<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
=========
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-10874
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MESA Inc.
=========
(Exact name of registrant as specified in its charter)
Texas 75-2394500
----- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
- ---------------------------- -----
(Address of Principal (Zip Code)
Executive Offices)
(214) 444-9001
--------------
(Registrant's telephone number)
(No changes)
------------
(Former name, former address, and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Number of shares of common stock outstanding as of the close of business on
August 12, 1996: 64,260,721
----------
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<PAGE> 2
PART I - FINANCIAL INFORMATION
==============================
Item 1. Financial Statements
- -----------------------------
MESA Inc.
Consolidated Statement of Operations
------------------------------------
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ -------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C>
REVENUES:
Natural gas................. $ 44,243 $ 32,875 $ 94,810 $ 68,731
Natural gas liquids......... 19,979 18,573 43,115 36,779
Oil and condensate.......... 4,484 5,174 8,847 10,567
Other....................... 2,616 2,552 5,193 5,344
-------- -------- -------- --------
71,322 59,174 151,965 121,421
-------- -------- -------- --------
COSTS AND EXPENSES:
Lease operating............. 11,739 10,626 25,283 23,200
Production and other taxes.. 4,893 4,482 10,299 9,227
Exploration charges......... 2,270 933 2,814 2,237
General and administrative.. 8,954 5,763 14,538 12,407
Depreciation, depletion and
amortization............... 22,406 20,290 52,648 41,296
-------- -------- -------- --------
50,262 42,094 105,582 88,367
-------- -------- -------- --------
OPERATING INCOME................. 21,060 17,080 46,383 33,054
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest income............. 3,747 4,191 6,964 8,100
Interest expense............ (36,164) (36,449) (73,913) (73,112)
Gains (losses) on investments 586 (2,804) 9,349 1,749
Gain from collection of
interest from Bicoastal
Corporation................ -- -- 2,548 4,653
Gain from adjustment of
contingency reserve........ 15,000 -- 15,000 --
Other....................... 318 4,029 (727) 3,709
-------- -------- -------- --------
(16,513) (31,033) (40,779) (54,901)
-------- -------- -------- --------
NET INCOME (LOSS)................ $ 4,547 $(13,953) $ 5,604 $(21,847)
======== ======== ========= ========
NET INCOME (LOSS) PER COMMON SHARE.$ .07 $ (.22) $ .09 $ (.34)
======== ======== ========= ========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING............ 64,057 64,050 64,053 64,050
======== ======== ========= ========
</TABLE>
(See accompanying notes to consolidated financial statements.)
2
<PAGE> 3
MESA Inc.
=========
Consolidated Balance Sheets
---------------------------
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
---------- ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash investments.................... $ 174,391 $ 149,143
Investments.................................. 4 38,280
Accounts and notes receivable................ 45,393 44,734
Other........................................ 5,482 4,590
---------- ----------
Total current assets.................... 225,270 236,747
---------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Oil and gas properties, wells and
equipment using the successful
efforts method of accounting............... 1,916,705 1,900,163
Office and other............................. 40,183 41,603
Accumulated depreciation, depletion
and amortization........................... (908,209) (859,077)
---------- ----------
1,048,679 1,082,689
---------- ----------
OTHER ASSETS:
Restricted cash of subsidiary partnership.... 54,856 57,731
Gas balancing receivable..................... 57,319 56,020
Other........................................ 27,335 31,509
---------- ----------
139,510 145,260
---------- ----------
$1,413,459 $1,464,696
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities on long-term debt......... $ 118,634 $ 101,413
Accounts payable and accrued liabilities..... 27,478 31,068
Interest payable............................. 60,783 60,465
---------- ----------
Total current liabilities............... 206,895 192,946
---------- ----------
LONG-TERM DEBT.................................... 1,083,029 1,135,330
---------- ----------
DEFERRED REVENUE.................................. 15,175 17,578
---------- ----------
OTHER LIABILITIES................................. 34,646 51,838
---------- ----------
CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, authorized
500,000,000 shares and 10,000,000 shares,
respectively; no shares issued and
outstanding................................ -- --
Common stock, $.01 par value, authorized
600,000,000 shares and 100,000,000 shares,
respectively; outstanding
64,260,721 shares and 64,050,009 shares,
respectively............................... 643 640
Additional paid-in capital................... 400,068 398,965
Accumulated deficit.......................... (326,997) (332,601)
---------- ----------
73,714 67,004
---------- ----------
$1,413,459 $1,464,696
========== ==========
</TABLE>
(See accompanying notes to consolidated financial statements.)
3
<PAGE> 4
MESA Inc.
=========
Consolidated Statements of Cash Flows
-------------------------------------
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
-------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $ 5,604 $(21,847)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization..... 52,648 41,296
Accreted interest on discount notes.......... -- 39,169
Gains from investments....................... (9,349) (1,749)
Changes in operating receivables and payables (20,053) (18,268)
Changes in investments, net.................. 47,625 15,743
Other........................................ 2,098 (907)
-------- --------
Cash provided by operating activities........ 78,573 53,437
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.............................. (19,664) (19,392)
Other............................................. (90) 2,025
-------- --------
Cash used in investing activities............ (19,754) (17,367)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt...................... (34,865) --
Other............................................. 1,294 3,450
-------- --------
Cash provided by (used in) financing
activities................................. (33,571) 3,450
-------- --------
NET INCREASE IN CASH AND CASH INVESTMENTS.............. 25,248 39,520
CASH AND CASH INVESTMENTS AT BEGINNING OF PERIOD....... 149,143 143,422
-------- --------
CASH AND CASH INVESTMENTS AT END OF PERIOD............. $174,391 $182,942
======== ========
</TABLE>
(See accompanying notes to consolidated financial statements.)
4
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MESA Inc.
=========
Consolidated Statement of Changes in Stockholders' Equity
---------------------------------------------------------
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
--------------- Paid-in Accumulated
Shares Amount Capital Deficit
------ ------ ---------- -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995..... 64,050 $640 $398,965 $(332,601)
Net income ............... -- -- -- 5,604
Stock Options Exercised... 211 3 1,103 --
------ ---- -------- ---------
BALANCE, June 30, 1996......... 64,261 $643 $400,068 $(326,997)
====== ==== ========= =========
</TABLE>
(See accompanying notes to consolidated financial statements.)
5
<PAGE> 6
MESA Inc.
=========
Notes to Consolidated Financial Statements
------------------------------------------
June 30, 1996
(unaudited)
MESA Inc., a Texas corporation, was formed in 1991 in connection with a
transaction which reorganized the business of Mesa Limited Partnership (the
"Partnership") into corporate form. The Partnership was formed in 1985 to
succeed to the business of Mesa Petroleum Co. ("Original Mesa"). Unless the
context otherwise requires, as used herein the term "Mesa" refers to MESA Inc.
and its subsidiaries taken as a whole and includes its predecessors.
The consolidated financial statements of Mesa for the three and six month
periods ended June 30, 1996 and 1995, are unaudited but reflect, in the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to fairly present the results for such periods. The
preparation of the consolidated financial statements of Mesa in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from the estimates. The
accompanying financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto contained in Mesa's
Annual Report on Form 10-K ("Form 10-K") for the year ended December 31, 1995.
(1) RECAPITALIZATION
================
In August of 1996, Mesa completed a recapitalization of its balance sheet
by issuing new equity and repaying and refinancing substantially all of its
then existing long-term debt. The structure and effects of the
Recapitalization are described below.
Equity Infusion
- ---------------
On April 26, 1996, Mesa entered into a stock purchase agreement with
DNR-MESA Holdings L.P., a Texas limited partnership ("DNR"), whose sole general
partner is Rainwater Inc., a Texas corporation owned by Richard E. Rainwater.
The agreement contemplated that Mesa would issue $265 million in new preferred
equity and would repay and/or refinance substantially all of its $1.2 billion
of existing debt (the "Recapitalization"). The sale of shares to DNR and
certain other matters were approved by Mesa's stockholders at a special meeting
on June 25, 1996. On July 2, 1996, DNR purchased, in a private placement,
approximately 58.8 million shares of a new class of Series B 8% Cumulative
Convertible Preferred Stock ("Series B Preferred"). On July 5, 1996, Mesa
commenced a rights offering for approximately 58.6 million shares of a new
class of Series A 8% Cumulative Convertible Preferred Stock ("Series A
Preferred") to its existing stockholders (the "Rights Offering"). DNR
provided a standby commitment to purchase an additional number of shares of
Series B Preferred equal to the number of shares of Series A Preferred not
subscribed to in the Rights Offering. Stockholders received .912 rights in
respect of each share of common stock held. Each full right was exercisable
for one share of Series A Preferred at an exercise price of $2.26 per share,
the same per share price at which DNR purchased shares of Series B Preferred.
On August 5, 1996, the Rights Offering closed. On August 8, 1996, Mesa issued
approximately 58.6 million shares of Series A Preferred to rights holders who
exercised their rights. Because the rights offering was oversubscribed, DNR
was not required to purchase additional Series B Preferred pursuant to its
standby commitment.
6
<PAGE> 7
Each share of Series A and B Preferred is convertible into one share of
Mesa common stock at any time prior to mandatory redemption in 2008. After
2006, at the option of Mesa's non-series B directors, Mesa has the right to
redeem any outstanding Series A and Series B Preferred shares for common stock
or cash. At mandatory redemption in 2008, the remaining Series A and B
Preferred shares will be converted into common stock or cash at the option of
Mesa's non-series B directors. An annual 8% pay-in-kind dividend will be paid
quarterly on the shares during the first four years following issuance.
Thereafter, the 8% dividend may, at the option of Mesa, be paid in cash or
additional preferred shares, depending on whether certain financial tests are
met and subject to any limitations in Mesa's debt agreements.
The Series A and B Preferred represent 64.6% of the fully diluted common
shares at the time of issuance and will represent 71.5% of such shares after
the mandatory four-year pay-in-kind period, excluding stock options and
assuming no other stock issuance by Mesa. The Series A and B Preferred have a
liquidation preference per share equal to $2.26 plus accrued and unpaid
dividends. The terms of the Series A and Series B Preferred are substantially
identical except for certain voting rights and certain provisions relating to
transferability. The Series A and B Preferred will vote with the common stock
as a single class on all matters, except as otherwise required by law and
except for (i) the right of the holders of the Series B Preferred to nominate
and elect a majority of Mesa's Board of Directors for so long as DNR and its
affiliates meet certain minimum stock ownership requirements, and (ii) the
right of the holders of the Series A Preferred to elect two directors in the
event of certain dividend arrearages. As a result of the stock issuances, DNR
owns approximately 32.4% of Mesa's fully diluted common shares.
New Debt
- --------
In conjunction with the issuance of Series A and B Preferred, Mesa entered
into a new seven-year $525 million secured revolving credit facility ("New
Credit Facility") with a group of banks. Mesa also issued and sold $475
million of senior subordinated notes consisting of $325 million of 10-5/8%
senior subordinated notes due in 2006 ("Senior Subordinated Notes") and $150
million of 11-5/8% senior subordinated discount notes due in 2006 ("Senior
Discount Notes"). (See Note 3 for a more detailed description of the new
debt.)
7
<PAGE> 8
Use of Proceeds
- ---------------
The total proceeds from the issuance of the new equity and new long-term
debt, together with certain cash and investments on hand, were used to repay
and refinance then existing long-term debt and transaction costs as follows:
<TABLE>
<CAPTION>
Amounts
------------
(In millions)
<S> <C>
Sources
New Credit Facility.......................................... $ 365.0
Senior Subordinated Notes.................................... 325.0
Senior Discount Notes........................................ 150.1
Series A and B Preferred Stock............................... 265.4
Cash and investments......................................... 159.8
--------
Total sources........................................... $1,265.3
========
Uses
Repayment of HCLP Secured Notes............................... $ 492.3
Repayment of Former Credit Facility........................... 38.6
Redemption of 12-3/4% Secured Discount Notes due June 30 1998. 617.4
Redemption of 13-1/2% Subordinated Notes due May 1, 1999...... 7.6
Prepayment premium with respect to HCLP Secured Notes......... 50.9
Fees and expenses............................................. 33.5
Accrued interest.............................................. 25.0
--------
Total uses............................................... $1,265.3
========
</TABLE>
See Note 3 for a description of Mesa's existing long-term debt at June 30,
1996 before completion of the Recapitalization. The fees and expenses
associated with the Recapitalization consist primarily of underwriter fees,
preferred stock commitment fees, legal fees, printing and mailing costs and
accounting fees. The fees associated with the Series A and B Preferred stock
will be offset against the proceeds of the issuance of the shares and reflected
in additional paid-in capital on the consolidated balance sheet. The fees
relating to the issuance of new debt will be capitalized and amortized over the
term of the associated debt.
An extraordinary loss totaling approximately $62 million on the
extinguishment of long-term debt will be recognized in the third quarter of
1996. The loss will consist primarily of the $50.9 million HCLP Secured Note
prepayment premium and approximately $11 million of unamortized debt issuance
costs and premiums associated with the debt that was repaid and refinanced.
Effect of the Recapitalization
- ------------------------------
On June 30, 1996, Mesa's direct subsidiaries were Mesa Operating Co.
("MOC"), Mesa Holding Co. ("MHC") and Hugoton Management Co. ("HMC"). MOC
owned all of Mesa's interest in the West Panhandle field of Texas, the Gulf
Coast and the Rocky Mountain areas, as well as an approximate 99% limited
partnership in Hugoton Capital Limited Partnership ("HCLP"). MHC owned cash,
an approximate 1% limited partnership interest in HCLP and 100% of Mesa
Environmental Ventures Co. ("MEV"), a company established to compete in the
natural gas vehicle business. HMC owned the general partnership interest in
HCLP. HCLP owned substantially all of Mesa's Hugoton field natural gas
properties.
In conjunction with the recapitalization of Mesa on July 2, 1996, MHC,
HCLP and HMC merged into MOC. As a result, MOC now owns substantially all of
Mesa's assets and liabilities, including all of Mesa's oil and gas properties
and all of its long-term debt. MEV is now a subsidiary of MOC.
8
<PAGE> 9
The Recapitalization will enhance Mesa's ability to compete in the oil and
gas industry by substantially increasing its cash flow available for investment
and improving its ability to attract capital, which will increase its ability
to pursue investment opportunities. Specifically, Mesa's financial condition
will improve significantly as a result of the Recapitalization due to (i) a
significant reduction in total debt outstanding ($317 million, initially), (ii)
a reduction in annual cash interest expense of approximately $75 million, (iii)
the implementation of a cost savings program designed to initially reduce
annual general and administrative and other operating overhead expenses by
approximately $10 million, and (iv) the extension of maturities on its
long-term debt.
The expected reduction of annual cash interest expense is based on the
following assumptions: (i) average borrowings under the New Credit Facility of
approximately $365 million, excluding letters of credit, and (ii) annual
interest rates of approximately 7% under the New Credit Facility, 10-5/8% under
the Senior Subordinated Notes and 11-5/8% under the Senior Discount Notes.
Actual borrowings and interest rates under the New Credit Facility will
fluctuate over time and will affect Mesa's actual cash interest expense.
Management believes that cash from operating activities, together with as
much as $150 million of availability under the New Credit Facility will be
sufficient for Mesa to meet its debt service obligations and scheduled capital
expenditures, and to fund its working capital needs, for the next several
years. Notwithstanding the Recapitalization, Mesa continues to be highly
leveraged.
(2) INVESTMENTS
===========
The value of investments are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
NYMEX Futures Contracts:
Margin Cash............................... $ 4 $17,498
Unrealized gain in trading contracts...... -- 7,558
Commodity Price Swaps:
Margin Cash............................... -- 2,434
Unrealized gain (loss) in price swaps..... -- (811)
Natural Gas Options:
Premiums.................................. -- 66
Unrealized gain in trading options........ -- 978
Equity securities:
Cost...................................... -- 10,719
Unrealized loss........................... -- (162)
------- -------
Total market value........................ $ 4 $38,280
======= =======
</TABLE>
For the six months ended June 30, 1996, Mesa recognized net gains of
approximately $9.3 million from its investments compared with net gains for the
same period in 1995 of $1.7 million. These gains do not include gains or
losses from futures contracts accounted for as a hedge of production. Hedge
gains or losses are included in revenues in the period in which the hedged
production occurs.
9
<PAGE> 10
The net investment gains and losses recognized during a period include
both realized and unrealized gains and losses. Mesa realized net gains from
investments of $16.9 million for the six months ended June 30, 1996, and $3.6
million for the same period in 1995. At June 30, 1996, Mesa had no open
futures contracts and no unrealized gain or loss on investments.
In 1995 Mesa entered into certain over-the-counter commodity price swap
agreements for trading purposes. Mesa was required to make payments to (or
receive payments from) a counter party based on the differential between a
fixed and a variable price for specified natural gas volumes. Mesa's
agreements were to expire on the last day of trading for April, May and June
1996 natural gas futures contracts as determined by the NYMEX. During the six
months ended June 30, 1996, Mesa closed all of these positions, which related
to 10.1 million British thermal units ("BTUs") of natural gas, at a gain of
$3.4 million.
(3) LONG-TERM DEBT
==============
Long-term debt and current maturities are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ------------
<S> <C> <C>
HCLP Secured Notes.......................... $ 492,309 $ 504,674
Former Credit Agreement..................... 38,632 61,131
12-3/4% secured discount notes.............. 618,302 618,518
12-3/4% unsecured discount notes............ 39,725 39,725
13-1/2% subordinated notes.................. 7,390 7,390
Other....................................... 5,305 5,305
---------- ----------
1,201,663 1,236,743
Current maturities.......................... (118,634) (101,413)
---------- ----------
Long-term debt.............................. $1,083,029 $1,135,330
========== ==========
</TABLE>
Pursuant to the Recapitalization, on July 2, 1996, Mesa repaid and
refinanced substantially all of its then outstanding long-term debt. See Note
1 for a description of the Recapitalization. Amounts outstanding under
long-term debt agreements subsequent to the Recapitalization are as follows (in
thousands):
<TABLE>
<CAPTION>
July 2, 1996
------------
<S> <C>
New Credit Facility................................. $495,000
Senior Subordinated Notes........................... 325,000
Senior Discount Notes............................... 150,097
13-1/2% Subordinated Notes.......................... 7,390
Other............................................... 5,305
--------
982,792
Current maturities(1)............................... (12,695)
--------
Long-term debt...................................... $970,097
========
</TABLE>
(1) On July 23, 1996, Mesa notified holders of the 13-1/2% Subordinated
Notes that the notes will be redeemed in full on August 22, 1996. Current
maturities at July 2, 1996 include the 13-1/2% Subordinated Notes.
10
<PAGE> 11
MOC is the borrower under the New Credit Facility and all borrowings are
fully and unconditionally guaranteed by MESA Inc. The New Credit Facility,
which is secured by liens on substantially all of Mesa's assets, matures on
June 30, 2003. The borrowing base for the New Credit Facility is determined
based on the value of Mesa's proved oil and gas reserves. Initially the
borrowing base was set at $525 million. As of August 8, 1996, the New Credit
Facility supports Letters of Credit totaling $11 million and Mesa has $149
million of unused borrowing capacity. Borrowings bear interest, at Mesa's
option, at Interbank Eurodollar rates plus 1-1/2%, CD rates plus 1-1/2%, Fed
Funds rates plus 1% or the prime rate plus 1/2%.
The New Credit Facility restricts, among other things, Mesa's ability to
incur additional indebtedness, create liens, pay dividends, acquire stock or
make investments, loans and advances.
The 10.625% Senior Subordinated Notes are unsecured and mature in 2006.
MOC is the issuer of such notes and such notes are fully and unconditionally
guaranteed by MESA Inc. Interest is payable semiannually in cash.
The 11.625% Senior Discount Notes are unsecured and mature in 2006. MOC
is the issuer of such notes and such notes are fully and unconditionally
guaranteed by MESA Inc. Through June 30, 2001, interest will not accrue;
however, the accreted value, as defined, of such notes will increase at a rate
of 11.625% per year, compounded semiannually. Thereafter, through maturity,
interest will be payable semiannually in cash.
The indentures governing the Senior Subordinated Notes and the Senior
Discount Notes contain certain covenants that, among other things, limit the
ability of Mesa and its restricted subsidiaries to incur additional
indebtedness and issue "disqualified stock," pay dividends, make investments,
make certain other restricted payments, enter into certain transactions with
affiliates, dispose of assets, incur liens and engage in mergers and
consolidations.
HCLP Secured Notes
- ------------------
In 1991 HCLP issued $616 million of HCLP Secured Notes in a private
placement with a group of institutional lenders. Proceeds from the issuance
repaid existing bank debt and funded a $66 million restricted cash balance
within HCLP, which was available to supplement cash flows from the HCLP
properties in the event such cash flows were not sufficient to fund principal
and interest payments on the HCLP Secured Notes when due.
On July 2, 1996, pursuant to the Recapitalization, Mesa prepaid the HCLP
Secured Notes. See Note 1. A prepayment premium, based on prevailing interest
rates at the date of redemption, was due upon redemption of the HCLP Secured
Notes totaling $50.9 million. Such premium will be classified as an
extraordinary loss from early extinguishment of debt in the third quarter of
1996 statement of operations.
Former Credit Agreement
- -----------------------
As of June 30, 1996, Mesa had outstanding borrowings of approximately
$38.6 million and letter of credit obligations of $11.0 million under its $82.5
million bank credit facility, as amended (the "Former Credit Agreement"). The
Former Credit Agreement required principal payments of $22.5 million in the
first half of 1996, with the remainder due in June 1997 (including cash
collateralization of letters of credit outstanding at that time).
11
<PAGE> 12
On July 2, 1996, pursuant to the Recapitalization, Mesa prepaid all of its
obligations under the Former Credit Agreement. See Note 1.
Discount Notes
- --------------
In August 1993, Mesa issued approximately $435.5 million initial accreted
value ($569.2 million face amount), as defined, of 12-3/4% secured discount
notes due June 30, 1998, $136.9 million initial accreted value ($178.8 million
face amount) of 12-3/4% unsecured discount notes due June 30, 1996 (together,
the "Discount Notes") and $29.3 million principal amount of 0% convertible
notes. The 0% convertible notes were converted into approximately 7.5 million
shares of common stock in 1993. The 12-3/4% unsecured discount notes were paid
at maturity on July 1, 1996.
In 1994, Mesa issued an additional $48.2 million face amount of 12-3/4%
secured discount notes and used the proceeds to settle a lawsuit. Also in
1994, Mesa redeemed $139.1 million face amount of 12-3/4% unsecured discount
notes with proceeds from a public offering of Mesa common stock and from
additional borrowings under the Credit Agreement.
On July 2, 1996, pursuant to the Recapitalization, Mesa defeased the
12-3/4% secured discount notes, which have been redeemed. See Note 1.
Subordinated Notes
- ------------------
The 13-1/2% subordinated notes are unsecured and mature in 1999. Interest
on these notes is payable semiannually in cash. Pursuant to the
Recapitalization, these notes have been called for redemption on August 22,
1996.
Interest and Maturities
- -----------------------
The aggregate interest payments, net of amounts capitalized, made during
the six months ended June 30, 1996 and 1995, were $72.6 million and $31.7
million, respectively. The interest payments in the six months ended June 30,
1996 included a $42 million interest payment made on January 2, 1996, according
to terms of the Discount Notes, related to the regular December 31, 1995
interest payment on Mesa's Discount Notes. In addition, on July 1, 1996, Mesa
made a $41.9 million interest payment related to the regular June 30, 1996
interest payment on its Discount Notes. Payment of approximately $40.3 million
of interest expense incurred during the six months ended June 30, 1995 was
deferred under the terms of the Discount Notes until the repayment dates of the
Discount Notes. Such interest is included in interest expense in the
consolidated statements of operations for the six months ended June 30, 1995.
There are no scheduled principal payments under the terms of the New
Credit Facility, the Senior Subordinated Notes or the Senior Discount Notes in
the next five years.
12
<PAGE> 13
(4) CONTINGENCIES
=============
Masterson
- ---------
In February 1992 the current lessors of an oil and gas lease (the "Gas
Lease") dated April 30, 1955, between R. B. Masterson, et al., as lessor, and
Colorado Interstate Gas Company ("CIG"), as lessee, sued CIG in Federal
District Court in Amarillo, Texas, claiming that CIG had underpaid royalties
due under the Gas Lease. Under the agreements with CIG, Mesa has an
entitlement to gas produced from the Gas Lease. In August 1992 CIG filed a
third-party complaint against Mesa for any such royalty underpayments which may
be allocable to Mesa. Plaintiffs alleged that the underpayment was the result
of CIG's use of an improper gas sales price upon which to calculate royalties
and that the proper price should have been determined pursuant to a
"favored-nations" clause in a July 1, 1967, amendment to the Gas Lease (the
"Gas Lease Amendment"). The plaintiffs also sought a declaration by the court
as to the proper price to be used for calculating future royalties.
The plaintiffs alleged royalty underpayments of approximately $500 million
(including interest at 10%) covering the period from July 1, 1967, to the
present. In March 1995 the court made certain pretrial rulings that eliminated
approximately $400 million of the plaintiffs' claims (which related to periods
prior to October 1, 1989), but which also reduced a number of Mesa's defenses.
Mesa and CIG filed stipulations with the court whereby Mesa would have been
liable for between 50% and 60%, depending on the time period covered, of an
adverse judgment against CIG for post-February 1988 underpayments of royalties.
On March 22, 1995, a jury trial began and on May 4, 1995, the jury
returned its verdict. Among its findings, the jury determined that CIG had
underpaid royalties for the period after September 30, 1989, in the amount of
approximately $140,000. Although the plaintiffs argued that the
"favored-nations" clause entitled them to be paid for all of their gas at the
highest price voluntarily paid by CIG to any other lessor, the jury determined
that the plaintiffs were estopped from claiming that the "favored-nations"
clause provides for other than a pricing-scheme to pricing-scheme comparison.
In light of this determination, and the plaintiffs' stipulation that a
pricing-scheme to pricing-scheme comparison would not result in any "trigger
prices" or damages, defendants asked the court for a judgment that plaintiffs
take nothing. The court, on June 7, 1995, entered final judgment that
plaintiffs recover no monetary damages. The plaintiffs have filed a motion for
new trial on which the court has not yet ruled. Mesa cannot predict whether
the court will grant such motion or, if it does not, whether the plaintiffs
will appeal the court's final judgment. However, based on the jury verdict and
final judgment, Mesa does not expect the ultimate resolution of this lawsuit to
have a material adverse effect on its financial position or results of
operations.
On June 7, 1996, the plaintiffs filed a separate suit against CIG and Mesa
in state court in Amarillo, Texas, similarly claiming underpayment of royalties
under the "favored-nations" clause, but based upon the above-described
pricing-scheme to pricing-scheme comparison on a well-by-well monthly basis.
The plaintiffs also claim underpayment of royalties since June 7, 1995 under
the "favored-nations" clause based upon either the pricing-scheme to
pricing-scheme method or their previously alleged higher price method. Mesa
believes it has several defenses to this action and intends to contest it
vigorously. Mesa has not yet determined the amount of damages, if any, that
would be payable if such action were determined adversely to Mesa.
The federal court in the above-referenced first suit issued an order on
July 29, 1966 which stayed the state suit pending a decision by the court on
plaintiff's motion for new trial.
13
<PAGE> 14
Thompson
- --------
In May 1996, the current lessors of an oil and gas lease dated October 8,
1958 between Terry Thompson, Jr., et al., as Lessor, and CIG, as Lessee, sued
CIG in state court in Amarillo claiming CIG has underpaid royalties based upon
allegations that CIG failed to develop, produce and market the gas properly.
Mesa is not currently a party of this litigation; however, if CIG is found to
be liable for any such underpayments, it may seek to recover from Mesa the
portion of such underpayments which may be allocable to Mesa. Mesa believes
there are several defenses to this action and, to the extent Mesa becomes a
party, intends to contest such action vigorously. Mesa has not yet determined
the amount of damages, if any, that would be payable if such action were
determined adversely to Mesa.
Mesa does not expect the resolution of this lawsuit to have a material
adverse effect on its financial position or results of operations.
Lease Termination
- -----------------
In 1991 Mesa sold certain producing oil and gas properties to Seagull
Energy Company ("Seagull"). In 1994, two lawsuits were filed against Seagull
in the 100th District Court in Carson County, Texas, by certain land and
royalty owners claiming that certain of the oil and gas leases owned by Seagull
have terminated due to cessation in production and/or lack of production in
paying quantities occurring at various times from first production through
1994. In the third quarter of 1995, Seagull filed third-party complaints
against Mesa claiming breach of warranty and false representation in connection
with the sale of such properties to Seagull. Seagull filed a similar
third-party complaint June 29, 1995, against Mesa covering a different lease in
the 69th District Court in Moore County, Texas. The plaintiffs in the cases
against Seagull are seeking to terminate the leases. Seagull, in its complaint
against Mesa, is seeking unspecified damages relating to any leases which are
terminated. Mesa believes it has several defenses to these lawsuits, including
a two-year limitation on indemnification set forth in the purchase and sale
agreement pursuant to which Mesa sold the properties.
Mesa does not expect the resolution of this lawsuit to have a material
adverse effect on its financial position or results of operations.
Other
- -----
Mesa is also a defendant in other lawsuits and has assumed liabilities
relating to Original Mesa and the Partnership. Mesa does not expect the
resolution of these other matters to have a material adverse effect on its
financial position or results of operations.
14
<PAGE> 15
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- --------------------------------------------------------------------------------
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
===============================================
This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this Form 10-Q, including without
limitation, the statements under "Capital Resources and Liquidity" and Notes 1
and 3 to the consolidated financial statements of Mesa regarding MESA Inc.'s
("Mesa") financial position and liquidity, its ability to make debt service
payments and other matters are forward-looking statements. Although Mesa
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from Mesa's expectations ("Cautionary Statements") are disclosed in
this Form 10-Q, including without limitation, and in Mesa's Form 10-K for the
year ended December 31, 1995, in conjunction with the forward-looking
statements included in this Form 10-Q. All subsequent written and oral
forward-looking statements attributable to Mesa or persons acting on its behalf
are expressly qualified in their entirety by the Cautionary Statements.
RESULTS OF OPERATIONS
=====================
Mesa reported net income of $4.5 million in the second quarter of 1996
compared with a net loss of $14.0 million in the second quarter of 1995. Mesa
had net income of $5.6 million for the six months ended June 30, 1996 compared
with a net loss of $21.8 million for the same period in 1995.
The following table presents a summary of the results of operations of
Mesa for the periods indicated (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C>
Revenues....................... $ 71,322 $ 59,174 $151,965 $121,421
Operating and
administrative costs.......... (27,856) (21,804) (52,934) (47,071)
Depreciation, depletion
and amortization.............. (22,406) (20,290) (52,648) (41,296)
-------- -------- -------- --------
Operating income............... 21,060 17,080 46,383 33,054
Interest expense, net
of interest income............ (32,417) (32,258) (66,949) (65,012)
Other.......................... 15,904 1,225 26,170 10,111
-------- -------- -------- --------
Net income (loss).............. $ 4,547 $(13,953) $ 5,604 $(21,847)
======== ======== ======== ========
</TABLE>
15
<PAGE> 16
Revenues
--------
The table below presents, for the periods indicated, the revenues,
production and average prices received from sales of natural gas, natural gas
liquids and oil and condensate.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues (in thousands):
Natural gas............... $ 44,243 $ 32,875 $ 94,810 $ 68,731
Natural gas liquids....... 19,979 18,573 43,115 36,779
Oil and condensate........ 4,484 5,174 8,847 10,567
-------- -------- -------- --------
Total................ $ 68,706 $ 56,622 $146,772 $116,077
-------- -------- -------- --------
Natural Gas Production
(million cubic feet):
Hugoton................... 12,111 12,978 25,054 25,677
West Panhandle............ 4,097 4,516 9,568 9,443
Other..................... 4,757 1,487 8,454 3,736
-------- -------- -------- --------
Total................ 20,965 18,981 43,076 38,856
-------- -------- -------- --------
Natural Gas Liquids Production
(thousand barrels):
Hugoton................... 842 934 1,712 1,864
West Panhandle............ 617 653 1,457 1,349
Other..................... 58 14 71 29
-------- -------- -------- --------
Total................ 1,517 1,601 3,240 3,242
======== ======== ======== ========
Oil and Condensate Production
(thousand barrels):
Hugoton................... -- -- -- --
West Panhandle............ 42 19 76 36
Other..................... 192 285 402 590
-------- -------- -------- --------
Total................. 234 304 478 626
======== ======== ======== ========
Average Prices:
Natural gas (per thousand
cubic feet).............. $ 2.06 $ 1.71 $ 2.17 $ 1.71
Natural gas liquids
(per barrel)............. $ 13.17 $ 11.60 $ 13.52 $ 11.39
Oil and condensate
(per barrel)............. $ 19.54 $ 16.98 $ 18.55 $ 16.74
</TABLE>
Mesa's natural gas equivalent production was 3 percent higher in the
second quarter of 1996 and 5 percent higher for the six-month period ended June
30, 1996 as compared to the same periods in 1995. The increase in production
is primarily due to Mesa's success in the Gulf of Mexico.
Mesa's natural gas price increased 20 percent, natural gas liquids
increased 14 percent, and oil prices increased 15 percent in the second quarter
of 1996 as compared to 1995. The natural gas, natural gas liquids and oil
prices for the six-month period ended June 30, 1996 increased 27 percent, 19
percent and 11 percent, respectively, as compared to 1995.
16
<PAGE> 17
Approximately 90 percent of Mesa's 1996 natural gas production was sold at
market prices. The remaining 10 percent was sold under a fixed-price contract.
From time to time, Mesa hedges its production; however, in the first half of
1996, Mesa hedged none of its production. Amortization of deferred gains and
losses from hedging activities are included in revenues when the hedged
production occurs. Mesa recognized $6.4 million in the second quarter of 1995
and $11.3 million in the six months ended June 30, 1995 of hedge gains as
natural gas revenues. The following table shows the effect of hedging
activities on Mesa's natural gas prices:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Natural gas prices (per Mcf):
Actual price received
for production.......... $ 2.06 $ 1.37 $ 2.17 $ 1.42
Effect of hedging
activities.............. -- .34 -- .29
------- ------- ------- -------
Average price............. $ 2.06 $ 1.71 $ 2.17 $ 1.71
======= ======= ======= =======
</TABLE>
In the second quarter of 1996, Mesa hedged a portion of its natural gas
liquids and oil production for the second half of 1996. These positions were
also closed in the second quarter of 1996 and Mesa realized a net loss of $.9
million which will be recognized in the second half of 1996 as the hedged
production occurs.
Costs and Expenses
------------------
Mesa's costs and expenses increased from $42.1 million in the second
quarter of 1995 to $50.3 million for the same period in 1996. Lease operating
expense increased due to higher production costs in the West Panhandle field
and higher production. Production and other taxes were higher due to increased
revenues resulting from higher prices partially offset by lower tax rates for
Hugoton field production. Exploration charges were greater, reflecting
increased exploration activities in the Gulf of Mexico and consist primarily of
exploratory dry-hole expense. General and administrative ("G&A") expenses
increased due to a $3.6 million charge associated with a reduction in
personnel. Depreciation, depletion and amortization ("DD&A") expense, which is
calculated quarterly on a unit-of-production basis, was higher primarily due to
increased production.
Mesa's costs and expenses increased from $88.4 million to $105.6 million
in the six-month period ended June 30, 1996, compared to the same period in
1995. Lease operating expense increased due to higher production costs in the
West Panhandle field and higher production. Production and other taxes were
higher due to increased revenues resulting from higher prices partially offset
by lower tax rates for Hugoton field production. Exploration charges were
greater, reflecting increased exploration activities in the Gulf of Mexico and
consist primarily of exploratory dry-hole expense. G&A expenses increased due
to a $3.6 million charge associated with a reduction in personnel. DD&A
expense, which is calculated quarterly on a unit-of-production basis, was
higher primarily due to increased production and an impairment of long-lived
assets of approximately $6.8 million in accordance with the adoption of a new
accounting requirement (SFAS No. 121).
17
<PAGE> 18
Other Income (Expense)
----------------------
Interest income and interest expense in the three- and six-month periods
ended June 30, 1996 were not materially different from such income and expense
during the same periods in 1995 as average cash balances and aggregate debt
outstanding were not materially different.
Results of operations for the six months ended June 30, 1996 and 1995
include certain items which are either non-recurring or are not directly
associated with Mesa's oil and gas producing operations. The following table
sets forth the amounts of such items for the periods indicated (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C>
Gains from investments......... $ 586 $ (2,804) $ 9,349 $ 1,749
Gains from collections
from Bicoastal Corporation.... -- -- 2,548 4,653
Gain from adjustment of
contingency reserve........... 15,000 -- 15,000 --
Other.......................... 318 4,029 (727) 3,709
-------- -------- -------- --------
Total Other Income.......... $ 15,904 $ 1,225 $ 26,170 $ 10,111
======== ======== ======== ========
</TABLE>
The gains from investments relate to Mesa's investments in marketable
securities and energy futures contracts, which include NYMEX futures contracts,
commodity price swaps and options that are not accounted for as hedges of
future production. Mesa's investments in marketable securities and futures
contracts are valued at market prices at each reporting date with gains and
losses included in the statement of operations for such reporting period
whether or not such gains or losses have been realized.
The gains from collection of interest from Bicoastal Corporation relate to
a note receivable from such company, which was in bankruptcy. Mesa's claims in
the bankruptcy exceeded its recorded receivable. As of June 30, 1996, Mesa had
collected the full amount of its allowed claim plus a portion of the interest
due on such claims. Mesa does not expect any future amounts received from such
company to be significant.
In the second quarter of 1996, Mesa revalued certain contingencies
associated primarily with contracts which were settled in the mid-to-late
1980's. As a result of the revaluation, Mesa recorded a net gain of $15
million in the second quarter of 1996.
CAPITAL RESOURCES AND LIQUIDITY
===============================
In August of 1996, Mesa completed a recapitalization of its balance sheet
by issuing new preferred equity and repaying and refinancing substantially all
of its existing long-term debt (the "Recapitalization"). See Note 1 to the
consolidated financial statements of Mesa included elsewhere in this Form 10-Q
for a detail discussion of the Recapitalization, which discussion is
incorporated herein by reference.
18
<PAGE> 19
The Recapitalization will enhance Mesa's ability to compete in the oil and
gas industry by substantially increasing its cash flow available for investment
and improving its ability to attract capital, which will increase its ability
to pursue investment opportunities. Specifically, Mesa's financial condition
will improve significantly as a result of the Recapitalization due to (i) a
significant reduction in total debt outstanding ($317 million, initially), (ii)
a reduction in annual cash interest expense of approximately $75 million, (iii)
the implementation of a cost savings program designed to initially reduce
annual general and administrative and other operating overhead expenses by
approximately $10 million, and (iv) the extension of maturities on its
long-term debt.
The expected reduction of annual cash interest expense is based on the
following assumptions: (i) average borrowings under the New Credit Facility of
approximately $365 million, excluding letters of credit, and (ii) annual
interest rates of approximately 7% under the New Credit Facility, 10-5/8% under
the Senior Subordinated Notes and 11-5/8% under the Senior Discount Notes.
Actual borrowings and interest rates under the New Credit Facility will
fluctuate over time and will affect Mesa's actual cash interest expense.
Management believes that cash from operating activities, together with as
much as $150 million of availability under the New Credit Facility will be
sufficient for Mesa to meet its debt service obligations and scheduled capital
expenditures, and to fund its working capital needs, for the next several
years. Notwithstanding the Recapitalization, Mesa continues to be highly
leveraged.
OTHER
=====
See Note 4 to the consolidated financial statements of Mesa included
elsewhere in this Form 10-Q for information regarding the status of certain
pending litigation.
Mesa recognizes its ownership interest in natural gas production as
revenue. Actual production quantities sold may be different from Mesa's
ownership share of production in a given period. Mesa records these
differences as gas balancing receivables or as deferred revenue. Net gas
balancing underproduction represented approximately 3.7% of total equivalent
production for the six months ended June 30, 1996, compared with 1.6% during
the same period in 1995. The gas balancing receivable or deferred revenue
component of natural gas and natural gas liquids revenues in future periods is
dependent on future rates of production, field allowables and the amount of
production taken by Mesa or by its joint interest partners.
Mesa invests from time to time in marketable equity and other securities,
as well as in energy-related commodity futures contracts, which include NYMEX
futures contracts, price swaps and options. Mesa also enters into natural gas
futures contracts as a hedge against natural gas price fluctuations.
Management does not anticipate that inflation will have a significant
effect on Mesa's operations.
19
<PAGE> 20
PART II - OTHER INFORMATION
===========================
Item 1. Legal Proceedings
- --------------------------
Reference is made to Part I, Item 1, Note 4 of this Form 10-Q for
information regarding legal proceedings, which information is incorporated
herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
A special meeting of stockholders was held on June 25, 1996. There were
three matters submitted to the stockholder at the meeting. The results of the
votes were as follows:
1. Approval of the issuance and sale of a minimum of approximately 58.8
million shares and a maximum of approximately 117.3 million shares
(subject to appropriate adjustment to reflect the reverse stock split
described in Proposal Three, if approved) of Series B 8% Cumulative
Convertible Preferred Stock, par value $.01 per share, of MESA Inc.
("Mesa") to DNR-MESA Holdings, L.P., a Texas limited partnership
("DNR"), the sole general partner of which is Rainwater, Inc., at a
price of $2.26 per share on the terms and subject to the conditions
set forth in that certain Stock Purchase Agreement, dated April 26,
1996, between Mesa and DNR.
<TABLE>
<CAPTION>
Votes Cast Number of
------------------------- -----------
For Against Abstentions
---------- --------- -----------
<S> <C> <C>
34,459,789 8,236,989 644,979
</TABLE>
2. Approval of an amendment of Mesa's Amended and Restated Articles of
Incorporation to (i) increase the number of authorized shares of
Common Stock, par value $.01 per share, of Mesa from 100,000,000 to
600,000,000 (subject to the effect of the reverse stock split
described in Proposal Three, if approved), (ii) increase the number
of authorized shares of Preferred Stock, par value $.01 per share, of
Mesa from 10,000,000 to 500,000,000 (subject to the effect of the
reverse stock split described in Proposal Three, if approved) and
(iii) permit the taking of action by written consent of the holders
of any series of Preferred Stock if and to the extent provided in the
resolution of the Board of Directors establishing any such series.
<TABLE>
<CAPTION>
Votes Cast Number of
------------------------- -----------
For Against Abstentions
---------- --------- -----------
<S> <C> <C>
34,153,553 8,532,498 655,706
</TABLE>
3. Defeat of an amendment of Mesa's Amended and Restated Articles of
Incorporation to effect (i) a one-for-four reverse stock split of the
outstanding shares of Common Stock, (ii) a reduction of the
authorized shares of Common Stock from 600,000,000 to 150,000,000 and
(iii) a reduction of the authorized shares of Preferred Stock from
500,000,000 to 125,000,000.
<TABLE>
<CAPTION>
Votes Cast Number of
------------------------- -----------
For Against Abstentions
---------- ---------- -----------
<S> <C> <C>
30,937,033 10,591,559 1,813,165
</TABLE>
<PAGE> 21
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits (Asterisk indicates incorporated by reference herein)
*2.1 - Stock Purchase Agreement dated April 29, 1996 between MESA Inc.
And DNR-MESA Holdings, L.P. (Exhibit 10 to April 29, 1996 Form
8-K).
*3.1 - Amended and Restated Articles of Incorporation of MESA Inc.
dated December 31, 1991 (Exhibit 3[a] to Mesa's Form 10-K dated
December 31, 1991).
*3.2 - Statement of Resolution establishing series of notes designated
Series A 8% Cumulative Convertible Preferred Stock and Series B
8% Cumulative Convertible Preferred Stock. (Exhibit 4 to April
29, 1996 8-K).
3.3 - Amended and Restated Bylaws of MESA Inc.
*4.1 - Indenture dated as of May 1, 1993, among MESA Inc., Mesa
Operating Limited Partnership, Mesa Capital Corporation and
Harris Trust and Savings Bank, as Trustee, relating to the
secured discount notes and including (a) a form of Secured
Notes, (b) a form of Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement, dated as of May 1,
1993, between Mesa Operating Limited Partnership and Harris
Trust and Savings Bank, as trustee, securing the Secured Notes,
and (c) a form of Security Agreement, Pledge and Financing
Statement dated as of May 1, 1993, between Mesa Operating
Limited Partnership and Harris Trust and Savings Bank, as
trustee, securing the Secured Notes (Exhibit 4[f] to Mesa's Form
10-Q/A dated June 30, 1993).
*4.2 - First Supplemental Indenture dated as of January 5, 1994, among
MESA Inc., Mesa Operating Co., Mesa Capital Corporation and
Harris Trust and Savings Bank, as Trustee (Exhibit 4.2 to Mesa's
Registration Statement on Form S-1, Registration No. 33-51909).
*4.3 - First Supplement to Security Agreement, Pledge and Financing
Statement dated as of March 2, 1994, by Mesa Operating Co. in
favor of Harris Trust and Savings Bank, as Trustee for the pro
rata benefit of the Noteholders under the Indenture (Exhibit 4.9
to Mesa's Form 10-Q dated March 31, 1994).
*4.4 - Indenture dated as of May 1, 1993, among MESA Inc., Mesa
Operating Limited Partnership, Mesa Capital Corporation and
American Stock Transfer & Trust Company, as Trustee, relating to
the unsecured discount notes (Exhibit 4[g] to Mesa's Form 10-Q/A
dated June 30, 1993).
*4.5 - First Supplemental Indenture dated as of January 5, 1994, among
MESA Inc., Mesa Operating Co., Mesa Capital Corporation and
American Stock Transfer & Trust Company, as Trustee (Exhibit 4.4
to Mesa's Registration Statement on Form S-1, Registration No.
33-51909).
21
<PAGE> 22
*4.6 - Indenture dated May 1, 1989, among Mesa Capital Corporation,
Mesa Limited Partnership, Mesa Operating Limited Partnership,
and Texas Commerce Bank National Association, as Trustee
(Exhibit 4[c] to the Partnership's Form 10-Q dated March 31,
1989).
