of the
Outstanding Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 11.4 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Securities.
Anything in this Article XI to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 11.4
hereof which, in the opinion of a nationally
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recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
legal defeasance or covenant defeasance, as applicable, in accordance with this
Article.
Section 11.6 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 11.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and any Subsidiary Guarantors' obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 11.2 or 11.3 hereof, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 11.5 hereof; provided, however,
that if the Company or any Subsidiary Guarantor makes any payment of principal
of (or premium, if any, on) or interest on any Security following the
reinstatement of its obligations, the Company or such Subsidiary Guarantor shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE XII
GUARANTEES
Section 12.1 Unconditional Guarantee.
Each Restricted Subsidiary that hereafter becomes a Subsidiary Guarantor
shall unconditionally, jointly and severally, guarantee (each such guarantee to
be referred to herein as a "Subsidiary Guarantee," with all such guarantees
being referred to herein as the "Subsidiary Guarantees") to each Holder of
Securities authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, the full and prompt performance of the Company's
obligations under this Indenture and the Securities and that:
(a) the principal of (or premium, if any, on) and interest and
Liquidated Damages, if any, on the Securities will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Securities, if any, to the
extent lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be promptly paid in
full when due or performed in
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accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise;
subject, however, in the case of clauses (a) and (b) above, to the limitations
set forth in Section 12.4 hereof.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and
severally obligated to pay the same immediately. The obligations of each
Subsidiary Guarantor hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Securities or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Securities with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Subsidiary Guarantor shall waive diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and shall
covenant that its Subsidiary Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities, this Indenture and
in the Subsidiary Guarantee. If any Holder or the Trustee is required by any
court or otherwise to return to the Company, any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or any Subsidiary Guarantor, any amount paid by the Company or any
Subsidiary Guarantor to the Trustee or such Holder, the Subsidiary Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
No Subsidiary Guarantor shall be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed by the
Subsidiary Guarantee until payment in full of all obligations guaranteed
thereby. Each Subsidiary Guarantor shall further agree that, as between each
Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (i) the maturity of the obligations guaranteed by the Subsidiary
Guarantee may be accelerated as provided in Article IV hereof for the purposes
of the Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed by the Subsidiary Guarantee, and (ii) in the event of any
acceleration of such obligations as provided in Article IV hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Subsidiary Guarantor for the purpose of the Subsidiary
Guarantee.
Section 12.2 Subsidiary Guarantors May Consolidate, etc. on Certain Terms.
(a) Except as set forth in Articles VII and IX hereof, nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
assets of a Subsidiary Guarantor as an entirety or substantially as an entirety,
to the Company or another Subsidiary Guarantor.
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(b) Except as set forth in Articles VII and IX hereof, nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into a corporation or
corporations other than the Company or a Subsidiary Guarantor (whether or not
affiliated with the Subsidiary Guarantor), or successive consolidations or
mergers in which a Subsidiary Guarantor or its successor or successors shall be
a party or parties, or shall prevent any sale or conveyance of the Properties of
a Subsidiary Guarantor as an entirety or substantially as an entirety, to a
corporation other than the Company or another Subsidiary Guarantor (whether or
not Affiliated with the Subsidiary Guarantor) authorized to acquire and operate
the same; provided, however, that, subject to Sections 12.2(a) and 12.3 hereof,
(A) immediately after such transaction, and giving effect thereto, no Default or
Event of Default shall have occurred as a result of such transaction and be
continuing, (B) such transaction shall not violate any of the covenants in
Sections 9.1 through 9.19 hereof, and (C) each Subsidiary Guarantor shall
covenant and agree that, upon any such consolidation, merger, sale or
conveyance, such Subsidiary Guarantor's Subsidiary Guarantee set forth in this
Article XII and in a notation to the Securities, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed by such Subsidiary Guarantor, shall be expressly
assumed (in the event that the Subsidiary Guarantor is not the surviving
corporation in the merger), by supplemental indenture satisfactory in form to
the Trustee, executed and delivered to the Trustee, by such corporation formed
by such consolidation, or into which the Subsidiary Guarantor shall have merged,
or by the corporation that shall have acquired such Property (except to the
extent the following Section 12.3 would result in the release of such Subsidiary
Guarantee in which case such surviving corporation does not have to execute any
such supplemental indenture). In the case of any such consolidation, merger,
sale or conveyance and upon the assumption by the successor corporation, by
supplemental indenture executed and delivered to the Trustee and satisfactory in
form to the Trustee of the due and punctual performance of all of the covenants
and conditions of this Indenture to be performed by the Subsidiary Guarantor,
such successor corporation shall succeed to and be substituted for the
Subsidiary Guarantor with the same effect as if it had been named herein as a
Subsidiary Guarantor.
Section 12.3 Release of a Subsidiary Guarantor.
The Subsidiary Guarantee of any Restricted Subsidiary may be released upon
the terms and subject to the conditions set forth in Section 9.12 (c) hereof.
Each Subsidiary Guarantor that is designated as an Unrestricted Subsidiary in
accordance with the provisions of this Indenture shall be released from all of
its Subsidiary Guarantee and related obligations set forth in this Indenture for
so long as it remains an Unrestricted Subsidiary. The Trustee shall deliver an
appropriate instrument evidencing such release upon receipt of a Company Request
accompanied by an Officers' Certificate and an Opinion of Counsel certifying
that such sale or other disposition was made by the Company in accordance with
the provisions of this Indenture. Any Subsidiary Guarantor not so released
remains liable for the full amount of principal of (and premium, if any, on) and
interest on the Securities as provided in this Article XII.
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Section 12.4 Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor shall confirm, and by its acceptance hereof each
Holder hereby confirms, that it is the intention of all such parties that the
Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of any federal or
state law. To effectuate the foregoing intention, the Holders hereby
irrevocably agree, and each Subsidiary Guarantor shall irrevocably agree, that
the obligations of each Subsidiary Guarantor under its Subsidiary Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities (including, but not limited to, Guarantor
Senior Indebtedness) of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to Section 12.5 hereof, result in the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. This Section 12.4 is for the benefit of the creditors of each
Subsidiary Guarantor.
Section 12.5 Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors shall agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (if
any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to its Subsidiary Guarantee.
Section 12.6 Execution and Delivery of Notation of Subsidiary Guarantee.
To evidence the Subsidiary Guarantee set forth in Section 12.1 hereof, the
Company shall cause each Subsidiary Guarantor to execute the notation of
Subsidiary Guarantee in substantially the form set forth in Exhibit B attached
hereto to be endorsed on each Security ordered to be authenticated and delivered
by the Trustee, and shall cause this Indenture or a supplemental indenture to be
executed on behalf of each Subsidiary Guarantor by its President or one of its
Vice Presidents and attested to by one of its Secretaries or Assistant
Secretaries. Each Subsidiary Guarantor shall agree that its Subsidiary
Guarantee set forth in Section 12.1 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Subsidiary Guarantee. Each such notation of Subsidiary Guarantee shall be
signed on behalf of each Subsidiary Guarantor by two Officers, or an Officer and
an Assistant Secretary 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 such notation of Subsidiary
Guarantee prior to the authentication of the Security on which it is endorsed,
and the delivery of such Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the
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Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary
Guarantors. Such signatures upon the notation of Subsidiary Guarantee may be by
manual or facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Subsidiary Guarantee, and in case any such officer who shall
have signed the notation of Subsidiary Guarantee shall cease to be such officer
before the Security on which such notation of Subsidiary Guarantee is endorsed
shall have been authenticated and delivered by the Trustee or disposed of by the
Company, such Security nevertheless may be authenticated and delivered or
disposed of as though the person who signed the notation of Subsidiary Guarantee
had not ceased to be such officer of the Subsidiary Guarantor.
Section 12.7 Severability.
In case any provision of the Subsidiary Guarantee shall be invalid, illegal
or unenforceable, that portion of such provision that is not invalid, illegal or
unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 12.8 Subsidiary Guarantees Subordinated to Guarantor Senior
Indebtedness.
Each Subsidiary Guarantor shall covenant and agree, and each Holder of a
Security, by his acceptance of the Subsidiary Guarantees, covenants and agrees,
for the benefit of the holders, from time to time, of Guarantor Senior
Indebtedness, that the payments by such Subsidiary Guarantor in respect of its
Subsidiary Guarantee are subordinated and subject in right of payment, to the
extent and in the manner provided in this Article XII, to the prior payment in
full of all Guarantor Senior Indebtedness of such Subsidiary Guarantor, whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed or guaranteed; provided, however, that the Subsidiary Guarantees of the
Subsidiary Guarantors, the Indebtedness represented thereby and the payment of
the principal of (and premium, if any, on) and the interest on the Securities
pursuant to the Subsidiary Guarantees in all respects shall rank pari passu
with, or prior to, all existing and future unsecured indebtedness (including,
without limitation, Indebtedness) of the Subsidiary Guarantors that is
subordinated to the Guarantor Senior Indebtedness.
This Article XII shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Guarantor
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Guarantor Senior Indebtedness, and such holders are made obligees hereunder
and any of them may enforce such provisions.
Section 12.9 Subsidiary Guarantors Not to Make Payments with Respect to
Subsidiary Guarantees in Certain Circumstances.
(a) No payment or distribution of any Property of any Subsidiary
Guarantor of any kind or character (other than Permitted Guarantor Junior
Securities) may be made by such Subsidiary Guarantor in respect of its
Subsidiary Guarantee upon the happening of any default in
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respect of the payment or required prepayment of any of its Guarantor Senior
Indebtedness when the same becomes due and payable (a "Subsidiary Guarantor
Payment Default"), unless and until such Subsidiary Guarantor Payment Default
shall have been cured or waived in writing or shall have ceased to exist or such
Guarantor Senior Indebtedness shall have been paid in full or otherwise
discharged, after which such Subsidiary Guarantor shall resume making any and
all required payments in respect of its Subsidiary Guarantee, including any
missed payments.
(b) Upon the happening of any event (other than a Subsidiary
Guarantor Payment Default) the occurrence of which entitles one or more Persons
to accelerate the maturity of any Designated Guarantor Senior Indebtedness (a
"Subsidiary Guarantor Non-payment Default"), and receipt by the applicable
Subsidiary Guarantor and a Responsible Officer of the Trustee, on behalf of the
Trustee, of written notice thereof from one or more of the holders of such
Designated Guarantor Senior Indebtedness or their representative (a "Subsidiary
Guarantor Payment Notice"), then, unless and until such Subsidiary Guarantor
Non-payment Default shall have been cured or waived in writing or shall have
ceased to exist or such Designated Guarantor Senior Indebtedness is paid in full
or otherwise discharged or the holders (or a representative of the holders) of
such Designated Guarantor Senior Indebtedness give their written approval, no
payment or distribution shall be made by such Subsidiary Guarantor in respect of
its Subsidiary Guarantee (other than Permitted Guarantor Junior Securities);
provided, however, that these provisions will not prevent the making of any
payment for more than 179 days after a Subsidiary Guarantor Payment Notice shall
have been given after which, subject to Section 12.9(a), such Subsidiary
Guarantor will resume making any and all required payments in respect of its
Subsidiary Guarantee, including any missed payments. Notwithstanding any other
provision of this Indenture, only one Subsidiary Guarantor Payment Notice shall
be given with respect to any Subsidiary Guarantee within any 360 consecutive day
period. No Subsidiary Guarantor Non-payment Default with respect to Designated
Guarantor Senior Indebtedness that existed or was continuing on the date of any
Subsidiary Guarantor Payment Notice with respect to the Designated Guarantor
Senior Indebtedness initiating such Subsidiary Guarantor Payment Notice shall
be, or can be, made the basis for the commencement of a subsequent Subsidiary
Guarantor Payment Notice with respect to such Subsidiary Guarantee, whether or
not within a period of 360 consecutive days, unless such default shall have been
cured or waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial covenant
for a period commencing after the date of commencement of such Subsidiary
Guarantor Payment Notice, that, in either case, would give rise to a Subsidiary
Guarantor Non-payment Default pursuant to any provision under which a Subsidiary
Guarantor Non-payment Default previously existed or was continuing shall
constitute a new Subsidiary Guarantor Non-payment Default for this purpose;
provided that, in the case of a breach of a particular financial covenant, such
Subsidiary Guarantor shall have been in compliance for at least one full 90
consecutive day period commencing after the date of commencement of such
Subsidiary Guarantor Payment Notice). In no event shall a Subsidiary Guarantor
Payment Notice extend beyond 179 days from the date of its receipt and there
must be a 181 consecutive day period in any 360 consecutive day period during
which no Subsidiary Guarantor Payment Notice is in effect with respect to such
Subsidiary Guarantee.
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(c) In the event that, notwithstanding the foregoing, a Subsidiary
Guarantor shall make any payment in respect of its Subsidiary Guarantee to
the Trustee or the Holder of any Security prohibited by the foregoing
provisions of this Section 12.9, then and in such event such payment shall
be paid over and delivered forthwith to the Company. In the event that a
Subsidiary Guarantor shall make any payment in respect of its Subsidiary
Guarantee to the Trustee and a Responsible Officer of the Trustee, on
behalf of the Trustee, shall receive written notice of a Subsidiary
Guarantor Payment Default or a Subsidiary Guarantor Non-payment Default
from one or more of the Holders of Guarantor Senior Indebtedness (or their
representative) prior to making any payment to Holders in respect of the
Subsidiary Guarantee and prior to 11:00 a.m. Eastern Time on the date which
is two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose, such payments shall be paid over
by the Trustee and delivered forthwith to the Company. Each Subsidiary
Guarantor shall give prompt written notice to the Trustee of any default
under any of its Guarantor Senior Indebtedness or under any agreement
pursuant to which its Guarantor Senior Indebtedness may have been issued.
SECTION 12.10 Subsidiary Guarantees Subordinated to Prior Payment of All
Guarantor Senior Indebtedness upon Dissolution, etc.
Upon any distribution of Properties of any Subsidiary Guarantor or payment
on behalf of a Subsidiary Guarantor in the event of any Insolvency or
Liquidation Proceeding with respect to such Subsidiary Guarantor:
(a) the holders of such Subsidiary Guarantor's Guarantor Senior
Indebtedness shall be entitled to receive payment in full of such Guarantor
Senior Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness, whether
or not a claim for such interest would be allowed in such a proceeding) before
the Holders are entitled to receive any direct or indirect payment or
distribution of any kind or character, whether in cash, property or securities
(other than Permitted Guarantor Junior Securities), on account of any payment in
respect of such Subsidiary Guarantor's Subsidiary Guarantee;
(b) any direct or indirect payment or distribution of Properties of
such Subsidiary Guarantor of any kind or character, whether in cash, property or
securities (other than a payment or distribution in the form of Permitted
Guarantor Junior Securities), by set-off or otherwise, to which the Holders or
the Trustee, on behalf of the Holders, would be entitled except for the
provisions of this Article XII, shall be paid by the Subsidiary Guarantor or by
any liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of such Guarantor Senior Indebtedness or
their representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Seni or Guarantor
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of such Guarantor Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full of all such
Guarantor Senior Indebtedness, after giving effect to any concurrent payment or
distribution to the holders of such Guarantor Senior Indebtedness;
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(c) in the event that, notwithstanding the foregoing provisions of
this Section 12.10, any direct or indirect payment or distribution of Properties
of such Subsidiary Guarantor of any kind or character, whether in cash, property
or securities (other than a payment or distribution in the form of Permitted
Guarantor Junior Securities), shall be received by the Trustee or the Holders
before all such Guarantor Senior Indebtedness is paid in full or otherwise
discharged, such Properties shall be received and held in trust for and shall be
paid over to the holders of such Guarantor Senior Indebtedness remaining unpaid
or their representatives, for application to the payment of such Guarantor
Senior Indebtedness until all such Guarantor Senior Indebtedness shall have been
paid or provided for in full, after giving effect to any concurrent payment or
distribution to the holders of such Guarantor Senior Indebtedness;
(d) to the extent any payment of or distribution in respect of
Senior Indebtedness (whether by or on behalf of the Company or any Subsidiary
Guarantor, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then if such payment or distribution is recovered by,
or paid over to, such receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar person, the Senior Indebtedness or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payments had not occurred; and
(e) to the extent that the obligation to repay any Senior
Indebtedness is declared to be fraudulent, invalid or otherwise set aside under
any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then the obligation so declared fraudulent, invalid or otherwise set aside (and
all other amounts that would come due with respect thereto had such obligation
not been so affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
The Company or a Subsidiary Guarantor shall give prompt written notice to a
Responsible Officer of the Trustee, on behalf of the Trustee, of the occurrence
of any Insolvency or Liquidation Proceeding with respect to such Subsidiary
Guarantor.