*4.7 - First Supplemental Indenture dated as of December 31, 1991,
among Mesa Capital Corporation, MESA Inc., Mesa Operating
Limited Partnership, as Issuers, and Texas Commerce Bank
National Association, as Trustee (Exhibit 4[e] to Mesa's Form
10-K dated December 31, 1991).
*4.8 - Second Supplemental Indenture dated as of April 30, 1992, among
Mesa Capital Corporation, MESA Inc., Mesa Operating Limited
Partnership and Texas Commerce Bank National Association, as
Trustee (Exhibit 4[k] to Mesa's Form 10-Q dated June 30, 1992).
*4.9 - Third Supplemental Indenture dated as of August 26, 1993, among
Mesa Capital Corporation, MESA Inc., Mesa Operating Limited
Partnership and Texas Commerce Bank National Association, as
Trustee (Exhibit 4[l] to Mesa's Form 10-Q/A dated June 30,
1993).
*4.10 - Fourth Supplemental Indenture dated as of January 5, 1994, among
MESA Inc., Mesa Operating Co., Mesa Capital Corporation and
Texas Commerce Bank National Association, as Trustee (Exhibit
4.16 to Mesa's Registration Statement on Form S-1, Registration
No. 33-51909).
*4.11 - Indenture dated as of May 30, 1991, among Hugoton Capital
Limited Partnership, Hugoton Capital Corporation and Bankers
Trust Company (Exhibit 4[e] to the Partnership's Form 10-Q dated
June 30, 1991).
*4.12 - First Supplemental Indenture dated September 1, 1991, among
Hugoton Capital Limited Partnership, Hugoton Capital Corporation
and Bankers Trust Company, as Trustee (Exhibit 4[h] to Mesa's
Registration Statement on Form S-4, Registration No. 33-42102).
*4.13 - Amended and Restated Mortgage, Assignment, Security Agreement
and Financing Statement dated June 12, 1991, from Hugoton
Capital Limited Partnership to Bankers Trust Company, as
Collateral Agent (Exhibit 4[f] to the Partnership's Form 10-Q
dated June 30, 1991).
*4.14 - Third Amended and Restated Credit Agreement dated as of November
29, 1994, among Mesa, Mesa Operating Co., and the Banks named in
this Credit Agreement and Societe Generale, Southwest Agency, as
Agent (Exhibit 4.7 to Mesa's Form 10-K dated December 31, 1994).
*4.15 - Intercreditor Agreement dated as of August 26, 1993, among
Societe Generale, Southwest Agency, as agent for the Banks under
Mesa's Credit Agreement, Harris Trust and Savings Bank, as
trustee with respect to the Secured Notes, and American Stock
Transfer & Trust Company, as trustee with respect to the
Unsecured Notes (Exhibit 4.18 to Mesa's Registration Statement
on Form S-4, Registration No. 33-53706).
22
<PAGE> 23
The Registrant agrees to furnish to the Commission upon request
any instruments defining the right of holders of long-term debt
with respect to which the total amount outstanding does not
exceed 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
4.16 - Credit Agreement dated as of July 2, 1996, among Mesa Operating
Co., as Borrower, MESA Inc. and the Banks listed as lenders in
the Credit Agreement and The Chase Manhattan Bank, N.A., as
Administrative Agent, Bankers Trust Company, as Syndication
Agent, and Society Generale, Southwest Agency, as Documentation
Agent.
4.17 - Indenture dated July 2, 1996, among Mesa Operating Co., as
Issuer, MESA Inc., as a Guarantor, and Harris Trust and Savings
Bank as Trustee relating to 11-5.8% Senior Subordinated Discount
Notes Due 2006.
4.18 - Indenture dated July 2, 1996, among Mesa Operating Co., as
Issuer, MESA Inc., as a Guarantor, and Harris Trust and Savings
Bank as Trustee relating to 10-5/8% Senior Subordinated Notes
Due 2006.
*10.1 - Stock Purchase Agreement, dated April 26, 1996, between Mesa and
DNR-MESA Holdings, L.P. (Exhibit No. 10 to Mesa's Form 8-K filed
on April 29, 1996).
*10.2 - Contract dated January 3, 1928, between Colorado Interstate Gas
Company and Amarillo Oil Company (the "B" Contract) (Exhibit
10.1 to Pioneer Corporation's Form 10-K dated December 31,
1985).
*10.3 - Amendments to the "B" Contract (Exhibit 10.2 to Pioneer
Corporation's Form 10-K dated December 31, 1985).
*10.5 - Gathering Charge Agreement dated January 20, 1984, as amended,
with respect to the "B" Contract (Exhibit 10.3 to Pioneer
Corporation's Form 10-K dated December 31, 1985).
*10.5 - Agreement of Compromise and Settlement dated May 29, 1987,
between the Partnership and Colorado Interstate Gas Company
(Confidential Treatment Requested) (Exhibit 10[s] to the
Partnership's Form 10-K dated December 31, 1987).
*10.6 - Agreement of Sale between Pioneer Corporation and Cabot
Corporation dated August 29, 1984 (Exhibit 10.5 to Pioneer
Corporation's Form 10-K dated December 31, 1985).
*10.7 - Settlement Agreement dated March 15, 1989, by and among Mesa
Operating Limited Partnership and Mesa Limited Partnership, et
al, Energas Company and the City of Amarillo (Exhibit 10[k] to
the Partnership's Form 10-K dated December 31, 1990).
*10.8 - Gas Purchase Agreement dated December 1, 1989, between Williams
Natural Gas Company and Mesa Operating Limited Partnership
acting on behalf of itself and as agent for Mesa Midcontinent
Limited Partnership (Exhibit 10.1 to Registration Statement of
the Partnership on Form S-3, Registration No. 33-32978).
23
<PAGE> 24
*10.9 - "B" Contract Production Allocation Agreement dated July 29,
1991, and effective as of January 1, 1991, between Colorado
Interstate Gas Company and Mesa Operating Limited Partnership
(Exhibit 10[r] to Mesa's Form 10-K dated December 31, 1991).
*10.10 - Amendment to "B" Contract Production Allocation Agreement
effective as of January 1, 1993, between Colorado Interstate Gas
Company and Mesa Operating Limited Partnership (Exhibit 10.24 to
Mesa's Registration Statement on Form S-1, Registration No.
033-51909).
*10.11 - Amended Supplemental Stipulation and Agreement between Colorado
Interstate Gas Company and Mesa Operating Limited Partnership
dated June 19, 1991 (Exhibit 10[w] to the Partnership's
Registration Statement on Form S-4, Registration No. 33-42102).
*10.12 - Amended Peak Day Gas Purchase Agreement dated effective June 19,
1991, between Colorado Interstate Gas Company and Mesa Operating
Limited Partnership (Exhibit 10[t] to Mesa's Form 10-K dated
December 31, 1991).
*10.13 - Omnibus Amendment to Collateral Instruments to Supplemental
Stipulation and Agreement dated June 19, 1991, between Colorado
Interstate Gas Company and Mesa Operating Limited Partnership
(Exhibit 10[u] to Mesa's Form 10-K dated December 31, 1991).
*10.14 - Amarillo Supply Agreement between Mesa Operating Limited
Partnership, Seller, and Energas Company, a division of Atmos
Energy Corporation, Buyer, dated effective January 2, 1993
(Exhibit 10.14 Mesa's Form 10-K dated December 31, 1995).
*10.15 - Gas Gathering Agreement-Interruptible between Colorado
Interstate Gas Company, Transporter, and Mesa Operating Limited
Partnership, Shipper, dated effective October 1, 1993, as
amended by agreements dated January 1, 1994, January 5, 1994,
and June 1, 1994 (Exhibit 10.15 Mesa's Form 10-K dated December
31, 1995).
*10.16 - Gas Supply Agreement dated May 11, 1994, between Mesa Operating
Co., as successor to Mesa Operating Limited Partnership, acting
on behalf of itself and as agent for Hugoton Capital Limited
Partnership, and Williams Gas Marketing Company, and Gas Supply
Guarantee dated May 11, 1994 (Exhibit 10.14 Mesa's Form 10-K
dated December 31, 1995).
*10.17 - Gas Transportation Agreement dated June 14, 1994, between
Western Resources, Inc. and Mesa Operating Co., acting on behalf
of itself and as agent for Hugoton Capital Limited Partnership
(Exhibit 10.24 to Mesa's Form 10-K dated December 31, 1994).
*10.18 - Incentive Bonus Plan of Mesa Operating Limited Partnership, as
amended, dated effective January 1, 1986 (Exhibit 10[s] to the
Partnership's Form 10-K dated December 31, 1990).
*10.19 - Performance Bonus Plan of Mesa Operating Limited Partnership
dated effective January 1, 1990 (Exhibit 10[t] to the
Partnership's Form 10-K dated December 31, 1990).
24
<PAGE> 25
*10.20 - 1991 Stock Option Plan of Mesa (Exhibit 10[v] to Mesa's Form
10-K dated December 31, 1991).
*10.21 - Interruptible Gas Transportation and Sales Agreement dated
January 1, 1991, between Mesa Operating Limited Partnership and
Energas Company and Amendment dated January 1, 1995 (Exhibit
10.22 Mesa's Form 10-K dated December 31, 1995).
*10.22 - "B" Contract Operating Agreement dated January 1, 1988, between
Mesa Operating Limited Partnership and Colorado Interstate Gas
Company (Exhibit 10.23 Mesa's Form 10-K dated December 31,
1995).
*10.23 - "B" Contract Agreement of Compromise and Settlement dated May
29, 1987, between Mesa Operating Limited Partnership and
Colorado Interstate Gas Company, and Amendment to Gathering
Agreement dated July 15, 1990 (Exhibit 10.24 Mesa's Form 10-K
dated December 31, 1995).
*10.24 - Gas Purchase Agreement dated January 1, 1996, between Mesa
Operating Co., as Seller, and KN Marketing L.P., as Buyer, and
Amendment dated August 1, 1995 (Exhibit 10.25 Mesa's Form 10-K
dated December 31, 1995).
*10.25 - Change in Control Retention/Severance Plan adopted August 22,
1995, and Amendment dated October 20, 1995 (Exhibit 10.26 Mesa's
Form 10-K dated December 31, 1995).
27 - Article 5 of Regulation S-X Financial Data Schedule for the
Second Quarter 1996 Form 10-Q.
(b) Reports on Form 8-K
1. Current Report on Form 8-K dated April 29, 1996 regarding the Stock
Purchase Agreement between MESA Inc. and DNR-MESA Holdings, L.P.
25
<PAGE> 26
SIGNATURES
==========
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MESA Inc.
(Registrant)
/s/ Wayne A. Stoerner
-----------------------------
Wayne A. Stoerner
Manager-Accounting
(Principal accounting officer
duly authorized to sign on
behalf of the Registrant)
Date: August 13, 1996
26
<PAGE> 27
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.3 Amended and Restated Bylaws of MESA Inc.
4.16 Credit Agreement dated as of July 2, 1996, among Mesa
Operating Co., as Borrower, MESA Inc. and the Banks listed as
lenders in the Credit Agreement and The Chase Manhattan Bank,
N.A., as Administrative Agent, Bankers Trust Company, as
Syndication Agent, and Society Generale, Southwest Agency, as
Documentation Agent.
4.17 Indenture dated July 2, 1996, among Mesa Operating Co., as
Issuer, MESA Inc., as a Guarantor, and Harris Trust and
Savings Bank as Trustee relating to 11-5.8% Senior
Subordinated Discount Notes Due 2006.
4.18 Indenture dated July 2, 1996, among Mesa Operating Co., as
Issuer, MESA Inc., as a Guarantor, and Harris Trust and
Savings Bank as Trustee relating to 10-5/8% Senior
Subordinated Notes Due 2006.
27 Article 5 of Regulation S-X Financial Data Schedule
for the Second Quarter 1996 Form 10-Q.
</TABLE>
<PAGE> 1
AMENDED AND RESTATED
BYLAWS
of
MESA INC.
The following Amended and Restated Bylaws, adopted by the Board of
Directors of MESA Inc. (the "Corporation") as of July 2, 1996, shall govern the
business of the Corporation, except as the same may be afterwards amended:
ARTICLE I
CAPITAL STOCK
Section 1. Certificates Representing Shares. The Corporation
shall deliver certificates representing all shares to which shareholders are
entitled. Such certificates shall be signed by the Chairman of the Board, the
President or a Vice President and either the Secretary or any assistant
Secretary, and shall bear the seal of the Corporation or a facsimile thereof.
The signatures of such officers upon a certificate may be facsimiles. In case
any officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Corporation with the same effect as if be
were such officer at the date of its issuance.
Section 2. Shareholders of Record. The Board of Directors of
the Corporation may appoint one or more transfer agents or registrars of any
class of stock of the Corporation. Unless and until such appointment is made,
the Secretary of the Corporation shall maintain among other records a stock
transfer book, the stubs in which shall set forth the names and addresses of
the holders of all issued shares of the Corporation, the number of shares held
by each, the certificate numbers representing such shares, the date of issue of
the certificates representing such shares, and whether or not such shares
originate from original issues or from transfer. The names and addresses of
shareholders as they appear on the stock transfer book shall be the official
list of shareholders of record of the Corporation for all purposes. The
Corporation shall be entitled to treat the holder of record of any shares of
the Corporation as the owner thereof for all purposes and shall not be bound to
recognize any equitable or other claim to, or interest in, such shares or any
rights deriving from such shares, on the part of any other person, including
(but without limitation) a purchaser, assignee or transferee, unless and until
such other person becomes the holder of record of such shares, whether or not
the Corporation shall have either actual or constructive notice of the interest
of such other person
Section 3. Transfer of Shares. The shares of the Corporation
shall be transferable on the stock transfer books of the Corporation by the
holder of record thereof, or his duly authorized attorney or legal
representative, upon endorsement and surrender for cancellation of the
certificates for such shares. All certificates surrendered for transfer shall
be cancelled, and no new certificate
<PAGE> 2
shall be issued until a former certificate or certificates for a like number of
shares shall have been surrendered and cancelled, except that in the case of a
lost, destroyed or mutilated certificate, a new certificate may be issued
therefor upon such conditions for the protection of the Corporation and any
transfer agent or registrar as the Board of Directors or the Secretary or any
other officer may prescribe.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. All meetings of shareholders
shall be held at the registered office of the Corporation, or at such other
place within or without the State of Texas as may be designated by the Board of
Directors or officer calling the meeting.
Section 2. Annual Meeting. Annual meetings of the shareholders
shall be each calendar year on a date and at a time designated by the Board of
Directors or as may otherwise be set forth in the notice of the meeting.
Failure to designate a time for the annual meeting or to hold the annual
meeting at the designated time shall not work a dissolution of the Corporation.
Section 3. Special Meetings. Special meetings of the
shareholders may be called by the chief executive officer or the Board of
Directors. Special meetings of shareholders shall be called by the Secretary
upon the written request of the holders of shares entitled to cast not less
than 20% of all the votes entitled to be cast at such meeting. Such request
shall state the purpose or purposes of such meeting and the matters proposed to
be acted on thereat. Upon receipt of such request and any notice required by
Sections 9 and/or 10 of Article II, the Board of Directors shall set a date for
the special meeting, set a record date in accordance with Article II, Section
5, and shall cause an appropriate officer of the Corporation to give the notice
required under Article II, Section 4.
Section 4. Notice of Meeting. Written notice of all meetings
stating the place, day and hour of the meeting and in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than sixty days before the meeting to the
shareholders of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mall
addressed to the shareholder at his address as it appears on the stock transfer
book of the Corporation, with postage thereon prepaid. Any notice required to
be given to any shareholder under any provision of the Texas Business
Corporation Act or the Articles of Incorporation or these Bylaws need not be
given to the shareholder if (1) notice of two consecutive annual meetings and
all notices of meetings held during the period between those annual meetings,
if any, or (2) all (but in no event less than two) payments (if sent by first
class mail) of distributions or interest on securities during a 12-month period
have been mailed to that person, addressed at his address as shown on the
records of the Corporation, and have been returned undeliverable. Any action
or meeting taken or held without notice to such a person shall have the same
force and effect as if the notice had been duly given. If such a person
delivers to the Corporation a written notice setting forth his then current
address, the requirement that notice be given to that person shall be
reinstated.
-2-
<PAGE> 3
Section 5. Fixing of Record Date. The Board of Directors shall
fix and shall have the exclusive authority to fix, in advance, a date as the
record date for the purpose of determining shareholders entitled to notice of
or to vote at any annual or special meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive a distribution by the Corporation
(other than a distribution involving a purchase or redemption by the
Corporation of any of its own shares) or a share dividend, or in order to make
a determination of shareholders for any other proper purpose. Such date, in
any case, shall be not more than sixty days, and in the case of a meeting of
shareholders not less than ten days, prior to the date on which the particular
action requiring such determination of shareholders is to be taken.
Section 6. Voting List. The officer or agent having charge of
the stock transfer books of the Corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten days prior to such meeting, shall be kept on
file at the registered office of the Corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The original stock transfer books shall be prima facie
evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders. Failure to comply
with any requirements of this Section 6 shall not affect the validity of any
action taken at such meeting.
Section 7. Voting on Matters Other than the Election of
Directors. With respect to any matter, other than the election of directors,
any holder of shares of the Corporation entitled to vote shall be entitled to
one vote for each such share, either in person or by proxy executed in writing
by him or by his duly authorized attorney-in-fact, except to the extent
otherwise provided in the Articles of Incorporation. No proxy shall be valid
after 11 months from the date of its execution unless otherwise provided in the
proxy. Each proxy shall be revocable unless the proxy form conspicuously
states that the proxy is irrevocable and the proxy is coupled with an interest.
Section 8. Confidential Voting. The Board of Directors shall
designate an independent third party not affiliated with the Corporation or, in
the case of proxies solicited by another person, such other person to collect,
count and hold all proxies and ballots that identify shareholders and keep the
names of such shareholders confidential from the Board of Directors, any other
person soliciting proxies and all other persons, except to the extent that such
disclosure is required by law or is required to resolve any dispute relating to
such election or proxies. No proxy or ballot shall be valid if delivered to
any person other than such independent third party or if collected or counted
in a manner otherwise contrary to the requirements of this Section. The
foregoing shall not apply to any proxy solicited pursuant to a solicitation
made to fewer than ten shareholders. Nothing contained herein shall be
construed to prohibit such independent third party from releasing from time to
time prior to a meeting to the Board of Directors or such other persons
soliciting proxies (i) the cumulative results of the vote through such time and
(ii) the names of shareholders for which proxies or consents have not been
received as to some or all of the shares held. The chairman of the meeting
-3-
<PAGE> 4
shall, if the facts warrant, determine and declare at the meeting at which
proxies are to be voted, that any proxy or ballot was not collected or counted
in accordance with the terms of the Bylaws.
Section 9. Nomination of Directors. Subject to the rights of
holders of any class or series of stock having a preference over Common Stock
of the Corporation as to dividends or upon liquidation to elect directors under
specified circumstances, nominations of persons for election to the Board of
Directors may be made only (a) by the Board of Directors or a committee
appointed by the Board of Directors or (b) by any shareholder who is a
shareholder of record at the time of giving of the shareholder's notice
provided for in this Section 9, who shall be entitled to vote at such meeting
and who complies with the notice procedures set forth in this Section 9. A
shareholder wishing to nominate one or more individuals to stand for election
in the election of members of the Board of Directors at an annual or special
meeting must provide written notice thereof to the Board of Directors not less
than 80 days in advance of such meeting; provided, however, that in the event
that the date of the meeting was not publicly announced by the Corporation by a
mailing to shareholders, a press release or a filing with the Securities and
Exchange Commission pursuant to Section 13(a) or 14(a) of the Securities and
Exchange Act of 1934 more than 90 days prior to the meeting, such notice, to be
timely, must be delivered to the Board of Directors not later than the close of
business on the tenth day following the day on which the date of the meeting
was publicly announced. A shareholder's notice shall set forth (i) the name
and address, as they appear on the Corporation's books, of the shareholder
making the nomination or nominations; (ii) such information regarding the
nominee(s) proposed by such shareholder as would be required to be included in
a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had the nominee(s) been nominated or intended to be
nominated by the Board of Directors; (iii) a representation of the shareholder
as to the class and number of shares of capital stock of the Corporation that
are beneficially owned by such shareholder, and the shareholder's intent to
appear in person or by proxy at the meeting to propose such nomination; and
(iv) the written consent of the nominee(s) to serve as a member of the Board of
Directors if so elected. No shareholder nomination shall be effective unless
made in accordance with the procedures set forth in this Section 9. The
chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that a shareholder nomination was not made in accordance with the
provisions of the Bylaws, and if the chairman should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
Section 10. Proposals of Shareholders. At any meeting of
shareholders, there shall be conducted only such business as shall have been
brought before the meeting (a) by or at the direction of the Board of Directors
or (b) by any shareholder of the Corporation who is a shareholder of record at
the time of giving of the shareholder's notice provided for in this Section 10,
who shall be entitled to vote at such meeting and who complies with the notice
procedure set forth in this Section 10. For business to be properly brought
before a meeting of shareholders by a shareholder, the shareholder shall have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a shareholder's notice shall be delivered to or mailed and received
at the principal executive offices of the Corporation not less than 80 days in
advance of such meeting; provided, however, that in the event that the date of
the meeting was not publicly announced by the Corporation by a mailing to
shareholders, a press release or a filing with the Securities and Exchange
Commission pursuant to
-4-
<PAGE> 5
Section 13(a) or 14(a) of the Securities and Exchange Act of 1934 more than 90
days prior to the meeting, such notice, to be timely, must be delivered to the
Board of Directors not later than the close of business on the tenth day
following the day on which the date of the meeting was first so publicly
announced. A shareholder's notice shall set forth as to each matter proposed to
be brought before the meeting: (1) a brief description of the business desired
to be brought before the meeting, the reasons for conducting such business at
the meeting and, in the event that such business includes a proposal regarding
the amendment of either the Articles of Incorporation or Bylaws of the
Corporation, the language of the proposed amendment; (2) the name and address,
as they appear on the Corporation's books, of the shareholder proposing such
business; (3) a representation of the shareholder as to the class and number of
shares of capital stock of the Corporation that are beneficially owned by such
shareholder, and the shareholder's intent to appear in person or by proxy at
the meeting to propose such business; and (4) any material interest of such
shareholder in such proposal or business. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at a shareholders
meeting unless brought before the meeting in accordance with the procedure set
forth in this Section 10. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the provisions of the Bylaws,
and if the chairman should so determine, the chairman shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
Section 11. Election of Directors. At each election for
directors every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by such
shareholder for as many persons as there are directors to be elected and for
whose election such shareholder has a right to vote. Each shareholder may
cumulate his votes by giving one candidate as many votes as the number of such
directors multiplied by his shares shall equal, or by distributing such votes
on the same principle among any number of such candidates. Cumulative voting
shall not be allowed in an election unless a shareholder who intends to
cumulate votes as herein authorized gives written notice of such intention to
the Secretary of the Corporation on or before the date preceding the election
at which such shareholder intends to cumulate votes. All shareholders entitled
to vote cumulatively may cumulate their votes if any shareholder gives the
written notice provided for herein.
Section 12. Quorum and Voting of Shareholders. The holders of a
majority of shares entitled to vote on a matter, represented in person or by
proxy, shall constitute a quorum as to that matter at a meeting of
shareholders, but, if a quorum is not present or represented, a majority in
interest of those present or represented may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented any business may be transacted which might have
been transacted at the meeting as originally notified. With respect to any
matter, other than the election of directors or a matter for which the
affirmative vote of the holders of a specified portion of the shares entitled
to vote is required by law, the Articles of Incorporation, or these Bylaws, the
vote of the holders of a majority of the shares entitled to vote on that matter
and represented in person or by proxy at a meeting at which a quorum is present
or represented shall be the act of the shareholders' meeting.
-5-
<PAGE> 6
Section 13. Officers. The Chairman of the Board, if there is
one, or otherwise the President, shall, if present, preside at and be the
chairman of, and the Secretary shall keep the records of, each meeting of
shareholders. In the absence of either such officer, his duties shall be
performed by another officer of the Corporation appointed by the Board of
Directors or appointed at the meeting.
Section 14. Conduct of Meeting. The chairman of a meeting of
shareholders shall have the power to appoint inspectors of election and to
establish and interpret rules for the conduct of the meeting.
Section 15. Preferred Stock Rights. Notwithstanding anything in
this Article II to the contrary, the provisions of this Article II are subject
to the rights of the holders of any class or series of Preferred Stock to call
shareholder meetings, to receive notice of meetings, to nominate and elect
directors voting as a separate class or series, to conduct meetings of such
holders subject to such quorum and voting procedures applicable to such class
or series or to act by written consent in lieu of a meeting, all as set forth
in any resolution of the Board of Directors establishing such class or series
of Preferred Stock. In determining the right of the Board of Directors or a
committee appointed by the Board of Directors to nominate persons for election
to the Board of Directors by holders of the Corporation's Common Stock pursuant
to Section 9 of this Article II, the Board of Directors or such committee shall
for such purpose be deemed to exclude any directors elected exclusively by the
holders of a class or series of Preferred Stock to the extent such directors
are not authorized to participate in such nomination pursuant to the provisions
of the resolution establishing such class or series of Preferred Stock.
ARTICLE III
DIRECTORS
Section 1. Number and Tenure. The business and affairs of the
Corporation shall be managed by a Board of Directors consisting of seven (7)
directors. The number of directors shall be increased from time to time to the
extent required to comply with the provisions of the Articles of Incorporation
pertaining to special voting rights of the holders of any class or series of
Preferred Stock (other than the Series B Preferred Stock), but apart from such
increases may not be otherwise increased or decreased except by amendment to
these Bylaws approved by the unanimous vote or written consent of all
directors. No amendment to the Bylaws to decrease the number of members of the
Board of Directors shall have the effect of shortening the term of any
incumbent director. Unless sooner removed in accordance with these Bylaws or
the Articles of Incorporation, members of the Board of Directors shall hold
office for the term for which such director is elected and until their
successors shall have been elected and qualified.
Section 2. Qualifications. Directors need not be shareholders
of the Corporation.
-6-
<PAGE> 7
Section 3. Vacancies. Subject to the rights of holders of any
class or series of Preferred Stock, any vacancy occurring in the Board of
Directors or any directorship to be filled by reason of an increase in the
number of directors may be filled by election at an annual or special meeting
of shareholders called for that purpose or by the affirmative vote of a
majority of the remaining directors, though less than a quorum of the entire
Board; provided, however, that any directorship to be filled by the Board of
Directors by reason of an increase in the number of directors may be filled for
a term of office continuing only until the next election of one or more
directors by the shareholders; and provided, further, that the Board of
Directors may not fill more than two directorships to be filled by reason of an
increase in the number of directors during the period between any two
successive annual meetings of shareholders. Subject to the foregoing, a
director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office.
Section 4. Place of Meeting. Meetings of the Board of Directors
may be held either within or without the State of Texas, at whatever place is
specified by the officer calling the meeting. In the absence of specific
designation, the meetings shall be' held at the principal office of the
Corporation.
Section 5. Regular Meetings. Board of Directors shall meet each
year immediately following the annual meeting of the shareholders, at the place
of such meeting, for the action of such business as may properly be brought
before it. No notice of annual meetings need be given to either existing or
newly elected members of the Board of Directors. Regular meetings may be held
at such other times as shall be designated by the Board of Directors.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be held at any time upon the call of the Chairman of the Board,
the President or any two directors of the Corporation. Notice shall be sent by
mail or telegram to the last known address of each director at least four days
before the meeting. Oral notice may be substituted for such written notice if
given not later than one day before the meeting. Notice of the time, place and
purpose of such meeting may be waived in writing before or after such meeting,
and shall be equivalent to the giving of notice. Attendance of a director at
such meeting shall also constitute a waiver of notice thereof, except where he
attends for the announced purpose of objecting to the action of any business on
the ground that the meeting is not lawfully called or convened. Except as
otherwise herein provided, neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting. Notwithstanding
any other provision of these Bylaws, the unanimous vote of all the directors of
the Corporation shall be required to amend the first sentence of this Section
6.
Section 7. Quorum. Except as otherwise provided by law, the
Articles of Incorporation or these Bylaws (i) a majority of the number of
directors fixed in the manner provided in these Bylaws as from time to time
amended shall constitute a quorum for the transaction of business, and (ii) the
act of a majority of the directors present at any meeting at which a quorum is
present shall be the act of the Board of Directors. Any regular or special
directors' meeting may be adjourned from time to time by those present, whether
a quorum is present or not.
-7-
<PAGE> 8
Section 8. Committees. The Board of Directors, by resolution or
resolutions passed by a majority of the whole Board of Directors, may designate
one or more members of the Board of Directors to constitute an Executive
Committee and one or more other committees, which shall in each case consist of
such number of directors as the Board of Directors may determine; provided
that, at least one member of each such committee shall be a director who is
elected by the holders of the Corporation's Common Stock and the identity of
each such member shall be determined by the directors elected by the holders of
Common Stock. The Executive Committee shall have and may exercise, subject to
such restrictions as may be contained in the Articles of Incorporation or that
may be imposed by law, all of the authority of the Board of Directors,
including without limitation the power and authority to declare a dividend and
to authorize the issuance of shares of the Corporation. Each other committee
shall have and may exercise such powers of the Board in the management of the
business and affairs of the Corporation, including without limitation the power
and authority to declare a dividend and to authorize the issuance of shares of
the Corporation, as the Board of Directors may determine by resolution and
specify in the respective resolutions appointing them, subject to such
restrictions as may be contained in the Articles of Incorporation or that may
be imposed by law. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors. A majority of all the members of any such committee may fix its
rules of procedure, determine its action and fix the time and place, whether
within or without the State of Texas, of its meetings and specify what notice
thereof, if any, shall be given, unless the Board of Directors shall provide
otherwise by resolution. The Board of Directors, by resolution or resolutions
passed by a majority of the whole Board of Directors, shall have power to
change the membership of any such committee at any time, to fill vacancies
therein and to disband any such committee, either with or without cause, at any
time, subject however, to the proviso in the first sentence of this Section 8.
Each committee shall keep regular minutes of its proceedings and report the
same to the Board of Directors when required. Notwithstanding any other
provision of these Bylaws, the unanimous vote of all the directors of the
Corporation shall be required to amend the first and sixth sentences of this
Section 8.
Section 9. Compensation. Directors may be paid their expenses,
if any, of attendance at each regular or special meeting of the Board of the
Directors or any committee thereof, and a salary as director as may be fixed by
the Board of Directors from time to time; provided, that nothing contained
herein shall be construed to preclude any director from serving the Corporation
in any other capacity and receiving compensation therefor.
Section 10. Removal. At any special meeting of shareholders
called expressly for the purposes of removal (for which, if called by
shareholders, notice has been given in accordance with Article in, Section 10),
any director or the entire Board of Directors may be removed, either for or
without cause, by the affirmative vote of a majority of the outstanding shares
entitled to vote at elections of directors, except that if less than the entire
Board of Directors is to be removed, no director may be removed if the number
of votes cast against that director's removal would be sufficient to elect the
director if then cumulatively voted at an election of the entire Board of
Directors. Whenever the holders of any class or series of shares are entitled
to elect one or more directors by the provisions of the Articles of
Incorporation, only the holders of shares of that class
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or series shall be entitled to vote for or against the removal of any director
elected by the holders of shares of that class or series.
Section 11. Action Without a Meeting. Any action required or
permitted to be taken at a meeting of directors or any committee may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors or members of the committee, as the
case may be, and such consent shall have the same force and effect as a
unanimous vote at a meeting.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the Corporation shall be
elected by a majority of the whole Board of Directors, and shall consist of a
President and a Secretary. A majority of the whole Board of Directors, in its
discretion, may also elect a Chairman of the Board (who must be a director),
one or more Vice Presidents, a Treasurer and such other officers as the Board
of Directors may from time to time designate, all of whom shall hold office
until their successors are elected and qualified. Any two or more offices may
be held by the same person.
The salaries of the officers shall be determined by the Board of
Directors, and may be altered by the Board of Directors from time to time
except as otherwise provided by contract. All officers shall be entitled to be
paid or reimbursed for all costs and expenditures incurred in the Corporation's
business.
Section 2. Vacancies. Whenever any vacancies shall occur in any
office by death, resignation, increase in the number of officers of the
Corporation or otherwise, the same shall be filled by a majority of the whole
Board of Directors, and the officer so elected shall hold office until his
successor is chosen and qualified.
Section 3. Removal. Any officer or agent elected or appointed
by the Board of Directors in the manner provided in these Bylaws may be removed
by a majority of the whole Board of Directors whenever in its judgment the best
interests of the Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
Section 4. Chairman of the Board. The Chairman of the Board if
there is one, shall, if present, preside at all meetings of the shareholders
and of the Board of Directors. If so designated by the Board of Directors, the
Chairman of the Board shall be the chief executive officer of the Corporation
and in such capacity may sign, with the Secretary or any other proper officer
of the Corporation thereunto authorized by the Board of Directors, certificates
for shares of the
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Corporation, any deeds, mortgages, bonds, contracts or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed and executed; and in general
shall perform all duties incident to the office of Chairman of the Board and
such other duties as may be prescribed by the Board of Directors from time to
time. If not designated as the chief executive officer by the Board of
Directors, the Chairman of the Board shall advise and counsel the President and
the other officers of the Corporation and shall exercise such powers and
perform such duties as shall be assigned to or required of the Chairman of the
Board from time to time by the Board of Directors or the Executive Committee.
Section 5. President. The President shall, subject to the
control of the Board of Directors and the chief executive officer, if not the
President, in general supervise and control all of the business and affairs of
the Corporation. In the absence of the Chairman of the Board, or if there is
none, the President shall preside at all meetings of the shareholders and (if
the President is a director) of the Board of Directors. If so designated by
the Board of Directors, the President shall be the chief executive officer of
the Corporation. The President may sign, with the Secretary or any other
proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed and executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice President. Any Vice President may perform the
usual and customary duties that pertain to such office (but no unusual or
extraordinary duties or powers conferred by the Board of Directors upon the
President) and, under the direction and subject to the control of the Board of
Directors, such other duties as may be assigned to a Vice President.
Section 7. Secretary. It shall be the duty of the Secretary to
attend all meetings of the shareholders and Board of Directors and record
correctly the proceedings had at such meetings in a book suitable for that
purpose. It shall also be the duty of the Secretary to attest with his
signature and the seal of the Corporation all stock certificates issued by the
Corporation and to keep a stock ledger in which shall be correctly recorded all
transactions permitting to the capital stock of the Corporation. The Secretary
shall also attest with his signature and the seal of the Corporation all deeds,
conveyances or other instruments requiring the seal of the Corporation. The
person holding the office of Secretary shall also perform under the direction
and subject to the control of the Board of Directors, such other duties as may
be assigned to the Secretary. The duties of the Secretary may also be
performed by any Assistant Secretary.
Section 8. Treasurer. The Treasurer shall keep such moneys of
the Corporation as may be entrusted to his keeping and account for the same.
The Treasurer shall be prepared at all times to give information as to the
condition of the Corporation and shall make a detailed annual report
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of the entire business and financial condition of the Corporation. The person
holding the office of Treasurer shall also perform, under the direction and
subject to the control of the Board of Directors, such other duties as may be
assigned to the Treasurer. The duties of the Treasurer may also be performed
by any Assistant Treasurer.
Section 9. Other Officers. Assistant Secretaries, if any, and
Assistant Treasurers, if any, shall have the duties set forth in Sections 7 and
8, respectively, of this Article IV. Any officer whose duties are not set
forth in Sections 4 through 8 of this Article IV shall have such duties as the
Board of Directors or the President may prescribe.
Section 10. Delegation of Authority. In the case of any absence
of any officer of the Corporation or for any other reason that the Board may
deem sufficient, a majority of the whole Board of Directors may delegate some or
all of the powers or duties of such officer to any other officer or to any
director, employee, shareholder or agent for whatever period of time seems
desirable.
ARTICLE V
INDEMNITY
Section 1. Indemnification. Each person who at any time shall
serve, or shall have served, as a director, officer, employee or agent of the
Corporation, or any person who, while a director, officer, employee or agent of
the Corporation, is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise (each such person referred to herein as an "Indemnitee"), shall be
entitled to indemnification as and to the fullest extent permitted by Article
2.02-1 of the Texas Business Corporation Act or any successor statutory
provision as from time to time amended (the "T.B.C.A."). The foregoing right
of indemnification shall not be deemed exclusive of any other rights to which
those to be indemnified may be entitled as a matter of law or under any
agreement, other provision of these Bylaws, vote of shareholders or directors,
or other arrangement. The Corporation may enter into indemnification
agreements with its executive officers and directors that contractually provide
to them the benefits of the provisions of this Article V and include related
provisions meant to facilitate the Indemnitees' receipt of such benefits and
such other indemnification protections as may be deemed appropriate.
Section 2. Advancement or Reimbursement of Expenses. The rights
of Indemnitee provided under the preceding section shall include, but not be
limited to, the right to be indemnified and to have expenses advanced in all
proceedings to the fullest extent permitted by Article 2.02-1 of the T.B.C.A.
In the event that an Indemnitee is not wholly successful, on the merits or
otherwise, in a proceeding but is successful on the merits or otherwise, as to
any claim in such proceeding, the Corporation shall indemnify Indemnitee
against all expenses actually and reasonably incurred by him or on his behalf
relating to each claim. The termination of a claim in a proceeding by
dismissal with or without prejudice, shall be deemed to be a successful result
as to such claim. In addition,
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to the extent an Indemnitee is, by reason of his corporate status, a witness or
otherwise participates in any proceeding at a time when he is not named a
defendant or respondent in the proceeding, he shall be indemnified against all
expenses actually and reasonably incurred by him or on his behalf in connection
therewith. The Corporation shall pay all reasonable expenses incurred by or on
behalf of Indemnitee in connection with any proceeding or claim, whether
brought by the Corporation or otherwise, in advance of any determination
respecting entitlement to indemnification pursuant to this Article V within ten
days after the receipt by the Corporation of a written request from Indemnitee
reasonably evidencing such expenses and requesting such payment or payments
from time to time, whether prior to or after final disposition of such
proceeding or claim; provided that the Indemnitee undertakes and agrees in
writing that be will reimburse and repay the Corporation for any expenses so
advanced to the extent that it shall ultimately be determined by a court, in a
final adjudication from which there is no further right of appeal, that
Indemnitee is not entitled to be indemnified against such expenses.
Section 3. Determination of Request. Upon written request to
the Corporation by an Indemnitee for indemnification pursuant to these Bylaws,
a determination, if required by applicable law, with respect to Indemnitee's
entitlement thereto shall be made in accordance with Article 2.02-1 of the
T.B.C.A. provided, however, that notwithstanding the foregoing, if a Change in
Control shall have occurred, such determination shall be made by Independent
Counsel selected by the Indemnitee, unless the Indemnitee shall request that
such determination be made in accordance with Article 2.02-1F (1) or (2). The
Corporation shall pay any and all reasonable fees and expenses of Independent
Counsel incurred in connection with any such determination. If a Change in
Control shall have occurred, the Indemnitee shall be presumed (except as
otherwise expressly provided in this Article) to be entitled to indemnification
under this Article upon submission of a request to the Corporation for
indemnification, and thereafter the Corporation shall have the burden of proof
in overcoming that presumption in reaching a determination contrary to that
presumption. The presumption shall be used by Independent Counsel, or such
other person or persons determining entitlement to indemnification, as a basis
for a determination of entitlement to indemnification unless the Corporation
provides information sufficient to overcome such presumption by clear and
convincing evidence or the investigation, review and analysis of Independent
Counsel or such other person or persons convinces him or them by clear and
convincing evidence that the presumption should not apply.
Section 4. Effect of Certain Proceeding. The termination of any
proceeding or of any claim in a proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Article) by itself adversely
affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did conduct himself in good faith and in a manner that he reasonably
believed in the case of conduct in his official capacity, that was in the best
interests of the Corporation or, in all other cases, that was not opposed to
the best interests of the Corporation or, with respect to any criminal
proceeding, that Indemnitee had reasonable cause to believe that his conduct
was unlawful and Indemnitee shall be deemed to have been found liable in
respect of any claim only after he shall have been so adjudged by a court in
competent jurisdiction after exhaustion of all appeals therefrom.
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Section 5. Expenses of Enforcement of Article. In the event
that Indemnitee, pursuant to this Article V, seeks a judicial adjudication to
enforce his rights under, or to recover damages for breach of, rights created
under or pursuant to this Article, Indemnitee shall be entitled to recover from
the Corporation, and shall be indemnified by the Corporation against, any and
all expenses actually and reasonably incurred by him in such judicial
adjudication but only if he prevails therein. If it shall be determined in
said judicial adjudication that Indemnitee is entitled to receive part but not
all of the indemnification or advancement of expenses sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication shall be
reasonably prorated in good faith by counsel for Indemnitee. Notwithstanding
the foregoing, if a Change in Control shall have occurred, Indemnitee shall be
entitled to indemnification under this Section regardless of whether Indemnitee
ultimately prevails in such judicial adjudication
Section 6. Insurance and Self-Insurance Arrangements. The
Corporation may procure or maintain insurance or other similar arrangements, at
its expense, to protect itself and any Indemnitee against any expense,
liability or loss asserted against or incurred by such person, incurred by him
in such a capacity or arising out of his status as such a person, whether or
not the Corporation would have the power to indemnify such person against such
expense or liability. In considering the cost and availability of such
insurance, the Corporation, (through the exercise of the business judgment of
its directors and officers), may from time to time, purchase insurance which
provides for any and all of (i) deductibles, (ii) limits on payments required
to be made by the insurer, or (iii) coverage which may not be as comprehensive
as that previously included in insurance purchased by the Corporation. The
purchase of insurance with deductibles, limits on payments and coverage
exclusions will be deemed to be in the best interest of the Corporation but may
not be in the best interest of certain of the persons covered thereby. As to
the Corporation, purchasing insurance with deductibles, limits on payments, and
coverage exclusions is similar to the Corporation's practice of sell-insurance
in other areas. In order to protect the Indemnitees who would otherwise be
more fully or entirely covered under such policies, the Corporation shall
indemnify and hold each of them harmless as provided in Section 1 of this
Article V, without regard to whether the Corporation would otherwise be
entitled to indemnify such officer or director under the other provisions of
this Article V, or under any law, agreement, vote of shareholders or directors
or other cement, to the extent (i) of such deductibles, (ii) of amounts
exceeding payments required to be made by an insurer or (iii) that prior
policies of officer's and director's liability insurance held by the
Corporation or its predecessors would have provided for payment to such officer
or director. Notwithstanding the foregoing provision of this Section 6, no
Indemnitee shall be entitled to indemnification for the results of such
person's conduct that is intentionally adverse to the interests of the
Corporation. This Section 6 is authorized by Section 2.02-1(R) of the Texas
Business Corporation Act as in effect as of the date hereof, and further is
intended to establish an arrangement of self- insurance pursuant to that
section.
Section 7. Severability. If any provision or provisions of this
Article shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Article shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
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Section 8. Definitions. The following terms are used herein as
follows:
"Change in Control" means a change in control of the
Corporation occurring after the date of adoption of these Bylaws of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A (or in response to any similar item
on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Corporation is then subject to such reporting requirement;
provided, however, that, without limitation, such a Change in Control
shall be deemed to have occurred if at any time after the date of
adoption of these Bylaws (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
40% or more of the combined voting power of the Corporation's then
outstanding securities without the prior approval of at least
two-thirds of the members of the Board of Directors in office
immediately prior to such person attaining such percentage interest;
(ii) the Corporation is a party to a merger, consolidation, share
exchange, sale of assets or other reorganization, or a proxy contest,
as a consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a
majority of the Board of Directors thereafter or (iii) during any
15-month period, individuals who at the becoming of such period
constituted the Board of Directors (including for this purpose any new
director whose election or nomination for election by the
Corporation's shareholders was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least
a majority of the Board of Directors; notwithstanding the foregoing,
no Change in Control shall be deemed to have occurred as a result of
the transfer of substantially all the assets of Mesa limited
Partnership to the Corporation and the transactions contemplated
thereby.
"corporate status" means the status of a person who is or was
a director, officer, partner, employee, agent or fiduciary of the
Corporation or of any other corporation partnership, joint venture,
trust, employee benefit plan or other enterprise which such person is
or was serving at the request of the Corporation.
"Disinterested Director" means a director of the Corporation
who is not a named defendant or respondent to the proceeding or
subject to a claim in respect of which indemnification is sought by
Indemnitee.
"Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither
contemporaneously is, nor in the five years theretofore has been,
retained to represent: (a) the Corporation or Indemnitee in any matter
material to either such party, (b) any other party to the proceeding
giving rise to a claim for indemnification hereunder or (c) the
beneficial owner, directly or indirectly, of securities of the
Corporation representing 40% or more of the combined voting power of
the Corporation's then outstanding voting securities. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of
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professional conduct then prevailing, would have a conflict of
interest in representing either the Corporation or Indemnitee in an
action to determine Indemnitee's rights to indemnification under these
Bylaws.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 1. Amendments. These Bylaws may be amended or
repealed, or new Bylaws adopted, (a) by a majority of the whole Board of
Directors, except to the extent that (i) the shareholders in amending,
repealing or adopting a particular Bylaw expressly provide that the Board of
Directors may not amend or repeal that bylaw, (ii) the Articles of
Incorporation or the Texas Business Corporation Act reserves the power to take
such action to the shareholders in whole or part, or (iii) Sections 1, 6 and 8
of Article III provide otherwise, or (b) by the shareholders, unless the
Articles of Incorporation or a bylaw adopted by the shareholders provides
otherwise as to all or some portion of the Bylaws; provided that any amendment
or repeal of the Bylaws by the shareholders (i) may only be effected at a
shareholders meeting for which notice has been given pursuant to Article III
Section 10 of these Bylaws, and (ii) shall be subject to the rights of holders
of any class or series of Preferred Stock to vote as a separate class or series
to approve such proposed amendment or repeal as set forth in a resolution of
the Board of Directors establishing such class or series.
Section 2. Waiver. Whenever any notice is required to be given
to any shareholder, director or committee member under the provisions of any
law, the Articles of Incorporation or these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be equivalent to the giving of such
notice.
Section 3. Conference Telephone Meeting. Meetings of
shareholders, directors, or any committee thereof, may be held by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Section 4. Offices. The principal office of the Corporation
shall be located in Dallas, Texas, unless and until changed by resolution of
the Board of Directors. The Corporation may also have offices at such other
places as the Board of Directors may from time to time designate, or as the
business of the Corporation may require.
Section 5. Resignations. Any director or officer may resign at
any time. Such resignations shall be made in writing and shall take effect at
the time specified therein, or, if no time be specified, at the time of its
receipt by the President or Secretary. The acceptance of a resignation shall
not be necessary to make it effective, unless expressly so provided in the
resignation.
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Section 6. Seal. The seal of the Corporation shall be circular
in form with a five pointed star in the center and the name of the Corporation
around the margin thereof, or in such other form as may be fixed by resolution
of the Board of Directors.
Section 7. Fiscal Year. The fiscal year of the Corporation
shall be the calendar year beginning on January 1, or such other fiscal year as
shall be fixed by the resolution of the Board of Directors.
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================================================================================
$525,000,000
CREDIT AGREEMENT
among
MESA OPERATING CO.,
as Borrower
MESA INC.
The Several Lenders
from Time to Time Parties Hereto
THE CHASE MANHATTAN BANK, N.A.
as Administrative Agent
BANKERS TRUST COMPANY
as Syndication Agent
and
SOCIETE GENERALE, SOUTHWEST AGENCY,
as Documentation Agent
Dated as of July 2, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . 19
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS AND SWING LINE COMMITMENT . 20
2.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . 20
2.2 Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . 20
2.3 Swing Line Commitment . . . . . . . . . . . . . . . . . . . . . . . 20
2.4 Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . 22
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1 The L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 Procedure for Issuance of Letters of Credit . . . . . . . . . . . . 23
3.3 Fees, Commissions and Other Charges . . . . . . . . . . . . . . . . 23
3.4 L/C Participations . . . . . . . . . . . . . . . . . . . . . . . . 23
3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . . . . 24
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . 25
3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . . . . . . 25
3.8 L/C Applications . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . 25
4.2 Computation of Interest and Fees . . . . . . . . . . . . . . . . . 26
4.3 Conversion and Continuation Options . . . . . . . . . . . . . . . . 26
4.4 Minimum Amounts Maximum Number of Tranches . . . . . . . . . . . . 26
4.5 Optional Prepayments and Commitment Reductions . . . . . . . . . . 26
4.6 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . 27
4.7 Commitment Fee; Administrative Agent's Fee; Other Fees . . . . . . 29
4.8 Inability to Determine Interest Rate . . . . . . . . . . . . . . . 29
4.9 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . 29
4.10 Computation of Borrowing Base . . . . . . . . . . . . . . . . . . . 30
4.11 Borrowing Base Compliance . . . . . . . . . . . . . . . . . . . . . 32
4.12 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.13 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . 33
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.15 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.16 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 36
5.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . 36
5.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . 37
5.4 Corporate Power; Authorization; Enforceable Obligations . . . . . . 37
5.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . 37
5.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . 38
5.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 38
5.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . 39
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5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.12 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . 39
5.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.14 Investment Company Act; Other Regulations . . . . . . . . . . . . . 39
5.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 40
5.18 No Material Misstatements . . . . . . . . . . . . . . . . . . . . . 40
5.19 Capitalization of MESA and the Borrower . . . . . . . . . . . . . . 41
5.20 Location of Real Property and Leased Premises . . . . . . . . . . . 41
5.21 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.22 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.24 "B" Contract; Supply Contract . . . . . . . . . . . . . . . . . . . 42
5.25 Refinanced Indebtedness . . . . . . . . . . . . . . . . . . . . . . 42
5.26 Future Commitments . . . . . . . . . . . . . . . . . . . . . . . . 42
5.27 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 42
6.1 Conditions to Initial Extensions of Credit . . . . . . . . . . . . 42
6.2 Conditions to Each Extension of Credit . . . . . . . . . . . . . . 46
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 47
7.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . 47
7.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 48
7.4 Conduct of Business and Maintenance of Existence; Compliance with
Law and Contractual Obligations . . . . . . . . . . . . . . . . . . 48
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . 48
7.6 Inspection of Property; Books and Records; Discussions . . . . . . 49
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 50
7.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 51
7.10 Additional Collateral . . . . . . . . . . . . . . . . . . . . . . . 51
7.11 Collateral Value . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.12 Corporate Separateness . . . . . . . . . . . . . . . . . . . . . . 52
7.13 Updated Opinions . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.1 Financial Covenant Conditions . . . . . . . . . . . . . . . . . . . 52
8.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . 53
8.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . 54
8.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . . . . 55
8.5 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . 55
8.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . 56
8.7 INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . 57
8.8 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . 57
8.9 INTENTIONALLY OMITTED. . . . . . . . . . . . . . . . . . . . . . . 58
8.10 Limitation on Investments, Loans and Advances . . . . . . . . . . . 58
8.11 Limitation on Optional Payments and Modifications of Debt
Instruments, Other Material Agreements . . . . . . . . . . . . . . 59
8.12 Limitation on Transactions with Affiliates . . . . . . . . . . . . 60
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
8.13 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . 60
8.14 Limitation on Changes in Fiscal Year . . . . . . . . . . . . . . . 60
8.15 Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . . 60
8.16 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . 61
8.17 Redeemable Capital Stock . . . . . . . . . . . . . . . . . . . . . 61
8.18 Forward Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.19 Unrestricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . 64
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . 65
10.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . 65
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.6 Non-Reliance on Administrative Agent and Other Lenders . . . . . . 65
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.8 Administrative Agent in Its Individual Capacity . . . . . . . . . . 66
10.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . 66
10.10 Issuing Lender . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.11 Syndication Agent and Documentation Agent . . . . . . . . . . . . . 67
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 67
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . 68
11.4 Survival of Representations and Warranties . . . . . . . . . . . . 68
11.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . 69
11.6 Successors and Assigns; Participations and Assignments . . . . . . 69
11.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . 71
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . 72
11.13 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . 73
11.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.16 Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . 73
11.17 Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
11.18 Pre-Funding Escrow Arrangements . . . . . . . . . . . . . . . . . . 74
11.19 FINAL AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 76
11.20 NON-STANDARD TERMS; NO UNWRITTEN ORAL AGREEMENTS . . . . . . . . . 76
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
1.1(a) Commitments
1.1(b) Refinanced Indebtedness
1.1(c) Unrestricted Assets
1.1(d) Existing Letters of Credit
5.2(b) Distributions in respect of Capital Stock
5.8(d) Disposed Mortgaged Properties
5.15 Subsidiaries
5.19 Capitalization
5.20 Real Property
5.22 Labor Matters
5.26 Gas Imbalances and other Future Commitments
6.1(v) Sources and Uses
8.3 Outstanding Liens
8.4 Outstanding Guarantee Obligations
8.10 Investments
11.2 Addresses for Notices
EXHIBITS
A-1 Form of Revolving Credit Note
A-2 Form of Swing Line Note
B Form of Guarantee and Collateral Agreement
C Intentionally Omitted
D Form of Swing Line Loan Participation Certificate
E-1 Form of Opinion of Counsel to Loan Parties
E-2 Form of Opinion of Kansas Counsel to Loan Parties
F-1 Form of Kansas Mortgage
F-2 Form of Texas Mortgage
G Form of Borrowing Certificate
H Form of Solvency Certificate
I Form of Assignment and Acceptance
</TABLE>
- iv -
<PAGE> 6
CREDIT AGREEMENT, dated as of July 2, 1996, among Mesa
Operating Co., a Delaware corporation (the "Borrower"), MESA Inc., a Texas
corporation ("MESA"), the several banks, financial institutions and other
entities from time to time parties to this Agreement, including The Chase
Manhattan Bank, N.A. ("Chase"), Bankers Trust Company ("Bankers Trust") and
Societe Generale, Southwest Agency ("SocGen") as lenders (collectively, the
"Lenders"), Chase, as administrative agent for the Lenders (in such capacity,
the "Administrative Agent"), Bankers Trust, as syndication agent for the
Lenders (in such capacity, the "Syndication Agent"), and SocGen, as
documentation agent for the Lenders (in such capacity, the "Documentation
Agent").
W I T N E S E T H :
WHEREAS, MESA and the Borrower have requested that the Lenders
extend a revolving credit facility to the Borrower in order to (a) effect the
Recapitalization (such term and other capitalized terms used in these recitals
having the meaning set forth in this Agreement), (b) pay costs and expenses
relating to the Recapitalization and (c) finance general corporate purposes of
the Borrower and the Restricted Subsidiaries;
WHEREAS, the Recapitalization will be effectuated in two
stages;
WHEREAS, the first stage will consist of the following
transactions occurring on the Closing Date: (a) the parties hereto entering
into this Agreement and the Lenders making up to $525 million of credit
available to the Borrower hereunder on the terms and subject to the conditions
stated herein, (b) MESA issuing and DNR purchasing $133,000,000 of newly issued
Series B Preferred Stock of MESA, (c) the Borrower issuing $325 million of its
Senior Subordinated Notes, (d) the Borrower issuing Senior Subordinated
Discount Notes in an amount sufficient to provide $150,000,000 of gross
proceeds, (e) MESA's material Subsidiaries (other than the Borrower) being
merged into the Borrower and (f) DNR causing to be issued in favor of MESA the
Rainwater Letter of Credit to support DNR's obligation to purchase additional
Series B Preferred Stock in an amount equal to the amount of Series A Preferred
Stock not purchased by MESA's common stockholders pursuant to the Rights
Offering;
WHEREAS, in connection with the Recapitalization, all or a
portion of the HCLP Secured Notes will be assigned to, and purchased by, the
Lenders on the Closing Date and the Indebtedness evidenced thereby will be
continued, amended and restated as set forth in this Agreement;
WHEREAS, MESA and the Borrower will use (i) the $133 million
of gross proceeds from the issuance of the Series B Preferred Stock, (ii)
proceeds of the Revolving Credit Commitments, (iii) the $325,000,000 of gross
proceeds from the issuance by the Borrower of its Senior Subordinated Notes,
(iv) the $150,000,000 of gross proceeds from the issuance by the Borrower of
its Senior Subordinated Discount Notes and (v) existing cash, to repay on the
Closing Date substantially all of the existing Indebtedness of MESA and its
Subsidiaries, together with accrued and unpaid interest thereon, and to pay
fees and expenses in connection with the Recapitalization; and
WHEREAS, within 60 days (or, with the approval of the Agents,
90 days) after the Closing Date the second stage of the Recapitalization shall
be effected with MESA issuing and its common stockholders purchasing up to $132
million of Series A Preferred Stock pursuant to the Rights Offering and DNR
purchasing Additional Series B Preferred Stock in an amount equal to the amount
of Series A Preferred Stock not sold in connection with the Rights Offering
(all of the Preferred Stock, if converted to common stock of MESA in accordance
with the terms thereof, would entitle the holders thereof to approximately 63%
of the outstanding common stock of MESA);
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
<PAGE> 7
2
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced from time to
time by Chase as its prime rate in effect at its principal office in
New York City (the Prime Rate not being intended to be the lowest rate
of interest charged by Chase in connection with extensions of credit
to debtors); "Base CD Rate" shall mean the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus
the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day,
the next preceding Business Day) by the Board of Governors of the
Federal Reserve System (the "Board") through the public information
telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such
day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00
A.M., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which
is based upon the ABR.
"Additional Series B Preferred Stock": Series B Preferred
Stock issued pursuant to the Stock Purchase Agreement after the
Closing Date in satisfaction of DNR's standby commitment to purchase
one share of Series B Preferred Stock for each share of Series A
Preferred Stock not purchased in the Rights Offering.
"Administrative Agent": as defined in the preamble to this
Agreement.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Agents": the collective reference to the Administrative
Agent, the Syndication Agent and the Documentation Agent.
"Aggregate Revolving Credit Exposure": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal
amount of all Loans made by such Lender then outstanding and (b) such
Lender's Commitment Percentage of the Letter of Credit Outstandings at
such time.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Assignee": as defined in subsection 11.6(c).
<PAGE> 8
3
"Available Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Revolving Credit Commitment over (b) such Lender's Aggregate Revolving
Credit Exposure.
"`B' Contract": the Agreement, dated January 3, 1928, between
Colorado Interstate Gas Company (as successor by merger with Canadian
River Gas Company) and Pioneer Corporation (as successor by merger
with Amarillo Oil Company) and as assigned by Pioneer Corporation to
Mesa Limited Partnership, and assigned by Mesa Limited Partnership to
the Borrower (as successor by merger with MOLP), applicable to said
parties' interests in natural gas produced from certain acreage in the
West Panhandle Field of Texas, as heretofore amended, supplemented or
otherwise modified and as may be further amended, supplemented or
otherwise modified from time to time in accordance with subsection
8.11.
"Borrower Redetermination Notice": a notice from the Borrower
to each member of the Engineering Committee requesting that the
Engineering Committee redetermine the Borrowing Base, which notice may
be sent by the Borrower at any time, provided no more than one such
notice may be delivered by the Borrower during any consecutive 12
month period.
"Borrowing Base": at any time of determination, the amount
then in effect as determined in accordance with subsection 4.10;
provided, however, that from the date hereof until such time as the
Borrowing Base is so redetermined in accordance with subsection 4.10,
the Borrowing Base shall be $525,000,000.
"Borrowing Base Deficiency": as defined in subsection 4.11.
"Borrowing Base Period": (a) initially, the period commencing
on the Closing Date and ending on the earliest of (i) January 1, 1997,
(ii) the date of the Reserve Report issued in connection with any
Borrower Redetermination Notice or Lender Redetermination Notice and
(iii) the date on which a Major Transaction shall have occurred and
(b) thereafter, each period commencing on the last day of the
immediately preceding Borrowing Base Period and ending on the earlier
of (i) the immediately succeeding January 1, (ii) the date of the
first Reserve Report, if any, issued since the commencement of such
Borrowing Base Period in connection with a Borrower Redetermination
Notice or a Lender Determination Notice and (iii) the date on which a
Major Transaction shall have occurred.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2, 2.3(a) or 3.2 as a date on which the
Borrower requests the Lenders to make Loans or the Issuing Lender to
issue a Letter of Credit hereunder.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Dallas, Texas are
authorized or required by law to close.
"Capital Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency thereof, (b)
certificates of deposit and eurodollar time deposits with maturities
of one year or less from the date of acquisition and overnight bank
deposits of any Lender or of any commercial bank (i) having capital
and surplus in excess of $500,000,000 or (ii) which has a short-term
commercial paper rating which satisfies the requirements set forth in
clause (d) below, (c) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued, fully guaranteed or insured by the United States
Government or any agency thereof, (d) commercial
<PAGE> 9
4
paper of a domestic issuer rated at least A-2 by Standard and Poor's
Ratings Group ("S&P") or P-2 by Moody's Investors Service, Inc.
("Moody's"), (e) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or
A by Moody's, (f) securities with maturities of one year or less from
the date of acquisition backed by standby letters of credit issued by
any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or
similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any ABR
Loan, the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation (the "FDIC") classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.4 (or any successor provision) to the FDIC (or any
successor) for the FDIC's (or such successor's) insuring time deposits
at offices of such institution in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) (the "Board"), for determining the
maximum reserve requirement for a Depositary Institution (as defined
in Regulation D of the Board) in respect of new non-personal time
deposits in Dollars having a maturity of 30 days or more.
"Change of Control": the occurrence of any of the events set
forth in paragraph (m) of Section 9.
"Chase": The Chase Manhattan Bank, N.A.
"Closing Date": the date on which the conditions precedent
set forth in subsection 6.1 shall be satisfied.
"Co-Arrangers": Chase Securities Inc. and BT Securities
Corporation.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all assets of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commitments": the collective reference to the Revolving
Credit Commitments, the L/C Commitment and the Swing Line Commitment.
"Commitment Percentage": as to any Lender at any time, the
percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of
such Lender's Revolving Credit Loans then outstanding constitutes of
the aggregate principal amount of the Revolving Credit Loans then
outstanding).
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date
on which the Commitments shall terminate as provided herein.
"Commodity Hedging Agreement": a commodity hedging or
purchase agreement or similar arrangement entered into with the intent
of protecting against fluctuations in commodity prices or the exchange
of notional commodity obligations, either generally or under specific
contingencies.
<PAGE> 10
5
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated Interest Expense": with respect to MESA, the
Borrower and the Restricted Subsidiaries on a consolidated basis for
any period, (a) the sum of (i) gross interest expense (including all
cash and accrued interest expense) of MESA, the Borrower and the
Restricted Subsidiaries for such period on a consolidated basis,
including (x) the amortization of debt discounts, (y) the amortization
of all fees (including fees with respect to Interest Rate Protection
Agreements and Commodity Hedging Agreements) payable in connection
with the incurrence of Indebtedness to the extent included in interest
expense and (z) the portion of any payments or accruals with respect
to Capital Leases allocable to interest expense and (ii) capitalized
interest of MESA, the Borrower and the Restricted Subsidiaries on a
consolidated basis minus (b) gross interest income of MESA, the
Borrower and the Restricted Subsidiaries for such period on a
consolidated basis. For purposes of the foregoing, gross interest
expense shall be determined after giving effect to any net payments
made or received by the Borrower and the Restricted Subsidiaries with
respect to Interest Rate Protection Agreements.
"Consolidated Net Income": for any period, net income of
MESA, the Borrower and the Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Default": any of the events specified in Section 9, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"DNR": DNR-MESA Holdings, L.P., a Texas Limited partnership,
the sole general partner of which is Rainwater Inc., a Texas
corporation.
"Documentation Agent": as defined in the preamble to this
Agreement.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"EBITDAEX": for any period, Consolidated Net Income for such
period, plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income for such period, (a)
the aggregate amount of Consolidated Interest Expense for such period,
(b) the aggregate amount of letter of credit fees paid during such
period, (c) the aggregate amount of income tax expense for such
period, (d) all amounts attributable to depreciation, depletion and
amortization for such period, (e) the aggregate amount of exploration
costs for such period and (f) all non-cash non-recurring charges
during such period, and minus, without duplication and to the extent
added to revenues in determining Consolidated Net Income for such
period, all non-cash non-recurring gains during such period, in each
case determined in accordance with GAAP. For the avoidance of doubt,
non-cash, non-recurring charges will not include accruals for closure
and post-closure liabilities in connection with this Agreement.
"Engineering Committee": Chase, Bankers Trust and SocGen.
"Environmental Consultant": as defined in subsection 7.8(d).
"Environmental Laws": any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or other legally
enforceable requirement (including, without limitation, common law) of
any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of
the environment or of human health as it relates to the environment,
as has been, is now, or may at any time hereafter be, in effect.
<PAGE> 11
6
"Environmental Permits": any and all permits, licenses,
registrations, notifications, exemptions and any other authorization
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of
the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained
by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chase is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Existing Letters of Credit": the collective reference to the
letters of credit identified on Schedule 1.1(d).
"Exploration Expenditures": all direct costs incurred by
MESA, the Borrower and the Restricted Subsidiaries for (a) exploratory
work, including such work on geological and geophysical examinations,
aerial mapping and investigations relating to subsurface geology or
(b) the drilling of wells in unproven territory for the purpose of
ascertaining the presence of commercial quantities of Hydrocarbons
underground.
"Fair Market Value": (a) as to any Oil and Gas Property, the
value attributed to such Oil and Gas Property in the most recent
Reserve Report and (b) as to any other Property, such value as may be
determined in good faith by the Borrower as the fair market value
thereof (or, if such value is being determined in connection with a
sale, transfer or other disposition of such Property or a group of
related Property, and such Property (or such Properties) has a fair
market value in excess of $25,000,000, the value of such Property (or
such Properties) as determined in good faith by the Board of Directors
of the Borrower).
"Foreign Subsidiary": any Subsidiary organized under the laws
of any jurisdiction outside the United States of America.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time, provided that
for purposes of determining compliance with the covenants contained in
Section 8, "GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect on the date hereof and
applied on a basis consistent with the application used in the
financial statements
<PAGE> 12
7
referred to in subsection 5.1, provided, further, that if the Borrower
notifies the Administrative Agent that the Borrower wishes to amend
any covenant contained in Section 8 or any related definition to
eliminate the effect of any change in GAAP occurring after the date of
this Agreement on the application of such covenant (or if the
Administrative Agent notifies the Borrower that it wishes to amend
Section 8 or any related definition for such purpose) then (a) the
Borrower and the Administrative Agent shall negotiate in good faith to
agree upon an appropriate amendment and (b) the Borrower's compliance
with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective until
such covenant is amended in a manner satisfactory to the Borrower and
the Required Lenders.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith. Obligations of MESA, the Borrower or any Restricted Subsidiary
pursuant to indemnities which (a) are granted in the ordinary course
of business, including, without limitation, such obligations in
connection with stock purchase agreements or asset purchase and sale
agreements and (b) do not cover Indebtedness of the types described in
clauses (a) through (f) of the definition of Indebtedness, shall not
constitute "Guarantee Obligations" for purposes of this Agreement.
"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement executed and delivered by each of the Loan
Parties, substantially in the form of Exhibit B, as amended, modified
or supplemented from time to time.
"Guarantor": MESA and each of the Restricted Subsidiaries.
"HCLP Secured Notes": the notes issued pursuant to the
Indenture, dated as of May 30, 1991, among Hugoton Capital Limited
Partnership, Hugoton Capital Corporation and Bankers Trust Company, as
trustee, as amended, supplemented or otherwise modified prior to the
Closing Date.
"Hydrocarbon Interests": all rights, titles, interests and
estates now owned or hereafter acquired in and to oil and gas leases,
oil, gas and mineral leases, or other liquid or gaseous hydrocarbon
leases, mineral fee or lease interests, farm-outs overriding royalty
and royalty interests, net profit interests, oil payments,
<PAGE> 13
8
production payment interests and similar mineral interests, including
any reserved or residual interest of whatever nature.
"Hydrocarbons": oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, all products
refined, separated, settled and dehydrated therefrom and all products
refined therefrom, including, without limitation, kerosene, liquefied
petroleum gas, refined lubricating oils, diesel fuel, drip gasoline,
natural gasoline, helium, sulfur and all other minerals.
"Indebtedness": of any Person at any date (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices and accrued current liabilities
incurred in the ordinary course of business), (b) any other
indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person
under Capital Leases, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (e) all
obligations of such Person under Commodity Hedging Agreements and
Interest Rate Protection Agreements and (f) all obligations of others
of the type referred to in clauses (a) through (e) above and which are
secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment
thereof, except that the amount of any nonrecourse obligation shall be
deemed to be the lesser of the value of the property securing such
obligation and the amount of such obligation so secured.
"Information Memorandum": the Confidential Information
Memorandum, dated May 1996, delivered to the Lenders and relating to
MESA, the financing contemplated hereby and the Recapitalization, as
the same may be supplemented prior to the Closing Date.
"Initial Reserve Report": as defined in subsection 6.1(x).
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December, commencing September 30,
1996, (b) as to any Eurodollar Loan having an Interest Period of three
months or less, the last day of such Interest Period, and (c) as to
any Eurodollar Loan having an Interest Period longer than three months
each day which is three months or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest
Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three, six or, if
available to all Lenders, 12 months thereafter, as selected by
the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto;
and
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three, six or, if
available to all Lenders, 12 months thereafter, as selected by
the Borrower by irrevocable notice to the Administrative Agent
not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
<PAGE> 14
9
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month; and
(3) the Borrower shall use reasonable efforts to
select Interest Periods so as not to require a payment or
prepayment of any Eurodollar Loan during an Interest Period
for such Loan.
"Interest Rate Protection Agreement": an interest rate swap,
cap or collar agreement or similar arrangement entered into with the
intent of protecting against fluctuations in interest rates or the
exchange of notional interest obligations, either generally or under
specific contingencies.
"Issuing Lender": Chase, SocGen or any of their respective
Affiliates, in its capacity as issuer of a Letter of Credit and any
other Lender to whom Chase, SocGen or any of their respective
Affiliates assigns its obligations to issue Letters of Credit
hereunder.
"Kansas Mortgage": the collective reference to the Mortgages,
substantially in the form of Exhibit F-1 hereto, executed and
delivered by the Borrower with respect to the Mortgaged Property
located in Kansas, as the same may be amended, supplemented or
otherwise modified from time to time.
"L/C Application": as defined in subsection 3.2.
"L/C Commitment": the Issuing Lender's obligation to issue
Letters of Credit pursuant to Section 3 of this Agreement.
"L/C Participating Interest": with respect to any Letter of
Credit (a) in the case of the Issuing Lender with respect thereto, its
interest in such Letter of Credit and any L/C Application relating
thereto after giving effect to the granting of participating interests
therein, if any, pursuant hereto and (b) in the case of each
Participating Lender, its undivided participating interest in such
Letter of Credit and any L/C Application relating thereto.
"Lender Redetermination Notice": a notice from the
Engineering Committee to the Borrower giving notice of its intention
to redetermine the Borrowing Base, which notice may be sent by
Engineering Committee at any time the Engineering Committee so elects,
provided that such an election can be made by the Engineering
Committee no more than once during any consecutive 12 month period.
"Letters of Credit": as defined in subsection 3.1(a), and
shall include, for all purposes of this Agreement, the Existing
Letters of Credit.
"Letter of Credit Outstandings": at any time, the sum of (a)
the aggregate amount available for drawing under Letters of Credit
then outstanding and (b) the aggregate amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to
subsection 3.5.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Capital Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
<PAGE> 15
10
"Loan Documents": this Agreement, any Notes, the L/C
Applications and the Security Documents.
"Loan Parties": the Guarantors and each other Subsidiary of
MESA (including the Borrower) which is a party to a Loan Document.
"Major Transaction": (a) during any Borrowing Base Period,
the sale, transfer or other disposition by MESA, the Borrower and the
Restricted Subsidiaries of, or casualties, losses or material adverse
claims with respect to, assets (other than Unrestricted Assets)
included in the Borrowing Base for such Borrowing Base Period with an
aggregate Fair Market Value in excess of ten percent (10%) of the
amount of the Borrowing Base then in effect, (b) during any Borrowing
Base Period, the occurrence of any event (including, without
limitation, the disclosure to, or discovery by, the Administrative
Agent or any member of the Engineering Committee of information not
known at the time of establishing the Borrowing Base then in effect)
relating to any Property (including Oil and Gas Properties) included
in the Borrowing Base, which causes the Administrative Agent or the
Engineering Committee to reasonably determine that the Borrower does
not have good title to any portion of such Properties which have an
aggregate Fair Market Value in excess of ten percent (10%) of the
amount of the Borrowing Base then in effect or (c) the occurrence of
any Event of Default. For purposes of this definition, any Oil and
Gas Properties owned by MESA, the Borrower or any Restricted
Subsidiary at the time of the determination of a Borrowing Base shall
be deemed to be included in such Borrowing Base.
"Material Adverse Effect": a material adverse effect on (a)
the Recapitalization, (b) the business, operations, assets, property
or condition (financial or otherwise) (or, for purposes of the
representation made in subsection 5.2 on the Closing Date only,
prospects) of MESA and its Subsidiaries taken as a whole (other than
as a result of a general industry decrease in oil and gas prices) or
(c) the validity or enforceability of this Agreement or any other Loan
Document or the rights or remedies of the Administrative Agent, any
other Agent or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials, or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos or asbestos containing
material, polychlorinated biphenyls, urea-formaldehyde insulation, and
any other substance that is regulated pursuant to or could give rise
to liability under any Environmental Law.
"MESA": as defined in the preamble to this Agreement.
"MEV": MESA Environmental Ventures Co.
"MOLP": MESA Operating Limited Partnership, a Delaware
limited partnership.
"Mortgages": collectively (i) the Kansas Mortgage, (ii) the
Texas Mortgage and (iii) each other mortgage, deed of trust,
assignment, security agreement or mortgage executed by the Borrower or
any other Loan Party and in form and substance reasonably satisfactory
to the Administrative Agent which purports to create a Lien in favor
of the Administrative Agent, in each case as amended, supplemented or
otherwise modified from time to time.
"Mortgaged Property": all of the Oil and Gas Properties and
other Collateral purported to be subject to the Lien of the Mortgages.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) with respect to the sale, transfer,
lease or other disposition of any asset by MESA, the Borrower or any
Restricted Subsidiary, an amount certified in reasonable detail by a
Responsible Officer of the Borrower to the Lenders as the excess, if
any, of (i) the sum of cash and Cash Equivalents
<PAGE> 16
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received in connection with such sale, transfer, lease or other
disposition over (ii) the sum of (A) amounts placed in escrow or held
as a reserve, in accordance with GAAP, against any liabilities
associated with such sale or disposition (except that, to the extent
and as of the time any such amounts are released from such reserve,
such amounts shall constitute Net Cash Proceeds), (B) amounts paid to
minority interest holders of such asset and the principal amount of
any Indebtedness (other than Indebtedness under this Agreement) which
is secured by any such asset and which is repaid in connection with
the sale, transfer, lease or other disposition thereof, (C) the
reasonable out-of-pocket expenses actually incurred by MESA, the
Borrower or such Restricted Subsidiary in connection with such sale,
transfer, lease or other disposition and (D) provision for taxes
attributable to such sale, transfer, lease or other disposition (as
estimated by the Borrower in good faith), (b) with respect to the sale
or issuance of any Capital Stock by MESA, the Borrower or any
Restricted Subsidiary, an amount certified in reasonable detail by a
Responsible Officer of the Borrower to the Lenders as the excess of
(i) the sum of the cash and Cash Equivalents received in connection
with such sale or issuance over (ii) the underwriting discounts and
commissions (if any) and other reasonable fees, out-of-pocket expenses
and other costs actually incurred by MESA, the Borrower or such
Restricted Subsidiary in connection with such sale or issuance and (c)
with respect to the incurrence of Indebtedness by MESA, the Borrower
or any Restricted Subsidiary, an amount certified in reasonable detail
by a Responsible Officer of the Borrower to the Lenders as the excess
of (i) the sum of the cash and Cash Equivalents received in connection
with such incurrence of Indebtedness over (ii) the reasonable fees,
out-of-pocket expenses and other costs actually incurred by MESA, the
Borrower or such Restricted Subsidiary in connection with such
incurrence of Indebtedness. Fees, commissions and other costs and
expenses paid to MESA or any of its Subsidiaries shall be disregarded
in determining Net Cash Proceeds.
"Non-Excluded Taxes": as defined in subsection 4.14(a).
"Non-Recourse Debt": Indebtedness as to which neither MESA,
the Borrower nor any of the Restricted Subsidiaries (a) provides any
guarantee or credit support of any kind (including any undertaking,
guarantee, indemnity, agreement or instrument that would constitute
Indebtedness) or (b) is directly or indirectly liable (as a guarantor
or otherwise).
"Non-U.S. Lender": as defined in subsection 4.14(b).
"Notes": the collective reference to the Revolving Credit
Notes and the Swing Line Note.
"Obligations": as defined in the Guarantee and Collateral
Agreement.
"Oil and Gas Business": (a) the acquisition, exploration,
exploitation, development, operation and disposition of interests in
oil and gas properties and Hydrocarbons, (b) the gathering,
marketing, treating, processing, storage, 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, transportation or
marketing of oil, gas and other minerals and products produced in
association therewith; and (d) any activity that is ancillary or
necessary or desirable to facilitate the activities described in
clauses (a) through (c) of this definition, provided that in no event
shall "Oil and Gas Business" include the business of refining crude
oil.
"Oil and Gas Properties": Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon
Interests; all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created
thereby (including without limitation all units created under orders,
regulations and rules of any Governmental Authority having
jurisdiction) which may affect all or any portion of the Hydrocarbon
Interests; all pipelines, gathering lines, compression facilities,
tanks and processing plants; all interests held in royalty trusts
whether presently existing or hereafter created; all Hydrocarbons in
and under and which may be produced, saved, processed or attributable
to the Hydrocarbon Interests, the lands covered thereby and all
hydrocarbons in pipelines, gathering lines, tanks and processing
plants and all rents, issues, profits, proceeds, products, revenues
and other incomes from or attributable to the Hydrocarbon Interests;
all tenements, hereditaments, appurtenances and Properties in any way
appertaining, belonging, affixed or
<PAGE> 17
12
incidental to the Hydrocarbon Interests, and all rights, titles,
interests and estates described or referred to above, including any
and all real property, now owned or hereafter acquired, used or held
for use in connection with the operating, working or development of
any of such Hydrocarbon Interests or Property and including any and
all surface leases, rights-of-way, easements and servitude together
with all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing; all oil, gas and mineral
leasehold and fee interests, all overriding royalty interests, mineral
interests, royalty interests, net profits interests, net revenue
interests, oil payments, production payments, carried interests and
any and all other interests in Hydrocarbons; and the "B" Contract; in
each case whether now owned or hereafter acquired directly or
indirectly.
"Participants": as defined in subsection 11.6(b).
"Participating Lender": with respect to any Letter of Credit,
any Lender (other than the Issuing Lender with respect to such Letter
of Credit) with respect to its L/C Participating Interest in such
Letter of Credit.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Business Acquisition": the formation of a new
Subsidiary or any acquisition of all or substantially all the assets
of, or shares of capital stock, partnership interests, joint venture
interests, limited liability company interests or other similar equity
interests in, a Person or division or line of business of a Person (or
any subsequent investment made in a previously acquired Permitted
Business Acquisition) if immediately after giving effect thereto: (a)
no Default or Event of Default shall have occurred and be continuing
or would result therefrom, (b) all transactions related thereto shall
be consummated in accordance with applicable laws, (c) more than 50%
of the Capital Stock of any acquired or newly formed corporation,
partnership, association or other business entity are owned directly
by MESA, the Borrower or a domestic Wholly Owned Restricted Subsidiary
and all actions required to be taken, if any, with respect to such
acquired or newly formed Subsidiary under subsection 7.10 shall have
been taken and (d)(i) MESA and the Borrower shall be in compliance, on
a pro forma basis after giving effect to such acquisition or
formation, with the covenants contained in subsection 8.1 recomputed
as at the last day of the most recently ended fiscal quarter of MESA
as if such acquisition had occurred on the first day of each relevant
period for testing such compliance, and the Borrower shall have
delivered to the Administrative Agent an officers' certificate to such
effect, together with all relevant financial information for such
Person or assets, and (ii) any acquired or newly formed Restricted
Subsidiary shall not be liable for any Indebtedness or Guarantee
Obligations (except for Indebtedness and Guarantee Obligations
permitted by subsections 8.2 and 8.4).
"Permitted Business Investment": investments made in the
ordinary course of, and of a nature that is or shall have become
customary in, the Oil and Gas Business as a means of actively
exploiting, exploring for, acquiring, developing, processing,
gathering, marketing or transporting oil and gas through agreements,
transactions, interests or arrangements which permit one to share
risks or costs, comply with regulatory requirements regarding local
ownership or satisfy other objectives customarily achieved through the
conduct of Oil and Gas Business jointly with third parties, including,
without limitation, (a) ownership interests in oil and gas properties,
processing facilities, gathering systems or ancillary real property
interests and (b) investments in the form of or pursuant to operating
agreements, processing agreements, farm-in agreements, farm-out
agreements, development agreements, area of mutual interest
agreements, unitization agreements, pooling agreements, joint bidding
agreements, service contracts, and other similar agreements with third
parties, provided that an investment in capital stock, partnership
interests, joint venture interests, limited liability company
interests or other similar equity interests in a Person shall not
constitute a Permitted Business Investment.
"Permitted Marketing Transaction": (a) a transaction in which
the Borrower or any Subsidiary (i) establishes a position using New
York Mercantile Exchange Crude Oil or Natural Gas Futures contracts to
purchase hydrocarbons for future delivery to it or (ii) purchases or
commits to purchase Hydrocarbons for future delivery to it, and
contemporaneous with such purchase pursuant to clause (i) or (ii)
either (A) establishes one or more positions using New York Mercantile
Exchange Crude Oil or Natural Gas Futures
<PAGE> 18
13
contracts to resell at a date subsequent to such delivery date or (B)
enters into a contract with that Person or another Person to resell at
a date subsequent to such delivery date, in either case, a similar
aggregate quantity and quality of Hydrocarbons as so purchased by the
Borrower or such Subsidiary, as applicable, at an aggregate price
greater than the Indebtedness incurred for the Hydrocarbons so
purchased by the Borrower or such Subsidiary or (b) any other purchase
of Hydrocarbons by the Borrower or any Subsidiary for which the
Borrower or such Subsidiary has contracts to sell Hydrocarbons at a
date subsequent to such purchase, provided the Hydrocarbons to be
purchased are in a similar aggregate quantity and quality as the
Hydrocarbons to be sold, and provided, further, the Hydrocarbons to be
purchased are at an aggregate price less than the aggregate price to
be received with respect to such sale.
"Permitted Subordinated Refinancing Debt": Indebtedness of
the Borrower issued in exchange for, or the net proceeds of which are
used to refinance, replace, defease or refund, any or all of the
Subordinated Notes; provided that the principal amount of such
Permitted Subordinated Refinancing Debt does not exceed the principal
amount (or accreted value, if applicable) of the Subordinated Notes so
refinanced, replaced, defeased or refunded, plus the amount of
premiums, prepayments, penalties and other amounts required to be paid
in connection therewith and the reasonable and customary fees and
expenses incurred in connection therewith, provided, further, such
Indebtedness shall be documented on terms and conditions reasonably
satisfactory to the Required Lenders.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is subject to Title IV of ERISA and in respect of which the Borrower
or a Commonly Controlled Entity is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Preferred Stock": the collective reference to the Series A
Preferred Stock and the Series B Preferred Stock.
"Present Value of Estimated Future Net Revenues": the present
value of the estimated future net revenues from production of oil and
gas from Proved Reserves net of all production-related taxes, lease
operating expenses and capital costs, discounted by a factor of ten
percent per annum, before income taxes and with no price or cost
escalation or deescalation, all in accordance with guidelines
promulgated by the Securities and Exchange Commission.
"Properties": any kind of facility, fixture, property or
asset, whether real, personal or mixed, or tangible or intangible
owned, leased or operated by MESA, the Borrower or any Restricted
Subsidiary.
"Proved Reserves": the estimated quantities of crude oil,
condensate, natural gas and natural gas liquids that adequate
geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years from proved reservoirs under
existing economic and operating conditions (i.e., prices and costs as
of the date the estimate is made). Prices used in any such
calculation shall include consideration of changes in existing prices
provided only by contractual arrangements, but not on escalation based
upon future conditions. Reservoirs are to be considered proved if
economic productibility is supported by actual production or formation
tests. In certain instances, proved reserves may be included on the
basis of a combination of core analysis and electrical and other type
logs which indicate the reservoirs are analogous to reservoirs in the
same field which are producing or have demonstrated the ability to
produce on a formation test. The area of a reservoir considered
proved shall be limited to (a) that portion of a reservoir delineated
by drilling and defined by gas-oil and/or oil-water contracts, if any;
and (b) the immediately adjoining portions of a reservoir not yet
drilled, but which can be reasonably judged as economically productive
on the basis of available geological and engineering data. In the
absence of information on fluid contacts, the lowest known structural
occurrence of hydrocarbons shall establish the lower proved limit of
the reservoir. Reserves that can be produced economically through
application of improved recovery techniques (such as fluid injection)
may
<PAGE> 19
14
be included in the "proved" classification when (i) successful testing
by a pilot project, or the operation of an installed program in the
reservoir, provides support for the engineering analysis on which the
improved recovery project or program was based and (ii) it is
reasonably certain the project or program will proceed. Estimates of
proved reserves shall not include the following: (i) oil that may
become available from known reservoirs but is classified separately as
"indicated additional reserve"; (ii) crude oil, natural gas and
natural gas liquids, the recovery of which is subject to reasonable
doubt because of uncertainty as to geology, reservoir characteristics
or economic factors; (iii) crude oil, natural gas and natural gas
liquids that may occur in undrilled prospects; (iv) crude oil, natural
gas or natural gas liquids being held in underground or surface
storage; and (v) crude oil, natural gas and natural gas liquids that
may be recovered from oil shales, coal, gilsonite and other such
sources.
"Rainwater Affiliates": Richard E. Rainwater and his
Affiliates. For purposes of this definition (i) each of Natural Gas
Partners II, L.P. and Natural Gas Partners III, L.P. shall be a
Rainwater Affiliate but either shall cease to be a Rainwater Affiliate
if the current managers are replaced by any persons who are not
Rainwater Affiliates or employees of a Rainwater Affiliate and (ii)
"Affiliate" means (a) with respect to any Person, any other Person
that directly or indirectly controls or manages, is controlled or
managed by, or is under common control or management with such Person,
whether through the ownership of equity interests, by contract or
otherwise, and (b) with respect to any individual, in addition to any
Persons specified in clause (a), the spouse, any parent or any child
of such individual and any trust for the benefit of such individual,
spouse, parent or child.
"Rainwater Letter of Credit": a letter of credit for the
account of DNR or its general partner in favor of MESA, in form and
substance reasonably satisfactory to, and issued by a bank in all
respects reasonably acceptable to, the Lenders, supporting DNR's
obligation to purchase Additional Series B Preferred Stock.
"Recapitalization": the collective reference to (a) the offer
by MESA to sell to its common stockholders $132,000,000 of Series A
Preferred Stock pursuant to the Rights Offering and the sale of the
Series A Preferred Stock pursuant thereto, (b) the sale by MESA of (i)
$133,000,000 of its Series B Preferred Stock to DNR pursuant to the
Stock Purchase Agreement and (ii) Additional Series B Preferred Stock
(in an amount equal to the number of shares of the Series A Preferred
Stock not sold to the common stockholders of MESA pursuant to the
Rights Offering) to DNR pursuant to the Stock Purchase Agreement, (c)
the issuance by the Borrower of the Subordinated Notes, (d) the making
of the initial extensions of credit by the Lenders pursuant to this
Agreement, (e) the merger of Hugoton Capital Limited Partnership,
Hugoton Management Corporation and MESA Holding Co. into the Borrower,
with the Borrower as the surviving corporation, on or prior to the
Closing Date, (f) the repayment (or defeasance or other provision for
repayment is made, in either case on terms reasonably acceptable to
the Administrative Agent) in full of the Refinanced Indebtedness on
the Closing Date, and (g) the issuance and delivery of the Rainwater
Letter of Credit.
"Recapitalization Documents": the collective reference to the
Stock Purchase Agreement, the Preferred Stock, the Statement of
Resolution, the Rights Offering Prospectus and the Rainwater Letter of
Credit.
"Re-determination Date": each date that the redetermined
Borrowing Base becomes effective subject to the notice requirements
specified in subsection 4.10.
"Refinanced Indebtedness": the Indebtedness of MESA and its
Subsidiaries described as "Refinanced Indebtedness" on Schedule
1.1(b), which will be repaid (or defeased or other provision for
repayment is made, in either case on terms reasonably acceptable to
the Administrative Agent) in full on the Closing Date.
"Refunded Swing Line Loans": as defined in subsection 2.3(b).
"Register": as defined in subsection 11.6(d).
<PAGE> 20
15
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reimbursement Obligations": the obligation of the Borrower
to reimburse the Issuing Lender pursuant to subsection 3.5(a) for
amounts drawn under Letters of Credit issued by the Issuing Lender in
accordance with the terms of this Agreement and the related L/C
Applications.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Lenders": at any time, Lenders the Commitment
Percentages of which aggregate at least 51%.
"Requirement of Law": as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of
its property is subject.
"Reserve Report": as defined in subsection 4.10(b).
"Responsible Officer": of any Loan Party, the chief executive
officer, the president or any vice president of such Loan Party or,
with respect to financial matters, the chief financial officer of such
Loan Party.
"Restricted Subsidiaries": the collective reference to (a)
any direct or indirect Subsidiary of the Borrower which is a
"Restricted Subsidiary" or a "Subsidiary Guarantor" for purposes of
any Subordinated Note Document and (b) any direct or indirect
Subsidiary of the Borrower that is not an Unrestricted Subsidiary
under this Agreement. Restricted Subsidiaries may only be direct or
indirect Subsidiaries of the Borrower.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to the
Borrower hereunder in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1(a), as such amount may be reduced from time to
time in accordance with the provisions of this Agreement.
"Revolving Credit Loans": as defined in subsection 2.1(a).
"Revolving Credit Note": as defined in subsection 2.4(e).
"Rights Offering": MESA's rights offering to its
shareholders, pursuant to which MESA will distribute to the holders of
its common stock transferable rights to purchase $132 million of
Series A Preferred Stock.
"Rights Offering Prospectus": the Prospectus as in effect on
the date hereof related to the Rights Offering as contained in Form
S-3 which was originally filed with the Securities and Exchange
Commission on May 9, 1996, as such Prospectus shall be further
amended, supplemented or otherwise modified from time to time in
accordance with subsection 8.11.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Mortgages and all other
security documents hereafter delivered to the Administrative Agent
granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and under any of
the other Loan Documents or to secure any guarantee of any such
obligations and liabilities.
<PAGE> 21
16
"Senior Subordinated Discount Indenture": the Indenture dated
as of July 2, 1996 between the Borrower and Harris Trust and Savings
Bank, as trustee, pursuant to which the Senior Subordinated Discount
Notes were issued, as amended, modified and supplemented from time to
time in accordance with subsection 8.11.
"Senior Subordinated Discount Notes": the $264,000,000
aggregate principal amount of 11-5/8% Senior Subordinated Discount
Notes of the Borrower issued pursuant to the Senior Subordinated
Discount Indenture, as amended, modified and supplemented from time to
time in accordance with subsection 8.11.
"Senior Subordinated Indenture": the Indenture dated as of
July 2, 1996 between the Borrower and Harris Trust and Savings Bank,
as trustee, pursuant to which the Senior Subordinated Notes were
issued, as amended, modified and supplemented from time to time in
accordance with subsection 8.11.
"Senior Subordinated Notes": the $325,000,000 aggregate
principal amount of 10-5/8% Senior Subordinated Notes of the Borrower
issued pursuant to the Senior Subordinated Indenture, as amended,
modified and supplemented from time to time in accordance with
subsection 8.11.
"Series A Preferred Stock": the Series A 8% Cumulative
Convertible Preferred Stock of MESA.
"Series B Preferred Stock": the Series B 8% Cumulative
Convertible Preferred Stock of MESA.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"SocGen": Societe Generale, Southwest Agency.
"Statement of Resolution": the Statement of Resolution
Establishing Series of Shares with respect to the Preferred Stock,
which is included in MESA's articles of incorporation.