SECTION 12.11 Holders to be Subrogated to Rights of Holders of Guarantor
Senior Indebtedness.
After the payment in full of all Guarantor Senior Indebtedness of a
Subsidiary Guarantor, the Holders shall be subrogated (equally and ratably with
the holders of all other Indebtedness of such Subsidiary Guarantor which by its
express terms is subordinated to such Guarantor Senior Indebtedness to
substantially the same extent as such Subsidiary Guarantee is so subordinated
and which is entitled to like rights of subrogation as a result of payments made
to the holders of such Guarantor Senior Indebtedness) to the rights of the
holders of such Guarantor Senior Indebtedness to receive payments or
distributions of cash, property and securities of such Subsidiary Guarantor
applicable to such Guarantor Senior Indebtedness until all amounts owing on the
Securities shall be
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paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of such Guarantor Senior Indebtedness by or on
behalf of such Subsidiary Guarantor or by or on behalf of the Holders by virtue
of this Article XII which otherwise would have been made to the Holders shall,
as between such Subsidiary Guarantor, its creditors other than the holders of
Guarantor Senior Indebtedness, and the Holders of the Securities, be deemed to
be a payment or distribution by such Subsidiary Guarantor to or on account of
such Guarantor Senior Indebtedness, it being understood that the subordination
provisions of this Article XII are, and are intended solely for, the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
Guarantor Senior Indebtedness, on the other hand.
SECTION 12.12 Obligations of the Subsidiary Guarantors Unconditional.
Nothing contained in this Article XII or elsewhere in this Indenture or in
any Security is intended to or shall impair, as between Subsidiary Guarantors
and the Holders, the obligation of the Subsidiary Guarantors under the
Subsidiary Guarantees, or is intended to or shall affect the relative rights of
the Holders and creditors of the Subsidiary Guarantors, nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon Default under this Indenture subject
to the rights, if any, under this Article XII of the holders of Guarantor Senior
Indebtedness in respect of cash, property or securities of any Subsidiary
Guarantor received upon the exercise of any such remedy. Upon any distribution
of Properties of a Subsidiary Guarantor referred to in this Article XII, the
Trustee, subject to the provisions of Section 5.2 hereof, and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of a trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, or agent or other person making any distribution to the Trustee or
to the Holders of the Securities, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the related
Guarantor Senior Indebtedness and other indebtedness of such Subsidiary
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
XII.
SECTION 12.13 Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts (other than the existence of a Payment Default or a
Payment Blockage Period) that would prohibit the making of any payment to or by
the Trustee, unless a Responsible Officer of the Trustee, on behalf of the
Trustee, shall have received at the Corporate Trust Office written notice
thereof from a Subsidiary Guarantor or from one or more holders of Guarantor
Senior Indebtedness or Designated Guarantor Senior Indebtedness, in the case of
a Subsidiary Guarantor Non-payment Default, or from any representative thereof;
and, prior to the receipt of any such written notice, the Trustee, subject to
TIA Sections 315(a) through 315(d), shall be entitled to assume conclusively
that no such facts exist. The Trustee shall be entitled to rely on the delivery
to it of a written notice by a Person representing himself to be a holder of
Guarantor Senior Indebtedness or Designated Guarantor
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Senior Indebtedness, in the case of a Subsidiary Guarantor Non-payment Default
(or a representative on behalf of such holder), to establish that such notice
has been given by a holder of Guarantor Senior Indebtedness or Designated
Guarantor Senior Indebtedness, in the case of a Subsidiary Guarantor Non-payment
Default, or a representative on behalf of any such holder or holders.
SECTION 12.14 Application by Trustee of Money Deposited with it.
Except as provided in Article XIV, any deposit of money by a Subsidiary
Guarantor with the Trustee or any Paying Agent (whether or not in trust) for any
payment in respect of the related Subsidiary Guarantee shall be subject to the
provisions of Sections 12.8, 12.9, 12.10 and 12.11 hereof except that, if a
Payment Default does not exist, a Payment Blockage Period is not in effect and
if prior to 11:00 a.m. Eastern time on the date which is one Business Day prior
to the date on which by the terms of this Indenture any such money may become
payable for any purpose, the Trustee or, in the case of any such deposit of
money with a Paying Agent, the Paying Agent shall not have received with respect
to such money the notice provided for in Section 12.13 hereof, then the Trustee
or such Paying Agent, as the case may be, shall have full power and authority to
receive such money and to apply the same to the purpose for which it was
received, and shall not be affected by any notice to the contrary which may be
received by it on or after 11:00 a.m., Eastern time, one Business Day prior to
such payment date. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article XII, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article XII, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Guarantor Senior Indebtedness but shall have only such obligations to
such holders as are expressly set forth in this Article XII.
SECTION 12.15 Subordination Rights Not Impaired by Acts or Omissions of
Subsidiary Guarantors or Holders of Guarantor Senior
Indebtedness.
No right of any present or future holders of any Guarantor Senior
Indebtedness of a Subsidiary Guarantor to enforce subordination as provided
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of such Subsidiary Guarantor or by any act or failure
to act by any such holder, or by any noncompliance by such Subsidiary Guarantor
with the terms of this Indenture, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with.
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Without in any way limiting the generality of the preceding paragraph of
this Section, the holders of Guarantor Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Holders of the Securities, without incurring responsibility to the Holders of
the Securities and without impairing or releasing the subordination or other
benefits provided in this Article, or the obligations hereunder of the Holders
of the Securities to the holders of Guarantor Senior Indebtedness, do any one or
more of the following: (a) change the manner, place or terms of payment or
extend the time of payment of, or renew, exchange, amend, increase or alter,
Guarantor Senior Indebtedness or the term of any instrument evidencing the same
or any agreement under which Guarantor Senior Indebtedness is outstanding or any
liability of any obligor thereon (unless such change, extension or alteration
results in such Indebtedness no longer being Guarantor Senior Indebtedness as
defined in this Indenture); (b) sell, exchange, release or otherwise deal with
any Property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (c) settle or compromise any Guarantor Senior Indebtedness or any
liability of any obligor thereon or release any Person liable in any manner for
the collection of Guarantor Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company and any other Person.
SECTION 12.16 Holders Authorize Trustee to Effectuate Subordination of
Subsidiary Guarantees.
Each Holder, by his acceptance thereof, authorizes and expressly directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article XII and appoints the
Trustee as his attorney-in-fact for such purpose, including, in the event of any
Insolvency or Liquidation Proceeding with respect to any Subsidiary Guarantor,
the immediate filing of a claim for the unpaid balance of his Securities
pursuant to the related Subsidiary Guarantee in the form required in said
proceedings and the causing of said claim to be approved.
SECTION 12.17 Right of Trustee to Hold Guarantor Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article XII in respect of any Guarantor Senior Indebtedness at any time held by
it to the same extent as any other holder of Guarantor Senior Indebtedness, and
nothing in this Indenture shall be construed to deprive the Trustee of any of
its rights as such holder.
SECTION 12.18 Article XII Not to Prevent Events of Default.
The failure to make a payment on account of the Subsidiary Guarantees by
reason of any provision in this Article XII shall not be construed as preventing
the occurrence of an Event of Default under this Indenture.
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SECTION 12.19 Payment.
For purposes of this Article XII, a payment with respect to any Subsidiary
Guarantee or with respect to principal of or interest on any Security or any
Subsidiary Guarantee shall include, without limitation, payment of principal of
and interest on any Security, any depositing of funds under Article IV hereof,
any payment on account of any repurchase or redemption of any Security and any
payment or recovery on any claim (whether for rescission or damages and whether
based on contract, tort, duty imposed by law, or any other theory of liability)
relating to or arising out of the offer, sale or purchase of any Security.
ARTICLE XII
SUBORDINATION OF SECURITIES
SECTION 13.1 Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees for the benefit of the
holders, from time to time, of Senior Indebtedness, that, to the extent and in
the manner hereinafter set forth in this Article XIII, the Indebtedness
represented by the Securities and the payment of and distributions of or with
respect to the Note Obligations are hereby expressly made subordinate and
subject in right of payment as provided in this Article XIII to the prior
payment in full in cash or Cash Equivalents of all amounts payable under all
existing and future Senior Indebtedness which includes, without limitation, all
Credit Agreement Obligations of the Company.
This Article XIII shall constitute a continuing offer to all persons who,
in reliance upon such provisions, become holders of, or continue to hold Senior
Indebtedness; and such provisions are made for the benefit of the holders of
Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them may enforce such provisions.
SECTION 13.2 Payment Over of Proceeds upon Dissolution, etc.
In the event of an Insolvency or Liquidation Proceeding with respect to the
Company:
(i) the holders of all Senior Indebtedness shall be
entitled to receive payment in full in cash or Cash Equivalents of all
Senior Indebtedness (including interest after the commencement of such
proceeding at the rate specified in the applicable Senior Indebtedness,
whether or not a claim for such interest would be allowed in such
proceeding) before the Holders of the Securities are entitled to receive
any direct or indirect payment or distribution whether in cash, property
or securities (excluding Permitted Junior Securities of the Company) on
account of the Note Obligations;
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(ii) any direct or indirect payment or distribution of
properties or assets of the Company of any kind or character, whether in
cash, property or securities (excluding Permitted Junior Securities of the
Company), by set-off or otherwise, to which the Holders or the Trustee
would be entitled but for the provisions of this Article XIII shall be paid
by the liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of Senior Indebtedness or
their representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in
cash or cash equivalents of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness;
(ii) in the event that, notwithstanding the foregoing provisions
of this Section 13.2, the Trustee or the Holder of any Security shall have
received any payment or distribution of properties or assets of the Company
of any kind or character, whether in cash, property or securities, by set
off or otherwise, in respect of any Note Obligations before all Senior
Indebtedness is paid or provided for in full, then and in such event such
payment or distribution (excluding Permitted Junior Securities of the
Company) shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other person making payment or distribution of assets of the Company for
application to the payment of all Senior Indebtedness remaining unpaid, to
the extent necessary to pay all Senior Indebtedness in full, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness;
(iv) to the extent any payment of or distribution in respect of
Senior Indebtedness (whether by or on behalf of the Company or any
Subsidiary Guarantor, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if
such payment or distribution is recovered by, or paid over to, such
receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar person, the Senior Indebtedness or part thereof originally intended
to be satisfied shall be deemed to be reinstated and outstanding as if such
payments had not occurred; and
(v) to the extent that the obligation to repay any Senior
Indebtedness is declared to be fraudulent, invalid or otherwise set aside
under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then the obligation so declared fraudulent, invalid or
otherwise set aside (and all other amounts that would come due with respect
thereto had such obligation not been so affected) shall be deemed to be
reinstated and
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outstanding as Senior Indebtedness for all purposes hereof as if such
declaration, invalidity or setting aside had not occurred.
The consolidation of the Company with, or the merger of the Company with or
into, another person or the liquidation or dissolution of the Company following
the conveyance, transfer or lease of its properties and assets substantially as
an entirety to another person upon the terms and conditions set forth in Article
VII hereof shall not be deemed a dissolution, winding-up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of the Company for the purposes of this Article if the person
formed by such consolidation or the surviving entity of such merger or the
person which acquires by conveyance, transfer or lease such properties and
assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in such Article VII hereof to the extent applicable.
SECTION 13.3 Suspension of Payment When Senior Indebtedness in Default.
(a) Unless Section 13.2 hereof shall be applicable, upon
the occurrence of a Payment Default, no direct or indirect payment or
distribution of any assets of the Company of any kind or character shall be made
by or on behalf of the Company on account of the Note Obligations or on account
of the purchase or redemption or other acquisition of any Note Obligations
unless and until such Payment Default shall have been cured or waived or shall
have ceased to exist or such Designated Senior Indebtedness shall have been
discharged or paid in full in cash in Cash Equivalents, after which, subject to
Section 13.2 hereof (if applicable), the Company shall resume making any and all
required payments in respect of the Securities and the other Note Obligations,
including any missed payments.
(b) Unless Section 13.2 hereof shall be applicable, upon
(i) the occurrence of a Non-payment Default and (ii) receipt by the Trustee from
a Senior Representative of written notice (a "Payment Blockage Notice") of such
occurrence stating that such notice is a Payment Blockage Notice pursuant to
this Section 13.3(b) of this Indenture, no payment or distribution of any assets
of the Company of any kind or character shall be made by or on behalf of the
Company on account of any Note Obligations or on account of the purchase or
redemption or other acquisition of Note Obligations for a period ("Payment
Blockage Period") commencing on the date of receipt by the Trustee of such
notice unless and until the earlier to occur of the following events (subject to
any blockage of payments that may then be in effect under Section 13.2 hereof or
subsection (a) of this Section 13.3 hereof) (w) 179 days shall have elapsed
since receipt of such written notice by the Trustee, (x) the date, as set forth
in a written notice to the Company or the Trustee from the Senior Representative
initiating such Payment Blockage Period, on which such Non-payment Default shall
have been cured or waived or shall have ceased to exist (provided that no other
Payment Default or Non-Payment Default has occurred and is then continuing after
giving effect to such cure or waiver), (y) such Designated Senior Indebtedness
shall have been discharged or paid in full in cash or Cash Equivalents or (z)
such Payment Blockage Period shall have been terminated by written notice to the
Company or the Trustee from the Senior Representative initiating such Payment
Blockage
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Period, after which, subject to Sections 13.2 and 13.3(a) hereof (if
applicable), the Company shall promptly resume making any and all required
payments in respect of the Note Obligations, including any missed payments.
Notwithstanding any other provision of this Indenture, only one Payment Blockage
Period may be commenced within any 360 consecutive day period. No Non-payment
Default with respect to Designated Senior Indebtedness that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or can be, made the basis for the commencement of a second
Payment Blockage Period, whether or not within a period of 360 consecutive days,
unless such default shall have been cured or waived for a period of not less
than 90 consecutive days (it being acknowledged that any subsequent action, or
any breach of any financial covenant for a period commencing after the date of
commencement of such Payment Blockage Period, that, in either case, would give
rise to a Non-payment Default pursuant to any provision under which a Non-
payment Default previously existed or was continuing shall constitute a new Non-
payment Default for this purpose; provided, however, that, in the case of a
breach of a particular financial covenant, the Company shall have been in
compliance for at least one full 90 consecutive day period commencing after the
date of commencement of such Payment Blockage Period). In no event shall a
Payment Blockage Period extend beyond 179 days from the date of the receipt of
the notice referred to in clause (ii) hereof and there must be a 181 consecutive
day period in any 360 consecutive day period during which no Payment Blockage
Period is in effect pursuant to this Section 13.3(b).
(c) In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Security shall have received any payment or
distribution prohibited by the foregoing provisions of this Section 13.3, then
and in such event such payment or distribution shall be paid over and delivered
forthwith to the Senior Representatives or as a court of competent jurisdiction
shall direct for application to the payment of any due and unpaid Senior
Indebtedness, to the extent necessary to pay all such due and unpaid Senior
Indebtedness in cash or Cash Equivalents, after giving effect to any concurrent
payment to or for the holders of Senior Indebtedness.
SECTION 13.4 Trustee's Relation to Senior Indebtedness.
With respect to the holders of Senior Indebtedness, notwithstanding any
other provisions of this Indenture, the Trustee undertakes to perform or to
observe only such of its covenants and obligations as are specifically set forth
in this Article XIII, and no implied covenants or obligations with respect to
the holders of Senior Indebtedness shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and the Trustee shall not be liable to any holder
of Senior Indebtedness if it shall mistakenly (but not as a result of willful
misconduct or gross negligence of the Trustee) pay over or deliver to Holders,
the Company or any other person moneys or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article XIII or otherwise.