"Stock Purchase Agreement": the Stock Purchase Agreement
dated April 26, 1996 between MESA and DNR, as amended, modified and
supplemented from time to time in accordance with subsection 8.11.
"Subordinated Debt Prospectus": the Prospectus as in effect
on the date hereof related to the issuance of the Subordinated Notes
as contained in the Form S-3 which was originally filed with the
Securities and Exchange Commission on May 7, 1996, as such Prospectus
shall be further amended, supplemented or otherwise modified from time
to time in accordance with subsection 8.11.
"Subordinated Note Documents": the collective reference to
the Subordinated Notes, the Senior Subordinated Indenture, the Senior
Subordinated Discount Indenture, the Subordinated Debt Prospectus, and
any subordinated guarantees to be executed by MESA or any of its
Subsidiaries (other than the Borrower) in connection therewith and
each agreement, instrument and document delivered in connection
therewith or relating thereto.
"Subordinated Notes": the collective reference to the Senior
Subordinated Notes and the Senior Subordinated Discount Notes.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which more than 50% of the total voting power of
shares of stock or other equity ownership interests having ordinary
voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
vote in the election of directors, a managing general partner, or
majority of general partners or other managers or trustees thereof, is
at the time owned or controlled, directly or indirectly by such Person
or one or more of the other Subsidiaries of such Person (or a
combination thereof). Unless otherwise qualified,
<PAGE> 22
17
all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to any direct or indirect Subsidiary or
Subsidiaries of MESA.
"Supermajority Lenders": at any time, Lenders the Commitment
Percentages of which aggregate at least 66-2/3%.
"Supply Contract": the Amarillo Supply Agreement, dated
January 2, 1993, between the Borrower (as successor in interest to
MOLP), as Seller, and Energas Company, a division of Atmos Energy
Corporation, as Buyer, as heretofore amended, supplemented or
otherwise modified, and as further amended, supplemented or otherwise
modified from time to time in accordance with subsection 8.11.
"Surviving Indebtedness": Indebtedness of MESA and its
Subsidiaries described as "Surviving Indebtedness" on Schedule 1.1(b),
which shall not be repaid or defeased or provision for payment made on
the Closing Date, in a principal amount not to exceed $13,000,000 in
the aggregate.
"Swing Line Commitment": the Swing Line Lender's obligation
to make Swing Line Loans pursuant to subsection 2.3.
"Swing Line Lender": Chase, in its capacity as lender of the
Swing Line Loans.
"Swing Line Loan Participation Certificate": a certificate in
substantially the form of Exhibit D, as the same may be amended,
supplemented or otherwise modified from time to time.
"Swing Line Loans": as defined in subsection 2.3(a).
"Swing Line Note": as defined in subsection 2.4(e).
"Termination Date": June 30, 2003.
"Texas Mortgage": the collective reference to the Mortgages,
substantially in the form of Exhibit F-2 hereto, executed and
delivered by the Borrower with respect to the Mortgaged Property
located in Texas, as the same may be amended, supplemented or
otherwise modified from time to time.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day); Tranches may
be identified as "Eurodollar Tranches".
"Transferee": as defined in subsection 11.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Unrestricted Assets": the collective reference to the assets
referred to on Schedule 1.1(c).
"Unrestricted Subsidiaries": the collective reference to:
(a) MEV and each other Subsidiary of the Borrower
existing as of the Closing Date (after giving effect to the
transactions contemplated by the Recapitalization);
(b) any direct or indirect Subsidiary of MESA
acquired or formed after the Closing Date which at the time of
such acquisition or formation is designated by the Board of
Directors of MESA and the Borrower as an "Unrestricted
Subsidiary" in writing, a copy of which shall be provided to
the
<PAGE> 23
18
Administrative Agent promptly upon such designation, provided
that the Board of Directors of MESA and the Borrower may
designate any such newly acquired or formed Subsidiary of MESA
to be an "Unrestricted Subsidiary" only if: (i) such
Subsidiary does not, directly or indirectly, own any Capital
Stock of, or own or hold any Lien on any property of, MESA or
any other Subsidiary of MESA which is not a Subsidiary of the
Subsidiary to be so designated an "Unrestricted Subsidiary;"
(ii) all the Indebtedness of such Subsidiary shall at the date
of acquisition or formation, and will at all times thereafter
consist of, Non-Recourse Debt, provided that the provisions of
this clause (ii) shall not prohibit MESA, the Borrower or any
Restricted Subsidiary from guaranteeing the Indebtedness of
such Subsidiary to the extent permitted by subsection 8.10;
(iii) MESA and the Borrower certify to the Administrative
Agent that (A) after giving effect to any investment made by
MESA, the Borrower or any Restricted Subsidiary in such Person
prior to the date of such acquisition or formation, as the
case may be, together with any investment to be made on the
date of such acquisition or formation, MESA, the Borrower and
the Restricted Subsidiaries are in compliance with the
provisions of subsection 8.10 and (B) the designation of such
Subsidiary as an "Unrestricted Subsidiary" complies with the
provisions contained in this definition; (iv) such Subsidiary,
either alone or in the aggregate with all other Unrestricted
Subsidiaries, does not operate, directly or indirectly, all or
substantially all of the business of MESA, the Borrower and
the Subsidiaries; (v) such Subsidiary does not, directly or
indirectly, own any Indebtedness of, and has no investments
in, MESA, the Borrower or any Restricted Subsidiary, except to
the extent permitted by subsection 8.10; (vi) such Subsidiary
is a Person with respect to which neither MESA, the Borrower
nor any of the Restricted Subsidiaries has any direct or
indirect obligation (A) to subscribe for additional Capital
Stock or (B) to maintain or preserve such Person's financial
condition or to cause such Person to achieve any specified
levels of operating results, except to the extent permitted by
subsection 8.10; and (vii) on the date such Subsidiary is
acquired or formed, such Subsidiary is not a party to any
agreement, contract, arrangement or understanding with MESA,
the Borrower or any Restricted Subsidiary with terms
substantially less favorable to MESA, the Borrower or such
Restricted Subsidiary than those that might have been obtained
from Persons who are not Affiliates of MESA; and
(c) any Subsidiary of an Unrestricted Subsidiary
(and such Subsidiary shall comply with the provisions
contained in clause (b) above).
"Wholly-Owned Restricted Subsidiary": a Restricted Subsidiary
of the Borrower, all of the outstanding Capital Stock of which (other
than directors' qualifying shares) is owned, directly or indirectly,
by the Borrower or one or more other Wholly Owned Restricted
Subsidiaries of the Borrower.
"Williamson": Williamson Petroleum Consultants, Inc., a Texas
corporation.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Loan Document or any certificate or other document
made or delivered pursuant hereto or thereto.
(b) As used herein and in any Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to MESA or any Subsidiary of MESA not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under
GAAP. References in this Agreement or any other Loan Document to financial
statements shall be deemed to include all related schedules and notes thereto.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
<PAGE> 24
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(e) References in this Agreement or any other Loan Document
to knowledge of any Loan Party of events or circumstances shall be deemed to
refer to events or circumstances of which a Responsible Officer has, or should
have had, knowledge.
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS AND
SWING LINE COMMITMENT
2.1 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Lender severally agrees to make revolving credit
loans ("Revolving Credit Loans") to the Borrower from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed the amount of such Lender's Revolving Credit Commitment; provided
that no Lender shall make any Revolving Credit Loans if, after giving effect
thereto, the sum of the Revolving Credit Loans, the Swing Line Loans and Letter
of Credit Outstandings (in each case, after giving effect to the Loans
requested to be made and the Letters of Credit requested to be issued on such
date) exceed the lesser of (i) the Revolving Credit Commitments and (ii) the
Borrowing Base then in effect. During the Commitment Period the Borrower may
use the Revolving Credit Commitments by borrowing, prepaying the Revolving
Credit Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 4.3, provided that no Revolving Credit Loan shall be made
as a Eurodollar Loan after the day that is one month prior to the Termination
Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Revolving Credit Commitments during the Commitment Period
on any Business Day, provided that the Borrower shall give the Administrative
Agent irrevocable notice (which notice must be received by the Administrative
Agent prior to 12:00 noon, New York City time, (a) three Business Days prior to
the requested Borrowing Date, if all or any part of the requested Revolving
Credit Loans are to be initially Eurodollar Loans or (b) one Business Day prior
to the requested Borrowing Date, otherwise), specifying (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to
be of Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (x) in the case of ABR Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
Available Commitments are less than $5,000,000, such lesser amount) and (y) in
the case of Eurodollar Loans, $10,000,000 or a whole multiple of $1,000,000 in
excess thereof. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Lender thereof. Each Lender
will make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 11.2 prior to 11:00 A.M., New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
2.3 Swing Line Commitment. (a) Subject to the terms and
conditions hereof, the Swing Line Lender agrees to make swing line loans
(individually, a "Swing Line Loan"; collectively, the "Swing Line Loans") to
the Borrower from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed $10,000,000;
provided that the Swing Line Lender shall not make any Swing Line Loan if,
after giving effect thereto, the sum of the Swing Line Loans, the Revolving
Credit Loans and Letter of Credit Outstandings (in each case after giving
effect to the Loans requested to be made and the Letters of Credit requested to
be issued on such date) exceed the lesser of (i) the Revolving Credit
Commitments and (ii) the Borrowing Base then in effect. During the Commitment
Period, the Borrower may use the Swing Line Commitment by borrowing, prepaying
the Swing Line Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. All Swing Line Loans shall be made as
ABR Loans and shall not be entitled to be converted into Eurodollar Loans. The
Borrower shall give the Swing Line Lender irrevocable notice (which notice must
be received by the Swing Line Lender
<PAGE> 25
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prior to 12:00 Noon, New York City time) on the requested Borrowing Date
specifying the amount of the requested Swing Line Loan which shall be in a
minimum amount of $100,000 or a whole multiple of $100,000 in excess thereof.
The proceeds of the Swing Line Loan will be made available by the Swing Line
Lender to the Borrower at the office of the Swing Line Lender by 3:00 p.m. on
the Borrowing Date by crediting the account of the Borrower at such office with
such proceeds. The Borrower may at any time and from time to time prepay the
Swing Line Loans, in whole or in part, without premium or penalty, by notifying
the Swing Line Lender prior to 12:00 Noon on any Business Day of the date and
amount of prepayment. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein. Partial
prepayments shall be in an aggregate principal amount of $100,000 or a whole
multiple of $100,000 in excess thereof.
(b) The Swing Line Lender, at any time in its sole and
absolute discretion may, on behalf of the Borrower (which hereby irrevocably
directs the Swing Line Lender to act on its behalf) request each Lender,
including the Swing Line Lender, to make a Revolving Credit Loan in an amount
equal to such Lender's Commitment Percentage of the amount of the Swing Line
Loans outstanding on the date such notice is given (the "Refunded Swing Line
Loans"). Unless any of the events described in paragraph (f) of Section 9
shall have occurred with respect to the Borrower (in which event the procedures
of paragraph (d) of this subsection 2.3 shall apply) each Revolving Credit
Lender shall make the proceeds of its Revolving Credit Loan available to the
Administrative Agent for the account of the Swing Line Lender at the office of
the Administrative Agent specified in subsection 11.2 prior to 12:00 Noon (New
York City time) in funds immediately available on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving
Credit Loans shall be immediately applied to repay the Refunded Swing Line
Loans. Effective on the day such Revolving Credit Loans are made, the portion
of the Swing Line Loans so paid shall no longer be outstanding as Swing Line
Loans, shall no longer be due under any Swing Line Note and shall be due under
the respective Revolving Credit Loans made by the Lenders in accordance with
their respective Commitment Percentages.
(c) Notwithstanding anything herein to the contrary, the
Swing Line Lender shall not be obligated to make any Swing Line Loans if the
conditions set forth in subsection 6.2 have not been satisfied.
(d) If prior to the making of a Revolving Credit Loan
pursuant to paragraph (b) of this subsection 2.3 one of the events described in
paragraph (f) of Section 9 shall have occurred and be continuing with respect
to the Borrower, each Lender will, on the date such Revolving Credit Loan was
to have been made pursuant to the notice in subsection 2.3(b), purchase an
undivided participating interest in the Refunded Swing Line Loans in an amount
equal to (i) its Commitment Percentage times (ii) the Refunded Swing Line
Loans. Each Lender will immediately transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation, and upon receipt
thereof the Swing Line Lender will deliver to such Lender a Swing Line Loan
Participation Certificate dated the date of receipt of such funds and in such
amount.
(e) Whenever, at any time after any Lender has purchased a
participating interest in a Swing Line Loan, the Swing Line Lender receives any
payment on account thereof, the Swing Line Lender will distribute to such
Lender its participating interest in such amount (appropriately adjusted, in
the case of interest payments, to reflect the period of time during which such
Lender's participating interest was outstanding and funded); provided, however,
that in the event that such payment received by the Swing Line Lender is
required to be returned, such Lender will return to the Swing Line Lender any
portion thereof previously distributed by the Swing Line Lender to it.
(f) Each Lender's obligation to make the Loans referred to in
subsection 2.3(b) and to purchase participating interests pursuant to
subsection 2.3(d) shall be absolute, irrevocable and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such Lender or
the Borrower may have against the Swing Line Lender, the Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower or any other Loan Party; (iv) any
breach of this Agreement or any other Loan Document by MESA or any of its
Subsidiaries or any other Lender; or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
2.4 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan of such
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Lender on the Termination Date (or such earlier date on which the Loans become
due and payable pursuant to Section 9). The Borrower hereby further agrees to
pay interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof to but not including the date the Loans are
paid in full at the rates per annum, and on the dates, set forth in subsection
4.1.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Agent shall maintain the Register pursuant to
subsection 11.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 2.4(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of the Administrative Agent or any Lender to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender (i) a promissory note of the Borrower evidencing the Revolving
Credit Loans of such Lender, substantially in the form of Exhibit A-1 with
appropriate insertions as to date and principal amount (a "Revolving Credit
Note"), and/or (ii) a promissory note of the Borrower evidencing the Swing Line
Loans of such Lender, substantially in the form of Exhibit A-2 with appropriate
insertions as to date and principal amount (a "Swing Line Note").
SECTION 3. LETTERS OF CREDIT
3.1 The L/C Commitment. (a) Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements of the
other Lenders set forth in subsection 3.4(a), agrees to issue letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day
during the Commitment Period in such form as may be approved from time to time
by the Issuing Lender; provided that the Issuing Lender shall not issue any
Letter of Credit if, after giving effect to such issuance and after giving
effect to any Loans requested to be made or Letters of Credit requested to be
issued on such date, (i) the Letter of Credit Outstandings would exceed
$60,000,000 or (ii) the sum of the Revolving Credit Loans, Swing Line Loans and
Letter of Credit Outstandings would exceed the lesser of (x) the Revolving
Credit Commitments and (y) the Borrowing Base then in effect. Each Letter of
Credit shall (i) be issued to support obligations of the Borrower or any of the
Subsidiaries, contingent or otherwise, which finance the working capital and
business needs of the Borrower and the Subsidiaries, and (ii) shall expire no
later than the earlier of (x) one year (or such later date agreed to by the
Issuing Lender) after the date of issuance and (y) five Business Days prior to
the Termination Date, provided that any Letter of Credit with a one-year tenor
may provide for the extension thereof for additional one-year periods (which
shall in no event extend beyond the date referred to in clause (y) above). Each
Letter of Credit shall be denominated in Dollars.
(b) As of the Closing Date, each Existing Letter of Credit
shall constitute, for all purposes of this Agreement and the other Loan
Documents, a Letter of Credit issued and outstanding hereunder and shall be
deemed to be issued on the Closing Date.
(c) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, (i) the laws of the
State of New York or, if acceptable to the Issuing Lender, the State of Texas
or (ii) with
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respect to any Existing Letter of Credit which is currently subject to the laws
of the State California (and renewals thereof), the laws of the State of
California.
(d) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any Participating Lender to exceed any limits
imposed by, any applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that the Issuing Lender issue a Letter
of Credit by delivering to the Issuing Lender and the Administrative Agent at
their respective addresses for notices specified herein a letter of credit
application in the Issuing Lender's then customary form (an "L/C Application")
completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as may be customary
and as the Issuing Lender may reasonably request. Upon receipt of any L/C
Application, the Issuing Lender will process such L/C Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and, upon
receipt by the Issuing Lender of confirmation from the Administrative Agent
that issuance of such Letter of Credit will not contravene subsection 3.1, the
Issuing Lender shall promptly issue the Letter of Credit requested thereby (but
in no event shall the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the L/C Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender
and the Borrower. The Issuing Lender shall furnish a copy of such Letter of
Credit to the Borrower and the Administrative Agent promptly following the
issuance thereof, and, thereafter, the Administrative Agent shall promptly
furnish a copy thereof to the Lenders.
3.3 Fees, Commissions and Other Charges. (a) The Borrower
shall pay to the Administrative Agent, for the account of (i) the Issuing
Lender and the Participating Lenders, a letter of credit commission with
respect to each Letter of Credit, computed for the period from the date such
Letter of Credit is issued to the date upon which the next payment is due under
this subsection (and, thereafter, from the date of payment under this
subsection to the date upon which the next payment is due under this
subsection) at the rate of 1.5% per annum of the average daily aggregate amount
available to be drawn under such Letter of Credit during such period and (ii)
the Issuing Lender, a letter of credit commission with respect to each Letter
of Credit in an amount equal to .25% of the stated amount of such Letter of
Credit (and an additional .25% of the stated amount of such Letter of Credit on
each anniversary of its issuance date). The letter of credit commissions
payable pursuant to clause (i) above shall be payable quarterly in arrears on
the last day of each March, June, September and December, commencing September
30, 1996, and on the Termination Date, and the letter of credit commissions
payable pursuant to clause (ii) above shall be payable on the date such Letter
of Credit is issued (and the date such Letter of Credit is extended). Such
commissions shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing Lender
in issuing, effecting payment under, amending or otherwise administering any
Letter of Credit.
(c) The Administrative Agent shall, promptly following its
receipt thereof, distribute to the Issuing Lender and the Participating Lenders
all fees and commissions received by the Administrative Agent for their
respective accounts pursuant to this subsection.
3.4 L/C Participations. (a) Effective on the date of
issuance of each Letter of Credit (including, without limitation, each Existing
Letter of Credit which is deemed issued on the Closing Date), the Issuing
Lender irrevocably agrees to grant and hereby grants to each Participating
Lender, and each Participating Lender irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such Participating Lender's own account and
risk an undivided interest equal to such Participating Lender's Commitment
Percentage in the Issuing Lender's obligations and rights under each Letter of
Credit issued by the Issuing Lender and the amount of each draft paid by the
Issuing Lender thereunder. Each Participating Lender unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which such Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such Participating
Lender shall pay to the Administrative Agent, for the account of the Issuing
Lender, upon demand
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at the Administrative Agent's address specified in subsection 11.2, an amount
equal to such Participating Lender's Commitment Percentage of the amount of
such draft, or any part thereof, which is not so reimbursed. On the date that
any Assignee becomes a Lender party to this Agreement in accordance with
subsection 11.6, participating interests in any outstanding Letters of Credit
held by the transferor Lender from which such Assignee acquired its interest
hereunder shall be proportionately reallotted between such Assignee and such
transferor Lender. Each Participating Lender hereby agrees that its obligation
to participate in each Letter of Credit, and to pay or to reimburse the Issuing
Lender for its participating share of the drafts drawn or amounts otherwise
paid thereunder, is absolute, irrevocable and unconditional and shall not be
affected by any circumstances whatsoever (including, without limitation, the
occurrence or continuance of any Default or Event of Default), and that each
such payment shall be made without offset, abatement, withholding or other
reduction whatsoever.
(b) If any amount required to be paid by any Participating
Lender to the Issuing Lender pursuant to subsection 3.4(a) in respect of any
unreimbursed portion of any draft paid by the Issuing Lender under any Letter
of Credit is paid to the Issuing Lender within three Business Days after the
date such payment is due, such Participating Lender shall pay to the
Administrative Agent, for the account of the Issuing Lender, on demand, an
amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
draft is paid to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If
any such amount required to be paid by any Participating Lender pursuant to
subsection 3.4(a) is not in fact made available to the Administrative Agent,
for the account of the Issuing Lender, by such Participating Lender within
three Business Days after the date such payment is due, the Issuing Lender
shall be entitled to recover from such Participating Lender, on demand, such
amount with interest thereon calculated from such due date at the rate per
annum applicable to ABR Loans hereunder. A certificate of the Issuing Lender
submitted to any Participating Lender with respect to any amounts owing under
this subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has paid a
draft under any Letter of Credit and has received from any Participating Lender
its pro rata share of such payment in accordance with subsection 3.4(a), the
Issuing Lender receives any reimbursement on account of such unreimbursed
portion, or any payment of interest on account thereof, the Issuing Lender will
pay to the Administrative Agent, for the account of such Participating Lender,
its pro rata share thereof; provided, however, that in the event that any such
payment received by the Issuing Lender shall be required to be returned by the
Issuing Lender, such Participating Lender shall return to the Administrative
Agent for the account of the Issuing Lender, the portion thereof previously
distributed to it.
3.5 Reimbursement Obligation of the Borrower. If any draft
shall be presented for payment under any Letter of Credit, the Issuing Lender
shall notify the Borrower and the Administrative Agent of the date and the
amount thereof. The Borrower agrees to reimburse the Issuing Lender (whether
with its own funds or with proceeds of the Revolving Credit Loans or Swing Line
Loans) on each date on which the Issuing Lender pays a draft so presented under
any Letter of Credit for the amount of (i) such draft so paid and (ii) any
taxes, fees, charges or other costs or expenses incurred by the Issuing Lender
in connection with such payment. Each such payment shall be made to the
Issuing Lender at its address for notices specified herein in lawful money of
the United States of America and in immediately available funds. Interest
shall be payable on any and all amounts remaining unpaid by the Borrower under
this subsection from the date of payment of the applicable draft until payment
in full thereof, (x) for the period commencing on the date of payment of the
applicable draft to the date which is 3 days thereafter, at the rate which
would be payable on ABR Loans at such time and (y) thereafter, at the rate
which would be payable on ABR Loans at such time plus 2%.
3.6 Obligations Absolute. (a) The Borrower's obligations
under this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower or any other Person may have or have had against the
Issuing Lender or any other Lender or any beneficiary of a Letter of Credit.
The Borrower also agrees with the Issuing Lender that the Issuing Lender shall
not be responsible for, and the Borrower's obligations under subsection 3.5
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of the
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Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except
for errors or omissions caused by the Issuing Lender's gross negligence or
willful misconduct. The Borrower agrees that any action taken or omitted by
the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in
the Uniform Commercial Code of the State of New York (or, with respect to
Letters of Credit governed by the State of Texas, the Uniform Commercial Code
of the State of Texas), including, without limitation, Article V thereof, shall
be binding on the Borrower and shall not result in any liability of such
Issuing Lender to the Borrower.
(b) Without limiting the generality of the foregoing, it is
expressly agreed that the absolute and unconditional nature of the Borrower's
obligations under this Section 3 to reimburse the Issuing Lender for each
drawing under a Letter of Credit will not be excused by the gross negligence or
wilful misconduct of the Issuing Lender. However, the foregoing shall not be
construed to excuse the Issuing Lender from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing
Lender's gross negligence or wilful misconduct in determining whether drafts
and other documents presented under a Letter of Credit comply with the terms
thereof.
3.7 Letter of Credit Payments. Without limitation of
subsection 3.6, the responsibility of the Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.
3.8 L/C Applications. To the extent that any provision of
any L/C Application, including any reimbursement provisions contained therein,
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall prevail.
SECTION 4. GENERAL PROVISIONS
4.1 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus 1.5%.
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus .5%.
(c) If all or a portion of (i) any principal of any Loan,
(ii) any interest payable thereon, (iii) any commitment fee or (iv) any other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), the principal of the Loans and any
such overdue interest, commitment fee or other amount shall bear interest at a
rate per annum which is (x) in the case of principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of any such overdue interest, commitment
fee or other amount, the rate described in paragraph (b) of this subsection
plus 2%, in each case from the date of such non-payment until such overdue
principal, interest, commitment fee or other amount is paid in full (as well
after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to subsection 4.1(c)
shall be payable from time to time on demand.
4.2 Computation of Interest and Fees. (a) Whenever it is
calculated on the basis of the Prime Rate, interest shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest and fees shall be calculated on the basis of
a 360-day year for the actual days elapsed. The Administrative Agent shall as
soon as practicable notify the Borrower and the Lenders of each determination
of a
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Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR, the Eurocurrency Reserve Requirements, the C/D Assessment
Rate or the C/D Reserve Percentage shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used by
the Administrative Agent in determining any interest rate pursuant to
subsection 4.1(a).
4.3 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans by giving
the Administrative Agent at least one Business Day's prior irrevocable notice
of such election, provided that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election. Any such notice of conversion to
Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. All or any part of
outstanding Eurodollar Loans and ABR Loans may be converted as provided herein,
provided that (i) no Loan may be converted into a Eurodollar Loan when any
Event of Default has occurred and is continuing and the Administrative Agent
has or the Required Lenders have determined that such a conversion is not
appropriate and (ii) no Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent has or the
Required Lenders have determined that such a continuation is not appropriate or
(ii) after the date that is one month prior to the Termination Date and
provided, further, that if the Borrower shall fail to give such notice or if
such continuation is not permitted such Loans shall be automatically converted
to ABR Loans on the last day of such then expiring Interest Period.
4.4 Minimum Amounts Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Loans comprising each Eurodollar Tranche shall be equal to
$10,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event
shall there be more than eight Eurodollar Tranches outstanding at any time.
4.5 Optional Prepayments and Commitment Reductions. (a) The
Borrower may on the last day of any Interest Period with respect thereto, in
the case of Eurodollar Loans, or at any time and from time to time, in the case
of ABR Loans, prepay the Loans, in whole or in part, without premium or
penalty, upon at least one Business Day's irrevocable notice to the
Administrative Agent or same-day irrevocable notice to the Administrative Agent
(in the case of Swing Line Loans), specifying the date and amount of prepayment
and whether the prepayment is (i) of Revolving Credit Loans or Swing Line
Loans, or a combination thereof, and (ii) of Eurodollar Loans, ABR Loans or a
combination thereof, and, in each case if of a combination thereof, the amount
allocable to each. Upon receipt of any such notice the Administrative Agent
shall promptly notify each Lender thereof. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection 4.15 and, in
the case of prepayments of the Swing Line Loans only, accrued interest to such
date on the amount prepaid. Except with respect to Swing Line Loans, partial
prepayments shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof.
(b) Subject to subsection 4.5(c), the Borrower shall have the
right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate the Revolving Credit Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments. Any such reduction
shall be in an amount equal to $10,000,000 or a whole multiple of $5,000,000 in
excess thereof and shall reduce permanently the Revolving Credit
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Commitments then in effect. Termination of the Revolving Credit Commitments
shall also terminate the obligation of the Swing Line Lender to make the Swing
Line Loans and of the Issuing Lender to issue Letters of Credit.
(c) In the event of any termination of the Revolving Credit
Commitments, the Borrower shall on the date of such termination repay or prepay
all its outstanding Swing Line Loans and Revolving Credit Loans (together with
accrued and unpaid interest on the Loans), reduce the Letter of Credit
Outstandings to zero and cause all Letters of Credit to be canceled and
returned to the Issuing Lender (or shall cash collateralize the Letter of
Credit Outstandings on terms and pursuant to documentation reasonably
satisfactory to the Issuing Lender and the Administrative Agent). In the event
of any partial reduction of the Revolving Credit Commitments, then (i) at or
prior to the effective date of such reduction, the Administrative Agent shall
notify the Borrower, the Swing Line Lender and the Lenders of the Aggregate
Revolving Credit Exposure of all the Lenders and (ii) if the Aggregate
Revolving Credit Exposure of all the Lenders would exceed the aggregate
Revolving Credit Commitments after giving effect to such reduction, then, prior
to giving effect to such reduction, the Borrower shall, on the date of such
reduction, first, repay or prepay Swing Line Loans, second, repay or prepay
Revolving Credit Loans, and, third, reduce the Letter of Credit Outstandings
(or cash collateralize the Letter of Credit Outstandings on terms and pursuant
to documentation reasonably satisfactory to the Issuing Lender and the
Administrative Agent), in an aggregate amount sufficient to eliminate such
excess.
4.6 Mandatory Prepayments. (a) The Borrower shall repay
Loans and cash collateralize Letter of Credit Outstandings on each date of
receipt of Net Cash Proceeds, as follows:
(i) by an amount equal to 75% of the Net Cash Proceeds
of any sale or issuance of Capital Stock after the Closing Date by
MESA, the Borrower or any of its Restricted Subsidiaries; provided,
however, that this paragraph (i) shall not apply:
(A) to Net Cash Proceeds from the sale or issuance
of Capital Stock of MESA to directors, officers and employees
of MESA, the Borrower and the Subsidiaries in connection with
permitted employee compensation and incentive arrangements;
(B) as long as no Default or Event of Default has
occurred and is continuing or would be in effect after giving
effect thereto, to Net Cash Proceeds from the sale of common
stock of MESA after the Closing Date to the extent that such
Net Cash Proceeds are used to redeem the Subordinated Notes in
accordance with the "equity clawback" provisions set forth in
Section 3.7(b) of each of the Senior Subordinated Indenture
and the Senior Subordinated Discount Indenture;
(C) to Net Cash Proceeds received from the sale of
the Series A Preferred Stock pursuant to the Rights Offering;
and
(D) to the Net Cash Proceeds received from the sale
of the Additional Series B Preferred Stock to DNR pursuant to
the Stock Purchase Agreement;
(ii) by an amount equal to 100% of the Net Cash Proceeds
of an incurrence of Indebtedness by MESA, the Borrower or any of the
Restricted Subsidiaries (other than Indebtedness permitted by
subsection 8.2); and
(iii) if a Major Transaction shall have occurred as a
result of the events described in clause (a) of the definition
thereof, (A) by an amount equal to 100 percent of the Net Cash
Proceeds received in respect of any sale of other disposition of any
asset which triggers the occurrence of such Major Transaction or (B)
by an amount equal to 100 percent of the Net Cash Proceeds received in
respect of the sale or disposition of assets in one transaction or in
a series of related transactions which triggers the occurrence of such
Major Transaction.
(b) (i) On the date on which the transactions contemplated by
the Rights Offering and any sale of Additional Series B Preferred Stock
(whether pursuant to a draw on the Rainwater Letter of Credit or otherwise) are
consummated, the Loans shall be prepaid in an amount so that, after giving
effect to such prepayment, the difference
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between (A) the aggregate Revolving Credit Commitments (or, if less, the
Borrowing Base) in effect at such time and (B) the Aggregate Revolving Credit
Exposure of all the Lenders shall be at least $100,000,000.
(ii) On the date of any re-determination of the
Borrowing Base as a result of the occurrence of a Major Transaction referred to
in clause (a) of the definition of Major Transaction, the Borrower shall prepay
the Loans and, if necessary, reduce or cash collateralize the Letter of Credit
Outstandings (as provided in subsection 4.5(c)) in an amount, if any, equal to
the excess of (A) the then Aggregate Revolving Credit Exposure of all the
Lenders over (B) an amount equal to such redetermined Borrowing Base.
(c) The Loans shall be repaid, and the Letter of Credit
Outstandings shall be reduced or cash collateralized, to the extent required by
subsection 4.11.
(d) All such repayments and cash collateralization shall be
made in accordance with subsection 4.6(e).
(e) (i) In the event the amount of any prepayment of the
Loans required to be made above shall exceed the aggregate principal amount of
the outstanding ABR Loans (the amount of any such excess being called the
"Excess Amount"), the Borrower shall have the right, in lieu of making such
prepayment in full, to prepay all the outstanding applicable ABR Loans and to
deposit an amount equal to the Excess Amount with, and (ii) in the event that
Letter of Credit Outstandings are required to be cash collateralized, the
Borrower shall deposit an amount equal to the aggregate amount of Letter of
Credit Outstandings to be cash collateralized with, the Administrative Agent in
a cash collateral account maintained (pursuant to documentation reasonably
satisfactory to the Administrative Agent) by and in the sole dominion and
control of the Administrative Agent. Any amounts so deposited shall be held by
the Administrative Agent as collateral for the Obligations and applied to the
prepayment of the applicable Eurodollar Loans at the end of the current
Interest Periods applicable thereto or Letter of Credit Outstandings, as the
case may be, or, during an Event of Default, to payment of any Obligations
(including obligations in respect of the Letters of Credit). On any Business
Day on which (i) collected amounts remain on deposit in or to the credit of
such cash collateral account after giving effect to the payments made on such
day pursuant to this subsection 4.6(e) and (ii) the Borrower shall have
delivered to the Administrative Agent a written request or a telephonic request
(which shall be promptly confirmed in writing) that such remaining collected
amounts be invested in the Cash Equivalent specified in such request, the
Administrative Agent shall use its reasonable efforts to invest such remaining
collected amounts in such Cash Equivalent, provided, however, that the
Administrative Agent shall have continuous dominion and full control over any
such investments (and over any interest that accrues thereon) to the same
extent that it has dominion and control over such cash collateral account and
no Cash Equivalent shall mature after the end of the Interest Period for which
it is to be applied. The Borrower shall not have the right to withdraw any
amount from such cash collateral account until the applicable Eurodollar Loans
and accrued interest thereon and Letter of Credit Outstandings are paid in full
or if a Default or Event of Default then exists or would result. Any
prepayment or collateralization pursuant to this subsection 4.6(e) shall be
applied in the order set forth in clause (ii) of the second sentence of
subsection 4.5(c).
4.7 Commitment Fee; Administrative Agent's Fee; Other Fees.
(a) The Borrower agrees to pay to the Administrative Agent for the account of
each Lender a commitment fee for the period from and including, for each
Lender, the date on which the Revolving Credit Commitment of such Lender shall
have been accepted to but not including the Termination Date, computed at the
rate of .375% per annum on the average daily amount of the Available Commitment
of such Lender during the period for which payment is made, payable on the
Closing Date and quarterly in arrears on the last day of each March, June,
September and December (commencing on September 30, 1996) and on the
Termination Date or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof. For purposes of the commitment fee calculations only,
Swing Line Loans shall be deemed to be not outstanding. Commitment fees shall
be nonrefundable when paid.
(b) The Borrower shall pay to the Administrative Agent the
fees set forth in the letter agreement dated July 2, 1996 among MESA, the
Borrower and the Administrative Agent, on the dates specified therein.
(c) The Borrower shall pay to each member of the Engineering
Committee the fees set forth in the letter agreement dated July 2, 1996 among
MESA, the Borrower and the Engineering Committee, on the dates specified
therein.
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4.8 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the Lenders as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have
been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall
be converted, on the first day of such Interest Period, to ABR Loans. Until
such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower
have the right to convert Loans to Eurodollar Loans.
4.9 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee hereunder and any reduction of the Revolving
Credit Commitments of the Lenders shall be made pro rata according to the
respective Commitment Percentages of the Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Loans shall be made pro rata according to the respective outstanding principal
amounts of the Loans then held by the Lenders. All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the Lenders,
at the Administrative Agent's office specified in subsection 11.2, in Dollars
and in immediately available funds. The Administrative Agent shall distribute
such payments to the Lenders promptly upon receipt in like funds as received.
If any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent, and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower a corresponding amount. If such amount is not made available
to the Administrative Agent by the required time on the Borrowing Date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If such
Lender's Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans
hereunder, on demand, from the Borrower.
4.10 Computation of Borrowing Base. (a) The Borrowing Base
in effect from time to time shall represent the maximum principal amount
(subject to the aggregate amount of the Revolving Credit Commitments) of Loans
and Letter of Credit Outstandings that the Lenders will allow to remain
outstanding during the Commitment Period. The Borrowing Base shall be
determined in accordance with this subsection 4.10. The Borrowing Base will be
based upon the value of certain Proved Reserves attributable to the Oil and Gas
Properties of the Borrower and the Restricted Subsidiaries, as such value is
determined in accordance with this subsection, and other assets of the Borrower
and the Restricted Subsidiaries reasonably acceptable to and on terms to be
agreed upon by the Borrower and the
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Engineering Committee, and will be determined by the Engineering Committee in
accordance with paragraph (e) of this subsection 4.10, subject to approval by
the Supermajority Lenders. Until the Commitments are no longer in effect, all
Letters of Credit have terminated and all of the Obligations are paid in full,
this Agreement shall be subject to the then effective Borrowing Base. During
the period from and after the Closing Date until the first Redetermination
Date, the amount of the Borrowing Base shall be $525,000,000.
(b) Prior to April 15, 1997 and prior to March 1 of each year
thereafter, the Borrower shall furnish to the Administrative Agent (with
sufficient copies for each Lender) a report (herein called a "Reserve Report")
in form and with attachments consistent with the Initial Reserve Report, which
Reserve Report shall be dated as of the immediately preceding January 1, and
shall set forth, among other things, (i) the Oil and Gas Properties then owned
by the Borrower and the Restricted Subsidiaries (and showing any additions to
or deletions from such Oil and Gas Properties made by the Borrower and the
Restricted Subsidiaries since the date of the previous Reserve Report or, with
respect to the Reserve Report dated as of January 1, 1997, since the date of
the Initial Reserve Report), (ii) which Mortgage, if any, such Oil and Gas
Properties are subject to, (iii) the Proved Reserves attributable to such Oil
and Gas Properties and (iv) a projection of the rate of production and net
income of the Proved Reserves as of the date of such Reserve Report, all in
accordance with the guidelines published by the Securities and Exchange
Commission. Each Reserve Report shall include a reserve report prepared by the
Borrower with respect to the Oil and Gas Properties of the Borrower and the
Restricted Subsidiaries and reviewed and found to be satisfactory by Williamson
or another independent engineering consulting firm reasonably satisfactory to
the Supermajority Lenders covering at least eighty-five percent (85%) of the
then net present value (determined in accordance with the guidelines published
by the Securities and Exchange Commission) of the Oil and Gas Properties of the
Borrower and the Restricted Subsidiaries, provided, however, that the
Engineering Committee shall have the right to approve of the composition of the
Oil and Gas Properties covered in that portion of the Reserve Report to be
reviewed by Williamson or such other independent engineering consulting firm.
(c) The Borrowing Base shall be re-determined (i) after
receipt by the Engineering Committee of each scheduled Reserve Report, (ii)
upon the delivery of a Lender Redetermination Notice to the Borrower and (iii)
upon the delivery of a Borrower Redetermination Notice to each member of the
Engineering Committee, all as provided in this subsection 4.10(c). The
Borrowing Base shall also be redetermined from time to time as provided in
subsection 4.10(d). Within 30 days after the delivery of a Borrower
Redetermination Notice or a Lender Redetermination Notice, the Borrower shall
furnish to the Administrative Agent (with sufficient copies for each Lender) a
Reserve Report as of the most recent practicable date. If the Borrower fails
to deliver a Reserve Report within the time period provided for in the
preceding sentence, then the Engineering Committee shall have the right to rely
on the last Reserve Report previously delivered by the Borrower with any such
adjustments and taking into account any additional information as the
Engineering Committee may deem appropriate, in its sole discretion. On or
before the date which is 30 days after receipt of a scheduled annual Reserve
Report or of a Reserve Report in connection with a Lender Redetermination
Notice or a Borrower Redetermination Notice, the Engineering Committee shall
re-determine the Borrowing Base and the Administrative Agent shall notify the
Borrower and the Lenders of the Engineering Committee's re-determination of the
Borrowing Base. Within 10 days after receipt from the Administrative Agent of
the amount of the Engineering Committee's re-determination of the Borrowing
Base, each Lender shall notify the Administrative Agent stating whether or not
such Lender agrees with that re-determination. Failure of any Lender to give
such notice within such period of time shall be deemed to constitute an
acceptance of such re-determination. If the Supermajority Lenders agree with
that re- determination, then the Administrative Agent promptly shall notify the
Borrower of the Borrowing Base as so re- determined, whereupon that
re-determined value shall automatically become effective (and shall remain
effective, subject to any re-determinations provided for by subsection 4.10(d),
until the Borrowing Base is again re-determined as provided in this subsection
4.10(c)). If the Supermajority Lenders do not approve the Engineering
Committee's re-determination of the Borrowing Base, then the Engineering
Committee shall make a further re-determination of the Borrowing Base and the
Administrative Agent promptly shall submit the Engineering Committee's new
re-determination to the Lenders and the Borrower. Each Lender shall have five
Business Days after receipt of each of the new re-determinations to notify the
Administrative Agent whether that Lender approves of the new re-determination.
Failure of any Lender to give such notice within such period of time shall be
deemed to constitute an acceptance of such re-determination. This process
shall continue until the Engineering Committee and the Supermajority Lenders
agree upon a re-determination of the Borrowing Base, whereupon the
Administrative Agent promptly shall notify the Borrower of the redetermination
and the re- determination shall become effective as provided above. Each
re-determination provided
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for by this subsection 4.10(c) shall be made in accordance with the provisions
of subsection 4.10(e). It is the intention of the Borrower and the Lenders
that the Borrowing Base be redetermined within 45 days after the furnishing of
each Reserve Report, subject to the provisions of this paragraph (c).
(d) (i) The Borrowing Base may be re-determined upon the
occurrence of any Major Transaction to take account of such Major Transaction,
all as provided in this subsection 4.10(d).
(ii) Within 20 days (or, if the Borrower intends to
submit additional Oil and Gas Properties to be included in the Borrowing Base
in connection with any such re-determination in accordance with clause (iv)
below, within 30 days after receiving a Reserve Report with respect to such Oil
and Gas Properties) after the Engineering Committee receives notice of the
occurrence of a Major Transaction, the Engineering Committee may, at its option
(or, at the request of the Required Lenders, shall), re-determine the Borrowing
Base to take account of such Major Transaction, and the Administrative Agent
shall notify the Lenders (with a copy to the Borrower) of the Engineering
Committee's re- determination of the Borrowing Base. In the event that a Major
Transaction shall have occurred as a result of the events described in clause
(a) of the definition thereof, the Borrowing Base shall, pending
re-determination pursuant to this subsection 4.10(d) or until the Engineering
Committee shall have notified the Borrower that it does not intend to
re-determine the Borrowing Base as a result of such Major Transaction,
automatically and without any further action be reduced by an amount equal to
sixty percent (60%) of the aggregate Fair Market Value of all assets sold
during the relevant Borrowing Base Period. Any automatic reduction of the
Borrowing Base pursuant to this clause (ii) shall, for all purposes of this
Agreement (including, without limitation, subsection 4.6(b)(ii)), be deemed a
re-determination of the Borrowing Base.
(iii) Within five Business Days after receipt from the
Administrative Agent of the amount of the Engineering Committee's
re-determination of the Borrowing Base pursuant to this subsection 4.10(d),
each Lender shall notify the Administrative Agent stating whether or not such
Lender agrees with that re-determination. Failure of any Lender to give such
notice within such period of time shall be deemed to constitute an acceptance
of such re- determination. If the Supermajority Lenders agree with that
re-determination, then the Administrative Agent promptly shall notify the
Borrower of the Borrowing Base as so re-determined, whereupon that
re-determined value shall automatically become effective (and shall remain
effective, until the Borrowing Base is again re-determined as provided in
subsection 4.10(c) or this subsection 4.10(d)). If the Supermajority Lenders
do not approve the Engineering Committee's re-determination of the Borrowing
Base, then the Engineering Committee shall make a further re-determination of
the Borrowing Base and the Administrative Agent promptly shall submit the
Engineering Committee's new re- determination to the Lenders and the Borrower.
Each Lender shall have five Business Days after receipt of each of the new
re-determinations to notify the Administrative Agent whether that Lender
approves of the new re-determination. Failure of any Lender to give such
notice within such period of time shall be deemed to constitute an acceptance
of such re-determination. This process shall continue until the Engineering
Committee and the Supermajority Lenders agree upon a re-determination of the
Borrowing Base, whereupon the Administrative Agent promptly shall notify the
Borrower of the redetermination and the re-determination shall become effective
as provided above. Each re-determination provided for by this subsection
4.10(d) shall be made in accordance with the provisions of subsection 4.10(e).
(iv) Subject to the Engineering Committee's right, in
its sole discretion, to re-determine the Borrowing Base within 20 days after
the occurrence of a Major Transaction, the Borrower may, in connection with any
such re-determination as a result of a Major Transaction described in clause
(a) of the definition thereof, submit additional Oil and Gas Properties to be
included in the re-determined Borrowing Base. If the Borrower intends to
include additional Oil and Gas Properties in any such re-determination of the
Borrowing Base, the Borrower shall (A) within five days after the occurrence of
such Major Transaction, notify the Engineering Committee in writing of its
intent to include additional Oil and Gas Properties in the Borrowing Base and
(B) within 30 days after the occurrence of such Major Transaction, furnish to
the Administrative Agent (with sufficient copies for each Lender) a Reserve
Report covering such additional properties. The Borrowing Base will be
re-determined in accordance with the procedures set forth in subsection 4.10(c)
applicable to a re-determination pursuant to a Borrower Redetermination Notice.
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(e) (i) All determinations and re-determinations by the
Engineering Committee provided for in this subsection 4.10 (and any
determinations and decisions by either or both of the Engineering Committee and
the Supermajority Lenders in connection therewith, including effecting any
re-determination of the value of any component contained in a Reserve Report)
shall be made by the Engineering Committee and the Lenders in their sole
discretion and shall be made on a reasonable basis and in good faith based upon
the application by the Engineering Committee and the Lenders of their
respective normal oil and gas lending criteria as they exist at the time of
determination.
(ii) All re-determinations in the Borrowing Base referred to
in this subsection 4.10 shall become effective immediately upon the delivery of
notice by the Administrative Agent to the Borrower of the re-determination.
4.11 Borrowing Base Compliance. Except as set forth in
subsection 4.6(b)(ii), if at any time the aggregate principal amount of the
Revolving Credit Loans, the Letter of Credit Outstandings and the Swing Line
Loans exceed the Borrowing Base then in effect (any such excess, the "Borrowing
Base Deficiency"), the Borrower shall prepay the Revolving Credit Loans and the
Swing Line Loans and cash collateralize the Letter of Credit Outstandings in an
amount equal to 50% of the Borrowing Base Deficiency within 90 days after such
date and prepay the Revolving Credit Loans and Swing Line Loans and cash
collateralize the Letter of Credit Outstandings in an amount equal to the
balance of the Borrowing Base Deficiency within 180 days after such date in
each case, together with interest accrued to the date of such payment or
prepayment and any amounts payable under subsection 4.15. In addition, the
Borrower may, in order to reduce or eliminate such Borrowing Base Deficiency,
submit (i) additional Oil and Gas Properties in accordance with subsection
7.10(d) and/or (ii) other properties reasonably acceptable to and on terms to
be agreed upon by the Supermajority Lenders, to be included in the Borrowing
Base. Prepayments and collateralization pursuant to this subsection 4.11 shall
be made as set forth in subsection 4.5(c).