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SECTION 13.5 Subrogation to Rights of Holders of Senior Indebtedness.
Upon the payment in full of cash or Cash Equivalents of all Senior
Indebtedness, the Holders of the Securities shall be subrogated (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to Senior Indebtedness to substantially the same extent as
the Securities are so subordinated and which is entitled to like rights of
subrogation as a result of the payments made to the holders of Senior
Indebtedness) to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of, premium, if any, and interest
and Liquidated Damages, if any, on the Securities shall be paid in full in cash
or Cash Equivalents. For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article XIII, and no payments over
pursuant to the provisions of this Article XIII to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee shall, as among the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Securities, be deemed to be payment or distribution by the
Company to or on account of the Senior Indebtedness.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article XIII shall have been
applied, pursuant to the provisions of this Article XIII, to the payment of all
amounts payable under the Senior Indebtedness of the Company and such payments
or distributions received by such holders of such Senior Indebtedness shall be
in excess of the amount sufficient to pay all amounts payable under or in
respect of such Senior Indebtedness in full in cash or cash equivalents, then
and in such case the Holders shall be entitled to receive the amount of such
excess from the Company upon and to the extent of any return of such excess by
the holders of such Senior Indebtedness.
SECTION 13.6 Provisions Solely To Define Relative Rights.
The provisions of this Article XIII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article XIII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of, premium, if any, and
interest and Liquidated Damages, if any, on the Securities as and when the same
shall become due and payable in accordance with their terms; or (b) affect the
relative rights against the Company of the Holders of the Securities and
creditors of the Company other than the holders of the Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon a Default or an Event of
Default under this Indenture, subject to the rights, if any, under this Article
XIII of the holders of Senior Indebtedness.
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The failure to make a payment on account of any Note Obligations by reason
of any provision of this Article XIII shall not be construed as preventing the
occurrence of a Default or an Event of Default hereunder.
Section 13.7 Trustee To Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article XIII and appoints the
Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company whether in bankruptcy, insolvency, receivership proceedings, or
otherwise, the timely filing of a claim for the unpaid balance of the
Indebtedness of the Company owing to such Holder in the form required in such
proceedings and the causing of such claim to be approved. If the Trustee does
not file such a claim prior to 30 days before the expiration of the time to file
such a claim, the holders of Senior Indebtedness, or any Senior Representative,
may file such a claim on behalf of Holders of the Securities.
Section 13.8 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
(a) Without limiting the generality of subsection (a) of this
Section 13.8, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
XIII or the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding or any liability of any
obligor thereon; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (3) settle or
compromise any Senior Indebtedness or any liability of any obligor thereon or
release any person liable in any manner for the collection or payment of Senior
Indebtedness; and (4) exercise or refrain from exercising any rights against the
Company and any other person; provided, however, that in no event shall any such
actions limit the right of the Holders of the Securities to take any action to
accelerate the maturity of the Securities pursuant to Article IV hereof or to
pursue any rights or remedies hereunder or under applicable laws if the taking
of such action does not otherwise violate the terms of this Indenture.
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Section 13.9 Notice to Trustee.
(a) The Company shall give prompt written notice to the Trustee of
any fact (other than the existence of a Payment Default or a Payment Blockage
Period) known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article XIII or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts (other than the
existence of a Payment Default or a Payment Blockage Period) which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until a Responsible Officer of the Trustee, on behalf of
the Trustee, shall have received written notice thereof from the Company or a
holder of Senior Indebtedness or from any trustee, fiduciary or agent therefor;
and, prior to the receipt of any such written notice, the Trustee, subject to
the provisions of this Section 13.9, shall be entitled in all respects to assume
that no such facts exist; provided, however, that if a Payment Default does not
exist, a Payment Blockage Period is not in effect and the Trustee shall not have
received the notice provided for in this Section 13.9 at least one Business Day
prior to the date upon which by the terms hereof any money may become payable
for any purpose under this Indenture (including, without limitation, the payment
of the principal of, premium, if any, or interest and Liquidated Damages, if
any, on any Security), then, anything herein contained to the contrary
notwithstanding but without limiting the rights and remedies of the holders of
Senior Indebtedness or any trustee, fiduciary or agent thereof, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purpose for which such money was received and shall not be affected by
any notice to the contrary which may be received by it within one Business Day
prior to such date; nor shall the Trustee be charged with knowledge of the
curing of any such default or the elimination of the act or condition preventing
any such payment unless and until the Trustee shall have received an Officers'
Certificate to such effect.
(b) Subject to TIA Sections 315(a) through 315(d), the Trustee
shall be entitled to rely on the delivery to it of a written notice to a
Responsible Officer of the Trustee, on behalf of the Trustee, by a person
representing himself to be a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article XIII, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article XIII, and if such evidence is not furnished, the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
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Section 13.10 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article XIII, the Trustee, subject to TIA Sections 315(a) through 315(d),
and the Holders, shall be entitled to rely upon any order or decree entered by
any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding-up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders, for the purpose of ascertaining the persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereof, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XIII.
Section 13.11 Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XIII with respect to any Senior Indebtedness which may
at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article XIII shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 5.6 hereof.
Section 13.12 Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article XIII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XIII in addition to or in place of the Trustee; provided,
however, that Section 13.11 hereof shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 13.13 No Suspension of Remedies.
Nothing contained in this Article XIII shall limit the right of the Trustee
or the Holders of Securities to take any action to accelerate the maturity of
the Securities pursuant to Article IV hereof or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if any, under this
Article XIII of the holders, from time to time, of Senior Indebtedness.
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ARTICLE XIV
MISCELLANEOUS
Section 14.1 Compliance Certificates and Opinions.
Upon any application or request by the Company and/or any Subsidiary
Guarantor to the Trustee to take any action under any provision of this
Indenture, the Company and/or such Subsidiary Guarantor, as the case may be,
shall furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act or this Indenture. Each such certificate and each
such opinion shall be in the form of an Officers' Certificate or an Opinion of
Counsel, as applicable, and shall comply with the requirements of this
Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(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 each such individual,
he has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
The certificates and opinions provided pursuant to this Section 14.1 and
the statements required by this Section 14.1 shall comply in all respects with
TIA Sections 314(c) and (e).
Section 14.2 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such Opinion of Counsel may be based, insofar as it relates to
factual matters, upon an Officers' Certificate of an Officer or Officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate with respect to such matters
is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 14.3 Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of
Securities held by any Person, and the date of holding the same, shall be proved
by the Security Register.
(d) If the Company shall solicit from the Holders of Securities
any request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, by or pursuant to a Board Resolution, fix
in advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or
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other Act, but the Company shall have no obligation to do so. Notwithstanding
TIA Section 316(c), such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not earlier than the
date 30 days prior to the first solicitation of Holders generally in connection
therewith and not later than the date such solicitation is completed. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record date, but
only the Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of Outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date; provided that no such authorization, agreement
or consent by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than eleven months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
Section 14.4 Notices, etc. to Trustee, Company and Subsidiary Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(i) the Trustee by any Holder or by the Company or any
Subsidiary Guarantor shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing and delivered in person or mailed by
certified or registered mail (return receipt requested) to the Trustee at its
Corporate Trust Office; or
(ii) the Company or any Subsidiary Guarantor by the Trustee or
by any Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and delivered in person or mailed by
certified or registered mail (return receipt requested) to the Company addressed
to it or a Subsidiary Guarantor, as applicable, at the Company's principal
office located at 810 Houston Street, Suite 2000, Fort Worth, Texas 76102, or at
any other address otherwise furnished in writing to the Trustee by the Company.
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Section 14.5 Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Any
notice mailed to a Holder in the manner herein prescribed shall be conclusively
deemed to have been received by such Holder, whether or not such Holder actually
receives such notice. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
Section 14.6 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 14.7 Successors and Assigns.
All covenants and agreements in this Indenture by the Company and any
Subsidiary Guarantors shall bind their respective successors and assigns,
whether so expressed or not. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 14.8 Separability Clause.
In case any provision in this Indenture or in the Securities or the
Subsidiary Guarantees shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, and a Holder shall have no claim therefore against
any party hereto.
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Section 14.9 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person (other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder, the Holders, the holders of
Senior Indebtedness, the holders of Guarantor Senior Indebtedness and, to the
extent set forth in Section 12.4 hereof, creditors of Subsidiary Guarantors) any
benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 14.10 Governing Law; Trust Indenture Act Controls.
(a) THIS INDENTURE, THE SUBSIDIARY GUARANTEES, IF ANY, AND THE
SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. THE
COMPANY IRREVOCABLY SUBMITS AND WILL CAUSE EACH SUBSIDIARY GUARANTOR TO
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE, THE SECURITIES OR A SUBSIDIARY GUARANTEE, AND THE COMPANY IRREVOCABLY
AGREES AND WILL CAUSE EACH SUBSIDIARY GUARANTOR TO IRREVOCABLY AGREE THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED BY
ANY SUCH COURT.
(b) This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
If and to the extent that any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by Sections 310 and 318, inclusive, of the
Trust Indenture Act, or conflicts with any provision (an "incorporated
provision") required by or deemed to be included in this Indenture by operation
of such Trust Indenture Act sections, such imposed duties or incorporated
provision shall control. If any provision of this Indenture modifies or excludes
any provision of the Trust Indenture Act that may be so modified or excluded,
the latter provision shall be deemed to apply to this Indenture as so modified
or excluded, as the case may be.
Section 14.11 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, or Stated
Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities or
any Subsidiary Guarantees) payment of interest or principal (and premium, if
any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date or at the Stated Maturity or Maturity; provided that no
interest shall accrue for the period from
118
<PAGE>
and after such Interest Payment Date, Redemption Date, Stated Maturity or
Maturity, as the case may be.
Section 14.12 No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Securities
or this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder, by accepting any of the Securities,
waives and releases all such liability to the extent permitted by applicable
law.
Section 14.13 Duplicate Originals.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 14.14 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
119
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
ISSUER:
CROSS TIMBERS OIL COMPANY
a Delaware corporation
By: /s/ Louis G. Baldwin
------------------------------
Louis G. Baldwin
Senior Vice President
TRUSTEE:
THE BANK OF NEW YORK
as Trustee
By: /s/ Walter N. Gitlin
------------------------------
Walter Gitlin
Vice President
120
<PAGE>
EXHIBIT A-1
FORM OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2009
[FORM OF FACE]
No. _____ $__________
CUSIP No. ________________
Cross Timbers Oil Company, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________________________ or registered assigns the principal sum of
_______________ Dollars on November 1, 2009, at the office or agency of the
Company referred to below, and to pay interest thereon, commencing on May 1,
1998 and continuing semiannually thereafter, on May 1 and November 1 of each
year, from October 28, 1997, or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate of 8 3/4% per
annum, until the principal hereof is paid or duly provided for, and (to the
extent lawful) to pay on demand, interest on any overdue interest at the rate
borne by the Securities from the date on which such overdue interest becomes
payable to the date payment of such interest has been made or duly provided for.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and such defaulted interest,
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Securities, may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Interest on the Securities shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. All references herein to interest shall
include Liquidated Damages, if any, payable pursuant to the Registration Rights
Agreement referred to in the Indenture.
Payment of the principal of, premium, if any, and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the City of New York, or at such other office or agency of the Company as may
be maintained for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of
A1-1
<PAGE>
public and private debts; provided however, that payment of interest may be made
at the option of the Company (i) by check mailed to the registered holders of
the Securities at their respective addresses as shown on the Security Register
or (ii) with respect to any Holder owning Securities in the principal amount of
$500,000 or more, by wire transfer to an account maintained by the Holder
located in the United States, as specified in a written notice to the Trustee
(received prior to the relevant record date) by any such Holder requesting
payment by wire transfer and specifying the account to which transfer is
requested.
[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
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Registrar. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be 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.]/1/
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS PERMITTED BY
REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB") OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI") OR (C) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144
_________________________
/1/This paragraph should be included only if the Security is issued in global
form.
A1-2
<PAGE>
UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING."
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
A1-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CROSS TIMBERS OIL COMPANY
[SEAL]
By:_____________________________
Name:
Title:
Attest:
____________________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The Bank of New York, as Trustee, Certifies that this is one of the 8 3/4%
Series [A/B] Senior Subordinated Notes due 2009 referred to in the within-
mentioned Indenture.
Dated:_______________________ THE BANK OF NEW YORK
By:_____________________________
Authorized Signatory
A1-4
<PAGE>
FORM OF REVERSE OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2009
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 3/4% [Series A/B] Senior Subordinated Notes due 2009
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $175,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of October 28, 1997, between the Company and The Bank of New York, as trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Indebtedness evidenced by the Securities is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture) and this Security is issued subject to such provisions. Each Holder
of this Security, by accepting the same, (i) agrees to and shall be bound by
such provisions, (ii) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (iii) appoints the Trustee as his attorney-in-
fact for such purpose.
The Securities are subject to redemption at the option of the Company, in
whole or in part, at any time on or after November 1, 2002, upon not less than
30 or more than 60 days notice at the following Redemption Prices (expressed as
percentages of principal amount) set forth below, if redeemed during the 12-
month period beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PRICE
---- -----
<S> <C>
2002...................... 104.375%
2003...................... 102.917%
2004...................... 101.458%
2005 and thereafter....... 100.000%
</TABLE>
together in the case of any such redemption with accrued and unpaid interest,
and Liquidated Damages, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), all as
provided in the Indenture.
At any time and from time to time prior to November 1, 2000, the Company
may, at its option, redeem Securities in an amount in the aggregate equal to up
to 33% of the aggregate
A1-5
<PAGE>
principal amount of Securities originally issued under the Indenture with the
proceeds of one or more Public Equity Offerings by the Company at a redemption
price (expressed as a percentage of principal amount) of 108.75% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the applicable Redemption Date (subject to the right of
Holders of Securities on the relevant record date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least $116,700,000
aggregate principal amount of the Securities must remain outstanding after each
such redemption. In order to effect the foregoing redemption, the Company must
mail notice of redemption no later than 60 days after the related Public Equity
Offering and must consummate such redemption within 90 days of the closing of
the Public Equity Offering.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. In the event of redemption or purchase of
this Security in part only, a new Security or Securities for the unredeemed or
unpurchased portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
The Securities do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase, on a Business Day not more than 70 or
less than 30 days following the occurrence of a Change of Control of the
Company, all of the then outstanding Securities validly tendered at a purchase
price equal to 101% of the principal amount thereof, together with accrued and
unpaid interest and Liquidated Damages, if any, to the Change of Control
Purchase Date, all as provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Securities at a purchase price equal to 100% of the principal
amount of the Securities, together with accrued and unpaid interest to the Net
Proceeds Payment Date.
As set forth in the Indenture, an Event of Default is generally (a) failure
to pay principal upon maturity, redemption or otherwise (including pursuant to a
Change of Control Offer or a Net Proceeds Offer); (b) default for 30 days in
payment of interest on any of the Securities; (c) default in the performance of
agreements relating to mergers, consolidations and sales of all or substantially
all assets or the failure to make or consummate a Change of Control Offer or a
Net Proceeds Offer; (d) failure for 30 days after notice to comply with any
other covenants in the Indenture or the Securities; (e) certain payment
defaults under, the acceleration prior to the maturity of, and the exercise of
certain enforcement rights with respect to, certain Indebtedness of the Company
or any
A1-6
<PAGE>
Restricted Subsidiary in an aggregate principal amount in excess of $5,000,000;
(f) the failure of any Subsidiary Guarantee to be in full force and effect or
otherwise to be enforceable (except as permitted by the Indenture); (g) certain
events giving rise to ERISA liability; (h) certain final judgments against any
Restricted Subsidiary in an aggregate amount of $5,000,000 or more which remain
unsatisfied and either become subject to commencement or enforcement proceedings
or remain unstayed for a period of 60 days; and (i) certain events of
bankruptcy, insolvency or reorganization of the Company or any Restricted
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in aggregate principal amount of the Outstanding
Securities may declare the principal amount of all the Securities to be due and
payable immediately, except that (i) in the case of an Event of Default arising
from certain events of bankruptcy, insolvency or reorganization of the Company
or any Restricted Subsidiary, the principal amount of the Securities will become
due and payable immediately without further action or notice, and (ii) in the
case of an Event of Default which relates to certain payment defaults,
acceleration or the exercise of certain enforcement rights with respect to
certain Indebtedness, any acceleration of the Securities will be automatically
rescinded if any such Indebtedness is repaid or if the default relating to such
Indebtedness is cured or waived and if the holders thereof have accelerated such
Indebtedness then such holders have rescinded their declaration of acceleration
or if in certain circumstances the proceedings or enforcement action with
respect to the Indebtedness that is the subject of such Event of Default is
terminated or rescinded. No Holder may pursue any remedy under the Indenture
unless the Trustee shall have failed to act after notice of an Event of Default
and written request by Holders of at least 25% in principal amount of the
Outstanding Securities, and the offer to the Trustee of indemnity reasonably
satisfactory to it; however, such provision does not affect the right to sue for
enforcement of any overdue payment on a Security by the Holder thereof. Subject
to certain limitations, Holders of a majority in principal amount of the
Outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except default in payment of principal, premium or interest) if it determines
in good faith that withholding the notice is in the interest of the Holders. The
Company is required to file quarterly reports with the Trustee as to the absence
or existence of defaults.
The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of the Company on this Security and (ii) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and any Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, any Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
A1-7
<PAGE>
consequences. Any such consent or waiver by or on behalf of the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security. Without the consent of any
Holder, the Company, any Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Securities in addition to or in
place of Definitive Securities and to make certain other specified changes and
other changes that do not adversely affect the rights of any Holder.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
A director, officer, incorporator, or stockholder of the Company or any
Subsidiary Guarantor, as such, shall not have any personal liability under this
Security or the Indenture by reason of his or its status as such director,
officer, incorporator or stockholder. Each Holder, by accepting this Security
with or without the notation of Subsidiary Guarantee endorsed hereon, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Security with the notation of Subsidiary
Guarantee endorsed hereon.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, any Subsidiary Guarantors, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not
A1-8
<PAGE>
this Security is overdue, and neither the Company, the Subsidiary Guarantors, if
any, the Trustee nor any agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture. The Company will furnish
to any Holder upon written request and without charge a copy of the Indenture.
Requests may be made to the Company, 810 Houston Street, Suite 2000, Fort Worth,
Texas 76102.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders thereof. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identifying information
printed hereon.
This Security shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles.
A1-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to __________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date:___________________ Your Signature:__________________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
A1-10
<PAGE>
FORM OF OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Security purchased by the Company pursuant to
Section 9.15 or Section 9.16 of the Indenture, check the appropriate box:
Section 9.15 [_] Section 9.16 [_]
If you want to have only part of this Security purchased by the Company
pursuant to Section 9.15 or Section 9.16 of the Indenture, state the amount in
integral multiples of $1,000:
$_________
Date:___________________ Signature:_________________________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
A1-11
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY/2/
The following exchanges of a part of this Global Security for Definitive
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Global Signature of
decrease in increase in Security following authorized signatory
Date of Principal Amount Principal Amount such decrease of Trustee or
Exchange of this Global Security of this Global Security (or increase) Security Custodian
- -------- ----------------------- ----------------------- ------------------ --------------------
<S> <C> <C> <C> <C>
</TABLE>
_________________________________
/2/ This should be included only if the Security is issued in global form.
A1-12
<PAGE>
EXHIBIT A-2
FORM OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2009
[FORM OF FACE]
No. _____ $__________
CUSIP No. ________________
Cross Timbers Oil Company, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________________________ or registered assigns the principal sum of
_______________ Dollars on November 1, 2009, at the office or agency of the
Company referred to below, and to pay interest thereon, commencing on May 1,
1998, and continuing semiannually thereafter, on May 1 and November 1 of each
year, from October 28, 1997 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate of 8 3/4% per
annum, until the principal hereof is paid or duly provided for, and (to the
extent lawful) to pay on demand, interest on any overdue interest at the rate
borne by the Securities from the date on which such overdue interest becomes
payable to the date payment of such interest has been made or duly provided for.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and such defaulted interest,
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Securities, may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Interest on the Securities shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. All references herein to interest shall
include Liquidated Damages, if any, payable pursuant to the Registration Rights
Agreement referred to in the Indenture.
Payment of the principal of, premium, if any, and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the City of New York, or at such other office or agency of the Company as may
be maintained for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided however, that payment of interest may be made at the
option of the Company (i) by check mailed to the registered holders of the
Securities at their respective addresses as shown on the Security Register
A2-1
<PAGE>
or (ii) with respect to any Holder owning Securities in the principal amount of
$500,000 or more, by wire transfer to an account maintained by the Holder
located in the United States, as specified in a written notice to the Trustee
(received prior to the relevant record date) by any such Holder requesting
payment by wire transfer and specifying the account to which transfer is
requested.
[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
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Registrar. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be 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.]/1/
[THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.]/2/
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS PERMITTED BY
REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB") OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI") OR (C) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB
_______________________________________
/1/This paragraph should be included only if the Security is issued in global
form.
/2/This paragraph should be included only if the Security is a Regulation S
Temporary Note.
A2-2
<PAGE>
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT,
(D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING."
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
A2-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CROSS TIMBERS OIL COMPANY
[SEAL]
By:___________________________________
Name:
Title:
Attest:
______________________________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The Bank of New York, as Trustee, Certifies that this is one of the 8 3/4%
Series [A/B] Senior Subordinated Notes due 2009 referred to in the within-
mentioned Indenture.
Dated:________________ THE BANK OF NEW YORK
By:___________________________
Authorized Signatory
A2-4
<PAGE>
FORM OF REVERSE OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2009
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 3/4% [Series A/B] Senior Subordinated Notes due 2009
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $175,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of October 28, 1997, between the Company and The Bank of New York, as trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Indebtedness evidenced by the Securities is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture) and this Security is issued subject to such provisions. Each Holder
of this Security, by accepting the same, (i) agrees to and shall be bound by
such provisions, (ii) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (iii) appoints the Trustee as his attorney-in-
fact for such purpose.
The Securities are subject to redemption at the option of the Company, in
whole or in part, at any time on or after November 1, 2002, upon not less than
30 or more than 60 days notice at the following Redemption Prices (expressed as
percentages of principal amount) set forth below, if redeemed during the 12-
month period beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PRICE
---- -----
<S> <C>
2002................... 104.375%
2003................... 102.917%
2004................... 101.458%
2005 and thereafter.... 100.000%
</TABLE>
together in the case of any such redemption with accrued and unpaid interest,
and Liquidated Damages, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), all as
provided in the Indenture.
At any time and from time to time prior to November 1, 2000, the Company
may, at its option, redeem Securities in an amount in the aggregate equal to up
to 33 1/3% of the aggregate principal amount of Securities originally issued
under the Indenture with the proceeds of one or more Public Equity
A2-5
<PAGE>
Offerings by the Company at a redemption price (expressed as a percentage of
principal amount) of 108.75% of the principal amount thereof, plus accrued and
unpaid interest, and Liquidated Damages, if any, to the applicable Redemption
Date (subject to the right of Holders of Securities on the relevant record date
to receive interest due on the relevant Interest Payment Date); provided,
however, that at least $116,700,000 aggregate principal amount of the Securities
must remain outstanding after each such redemption. In order to effect the
foregoing redemption, the Company must mail notice of redemption no later than
60 days after the related Public Equity Offering and must consummate such
redemption within 90 days of the closing of the Public Equity Offering.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. In the event of redemption or purchase of
this Security in part only, a new Security or Securities for the unredeemed or
unpurchased portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
The Securities do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase, on a Business Day not more than 70 or
less than 30 days following the occurrence of a Change of Control of the
Company, all of the then outstanding Securities validly tendered at a purchase
price equal to 101% of the principal amount thereof, together with accrued and
unpaid interest and Liquidated Damages, if any, to the Change of Control
Purchase Date, all as provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Securities at a purchase price equal to 100% of the principal
amount of the Securities, together with accrued and unpaid interest to the Net
Proceeds Payment Date.
As set forth in the Indenture, an Event of Default is generally (a) failure
to pay principal upon maturity, redemption or otherwise (including pursuant to a
Change of Control Offer or a Net Proceeds Offer); (b) default for 30 days in
payment of interest on any of the Securities; (c) default in the performance of
agreements relating to mergers, consolidations and sales of all or substantially
all assets or the failure to make or consummate a Change of Control Offer or a
Net Proceeds Offer; (d) failure for 30 days after notice to comply with any
other covenants in the Indenture or the Securities; (e) certain payment
defaults under, the acceleration prior to the maturity of, and the exercise of
certain enforcement rights with respect to, certain Indebtedness of the Company
or any Restricted Subsidiary in an aggregate principal amount in excess of
$5,000,000; (f) the failure of any Subsidiary Guarantee to be in full force and
effect or otherwise to be enforceable (except as permitted by the Indenture);
(g) certain events giving rise to ERISA liability; (h) certain final judgments
against any Restricted Subsidiary in an aggregate amount of $5,000,000 or more
which remain unsatisfied and either become subject to commencement or
A2-6
<PAGE>
enforcement proceedings or remain unstayed for a period of 60 days; and (i)
certain events of bankruptcy, insolvency or reorganization of the Company or any
Restricted Subsidiary. If any Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in aggregate principal amount of the
Outstanding Securities may declare the principal amount of all the Securities to
be due and payable immediately, except that (i) in the case of an Event of
Default arising from certain events of bankruptcy, insolvency or reorganization
of the Company or any Restricted Subsidiary, the principal amount of the
Securities will become due and payable immediately without further action or
notice, and (ii) in the case of an Event of Default which relates to certain
payment defaults, acceleration or the exercise of certain enforcement rights
with respect to certain Indebtedness, any acceleration of the Securities will be
automatically rescinded if any such Indebtedness is repaid or if the default
relating to such Indebtedness is cured or waived and if the holders thereof have
accelerated such Indebtedness then such holders have rescinded their declaration
of acceleration or if in certain circumstances the proceedings or enforcement
action with respect to the Indebtedness that is the subject of such Event of
Default is terminated or rescinded. No Holder may pursue any remedy under the
Indenture unless the Trustee shall have failed to act after notice of an Event
of Default and written request by Holders of at least 25% in principal amount of
the Outstanding Securities, and the offer to the Trustee of indemnity reasonably
satisfactory to it; however, such provision does not affect the right to sue for
enforcement of any overdue payment on a Security by the Holder thereof. Subject
to certain limitations, Holders of a majority in principal amount of the
Outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except default in payment of principal, premium or interest) if it determines
in good faith that withholding the notice is in the interest of the Holders.
The Company is required to file quarterly reports with the Trustee as to the
absence or existence of defaults.
The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of the Company on this Security and (ii) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and any Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, any Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Security. Without the consent of any Holder, the
Company, any Subsidiary Guarantors and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Securities in addition to or in place of Definitive
Securities and to make certain other specified changes and other changes that do
not adversely affect the rights of any Holder.
A2-7
<PAGE>
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
A director, officer, incorporator, or stockholder of the Company or any
Subsidiary Guarantor, as such, shall not have any personal liability under this
Security or the Indenture by reason of his or its status as such director,
officer, incorporator or stockholder. Each Holder, by accepting this Security
with or without the notation of Subsidiary Guarantee endorsed hereon, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Security with the notation of Subsidiary
Guarantee endorsed hereon.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, any Subsidiary Guarantors, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security is
overdue, and neither the Company, the Subsidiary Guarantors, if any, the Trustee
nor any agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture. The Company will furnish
to any Holder upon written request and without charge a copy of the Indenture.
Requests may be made to the Company, 810 Houston Street, Suite 2000, Fort Worth,
Texas 76102.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to
A2-8
<PAGE>
the Holders thereof. No representation is made as to the accuracy of such
numbers as printed on the Securities and reliance may be placed only on the
other identifying information printed hereon.
This Security shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles.
A2-9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to __________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date:_____________________ Your Signature:_______________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
A2-10
<PAGE>
FORM OF OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Security purchased by the Company pursuant to
Section 9.15 or Section 9.16 of the Indenture, check the appropriate box:
Section 9.15 [_] Section 9.16 [_]
If you want to have only part of this Security purchased by the Company
pursuant to Section 9.15 or Section 9.16 of the Indenture, state the amount in
integral multiples of $1,000:
$____________
Date:_____________ Signature:________________________________________
(Sign exactly as your name appears on the other
side of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
A2-11
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY/3/
The following exchanges of a part of this Regulation S Global Note for an
interest in another Global Security or of other Global Securities for an
interest in this Regulation S Global Note, have been made.
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount
decrease in increase in of this Global Signature of
Principal Amount Principal Amount Security following authorized signatory
Date of of this Global of this Global such decrease of Trustee or
Exchange Security Security (or increase) Security Custodian
- ----------- ---------------- ---------------- ------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
_____________________
/3/ This should be included only if the Security is issued in global form.
A2-12
<PAGE>
EXHIBIT B
FORM OF NOTATION RELATING TO SUBSIDIARY
GUARANTEES
The form of notation to be set forth on each Security relating to the
Subsidiary Guarantees shall be in substantially the following form:
SUBSIDIARY GUARANTEE
Subject to the limitations set forth in the Indenture, the Subsidiary
Guarantors (as defined in the Indenture referred to in the Security upon which
this notation is endorsed and each hereinafter referred to as a "Subsidiary
Guarantor," which term includes any successor or additional Subsidiary Guarantor
under the Indenture) have, jointly and severally, unconditionally guaranteed (a)
the due and punctual payment of the principal (and premium, if any) of and
interest and Liquidated Damages, if any, on the Securities, whether at maturity,
acceleration, redemption or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest on the Securities, if any, to
the extent lawful, (c) the due and punctual performance of all other obligations
of the Company to the Holders or the Trustee, all in accordance with the terms
set forth in the Indenture, and (d) in case of any extension of time of payment
or renewal of any Securities or any of such other obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities and after giving effect to any collections from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to
its contribution obligations under the Indenture, result in the obligations of
such Subsidiary Guarantor under the Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law. Each
Subsidiary Guarantor that makes a payment or distribution under a Subsidiary
Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor.
The obligations of the Subsidiary Guarantors to the Holders or the Trustee
pursuant to the Subsidiary Guarantee and the Indenture are expressly subordinate
to all Guarantor Senior Indebtedness to the extent set forth in Article XII of
the Indenture and reference is made to such Indenture for the precise terms of
such subordination.
No stockholder, officer, director or incorporator, as such, past, present
or future, of the Subsidiary Guarantors shall have any personal liability under
the Subsidiary Guarantee by reason of his or its status as such stockholder,
officer, director or incorporator.
B-1
<PAGE>
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee upon
the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are defined
in the Indenture referred to in this Security upon which this notation of
Subsidiary Guarantee is endorsed shall have the meanings assigned to them in
such Indenture.
The Subsidiary Guarantee shall be binding upon each Subsidiary Guarantor
and its successors and assigns and shall inure to the benefit of the Trustee and
the Holders and, in the event of any transfer or assignment of rights by any
Holder or the Trustee, the rights and privileges herein conferred upon that
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof and in the Indenture.
The Subsidiary Guarantee shall not be valid or obligatory for any purpose
until it has been executed by the manual or facsimile signature of an authorized
officer of each Subsidiary Guarantor and the certificate of authentication on
the Security upon which this Subsidiary Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.
[SUBSIDIARY GUARANTOR]
Date:________________ By:________________________________
Name:___________________________
Title:__________________________
Attest:________________________
Secretary
B-2
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 8 3/4% Series [A/B] Senior Subordinated Notes due 2009 of Cross Timbers Oil
Company
This Certificate relates to $_____ principal amount of Securities held
in /4/______ book-entry or * ______ definitive form by _____________________
(the "Transferor").