4.12 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof after the date hereof shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by
this Agreement (a) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert ABR Loans to Eurodollar
Loans shall forthwith be canceled and (b) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to subsection
4.15.
4.13 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof after the date hereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note, any Letter of
Credit, any L/C Application or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by subsection 4.14,
changes in the rate or computation of tax on the overall net income of
such Lender, franchise taxes imposed in lieu of net income taxes and
doing business taxes);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower
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shall promptly pay such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, the
Borrower shall promptly pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender to the Borrower (with a
copy to the Administrative Agent) shall constitute prima facie evidence of the
correctness of the amount claimed, provided that, with respect to any
additional amount claimed hereunder by any Lender with respect to any date,
such Lender shall not be entitled to such additional amount unless it shall
have requested such additional amount from the Borrower in accordance with the
terms of this paragraph (c) within 120 days after the date such Lender learned
of the related amount, cost or reduction. The agreements in this subsection
shall survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder.
4.14 Taxes. (a) All payments made by the Borrower under
this Agreement and any Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes, franchise taxes
(imposed in lieu of net income taxes) and doing business taxes imposed on the
Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Administrative Agent or such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement or any Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Administrative Agent or
any Lender hereunder or under any Note, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided, however, that
the Borrower shall not be required to increase any such amounts payable to any
Non-U.S. Lender if such Non-U.S. Lender fails to comply with the requirements
of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If, when the Borrower is
required by this subsection 4.14(a) to pay any Non-Excluded Taxes, the Borrower
fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts
or other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as
a result of any such failure. The agreements in this subsection shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a citizen or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of
America, or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
the Borrower and the Administrative Agent (or, in the case of a Participant, to
the Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service form 1001 or
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Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest," a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form
W-8, an annual certificate representing that such Non-U.S. Lender (i) is not a
"bank" for purposes of Section 881(c) of the Code (and is not subject to
regulatory or other legal requirements as a bank in any jurisdiction, and has
not been treated as a bank in any filing with or submission made to any
Governmental Authority or rating agency), (ii) is not a 10% shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and (iii) is
not a controlled foreign corporation related to the Borrower (within the
meaning of Section 864(d)(4) of the Code)), properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from U.S. federal
withholding tax on all payments by the Borrower under this Agreement and the
other Loan Documents, along with such other additional forms as the Borrower,
the Administrative Agent (or, in the case of a Participant, the Lender from
which the related participation shall have been purchased) may reasonably
request to establish the availability of such exemption. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, and provided
that such Non-U.S. Lender is legally able to do so, each Non-U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in
a position to provide any previously delivered certificate to the Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose).
(c) If a Lender (or Transferee) or the Administrative Agent
shall become aware that it is entitled to receive a refund in respect of
Non-Excluded Taxes paid by the Borrower, or as to which it has been indemnified
by the Borrower, which refund in the good faith judgment of such Lender (or
Transferee) is allocable to such payment made pursuant to this subsection 4.14,
it shall promptly notify the Borrower of the availability of such refund and
shall, within 30 days after the receipt of a request by the Borrower, apply for
such refund. If any Lender (or Transferee) or the Administrative Agent
receives a refund in respect of any Non-Excluded Taxes paid by the Borrower, or
as to which it has been indemnified by the Borrower, which refund in good faith
judgment of such Lender (or Transferee) is allocable to such payment made
pursuant to this subsection 4.14, it shall promptly notify the Borrower of such
refund and shall, within 15 days after receipt, repay such refund to the
Borrower net of all out-of-pocket expenses of such Lender (or Transferee) or
the Administrative Agent; provided, however, that the Borrower, upon the
request of such Lender (or Transferee) or the Administrative Agent, agrees to
repay the amount paid over to the Borrower (plus penalties, interest or other
charges) to such Lender (or Transferee) or the Administrative Agent in the
event such Lender (or Transferee) or the Administrative Agent is required to
repay such refund to such Governmental Authority. The agreements in this
subsection 4.14 shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
4.15 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or converted, or not so borrowed,
converted or continued, for the period from the date of such prepayment or
conversion or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the percentage added to the
Eurodollar Rate pursuant to subsection 4.1(a) to the extent included therein)
over (ii) the amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing such amount
on deposit for a comparable period with leading banks in the interbank
eurodollar market. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder;
provided that invoices in respect of amounts payable pursuant to this
subsection 4.15 shall be submitted by each Lender no later than the date which
is 120 days after the date on which such Lender learned of the event giving
rise to such claim.
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4.16 Change of Lending Office. (a) Each Lender agrees that
if it makes any demand for payment under subsection 4.13 or 4.14(a), or if any
adoption or change of the type described in subsection 4.12 shall occur with
respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to
designate a different lending office if the making of such a designation would
reduce or obviate the need for the Borrower to make payments under subsection
4.13 or 4.14(a), or would eliminate or reduce the effect of any adoption or
change described in subsection 4.12.
(b) If any Lender requests compensation under subsection
4.13, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to
subsection 4.14, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrower may, at its expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to, and such
Lender promptly shall, assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in subsection 11.6), all its
interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) if such assignee is not a
Lender or an Affiliate thereof, the Borrower shall have received the prior
written consent of the Administrative Agent, the Issuing Lender and the Swing
Line Lender, which consents shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in Letters of Credit and Swing Line
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (at least to the extent of such outstanding
principal) and the Borrower (in the case of all other amounts) and (iii) in the
case of any such assignment resulting from a claim for compensation under
subsection 4.13 or payments required to be made pursuant to subsection 4.14,
such assignment will result in a reduction in such compensation or payments
compared to the compensation or payments payable to the assigning Lender. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
no longer exist or cease to apply.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, each of MESA and the Borrower hereby represents and warrants to the
Administrative Agent and each Lender that:
5.1 Financial Condition. (a) The consolidated balance
sheets of MESA and its consolidated Subsidiaries at December 31, 1994 and
December 31, 1995 and the related consolidated statements of operations, of
cash flows and of changes in stockholders' equity for the respective fiscal
years ended on such dates, together with the related notes and schedules
thereto, reported on by Arthur Andersen LLP, copies of which have heretofore
been furnished to each Lender, present fairly in all material respects the
consolidated financial condition of MESA and its consolidated Subsidiaries as
at such dates, and the consolidated results of their operations and their
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of MESA and its consolidated Subsidiaries,
as at March 31, 1996 and the related unaudited consolidated statements of
operations, of cash flows and of changes in stockholder's equity for the
three-month period ended on such date, certified by a Responsible Officer,
copies of which have heretofore been furnished to each Lender, present fairly
in all material respects the consolidated financial condition of MESA and its
consolidated Subsidiaries, and the consolidated results of their operations and
their consolidated cash flows for the three-month period then ended (subject to
normal year-end audit adjustments and the absence of complete footnote
disclosure).
(b) The unaudited pro forma consolidated balance sheet of
each of MESA and its consolidated Subsidiaries and the Borrower and its
consolidated Subsidiaries, as at March 31, 1996, certified by a Responsible
Officer, copies of which have heretofore been furnished to each Lender,
represents in all material respects the pro forma consolidated financial
condition of each of MESA and its consolidated Subsidiaries and the Borrower
and its consolidated Subsidiaries as at such date after giving effect to the
Recapitalization (including the transactions
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contemplated by the Rights Offering) and the initial extensions of credit under
this Agreement, assuming that the Recapitalization occurred on March 31, 1996.
(c) All such financial statements referred to in subsection
5.1(a), including the related schedules and notes thereto, have been prepared
in accordance with GAAP applied consistently throughout the periods involved
(except as approved by such accountants or Responsible Officer, as the case may
be, and as disclosed therein). Neither MESA nor any of its consolidated
Subsidiaries had, at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction, which is not reflected in the foregoing statements or in
the notes thereto to the extent required by GAAP. During the period from
January 1, 1996 to and including the date hereof there has been no sale,
transfer or other disposition by MESA or any of its consolidated Subsidiaries
of any material part of its business or property and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person) material in relation to the consolidated financial condition of
the Borrower and its consolidated Subsidiaries at December 31, 1995.
5.2 No Change. (a) Since December 31, 1995 there has been
no development, circumstance or event which has had or could reasonably be
expected to have a Material Adverse Effect, and (b) except as set forth on
Schedule 5.2(b), during the period from January 1, 1996 to and including the
date hereof no dividends or other distributions have been declared, paid or
made upon the Capital Stock of MESA nor has any of the Capital Stock of MESA
been redeemed, retired, purchased or otherwise acquired for value by any Loan
Party.
5.3 Corporate Existence; Compliance with Law. Each of MESA,
the Borrower and the Restricted Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, except, in the case of Restricted Subsidiaries, to the extent
that the failure to be in good standing could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect, (b) has the corporate or
partnership power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all applicable
Requirements of Law, except, in the case of clauses (c) and (d), to the extent
that the failure to be so qualified or to comply with such Requirements of Law
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
5.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party, grant the
Liens granted by it pursuant to the Security Documents and, in the case of the
Borrower, to borrow hereunder and has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party (including the granting of the Liens to be granted by it
pursuant to the Security Documents and, in the case of the Borrower, the
borrowings hereunder). No consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental Authority or any other
Person is required in connection with the borrowings hereunder, the granting
and perfection of the Liens to be granted by the Security Documents or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents to which each Loan Party is a party other than those which have been
obtained and are in full force and effect or those which the failure to obtain,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. This Agreement has been, and each other Loan Document to which any
Loan Party is a party will be, duly executed and delivered on behalf of such
Loan Party. This Agreement constitutes, and each other Loan Document to which
any Loan Party is a party when executed and delivered will constitute, a legal,
valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent transfer or conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
5.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents, the granting of the Liens under the Security Documents, the
borrowings hereunder and the use of the proceeds thereof will not violate any
applicable Requirement of Law or material Contractual Obligation of MESA, the
Borrower or of any of their
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respective Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective material properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation
except pursuant to the Loan Documents.
5.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of MESA or the Borrower, threatened by or against MESA, the
Borrower or any of the Restricted Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby or, as of the Closing
Date, the Recapitalization or any document or transaction contemplated thereby,
or (b) which could reasonably be expected to have a Material Adverse Effect.
5.7 No Default. No Loan Party is in default under or with
respect to any of its Contractual Obligations (including, without limitation,
the Supply Contract and the "B" Contract) in any respect which could reasonably
be expected to have a Material Adverse Effect (other than defaults which will
be cured upon repayment or defeasance of the Refinanced Indebtedness in
connection with consummation of the Recapitalization). No Default or Event of
Default has occurred and is continuing.
5.8 Ownership of Property; Liens. (a) Except for the Oil
and Gas Properties, the "B" Contract and the Supply Contract, each Loan Party
has good title in fee simple to, or a valid leasehold interest in, all its
material real property and material interests in real property set forth in
Parts A and B of Schedule 5.20, and good title to, a valid leasehold interest
in or a license to use, all its other material property, and none of such
property is subject to any Lien except as permitted by subsection 8.3.
(b) Each Loan Party has good and defensible title to all of
its Oil and Gas Properties (other than the "B" Contract and the Supply
Contract) which are not personal property and good title to all such Oil and
Gas Properties which are personal property and material to MESA and the Loan
Parties taken as a whole, except for (i) such imperfections of title as do not
in the aggregate materially detract from the value thereof to, or the use
thereof in, the business of MESA, the Borrower or any of the Restricted
Subsidiaries, (ii) Oil and Gas Properties disposed of since the date of the
most recent Reserve Report as permitted by subsection 8.6 hereof, and (iii)
Liens permitted by subsection 8.3 hereof. The quantum and nature of the
interest of the Borrower and the other Loan Parties in and to the Oil and Gas
Properties as set forth in each Reserve Report (including the Initial Reserve
Report) includes the entire interest of the Borrower and the other Loan Parties
in such Oil and Gas Properties as of the date of such Reserve Report and are
complete and accurate in all material respects as of the date of such Reserve
Report; and there are no "back-in" or "reversionary" interests held by third
parties which could materially reduce the interest of the Borrower and the
other Loan Parties in such Oil and Gas Properties except as expressly set forth
on an exhibit to the Mortgages. The ownership of the Oil and Gas Properties by
the Loan Parties shall not in any material respect obligate any Loan Party to
bear the costs and expenses relating to the maintenance, development or
operations of each such Oil and Gas Property in an amount in excess of the
working interest of such Loan Party in each Oil and Gas Property set forth in
the most recent Reserve Report.
(c) Exhibit A-1 to the Texas Mortgage contains a complete
listing of all instruments supplementing or amending the "B" Contract as of the
date hereof. Exhibit B to each Mortgage contains a complete listing, as of the
date hereof, of all contracts (and all amendments thereto) for the sale by any
Loan Party of Hydrocarbons produced from the Oil and Gas Properties subject to
such Mortgage. The Borrower owns its interests in the "B" Contract and the
Supply Contract free from all Liens other than non-consensual Liens permitted
by subsection 8.3.
(d) MESA and its Subsidiaries have not disposed of any of the
Mortgaged Properties or Oil and Gas Properties between the date of the Initial
Reserve Report and the date hereof except for dispositions of the type
described in subsection 8.6(a), (b) or (c), in connection with the
Recapitalization or as set forth on Schedule 5.8(d) hereto.
5.9 Intellectual Property. Each Loan Party owns, or is
licensed to use, all trademarks, tradenames, copyrights, technology, know-how
and processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not reasonably be
expected to have a Material Adverse Effect (the "Intellectual Property"). No
claim has been asserted and is pending by any Person challenging or questioning
the use
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of any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Borrower know of any valid basis for any
such claim, except such claims that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. The use of such Intellectual
Property by such Loan Party does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.10 No Burdensome Restrictions. No applicable Requirement
of Law or Contractual Obligation of any Loan Party could reasonably be expected
to have a Material Adverse Effect.
5.11 Taxes. Each Loan Party has filed all tax returns which
to the knowledge of such Loan Party are required to be filed by it and has paid
or caused to be paid all material taxes shown on said returns and all material
assessments, fees and other governmental charges levied upon it or upon any of
its property or income which are due and payable, except such taxes,
assessments, fees and other governmental charges, if any, as are being
diligently contested in good faith and by appropriate proceedings and with
respect to which there have been established adequate reserves on the books of
such Loan Party in accordance with GAAP. No tax lien has been filed with
respect to any such material taxes or material assessments, fees or other
governmental charges.
5.12 Federal Regulations. No part of the proceeds of any
Loan will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation G or
Regulation U, as the case may be.
5.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan. No
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period. The present value of
all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plan) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits
by an amount which has resulted or could result in any material liability to
any Loan Party or Commonly Controlled Entity. No Loan Party nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan which has resulted or which could result in any material
liability to any Loan Party or Commonly Controlled Entity, and no Loan Party
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
MESA and the Borrower have adopted FASB 106.
5.14 Investment Company Act; Other Regulations. No Loan
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness under this
Agreement or the other Loan Documents.
5.15 Subsidiaries. The Persons listed on Schedule 5.15
constitute all the Subsidiaries of MESA at the date hereof (after giving effect
to the transactions contemplated by the Recapitalization).
5.16 Purpose of Loans. The proceeds of the Loans made on the
Closing Date will be used to refinance the Refinanced Indebtedness of MESA and
its Subsidiaries in connection with the Recapitalization and to pay costs and
expenses relating to the Recapitalization. Without limitation, the proceeds of
the Loans made on the Closing Date shall be used for the purchase of the HCLP
Secured Notes. Loans made after the Closing Date shall be used for general
corporate purposes of MESA, the Borrower and the Restricted Subsidiaries.
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5.17 Environmental Matters. Other than exceptions to any of
the following that could not, individually or in the aggregate, reasonably be
expected to give rise to a Material Adverse Effect:
(a) the Borrower: (i) is, and within the period of all
applicable statutes of limitation has been, in material compliance
with all applicable Environmental Laws; (ii) holds all Environmental
Permits (each of which is in full force and effect) required for any
of its current or planned operations or for any property owned,
leased, or otherwise operated by it; (iii) is, and within the period
of all applicable statutes of limitation has been, in material
compliance with all of its Environmental Permits; and (iv) reasonably
believes that (A) each of its Environmental Permits will be timely
renewed without material expense, (B) any additional Environmental
Permits which it has reason to believe will be required will be timely
obtained without material expense, and (C) the costs of complying with
such renewed or additional Environmental Permits and any other
Environmental Laws applicable to or reasonably expected to apply to
Borrower will not be material.
(b) to the knowledge of the Borrower, Materials of
Environmental Concern have not been transported, disposed of, emitted,
discharged, or otherwise released or threatened to be released, to or
at any real property presently or formerly owned, leased or operated
by the Borrower or at any other location, which could reasonably be
expected to (i) give rise to material liability of the Borrower under
any applicable Environmental Law, or (ii) materially interfere with
the Borrower's continued operations, or (iii) materially impair the
fair saleable value of any material real property owned or leased by
the Borrower.
(c) no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or
relating to any Environmental Law to which the Borrower is, or to the
knowledge of the Borrower will be, named as a party is pending or, to
the knowledge of the Borrower, threatened.
(d) the Borrower has not received any written request for
information, or been notified that it is a potentially responsible
party under the Federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar Environmental Law, or
with respect to any Materials of Environmental Concern.
(e) the Borrower has not entered into or agreed to any
consent decree, order, or settlement or other agreement, nor is
subject to any judgment, decree, or order or other agreement, in any
judicial, administrative, arbitral, or other forum, relating to
compliance with or liability under any Environmental Law.
(f) to the knowledge of the Borrower, the Borrower has not
assumed or retained, by contract or operation of law, any material
liabilities of any kind, fixed or contingent, under any Environmental
Law.
For purposes of Section 9 of this Agreement, each of the foregoing
representations and warranties contained in this subsection 5.17 which are
qualified by the Borrower's knowledge shall be deemed not to be so qualified.
5.18 No Material Misstatements. (a) The written
information, reports, financial statements, exhibits and schedules furnished by
or on behalf of MESA or any of its Subsidiaries to the Administrative Agent or
any Lender in connection with the negotiation of any Loan Document or included
therein or delivered pursuant thereto (including the Information Memorandum,
the Subordinated Debt Prospectus and the Rights Offering Prospectus but
excluding any financial projections or budgets contained therein), when taken
as a whole, did not contain, and as they may be amended, supplemented or
modified from time to time, will not contain, as of the Closing Date, any
untrue statements of a material fact and did not omit, and as they may be
amended, supplemented or modified from time to time, will not omit, to state as
of the Closing Date, any material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which
they were, are or will be made, not materially misleading.
(b) All financial projections concerning MESA and its
Subsidiaries that are or have been made available to the Administrative Agent
or any Lender by or on behalf of MESA or any of its Subsidiaries, including
those contained in the Information Memorandum, the Subordinated Debt Prospectus
and the Rights Offering Prospectus, have been or will be prepared based on good
faith estimates and based upon assumptions believed by MESA and the Borrower to
be reasonable at the time of such preparation.
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5.19 Capitalization of MESA and the Borrower. The authorized
Capital Stock, the par value thereof and the amount of such authorized Capital
Stock issued and outstanding for each of MESA, the Borrower and MESA's other
Subsidiaries as of the Closing Date (after giving effect to the
Recapitalization) are set forth on Schedule 5.19. All outstanding shares of
Capital Stock of the Borrower are fully paid and nonassessable and, on and
after the Closing Date (after giving effect to the Recapitalization), will be
owned beneficially and of record by MESA and will be free of all Liens other
than the Liens created by the Loan Documents.
5.20 Location of Real Property and Leased Premises. (a)
Part A of Schedule 5.20 lists completely and correctly as of the Closing Date
all material real property (other than Oil and Gas Properties, the "B" Contract
and the Supply Contract) owned in fee by MESA, the Borrower and each of its
Subsidiaries and the addresses thereof.
(b) Part B of Schedule 5.20 lists completely and correctly as
of the Closing Date all material real property (other than Oil and Gas
Properties, the "B" Contract and the Supply Contract) leased by MESA, the
Borrower and each of its Subsidiaries and the respective addresses thereof.
5.21 Solvency. (a) Immediately after the consummation of
the Recapitalization and the other transactions to occur on the Closing Date
and immediately following the making of each Loan made and the issuance of each
Letter of Credit issued on the Closing Date and after giving effect to the
application of the proceeds thereof (i) the fair value of the assets of each of
MESA and the Borrower on a consolidated basis, at a fair valuation, will exceed
the debts and liabilities, direct, subordinated, contingent or otherwise, of
each of MESA and the Borrower on a consolidated basis; (ii) the present fair
saleable value of the property of each of MESA and the Borrower on a
consolidated basis will be greater than the amount that will be required to pay
the probable liability of each of MESA and the Borrower on a consolidated basis
on their debts and other liabilities, direct, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured;
(iii) MESA and its Subsidiaries on a consolidated basis will be able to pay
their debts and liabilities, direct, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) MESA and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted following the
Closing Date. For purposes of the representation contained in this subsection
5.21(a), unliquidated, contingent, disputed and unmatured claims shall be
valued at the amount that can, in light of all the facts and circumstances
existing at such time, be reasonably expected to be an actual or matured
liability.
(b) Neither MESA nor the Borrower intends to, or believes
that it or any of its Subsidiaries will, incur debts beyond its ability to pay
such debts as they mature, taking into account the timing and amounts of cash
available to be received by it or any such Subsidiary and the time and amounts
of cash to be payable on or in respect of its Indebtedness or that of any such
Subsidiary.
5.22 Labor Matters. Except as set forth in Schedule 5.22,
there are no strikes pending or threatened against MESA or any of its
Subsidiaries which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. The hours worked and payments
made to employees of MESA or any of its Subsidiaries have not been in violation
in any material respect of the Fair Labor Standards Act or any other applicable
law dealing with such matters. All material payments due from MESA or any of
its Subsidiaries or for which any claim may be made against MESA or any of its
Subsidiaries, on account of wages and employee health and welfare insurance and
other benefits have been paid or accrued as a liability on the books of MESA or
such Subsidiary to the extent required by GAAP. The consummation of the
Recapitalization will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which MESA or any of its Subsidiaries (or any predecessor) is a
party or by which MESA and its (or any predecessor) is bound, other than
collective bargaining agreements which, individually or in the aggregate, are
not material to MESA and its Subsidiaries taken as a whole.
5.23 Insurance. Each of MESA, the Borrower and the
Restricted Subsidiaries carries and maintains with respect to its insurable
properties insurance (including, to the extent consistent with past practices,
self-insurance) with financially sound and reputable insurers of the types, to
such extent and against such risks as is customary with companies in the same
or similar businesses.
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5.24 "B" Contract; Supply Contract. True and complete copies
of the "B" Contract and the Supply Contract (including, in each case, all
amendments and all material waivers and interpretive letters from one party to
the other relating thereto in effect as of the date hereof) have heretofore
been furnished to the Lenders. Each of the "B" Contract and the Supply
Contract (a) is valid and enforceable in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other similar laws relating to creditors'
rights and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and except
that rights to indemnity thereunder may be limited by applicable law, (b) is in
full force and effect and (c) to the knowledge of any Loan Party, no material
default on the part of any party thereto exists thereunder which could
reasonably be expected to result in a Material Adverse Effect.
5.25 Refinanced Indebtedness. Schedule 1.1(b) sets forth a
true and complete list of all Indebtedness of MESA and its Subsidiaries as of
the date hereof, but prior to giving effect to the Recapitalization and the use
of the proceeds of the initial Loans to be made hereunder on the Closing Date.
5.26 Future Commitments. As of the Closing Date, except as
set forth on Schedule 5.26, on a net basis there are no gas imbalances,
take-or-pay or other prepayments with respect to any Oil and Gas Property of
MESA or any Subsidiary which would require MESA or any Subsidiary to delivery
Hydrocarbons produced from Oil and Gas Properties at some future time without
then or thereafter receiving full payment therefor.
5.27 Senior Debt. The Obligations of MESA, the Borrowrer and
each Restricted Subsidiary constitute "Senior Debt" under and as such term is
defined in each of the Senior Subordinated Indenture and the Senior
Subordinated Discount Indenture.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extensions of Credit. The
agreement of each Lender to make the initial Loan requested to be made by it
and of the Issuing Lender to issue the initial Letter of Credit to be issued by
it is subject to the satisfaction, immediately prior to or concurrently with
the making of such Loan and the issuance of such Letter of Credit on the
Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (with the number of original counterparts requested by the
Administrative Agent) (i) this Agreement, executed and delivered by a
duly authorized officer of each of MESA and the Borrower, (ii) the
Guarantee and Collateral Agreement, executed and delivered by a duly
authorized officer of each Loan Party thereto and (iii) each Mortgage,
each executed and delivered by a duly authorized officer of each Loan
Party that is a party thereto.
(b) Related Agreements. The Administrative Agent shall have
received true and correct copies, certified as to authenticity by the
Borrower, of each Recapitalization Document (other than the Preferred
Stock), each Subordinated Note Document (other than the Subordinated
Notes) and such other documents or instruments as may be reasonably
requested by the Administrative Agent, including, without limitation,
a copy of any debt instrument, security agreement or other material
contract to which any Loan Party will be a party after the Closing
Date.
(c) Borrowing Certificate. The Administrative Agent shall
have received (with the number of original counterparts requested by
the Administrative Agent), a certificate of the Borrower, dated the
Closing Date, substantially in the form of Exhibit G, with appropriate
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President
and the Secretary or any Assistant Secretary of the Borrower.
(d) Corporate Proceedings of the Loan Parties. The
Administrative Agent shall have received (with the number of original
counterparts requested by the Administrative Agent), a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each Loan Party authorizing (i)
the execution, delivery and performance of this Agreement and the Loan
Documents to which it is a party, (ii) in the case of the Borrower,
the borrowings contemplated hereunder and (iii) the granting by
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it of the Liens created pursuant to the Loan Documents, certified by
the Secretary or an Assistant Secretary of such Loan Party as of the
Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state
that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(e) Loan Party Incumbency Certificates. The Administrative
Agent shall have received (with the number of original counterparts
requested by the Administrative Agent), a certificate of each Loan
Party, dated the Closing Date, as to the incumbency and signature of
the officers of such Loan Party executing any Loan Document reasonably
satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of such Loan Party.
(f) Corporate Documents. The Administrative Agent shall have
received (with the number of original counterparts requested by the
Administrative Agent), true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the
Closing Date as complete and correct copies thereof by the Secretary
or an Assistant Secretary of such Loan Party.
(g) Consents, Licenses and Approvals. All governmental and
third party approvals (including consents) necessary in connection
with the Recapitalization and the execution, delivery and performance
of the Loan Documents shall have been obtained and be in full force
and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse
conditions on the Recapitalization or the financing thereof,
including, without limitation, this Agreement. The Administrative
Agent shall have received copies of consents (in form and substance
reasonably satisfactory to the Administrative Agent) of the
counterparties to the "B" Contract and the Supply Contract, pursuant
to which such parties consent to the Lien of the Administrative Agent
on such contracts.
(h) Fees. The Lenders, the Agents and the Co-Arrangers shall
have received all fees and expenses required to be paid on or before
the Closing Date.
(i) Legal Opinions. The Administrative Agent shall have
received, with the number of counterparts as it may request, the
following legal opinions:
(i) the executed legal opinion of Baker &
Botts, counsel to MESA, the Borrower and the other Loan
Parties, substantially in the form of Exhibit E-1; and
(ii) the executed legal opinion of Foulston &
Siefkin, Kansas counsel to MESA, the Borrower and the other
Loan Parties, substantially in the form of Exhibit E-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative
Agent may reasonably require.
(j) Pledged Stock; Stock Powers; Pledged Notes. The
Administrative Agent shall have received the certificates representing
the shares pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof,
and the notes pledged, if any, pursuant to the Guarantee and
Collateral Agreement, each endorsed in blank by a duly authorized
officer of the pledgor thereof.
(k) Actions to Perfect Liens. The Administrative Agent shall
have received properly completed and executed financing statements (or
other similar documents), including, without limitation, duly executed
financing statements on form UCC-1, necessary or, in the opinion of
the Administrative Agent, desirable to perfect the Liens created by
the Security Documents, and the Administrative Agent shall be
reasonably satisfied that, other than filing such financing statements
and other similar documents and the Mortgages, no other filings,
recordings, registrations or other actions are necessary or, in the
opinion of the Administrative Agent, desirable to perfect the Liens
created by the Security Documents.
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(l) Surveys. The Administrative Agent shall have received
boundary line surveys of (i) the property leased by the Borrower
pursuant to the Ground Lease (as defined in the Texas Mortgage), (ii)
the real property located in Grant County, Kansas on which the Satanta
processing plant is located and (iii) the real property located in
Grant County, Kansas on which the Ulysses processing plant is located,
which boundary line surveys shall in each case be (A) dated a date
reasonably close to the Closing Date (as determined by the
Administrative Agent), (B) prepared by an independent professional
licensed land surveyor reasonably satisfactory to the Administrative
Agent, (C) prepared in a manner reasonably acceptable to the
Administrative Agent and (D) shall reflect that the buildings,
structures and other improvements necessary for the ownership and
operation of the processing plants purported to be located on the
property surveyed do not protrude on any adjoining property nor do any
improvements located on land adjacent to the property surveyed
encroach upon the property surveyed, which encroachments or
protrusions in either case could reasonably be expected to adversely
affect the ability of the Borrower to own, maintain, operate or sell
the property surveyed and/or the improvements located thereon.
(m) Flood Insurance. If required to be obtained by
applicable Requirements of Law, the Administrative Agent shall have
received (i) a policy of flood insurance conforming with subsection
7.5(c) and (ii) confirmation that the Borrower has received the notice
required pursuant to Section 208(e)(3) of Regulation H of the Board of
Governors of the Federal Reserve System.
(n) Copies of Documents. If requested by the Administrative
Agent, the Administrative Agent shall have received a copy, certified
by such parties as the Administrative Agent may reasonably deem
appropriate, of any document burdening the property covered by any
Mortgage.
(o) Lien Searches. The Administrative Agent shall have
received the results of recent lien searches by Persons reasonably
satisfactory to the Administrative Agent, in such jurisdictions and
offices as it shall request, and such searches shall reveal no Liens
on any assets of MESA, the Borrower or any of the Restricted
Subsidiaries, except for (i) Liens permitted by subsection 8.3 and
(ii) Liens to be released or assigned to the Administrative Agent, for
the ratable benefit of the Lenders, on the Closing Date in connection
with the Recapitalization.
(p) Insurance. The Administrative Agent shall have received
(i) copies of, or an insurance broker's or agent's certificate as to
coverage under, the insurance policies required by subsection 7.5 and
the applicable provisions of the Security Documents, and each property
and casualty policy covering any property which is Collateral shall be
endorsed or otherwise amended to include a "standard" or "New York"
lender's loss payable endorsement and to name the Administrative Agent
as additional insured, in form and substance satisfactory to the
Administrative Agent and (ii) confirmation from such insurance broker
that the scope and amount of coverage maintained by MESA, the Borrower
and the Restricted Subsidiaries are comparable to the scope and amount
of the insurance maintained by other companies of similar size in the
same industry and general location.
(q) Series B Preferred Stock. MESA shall have received at
least $133,000,000 in gross proceeds from the issuance of the Series B
Preferred Stock in accordance with the terms of the Stock Purchase
Agreement.
(r) Subordinated Notes. The Subordinated Notes shall have
been issued, and MESA shall have received gross proceeds of not less
than $475,000,000 therefrom, substantially on the terms and conditions
set forth in the Subordinated Debt Prospectus.
(s) Refinanced Indebtedness. The Administrative Agent shall
have received evidence satisfactory to it that simultaneously with the
making of the initial Revolving Credit Loans, the Refinanced
Indebtedness shall be paid in full and all Liens securing the
Refinanced Indebtedness and the Surviving Indebtedness shall have been
terminated (or assigned on satisfactory terms to the Administrative
Agent), amended or modified in a manner satisfactory to the
Administrative Agent for the benefit of the Lenders.
<PAGE> 48
43
(t) Recapitalization. The Recapitalization (other than the
transactions contemplated by the Rights Offering) shall have been
consummated simultaneously with the initial extensions of credit
hereunder in accordance with applicable law, the Stock Purchase
Agreement and all related documentation and otherwise substantially on
terms set forth in the Information Memorandum; the conditions to each
of DNR's and MESA's obligations set forth in the Stock Purchase
Agreement shall have been satisfied without giving effect to any
waiver or amendment in any manner adverse to the Lenders that was not
approved by all the Lenders; and the mergers, consolidation and other
transactions described in clause (e) of the definition of
"Recapitalization" intended to occur on or before the Closing Date
shall have been consummated prior to or simultaneously with the
initial extensions of credit hereunder; and the capital, corporate and
ownership structures of the Loan Parties, after giving effect to the
Recapitalization, shall be satisfactory to the Lenders.
(u) Solvency. The Administrative Agent shall have received
(i) a satisfactory solvency opinion from an independent valuation firm
satisfactory to the Lenders which shall document the solvency of each
of MESA and the Borrower, on a consolidated basis, after giving effect
to the Recapitalization, the other transactions contemplated thereby
and the extensions of credit contemplated hereby and (ii) a
certificate, substantially in the form of Exhibit H, from MESA,
executed by its chief financial officer, as to the solvency of each of
MESA and the Borrower, on a consolidated basis, after giving effect to
the Recapitalization (both before and after giving effect to the
Rights Offering), the other transactions contemplated hereby and the
extensions of credit contemplated hereunder.
(v) Sources and Uses. The Administrative Agent and the
Lenders shall be satisfied that the sources and uses of funds for the
Recapitalization shall not be materially inconsistent with the sources
and uses listed on Schedule 6.1(v).
(w) Title to Oil and Gas Properties. The Lenders shall be
satisfied as to the title of the Loan Parties to the Oil and Gas
Properties included in the Borrowing Base.
(x) Engineering Report. The Administrative Agent shall not
have received notice from Williamson revoking, rescinding or amending,
modifying or supplementing in any way (unless such amendments,
modifications or supplements are reasonably satisfactory in form and
substance to the Lenders) its report dated April 25, 1996 previously
delivered to the Administrative Agent and the Lenders, which report
supports the volumes, schedules and capital expenditures set forth in
the engineering report provided by MESA to the Lenders (the "Initial
Reserve Report").
(y) Environmental Reports. The Administrative Agent shall
have received environmental assessment reports from Pilko & Associates
with respect to processing and other facilities and other parcels of
real property owned or leased by MESA and its Subsidiaries, and the
Lenders shall be reasonably satisfied with the potential environmental
liabilities to which MESA and its Subsidiaries may be subject based on
such reports.
(z) Rainwater Letter of Credit. The Rainwater Letter of
Credit shall (i) have been issued and be in full force and effect,
(ii) be in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders, (iii) have been issued by a bank
reasonably acceptable to the Administrative Agent and the Lenders and
(iv) be in a stated amount equal to at least $132 million.
(aa) Title Vested in Borrower. The Administrative Agent and
the Lenders shall be reasonably satisfied that all filings and other
actions required to be taken or made in order to consummate the
transactions contemplated by clause (e) of the definition of
Recapitalization (including, without limitation, the conveyance to the
Borrower of title to substantially all of the Oil and Gas Properties
of MESA and its Subsidiaries) shall have been taken or made on or
before the Closing Date.
(bb) Board of Directors. The Lenders shall be reasonably
satisfied that the composition of the Board of Directors of MESA and
the Borrower will be as set forth in the Subordinated Debt Prospectus.
<PAGE> 49
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(cc) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and
the other Loan Documents shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent
shall have received such other documents and legal opinions in respect
of any aspect or consequence of the transactions contemplated hereby
or thereby as it shall reasonably request.
6.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including, without limitation, its initial extension of credit and any
renewal or extension of a Letter of Credit) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by each Loan Party in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date
(unless such representations and warranties are stated to relate to a
specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date).
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
Each borrowing by, and Letter of Credit issued on behalf of, the Borrower
hereunder shall constitute a representation and warranty by the Borrower and
MESA as of the date thereof that the conditions contained in this subsection
have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
MESA and the Borrower hereby agree that, so long as the
Commitments remain in effect, any Loan, Note or Letter of Credit remains
outstanding and unpaid or any amount is owing to any Lender or any Agent
hereunder or under any other Loan Document, MESA and the Borrower shall and
(except in the case of delivery of financial information, reports and notices)
shall cause each of the Restricted Subsidiaries to:
7.1 Financial Statements. Furnish to the Administrative
Agent with sufficient copies for the Lenders:
(a) as soon as available, but in any event within 105 days
after the end of each fiscal year of MESA, (i) a copy of the
consolidated balance sheet of MESA as at the end of such year and the
related consolidated statements of operations, of cash flows and of
changes in stockholders' equity for such year, setting forth in each
case in comparative form the figures for the previous year, reported
on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Arthur
Andersen LLP or other independent certified public accountants of
nationally recognized standing reasonably acceptable to the Required
Lenders and (ii) a copy of the consolidating balance sheet of each of
MESA and the Borrower as at the end of such year and the related
consolidating statements of operations, of cash flows and of changes
in stockholders' equity for such year, setting forth in each case in
comparative form the figures for the previous year, all in reasonable
detail and setting forth the financial information related to each
Subsidiary of MESA or the Borrower, as the case may be, and, with
respect to the consolidating financial statements of MESA, reconciling
to the financial statements referred to in clause (i) above for such
year, each certified by a Responsible Officer as being fairly stated
in all material respects (subject, in the case of the financial
statements delivered pursuant to clause (ii), to normal year-end audit
adjustments and the absence of complete footnote disclosure); and
(b) as soon as available, but in any event not later than 60
days after the end of each of the first three quarterly fiscal periods
of each fiscal year of MESA and the Borrower, the unaudited
consolidated balance sheets (together with the consolidating work
sheets which set forth, in reasonable detail, the financial
information of each Subsidiary with operations) of each of MESA and
the Borrower as at the end of such quarter and the related unaudited
consolidated statements of operations, of cash flows and of changes in
<PAGE> 50
45
stockholders' equity of each of MESA and the Borrower for such quarter
and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments and the absence of complete footnote disclosure);
all such financial statements shall be prepared in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).
7.2 Certificates; Other Information. Furnish to the
Administrative Agent, and except as otherwise provided, with sufficient copies
for the Lenders:
(a) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) and (b), a certificate of
a Responsible Officer (i) stating that, to the best of such
Responsible Officer's knowledge, during such period (A) except as
disclosed therein, no Subsidiary of MESA has been formed or acquired
(and, if any Restricted Subsidiary has been formed or acquired, MESA,
the Borrower and such Restricted Subsidiary have complied with the
requirements of subsection 7.10 with respect thereto), (B) no Loan
Party has changed its name, its principal place of business, its chief
executive office or the location of any material item of tangible
Collateral without complying with the requirements of this Agreement
and the Security Documents with respect thereto and (C) that such
Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate and (ii) setting
forth the computations (in reasonable detail) necessary to determine
whether MESA and the Borrower are in compliance with subsection 8.1;
(b) not later than sixty days after the end of each fiscal
year of MESA and the Borrower, a copy of the projections by MESA and
the Borrower of the operating budget and cash flow budget of each of
MESA and the Borrower for the succeeding fiscal year, such projections
to be accompanied by a certificate of a Responsible Officer to the
effect that such projections have been prepared based upon good faith
estimates and assumptions and on the basis of sound financial planning
practice.
(c) within five days after the same are sent, copies of all
financial statements and reports which MESA sends to its stockholders
generally, and within five days after the same are filed, copies of
all financial statements and reports which MESA or any other Loan
Party may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(d) promptly upon receipt thereof, copies of all reports and
management letters submitted to MESA, the Borrower or any Restricted
Subsidiary by independent public accountants in connection with any
interim or special audit of the books or operations of MESA, the
Borrower or such Restricted Subsidiary made by such accountants;
(e) together with the financial statements delivered pursuant
to subsections 7.1(a) and (b) and with any Reserve Report delivered
pursuant to subsection 4.10, a schedule identifying as of the last day
of the fiscal period for which the financial statements are delivered
or as of the date of delivery of such Reserve Report, as the case may
be, each commodity fixed price contract then in effect (excluding
those relating solely to Permitted Marketing Transactions) as to which
any Loan Party is bound which provides for payments of $5,000,000 or
more, and setting forth the names of the parties thereto and of any
guarantees thereof, and the volumes attributable to each such
contract; and
(f) at least quarterly, provide a written report setting
forth the Loan Parties' current and projected interest rate and
commodity hedging needs and strategies;
(g) deliver to the Administrative Agent copies of renewal or
replacement insurance policies as and when required by subsection
7.5(b)(v);
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(h) promptly upon the execution and delivery thereof, true
and complete copies of each amendment, supplement or other
modification to the "B" Contract or the Supply Contract; and
(i) promptly, such additional financial and other information
as any Lender (acting through the Administrative Agent) may from time
to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of MESA, the Borrower or the applicable Restricted
Subsidiary, as the case may be.
7.4 Conduct of Business and Maintenance of Existence;
Compliance with Law and Contractual Obligations. Continue to engage in
business of the same general type as now conducted by it or otherwise
consistent with the provisions of subsection 8.16; except as otherwise
permitted by subsection 8.5, preserve, renew and keep in full force and effect
its corporate existence; take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business except where the failure to maintain such rights, privileges and
franchises could not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect; and comply with all Contractual Obligations
and Requirements of Law except to the extent that failure to comply therewith
could not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.
7.5 Maintenance of Property; Insurance. (a) Keep all
property owned or leased by it that is useful and necessary in its business in
good working order and condition, ordinary wear and tear excepted; maintain
with financially sound and reputable insurance companies insurance of such
types, in such amounts and against such risks as is customary to be maintained
by companies engaged in the same or a similar business in the same general
area; and furnish to the Administrative Agent, upon written request, full
information as to the insurance carried.
(b) (i) Cause all such property and casualty insurance
policies with respect to the Collateral to be endorsed or otherwise amended to
include a "standard" or "New York" lender's loss payable endorsement, in form
and substance reasonably satisfactory to the Administrative Agent, which
endorsement shall provide that, from and after the Closing Date, if the
insurance carrier shall have received written notice from the Administrative
Agent of the occurrence of an Event of Default, the insurance carrier shall pay
all proceeds otherwise payable to MESA, the Borrower or the Loan Parties under
such policies directly to the Administrative Agent; (ii) cause all such
policies to provide that neither MESA, the Borrower, the Administrative Agent,
nor any other party shall be a coinsurer thereunder; (iii) if requested by the
Administrative Agent, deliver original or certified copies of all such policies
to the Administrative Agent; (iv) cause each such policy to provide that it
shall not be canceled, modified or not renewed (A) by reason of nonpayment of
premium upon not less than 20 days' prior written notice thereof by the insurer
to the Administrative Agent or (B) for any other reason upon not less than 30
day's prior written notice thereof by the insurer to the Administrative Agent;
and (v) unless otherwise agreed in writing by the Administrative Agent, deliver
to the Administrative Agent, prior to the cancellation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent), or insurance certificate with respect thereto, together
with evidence satisfactory to the Administrative Agent of payment of the
premium therefor.
(c) If at any time the area in which any Mortgaged Property
which constitutes "improved real estate" within the meaning of the Flood
Disaster Protection Act of 1973, as amended from time to time, is located is
designated (i) a "special flood hazard area" within the meaning of said Act in
any Flood Insurance Rate Map published by the Federal Emergency Management
Agency (or any successor agency), obtain flood insurance in such reasonable
total amount as the Administrative Agent or the Required Lenders may from time
to time reasonably require to comply with the National Flood Insurance Program
as set forth in the said Act or (ii) a "Zone 1" area (as so designated in the
national Ocean and Earthquake Risk Map), obtain earthquake insurance in such
reasonable total amount as the Administrative Agent or the Required Lenders may
from time to time reasonably require to comply with applicable Requirements of
Law.
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7.6 Inspection of Property; Books and Records; Discussions.
Keep and maintain a system of accounting established and administered in
accordance with sound business practices and keep and maintain proper books of
records and account; and permit representatives of the Administrative Agent
and, at the Lender's expense, any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records
during normal business hours and as often as may reasonably be requested
through the Administrative Agent and to discuss the business, operations,
properties and financial and other condition of MESA and its Subsidiaries with
officers and employees of MESA and its Subsidiaries and with MESA's independent
certified public accountants, provided that a representative of the Borrower
designated by a Responsible Officer may be present during any such discussions.
7.7 Notices. Promptly give notice to the Administrative
Agent of:
(a) the occurrence of any Default or Event of Default;
(b) any event described in clause (a) of the definition of
"Major Transaction";
(c) any (i) default or event of default under any Contractual
Obligation of MESA, the Borrower or any of the Restricted Subsidiaries
or (ii) litigation, investigation or proceeding which may exist at any
time between MESA, the Borrower or any of the Restricted Subsidiaries
and any Governmental Authority, which in the case of either clause (i)
or (ii), if not cured or if adversely determined, as the case may be,
could reasonably be expected to have a Material Adverse Effect;
(d) any litigation or proceeding affecting MESA, the Borrower
or any of the Restricted Subsidiaries (i) which could reasonably be
expected to result in an adverse judgment of $2,500,000 or more and
not covered by insurance or (ii) in which injunctive or similar relief
is sought which in the case of this clause (ii) could reasonably be
expected to materially interfere with the ordinary conduct of business
of MESA, the Borrower or any of the Restricted Subsidiaries;
(e) any material default or event of default under the "B"
Contract or the Supply Contract, or any default or any event of
default under the "B" Contract or the Supply Contract asserted by any
party thereto in writing;
(f) the following events, as soon as possible and in any
event within 30 days after MESA or the Borrower knows or has reason to
know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan; and
(g) any development, circumstance or event which could
reasonably be expected to have a Material Adverse Effect, including,
without limitation, any such event involving the Supply Contract or
the "B" Contract.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action MESA, the Borrower and the Restricted
Subsidiaries have taken or propose to take with respect thereto.