The Transferor*:
[_] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Securities held by the Depositary, a
Security or Securities in definitive registered form equal to its beneficial
interest in such Global Securities (or the portion thereof indicated above); or
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relative to the above captioned Securities and that the transfer of
this Security does not require registration under the Securities Act (as defined
below) because:*
[_] Such Security is being acquired for the Transferor's own account
without transfer (in satisfaction of Section 2.07(a)(ii)(A) or Section
2.07(d)(i)(A) of the Indenture).
[_] Such Security is being transferred (i) to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")), in reliance on Rule 144A under the Securities Act or
(ii) pursuant to an exemption from registration in accordance with Rule 904
under the Securities Act (and in the case of clause (ii), together with a
certification in substantially the form of Exhibit E to the Indenture).
[_] Such Security is being transferred (i) in accordance with Rule 144
under the Securities Act or (ii) pursuant to an effective registration statement
under the Securities Act.
___________________
/4/ Check appropriate box.
C-1
<PAGE>
[_] Such Security is being transferred to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act pursuant to a private placement exemption from the registration
requirements of the Securities Act together with a certification in
substantially the form of Exhibit D to the Indenture and, if such transfer is in
respect of an aggregate principal amount of Securities less than $250,000, an
opinion of counsel acceptable to the Company that such transfer is in compliance
with the Securities Act.
[_] Such Security is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the Securities Act
(based on an opinion of counsel acceptable to the Company).
_____________________________________________
[INSERT NAME OF TRANSFEROR]
By:__________________________________________
Name:
Title:
Address:
Date:_______________
C-2
<PAGE>
EXHIBIT D
FORM OF LETTER TO BE DELIVERED BY ACCREDITED
INVESTORS
We are delivering this letter in connection with an offering of 8 3/4%
Senior Subordinated Notes due 2009 (the "Notes") of Cross Timbers Oil Company, a
Delaware corporation (the "Company"), as described in the Offering Memorandum
(the "Offering Memorandum") relating to the offering.
We hereby confirm that:
(i) We are an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933, as amended (the "Securities Act"), or an entity in which all of the
equity owners are accredited investors within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional
Accredited Investor");
(ii) any purchase of Notes by us will be for our own account or for
the account of one or more other Institutional Accredited Investors;
(iii) in the event that we purchase any Notes, we will acquire Notes
having a minimum purchase price of at least $100,000 for our own account
and for each separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing the Notes and we and any account for which we are acting are
able to bear the economic risks of our or its investment in Notes;
(v) we are not acquiring Notes with a view to any distribution
thereof in a transaction that would violate the Securities Act or the
securities laws of any State of the United States or any other applicable
jurisdiction; provided that the disposition of our property and the
property of any accounts for which we are acting as fiduciary shall remain
at all times within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
necessary in connection with our decision to purchase Notes.
We understand that the Notes are being offered in a transaction not
involving any public offering within the meaning of the Securities Act and that
the Notes have not been registered under
D-1
<PAGE>
the Securities Act, and we agree, on our own behalf and on behalf of each
account for which we acquire any Notes, that such Notes may be offered, resold,
pledged or otherwise transferred only (a) to a person whom we reasonably believe
to be a qualified institutional buyer (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A, in a
transaction meeting the requirements of Rule 144 under the Securities Act,
outside the United States in a transaction meeting the requirements of Rule 904
under the Securities Act, or in accordance with another exemption from the
registration requirements of the Securities Act (based upon an opinion of
counsel acceptable to the Company), (b) to the Company or (c) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction. We understand that the registrar will not be required
to accept for registration of transfer any Notes, except upon presentation of
evidence satisfactory to the Company that the foregoing restrictions on transfer
have been complied with. We further understand that the Notes purchased by us
may be in the form of global certificates and that such certificates will bear a
legend reflecting the substance of this paragraph. We further agree to provide
to any person acquiring any of the Notes from us a notice advising such person
that resales of the Notes are restricted as stated herein.
We acknowledge that you, the Company and others will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
________________________________________
(Name of Purchaser)
By:_____________________________________
Name:
Title:
Address:
D-2
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
_____________, ____
The Bank of New York, as Registrar
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed sale of certain 8 3/4% Series [A/B] Senior
Subordinated Notes due 2009 (the "Securities") of Cross Timbers Oil Company, a
Delaware corporation (the "Company"), we represent that:
(vii) the offer of the Securities was not made to a person in the
United States;
(viii) at the time the buy order 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;
(ix) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S under the U.S. Securities Act of 1933, as applicable; and
(x) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and you 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 under the U.S. Securities Act of 1933.
Very truly yours,
_____________________________________________
[Name]
By:_____________________________________
Name:
Title:
Address:
E-1
<PAGE>
EXHIBIT 4.2
FORM OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES A SENIOR SUBORDINATED NOTE DUE 2009
[FORM OF FACE]
No. _____ $__________
CUSIP No. ________________
Cross Timbers Oil Company, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________________________ or registered assigns the principal sum of
_______________ Dollars on November 1, 2009, at the office or agency of the
Company referred to below, and to pay interest thereon, commencing on May 1,
1998, and continuing semiannually thereafter, on May 1 and November 1 of each
year, from October 28, 1997 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate of 8 3/4% per
annum, until the principal hereof is paid or duly provided for, and (to the
extent lawful) to pay on demand, interest on any overdue interest at the rate
borne by the Securities from the date on which such overdue interest becomes
payable to the date payment of such interest has been made or duly provided for.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and such defaulted interest,
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Securities, may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Interest on the Securities shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. All references herein to interest shall
include Liquidated Damages, if any, payable pursuant to the Registration Rights
Agreement referred to in the Indenture.
Payment of the principal of, premium, if any, and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the City of New York, or at such other office or agency of the Company as may
be maintained for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender
<PAGE>
for payment of public and private debts; provided however, that payment of
interest may be made at the option of the Company (i) by check mailed to the
registered holders of the Securities at their respective addresses as shown on
the Security Register or (ii) with respect to any Holder owning Securities in
the principal amount of $500,000 or more, by wire transfer to an account
maintained by the Holder located in the United States, as specified in a written
notice to the Trustee (received prior to the relevant record date) by any such
Holder requesting payment by wire transfer and specifying the account to which
transfer is requested.
[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
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Registrar. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be 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.]/1/
[THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.]/2/
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS PERMITTED BY
REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB") OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
____________________
/1/ This paragraph should be included only if the Security is issued in global
form.
/2/ This paragraph should be included only if the Security is a Regulation S
Temporary Note.
-2-
<PAGE>
SECURITIES ACT) (AN "IAI") OR (C) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE
COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT,
(D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING."
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CROSS TIMBERS OIL COMPANY
[SEAL]
By: _______________________________
Name:
Title:
Attest:
____________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The Bank of New York, as Trustee, Certifies that this is one of the 8 3/4%
Series A Senior Subordinated Notes due 2009 referred to in the within-mentioned
Indenture.
Dated: __________ THE BANK OF NEW YORK
By: _______________________________
Authorized Signatory
-4-
<PAGE>
FORM OF REVERSE OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES A SENIOR SUBORDINATED NOTE DUE 2009
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 3/4% Series A Senior Subordinated Notes due 2009
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $175,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of October 28, 1997, between the Company and The Bank of New York, as trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Indebtedness evidenced by the Securities is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture) and this Security is issued subject to such provisions. Each Holder
of this Security, by accepting the same, (i) agrees to and shall be bound by
such provisions, (ii) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (iii) appoints the Trustee as his attorney-in-
fact for such purpose.
The Securities are subject to redemption at the option of the Company, in
whole or in part, at any time on or after November 1, 2002, upon not less than
30 or more than 60 days notice at the following Redemption Prices (expressed as
percentages of principal amount) set forth below, if redeemed during the 12-
month period beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PRICE
---- -----
<S> <C>
2002................. 104.375%
2003................. 102.917%
2004................. 101.458%
2005 and thereafter . 100.000%
</TABLE>
together in the case of any such redemption with accrued and unpaid interest,
and Liquidated Damages, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), all as
provided in the Indenture.
At any time and from time to time prior to November 1, 2000, the Company
may, at its option, redeem Securities in an amount in the aggregate equal to up
to 33 1/3% of the aggregate
-5-
<PAGE>
principal amount of Securities originally issued under the Indenture with the
proceeds of one or more Public Equity Offerings by the Company at a redemption
price (expressed as a percentage of principal amount) of 108.75% of the
principal amount thereof, plus accrued and unpaid interest, and Liquidated
Damages, if any, to the applicable Redemption Date (subject to the right of
Holders of Securities on the relevant record date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least $116,700,000
aggregate principal amount of the Securities must remain outstanding after each
such redemption. In order to effect the foregoing redemption, the Company must
mail notice of redemption no later than 60 days after the related Public Equity
Offering and must consummate such redemption within 90 days of the closing of
the Public Equity Offering.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. In the event of redemption or purchase of
this Security in part only, a new Security or Securities for the unredeemed or
unpurchased portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
The Securities do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase, on a Business Day not more than 70 or
less than 30 days following the occurrence of a Change of Control of the
Company, all of the then outstanding Securities validly tendered at a purchase
price equal to 101% of the principal amount thereof, together with accrued and
unpaid interest and Liquidated Damages, if any, to the Change of Control
Purchase Date, all as provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Securities at a purchase price equal to 100% of the principal
amount of the Securities, together with accrued and unpaid interest to the Net
Proceeds Payment Date.
As set forth in the Indenture, an Event of Default is generally (a) failure
to pay principal upon maturity, redemption or otherwise (including pursuant to a
Change of Control Offer or a Net Proceeds Offer); (b) default for 30 days in
payment of interest on any of the Securities; (c) default in the performance of
agreements relating to mergers, consolidations and sales of all or substantially
all assets or the failure to make or consummate a Change of Control Offer or a
Net Proceeds Offer; (d) failure for 30 days after notice to comply with any
other covenants in the Indenture or the Securities; (e) certain payment
defaults under, the acceleration prior to the maturity of, and the exercise of
certain enforcement rights with respect to, certain Indebtedness of the Company
or any Restricted Subsidiary in an aggregate principal amount in
-6-
<PAGE>
excess of $5,000,000; (f) the failure of any Subsidiary Guarantee to be in full
force and effect or otherwise to be enforceable (except as permitted by the
Indenture); (g) certain events giving rise to ERISA liability; (h) certain final
judgments against any Restricted Subsidiary in an aggregate amount of $5,000,000
or more which remain unsatisfied and either become subject to commencement or
enforcement proceedings or remain unstayed for a period of 60 days; and (i)
certain events of bankruptcy, insolvency or reorganization of the Company or any
Restricted Subsidiary. If any Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in aggregate principal amount of the
Outstanding Securities may declare the principal amount of all the Securities to
be due and payable immediately, except that (i) in the case of an Event of
Default arising from certain events of bankruptcy, insolvency or reorganization
of the Company or any Restricted Subsidiary, the principal amount of the
Securities will become due and payable immediately without further action or
notice, and (ii) in the case of an Event of Default which relates to certain
payment defaults, acceleration or the exercise of certain enforcement rights
with respect to certain Indebtedness, any acceleration of the Securities will be
automatically rescinded if any such Indebtedness is repaid or if the default
relating to such Indebtedness is cured or waived and if the holders thereof have
accelerated such Indebtedness then such holders have rescinded their declaration
of acceleration or if in certain circumstances the proceedings or enforcement
action with respect to the Indebtedness that is the subject of such Event of
Default is terminated or rescinded. No Holder may pursue any remedy under the
Indenture unless the Trustee shall have failed to act after notice of an Event
of Default and written request by Holders of at least 25% in principal amount of
the Outstanding Securities, and the offer to the Trustee of indemnity reasonably
satisfactory to it; however, such provision does not affect the right to sue for
enforcement of any overdue payment on a Security by the Holder thereof. Subject
to certain limitations, Holders of a majority in principal amount of the
Outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except default in payment of principal, premium or interest) if it determines
in good faith that withholding the notice is in the interest of the Holders. The
Company is required to file quarterly reports with the Trustee as to the absence
or existence of defaults.
The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of the Company on this Security and (ii) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and any Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, any Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the
-7-
<PAGE>
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security. Without
the consent of any Holder, the Company, any Subsidiary Guarantors and the
Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Securities in
addition to or in place of Definitive Securities and to make certain other
specified changes and other changes that do not adversely affect the rights of
any Holder.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
A director, officer, incorporator, or stockholder of the Company or any
Subsidiary Guarantor, as such, shall not have any personal liability under this
Security or the Indenture by reason of his or its status as such director,
officer, incorporator or stockholder. Each Holder, by accepting this Security
with or without the notation of Subsidiary Guarantee endorsed hereon, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Security with the notation of Subsidiary
Guarantee endorsed hereon.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, any Subsidiary Guarantors, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all
-8-
<PAGE>
purposes, whether or not this Security is overdue, and neither the Company, the
Subsidiary Guarantors, if any, the Trustee nor any agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture. The Company will furnish
to any Holder upon written request and without charge a copy of the Indenture.
Requests may be made to the Company, 810 Houston Street, Suite 2000, Fort Worth,
Texas 76102.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders thereof. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identifying information
printed hereon.
This Security shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles.
-9-
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to __________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: ______________ Your Signature:_____________________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee: ___________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
-10-
<PAGE>
FORM OF OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Security purchased by the Company pursuant to
Section 9.15 or Section 9.16 of the Indenture, check the appropriate box:
Section 9.15 [_] Section 9.16 [_]
If you want to have only part of this Security purchased by the Company
pursuant to Section 9.15 or Section 9.16 of the Indenture, state the amount in
integral multiples of $1,000:
$___________
Date:____________ Signature:_______________________________________
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
-11-
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY/3/
The following exchanges of a part of this Regulation S Global Note for an
interest in another Global Security or of other Global Securities for an
interest in this Regulation S Global Note, have been made.
<TABLE>
<CAPTION>
Date of Amount of Amount of Principal Amount Signature of
- -------
Exchange decrease in increase in of this Global authorized
- --------
Principal Amount Principal Amount Security signatory
of this Global of this Global following such of Trustee or
Security Security decrease Security
-------- --------
(or increase) Custodian
------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
____________
/3/ This should be included only if the Security is issued in global form.
-12-
<PAGE>
EXHIBIT 4.3
FORM OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES B SENIOR SUBORDINATED NOTE DUE 2009
[FORM OF FACE]
No. _____ $__________
CUSIP No. ________________
Cross Timbers Oil Company, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________________________ or registered assigns the principal sum of
_______________ Dollars on November 1, 2009, at the office or agency of the
Company referred to below, and to pay interest thereon, commencing on May 1,
1998, and continuing semiannually thereafter, on May 1 and November 1 of each
year, from October 28, 1997 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate of 8 3/4% per
annum, until the principal hereof is paid or duly provided for, and (to the
extent lawful) to pay on demand, interest on any overdue interest at the rate
borne by the Securities from the date on which such overdue interest becomes
payable to the date payment of such interest has been made or duly provided for.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and such defaulted interest,
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Securities, may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Interest on the Securities shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. All references herein to interest shall
include Liquidated Damages, if any, payable pursuant to the Registration Rights
Agreement referred to in the Indenture.
Payment of the principal of, premium, if any, and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the City of New York, or at such other office or agency of the Company as may
be maintained for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender
<PAGE>
for payment of public and private debts; provided however, that payment of
interest may be made at the option of the Company (i) by check mailed to the
registered holders of the Securities at their respective addresses as shown on
the Security Register or (ii) with respect to any Holder owning Securities in
the principal amount of $500,000 or more, by wire transfer to an account
maintained by the Holder located in the United States, as specified in a written
notice to the Trustee (received prior to the relevant record date) by any such
Holder requesting payment by wire transfer and specifying the account to which
transfer is requested.
[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
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Registrar. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as may be
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be 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.]/1/
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
_________________
/1/ This paragraph should be included only if the Security is issued in global
form.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CROSS TIMBERS OIL COMPANY
[SEAL]
By: _______________________________
Name:
Title:
Attest:
____________________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The Bank of New York, as Trustee, Certifies that this is one of the 8 3/4%
Series B Senior Subordinated Notes due 2009 referred to in the within-mentioned
Indenture.
Dated: ______________ THE BANK OF NEW YORK
By: _______________________________
Authorized Signatory
-3-
<PAGE>
FORM OF REVERSE OF SECURITY
CROSS TIMBERS OIL COMPANY
8 3/4% SERIES B SENIOR SUBORDINATED NOTE DUE 2009
This Security is one of a duly authorized issue of securities of the
Company designated as its 8 3/4% Series B Senior Subordinated Notes due 2009
(herein called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $175,000,000,
which may be issued under an indenture (herein called the "Indenture") dated as
of October 28, 1997, between the Company and The Bank of New York, as trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Indebtedness evidenced by the Securities is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture) and this Security is issued subject to such provisions. Each Holder
of this Security, by accepting the same, (i) agrees to and shall be bound by
such provisions, (ii) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (iii) appoints the Trustee as his attorney-in-
fact for such purpose.
The Securities are subject to redemption at the option of the Company, in
whole or in part, at any time on or after November 1, 2002, upon not less than
30 or more than 60 days notice at the following Redemption Prices (expressed as
percentages of principal amount) set forth below, if redeemed during the 12-
month period beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PRICE
---- -----
<S> <C>
2002................. 104.375%
2003................. 102.917%
2004................. 101.458%
2005 and thereafter.. 100.000%
</TABLE>
together in the case of any such redemption with accrued and unpaid interest,
and Liquidated Damages, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), all as
provided in the Indenture.
At any time and from time to time prior to November 1, 2000, the Company
may, at its option, redeem Securities in an amount in the aggregate equal to up
to 33 1/3% of the aggregate
-4-
<PAGE>
principal amount of Securities originally issued under the Indenture with the
proceeds of one or more Public Equity Offerings by the Company at a redemption
price (expressed as a percentage of principal amount) of 108.75% of the
principal amount thereof, plus accrued and unpaid interest, and Liquidated
Damages, if any, to the applicable Redemption Date (subject to the right of
Holders of Securities on the relevant record date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least $116,700,000
aggregate principal amount of the Securities must remain outstanding after each
such redemption. In order to effect the foregoing redemption, the Company must
mail notice of redemption no later than 60 days after the related Public Equity
Offering and must consummate such redemption within 90 days of the closing of
the Public Equity Offering.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. In the event of redemption or purchase of
this Security in part only, a new Security or Securities for the unredeemed or
unpurchased portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
The Securities do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase, on a Business Day not more than 70 or
less than 30 days following the occurrence of a Change of Control of the
Company, all of the then outstanding Securities validly tendered at a purchase
price equal to 101% of the principal amount thereof, together with accrued and
unpaid interest and Liquidated Damages, if any, to the Change of Control
Purchase Date, all as provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Securities at a purchase price equal to 100% of the principal
amount of the Securities, together with accrued and unpaid interest to the Net
Proceeds Payment Date.
As set forth in the Indenture, an Event of Default is generally (a) failure
to pay principal upon maturity, redemption or otherwise (including pursuant to a
Change of Control Offer or a Net Proceeds Offer); (b) default for 30 days in
payment of interest on any of the Securities; (c) default in the performance of
agreements relating to mergers, consolidations and sales of all or substantially
all assets or the failure to make or consummate a Change of Control Offer or a
Net Proceeds Offer; (d) failure for 30 days after notice to comply with any
other covenants in the Indenture or the Securities; (e) certain payment
defaults under, the acceleration prior to the maturity of, and the exercise of
certain enforcement rights with respect to, certain Indebtedness of the Company
or any Restricted Subsidiary in an aggregate principal amount in
-5-
<PAGE>
excess of $5,000,000; (f) the failure of any Subsidiary Guarantee to be in full
force and effect or otherwise to be enforceable (except as permitted by the
Indenture); (g) certain events giving rise to ERISA liability; (h) certain final
judgments against any Restricted Subsidiary in an aggregate amount of $5,000,000
or more which remain unsatisfied and either become subject to commencement or
enforcement proceedings or remain unstayed for a period of 60 days; and (i)
certain events of bankruptcy, insolvency or reorganization of the Company or any
Restricted Subsidiary. If any Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in aggregate principal amount of the
Outstanding Securities may declare the principal amount of all the Securities to
be due and payable immediately, except that (i) in the case of an Event of
Default arising from certain events of bankruptcy, insolvency or reorganization
of the Company or any Restricted Subsidiary, the principal amount of the
Securities will become due and payable immediately without further action or
notice, and (ii) in the case of an Event of Default which relates to certain
payment defaults, acceleration or the exercise of certain enforcement rights
with respect to certain Indebtedness, any acceleration of the Securities will be
automatically rescinded if any such Indebtedness is repaid or if the default
relating to such Indebtedness is cured or waived and if the holders thereof have
accelerated such Indebtedness then such holders have rescinded their declaration
of acceleration or if in certain circumstances the proceedings or enforcement
action with respect to the Indebtedness that is the subject of such Event of
Default is terminated or rescinded. No Holder may pursue any remedy under the
Indenture unless the Trustee shall have failed to act after notice of an Event
of Default and written request by Holders of at least 25% in principal amount of
the Outstanding Securities, and the offer to the Trustee of indemnity reasonably
satisfactory to it; however, such provision does not affect the right to sue for
enforcement of any overdue payment on a Security by the Holder thereof. Subject
to certain limitations, Holders of a majority in principal amount of the
Outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of any continuing default
(except default in payment of principal, premium or interest) if it determines
in good faith that withholding the notice is in the interest of the Holders. The
Company is required to file quarterly reports with the Trustee as to the absence
or existence of defaults.
The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of the Company on this Security and (ii) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and any Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, any Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by or on behalf of the
-6-
<PAGE>
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security. Without
the consent of any Holder, the Company, any Subsidiary Guarantors and the
Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Securities in
addition to or in place of Definitive Securities and to make certain other
specified changes and other changes that do not adversely affect the rights of
any Holder.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
A director, officer, incorporator, or stockholder of the Company or any
Subsidiary Guarantor, as such, shall not have any personal liability under this
Security or the Indenture by reason of his or its status as such director,
officer, incorporator or stockholder. Each Holder, by accepting this Security
with or without the notation of Subsidiary Guarantee endorsed hereon, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Security with the notation of Subsidiary
Guarantee endorsed hereon.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, any Subsidiary Guarantors, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all
-7-
<PAGE>
purposes, whether or not this Security is overdue, and neither the Company, the
Subsidiary Guarantors, if any, the Trustee nor any agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture. The Company will furnish
to any Holder upon written request and without charge a copy of the Indenture.
Requests may be made to the Company, 810 Houston Street, Suite 2000, Fort Worth,
Texas 76102.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders thereof. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identifying information
printed hereon.
This Security shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles.
-8-
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to __________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date:______________ Your Signature:_________________________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
-9-
<PAGE>
FORM OF OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Security purchased by the Company pursuant to
Section 9.15 or Section 9.16 of the Indenture, check the appropriate box:
Section 9.15 [_] Section 9.16 [_]
If you want to have only part of this Security purchased by the Company
pursuant to Section 9.15 or Section 9.16 of the Indenture, state the amount in
integral multiples of $1,000:
$__________
Date:___________ Signature:_____________________________________
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee:____________________________________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
-10-
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY/2/
The following exchanges of a part of this Regulation S Global Note for an
interest in another Global Security or of other Global Securities for an
interest in this Regulation S Global Note, have been made.
<TABLE>
<CAPTION>
Date of Amount of Amount of Principal Amount Signature of
- -------
Exchange decrease in increase in of this Global authorized
- --------
Principal Amount Principal Amount Security signatory
of this Global of this Global following such of Trustee or
Security Security decrease Security
-------- --------
(or increase) Custodian
------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
___________________
/2/ This should be included only if the Security is issued in global form.
-11-
<PAGE>
EXHIBIT 5.1
KELLY, HART & HALLMAN
(A PROFESSIONAL CORPORATION)
201 MAIN STREET, SUITE 2500
FORT WORTH, TEXAS 76102
October 30, 1997
Cross Timbers Oil Company
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
This firm has acted as legal counsel to Cross Timbers Oil Company, a
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-4 (the "Registration Statement") pertaining to the Company's
offering of up to $175,000,000 principal amount of 8 3/4% Series B Senior
Subordinated Notes due 2009 of the Company (the "New Notes").
In connection with this opinion, we have made the following assumptions:
(i) all documents submitted to or reviewed by us, including all amendments and
supplements thereto, are accurate and complete and if not originals are true and
correct copies of the originals; (ii) the signatures on each of such documents
by the parties thereto are genuine; (iii) each individual who signed such
documents had the legal capacity to do so; and (iv) all persons who signed such
documents on behalf of a corporation were duly authorized to do so. We have
assumed that there are no amendments, modifications or supplements to such
documents other than those amendments, modifications and supplements that are
known to us.
Based on the foregoing, and subject to the limitations and qualifications
set forth herein, we are of the opinion that:
1. The Company was incorporated, exists and is in good standing under the
laws of the State of Delaware.
2. The issuance of the New Notes has been duly authorized and, upon the
due execution, authentication and delivery of the New Notes in accordance with
the terms of the Indenture governing the New Notes between the Company and The
Bank of New York, as Trustee (the "Indenture"), against the exchange of a like
principal amount of 8 3/4% Series A Senior Subordinated Notes due 2009 of the
Company (the "Old Notes") in accordance with the terms and conditions set forth
in the Prospectus constituting a part of the Registration Statement, the New
Notes will be validly issued.
3. Upon the due execution, authentication and delivery of the New Notes
in accordance with the terms of the Indenture, against the exchange of a like
principal amount of Old Notes in
<PAGE>
Cross Timbers Oil Company
October 30, 1997
Page 2
accordance with the terms and conditions set forth in the Prospectus
constituting a part of the Registration Statement, the New Notes will constitute
enforceable obligations of the Company, except (a) as such enforceability is
limited by applicable bankruptcy, insolvency, fraudulent conveyance and other
debtor relief laws of general applicability and (b) that the remedies of
specific performance and injunctive and other forms of equitable relief are
subject to equitable defenses and to the discretion of the court before which
any proceeding may be brought.
This opinion is further limited and qualified in all respects as follows:
For purposes of rendering the opinion set forth in numbered paragraph 1
above, we have relied solely upon a certificate of the Secretary of State of the
State of Delaware dated October 23, 1997.
This opinion is specifically limited to matters of the existing laws of the
United States of America and the General Corporation Law of the State of
Delaware; provided, however, that the opinion in numbered paragraph 2 relating
to provisions of the Indenture and the opinion in numbered paragraph 3 relating
to the enforceability of the New Notes are each limited solely to the existing
laws of the State of New York. Except as expressly stated in the foregoing
sentence, we express no opinion as to the applicability of the laws of any other
particular jurisdiction to the transactions described in this opinion.
This opinion is limited to the specific opinions expressly stated herein,
and no other opinion is implied or may be inferred beyond the specific opinions
expressly stated herein.
This opinion is intended solely for your benefit. It is not to be quoted
in whole or in part, disclosed, made available to or relied upon by any other
person, firm or entity without our express prior written consent.
This opinion is based upon our knowledge of the law and facts as of the
date hereof. We assume no duty to update or supplement this opinion to reflect
any facts or circumstances that may hereafter come to our attention or to
reflect any changes in any law that may hereafter occur or become effective.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the heading "Legal
Matters" in the Prospectus constituting a part of the Registration Statement.
Respectfully submitted,
/s/ Kelly, Hart & Hallman
KELLY, HART & HALLMAN
(a professional corporation)
<PAGE>
EXHIBIT 15.1
AWARENESS LETTER. UNAUDITED INTERIM FINANCIAL INFORMATION
Cross Timbers Oil Company
Fort Worth, Texas
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Cross Timbers Oil Company (the "Company") for the
periods ended March 31 and June 30, 1997, as indicated in our reports dated
April 23 and July 24, 1997, respectively. Because we did not perform an audit,
we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1997, are being incorporated by reference in this Registration
Statement on Form S-4.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and 11
of that Act.
ARTHUR ANDERSEN LLP
Fort Worth, Texas
October 30, 1997
<PAGE>
EXHIBIT 23.1
INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of Cross Timbers Oil Company on Form
S-4 of our report dated March 13, 1997, included in Cross Timbers Oil
Company's Annual Report on Form 10-K for the year ended December 31, 1996, and
to all references to our firm included in this registration statement.
ARTHUR ANDERSEN LLP
Fort Worth, Texas
October 30, 1997
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF MILLER AND LENTS, LTD. APPEARS HERE]
October 30, 1997
Cross Timbers Oil Company
810 Houston Street, Suite 2000
Fort Worth, TX 76102
Re: Securities and Exchange Commission
Form S-4 Registration Statement, No.
333-
Gentlemen:
The firm of Miller and Lents, Ltd., consents to the incorporation of its
estimated Proved Reserves, Future Net Revenues, and Present Values of Future
Net Revenues in the Cross Timbers Oil Company Form S-4 Registration Statement,
No. 333- , and to reference to our Firm in such registration statement.
Miller and Lents, Ltd. has no interests in Cross Timbers Oil Company or any
of its affiliated companies or subsidiaries and is not to receive any such
interest as payment for such reports and has no director, officer, or
employee, or otherwise, connected with Cross Timbers Oil Company. We are not
employed by Cross Timbers Oil Company on a contingent basis.
Yours very truly,
MILLER AND LENTS, LTD.
By /s/ JAMES C. PEARSON
-----------------------------------
James C. Pearson
President
JCP/mk
<PAGE>
EXHIBIT 25.1
________________________________________________________________________________
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
[_]
______________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, NY 10286
(Address of principal executive offices) (Zip code)
______________
CROSS TIMBERS OIL COMPANY
(Exact name of obligor as specified in its charter)
Delaware 75-2347769
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
810 Houston Street, Suite 2000
Fort Worth, TX 76102
(Address of principal executive offices) (Zip code)
______________
8 3/4% Series B Senior Subordinated Notes due 2009
(Title of the indenture securities)
________________________________________________________________________________
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York, NY
New York 10006 and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, NY
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and State
of New York, on the 28th day of October, 1997.