7.8 Environmental Laws. (a)(i) Comply substantially with,
and use reasonable efforts to require substantial compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws; (ii) obtain,
comply substantially with and maintain all Environmental Permits necessary for
its operations as conducted and as planned; and (iii) use reasonable efforts to
require that all tenants and subtenants obtain, comply substantially with and
maintain any and all Environmental Permits necessary for their operations as
conducted, with respect to any property leased or subleased from it. An entity
shall be deemed to be in substantial compliance with, or to comply
substantially with, an Environmental Law or Environmental Permit for purposes
of this subsection 7.8(a) provided that, upon learning of any
<PAGE> 53
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actual or suspected noncompliance, it promptly undertakes all reasonable
efforts to achieve compliance, and provided further that, in any case, such
non-compliance individually or in the aggregate could not reasonably be
expected to give rise to a Material Adverse Effect or materially adversely
affect the value of any Mortgaged Property.
(b) Comply with all orders and directives of all Governmental
Authorities regarding Environmental Laws, other than such orders and directives
as to which an appeal or other appropriate proceeding to contest such order or
directive has been timely and properly taken in good faith.
(c) Prior to acquiring any ownership or leasehold interest in
real property (except for property to be leased only for office use), or other
interest in any such real property that could give rise to it being found to be
an operator subject to potential material liability under any Environmental
Law: (i) obtain an environmental review pursuant to a procedure (which may, in
appropriate circumstances, include review by an Environmental Consultant), to
be developed by the Borrower in consultation with an Environmental Consultant,
which procedure shall be reasonably acceptable to the Administrative Agent,
within a reasonable period subsequent to the Closing Date; and (ii) provide the
Administrative Agent upon request with a copy of any written report prepared in
connection with such environmental review.
(d) Upon the Administrative Agent's reasonable written
request (and subject to the proviso below), and promptly upon the
Administrative Agent's request if there has been an Event of Default which has
not been fully and timely cured, permit an environmental consultant whom the
Administrative Agent in its discretion designates ("Environmental Consultant")
to perform environmental assessments; provided that prior to the occurrence of
any Event of Default and notwithstanding anything else herein to the contrary,
the costs and expenses of all environmental assessments performed under this
paragraph (d) which MESA and the Subsidiaries shall be obligated to reimburse
to Lenders shall not exceed $65,000 in any consecutive period of 24 months.
Such environmental assessments shall be in form, scope, and substance
reasonably satisfactory to the Administrative Agent. The Borrower shall
cooperate fully in the conduct of such environmental assessment, and shall pay
the reasonable costs of such environmental assessments immediately upon written
demand by the Administrative Agent. The Administrative Agent shall have the
right, but shall not have any duty, to request and/or obtain such environmental
assessment pursuant to this subsection 7.8(d).
7.9 Further Assurances. Upon the request of the
Administrative Agent, promptly perform or cause to be performed any and all
acts and execute or cause to be executed any and all documents (including,
without limitation, financing statements and continuation statements) for
filing under the provisions of the Uniform Commercial Code or any other
Requirement of Law which are necessary or advisable to maintain in favor of the
Administrative Agent, for the benefit of the Lenders, Liens on the Collateral
that are duly perfected in accordance with all applicable Requirements of Law.
7.10 Additional Collateral. (a) It is the intention of the
parties hereto that the Obligations and guarantees thereof be secured by
substantially all of the assets of MESA, the Borrower and the Restricted
Subsidiaries. Accordingly, with respect to assets acquired after the Closing
Date other than those described in paragraph (b), (c) or (d) of this
subsection, MESA, the Borrower and the Restricted Subsidiaries shall, from time
to time (and, in any event, within 30 days after the reasonable request by the
Administrative Agent to do so), (i) execute and deliver to the Administrative
Agent such amendments to the relevant Security Documents or such other
documents as the Administrative Agent shall reasonably deem necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a Lien on such assets, (ii) take all actions necessary or advisable to cause
such Lien to be duly perfected in accordance with all applicable Requirements
of Law, including, without limitation, the filing of financing statements in
such jurisdictions as may be requested by the Administrative Agent, and (iii)
if requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described in clauses (i) and (ii)
immediately preceding, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(b) With respect to any Person that, subsequent to the
Closing Date, becomes a Restricted Subsidiary (other than a Foreign
Subsidiary), promptly upon the request of the Administrative Agent: (i) cause
such new Restricted Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement, pursuant to documentation which is in form and substance
reasonably satisfactory to the Administrative Agent, and (B) to take all
actions reasonably necessary
<PAGE> 54
49
or advisable to cause the Lien created by the Guarantee and Collateral
Agreement to be duly perfected in accordance with all applicable Requirements
of Law, including, without limitation, the filing of financing statements in
such jurisdictions as may be reasonably requested by the Administrative Agent,
(ii) cause the Capital Stock of such Person owned by MESA, the Borrower and any
Restricted Subsidiary to be pledged to the Administrative Agent, for the
ratable benefit of the Lenders, pursuant to documentation reasonably
satisfactory to the Administrative Agent, and take all actions reasonably
necessary or advisable to cause the Lien thereon to be duly perfected in
accordance with all applicable Requirements of Law, and deliver the
certificates representing such Capital Stock to the Administrative Agent,
together with undated stock powers executed and delivered in blank by a duly
authorized officer of MESA, the Borrower or such Restricted Subsidiary, as the
case may be, and (iii) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described in
clauses (i) and (ii) immediately preceding, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any Person that, subsequent to the
Closing Date, becomes a Restricted Subsidiary and is a Foreign Subsidiary,
promptly upon the request of the Administrative Agent: (i) execute and deliver
to the Administrative Agent a new pledge agreement or such amendments to the
Guarantee and Collateral Agreement as the Administrative Agent shall deem
reasonably necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary which is
owned by MESA, the Borrower or any Restricted Subsidiary (provided that in no
event shall more than 65% of the Capital Stock of any such Subsidiary be
required to be so pledged), (ii) deliver to the Administrative Agent any
certificates representing such Capital Stock, together with undated stock
powers executed and delivered in blank by a duly authorized officer of MESA,
the Borrower or such Restricted Subsidiary, as the case may be, and take or
cause to be taken all such other actions under the law of the jurisdiction of
organization of such Foreign Subsidiary as may be reasonably necessary or
advisable to perfect such Lien on such Capital Stock and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(d) With respect to any Oil and Gas Property acquired after
the Closing Date by the Borrower or any Restricted Subsidiary, promptly (and in
any event within 30 days after the acquisition thereof) but only to the extent
required to maintain compliance with subsection 7.11: (i) execute and deliver
to the Administrative Agent such amendments to the relevant Security Documents
or such other documents as the Administrative Agent shall deem reasonably
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a Lien on such Oil and Gas Property; (ii) take all actions
reasonably necessary or advisable to cause such Lien to be duly perfected in
accordance with all applicable Requirements of Law, including, without
limitation, the filing of mortgages, deeds of trust or like documents or
financing statements in such jurisdictions as may be requested by the
Administrative Agent; and (iii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described in clauses (i) and (ii) immediately preceding, which opinions shall
be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
7.11 Collateral Value. At all times, cause Oil and Gas
Properties representing at least 85% of the value of the total Oil and Gas
Properties of MESA, the Borrower and the Restricted Subsidiaries to be included
in the Collateral.
7.12 Corporate Separateness. Cause the management, business
and affairs of MESA and its Subsidiaries to be conducted in such a manner so
that each Unrestricted Subsidiary will be perceived as a legal entity separate
and distinct from MESA, the Borrower and the Restricted Subsidiaries.
7.13 Updated Opinions. Within 60 days after the Closing
Date, the Borrower shall deliver to the Administrative Agent updated local
counsel opinions in form and substance and issued by counsel reasonably
acceptable to, and as to matters reasonably requested by, the Administrative
Agent.
<PAGE> 55
50
SECTION 8. NEGATIVE COVENANTS
The Borrower and MESA hereby agree that, so long as the
Commitments remain in effect, any Loan, Note or any Letter of Credit remains
outstanding and unpaid or any amount is owing to any Lender or any Agent
hereunder or under any other Loan Document, MESA and the Borrower shall not,
and shall not permit any Restricted Subsidiary to, directly or indirectly:
8.1 Financial Covenant Conditions. (a) Interest Coverage.
Permit, for any period of four consecutive fiscal quarters ending during any
"Test Period" set forth below, the ratio of (a) EBITDAEX to (b) Consolidated
Interest Expense for such period to be less than the ratio set forth below for
such period:
<TABLE>
<CAPTION>
Test Period Ratio
----------- -----
<S> <C>
Closing Date through and including 1.50 to 1.00
December 31, 1997
January 1, 1998 through and including 1.75 to 1.00
December 31, 1999
Thereafter 2.10 to 1.00
</TABLE>
(b) Exploration Expenditures. Permit Exploration
Expenditures for any period of four consecutive fiscal quarters (provided that,
with respect to any Restricted Subsidiary which is not a Wholly-Owned
Restricted Subsidiary, only a ratable portion of such Subsidiary's Exploration
Expenditures shall be included; such ratable portion to be equal to the
percentage of the equity interests of such Subsidiary owned, directly or
indirectly, by MESA, the Borrower and any other Wholly-Owned Restricted
Subsidiary) to exceed an amount equal to forty-five percent (45%) of the
difference between (x) EBITDAEX for such period and (y) the amount of cash
interest payments made during such period (provided that, with respect to any
Restricted Subsidiary which is not a Wholly-Owned Restricted Subsidiary, only a
ratable portion of such Subsidiary's EBITDAEX and cash interest payments shall
be included; such ratable portion to be equal to the percentage of the equity
interests of such Subsidiary owned, directly or indirectly, by MESA, the
Borrower and any other Wholly-Owned Restricted Subsidiary).
8.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Loan Parties under the Loan
Documents;
(b) Indebtedness of the Borrower to any Restricted Subsidiary
and of any Restricted Subsidiary to the Borrower or to any other
Restricted Subsidiary; and Indebtedness of MESA to the Borrower if the
proceeds of such Indebtedness are concurrently used by MESA to invest
in Unrestricted Subsidiaries in accordance with the terms, and subject
to the limitations, set forth in subsection 8.10 (provided no such
Indebtedness of MESA shall be created while a Default or Event of
Default shall have occurred and be continuing);
(c) Surviving Indebtedness outstanding on the date hereof but
not any extensions, renewals or replacements of such Indebtedness
except (i) from the proceeds of the Recapitalization, (ii) renewals
and extensions expressly provided for in the agreements evidencing any
such Indebtedness as the same are in effect on the date of this
Agreement and (iii) refinancings and extensions of any such
Indebtedness if the interest rate with respect thereto and other
material terms thereof shall not be materially less favorable to the
obligor thereon or to the Lenders than the Indebtedness being
refinanced or extended and the average life to maturity thereof is
greater than or equal to that of the Indebtedness being refinanced or
extended; provided that such Indebtedness permitted under clause (ii)
or clause (iii) above shall not be (A) Indebtedness of an obligor that
was not an obligor with respect to the Indebtedness being extended,
renewed or refinanced, (B) in a principal amount which exceeds the
Indebtedness being renewed, extended or refinanced plus the amount of
premiums, pre-payment penalties and other amounts required to be paid
in connection therewith and the reasonable and
<PAGE> 56
51
customary fees and expenses incurred in connection therewith or (C)
incurred, created or assumed if any Default or Event of Default has
occurred and is continuing or would result therefrom;
(d) in the case of the Borrower (i) Indebtedness of the
Borrower evidenced by the Senior Subordinated Notes, (ii)
Indebtedness of the Borrower evidenced by the Senior Subordinated
Discount Notes and (iii) Permitted Subordinated Refinancing Debt;
(e) Indebtedness of the Borrower and the Restricted
Subsidiaries pursuant to Interest Rate Protection Agreements and
Commodity Hedging Agreements, provided that such transactions shall be
entered into for business purposes and not for the purpose of
speculation;
(f) Indebtedness permitted by subsection 8.18; and
(g) additional Indebtedness of the Borrower and the
Restricted Subsidiaries not to exceed $50,000,000 in aggregate
principal amount at any one time outstanding.
Notwithstanding the foregoing, MESA shall not create, incur, assume or suffer
to exist any Indebtedness, other than Indebtedness described in clause (b)
above.
8.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes, assessments, fees and other governmental
charges and claims that are not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of MESA, the
Borrower or the applicable Restricted Subsidiary, as the case may be,
in conformity with GAAP;
(b) carriers', warehousemen's, suppliers' mechanics',
materialmen's, vendors', repairmen's, landlords' and other like Liens
arising in the ordinary course of business securing obligations which
are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) Liens incurred and deposits made in connection with
workers' compensation, unemployment insurance and other social
security legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(d) deposits made to secure the performance of bids, tenders,
trade contracts (other than for borrowed money), leases, statutory and
regulatory obligations, surety and appeal bonds, performance and
return-of-money bonds and other obligations of a like nature incurred
in the ordinary course of business;
(e) Liens constituting survey exceptions, encumbrances,
easements and reservations of, or rights of others for, rights-of-way,
zoning and other restrictions as to the use of real properties and
other similar encumbrances incurred in the ordinary course of business
which, with respect to all of the foregoing, do not secure the payment
of Indebtedness of the type described in clauses (a)-(d) of the
definition thereof and which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from the value
of the property subject thereto or materially interfere with the
ordinary conduct of the business of MESA, the Borrower or any
Restricted Subsidiary;
(f) Liens in existence on the date hereof (after giving
effect to the Recapitalization and the use of the proceeds therefrom)
and listed on Schedule 8.3, securing Indebtedness permitted by
subsection 8.2(c), provided that no such Lien is spread to cover any
additional property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding $10,000,000 in aggregate principal amount at
any time outstanding and Liens on property not included in the
Borrowing
<PAGE> 57
52
Base which secure Capital Leases and purchase money indebtedness under
subsection 8.2, provided no such Liens under this clause (g) shall
encumber any Capital Stock or other equity interests pledged under the
Guarantee and Collateral Agreement;
(h) Liens created pursuant to the Loan Documents;
(i) Liens encumbering pipelines or pipeline facilities that
arise under operation of law;
(j) Liens reserved in oil, gas and mineral leases for bonus
or rental payments and for compliance with the terms of such leases;
provided that the amount of any obligations secured thereby that are
delinquent, that are not diligently contested in good faith and for
which adequate reserves are not maintained by the Borrower or the
applicable Restricted Subsidiary, as the case may be, do not exceed,
at any time, the amount owing by the Borrower or any Restricted
Subsidiary, as applicable, for one month's payments as due thereunder;
and provided, further, the aggregate amount of obligations secured by
Liens permitted under this paragraph (j) shall do not exceed, at any
time, $1,000,000.
(k) Liens arising under operating agreements, oil and gas
leases, farm-out agreements, division orders, contracts for the sale,
transportation and exchange of oil or natural gas, unitization and
pooling declarations and agreements, and area of mutual interest
agreements, in each case, entered into in the ordinary course of
business and of a scope and nature customary in the oil and gas
industry; provided that the amount of any obligations secured thereby
that are delinquent, that are not diligently contested in good faith
and for which adequate reserves are not maintained by the Borrower or
the applicable Restricted Subsidiary, as the case may be, do not
exceed, at any time, the amount owing by the Borrower or any
Restricted Subsidiary, as applicable, for one month's billed operating
expenses or other expenditures attributable to such entity's interest
in the Property covered thereby; and provided, further, the aggregate
amount of obligations secured by Liens permitted by this paragraph (k)
shall not exceed, at any time, $1,000,000;
(l) pre-judgment Liens and judgment Liens not giving rise to
an Event of Default so long as any appropriate legal proceeding that
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;
(m) Liens constituting "Permitted Encumbrances" under and as
such term is defined in the respective Mortgages; and
(n) Liens constituting a lessor's interest in any property
which is subject to an operating lease.
8.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and
listed on Schedule 8.4;
(b) subordinated Guarantee Obligations of MESA and the
Restricted Subsidiaries in respect of (i) the Subordinated Notes
pursuant to the Subordinated Note Documents and (ii) the Permitted
Subordinated Refinancing Debt, provided such Guarantee Obligations
shall be documented on terms and conditions reasonably satisfactory to
the Required Lenders;
(c) Guarantee Obligations by the Borrower or any Restricted
Subsidiary of Indebtedness of the Borrower or any Restricted
Subsidiary permitted by subsection 8.2;
(d) Guarantee Obligations arising under the Loan Documents;
and
(e) Guarantee Obligations permitted by subsection 8.10.
<PAGE> 58
53
8.5 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, except:
(a) any Restricted Subsidiary of the Borrower may be merged
or consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more domestic Wholly Owned Restricted Subsidiaries of the
Borrower (provided that the domestic Wholly Owned Restricted
Subsidiary or Subsidiaries shall be the continuing or surviving
Person);
(b) any Restricted Subsidiary of the Borrower may sell,
lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any domestic
Wholly Owned Restricted Subsidiary (provided that a Wholly-Owned
Restricted Subsidiary may sell, lease, transfer or otherwise dispose
of any of its assets pursuant to this paragraph (b) only to the
Borrower or another domestic Wholly-Owned Restricted Subsidiary);
(c) MESA and its Subsidiaries may consummate the
Recapitalization and effect any transaction permitted by subsections
8.6 and 8.10; and
(d) any Restricted Subsidiary may be merged or consolidated
with any Person acquired in connection with a Permitted Business
Acquisition, provided a Restricted Subsidiary shall be the continuing
or surviving Person.
8.6 Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of the Borrower and
any Restricted Subsidiary, issue or sell any shares of the Borrower's or such
Restricted Subsidiary's Capital Stock to any Person other than MESA or the
Borrower or any domestic Wholly Owned Restricted Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out
property in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection
with the compromise or collection thereof;
(d) as permitted by subsections 8.5, 8.8 and 8.10;
(e) sales or other dispositions by the Borrower or any
Restricted Subsidiary of assets (other than receivables, except to the
extent disposed of incidentally in connection with an asset
disposition otherwise permitted hereby) included in the then effective
Borrowing Base, including any Capital Stock of Restricted Subsidiaries
owning any such assets, provided that:
(i) no Default or Event of Default shall have occurred
and be continuing immediately prior to or after any such sale or other
disposition; and
(ii) the Borrower, simultaneously with the consummation of
sales and other dispositions during any Borrowing Base Period of
assets (other than Unrestricted Assets) pursuant to this clause (e)
with an aggregate Fair Market Value in excess of ten percent (10%) of
the amount of the Borrowing Base then in effect, shall notify the
Administrative Agent and the Engineering Committee of such event and
the aggregate Fair Market Value of all assets sold or otherwise
disposed of during such Borrowing Base Period pursuant to this clause
(e); and
(f) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, the sale or other
disposition by the Borrower or any Restricted Subsidiary of any asset,
other than pursuant
<PAGE> 59
54
to clauses (a) through (e) above, not included in the then effective
Borrowing Base, including, without limitation, any assets acquired
after the most recent determination of the Borrowing Base.
Notwithstanding anything to the contrary contained herein, no sale may be made
of the Capital Stock of any Restricted Subsidiary, except in connection with
the sale of all of its outstanding Capital Stock that is then held by the
Borrower and any other Restricted Subsidiary.
8.7 INTENTIONALLY OMITTED.
8.8 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of MESA) on, or make any
payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of MESA, the Borrower or any
Restricted Subsidiary or any warrants or options to purchase any such Capital
Stock, whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of MESA, the Borrower or any Restricted Subsidiary (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "Restricted
Payments"), except that:
(a) any Restricted Subsidiary may declare and pay dividends to
or make other distributions to the Borrower or to any other Wholly
Owned Restricted Subsidiary (or, in the case of a Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary, to the
Borrower or any Restricted Subsidiary and to each other owner of
Capital Stock of such Restricted Subsidiary on a pro rata basis (or
more favorable basis from the perspective of the Borrower or such
Restricted Subsidiary) based on their relative ownership interests);
(b) the Borrower may declare and pay dividends or make other
distributions to MESA (i) to the extent necessary to permit MESA to
perform its continuing indemnity obligations and obligations to pay
fees and expenses under the Stock Purchase Agreement, provided, no
Default or Event of Default shall have occurred or be continuing, (ii)
in respect of overhead, tax liabilities, legal, accounting and other
professional fees and expenses to the extent actually incurred by MESA
in connection with the business of its ownership of the Capital Stock
of the Borrower and (iii) in respect of fees and expenses associated
with registration statements filed with the Securities and Exchange
Commission and subsequent ongoing public reporting requirements to the
extent actually incurred by MESA;
(c) MESA may declare and distribute dividends when due on the
Preferred Stock in kind by the issuance of additional shares of
Preferred Stock; provided that MESA may, after the fourth anniversary
of the Closing Date, pay cash dividends when due on the Preferred
Stock in accordance with the terms of the Statement of Resolutions as
in effect on the date hereof, provided that (i) such payment is made
on a regularly scheduled dividend payment date as set forth in the
Statement of Resolutions as in effect on the date hereof, (ii) no such
cash dividends shall be paid in respect of any period occurring prior
to the fourth anniversary of the Closing Date, (iii) no Default or
Event of Default shall have occurred and be continuing as of the date
such dividend is declared or as of the date such dividend is to be
paid, or would result therefrom, and (iv) as of the date such
dividends are declared and as of the date such dividends are to be
paid (A) the ratio (determined both before and after giving effect to
the payment of such dividend) of the Present Value of Estimated Future
Net Revenues (determined as the most recent fiscal year (or, if later,
the most recent date on which the Borrowing Base has been
re-determined) but as adjusted to take into account all asset sales
occurring since the end of such fiscal year (or, if later, the most
recent date on which the Borrowing Base has ben re-determined))
attributable to the Oil and Gas Properties of MESA, the Borrower and
the Restricted Subsidiaries to the aggregate principal amount of
Indebtedness of MESA, the Borrower and the Restricted Subsidiaries
shall be no less than 1.5 to 1.0 and (B) the ratio (determined both
before and after giving effect to the payment of such dividend) of
EBITDAEX (for the period of the four most recent consecutive fiscal
quarters) to Consolidated Interest Expense (for the same period) shall
be no less than 2.5 to 1.0; and
(d) as long as no Default or Event or Default has occurred
and is continuing or would result therefrom, MESA may purchase or
redeem, and the Borrower may declare and pay dividends or make other
<PAGE> 60
55
distributions to MESA the proceeds of which are to be used to purchase
or redeem, (i) shares of Capital Stock (or options or warrants in
respect of such shares) of MESA (including related stock appreciation
rights or similar securities) held by present or former officers or
employees of MESA or any Subsidiary or by any Plan upon such person's
death, disability, retirement or termination of employment or under
the terms of any such Plan or any other agreement under which such
shares of Capital Stock or related rights were issued; provided, that
the aggregate amount of such purchases or redemptions (or dividends or
distributions to MESA) under this clause (i) of this paragraph (d)
shall not exceed $2,500,000 in the aggregate and (ii) odd-lot shares
of Capital Stock of MESA, provided that the aggregate amount of such
purchases or redemptions (or dividends or distributions to MESA) under
clause (ii) of this paragraph (d) shall not exceed $2,500,000 in the
aggregate.
8.9 INTENTIONALLY OMITTED.
8.10 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or incur any
Guarantee Obligation on behalf or for the benefit of, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment (including by the issuance of
letters of credit) in, any Person, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) loans and advances to officers and employees of MESA, the
Borrower or any Restricted Subsidiary for travel, entertainment and
relocation expenses in the ordinary course of business in an aggregate
amount for MESA, the Borrower and the Restricted Subsidiaries not to
exceed $2,500,000 at any one time outstanding;
(d) investments by MESA in the Borrower or in any Restricted
Subsidiary and investments by any Restricted Subsidiary in MESA or the
Borrower or in other Restricted Subsidiaries, if any, provided that
(i) no additional investments may be made on or after the Closing Date
in any Subsidiary of MESA (other than the Borrower) which is not a
domestic Restricted Subsidiary, (ii) investments made after the
Closing Date in any Restricted Subsidiaries which are Foreign
Subsidiaries shall not exceed $10,000,000 in the aggregate at any time
outstanding after taking into account any return after the Closing
Date from dividends, distributions and repayments in respect of such
investment and (iii) investments may be made in MESA only to the
extent that the proceeds of such investments are concurrently used by
MESA to invest in Unrestricted Subsidiaries in accordance with the
terms, and subject to the limitations, set forth in subsection 8.10(j)
(provided no such investment shall be made while a Default or an Event
of Default shall have occurred and be continuing);
(e) investments arising out of the receipt by the Borrower or
any Restricted Subsidiary of noncash consideration for the sale of
assets permitted under paragraph (e) of subsection 8.6, provided that
any such consideration which is evidenced by a promissory note (if the
principal amount thereof is in excess of $1,000,000) is pledged upon
receipt pursuant to the Guarantee and Collateral Agreement;
(f) intercompany loans permitted to be incurred as
Indebtedness under subsection 8.2;
(g) Interest Rate Protection Agreements and Commodity Hedging
Agreements permitted pursuant to subsection 8.2;
(h) investments, other than investments listed in paragraphs
(a) through (g) of this subsection, existing on the Closing Date and
set forth on Schedule 8.10;
(i) investments resulting from pledges and deposits referred
to in subsection 8.3;
(j) investments by MESA in Unrestricted Subsidiaries (other
than investments made pursuant to subsection 8.10(k)), and investments
by the Borrower and the Restricted Subsidiaries after the Closing Date
<PAGE> 61
56
which are not otherwise permitted by this subsection 8.10 (including,
without limitation, investments in Unrestricted Subsidiaries (other
than investments made pursuant to subsection 8.10(k)), and, with
respect to any Restricted Subsidiary which is re-characterized as an
Unrestricted Subsidiary in accordance with subsection 8.19, the
cumulative amount of investments theretofore made by MESA, the
Borrower or any Restricted Subsidiary in such new Unrestricted
Subsidiary) in an aggregate amount not to exceed $40,000,000 at any
time outstanding (after taking into account any return after the
Closing Date from dividends, distributions and repayments in respect
of such investment) for all such investments made pursuant to this
paragraph (j);
(k) investments made solely as a result of issuing Letters of
Credit hereunder for the benefit of Unrestricted Subsidiaries solely
in order to support Unrestricted Subsidiaries' obligations under
Permitted Marketing Transactions, provided the related Letter of
Credit Outstandings shall not exceed $40,000,000;
(l) investments constituting Permitted Business Acquisitions
so long as, after giving effect to the consummation of the
transactions contemplated by each Permitted Business Acquisition and
the Loans to be made and the Letters of Credit to be issued hereunder
in connection therewith, the sum of (i) the cash and Cash Equivalents
then held by the Borrower and (ii) an amount equal to the difference
between (A) the aggregate Revolving Credit Commitments (or, if less,
the Borrowing Base) in effect at such time and (B) the Aggregate
Revolving Credit Exposure of all the Lenders at such time, equals at
least $20,000,000; and
(m) investments constituting Permitted Business Investments,
except that if any such investment constitutes Exploration
Expenditures, such investment shall be subject to the provisions of
subsection 8.1(b).
8.11 Limitation on Optional Payments and Modifications of
Debt Instruments, Other Material Agreements. (a) (i) Make any optional payment
or prepayment on or redemption, defeasance or purchase of (or otherwise set
apart assets for a sinking or other analogous fund or trust for the purchase
of) any Indebtedness or Guarantee Obligations under the Subordinated Note
Documents, provided that as long as no Default or Event of Default has occurred
is continuing or would exist after giving effect thereto, (A) the Borrower may
redeem the Subordinated Notes in accordance with the "equity clawback"
provisions set forth in Section 3.7(b) of each of the Senior Subordinated
Indenture and the Senior Subordinated Discount Indenture from the Net Cash
Proceeds from the sale after the Closing Date of Capital Stock of MESA (other
than with Net Cash Proceeds received in respect of the sale of the Series A
Preferred Stock and, if applicable, the sale of the Series B Preferred Stock in
connection with the Rights Offering and the Recapitalization), (B) the Borrower
may refinance the Indebtedness under the Subordinated Note Documents with the
proceeds of any Permitted Subordinated Refinancing Debt and (C) the Borrower
may redeem the Subordinated Notes with the 25% of the Net Cash Proceeds
received in respect of the sale by MESA after the Closing Date of its Capital
Stock (other than with Net Cash Proceeds received in respect of the sale of the
Series A Preferred Stock and, if applicable, the sale of the Series B Preferred
Stock in connection with the Rights Offering and the Recapitalization) which is
not required to be applied in accordance with subsection 4.6(a)(i); or (ii)
amend, modify or change, or consent or agree to any amendment, modification or
change to, any of the terms of any of the Subordinated Note Documents or any
document evidencing Permitted Subordinated Refinancing Debt or any guarantees
thereof (i) in any manner adverse to the Lenders (including, without
limitation, the subordination provisions contained therein) or (ii) to increase
the principal amount outstanding thereunder.
(b) Amend, modify, waive, supplement or terminate, or permit
the amendment, modification, supplement, waiver or termination of or to, the
"B" Contract or the Supply Contract in any manner adverse to the Lenders.
(c) Amend, modify, supplement, waive or terminate, or permit
the amendment, modification, supplement, waiver or termination of or to, its
articles or certificate of incorporation (including the Statement of
Resolution) or any Recapitalization Document in any manner adverse to the
Lenders (or, (x) with respect to the Rainwater Letter of Credit, in any manner
and (y) so long as the Rainwater Letter of Credit is in effect, with respect to
the letter agreement referred to therein, in any manner which will make it more
difficult to draw on the Rainwater Letter of Credit or delay the date on which
the Rainwater Letter of Credit may be drawn upon).
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(d) Designate any Indebtedness as "Designated Senior Debt"
under the Senior Subordinated Indenture or the Senior Subordinated Discount
Indenture without the consent of the Required Lenders.
(e) Incur any Indebtedness of the Borrower or any Restricted
Subsidiary under clause (b) of the second full paragraph of Section 4.9 of the
Senior Subordinated Indenture or the Senior Subordinated Discount Indenture,
other than Indebtedness under the Loan Documents.
(f) Amend, modify or otherwise supplement the Rainwater
Letter of Credit.
8.12 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate (and,
for purposes of this subsection 8.12, "Affiliate" shall include any
Unrestricted Subsidiary) unless such transaction is (a) otherwise permitted
under this Agreement, (b) in the ordinary course of MESA's, the Borrower's or
the applicable Restricted Subsidiary's business and (c) upon fair and
reasonable terms no less favorable to MESA, the Borrower or the applicable
Restricted Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate, provided that
this subsection shall not prohibit (i) the consummation of the Recapitalization
or the performance by MESA, the Borrower and the Restricted Subsidiaries of
their respective obligations under the Recapitalization Documents as in effect
on the date hereof, (ii) investments, loans and advances by MESA in
Unrestricted Subsidiaries as permitted by subsections 8.8 and 8.10, (iii) loans
or advances to officers, directors and employees of MESA, the Borrower or any
Restricted Subsidiary made in the ordinary course of business and consistent
with past practices not to exceed in the aggregate, at any time outstanding,
$2,500,000, (iv) the payment of reasonable and customary directors fees to
directors of MESA, the Borrower or any of the Restricted Subsidiaries who are
not employees of MESA, the Borrower or any Subsidiary, (v) any indemnification
or similar payment made to any director or officer of MESA, the Borrower or any
Restricted Subsidiary in accordance with the corporate charter or bylaws of the
Company or any Subsidiary or under applicable law, (vi) obligations of MESA,
the Borrower or any Restricted Subsidiary under employee compensation,
severance and other benefit arrangements entered into or provided for in the
ordinary course of business and (vii) any transaction relating to the
disposition of the Borrower's investment in MEV.
8.13 Limitation on Sales and Leasebacks. Except to the
extent permitted by the other provisions of this Agreement, enter into any
arrangement (a "Sale and Leaseback Transaction") with any Person providing for
the leasing by MESA, the Borrower or any Restricted Subsidiary of real or
personal property which has been or is to be sold or transferred by MESA, the
Borrower or such Restricted Subsidiary to such Person or to any other Person to
whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of MESA, the Borrower or any Restricted
Subsidiary.
8.14 Limitation on Changes in Fiscal Year. Permit the fiscal
year of MESA, the Borrower and the Restricted Subsidiaries to end on a day
other than December 31.
8.15 Limitation on Negative Pledge Clauses. Enter into with
any Person any agreement, other than (a) the Loan Documents and (b) the Senior
Subordinated Indenture and the Senior Subordinated Discount Indenture as in
effect on the date hereof, which prohibits or limits the ability of MESA, the
Borrower or any Restricted Subsidiary to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired other than restrictions imposed in connection with
Capital Leases or purchase money obligations for property leased or acquired in
the ordinary course of business on the property so leased or acquired,
customary restrictions contained in stock purchase agreements, asset sale
agreements limiting the transfer of assets pending the closing of the sale and
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practice.
8.16 Limitation on Lines of Business. (a) In the case of
MESA the Borrower and the Restricted Subsidiaries, enter into any business,
either directly or through any Restricted Subsidiary, if any, except for the
Oil and Gas Business; and (b) in the case of MESA, engage in any business or
activity other than (i) the ownership of all the outstanding Capital Stock of
the Borrower and Unrestricted Subsidiaries together with activities directly
related thereto, (ii) performance of its obligations under the Loan Documents,
(iii) actions required by law to maintain its status as a
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corporation and as a public company and (iv) actions incidental to the
consummation of the Recapitalization (it being agreed that MESA shall have no
direct Subsidiaries other than the Borrower and certain Unrestricted
Subsidiaries and shall be a passive holding company).
8.17 Redeemable Capital Stock. Issue any Capital Stock which
is mandatorily redeemable, or redeemable at the option of the holder thereof,
prior to the first anniversary of the Termination Date.
8.18 Forward Sales. Except in accordance with its ordinary
and customary practice as of the date hereof and except for Permitted Marketing
Transactions, enter into or permit to exist any advance payment agreement or
other arrangement pursuant to which the Borrower or any of its Subsidiaries,
having received full or substantial payment of the purchase price for a
specified quantity of Hydrocarbons upon entering such agreement or arrangement,
is required to deliver, in one or more installments subsequent to the date of
such agreement or arrangement, such quantity of Hydrocarbons pursuant to and
during the terms of such agreement or arrangement.
8.19 Unrestricted Subsidiaries. (a) Create or otherwise
designate any Subsidiary as an Unrestricted Subsidiary unless (i) the terms set
forth in the definition of Unrestricted Subsidiary are complied with respect to
such Subsidiary and (ii) the designation, creation and operation of such
Unrestricted Subsidiary could not reasonably be expected to result in a
Material Adverse Effect.
(b) Without the prior written consent of the Supermajority
Lenders, change the characterization of a Subsidiary from a Restricted
Subsidiary to an Unrestricted Subsidiary or an Unrestricted Subsidiary to a
Restricted Subsidiary; provided, however, the prior written consent of the
Supermajority Lenders shall not be required to (i) change the characterization
of an Unrestricted Subsidiary to a Restricted Subsidiary if (A) no Default or
Event of Default shall have occurred and be continuing at such time or would
result therefrom, (B) after giving effect to such re-characterization, each of
the representations and warranties made by each Loan Party in or pursuant to
the Loan Documents shall be true and correct in all material respects as of the
date of such re-characterization, (C) such Subsidiary shall have complied with
the provisions of subsection 7.10 and (D) the Borrower provides the
Administrative Agent five days advance written notice of its intent to
re-characterize such Subsidiary or (ii) change the characterization of a
Restricted Subsidiary to an Unrestricted Subsidiary if (A) no Default or Event
of Default shall have occurred and be continuing or would result therefrom, and
assuming that all investments made by MESA, the Borrower or any other
Subsidiary in such Restricted Subsidiary prior to the date of such
re-characterization were investments in an Unrestricted Subsidiary and (B) the
Borrower provides the Administrative Agent five days advance written notice of
its intent to re-characterize such Subsidiary.
(c) Permit any Unrestricted Subsidiary to fail to comply with
the requirements set forth in the definition of "Unrestricted Subsidiary."
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or any Reimbursement Obligation when due in accordance with the terms
thereof or hereof; or the Borrower shall fail to pay any interest on
any Loan, or any other amount payable hereunder, within five days
after any such interest or other amount becomes due in accordance with
the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished
by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
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(c) MESA, the Borrower or any Restricted Subsidiary shall
default in the observance or performance of any agreement applicable
to it contained in subsection 4.11 or Section 8 of this Agreement,
Section 4.2, 4.5 or 4.8(a)(iv) of any Mortgage or Section 5.4 or
5.5(b) of the Guarantee and Collateral Agreement; or
(d) MESA, the Borrower or any Restricted Subsidiary shall
default in the observance or performance of any other agreement
applicable to it contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this
Section), and such default shall continue unremedied for a period of
30 consecutive days after the earlier of (i) MESA or the Borrower
obtaining knowledge of such default or (ii) the receipt by the
Borrower of notice thereof from the Administrative Agent; or
(e) MESA, the Borrower or any Restricted Subsidiary shall (i)
default in any payment of principal of or interest of any Indebtedness
(other than the Loans) or in the payment of any Guarantee Obligation,
beyond the period of grace (not to exceed 30 days), if any, provided
in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable unless such
Guarantee Obligation is paid when due; provided, however, that no
Default or Event of Default shall exist under this paragraph unless
the aggregate amount of Indebtedness and/or Guarantee Obligations in
respect of which any default or other event or condition referred to
in this paragraph shall have occurred shall be equal to at least
$7,500,000; or
(f) (i) MESA, the Borrower or any of the Restricted
Subsidiaries shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or MESA, the Borrower or any of the
Restricted Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against
MESA, the Borrower or any of the Restricted Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged
or unbonded for a period of 60 days; or (iii) there shall be commenced
against MESA, the Borrower or any of the Restricted Subsidiaries any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) MESA, the Borrower or any of the Restricted Subsidiaries shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) MESA, the Borrower or any of the
Restricted Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of MESA, the Borrower or
any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) MESA, the Borrower or any Commonly
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Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
MESA, the Borrower or any Restricted Subsidiary involving in the
aggregate a liability (to the extent not paid or covered by insurance)
of $7,500,000 or more, and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within
60 days after the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any
reason, to be in full force and effect, or any Loan Party which is a
party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be
created thereby; or
(j) The subordination provisions contained in any
Subordinated Note Document shall cease, for any reason, to be in full
force and effect, or any Person that is a party thereto or any holder
of the Subordinated Notes shall so assert; or
(k) At any time prior to the receipt by MESA of $132 million
of gross proceeds from (i) the issuance of Series A Preferred Stock
pursuant to the Rights Offering and (ii) the issuance, if any, of
Additional Series B Preferred Stock, the invalidity, termination or
revocation of the Rainwater Letter of Credit (except termination as a
result of a final drawing thereunder or full performance by DNR of
DNR's obligations under the Stock Purchase Agreement for which the
Rainwater Letter of Credit was issued); or
(l) The failure of MESA to receive within 60 days (or, with
the approval of the Agents, 90 days) after the Closing Date $132
million of gross proceeds from the (i) issuance of Series A Preferred
Stock pursuant to the Rights Offering or (ii) the issuance, if any, of
Additional Series B Preferred Stock; or
(m) (i) MESA shall cease to own all of the Capital Stock of
the Borrower, free of Liens and other claims (other than Liens created
by the Loan Documents); (ii) the Rainwater Affiliates shall cease to
have the power to elect, whether directly or indirectly, a majority of
MESA's board of directors; (iii) any Person or "group" (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended) (A) shall have acquired beneficial ownership of 30%
or more of any outstanding class of Capital Stock having ordinary
voting power in the election of directors of MESA or the Borrower or
(B) shall obtain the power (whether or not exercised) to elect a
majority of MESA's directors, in each case other than the Rainwater
Affiliates; or (iv) a "Change of Control" (as defined in the
Subordinated Debt Documents or any other document governing
Indebtedness of MESA, the Borrower or any Restricted Subsidiary) shall
occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section or paragraph (l) of this
Section, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued and unpaid interest thereon) and all other
amounts owing under this Agreement (including, without limitation, all Letter
of Credit Outstandings, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) and the other Loan Documents shall immediately become due and
payable, and (B) if such event is any other Event of Default, either or both of
the following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to MESA and the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to MESA and the Borrower, declare the
Loans hereunder (with accrued and unpaid interest thereon) and all other
amounts owing under this Agreement (including, without limitation, all amounts
of Letter of Credit Outstandings, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) and the other Loan Documents to be due and payable forthwith,
whereupon the same
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shall immediately become due and payable. Except as expressly provided above
in this Section, presentment, demand, protest and all other notices of any kind
are hereby expressly waived.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then unexpired amount that is available to be drawn under such
Letters of Credit. The Borrower hereby grants to the Administrative Agent, for
the benefit of the Issuing Lender and the L/C Participants, a security interest
in such cash collateral to secure all obligations of the Borrower under this
Agreement and the other Loan Documents. Amounts held in such cash collateral
account shall be applied by the Administrative Agent to the payment of drafts
drawn under such Letters of Credit, and the unused portion thereof after all
such Letters of Credit shall have expired, been cancelled or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the Notes. After all such Letters of Credit shall have
expired, been cancelled or been fully drawn upon, all Reimbursement Obligations
shall have been satisfied and all other obligations of the Borrower hereunder
and under the other Loan Documents shall have been paid in full, the balance,
if any, in such cash collateral account shall be returned to the Borrower. The
Borrower shall execute and deliver to the Administrative Agent, for the account
of the Issuing Lender and the L/C Participants, such further documents and
instruments as the Administrative Agent may reasonably request to evidence the
creation and perfection of the within security interest in such cash collateral
account.
SECTION 10. THE AGENTS
10.1 Appointment. Each Lender hereby irrevocably designates
and appoints Chase as Administrative Agent of such Lender under this Agreement
and the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
10.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any Loan Party
or any officer thereof contained in this Agreement or any other Loan Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of any Loan Party to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
10.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct
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and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Loan Parties), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Loans.
10.5 Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received notice from a
Lender, MESA or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereafter taken, including any review of the affairs
of any Loan Party, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of each Loan Party and made its own decision to
make its extensions of credit hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of each Loan Party. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Loan Party which
may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
MESA or the Borrower and without limiting the obligation of MESA or the
Borrower to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements
in this subsection shall survive the payment of the Obligations and all other
amounts payable hereunder.
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10.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to the extensions of credit made by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Administrative Agent, and the terms "Lender" and "Lenders"
shall include the Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 10 days' notice to the Lenders.
If the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor
agent, with the consent of the Borrower (such consent not to be unreasonably
withheld or delayed), shall succeed to the rights, powers and duties of the
Administrative Agent hereunder. Effective upon such appointment and approval,
the term "Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
10.10 Issuing Lender. The provisions of this Section 10
applicable to the Administrative Agent shall apply to the Issuing Lender in the
performance of its duties under the Loan Documents, mutatis mutandis.
10.11 Syndication Agent and Documentation Agent. Neither the
Syndication Agent nor the Documentation Agent shall have any duties or
liabilities under the Loan Documents in their capacities as such.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent may, from time to time, (a) enter
into with the applicable Loan Parties written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the applicable Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Administrative Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of final maturity of
any Loan, or reduce the stated rate of any interest or fee payable hereunder or
extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Lender's Commitments, in each case without
the consent of each Lender affected thereby, or (ii) amend, modify or waive any
provision of this subsection or subsection 7.11 or reduce the percentage
specified in the definition of Required Lenders or Supermajority Lenders (or
modify any provision of this Agreement or any other Loan Document to provide
that an action currently requiring the approval of or consent by the
Supermajority Lenders may be taken with the consent or approval by a lower
percentage of Lenders), or consent to the assignment or transfer by any Loan
Party of any of its rights and obligations under this Agreement and the other
Loan Documents or release all or substantially all of the Collateral other than
in accordance with the terms of the applicable Loan Document or release any
Loan Party from its obligations under the Guarantee and Collateral Agreement
other than in accordance with the terms of the applicable Loan Documents, in
each case without the written consent of all the Lenders, (iii) amend, modify
or waive any provision of subsection 4.6(a)(iii), 4.6(b)(ii) or 8.6(e) without
the written consent of the Supermajority Lenders, or (iv) amend, modify or
waive any provision of Section 10 without the written consent of the then
Administrative Agent and Issuing Lender. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Loan Parties, the Lenders, the
Administrative Agent and all future holders of the Loans. In the case
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of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall
be restored to their former positions and rights hereunder and under the other
Loan Documents, and any Default or Event of Default waived shall be deemed to
be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand
or by courier service, when delivered, (b) in the case of delivery by mail,
three Business Days after being deposited in the mails, postage prepaid, or (c)
in the case of delivery by facsimile transmission, when sent and receipt has
been confirmed, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in Schedule 11.2 in the case of the
other parties hereto, or to such other address as may be hereafter notified by
the respective parties hereto:
The Borrower: Mesa Operating Co.
1400 Williams Square West
5205 North O'Connor Blvd.
Irving, TX 75039-3746
Attention: Steve Gardner
Fax: (214) 402-7028
MESA: MESA Inc.
1400 Williams Square West
5205 North O'Connor Blvd.
Irving, TX 75039-3746
Attention: Steve Gardner
Fax: (214) 402-7028
The Administrative
Agent: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza, 3rd Floor
New York, New York 10081
Attention: Richard Betz
Fax: (212) 552-1687
With a copy to:
Chemical Bank Agency Services
Corporation
140 East 45th Street, 29th Floor
New York, New York 10017
Attention: Janet Belden
Fax: (212) 622-0122
The Syndication Bankers Trust Company
Agent: One Bankers Trust Plaza
130 Liberty Plaza
New York, NY 10006
Attention: Artie Schoen
Fax: (212) 250-7200
The Documentation
Agent: Societe Generale
2001 Ross Avenue
Suite 4800
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65
Dallas, TX 75201
Attention: Matthew Flanigan
Fax: (214) 979-1104
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.3, 2.4, 4.3, 4.5 or 4.9 shall not be
effective until received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent, the
Issuing Lender or any Lender, any right, remedy, power or privilege hereunder
or under the other Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the extensions of credit hereunder.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Agents and the Co-Arrangers for all their reasonable
out-of-pocket costs and expenses incurred in connection with the development,
syndication, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation
and administration of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of (i)
counsel to the Administrative Agent and (ii) the Administrative Agent
customarily charged by it in connection with syndicated credits, (b) to pay or
reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the reasonable fees and disbursements
of counsel to each Lender and of counsel to the Administrative Agent, (c) to
pay, indemnify, and hold each Lender and the Agents (and their respective
directors, officers, employees and agents) harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender, the
Co-Arrangers and the Agents (and their respective directors, officers,
employees and agents) harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents or the use or the proposed use of proceeds
contemplated by this Agreement or in connection with the Recapitalization and
any such other documents, including, without limitation, any of the foregoing
relating to the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of any Loan Party or any of the
Properties (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided that the Borrower shall have no obligation
under this clause (d) (i) to any Agent, any Co-Arranger or any Lender (or any
of their respective directors, officers, employers or agents), with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of such Person or (ii) in respect of the matters addressed by clauses (a), (b)
and (c) above. The agreements in this subsection shall survive repayment of
the Loans and all other amounts payable hereunder and the termination of this
Agreement.
11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of MESA, the
Borrower, the Lenders, the Agents, all future holders of the Obligations and
their respective successors and assigns, except that neither the Borrower nor
MESA may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
<PAGE> 71
66
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law and at no cost or
expense to the Borrower, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents. In the event of any such sale by
a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan (and
any Note evidencing such Loan) for all purposes under this Agreement and the
other Loan Documents, and the Borrower, MESA and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents. No Lender shall be entitled to create in favor of any Participant,
in the participation agreement pursuant to which such Participant's
participating interest shall be created or otherwise, any right to vote on,
consent to or approve any matter relating to this Agreement or any other Loan
Document except for those specified in clauses (i) and (ii) of the proviso to
subsection 11.1. The Borrower agrees that each Participant shall be entitled
to the benefits of subsections 4.13, 4.14 and 4.15 with respect to its
participation in the Commitments and the Loans and Letters of Credit
outstanding from time to time as if it was a Lender; provided that, in the case
of subsection 4.14, such Participant shall have complied with the requirements
of said subsection and provided, further, that no Participant shall be entitled
to receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time and from
time to time assign to any Lender or, with the prior written consent of each
Issuing Lender, any Affiliate thereof or, with the prior written consent of the
Administrative Agent, the Borrower and each Issuing Lender (which in each case
shall not be unreasonably withheld), to an additional bank or financial
institution or other entity (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents including,
without limitation, its Revolving Credit Commitments, L/C Commitments, Loans
and L/C Participating Interests, pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit I, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender, by
the Borrower, the Administrative Agent and each Issuing Lender) and delivered
to the Administrative Agent for its acceptance and recording in the Register,
provided that (i) (unless the Borrower and the Administrative Agent otherwise
consent in writing) no such transfer to an Assignee (other than a Lender or any
Affiliate thereof) shall be in an aggregate principal amount less than
$15,000,000 in the aggregate (or, if less, the full amount of such assigning
Lender's Swing Line Loans, Revolving Credit Loans, participating interests in
Letters of Credit and Revolving Credit Commitments) and (ii) if any Lender
assigns all or any part of its rights and obligations under this Agreement to
one of its Affiliates in connection with or in contemplation of the sale or
other disposition of its interest in such Affiliate, the Borrower's prior
written consent shall be required for such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Revolving Credit Commitment and L/C Commitment as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
subsection, the consent of the Borrower shall not be required, and, unless
requested by the Assignee and/or the assigning Lender, new Notes shall not be
required to be executed and delivered by the Borrower, for any assignment which
occurs at any time when any of the events described in Section 9(f) shall have
occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower,
shall maintain at the address of the Administrative Agent referred to in
subsection 11.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amounts of the Loans owing to,
each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement
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67
and the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being
made in the Register. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Notwithstanding anything in this Agreement to the
contrary, no assignment under subsection 11.6(c) of any rights or obligations
under or in respect of the Loans, the Notes or the Letters of Credit shall be
effective unless and until the Administrative Agent shall have recorded the
assignment pursuant to subsection 11.6(d). Upon its receipt of an Assignment
and Acceptance executed by an assigning Lender and an Assignee (and, in the
case of an Assignee that is not then a Lender or an affiliate thereof, by the
Borrower and the Administrative Agent) together with payment to the
Administrative Agent of a registration and processing fee of $3,500, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower. On or prior to
such effective date, the assigning Lender shall surrender any outstanding Notes
held by it all or a portion of which are being assigned, and the Borrower, at
its own expense, shall, upon the request to the Administrative Agent by the
assigning Lender or the Assignee, as applicable, execute and deliver to the
Administrative Agent (in exchange for the outstanding Notes of the assigning
Lender) a new Revolving Credit Note, and/or Swing Line Note, as the case may
be, to the order of such Assignee in an amount equal to (i) in the case of a
Revolving Credit Note, the lesser of (A) the amount of such Assignee's
Revolving Credit Commitment and (B) the aggregate principal amount of all
Revolving Credit Loans made by such Assignee, (ii) in the case of a Swing Line
Note, the lesser of (A) the Swing Line Commitment and (B) the aggregate
principal amount of all Swing Line Loans made by such Assignee, in each case
with respect to the relevant Loan, Swing Line Commitment, or Revolving Credit
Commitment after giving effect to such Assignment and Acceptance and, if the
assigning Lender has retained a Swing Line Commitment or Revolving Credit
Commitment hereunder, a new Revolving Credit Note and/or Swing Line Note, as
the case may be, to the order of the assigning Lender in an amount equal to (i)
in the case of a Revolving Credit Note, the lesser of (A) the amount of such
Lender's Revolving Credit Commitment and (B) the aggregate principal amount of
all Revolving Credit Loans made by such Lender, (ii) in the case of a Swing
Line Note, the lesser of (A) the Swing Line Commitment and (B) the aggregate
principal amount of all Swing Line Loans made by such Lender, in each case with
respect to the relevant Loan, Swing Line Commitment or Revolving Credit
Commitment after giving effect to such Assignment and Acceptance. Any such new
Notes shall be dated the Closing Date and shall otherwise be in the form of the
Note replaced thereby. Any Notes surrendered by the assigning Lender shall be
returned by the Administrative Agent to the Borrower marked "canceled".
(f) Each of MESA and the Borrower authorizes each Lender to
disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee, subject to the provisions of subsection 11.15, any and
all financial information in such Lender's possession concerning the Loan
Parties and their Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of the Borrower in connection with such Lender's
credit evaluation of the Loan Parties and their Affiliates prior to becoming a
party to this Agreement, provided that prior to any such disclosure, each such
Assignee or Participant or proposed Assignee or Participant shall execute an
agreement whereby such Assignee or Participant shall agree to be bound by
subsection 11.15.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
11.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
Reimbursement Obligations, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 9(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans or Reimbursement
Obligations, or interest thereon, such Benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Loans or Reimbursement Obligations, or shall provide such
other Lenders with the benefits of any such collateral, or
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the proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to MESA
and the Borrower, any such notice being expressly waived by MESA or the
Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by MESA or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of MESA or the
Borrower, as the case may be. Each Lender agrees promptly to notify MESA and
the Borrower and the Administrative Agent after any such set-off and
application made by such Lender, provided that, to the extent permitted by
applicable law, the failure to give such notice shall not affect the validity
of such set-off and application.
11.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.
11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Borrower, MESA, the other Loan
Parties, the Administrative Agent and the Lenders with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to subject matter
hereof not expressly set forth or referred to herein or in the other Loan
Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAW.
11.12 Submission To Jurisdiction; Waivers. Each of MESA and
the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to MESA or the Borrower at its address set forth in
subsection 11.2 or at such other address of which the Administrative
Agent shall have been notified pursuant thereto;
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(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
11.13 Acknowledgments. Each of the Borrower and MESA hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to MESA or the Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and MESA and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among MESA, the Borrower and
the Lenders.
11.14 WAIVERS OF JURY TRIAL. MESA, THE BORROWER, THE AGENTS
AND THE LENDERS HEREBY KNOWINGLY AND INTENTIONALLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.15 Confidentiality. Each Lender agrees to keep
confidential any written or oral information (a) provided to it by or on behalf
of the Borrower or MESA pursuant to or in connection with this Agreement or (b)
obtained by such Lender based on a review of the books and records of the
Borrower or MESA all non-public information provided to it by the Borrower or
MESA pursuant to this Agreement, in each case that is designated by the
Borrower in writing as confidential; provided that nothing herein shall prevent
any Lender from disclosing any such information (i) to the Administrative Agent
or any other Lender, (ii) to any Transferee or prospective Transferee which
receives such information having been made aware of the confidential nature
thereof, (iii) to its employees, directors, agents, attorneys, Affiliates,
accountants and other professional advisors, (iv) upon the request or demand of
any Governmental Authority having jurisdiction over such Lender, (v) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (vi) which has been
publicly disclosed other than in breach of this Agreement, (vii) in connection
with any litigation or dispute arising out of this Agreement or any other Loan
Document or arising out of the transactions contemplated by this Agreement or
any other Loan Document involving such Lender, or (viii) in connection with the
exercise of any remedy hereunder.
11.16 Usury Savings Clause. It is the intention of the
parties hereto to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this Agreement,
the Notes, any of the other Loan Documents or any other document related
hereto, in no event shall this Agreement or any such other document require the
payment to any Agent or Lender or permit the collection by any Agent or Lender
of interest in excess of the maximum amount permitted by such laws. If from
any circumstances whatsoever, fulfillment of any provision of this Agreement or
of any other document pertaining hereto or thereto, shall involve transcending
the limit of validity prescribed by applicable law for the collection or
charging of interest, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances any
Agent or Lender shall ever receive anything of value as interest or deemed
interest by applicable law under this Agreement, the Notes, any of the other
Loan Documents or any other document pertaining hereto or otherwise an amount
that would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
the Notes or on account of any other indebtedness of the Borrower, and not to
the payment of interest, or if such excessive interest exceeds the unpaid
balance of principal of such indebtedness, such excess shall be refunded to the
Borrower. In determining whether or not the interest paid or payable with
respect to any indebtedness of the Borrower to any Agent or Lender, under any
specified contingency, exceeds the Highest Lawful Rate (as
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hereinafter defined), the Borrower, the Administrative Agent and the Lenders
shall, to the maximum extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, (c) amortize,
prorate, allocate and spread the total amount of interest throughout the full
term of such indebtedness so that interest thereon does not exceed the maximum
amount permitted by applicable law, and/or (d) allocate interest between
portions of such indebtedness, to the end that no such portion shall bear
interest at a rate greater than that permitted by applicable law.
To the extent that Article 5069-1.04 of the Texas Revised
Civil Statutes is relevant to the Administrative Agent and the Lenders for the
purpose of determining the Highest Lawful Rate, the Administrative Agent and
the Lenders hereby elect to determine the applicable rate ceiling under such
Article by the indicated (weekly) rate ceiling from time to time in effect.
Nothing set forth in this subsection 11.16 is intended to or shall limit the
effect or operation of subsection 11.11.
For purposes of this subsection 11.16, "Highest Lawful Rate"
shall mean, with respect to any Agent or Lender, the maximum rate of
nonusurious interest that may be contracted for, taken, reserved or received on
the Loans and the Notes under laws applicable to the such Agent or Lender, as
the case may be.
11.17 Releases. (a) Unless the Liens are assigned
pursuant to paragraph (c) below, at such time as the Loans, the Reimbursement
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created by the Loan Documents,
and the Guarantee and Collateral Agreement and all obligations (other than
those expressly stated to survive such termination) of the Administrative Agent
and each Loan Party thereunder and under the other Loan Documents shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the respective Loan
Parties. At the request and expense of any Loan Party following any such
termination, the Administrative Agent shall deliver to such Loan Party any
Collateral held by the Administrative Agent under the Guarantee and Collateral
Agreement, and execute and deliver to such Loan Party such documents as such
Loan Party shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Loan Party in a transaction permitted by this
Agreement or such Loan Party is designated as an Unrestricted Subsidiary in
accordance with the terms of this Agreement, then the Lenders authorize the
Administrative Agent, at the request and expense of such Loan Party, to execute
and deliver to such Loan Party all releases or other documents reasonably
necessary or desirable for the release of the Liens created by the Guarantee
and Collateral Agreement on such Collateral. At the request and sole expense
of the Borrower, the Lenders authorize the Administrative Agent to release a
Loan Party from its obligations under the Guarantee and Collateral Agreement in
the event that all the Capital Stock of such Loan Party shall be sold,
transferred or otherwise disposed of in a transaction permitted by this
Agreement or such Loan Party is designated as an Unrestricted Subsidiary in
accordance with the terms of this Agreement, provided that the Borrower shall
have delivered to the Administrative Agent, at least five Business Days prior
to the date of the proposed release, a written request for release identifying
the relevant Loan Party and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with this Agreement and the other Loan Documents.
(c) The Administrative Agent, at the request of the Borrower,
will consider assigning its Liens on any Collateral rather than releasing such
Liens. It is understood that any such assignment shall be structured to be
expressly non-recourse to the Agents, the Lenders and the Issuing Lender and
expressly without representation or warranty by the Agents, the Lenders and the
Issuing Lender.
11.18 Pre-Funding Escrow Arrangements. The Borrower
currently intends that the Closing Date will occur on July 2, 1996, and
currently desires that the Lenders make available to the Administrative Agent
and the Borrower on the Closing Date proceeds of the Revolving Credit Loans in
an aggregate amount equal to $495,000,000 (such aggregate amount of the
Revolving Credit Loans to be made on the Closing Date, the "Initial Loan
Amount") for the purposes set forth in subsection 5.16. In order to ensure
that the Initial Loan Amount will be available at 10:00 a.m., New York City
time, on July 2, 1996, the Borrower (a) will deliver a borrowing request (the
"Pre-Funding Request") to the Administrative Agent not later than 12:00 noon,
New York City time, on June 28, 1996, and (b) requests that the
<PAGE> 76
71
Lenders, pursuant to the Pre-Funding Request, transfer an amount equal to the
Initial Loan Amount (such amount, the "Delivered Funds") to the account of the
Administrative Agent specified in subsection 2.2 (such account, solely for the
purposes of this subsection 11.18, the "Escrow Account") on July 1, 1996. The
following agreements and understandings will apply with respect to (a) the
arrangements for the availability of funds to enable the funding by the Lenders
of the Initial Loan Amount upon the satisfaction of the conditions set forth in
subsections 6.1 and 6.2 of this Agreement (the "Closing") and (b) the release
of the Delivered Funds as the Initial Loan Amount upon the Closing:
(i) The Administrative Agent, on behalf of the Lenders,
shall have sole and exclusive dominion over and control of the Escrow
Account and all property from time to time deposited therein.
(ii) Upon receipt from the Borrower of the Pre-Funding
Request on June 28, 1996, the Administrative Agent will provide notice
to each Lender, in the manner that would be applicable to a borrowing
under subsection 2.2, that such Lender should make available to the
Administrative Agent not later than 2:00 p.m., New York City time, on
July 1, 1996, such Lender's pro rata portion of the Delivered Funds,
as such pro rata portion may be determined by the Administrative Agent
pursuant to the respective Commitments of the Lenders as set forth in
Schedule 1.1(a). Each Lender shall make its pro rata portion of the
Delivered Funds available to the Administrative Agent by wire transfer
of immediately available funds to the Escrow Account.
(iii) Notwithstanding anything in this Agreement or any
other document to the contrary, (A) the Administrative Agent shall
hold the Delivered Funds for the account of the Lenders pending
release of the Delivered Funds pursuant to paragraph (v) below and (B)
the Borrower shall have no right, title or interest in any of the
Delivered Funds pending such release. To the extent that the
Administrative Agent has any interest in the Delivered Funds, the
Administrative Agent hereby grants a Lien on such interest to itself
for the benefit of the Lenders. The Administrative Agent shall use
its reasonable efforts to invest (in any of (I) United States
government repurchase obligations or (II) commercial paper issued by
Chase, as determined by the Administrative Agent) such of the
Delivered Funds as are on deposit in the Escrow Account at 2:00 p.m.,
New York City time, on July 1, 1996. All earnings on the Delivered
Funds (the "Investment Earnings") shall be paid into the Escrow
Account. The Administrative Agent shall not be liable to any person
for any loss suffered in connection with any investment of funds made
by it in accordance with this subsection 11.18.
(iv) The Borrower shall reimburse each Lender (other
than Chase) for its cost of delivery of the Delivered Funds to the
Administrative Agent. Such reimbursement shall, as to each Lender, be
equal to the product of (A) such Lender's pro rata portion (determined
as set forth above) of the Delivered Funds times (B) a percentage
equal to the ABR plus the margin that would be applicable to such
Lender's ABR Loans as of the Closing Date multiplied by (C) a fraction
the numerator of which is the actual number of days elapsed from July
1, 1996, to the date such Delivered Funds are released to the Borrower
or distributed to the Lenders pursuant to paragraph (v) below, as the
case may be, and the denominator of which is 365. Such reimbursement
in respect of the Delivered Funds shall be paid by the Borrower to the
Administrative Agent on behalf of the Lenders on the first Interest
Payment Date to occur after the Closing Date pursuant to the terms of
this Agreement; provided, however, that if the Delivered Funds are
released to the Lenders (and not to the Borrower) pursuant to
paragraph (v) below, such reimbursement amount shall be payable by the
Borrower immediately upon release of the Delivered Funds.
(v) Upon the occurrence of the Closing on July 2, 1996,
the Administrative Agent is authorized to purchase on behalf of the
Lenders the HCLP Secured Notes and to release to and make available to
the Borrower (A) the remaining Delivered Funds and (B) all Investment
Earnings. If the Closing has not occurred by 11:59 p.m., New York
City time, on July 2, 1996, the Delivered Funds shall be immediately
released to the Administrative Agent for distribution to the Lenders
(other than Chase) on July 3, 1996, and all Investment Earnings shall
be released to the Administrative Agent to the extent necessary to
offset amounts payable by the Borrower to the Lenders.
(vi) In order to induce the Administrative Agent to act
under this subsection 11.18, MESA, the Borrower, the Administrative
Agent and the Lenders agree that:
<PAGE> 77
72
(A) The duties and obligations of the Administrative
Agent under this subsection 11.18 are those herein
specifically provided and no other. The Administrative Agent
shall not incur any liability whatsoever other than for its
own wilful misconduct or gross negligence.
(B) The Administrative Agent shall not have any
responsibility for the genuineness or validity of any document
or other material presented to or deposited with it pursuant
to this subsection 11.18, nor any liability for any action
taken, suffered or omitted in accordance with any written
instructions or certificates given to it hereunder and
believed by it to be signed by the proper party or parties
pursuant to this subsection 11.18.
(C) In the event that the Administrative Agent shall
be uncertain as to its duties or rights hereunder or shall
receive instructions, claims or demands from any party hereto
that, in its opinion, conflict with any of the provisions
under this subsection 11.18, the Administrative Agent shall be
entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow
until it shall be directed otherwise in writing by all the
other parties hereto or by a final order or judgment of a
court of competent jurisdiction.
(D) The Administrative Agent shall not be bound by
any modification, amendment, termination, cancellation,
rescission or supersession of this subsection 11.18 unless the
same shall be in writing and signed by all the other parties
hereto, and if its rights, duties or immunities as
Administrative Agent are affected thereby, unless it shall
have given its prior written consent thereto.
11.19 FINAL AGREEMENT. THIS CREDIT AGREEMENT, TOGETHER WITH
ALL OTHER WRITTEN AGREEMENTS BETWEEN MESA, THE BORROWER AND THE LENDERS, IS THE
FINAL EXPRESSION OF THE CREDIT AGREEMENT BETWEEN SUCH PARTIES, AND SUCH WRITTEN
CREDIT AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR ORAL CREDIT
AGREEMENT OR OF A CONTEMPORANEOUS ORAL CREDIT AGREEMENT BETWEEN THE BORROWER,
MESA AND THE LENDERS.
11.20 NON-STANDARD TERMS; NO UNWRITTEN ORAL AGREEMENTS. (A)
ANY ADDITIONAL NON-STANDARD TERMS OF THE CREDIT AGREEMENT BETWEEN MESA, THE
BORROWER AND THE LENDERS INCLUDING THE REDUCTION TO WRITING OF A PREVIOUS ORAL
CREDIT AGREEMENT BETWEEN SUCH PARTIES, ARE SET FORTH IN THE SPACE BELOW (IF
NONE, WRITE "NONE"):
"NONE."
(b) BY SIGNATURE BELOW, THE PARTIES AFFIRM THAT NO UNWRITTEN
ORAL CREDIT AGREEMENT BETWEEN MESA, THE BORROWER AND THE LENDERS EXISTS.
<PAGE> 78
73
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
MESA OPERATING CO.
By:
------------------------------------
Title:
MESA INC.
By:
------------------------------------
Title:
THE CHASE MANHATTAN BANK, N.A., as
Administrative Agent, Swing Line
Lender, Issuing Lender and as a Lender
By:
------------------------------------
Title:
BANKERS TRUST COMPANY, as Syndication
Agent and as a Lender
By:
------------------------------------
Title:
SOCIETE GENERALE, SOUTHWEST AGENCY, as
Documentation Agent, Issuing Lender
and as a Lender
By:
------------------------------------
Title:
<PAGE> 1
EXECUTION COPY
================================================================================
MESA OPERATING CO.
As Issuer
MESA INC.
As a Guarantor
11 5/8% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
__________________
INDENTURE
Dated as of July 2, 1996
__________________
__________________
HARRIS TRUST AND SAVINGS BANK
As Trustee
__________________
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3; 12.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3-10.5
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
</TABLE>
- ---------------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.3. Incorporation By Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . 23
Section 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 2
THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.4. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.5. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.7. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.8. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.9. Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.10. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.13. Book-Entry Provisions for Global Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 3
REDEMPTION AND PREPAYMENT . . . . . . . . . . . . . . . . . . . . . 31
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.2. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.6. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.7. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.8. Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
i
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<TABLE>
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<S> <C> <C>
Section 3.9. Offer to Purchase By Application of Excess Proceeds . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 4
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.1. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.4. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.6. Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.7. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.8. Dividend and Other Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . 43
Section 4.9. Incurrence of Indebtedness and Issuance of Disqualified Stock . . . . . . . . . . . . . . . 44
Section 4.10. Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.11. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.13. Offer to Repurchase Upon Change of Control . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.14. Additional Subsidiary Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.15. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.16. No Senior Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.17. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 5
SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.1. Merger, Consolidation, or Sale of Substantially All Assets . . . . . . . . . . . . . . . . 53
Section 5.2. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 6
DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
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Page
<S> <C> <C>
Section 6.7. Rights of Holders of Notes to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 7
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.6. Reports by Trustee to Holders of the Notes . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.9. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . 67
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . 67
Section 8.2. Legal Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.4. Conditions to Legal or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.5. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.6. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . 72
Section 9.1. Without Consent of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
iii
<PAGE> 7
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 9.2. With Consent of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.5. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.6. Trustee to Sign Amendment, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 10
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 10.1. Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 10.2. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.3. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 10.4. Default on Designated Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.5. Acceleration of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.6. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.7. Notice by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.8. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.9. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.10. Subordination May Not Be Impaired by Company . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.11. Payment, Distribution or Notice to Representative . . . . . . . . . . . . . . . . . . . . . 84
Section 10.12. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.13. Authorization to Effect Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.14. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 10.15. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE 11
THE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.1. The Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.2. Execution and Delivery Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 11.3. Parent and Subsidiary Guarantors May Consolidate, etc., on Certain Terms . . . . . . . . . 87
Section 11.4. Releases of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 11.5. Limitation on Subsidiary Guarantor Liability . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.6. "Trustee" to Include Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.7. Subordination of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 12
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 90
</TABLE>
iv
<PAGE> 8
<TABLE>
<CAPTION>
Page
<S> <C>
Section 12.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 12.3. Communication by Holders of Notes with Other Holders of Notes . . . . . . . . . . . . . . . 92
Section 12.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . 92
Section 12.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . 92
Section 12.6. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 12.7. No Personal Liability of Directors, Officers, Employees and Stockholders . . . . . . . . . 93
Section 12.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 12.9. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 93
Section 12.10. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 12.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.12. Counterpart Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.13. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF LEGEND FOR GLOBAL NOTE
Exhibit C FORM OF GUARANTEE
</TABLE>
v
<PAGE> 9
INDENTURE dated as of July 2, 1996 among Mesa Operating Co., a
Delaware corporation (the "Company"), as issuer, MESA INC., a Texas Corporation
(the "Parent"), as a guarantor and Harris Trust and Savings Bank, as trustee
(the "Trustee").
The Company, the Parent and the Trustee agree as follows for
the benefit of each other and for the equal and ratable benefit of the Holders
of the 11 5/8% Senior Subordinated Discount Notes due 2006 of the Company (the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"Accreted Value" with respect to any Note means, as of the
date of issuance of the Notes, 56.855% of the offering price of the stated
principal amount of such Note, and as of any date after such date of issuance
and prior to July 1, 2001 as of which the Accreted Value is being calculated
(the "Accreted Value Calculation Date") (a) if the Accreted Value Calculation
Date is a January 1 or July 1 interest payment date, the percentage of the
stated principal amount of such Note as of such date as shown in the table
below or (b) if the Accreted Value Calculation Date is not a January 1 or July
1, an amount equal to the sum of (i) the Accreted Value of such Note as of the
January 1 or July 1, as the case may be, immediately preceding the Accreted
Value Calculation Date, plus (ii) the accrued amortization of the original
issue discount from (but excluding) such immediately preceding January 1 or
July 1 to (and including) the Accreted Value Calculation Date, calculated as
the product of (x) 5.8125% of annual coupon rate of the Accreted Value of such
Note as of such immediately proceeding January 1 or July 1 and (y) a fraction,
the numerator of which is the number of days from (but excluding) such
immediately preceding January 1 or July 1 to (and including) the Accreted Value
Calculation Date (assuming a 360-day year of twelve 30-day months), and the
denominator of which is 180. The Accreted Value of each Note as of each
January 1 and July 1 prior to July 1, 2001 shall be an amount in dollars equal
to a percentage of the stated principal amount of such Note as set forth below:
<TABLE>
<CAPTION>
January 1 July 1
Payment Date Payment Date
------------ ------------
<S> <C> <C>
1997 60.141% 63.636%
1998 67.335% 71.249%
1999 75.390% 79.772%
2000 84.409% 89.315%
2001 94.507% 100.000%
</TABLE>
On and after July 1, 2001, the Accreted Value of each Note
shall be equal to 100% of the stated principal amount thereof.
<PAGE> 10
2
"Acquired Debt" means, with respect to any specified Person or
any Subsidiary of such Person (i) Indebtedness of any other Person existing at
the time such other Person is merged with or into or became a Subsidiary of
such specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control; further provided, however, that in no
event shall any limited partner of DNR that is a beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of less than 10% of the aggregate
voting power of the Capital Stock of the Company or the Parent be deemed to be
an Affiliate of the Company or the Parent.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition (but excluding the creation of a Lien) by the Company or any of its
Restricted Subsidiaries of any assets including, without limitation, by way of
a sale and leaseback; provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole shall be governed by Sections 4.13 and/or 5.1
hereof and not by Section 4.10 hereof), and (ii) the issue or sale by the
Company or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Subsidiaries (including the sale by a Restricted Subsidiary of Equity
Interests in an Unrestricted Subsidiary), in the case of either clause (i) or
(ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $5.0 million or (b) for net proceeds
in excess of $5.0 million. Notwithstanding the foregoing, the following shall
not be deemed to be Asset Sales: (1) a transfer of assets by the Company to a
Restricted Subsidiary of the Company or by a Restricted Subsidiary of the
Company to the Company or to another Restricted Subsidiary of the Company (in
the case of a transfer to a Subsidiary that is not a Wholly Owned Restricted
Subsidiary, transfers will be excluded from this definition only to the extent
of the Company's or the Restricted Subsidiary's interest in such Subsidiary
after giving effect to such transfer), (2) an issuance of Equity Interests by a
Restricted Subsidiary of the Company to the Company or to another Restricted
Subsidiary of the Company (in the case of an issuance of Equity Interests to a
Subsidiary that is not a Wholly Owned Restricted Subsidiary, issuances will be
excluded from this definition only to the extent of the Company's or the
Restricted Subsidiary's interest in such Subsidiary after giving effect to such
issuance), (3) a Permitted Investment or a Restricted Payment that is permitted
by Section 4.7, (4) the abandonment, farm-out, lease or sublease of undeveloped
oil and gas properties in the ordinary course of business, (5) the trade or
exchange by the Company or any Restricted Subsidiary of the Company of any oil
and gas property owned
<PAGE> 11
3
or held by the Company or such Restricted Subsidiary for any oil and gas
property owned or held by another Person, which the Board of Directors of the
Company determines in good faith to be of approximately equivalent value, (6)
the sale or transfer of hydrocarbons or other mineral products or other
inventory or surplus or obsolete equipment in the ordinary course of business
or (7) sale of hydrocarbons pursuant to Permitted Marketing Obligations.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended to the extent the
lease payments during such extension period are required to be capitalized on a
balance sheet in accordance with GAAP).
"Bankruptcy Code" means Title 11 of the United States Code,
as amended.
"Board of Directors" means the Board of Directors of the
Company or the Parent, as applicable, or any authorized committee of such Board
of Directors.
"Borrowing Base" means, as of any date, the aggregate amount
of borrowing availability as of such date under all Credit Facilities that
determine availability on the basis of a borrowing base or other asset-based
calculation, provided that in no event shall the Borrowing Base exceed $600.0
million.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any lender party to the
Credit Agreement or with any domestic commercial bank having capital and
surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days for
<PAGE> 12
4
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having a rating of at
least P1 from Moody's or a rating of at least A1 from S&P and (vi) money market
mutual or similar funds having assets in excess of $100,000,000.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole or the Parent and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than a Permitted Investor, (ii) the adoption by the shareholders of
the Company or the Parent of a plan relating to the liquidation or dissolution
of the Company or the Parent, (iii) after no shares of the Series B Preferred
Stock remain outstanding (a) Continuing Directors cease for any reason to
constitute a majority of the members of the Board of Directors of the Company
or the Parent for a period of two consecutive years or (b) an event or series
of events by which any person or other entity, other than a Permitted Investor,
or any group of Persons or other entities acting in concert as a partnership or
other group, other than a group of Permitted Investors, shall, as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases, merger, consolidation or otherwise, have become the beneficial owner
(within the meaning of rule 13d-3 under the Exchange Act) of 35% or more of the
aggregate voting power of the then outstanding Capital Stock of the Parent
having the right to elect directors under ordinary circumstances.
"Closing Date" the date of the closing of the sale of the
Notes offered pursuant to the Offering.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period plus (i) an amount equal to any extraordinary loss
plus any net loss realized in connection with an Asset Sale (together with any
related provision for taxes), to the extent such losses were included in
computing such Consolidated Net Income, plus (ii) provision for taxes based on
income or profits of such Person and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Interest Rate Hedging Agreements), to the extent that any such expense was
included in computing such Consolidated Net Income, plus (iv) depreciation,
<PAGE> 13
5
depletion and amortization expenses (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) for such Person and its Restricted Subsidiaries for
such period to the extent that such depreciation, depletion and amortization
expenses were included in computing such Consolidated Net Income, plus (v)
exploration expenses for such Person and its Restricted Subsidiaries for such
period to the extent such exploration expenses were included in computing such
Consolidated Net Income, plus (vi) other non-cash charges (excluding any such
non-cash charge to the extent that it represents an accrual of or reserve for
cash charges in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such other noncash charges were included in
computing such Consolidated Net Income, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation,
depletion and amortization, exploration and other non-cash charges and expenses
of, a Restricted Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in same proportion) that the Net Income of such Restricted Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, 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, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded and (iv) the cumulative effect of a change in accounting
principles shall be excluded. Notwithstanding the foregoing, for the purpose
of Section 4.8 only, there shall be excluded from Consolidated Net Income any
dividends or other distributions paid in cash by Unrestricted Subsidiaries to
the referent Person or a Restricted Subsidiary thereof to the extent such
dividend or other distributions increase the amount of Restricted Payments
pursuant to Subsection 4.8(c)(iv)(A).
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending prior to the
taking of any action for the purpose of which the determination is being made
and for which financial statements are available (but in no event ending more
than 135 days prior to the taking of such action), as (i) the par or stated
value of all outstanding Capital Stock of the Company, plus (ii)
<PAGE> 14
6
paid-in capital or capital surplus relating to such Capital Stock, plus (iii)
any retained earnings or earned surplus, less (a) any accumulated deficit and
(b) any amounts attributable to Disqualified Stock.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company or the Parent, as the case
may be, who (i) was a member of such Board of Directors immediately after the
first date on which no shares of Series B Preferred Stock were outstanding or
(ii) was nominated for election or elected to such Board of Directors with the
approval of (a) a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election or (b) a majority of those
directors who were previously approved by Continuing Directors.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.2 hereof or such other
address as to which the Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated
as of July 2, 1996, by and among the Company, the Parent, The Chase Manhattan
Bank, N.A. as administrative agent and as a lender, Bankers Trust Company, as
syndication agent and as a lender, Societe Generale, Southwest Agency, as
documentation agent and as a lender, and certain other banks, financial
institutions and other entities, as lenders, providing for up to $525.0 million
of Indebtedness, including any related notes, letters of credit issued
thereunder, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, restated,
modified, renewed, refunded, increased, replaced or refinanced, in whole or in
part, from time to time, whether or not with the same lenders or agents.
"Credit Facilities" means one or more debt facilities
(including, without limitation, the Credit Agreement) or commercial paper
facilities with banks or other lenders providing for revolving credit loans,
term loans, production payment financing, receivables financing (including
through the sale of receivables to such lenders or to special purpose entities
formed to borrow from such lenders against such receivables) or letters of
credit, in each case, as amended, restated, modified, renewed, refunded,
increased, replaced or refinanced in whole or in part from time to time.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Depository" means, with respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another
Person designated as Depository by the Company, which must be a clearing
agency registered under the Exchange Act.
"Designated Senior Debt" means (i) the Credit Agreement and
(ii) any other Senior Debt of the Company and its Subsidiaries permitted under
this Indenture the principal amount of
<PAGE> 15
7
which is $25 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, (i) matures or
is mandatorily redeemable for cash, pursuant to a sinking fund obligation or
otherwise, or redeemable for cash at the option of the Holder thereof, in whole
or in part, on or prior to the date that is 91 days after the date on which the
Notes mature, or (ii) requires the payment of cash dividends or other cash
distributions on or prior to the date that is 91 days after the date on which
the Notes mature.
"DNR" means DNR-MESA Holdings, L.P., a Delaware limited
partnership.
"Dollar-Denominated Production Payments" means production
payment obligations recorded as liabilities in accordance with GAAP, together
with all undertakings and obligations in connection therewith.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock) and,
with respect to any employee benefit plans, stock appreciation rights.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Debt" means Indebtedness of the Parent and its
Subsidiaries in existence after giving effect to the application of the
proceeds of the Recapitalization on the Closing Date, in an aggregate principal
amount not to exceed $12,900,000, together with all accrued and unpaid interest
thereon and all premiums payable with respect thereto until such amounts are
repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees,
redeems or pays any Indebtedness (other than revolving credit borrowings) or
issues or redeems Disqualified Stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the calculation of the Fixed Charge Coverage Ratio is made
(the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee or
redemption or payment of Indebtedness, or such issuance or redemption of
Disqualified Stock, as if the same had occurred at the beginning of the
applicable four-quarter reference period. In addition, for purposes of making
the computation referred to above, (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date (including, without limitation, any acquisition
to occur on the Calculation Date) shall be deemed to have occurred on the first
day of the four-quarter reference period and Consolidated Cash Flow for such
<PAGE> 16
8
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, (ii) the
net proceeds of Indebtedness incurred or Disqualified Stock issued by the
Company or any of its Restricted Subsidiaries pursuant to the first paragraph
of Section 4.9 hereof during the four-quarter reference period or subsequent to
such reference period and on or prior to the Calculation Date shall be deemed
to have been received by the Company or any such Restricted Subsidiary on the
first day of the four-quarter reference period and applied to its intended use
on such date, (iii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded and (iv) the Fixed
Charges attributable to discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of prior to the Calculation
Date, shall be excluded, but only to the extent that the obligations giving
rise to such Fixed Charges shall not be obligations of the referent Person or
any of its Restricted Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees incurred in respect of letter of credit
or bankers' acceptance financings; (ii) the consolidated interest expense of
such Person and its Restricted Subsidiaries that was capitalized during such
period, (iii) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or any of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or any of its Restricted Subsidiaries (whether or
not such guarantee or Lien is called upon) and (iv) all cash dividend payments
(and non-cash dividend payments (unless paid in Equity Interests which are not
Disqualified Stock) in the case of a Person that is a Restricted Subsidiary) on
any series of preferred stock of such Person or any of its Restricted
Subsidiaries owned by Persons other than the Company or a Restricted
Subsidiary. For purposes of the definition of Fixed Charges, (i) interest on a
Capital Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Board of Directors of such Person (as evidenced by
a resolution of the Board of Directors of the Company) to be the rate of
interest implicit in such Capital Lease Obligation in accordance with GAAP,
(ii) interest on Indebtedness that is determined on a fluctuating basis shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest of such Indebtedness in effect on the date Fixed Charges are being
calculated, subject to the proviso in clause (iii), (iii) interest on
Indebtedness that may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate actually chosen,
or, if none, then based upon such optional rate chosen as the Company may
designate, (provided, that for the period following the date on which the rate
actually chosen ceases to be in effect, the Company may designate an optional
rate other than that actually chosen, which optional rate shall be deemed to
accrue at a fixed per annum equal to the rate of interest on such optional rate
in effect on the date Fixed Charges are being calculated) and (iv) Fixed
Charges shall be increased or reduced by the net cost (including amortization
of discount) or benefit associated with obligations under Interest Rate Hedging
Agreements attributable to such period.
<PAGE> 17
9
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) 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
Government Security or a specific payment of principal of or interest on any
such Government Security 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 Government Security or the specific payment of principal of
or interest on the Government Security evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantee" means each of the Guarantees of the Notes by the
Parent and Subsidiary Guarantors hereunder.
"Guarantors" means each of (i) the Parent, and (ii) any
Restricted Subsidiary of the Company that executes a Guarantee in accordance
with the provisions of this Indenture, and, in each case, their respective
successors and assigns.
"Holder" means a Person in whose name a Note is registered on
the Registrar's books.
"Indebtedness" means, with respect to any Person, without
duplication, (a) any indebtedness of such Person, whether or not contingent,
(i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or
similar instruments, (iii) evidenced by letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances, (iv) representing
Capital Lease Obligations, (v) representing the balance deferred and unpaid of
the purchase price of any property, except any such balance that constitutes an
accrued expense or trade payable, (vi) representing any obligations in respect
of Interest Rate Hedging Agreements or Oil and Gas Hedging Contracts, and (vii)
in respect of any Production Payment, (b) all indebtedness of others of the
type referred to in clauses (a), (c), (d) or (e) secured by a Lien on any asset
of such Person (whether or not such indebtedness is assumed by such Person,
except that the amount of such indebtedness not
<PAGE> 18
10
assumed shall be deemed to be the lesser of the value of such asset and the
amount of such indebtedness so secured), (c) obligations of such Person in
respect of production imbalances and (d) Attributable Debt of such Person, (e)
Acquired Debt of such Person and (f) to the extent not otherwise included in
the foregoing, the guarantee by such Person of any indebtedness of any other
Person, of the type referred to in the preceding clauses (a), (c), (d) or (e).
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Interest Rate Hedging Agreements" means, with respect to any
Person, the obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Investments" means, with respect to any Person, all
investments by such Person (including investments by such Person in Affiliates)
in the form of direct or indirect loans (including guarantees of Indebtedness
or other obligations, but excluding trade credit and other ordinary course
advances customarily made in the Oil and Gas Business), advances or capital
contributions (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
the following shall not constitute Investments: (i) an acquisition of assets,
Equity Interests or other securities by the Company for consideration
consisting of Equity Interests (other than Disqualified Stock) in the Company,
(ii) Interest Rate Hedging Agreements entered into in accordance with the
limitations set forth in clause (h) of the definition of "Permitted
Indebtedness" set forth in Section 4.9 hereof and (iii) Oil and Gas Hedging
Contracts entered into in accordance with the limitations set forth in clause
(i) of the definition of "Permitted Indebtedness" set forth in Section 4.9
hereof and (iv) Permitted Marketing Transactions. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of the Company (other
than MEV) such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Equity Interests of such Subsidiary not sold or
disposed of.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, the City of Chicago or at a place
of payment are authorized by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security
<PAGE> 19
11
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquid Securities" means securities (i) of an issuer that is
not an Affiliate of the Company and (ii) that are publicly traded on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market;
provided, that securities meeting the requirements of clauses (i) and (ii)
above shall be treated as Liquid Securities from the date of receipt thereof
until the earlier of (x) the date on which such securities are sold or
exchanged for cash or cash equivalents and (y) 180 days following the date of
the closing of the Asset Sale in connection with which such Liquid Securities
were received. In the event such securities are not sold or exchanged for cash
or cash equivalents within such 180-day period, for purposes of determining
whether the transaction pursuant to which the Company or a Restricted
Subsidiary received the securities was in compliance with the provisions of
Section 4.10 hereof, such securities shall be deemed not to have been Liquid
Securities at any time.
"Material Restricted Subsidiary" means any Restricted
Subsidiary of the Company, which, as of the relevant date of determination,
would be a "significant subsidiary" as defined in Reg. Section 230.405
promulgated pursuant to the Securities Act as in effect on the date of issuance
of the Notes, assuming the Company is the "registrant" referred to in such
definition, except that the 10% amounts referred to in such definition shall be
deemed to be 5%.
"MEV" means Mesa Environmental Ventures Co. and its
Subsidiaries
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or
loss, together with any related provision for taxes on such extraordinary or
nonrecurring gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of Liquid Securities or any other any non-cash consideration
received in any Asset Sale, but excluding cash amounts placed in escrow, until
such amounts are released to the Company), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and expenses, and sales commissions) and any relocation
expenses incurred as a result thereof, taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing arrangements), amounts paid to minority interest holders,
amounts required to be applied to the repayment of Indebtedness (other than
Indebtedness under any Credit Facility) secured by a Lien on
<PAGE> 20
12
the asset or assets that were the subject of such Asset Sale and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP and any reserve established for future liabilities.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides any guarantee
or credit support of any kind (including any undertaking, guarantee, indemnity
or agreement or instrument that would constitute Indebtedness) or (b) is
directly or indirectly liable (as a guarantor or otherwise); (ii) no default
with respect to which (including any rights that the holders thereof may have
to take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of
the Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) the explicit terms of which provide
that there is no recourse against any of the assets of the Company or its
Restricted Subsidiaries.
"Note Custodian" means the Trustee or the Registrar, as
custodian with respect to the Notes in global form, or any successor entity
thereto or any entity acting as custodian with respect to Notes in global form.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness and with respect to Obligations
under the Credit Agreement, includes "Obligations" as defined therein.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary, the Assistant Secretary or any Vice-President of
such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company, by two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, that meets the requirements of
Section 12.5 hereof.
"Oil and Gas Business" means (i) the acquisition, exploration,
exploitation, development, operation and disposition of interests in oil, gas
and other hydrocarbon properties, (ii) the gathering, marketing, treating,
processing, storage, selling and transporting of any production from such
interests or properties, (iii) any business relating to or arising from
exploration for or development, production, treatment, processing, storage,
transportation or marketing of oil, gas and other minerals and products
produced in association therewith and (iv) any activity that is ancillary or
necessary or desirable to facilitate the activities described in clauses (i)
through (iii) of this definition.
<PAGE> 21
13
"Oil and Gas Hedging Contracts" means any oil and gas purchase
or hedging agreement, and other agreement or arrangement, in each case, that is
designed to provide protection against oil and gas price fluctuations.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
12.5 hereof. The counsel may be an employee of or counsel to the Company, the
Parent, any Subsidiary Guarantor or the Trustee.
"Pari Passu Indebtedness" means indebtedness which ranks pari
passu in right of payment to the Notes, including the Senior Subordinated
Notes.
"Permitted Business Investments" means investments made in the
ordinary course of, and of a nature that is or shall have become customary in,
the Oil and Gas Business as a means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, marketing or transporting oil and
gas through agreements, transactions, interests or arrangements which permit
one to share risks or costs, comply with regulatory requirements regarding
local ownership or satisfy other objectives customarily achieved through the
conduct of Oil and Gas Business jointly with third parties, including, without
limitation, (i) ownership interests in oil and gas properties, processing
facilities, gathering systems or ancillary real property interests and (ii)
Investments in the form of or pursuant to operating agreements, processing
agreements, farm-in agreements, farm-out agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling agreements,
joint bidding agreements, service contracts, joint venture agreements,
partnership agreements (whether general or limited), limited liability company
agreements, subscription agreements, stock purchase agreements and other
similar agreements with third parties.
"Permitted Investments" means (a) any Investment in the
Company or in a Restricted Subsidiary of the Company; (b) any Investment in
Cash Equivalents or securities issued or directly and fully guaranteed or
insured by the United States government or any agency or instrumentality
thereof having maturities of not more than one year from the date of
acquisition; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person if, as a result of such Investment and any related
transactions that at the time of such Investment are contractually mandated to
occur, (i) such Person becomes a Restricted Subsidiary of the Company or (ii)
such Person is merged, consolidated or amalgamated with or into, or transfers
or conveys all or substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company; (d) any Investment made
as a result of the receipt of non-cash consideration from an Asset Sale that
was made pursuant to and in compliance with Section 4.10 hereof; (e) other
Investments having an aggregate fair market value (measured on the date each
such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this
clause (e) that are at the time outstanding (net of repayments, dividends and
distributions received with respect to such Investments), not to exceed $37.5
million; (f) Permitted Business Investments; (g) any Investment acquired by the
Company in exchange for Equity Interests in the Company or the Parent (other
than Disqualified Stock); (h) Investments in Unrestricted Subsidiaries with net
cash proceeds contributed to the common equity capital of the Company or a
Restricted Subsidiary since the date of this Indenture, provided that the
amount of any
<PAGE> 22
14
such net cash proceeds that are used for any such Investment shall be excluded
from clause (c)(ii) of the first paragraph of Section 4.7 hereof and (i)
Investments received in connection with any good faith settlement of a
bankruptcy proceeding.