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
----------------------------------------
Walter N. Gitlin, Vice President
3
<PAGE>
Exhibit 7
to
Form T-1
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.................... $ 7,769,502
Interest-bearing balances............................................. 1,472,524
Securities:
Held-to-maturity securities........................................... 1,060,234
Available-for-sale securities......................................... 3,046,199
Federal funds sold and securities purchased under
agreements to resell.................................................. 3,193,800
Loans and lease financing receivables:
Loans and leases, net of unearned income.............................. 35,352,045
LESS: Allowance for loan and lease losses............................ 625,042
LESS: Allocated transfer risk reserve............................... 429
Loans and leases, net of unearned income,
allowance, and reserve............................................... 34,726,574
Assets held in trading accounts......................................... 1,611,096
Premises and fixed assets (including capitalized leases)................ 676,729
Other real estate owned................................................. 22,460
Investments in unconsolidated subsidiaries and associated companies..... 209,959
Customers' liability to this bank on acceptances outstanding............ 1,357,731
Intangible assets....................................................... 720,883
Other assets............................................................ 1,627,267
-------------
Total assets............................................................ $ 57,514,958
=============
</TABLE>
(continued)
<PAGE>
(continued)
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C>
LIABILITIES
Deposits:
In domestic offices................................................... $26,875,596
Noninterest-bearing................................................. 11,213,657
Interest-bearing.................................................... 15,661,939
In foreign offices, Edge and Agreement subsidiaries, and IBFs......... 16,334,270
Noninterest-bearing................................................... 586,369
Interest-bearing...................................................... 15,737,901
Federal funds purchased and securities sold under
agreements to repurchase.............................................. 1,583,157
Demand notes issued to the U. S. Treasury............................... 303,000
Trading liabilities..................................................... 1,308,173
Other borrowed money:
With remaining maturity of one year or less........................... 2,383,570
With remaining maturity of more than one year
through three years.................................................. 0
With remaining maturity of more than three years...................... 20,679
Bank's liability on acceptances executed and outstanding................ 1,377,244
Subordinated notes and debentures....................................... 1,018,940
Other liabilities....................................................... 1,732,722
-----------
Total liabilities....................................................... 52,937,421
-----------
EQUITY CAPITAL
Common stock............................................................ 1,135,284
Surplus................................................................. 731,319
Undivided profits and capital reserves.................................. 2,721,258
Net unrealized holding gains (losses) on available-for-sale securities.. 1,948
Cumulative foreign currency translation adjustments..................... ( 12,272)
-----------
Total equity capital.................................................... 4,577,537
-----------
Total liabilities and equity capital.................................... $57,514,958
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank, do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot (S)
Thomas A. Renyi (S) Directors
Alan R. Griffith (S)
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
CROSS TIMBERS OIL COMPANY
For Tender of 8 3/4% Series A Senior Subordinated Notes Due 2009
Pursuant to
Offer For Any and All Outstanding
8 3/4% Series A Senior Subordinated Notes Due 2009
in Exchange for
8 3/4% Series B Senior Subordinated Notes Due 2009
Which Have Been Registered Under the Securities Act of 1933
As Described in the Prospectus dated _____________________, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON _______________, 1997, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent For The Exchange Offer Is:
The Bank Of New York
<TABLE>
<CAPTION>
<S> <C> <C>
By Hand or Overnight Delivery: Facsimile Transmissions By Registered or Certified Mail:
(Eligible Institutions Only):
The Bank of New York The Bank of New York
101 Barclay Street (212) 571-3080 101 Barclay Street, 7E
Corporate Trust Services Window Attention: George Johnson New York, New York 10286
Ground Level To Confirm by Telephone Attention: Reorganization Section,
Attention: Reorganization Section, or for Information Call: George Johnson
George Johnson (212) 815-3687
</TABLE>
Delivery of this letter of transmittal to an address other than as set
forth above or transmission of this letter of transmittal via facsimile to a
number other than as set forth above does not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus, dated
_________________, 1997, as may be amended from time to time (the "Prospectus"),
of Cross Timbers Oil Company, a Delaware corporation (the "Company"), and this
Letter of Transmittal, which together constitute the Company's offer (the
"Exchange Offer") to exchange an aggregate principal amount of up to
$175,000,000 of 8 3/4% Series B Senior Subordinated Notes due November 1, 2009,
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), of the Company for a like principal amount of the issued and
outstanding 8 3/4% Series A Senior Subordinated Notes due November 1, 2009 of
the Company from the Holders thereof.
<PAGE>
PLEASE READ THE INSTRUCTIONS CONTAINED HEREIN CAREFULLY BEFORE COMPLETING
THIS LETTER OF TRANSMITTAL.
Capitalized terms used but not defined herein shall have the same
meanings respectively given to them in the Prospectus.
This Letter of Transmittal is to be completed by Holders of Old Notes (as
defined below) either if certificates for Old Notes ("Certificates") are to be
forwarded herewith or if tenders of Old Notes are to be made by book-entry
transfer to an account maintained by The Bank of New York (the "Exchange Agent")
at The Depository Trust Company (the "Book Entry Transfer Facility" or "DTC")
pursuant to the procedures set forth in "The Exchange Offer--Procedures for
Tendering Old Notes" in the Prospectus.
Holders of Old Notes whose Certificates are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus)
or who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Old Notes according to the guaranteed delivery procedures set
forth in "The Exchange Offer--Procedures for Tendering Old Notes" in the
Prospectus. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- -----------------------------------------------------------------------------------------------------------
Principal
Aggregate Amount of
Principal Old Notes
Name(s) and Address(es) of Holder(s): Certificate Amount of Tendered
(Please fill in, if blank) Number(s)* Old Notes (if less than all)**
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry Holders.
** Old Notes may be tendered in whole or in part in denominations of $1,000
and integral multiples of $1,000 in excess thereof, provided that if any
Old Notes are tendered for exchange in part, the untendered principal
amount thereof must be $1,000 or any integral multiple of $1,000 in excess
thereof. See Instruction 4. Unless otherwise indicated in the column, a
Holder will be deemed to have tendered all Old Notes represented by the Old
Notes indicated in Column 2. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:__________________________________
Account Number:_________________________________
Transaction Code Number:________________________
[_]CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of Holder(s):______________________________________________
Window Ticket Number (if any):__________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________, 1997
Name of Institution that Guaranteed Delivery:__________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution:__________________________________________
Account Number:_________________________
Transaction Code Number:________________
[_]CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES ARE
TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER
SET FORTH ABOVE.
[_]CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR YOUR OWN
ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ____________________________________________________
Address: ____________________________________________________
____________________________________________________
____________________________________________________
(include zip code)
3
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above described aggregate
principal amount of the Company's 8 3/4% Series A Senior Subordinated Notes due
November 1, 2009 (the "Old Notes") in exchange for a like aggregate principal
amount of the Company's 8 3/4% Series B Senior Subordinated Notes due November
1,2009, which have been registered under the Securities Act (the "New Notes"),
upon the terms and subject to the conditions set forth in the Prospectus,
receipt of which is acknowledged, and in this Letter of Transmittal (which,
together with the Prospectus, constitute the Exchange Offer).
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Old Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of the Company in connection with the
Exchange Offer) with respect to the tendered Old Notes, with full power of
substitution (such power of attorney's being deemed to be an irrevocable power
coupled with an interest) subject only to the right of withdrawal described in
the Prospectus, to (i) deliver Certificates to the Company together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of
the New Notes to be issued in exchange for such Old Notes, (ii) present
Certificates for transfer, and to transfer the Old Notes on the books of the
Company and (iii) receive for the account of the Company all benefits and other
wise exercise all rights of beneficial ownership of such Old Notes, all in
accordance with the terms and conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. UPON
REQUEST, THE UNDERSIGNED WILL EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY,
AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION
RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
If they are not already set forth above, please print the name(s) and
address(es) of the Holder(s) of the Old Notes tendered hereby as they appear on
the Certificates. The undersigned should indicate the Certificate number(s) of
the Old Notes that the undersigned wishes to tender in the appropriate boxes
above.
If any tendered Old Notes are not exchanged pursuant to the Exchange Offer
for any reason, or if Certificates are submitted for more Old Notes than are
tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered by
book-entry transfer, such Old Notes will be credited to an account maintained at
DTC), without expense to the tendering Holder, promptly following the expiration
or termination of the Exchange Offer.
The undersigned understands that tenders of Old Notes pursuant to any one
of the procedures described in "The Exchange Offer--Procedures for Tendering Old
Notes" in the Prospectus and in the instructions attached hereto will, upon the
Company's acceptance for exchange of such tendered Old Notes, constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, the Company may
not be required to accept for exchange any of the Old Notes tendered hereby.
4
<PAGE>
Unless otherwise indicated under "Special Issuance Instructions" below, the
undersigned hereby directs that the New Notes be issued in the name(s) of the
undersigned or, in the case of a book-entry transfer of Old Notes, that such New
Notes be credited to the account indicated above maintained at DTC. If
applicable, substitute Certificates not exchanged or not accepted for exchange
will be issued to the undersigned or, in the case of a book-entry transfer of
Old Notes, will be credited to the account indicated above maintained at DTC.
Similarly, unless otherwise indicated under "Special Delivery Instructions," New
Notes will be delivered to the undersigned at the address shown below the
undersigned's signature.
BY TENDERING OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY, (II) ANY NEW NOTES TO BE RECEIVED BY THE UNDERSIGNED
ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED
HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW NOTES TO BE
RECEIVED IN THE EXCHANGE OFFER AND (IV), IF THE UNDERSIGNED IS NOT A BROKER-
DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW NOTES. BY
TENDERING OLD NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF
TRANSMITTAL, A HOLDER OF OLD NOTES THAT IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE
DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO
THIRD PARTIES, THAT (A) THE BROKER-DEALER HOLDS SUCH OLD NOTES ONLY AS A
NOMINEE, OR (B) THE BROKER-DEALER ACQUIRED SUCH OLD NOTES FOR ITS OWN ACCOUNT AS
A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND THAT IT
WILL DELIVER A PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING
THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH NEW
NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT).
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT, A PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) MAY USE THE
PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, IN
CONNECTION WITH RESALES OF NEW NOTES THAT SUCH PARTICIPATING BROKER-DEALER
ACQUIRED FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER
TRADING ACTIVITIES, FOR A PERIOD ENDING 180 DAYS AFTER CONSUMMATION OF THE
EXCHANGE OFFER OR, IF EARLIER, WHEN SUCH PARTICIPATING BROKER-DEALER HAS
DISPOSED OF ALL SUCH NEW NOTES. IN THAT REGARD, EACH BROKER-DEALER THAT ACQUIRED
OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH OLD NOTES AND
EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM
THE COMPANY OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT THAT
MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS
UNTRUE IN ANY MATERIAL RESPECT OR THAT CAUSES THE PROSPECTUS TO OMIT TO STATE A
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR
INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY WERE MADE, NOT MISLEADING, OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS
SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER
WILL SUSPEND THE SALE OF NEW NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY
HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR
OMISSION AND THE COMPANY HAS FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED
PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR UNTIL THE COMPANY HAS GIVEN
NOTICE THAT THE SALE OF THE NEW NOTES MAY BE RESUMED, AS THE CASE MAY BE. IF THE
COMPANY GIVES NOTICE TO SUSPEND THE SALE OF THE NEW NOTES, IT SHALL EXTEND THE
180-DAY PERIOD REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE
ENTITLED TO USE THE PROSPECTUS IN
5
<PAGE>
CONNECTION WITH THE RESALE OF NEW NOTES BY THE NUMBER OF DAYS DURING THE PERIOD
FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE
DATE WHEN PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE
SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE NEW NOTES
OR TO AND INCLUDING THE DATE ON WHICH THE COMPANY HAS GIVEN NOTICE THAT THE SALE
OF NEW NOTES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Notes whose Old Notes are accepted for exchange will not
receive accrued interest on such Old Notes for any period from and after the
last Interest Payment Date to which interest has been paid or duly provided for
with respect to such Old Notes prior to the original issue date of the New Notes
or, if no such interest has been paid or duly provided for, such Holders will
not receive any accrued interest on such Old Notes; and the undersigned hereby
irrevocably waives the right to receive any interest on such Old Notes accrued
from and after such Interest Payment Date or, if no such interest has been paid
or duly provided for, from and after __________________, 1997.
Upon request, the undersigned will execute and deliver any additional
documents that the Company or the Exchange Agent may deem necessary or desirable
to complete the sale, assignment and transfer of the Old Notes tendered hereby.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and all
obligations of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, a tender of Old Notes is irrevocable.
BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES" ABOVE AND DULY
SIGNING AND DELIVERING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED WILL BE
DEEMED TO HAVE TENDERED THE OLD NOTES AS SET FORTH IN SUCH BOX.
6
<PAGE>
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREWITH)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by Holder(s) exactly as name(s) appear(s) on Certificate(s)
hereby tendered or on the Note Register, or by any person(s) authorized to
become the Holder(s) by endorsements and documents transmitted herewith
(including such opinions of counsel, certifications and other information as may
be required by the Company for the Old Notes to comply with the restrictions on
transfer applicable to the Old Notes). If signature is by an attorney-in-fact,
executor, administrator, trustee, guardian, officer of a corporation or a person
acting in another fiduciary or representative capacity, please set forth the
signatory's full title. See Instruction 5.
SIGNATURE(S) OF HOLDER(S):
___________________________________
___________________________________
Date:_________________________,1997
Name(s): __________________________________
__________________________________
(please print)
Capacity (full title): ____________________
Address: __________________________________
__________________________________
__________________________________
(include zip code)
Telephone Number (including area code): ____________________________
Taxpayer Identification or Social Security Number(s):________________
7
<PAGE>
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5):
______________________________________
(authorized signature)
Date:_________________,1997
Name of Firm: ____________________________________
(please print)
Capacity (full title): ___________________________
Address: _________________________________________
_________________________________________
_________________________________________
(include zip code)
Telephone Number (including area code):______________________________
8
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Notes or Old Notes not tendered are to be
issued in the name of someone other than the Holder of the Old Notes whose
name(s) appear(s) above.
Please issue:
[_] Old Notes not tendered to:
[_] New Notes to:
Name(s): __________________________________
__________________________________
(please print)
Capacity (full title): __________________________
Address: _________________________________________
_________________________________________
__________________________________________
(include zip code)
Telephone Number (including area code):_____________________________
Taxpayer Identification or Social Security Number(s):_______________
9
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Notes or Old Notes not tendered are to be
sent to someone other than the Holder of the Old Notes whose name(s) appear(s)
above, or to such Holder(s) at an address other than that shown above.
Please issue:
[_] Old Notes not tendered to:
[_] New Notes to:
Name(s): ________________________________________
________________________________________
(please print)
Capacity (full title):____________________________
Address: ________________________________________
________________________________________
________________________________________
(include zip code)
Telephone Number (including area code):_______________________________
Taxpayer Identification or Social Security Number(s):_________________
10
<PAGE>
INSTRUCTIONS
(FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER)
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed if either (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering Old Notes" in the Prospectus. The Exchange Agent
must receive Certificates, or timely confirmation of a book-entry transfer of
such Old Notes into the Exchange Agent's account at DTC, as well as this Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, and any other documents required by this
Letter of Transmittal, at its address set forth herein on or prior to the
Expiration Date. Old Notes may be tendered in whole or in part in the principal
amount of $1,000 and integral multiples thereof; provided, however, that, if any
Old Notes are tendered for exchange in part, the untendered principal amount
thereof must be $1,000 or any integral multiple thereof.
Holders who wish to tender their Old Notes (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent on or prior
to the Expiration Date or (iii) who cannot complete the procedures for delivery
by book-entry transfer on a timely basis, may tender their Old Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering Old Notes" in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) the Exchange Agent must receive a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form that the Company has
made available, on or prior to the Expiration Date; and (iii) the Exchange Agent
must receive the Certificates (or a book-entry confirmation (as defined in the
Prospectus)) representing all tendered Old Notes, in proper form for transfer,
together with a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees and any other
documents required by this Letter of Transmittal, within five New York Stock
Exchange, Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer--Guaranteed Delivery
Procedures" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Notes to be
properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution" means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are defined therein)
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; and
(v) a savings association that is a participant in a Securities Transfer
Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN THE EXCHANGE AGENT ACTUALLY RECEIVES
ALL OF SUCH DOCUMENTS. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution and delivery of this Letter of
Transmittal (or facsimile thereof), waives any right to receive any notice of
the acceptance of such tender.
11
<PAGE>
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the Holder (which term, for
purposes of this document, shall include any participant in DTC whose
name appears on the Note Register as the owner of the Old Notes) of
Old Notes tendered herewith, unless such Holder(s) has completed
either "Special Issuance Instructions" or "Special Delivery
Instructions" above, or
(ii) such Old Notes are tendered for the account of a firm that is an
Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Old Notes and any other required information should be
listed on a separate signed schedule that is attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Notes will be
accepted only in the principal amount of $1,000 and integral multiples thereof;
provided, however, that, if any Old Notes are tendered for exchange in part, the
untendered principal amount thereof must be $1,000 or any integral multiple
thereof. If less than all the Old Notes evidenced by any Certificate submitted
are to be tendered, please indicate the principal amount of Old Notes that are
to be tendered in the box entitled "Principal Amount of Old Notes Tendered (if
less than all)." In such case, new Certificate(s) for the remainder of the Old
Notes that were evidenced by the old Certificate(s) will only be sent to the
Holder of the Old Notes, promptly after the Expiration Date. All Old Notes
represented by Certificates delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date. In order for a withdrawal to be
effective on or prior to that time, the Exchange Agent must timely receive a
written, telegraphic, telex or facsimile transmission of such notice of
withdrawal at one of its addresses set forth above or in the Prospectus on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn and, if Certificates have been
tendered, the name of the Holder of the Old Notes as set forth on the
Certificate if different from that of the person who tendered such Old Notes. If
Certificates have been delivered or otherwise identified to the Exchange Agent,
then, prior to the physical release of such Certificates, the tendering Holder
must submit the serial numbers shown on the particular Certificates to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Old Notes tendered for the account
of an Eligible Institution. If Old Notes have been tendered pursuant to the
procedures for book-entry transfer set forth in the Prospectus under "The
Exchange Offer--Procedures for Tendering Old Notes," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of Old Notes, in which case a notice of withdrawal will be effective
if timely delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Old Notes properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any
subsequent time on or prior to the Expiration Date by following any of the
procedures described in the Prospectus under "The Exchange Offer--Withdrawal
Rights."
The Company will determine, in its sole discretion, all questions as to the
validity, form and eligibility (including time of receipt) of any such
withdrawal notice, and such determination shall be final and binding on all
parties. None of the Company, any affiliates or assigns of the Company, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Notes that have
been tendered but that are withdrawn will be returned to the Holder without cost
to such Holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the Holder(s) of the Old Notes tendered
hereby, the signature(s) must
12
<PAGE>
correspond exactly with the name(s) as written on the face of the Certificate(s)
without alteration, enlargement or any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint Holders,
all such Holders must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different name(s) on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in another fiduciary or representative
capacity, such persons must so indicate when signing and must submit proper
evidence satisfactory to the Company, in its sole discretion, of each such
person's authority to act.
If this Letter of Transmittal is signed by the Holder(s) of the Old Notes
listed and transmitted hereby, no endorsement(s) of Certificate(s) or separate
bond power(s) are required unless New Notes are to be issued in the name of a
person other than the Holder(s). Signature(s) on such Certificate(s) or bond
power(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the Holder
of the Old Notes listed and transmitted hereby, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
or names of the Holder(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information as
the Company or the Trustee may require in accordance with the restrictions on
transfer applicable to the Old Notes. Signatures on such Certificates or bond
powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Notes are to be
issued in the name of a person other than the signatory of this Letter of
Transmittal, or if New Notes are to be sent to someone other than the signatory
of this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal must be completed. Certificates
for Old Notes not exchanged will be returned by mail or, if tendered by book-
entry transfer, by crediting the account indicated above maintained at DTC. See
Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of Old Notes. Such
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders that it determines not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company, be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer--Certain Conditions
to the Exchange Offer" or any conditions or irregularity in any tender of Old
Notes by any particular Holder, whether or not the Company waives similar
conditions or irregularities in the case of any other Holder. The Company's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding on
all parties. No tender of Old Notes will be deemed to have been validly made
until all irregularities with respect to such tender have been cured or waived.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give notification of any
irregularities in tenders or shall incur any liability for failure to give such
notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front cover of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from a broker,
dealer, commercial bank, trust company or other nominee.
13
<PAGE>
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. federal
income tax law, a Holder whose tendered Old Notes are accepted for exchange is
required to provide the Exchange Agent with such Holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the Holder or other payee to a $50 penalty.
The box in Part 2 of the Substitute Form W-9 should be checked if the
tendering Holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
Holder must also complete the Certificate of Awaiting Taxpayer Identification
Number below in order to avoid backup withholding. Notwithstanding that the box
in Part 2 has been checked and the Certificate of Awaiting Taxpayer
Identification Number has been completed, the Exchange Agent will withhold 31%
of all payments made prior to the time that a properly certified TIN is provided
to the Exchange Agent. The Exchange Agent will retain such amounts withheld
during the 60 day period following the date of the Substitute Form W-9. If the
Holder furnishes the Exchange Agent with its TIN within 60 days after the date
of the Substitute Form W-9, the amounts retained during the 60 day period will
be remitted to the Holder and no further amounts shall be retained or withheld
from payments made to the Holder thereafter. If, however, the Holder has not
provided the Exchange Agent with its TIN within such 60 day period, amounts
withheld will be remitted to the IRS as backup withholding. In addition, 31% of
all payments made thereafter will be withheld and remitted to the IRS until a
correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN of the Holder of
the Old Notes or of the last transferee appearing on the transfers attached to,
or endorsed on, the Old Notes. If the Old Notes are registered in more than one
name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below and write "exempt" on the face
thereof to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8
signed under penalties of perjury attesting to its exempt status. Please consult
the enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which Holders are exempt from
backup withholding.
Backup withholding is not an additional U.S. federal income tax. Rather,
the U.S. federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of tax, a refund may be obtained.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive satisfaction of any or all conditions to the Exchange Offer enumerated
herein or in the Prospectus.
11. NO CONDITIONAL TENDERS. The Company will not accept any alternative,
conditional, irregular or contingent tenders. By execution and delivery of this
Letter of Transmittal, a tendering Holder of Old Notes shall be deemed to have
irrevocably waived any right to receive notice of acceptance of such Old Notes
for exchange.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Notes have been lost, destroyed or stolen, the Holder should
promptly notify the Exchange Agent, which will instruct the Holder as to the
steps that must be taken in order to replace the Certificate(s). In such event,
the Exchange Agent will be unable to process this Letter of Transmittal and
related documents until the Holder has followed the procedures for replacing
lost, destroyed or stolen Certificate(s).
13. SECURITY TRANSFER TAXES. Holders who tender their Old Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, a transfer tax is imposed because the New Notes are to
be delivered to, or are to be issued in the name of, any person other than the
Holder of the Old Notes tendered, or if a transfer tax is imposed for any reason
other than the exchange of Old Notes in connection with
14
<PAGE>
the Exchange Offer, then the tendering Holder must pay the amount of any such
transfer tax (whether imposed on the Holder or any other person). If the
tendering Holder submits satisfactory evidence of payment of such taxes or
exemption therefrom with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering Holder.
IMPORTANT: THE EXCHANGE AGENT MUST RECEIVE THIS LETTER OF
TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER REQUIRED
DOCUMENTS ON OR PRIOR TO THE EXPIRATION DATE.
15
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
(See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
PART 1-PLEASE PROVIDE YOUR TIN ON THE TIN:__________________________
LINE AT RIGHT AND CERTIFY BY SIGNING Social Security Number or
AND DATING BELOW Employer Identification Number
- ------------------------------------------------------------------------------------------------------------------------------
PART 2 -- TIN Applied For [_]
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Form W-9 (1) the number shown on this form is my correct taxpayer identification number (or I
Department Of The am waiting for a number to be issued to me).
Treasury
Internal Revenue Service (2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS")
Payor's Request For that I am subject to backup withholding as a result of a failure to report all interest
Taxpayer or dividends, or (c) the IRS has notified me that I am no longer subject to backup
Identification Number withholding, and
("TIN") and
Certification (3) any other information provided on this form is true and correct.
Signature____________________________________ Date___________________ , 1997
- ------------------------------------------------------------------------------------------------------------------------------
You must cross out Part (2) above if you have been notified by the IRS that you are subject to backup withholding
because of underreporting interest or dividends on your tax return and you have not been notified by the IRS that you
are no longer subject to backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOXC
IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments made to me on account of the New Notes shall be retained until I
provide a taxpayer identification number to the Exchange Agent and that, I do
not provide my taxpayer identification number within 60 days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31% of all reportable payments made to me thereafter will be withheld and
remitted to the Internal Revenue Service until I provide a taxpayer
identification number.
Signature______________________ Date_______________________, 1997
- --------------------------------------------------------------------------------
16
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--
Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-
0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF -- NUMBER OF --
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 8.Sole proprietorship The owner/(4)/
account
2.Two or more individuals (joint The actual owner of the The legal entity (Do
account) account or, 9.A valid trust, estate, not furnish the
if combined funds, any one or pension trust identifying number
of the individuals/(1)/ of the personal
representative or
The actual owner of the trustee unless the
3.Husband and wife (joint account or, if joint funds, legal entity itself
account) either person/(1)/ is not designated
in the account
The minor/(2)/ title.)/(5)/
4.Custodian account of minor The corporation
(Uniform Gift to Minors Act) The adult or, if the minor 10.Corporate account
is The organization
5.Adult and minor (joint the only contributor, the 11.Religious, charitable
account) minor/(1)/ or educational
organization account
The ward, minor, or The partnership
incompetent person/(3)/ 12.Partnership account
held in the name of
6.Account in the name of the business The organization
guardian or committee for a The grantor-trustee/(1)/
designated ward, minor, or 13.Association, club, or
incompetent person other tax-exempt The broker or
The actual owner/(1)/ organization nominee
7. a.The usual revocable
savings trust account 14.A broker or registered The public entity
(grantor is also trustee) nominee
b.So-called trust account that
is not a legal or valid trust 15.Account with the
under State law. Department of
Agriculture in the
name of a public
entity (such as a State
or local government,
school district, or
prison) that receives
agricultural program
payments
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/List first and circle the name of the person whose number you furnish.
/(2)/Circle the minor's name and furnish the minor's social security number.
/(3)/Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
/(4)/Show the name of the owner.
/(5)/List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
<TABLE>
<S> <C>
OBTAINING A NUMBER .Payments of tax-exempt interest (including exempt-interest
If you don't have a taxpayer identification number or you dividends under section 852).
don't know your number, obtain Form SS-5, Application for a .Payments described in section 6049(b)(5) to non-resident aliens.
Social Security Number Card, or Form SS-4, Application for .Payments on tax-free covenant bonds under section 1451.
Employer Identification Number, at the local office of the .Payments made by certain foreign organizations.
Social Security Administration or the Internal Revenue .Payments made to a nominee.
Service and apply for a number. Exempt payees described above should file Form W-9 to avoid
PAYEES EXEMPT FROM BACKUP WITHHOLDING possible erroneous backup withholding. FILE THIS FORM WITH THE
Payees specifically exempted from backup withholding on ALL PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT'
payments include the following: ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
.A corporation. PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN
.A financial institution. AND DATE THE FORM.
.An organizational exempt from tax under section 501(a), or Certain payments other than interest, dividends, and patronage
an individual retirement plan dividends, that are not subject to information reporting are also
.The United States or any agency or instrumentality thereof. not subject to backup withholding. For details, see the
.A State, the District of Columbia, a possession of the regulations under section 6041, 6041A(a), 6045, and 6050A.
United States, or any subdivision or instrumentality thereof.
.A foreign government, a political subdivision of a foreign PRIVACY ACT NOTICE.--Section 6109 requires most recipients of
government, or any agency or instrumentality thereof. dividend, interest, or other payments to give taxpayer
.An international organization or any agency, or identification numbers to payers who must report the payments to
instrumentality thereof. IRS. IRS uses the numbers for identification purposes. Payers
.A registered dealer in securities or commodities registered must be given the numbers whether or not recipients are required to
in the U.S. or a possession of the U.S. file tax returns. Beginning January 1, 1993, payers must generally
.A real estate investment trust. withhold 31% of taxable interest, dividend, and certain other
.A common trust fund operated by a bank under section 584(a). payments to a payee who does not furnish a taxpayer identification
.An exempt charitable remainder trust, or a non-exempt trust number to a payer. Certain penalties may also apply.
described in section 4947(a)(1).
.An entity registered at all times during the tax year under PENALTIES
the Investment Company Act of 1940 PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If
.A foreign central bank of issue. you fail to furnish your taxpayer identification number to a payer,
you are subject to a penalty of $50 for each such failure unless
Payments of dividends and patronage dividends not generally your failure is due to reasonable cause and not to willful neglect.
subject to backup withholding include the following: CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO
.Payments to nonresident aliens subject to withholding under WITHHOLDING.--If you make a false statement with no reasonable
section 1441. basis which results in no imposition of backup withholding, you are
.Payments to partnerships not engaged in a trade or business subject to a penalty of $500.
in the U.S. and which have at least one nonresident partner. CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying
.Payments of patronage dividends where the amount received in certifications or affirmations may subject you to criminal
not paid in money. penalties including fines and/or imprisonment.
.Payments made by certain foreign organizations.
.Payments made to a nominee.
Payments of interest not generally subject to backup
withholding include the following:
.Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this
interest is $600 or more and is paid in the course of the
payer's trade or business and you have not provided your FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
correct taxpayer identification number to the payer. CONSULTANT OR THE INTERNAL REVENUE SERVICE
</TABLE>
<PAGE>
NOTICE OF GUARANTEED DELIVERY
For Tender of
Any and All Outstanding
8 3/4% Series A Senior Subordinated Notes Due 2009
Of
Cross Timbers Oil Company
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i) the
Holder's certificates ("Certificates") for 8 3/4% Series A Senior Subordinated
Notes due November 1, 2009 of the Company (the "Old Notes") are not immediately
available, (ii) the Holder cannot deliver the Old Notes, Letter of Transmittal
and all other required documents to The Bank of New York (the "Exchange Agent")
on or prior to 5:00 p.m. New York City time, on the Expiration Date or (iii) the
Holder cannot complete the procedures for delivery by book-entry transfer on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand,
overnight courier or mail, or transmitted by facsimile transmission, to the
Exchange Agent. See "The Exchange Offer--Guaranteed Delivery Procedures"
in the Prospectus. Capitalized terms not defined herein have the meanings
respectively given to them in the Prospectus.
The Exchange Agent For the Exchange Offer Is:
The Bank Of New York
<TABLE>
<S> <C> <C>
By Hand or Overnight Facsimile Transmissions By Registered Or
Delivery: (Eligible Institutions Only): Certified
Mail:
The Bank of New York (212) 571-3080
101 Barclay Street Attention: George Johnson The Bank of New York
Corporate Trust Services To Confirm by Telephone 101 Barclay Street, 7E
Window Ground Level or for Information Call: New York, New York 10286
Attention: Reorganization (212) 815-3687 Attention: Reorganization
Section, George Johnson Section,
George Johnson
</TABLE>
<PAGE>
Delivery of this Notice of Guaranteed Delivery to an address other than
as set forth above or transmission of this Notice of Guaranteed Delivery via
facsimile to a number other than as set forth above will not constitute a valid
delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS HERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to Cross Timbers Oil Company, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated _______________________, 1997 (as the same may be
amended or supplemented from time to time, the "Prospectus"), and the related
Letter of Transmittal (which together constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the aggregate principal amount of Old Notes set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures."
Aggregate Principal Amount Tendered: $__________________________
(Must be in denominations of a principal amount of $1,000 and any integral
multiple thereof.)
Name(s) of Holder)s):_____________________________________
Certificate No(s):________________________________________
Total Principal Amount
Represented by Certificate(s): $
________________________
If Old Notes will be tendered by book-entry transfer, please provide the
following information:
DTC Account Number:________________________
Date:_____________________
2
<PAGE>
________________________________________________________________________________
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
________________________________________________________________________________
PLEASE SIGN BELOW:
Signature(s) of Holder(s) or
Authorized Signatory: Date:
_____________________________________ ______________, 1997
_____________________________________ ______________, 1997
Telephone Number (including area code):___________
Must be signed by Holder(s) of Old Notes exactly as name(s) appear(s) on
tendered Certificates or on a security position listing, or by person(s)
authorized to become Holder(s) by endorsement and documents transmitted with
this Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in another fiduciary or representative capacity, such person must
set forth his or her full title below.
Please print name(s) and address(es) below:
Name(s): _______________________________________
_______________________________________
Capacity (full title): ____________________________
Address(es): _____________________________________
_____________________________________
_____________________________________
(include zip code)
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (each of
the foregoing being referred to as an "Eligible Institution"), hereby guarantees
to deliver to the Exchange Agent, at one of its addresses set forth above,
either the Old Notes tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Old Notes to the Exchange
Agent's account at The Depository Trust Company, pursuant to the procedures for
book-entry transfer set forth in the Prospectus, in either case together with
one or more properly completed and duly executed Letter(s) of Transmittal (or
facsimiles thereof) and any other required documents within five business days
after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Old Notes tendered hereby to the Exchange Agent within the
time period set forth above and that failure to do so could result in a
financial loss to the undersigned.
___________________________________ ____________________________________
Name of Firm Authorized Signature
___________________________________ ____________________________________
Address (including zip code) Title
___________________________________ ____________________________________
(Please type or print name)
___________________________________
Date:______________, 1997
Telephone Number (including area code): ___________
* * * * *
DO NOT SEND CERTIFICATES WITH THIS FORM. CERTIFICATES SHOULD ONLY BE SENT WITH
A PROPERLY COMPLETED LETTER OF TRANSMITTAL.
4