"Permitted Investor" means any Person who is or was (i) a
holder of Shares of the Series B Preferred Stock or (ii) an Affiliate of a
Person described in the immediately preceding clause (i).
"Permitted Liens" means (i) Liens securing Senior Debt under
the Credit Agreement, (ii) Liens securing Indebtedness of a Subsidiary and
Liens securing Senior Debt, in each case, that is outstanding on the date of
issuance of the Notes (after giving effect to the Recapitalization and the use
of the proceeds therefrom) and Liens securing Senior Debt that is permitted by
the terms of the Indentures to be incurred, (iii) Liens in favor of the Company
or any Restricted Subsidiary, (iv) Liens on property or assets existing at the
time of acquisition thereof by the Company or any Subsidiary of the Company and
Liens on property or assets of a Subsidiary existing at the time it became a
Subsidiary; provided, that such Liens were in existence prior to the
contemplation of the acquisition and do not extend to any property or assets
other than the acquired property or assets or the property or assets of the
acquired Subsidiary, (v) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance or
other kinds of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety or appeal bonds, bids,
leases, government contracts and other contracts (other than for borrowed
money), performance and return-of-money bonds or other obligations of a like
nature incurred in the ordinary course of business (including, without
limitation, lessee or operator obligations under statutes, governmental
regulations or instruments related to the ownership, exploration and production
of oil, gas and minerals on state or federal lands or waters), (vi) Liens
existing on the date of the Indentures (after giving effect to the
Recapitalization and the use of proceeds therefrom), (vii) Liens for taxes,
assessments and governmental charges and claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided, that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor, (viii) statutory liens of landlords, mechanics, suppliers,
vendors, warehousemen, carriers and other like Liens arising in the ordinary
course of business, (ix) pre-judgment Liens and judgment Liens not giving rise
to an Event of Default so long as any appropriate legal proceeding that 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, (x) Liens on, or related to, properties or assets to
secure all or part of the costs incurred in the ordinary course of the Oil and
Gas Business for the exploration, drilling, development, production,
processing, transportation, marketing or storage or operation thereof and to
support trade letters of credit and bankers' acceptances issued or created in
the ordinary course of business, (xi) Liens encumbering pipelines or pipeline
facilities that arise under operation of law, (xii) 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 or natural gas, unitization and pooling
declarations and agreements, area of mutual interest agreements and other
agreements that are customary in the Oil and Gas Business, (xiii) Liens
reserved in oil and gas mineral leases for bonus and rental payments
<PAGE> 23
15
and for compliance with the terms of such leases, (xiv) Liens constituting
survey exceptions, encumbrances, easements, and reservations of, and rights to
others for, rights-of-way, zoning and other restrictions as to the use of real
properties, and minor defects of title which, in the case of any of the
foregoing, do not secure the payment of borrowed money, and in the aggregate do
not materially adversely affect the value of the assets of the Company and its
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 such Subsidiaries, (xv) Liens not otherwise permitted by clauses (i) through
(xiv) that are incurred in the ordinary course of business of the Company or
any Subsidiary of the Company with respect to obligations that do not exceed
$5.0 million at any one time outstanding, (xvi) Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries, (xvii)
any interest or title of a lessor under any Capital Lease Obligation and
(xviii) purchase money Liens; provided, however, that (a) the related purchase
money Indebtedness shall not be secured by any property or assets of the
Company or any Restricted Subsidiary other than the property and assets so
acquired and the proceeds thereof and (b) the Lien securing such Indebtedness
shall be created no later than 10 days after such acquisition.
"Permitted Marketing Transaction" means (i) a transaction in
which the Company or any Subsidiary of the Parent either (a) establishes a
position using New York Mercantile Exchange Crude Oil or Natural Gas Futures
contracts to purchase hydrocarbons for future delivery to it or (b) purchases
or commits to purchase hydrocarbons for future delivery to it, and
contemporaneous with such purchase transaction either (1) establishes one or
more positions using New York Mercantile Exchange Crude Oil or Natural Gas
Futures contracts to resell at a date subsequent to such delivery date or (2)
enters into a contract with a Person to resell at a date subsequent to such
delivery date, a similar aggregate quantity and quality of hydrocarbons as so
purchased by the Company or such Subsidiary, as applicable, at an aggregate
price greater than the Indebtedness incurred for the hydrocarbons so purchased
by the Company or such Subsidiary or (ii) any other purchase by the Company or
any Subsidiary of the Parent of hydrocarbons for which the Company or such
Subsidiary has contracts to sell.
"Permitted Refinancing Debt" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Indebtedness incurred under a Credit
Facility) of the Company or any of its Restricted Subsidiaries; provided that:
(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Debt does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded, plus the amount of premiums and prepayment penalties and
other amounts required to be paid to the holders of such Indebtedness in
connection therewith and reasonable fees and expenses incurred in connection
therewith; (ii) such Permitted Refinancing Debt has a final maturity date on or
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Debt has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes
at least to the same
<PAGE> 24
16
extent as the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock" means the collective reference to the Series
A Preferred Stock and the Series B Preferred Stock.
"Production Payments" means Dollar-Denominated Production
Payments and Volumetric Production Payments, collectively.
"Recapitalization" means the use of the net proceeds by the
Parent and the Company from (i) the sale of the Notes and the Senior
Subordinated Notes, (ii) the credit facility pursuant to the Credit Agreement,
(iii) the sale of the Series B Preferred Stock pursuant to the Stock Purchase
Agreement and (iv) the sale of the Series A Preferred Stock pursuant to the
Rights Offering along with cash and investment balances of the Parent and the
Company to repay and/or refinance substantially all of the Parent's, the
Company's and their respective Subsidiaries' outstanding Indebtedness.
"Repurchase Offer" means an offer made by the Company to
purchase all or any portion of a Holder's Notes pursuant to Section 4.10 or
4.13 hereof.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers 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.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Subsidiary" means any direct or indirect
Subsidiary of the Company that is not an Unrestricted Subsidiary.
"Rights Offering" means the rights offering by the Parent
whereby it will distribute to holders of its common stock transferrable rights
to purchase a pro rata portion of approximately 58,400,000 shares of Series A
Preferred Stock.
"S&P" means Standard & Poor's Ratings Group and its
successors.
"Securities Act" means the Securities Act of 1933, as amended.
<PAGE> 25
17
"Senior Subordinated Notes" means the 10 5/8% Senior
Subordinated Notes issued by the Company due July 1, 2006.
"Senior Subordinated Notes Indenture" means the Indenture
dated as of July 2, 1996 among the Company, the Parent and Harris Trust and
Savings Banks, as trustee, pursuant to which the Senior Subordinated Notes were
issued, as the same may be amended, supplemented or otherwise modified from
time to time.
"Series A Preferred Stock" means the Series A 8% Cumulative
Convertible Preferred Stock of the Parent.
"Series B Preferred Stock" means the Series B 8% Cumulative
Convertible Preferred Stock of the Parent.
"Standby Commitment" means the standby commitment provided by
DNR pursuant to which it will purchase additional shares of Series B Preferred
Stock equal to the number of shares of Series A Preferred Stock, if any, not
purchased in the Rights Offering.
"Stated Price" means, with respect to any Note as of any date
of determination, (i) the Accreted Value thereof on the date of determination,
if such date is on or prior to July 1, 2001 or (ii) 100% of the principal
amount thereof plus accrued but unpaid interest thereon to the date of
determination, if such date is after July 1, 2001, and in the cases, and only
the cases, of an optional redemption effected pursuant to the provisions of
Sections 3.7 and 4.13, the premium (if any) payable pursuant to such Sections,
as applicable.
"Stock Purchase Agreement" means the Stock Purchase Agreement
dated April 26, 1996 between the Parent and DNR, as the same may be amended,
supplemented, or otherwise modified from time to time.
"Subordinated Indebtedness" means any Indebtedness of the
Company or any Restricted Subsidiary (whether outstanding on the date of the
issuance of the Notes or thereafter incurred) which is subordinate or junior in
right of payment to the Notes pursuant to a written agreement.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
<PAGE> 26
18
"Subsidiary Guarantors" means any Restricted Subsidiary of the
Company that executes a Guarantee in accordance with the provisions of this
Indenture and any successor or assign of such Subsidiary that becomes obligated
under any Guarantee pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Total Assets" means, with respect to the Company, the total
consolidated assets of the Company and its Restricted Subsidiaries, as shown on
the most recent balance sheet of the Company.
"Trustee" means the party named as such in the preamble to
this Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company which at the time of determination shall be an Unrestricted Subsidiary
(as designated 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 (including any newly
acquired or newly formed Subsidiary or a Person becoming a Subsidiary through
merger or consolidation or Investment therein) to be an Unrestricted Subsidiary
only if: (a) such Subsidiary does not own any Capital Stock of, or own or hold
any Lien on any property of, any other Subsidiary of the Company which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary; (b) all the Indebtedness of such Subsidiary shall at the date of
designation, and will at all times thereafter consist of, Non-Recourse Debt;
(c) the Company certifies that such designation was permitted by Section 4.7;
(d) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly, all or
substantially all of the business of the Company and the Subsidiaries; (e) such
Subsidiary does not, directly or indirectly, own any Indebtedness of or Equity
Interest in, and has no Investments in, the Company or any Restricted
Subsidiary; (f) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (1) to subscribe for additional Equity Interests or (2) to maintain
or preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and (g) on the date such
Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary with terms substantially less favorable to the
Company than those that might have been obtained from Persons who are not
Affiliates of the Company and (h) the Board of Directors of the Company shall
have made a determination (as set forth in the resolution approving such
designation, creation or purchase) that the designation, creation and operation
of the Unrestricted Subsidiary is not reasonably expected to materially and
adversely affect the financial condition, business, or operations of the
Company and its Restricted Subsidiaries taken together as a whole (which
resolution shall be conclusive evidence of compliance with this provision).
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a resolution of the Board
of Directors of the Company giving effect to such designation and an Officer's
Certificate certifying
<PAGE> 27
19
that such designation complied with the foregoing conditions. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred as of such date. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, that immediately after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof and the Company could incur
at least $1.00 of additional Indebtedness (excluding Permitted Indebtedness)
pursuant to Section 4.9 on a pro forma basis taking into account such
designation.
"Volumetric Production Payments" means production payment
obligations recorded as deferred revenue in accordance with GAAP, together with
all undertakings and obligations in connection therewith.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means, with respect to
any Person, a Restricted Subsidiary of such Person, all of the outstanding
Capital Stock or other ownership interests of which (other than directors'
qualifying shares) are owned, directly or indirectly, by such Person or by one
or more Wholly Owned Restricted Subsidiaries of such Person.
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . 4.11
"Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . 3.9
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . 10.2
"Change of Control Offer" . . . . . . . . . . . . . . . . . . 4.13
"Change of Control Payment" . . . . . . . . . . . . . . . . . 4.13
"Change of Control Payment Date" . . . . . . . . . . . . . . . 4.13
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . 8.3
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"DTC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . 6.1
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . 4.10
"Global Note Holder" . . . . . . . . . . . . . . . . . . . . . 2.1
</TABLE>
<PAGE> 28
20
<TABLE>
<S> <C>
"incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . 8.2
"Notice of Default" . . . . . . . . . . . . . . . . . . . . . 6.1
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . 3.9
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . 3.9
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Payment Blockage Notice" . . . . . . . . . . . . . . . . . . 10.4
"Payment Default" . . . . . . . . . . . . . . . . . . . . . . 6.1
"Permitted Indebtedness" . . . . . . . . . . . . . . . . . . . 4.9
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . 3.9
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . 4.7
"Senior Debt" . . . . . . . . . . . . . . . . . . . . . . . . 10.2
</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 Notes;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" with respect to the Notes means the Company and with
respect to the Guarantees means the Parent and any Subsidiary
Guarantor and any successor obligor upon the Notes and the Guarantees,
respectively.
All other terms used in this indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by rule enacted by
the Commission under the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
<PAGE> 29
21
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement of
successor sections or rules adopted by the Commission from time to
time.
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Guarantees of the
Parent and the Subsidiary Guarantors, if any, shall be substantially in the
form of Exhibit C hereto, the terms of which are incorporated in and made part
of this indenture. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Note shall be dated the
date of its issuance and shall show the date of its authentication. The Notes
will be fully registered and only in denominations of $1,000 principal amount
(at maturity) and integral multiples of $1,000 in excess thereof.
The Notes offered and sold may be issued initially in the form
of one or more fully registered Global Notes, with, or on behalf of, The
Depository Trust Company and registered in the name of Cede & Co., as nominee
of the Depository (such nominee being referred to herein as the "Global Note
Holder"), or will remain in the custody of the Registrar pursuant to the Fast
Balance Certificate Agreement between the Depository and the Registrar and
shall bear the legend set forth as Exhibit B. Except as set forth in Section
2.6, the Global Notes may be transferred, in whole and not in part, only to
another nominee of the Depository or to a successor of the Depository or its
nominee.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, Parent, any Subsidiary Guarantor and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions
and (as to the Trustee, to the extent such terms and provisions pertain to the
Trustee) to be bound thereby.
Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the legend on Exhibit B). Notes issued
in certificated form shall be substantially in the form of Exhibit A attached
hereto (but without including the legend on Exhibit B). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate amount of outstanding Notes
from time to time endorsed
<PAGE> 30
22
thereon and that the aggregate amount of outstanding Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.6 hereof.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers, authenticate Notes for original issue up to the aggregate
principal amount (at maturity) of $264,000,000. The aggregate principal amount
(at maturity) of Notes outstanding at any time may not exceed $264,000,000,
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.
Section 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York where (i) Notes may be presented for
registration of transfer or for exchange ("Registrar") and (ii) Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company shall notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries
may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC")to act as Depository with respect to the Global Notes.
<PAGE> 31
23
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent, including the
Trustee (who shall be deemed to have agreed by its execution of this
Indenture), to agree in writing that the Paying Agent shall hold in trust for
the benefit of Holders or the Trustee (unless the Paying Agent is the Trustee,
in which case it shall hold in trust for the Holders) all money held by the
Paying Agent for the payment of the Stated Price of or interest on the Notes,
and shall notify the Trustee of any default by the Company, the Parent or any
Subsidiary Guarantor in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it
to the Trustee. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company, the Parent or a Subsidiary) shall have no
further liability for the money. If the Company, the Parent or a Subsidiary
acts as Paying Agent, it shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company, the Parent or
a Subsidiary Guarantor, the Trustee shall serve as sole Paying Agent for the
Notes.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company, the Parent and/or the
Subsidiary Guarantors shall furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Notes and the
Company, the Parent and the Subsidiary Guarantors shall otherwise comply with
TIA Section
312(a).
Section 2.6. Transfer and Exchange.
Subject to the provisions of Section 2.13, when Notes are
presented to the Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Notes surrendered for transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer duly executed
by the Holder thereof (or his attorney duly authorized in writing) in form
satisfactory to the Company and to the Registrar. In order to permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's written request. No
service charge shall be made for any registration of transfer or exchange or of
redemption, but the Company may, by notice to the Trustee, require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or other
governmental charge payable upon exchanges
<PAGE> 32
24
or transfers pursuant to Sections 2.2, 2.3, 3.6, 3.7(b) or 3.9). The Registrar
shall not be required to register the transfer of or exchange of any Note (i)
during a period beginning at the opening of business 15 days before the mailing
of a notice of redemption of Notes and ending at the close of business on the
day of such mailing and (ii) selected for redemption in whole or in part
pursuant to Article Three, except the unredeemed portion of any Note being
redeemed in part.
Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes, and
neither the Trustee, any Agent nor the Company shall be affected by notice to
the contrary.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the
Trustee, upon the receipt of a written authentication order of the Company
signed by two Officers of the Company, shall authenticate a replacement Note if
the Trustee's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may
suffer if a Note is replaced. The Company and the Trustee may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.9 hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue. Notes will also cease to be outstanding for certain purposes hereunder
as provided in Article 8 hereof.
If the Paying Agent (other than the Company, the Parent, a
Subsidiary or an Affiliate of any thereof) holds, on a redemption date or
maturity date, money sufficient to pay the Stated Price
<PAGE> 33
25
of Notes payable on that date, then on and after that date such Notes shall be
deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal
amount (at maturity) of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company, the Parent, any Subsidiary Guarantor, or
by any Affiliate of the Company, the Parent or any Subsidiary Guarantor, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Trustee actually knows are
registered in the names of the Company, the Parent, any Subsidiary Guarantor or
any of their Affiliates or are certified as such by the Company in an Officer's
Certificate delivered to the Trustee shall be so disregarded.
When the Company, the Parent, any Subsidiary Guarantor or any
of their Affiliates repurchases or otherwise acquires Notes, the Company shall
notify the Trustee, in writing, of the aggregate principal amount of such Notes
so repurchased or otherwise acquired. The Trustee may require an Officer's
Certificate listing Notes owned by the Company, the Parent, any Subsidiary
Guarantor or any of their Affiliates.
Section 2.10. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate
<PAGE> 34
26
provided in the Notes and in Section 4.1 hereof. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment. The Company shall fix or cause
to be fixed each such special record date and payment date, provided that no
such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to
be mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
Section 2.13. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in the
name of Cede & Co., as the nominee of The Depository Trust Company, (ii) be
delivered to the Registrar as custodian for such Depository and (iii) bear
legends as set forth in Exhibit B.
(b) Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Registrar or the Trustee as
its custodian, or under the Global Note, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Note 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 Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(c) Transfers of Global Notes shall be limited to transfers
in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Notes may be
transferred or exchanged for Certificated Notes in accordance with the rules
and procedures of the Depository. In addition, Certificated Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in Global Notes if (i) the Company notifies the Registrar that the Depository
is unwilling or unable to continue as Depository for any Global Note and a
successor Depository is not appointed by the Company within 90 days of such
notice or (ii) the Company, at its option, notifies the Registrar in writing
that it elects to cause the issuance of Notes in definitive form under the
Indenture or (iii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue Certificated
Notes.
(d) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (c), the Registrar shall (if one or more Certificated Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver, one or
more Certificated Notes of like tenor and amount.
<PAGE> 35
27
(e) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to the second sentence of paragraph (c),
the Global Notes shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depository in exchange
for its beneficial interest in the Global Notes, an equal aggregate principal
amount of Certificated Notes of authorized denominations.
(f) The Holder of any Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, then it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date,
an Officers' Certificate setting forth (i) the paragraph of the Notes and/or
Section of this Indenture pursuant to which the redemption shall occur, (ii)
the redemption date, (iii) the principal amount of Notes to be redeemed and
(iv) the redemption price.
Section 3.2. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption shall be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. In the
event of partial redemption by lot, the particular Notes to be redeemed shall
be selected, unless otherwise provided herein, not less than 30 nor more than
60 days prior to the redemption date by the Trustee from the outstanding Notes
not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount (at maturity) thereof to be redeemed.
Notes and portions of Notes selected shall be in amounts of $1,000 principal
amount (at maturity) or whole multiples of $1,000; except that if all of the
Notes of a Holder are to be redeemed, the entire outstanding amount of Notes
held by such Holder, even if not a multiple of $1,000, shall be redeemed. A
new Note in principal amount (at maturity) equal to the unredeemed portion
thereof shall be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date, unless the Company
defaults in payment of the redemption price, interest ceases to accrete or
accrue, as the case may be, on Notes or portions of them called for redemption.
Except as provided in this Section 3.2, provisions of this
<PAGE> 36
28
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption.
Section 3.3. Notice of Redemption.
Subject to the provisions of Section 3.9 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder of Notes to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of
the principal amount (at maturity) of such Note to be redeemed and
that, after the redemption date upon surrender of such Note, a new
Note or Notes having an Accreted Value (as of a specified date) and
principal amount (at maturity) equal to the unredeemed portion of the
Accreted Value (as of such specified date) and principal amount (at
maturity) thereof, respectively, shall be issued upon cancellation of
the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption cease to
accrete or accrue, as the case may be, on and after the redemption
date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
At the Company's request and expense, the Trustee shall give
the notice of redemption in the Company's name; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
<PAGE> 37
29
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.3 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.5. Deposit of Redemption Price.
On or prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest, if any, on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of and accrued
interest, if any, on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrete or
accrue, as the case may be, on the Notes or the portions of Notes called for
redemption. If a Note is redeemed on or after an interest record date but on
or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Note was registered at
the close of business on such record date. If any Note called for redemption
shall not be so paid upon surrender for redemption because of the failure of
the Company to comply with the preceding paragraph, interest shall accrete or
be paid on the unpaid principal, from the redemption date until such principal
is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.1
hereof.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the receipt of a written authentication order of the
Company signed by two Officers of the Company, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note having an Accreted
Value (as of the redemption date) and principal amount (at maturity) equal to
the unredeemed portion of the Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in clause (b) of this Section
3.7, the Company shall not have the option to redeem the Notes pursuant to this
Section 3.7 prior to July 1, 2001. From and after July 1, 2001, the Company
shall have the option to redeem the Notes, in whole or in part, at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest thereon from July 1, 2001 to the
applicable redemption date, if redeemed during the twelve-month period
beginning on July 1 of each of the years indicated below:
<PAGE> 38
30
<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
---- ----------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . 105.813%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 103.875%
2003 . . . . . . . . . . . . . . . . . . . . . . . . 101.938%
2004 and thereafter . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
Section 3.7, at any time prior to July 1, 1999, the Company may, at its option,
on any one or more occasions, redeem up to $88 million of the aggregate
principal amount (at maturity) of Notes at a redemption price of 110% of the
Accreted Value (at the redemption date) thereof, with the net proceeds of sales
of Equity Interests (other than Disqualified Stock) in the Company or Parent;
provided that at least $176 million of the aggregate principal amount (at
maturity) of Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 60
days of the date after the closing of the related sale of such Equity
Interests.
(c) Any redemption pursuant to this Section 3.7 shall be
made pursuant to the provisions of Sections 3.1 through 3.6 hereof.
Section 3.8. Mandatory Redemption.
Except as set forth under Sections 4.10 and 4.13 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Section 3.9. Offer to Purchase By Application of Excess
Proceeds.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an offer to all Holders of Notes and, to
the extent required by the terms thereof, to all holders or lenders of other
Pari Passu Indebtedness, to purchase Notes and any such Pari Passu Indebtedness
(an "Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof, giving effect to any
related offer for Pari Passu Indebtedness pursuant to Section 4.10, (the "Offer
Amount") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to the Asset Sale Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
<PAGE> 39
31
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer. The
Asset Sale Offer shall be made to all Holders. The notice, which shall govern
the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to
this Section 3.9 and Section 4.10 hereof and the length of time the
Asset Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment
shall continue to accrue interest;
(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrete or accrue interest, as the case may be,
after the Purchase Date;
(e) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may only elect to have all of such
Note purchased and may not elect to have only a portion of such Note
purchased;
(f) that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the
Note, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Note completed, or transfer by book-entry transfer,
to the Company, a Depository, if appointed by the Company, or a Paying
Agent at the address specified in the notice at least three Business
Days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their
election if the Company, the Depository or the Paying Agent, as the
case may be, receives, not later than the expiration of the Offer
Period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate Accreted Value or principal
amount, as the case may be, of Notes surrendered by Holders exceeds
the Offer Amount, the Company shall select the Notes to be purchased
on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of
$1,000 in principal
<PAGE> 40
32
amount at maturity, or integral multiples thereof, shall be purchased)
in the manner provided in Section 4.10; and
(i) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.9. The Company, the Depository or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Note, and the Trustee, upon receipt of a written authentication
order of the Company signed by two Officers of the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal
to any unpurchased portion of the Note surrendered. Any Note not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof.
The Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1 through 3.6 hereof.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Parent,
the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the
due date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all such amounts then due.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the then applicable interest rate
on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful.
<PAGE> 41
33
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where principal,
premium, if any, and interest on the Notes will be paid and where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the following office of an
Affiliate of the Trustee as one such office or agency of the Company in
accordance with Section 2.3: Harris Trust Company of New York, 77 Water
Street, New York, New York 10005.
Section 4.3. Reports.
(a) To the extent permitted by the Exchange Act, the
Company shall file with the Commission and provide, within 15 days after such
filing, the Trustee and Holders and prospective Holders (upon request) with the
annual reports and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act. In the event that the
Company is not permitted to file such reports, documents and information with
the Commission, the Company will provide substantially similar information to
the Trustees, the Holders and prospective Holders (upon request) as if the
Company were subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act. The Company shall at all times comply with TIA Section
314(a)
(b) The Company shall be deemed to have satisfied the
provisions of Section 4.3(a) if the Parent files and provides reports,
documents and information of the types otherwise so required, in each case
within the applicable time periods, and the Company is not required to file
such reports, documents and information separately under the applicable rules
and regulations of the Commission (after giving effect to any exemptive relief)
because of the filings by the Parent.
<PAGE> 42
34
Section 4.4. Compliance Certificate.
(a) Each of the Parent and the Company shall deliver to
the Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Parent and its
Subsidiaries and the Company and its Subsidiaries, as the case may be, during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Parent or the Company, as the
case may be, 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 his or her knowledge the Parent or the
Company, as the case may be, 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 of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Parent or the Company, as the case may be, is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, premium, if any, or interest on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Parent or the Company, as the case may be, is taking or
proposes to take with respect thereto. As of the date hereof, each of the
Parent's and the Company's fiscal year ends on December 31 of each calendar
year. In the event the Company changes its fiscal year, it shall promptly
notify the Trustee of such change.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
fiscal year-end financial statements delivered pursuant to Section 4.3(a) above
shall be accompanied by a written statement of the Parent's or the Company's,
as the case may be, independent public accountants (who shall be a firm of
established national reputation) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, within five Business Days of any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.5. Taxes.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
<PAGE> 43
35
Section 4.6. Stay, Extension and Usury Laws.
Each of the Company, the Parent and the Subsidiary Guarantors
covenants (to the extent that it may lawfully do so) that it shall 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 wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance
of this Indenture; and each of the Company, the Parent and the Subsidiary
Guarantors (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.
Section 4.7. Restricted Payments.
The Company shall not and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
Equity Interests (including, without limitation, any payment to holders of the
Company's Equity Interests in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's
Equity Interests in their capacity as such (other than dividends or
distributions (a) payable in Equity Interests (other than Disqualified Stock)
of the Company, (b) to the extent necessary to permit the Parent to pay
overhead, tax liabilities, legal, accounting or other professional fees and
expenses and any fees and expenses associated with registration statements
filed with the Commission and subsequent ongoing public reporting requirements,
in each case to the extent actually incurred by the Parent in connection with
acting as a holding company for the Company and its Subsidiaries or (c) to the
extent necessary to permit the Parent to perform its obligations to pay fees,
expenses and indemnification under Sections 5.4, 5.5, 5.15, 8.3, 9.2 and 9.3 of
the Stock Purchase Agreement; (ii) purchase, redeem, defease or otherwise
acquire or retire for value any Equity Interests of the Company or any direct
or indirect parent or other Affiliate of the Company that is not a Wholly Owned
Restricted Subsidiary of the Company; (iii) make any principal payment on, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except any scheduled principal
payment or sinking fund payment or at final maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.9 hereof; and
<PAGE> 44
36
(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date of this Indenture (excluding
Restricted Payments permitted by clauses (2), (3), (5) and (6) of the
next succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first month after the
date of this Indenture to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company
since the date of this Indenture (A) as capital contributions to the
Company (other than from a Subsidiary of the Company or from the
Rights Offering or the Standby Commitment) and (B) from the issue,
sale or exercise since the date of this Indenture of Equity Interests
in the Company or the Parent or of debt securities of the Company or
the Parent that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of this Indenture is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the
net proceeds of such sale, liquidation or repayment and (B) the
initial amount of such Restricted Investment, plus (iv) the amount
equal to the net reduction in Investments in Unrestricted Subsidiaries
resulting from (A) payments of dividends or interest or other
transfers of assets to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries, (B) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries or (C) the receipt of proceeds
by the Company or any Restricted Subsidiary from the sale or other
disposition of any portion of any Investment in an Unrestricted
Subsidiary not to exceed the amount of Investments previously made by
the Company or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of the amount
of Restricted Payments.
The foregoing provisions shall not prohibit (1) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of
this Indenture and such dividend (a) shall be deemed paid on the date of such
date of declaration for purposes of clauses (a) and (b) in the next preceding
paragraph and (b) shall be included in the determination of Restricted Payments
pursuant to clause (c) of the preceding paragraph only when declared and not
when paid; (2) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Subsidiary of the Company)
of other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any
<PAGE> 45
37
such redemption, repurchase, retirement or other acquisition shall be excluded
from clause (c)(ii) of the preceding paragraph; (3) the defeasance, redemption
or repurchase of Subordinated Indebtedness with the net cash proceeds from an
incurrence of subordinated Permitted Refinancing Debt or the substantially
concurrent sale (other than to a Subsidiary of the Company) of Equity Interests
of the Company or the Parent (other than Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause
(c)(ii) of the preceding paragraph; (4) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company, the
Parent or any Subsidiary of the Company (x) held by any of the Company's (or
any of its Subsidiaries') employees pursuant to any management equity
subscription agreement, stock option agreement or any other agreement with such
employee, or (y) in connection with a tender offer to eliminate odd lots of
such Equity Interests; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$2.0 million in any fiscal year (plus the aggregate cash proceeds received by
the Company during such fiscal year from any issuance of Equity Interests by
the Company or the Parent to any Permitted Investors or employee of the Company
or any of its Subsidiaries); and provided further that no Default or Event of
Default shall have occurred and be continuing immediately after such
transaction; (5) repurchases of Equity Interests deemed to occur upon exercise
of stock options if such Equity Interests represent a portion of the exercise
price of such options; (6) the defeasance, redemption, repurchase or repayment
of the Existing Debt if any of the Existing Debt is subordinated to the Notes.
The amount of all Restricted Payments (other than cash) shall
be the fair market value (as determined in good faith by a resolution of the
Board of Directors of the Company set forth in an Officers' Certificate
delivered to the Trustee, which determination shall be conclusive evidence of
compliance with this provision) on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Company or the applicable Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later
than ten days after the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.7 were computed.
In computing Consolidated Net Income for purposes of this
Section 4.7, (i) the Company shall use audited financial statements for the
portion 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 on 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.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated shall be deemed to be Restricted Payments at
the time of such designation and shall reduce the amount available for
Restricted
<PAGE> 46
38
Payments under clause (c) of the first paragraph of this covenant and/or the
applicable provisions of the second paragraph of this covenant, as appropriate.
All such outstanding Investments shall be deemed to constitute Investments in
an amount equal to the fair market value of such Investments at the time of
such designation. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Section 4.8. Dividend and Other Payment Restrictions
Affecting Subsidiaries.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(x) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (y) pay any indebtedness owed by it to the Company
or any of its Restricted Subsidiaries, (ii) make loans or advances to the
Company or any of its Restricted Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
the Credit Agreement as in effect as of the date of this Indenture, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof or any other Credit Facility,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements, refinancings or other Credit
Facilities are no more restrictive with respect to such dividend and other
payment restrictions than those contained in the Credit Agreement as in effect
on the date of this Indenture, (b) this Indenture and the Senior Subordinated
Notes Indenture and the Notes and the Senior Subordinated Notes, (c) applicable
law, (d) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except, in the case of Indebtedness, to the
extent such Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person and
its Subsidiaries, or the property or assets of the Person and its Subsidiaries,
so acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (e) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (f) capital leases and
purchase money obligations for property leased or acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so leased or acquired, (g) restrictions in the form
of Liens which are not prohibited pursuant to Section 4.12 and which are
customary limitations on the transfer of collateral and customary restrictions
contained in stock purchase agreements or asset sales agreements limiting the
transfer of assets pending the closing of the sale or (h) Permitted Refinancing
Debt, provided that the restrictions contained in the agreements governing such
Permitted Refinancing Debt are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced.
<PAGE> 47
39
Section 4.9. Incurrence of Indebtedness and Issuance of
Disqualified Stock.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and the Company shall not and shall not
permit any of its Restricted Subsidiaries to, issue any Disqualified Stock;
provided, however, subject to the limitations set forth below, the Company and
the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock if:
(i) the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.5 to 1, determined on a pro
forma basis as set forth in the definition of Fixed Charge Coverage
Ratio; and
(ii) no Default or Event of Default shall have occurred
and be continuing at the time such additional Indebtedness is incurred
or such Disqualified Stock is issued or would occur as a consequence
of the incurrence of the additional Indebtedness or the issuance of
the Disqualified Stock.
Notwithstanding the foregoing, this Indenture shall not
prohibit any of the following (collectively, "Permitted Indebtedness"): (a)
the Indebtedness evidenced by the Notes and the Senior Subordinated Notes; (b)
the incurrence by the Company of Indebtedness pursuant to Credit Facilities, so
long as the aggregate principal amount of all Indebtedness outstanding under
all Credit Facilities does not, at any one time, exceed the greater of (1) $525
million or (2) the Borrowing Base; (c) the guarantee by any Restricted
Subsidiary (including any Subsidiary Guarantor) of any Indebtedness that is
permitted by this Indenture to be incurred by the Company; provided that such
Subsidiary, if not a Subsidiary Guarantor, becomes a Subsidiary Guarantor
hereunder; (d) all Indebtedness of the Company and its Restricted Subsidiaries
in existence as of the date of the Indenture after giving effect to the
Recapitalization and the application of the proceeds thereof; (e) intercompany
Indebtedness between or among the Company, the Parent and any of the Company's
Restricted Subsidiaries; provided, however, that (i) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinate to the
payment in full of all Obligations with respect to the Notes and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company, the Parent or a
Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not the Company, the Parent or a Restricted
Subsidiary shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case may be;
(f) Indebtedness of the Company or any Restricted Subsidiary related to any
Permitted Marketing Transaction including, without limitation, under letters of
credit or guarantees of Indebtedness or other obligations of a party to a
Permitted Marketing Transaction, provided, that in the event that the Company
or any Restricted Subsidiary guarantees such Indebtedness or other obligations
of another party, then either (1) the Person who is obligated to purchase
hydrocarbons from such party
<PAGE> 48
40
has an investment grade credit rating from S&P or Moody's, or in lieu thereof,
a Person guaranteeing the payment of such obligated Person has an investment
grade credit rating from S&P or Moody's or (2) such Person posts, or has posted
for it, a letter of credit in favor of the Company or such Subsidiary Guarantor
with respect to all of such Person's obligations under such contracts, (g) in
addition to Indebtedness under any Credit Facility, Indebtedness in connection
with one or more standby letters of credit, guarantees, performance bonds or
other reimbursement obligations, in each case, issued in the ordinary course of
business and not in connection with the borrowing of money or the obtaining of
advances or credit (other than advances or credit on open account, includible
in current liabilities, for goods and services in the ordinary course of
business and on terms and conditions which are customary in the Oil and Gas
Business, and other than the extension of credit represented by such letter of
credit guarantee or performance bond itself), not to exceed in the aggregate at
any given time outstanding 5.0% of Total Assets; (h) Indebtedness under
Interest Rate Hedging Agreements entered into for the purpose of limiting
interest rate risks, provided that the obligations under such agreements are
related to payment obligations on Indebtedness otherwise permitted by the terms
of this covenant and that the aggregate notional principal amount of such
agreements does not exceed 105% of the principal amount of the Indebtedness to
which such agreements relate; (i) Indebtedness under Oil and Gas Hedging
Contracts, provided that such contracts were entered into in the ordinary
course of business for the purpose of limiting risks that arise in the ordinary
course of business of the Company and its Subsidiaries; (j) the incurrence by
the Company and Subsidiary Guarantors of Indebtedness not otherwise permitted
to be incurred pursuant to this paragraph, provided that the aggregate
principal amount (or accreted value, as applicable) of all Indebtedness
incurred pursuant to this clause (j), together with all Permitted Refinancing
Debt incurred pursuant to clause (k) of this paragraph in respect of
Indebtedness previously incurred pursuant to this clause (j), does not exceed
$25.0 million at any one time outstanding; (k) Permitted Refinancing Debt
incurred in exchange for, or the net proceeds of which are used to refinance,
extend, renew, replace, defease or refund, Indebtedness that was permitted by
this Indenture to be incurred (including Indebtedness previously incurred
pursuant to this clause (k)); or (l) production imbalances arising in the
ordinary course of business and consistent with past practices.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries (other than MEV) to, engage in an Asset Sale unless (i)
the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by a resolution of the Board of Directors of
the Company set forth in an Officers' Certificate delivered to the Trustee,
which determination shall be conclusive evidence of compliance with this
provision) of the assets or Equity Interests issued or sold or otherwise
disposed of and (ii) at least 80% of the consideration therefor received by the
Company or such Restricted Subsidiary (after deducting expenses associated with
such asset sale) is in the form of cash, Cash Equivalents, oil and gas
properties owned or held by another Person which are to be used in the Oil and
Gas Business of the Company or its Restricted Subsidiaries or any combination
thereof; provided that the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet or, with
respect to plugging and abandonment
<PAGE> 49
41
obligations and other similar liabilities, in the notes thereto), of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any Liquid Securities received by the
Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash within 180
days after closing such Asset Sale, shall be deemed to be cash for purposes of
this provision to the extent of the liabilities assumed or cash received.
Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds, at its option, for one or
more of the following purposes: (a) to reduce Senior Debt of the Company and
its Subsidiaries, (b) to make Permitted Business Investments, (c) to acquire
controlling interests in other Oil and Gas Businesses to the extent such
Investments are not Permitted Business Investments, (d) to make capital
expenditures in respect of the Company's or its Restricted Subsidiaries' Oil
and Gas Business, and (e) to purchase assets that are used or useful in the Oil
and Gas Business. Pending the final application of any such Net Proceeds, the
Company may temporarily reduce Senior Debt of the Company and its Subsidiaries
that is revolving debt or otherwise invest such Net Proceeds in any manner that
is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
shall (after the expiration of the periods specified in this paragraph) be
deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall make an Asset Sale Offer to purchase the maximum
principal amount of Notes and any other Pari Passu Indebtedness to which the
Asset Sale Offer applies that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to, in the case of any such Pari
Passu Indebtedness, 100% of the principal amount thereof, plus accrued and
unpaid interest thereon to the date of purchase or, in the case of the Notes,
prior to July 1, 2001, 100% of the Accreted Value thereof on the date of
purchase and thereafter, 100% of the principal amount of the Notes, plus after
July 1, 2001, accrued but unpaid interest thereon, if any, to the date of
purchase, or, in the case of any other discount Pari Passu Indebtedness, 100%
of the accreted value thereof on the date of purchase, in each case, in
accordance with the procedures set forth in Section 3.9 hereof or the
agreements governing the Pari Passu Indebtedness, as applicable. To the extent
that the aggregate amount (or accreted value, as the case may be) of Notes and
Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes and such proceeds will no longer be considered
"Excess Proceeds" for the purposes of this Section 4.10. If the sum of (i) the
aggregate Accreted Value (or, if after July 1, 2001, the principal amount) of
the Notes surrendered by the Holders thereof, and (ii) the aggregate principal
amount or accreted value, as the case may be, of other Pari Passu Indebtedness
surrendered by holders or lenders thereof, exceeds the amount of Excess
Proceeds, the Trustee and the trustee or other lender representatives for the
Pari Passu Indebtedness shall select the Notes and other Pari Passu
Indebtedness to be purchased on a pro rata basis, based on the aggregate
principal amount (or accreted value, as applicable) thereof surrendered in such
Asset Sale Offer.
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Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any of
its Affiliates (each of the foregoing, an "Affiliate Transaction"), unless (i)
such Affiliate Transaction is on terms that are no less favorable to the
Company or such Subsidiary, as the case may be, than would be available in a
comparable transaction by the Company or such Subsidiary in arm's length
dealings with an unrelated third party or, in the event no comparable
transaction with an unaffiliated Person is available, on terms that are fair
from a financial point of view to the Company or such Subsidiary, as the case
may be, (ii) with respect to an Affiliate Transaction or series of related
Affiliate Transactions involving payments in excess of $1,000,000 in the
aggregate, the Company delivers an Officers' Certificate to the Trustee
certifying that such Affiliate Transaction complies with clause (i) above,
(iii) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving payments in excess of $5,000,000 but less than
$15,000,000 in the aggregate, the Company delivers an Officer's Certificate to
the Trustee certifying that (a) such Affiliate Transaction or series of related
Affiliate Transactions complies with clause (i) above and (b) such Affiliate
Transaction or series of related Affiliate Transactions has been approved by a
resolution adopted by a majority of the members of the Board of Directors of
the Company who are disinterested with respect to such Affiliate Transaction or
series of related Affiliate Transactions (which resolution shall be conclusive
evidence of compliance with this provision) and (iv) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
payments of $15,000,000 or more in the aggregate, (A) the Company delivers an
Officer's Certificate certifying that (a) such Affiliate Transaction or series
of related Affiliate Transactions complies with clause (i) above and (b) such
Affiliate Transaction has been approved by a resolution adopted by a majority
of the members of the Board of Directors of the Company who are disinterested
with respect to such Affiliate Transaction and (B) the Company shall have
received a written opinion of a firm of investment bankers nationally
recognized in the United States that such Affiliate Transaction or series of
related Affiliate Transactions is fair from a financial point of view to the
Company or such Subsidiary (which resolution and fairness opinion shall be
conclusive evidence of compliance with this provision), provided, however, that
the foregoing shall not apply to (1) the Recapitalization, the payment of fees,
expenses and indemnifications under Sections 5.4, 5.5, 5.15, 8.3, 9.2 and 9.3
of the Stock Purchase Agreement or any transaction effected pursuant to the
terms of the Series A Preferred Stock or Series B Preferred Stock as in effect
on the date of this Indenture, (2) Permitted Investments and Restricted
Payments that are permitted by Section 4.7 hereof, (3) loans or advances to
officers, directors and employees of the Company or any Subsidiary made in the
ordinary course of business and consistent with past practices of the Company
and its Subsidiaries not to exceed in the aggregate at any one time outstanding
$2.5 million, (4) the payment of reasonable and customary regular fees to
directors of the Company or any of its Subsidiaries who are not employees of
the Company or any Subsidiary, (5) any indemnification or similar payment made
to any director or officer (A) in accordance with the corporate charter or by-
laws of the Company or any Subsidiary, (B) under any agreement or (C) under
applicable law, (6) obligations of the Company or any Subsidiary under employee
compensation and other benefit arrangements entered into or provided for in the
ordinary course of
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business, (7) any transaction relating to the disposition of the Company's
Investment in MEV or (8) any transaction between or among the Company, the
Parent and its Restricted Subsidiaries.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien (other than Permitted Liens) upon any of its property
or assets, now owned or hereafter acquired securing Indebtedness (other than
Senior Debt), unless prior to or contemporaneously therewith the Notes are
directly secured equally and ratably, provided that (i) if such secured
Indebtedness is Pari Passu Indebtedness, the Lien securing such Pari Passu
Indebtedness shall be subordinate and junior to, or pari passu with, the Lien
securing the Notes and (ii) if such secured Indebtedness is Subordinated
Indebtedness, the Lien securing such Subordinated Indebtedness shall be
subordinate and junior to the Lien securing the Notes at least to the same
extent as such Subordinated Indebtedness is subordinated to the Notes.
Section 4.13. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to prior to July 1, 2001, 101% of the Accreted
Value of the Notes on the date of purchase and, on July 1, 2001 and thereafter,
101% of the aggregate principal amount thereof plus accrued and unpaid interest
if any, thereon to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company shall mail a notice
to each Holder stating: (1) and describing the transaction or transactions
that constitute the Change of Control; (2) that the Change of Control Offer is
being made pursuant to this Section 4.13 and that all Notes tendered shall be
accepted for payment; (3) the purchase price and the purchase date described
below (the "Change of Control Payment Date"); (4) that any Note not tendered
shall continue to accrete or accrue interest, as the case may be, if any; (5)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest, if any, after the Change of Control Payment
Date; (6) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer shall be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (7) that Holders shall be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and (8) that
Holders whose Notes are being purchased only in part shall be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount at
maturity or an integral multiple thereof. The Company, the Parent and each
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Subsidiary Guarantor shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable to such party in connection
with the repurchase of the Notes as a result of a Change of Control.
(b) On a Business Day that is no earlier than 30 days nor
later than 60 days from the date that the Company mails or causes to be mailed
notice of the Change of Control to the Holders (the "Change of Control Payment
Date"), the Company shall, to the extent lawful, (i) accept for payment all
Notes or portions thereof properly tendered pursuant to the Change of Control
Offer, (ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered and
(iii) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount
(or Accreted Value, if applicable) of Notes or portions thereof being purchased
by the Company. The Paying Agent shall promptly mail to each Holder of Notes
so tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above shall be
applicable whether or not any other provisions of this Indenture are
applicable.
The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.13 and purchases all Notes (or
portions thereof) validly tendered and not withdrawn under such Change of
Control Offer.
Section 4.14. Additional Subsidiary Guarantees.
In the event that the Company or any of its Restricted
Subsidiaries shall acquire or create a Material Restricted Subsidiary after the
date of this Indenture, such newly acquired or created Material Restricted
Subsidiary shall be deemed to make the guarantee set forth in Section 11.1 and
the Company shall cause such Material Restricted Subsidiary to evidence such
guarantee in the manner set forth in Section 11.2. Notwithstanding the
foregoing, this Section 4.14 shall not apply to any newly acquired or created
Subsidiary that has been properly designated as an Unrestricted Subsidiary in
accordance with this Indenture for so long as it continues to constitute an
Unrestricted Subsidiary.
Section 4.15. Corporate Existence.
Subject to Article 5 hereof, the Company, the Parent and the
Restricted Subsidiaries shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its
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45
corporate existence, and the corporate, partnership or other existence of each
of the Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Restricted Subsidiary and (ii) the rights (charter,
partnership agreement and statutory), licenses and franchises of the Company,
the Parent and the Restricted Subsidiaries; provided, however, that the
Company, the Parent and the Restricted Subsidiaries shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of the Restricted Subsidiaries, if the Board of
Directors of the relevant Person shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and the
Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.
Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.9 hereof, (i) the
Company shall not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment
to any Senior Debt of the Company and senior in any respect in right of payment
to the Notes and (ii) the Parent and the Subsidiary Guarantors shall not
directly or indirectly incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any guarantees issued in respect of Senior Debt of the Company and
senior in any respect in right of payment to the Guarantees; provided, however,
that the foregoing limitations shall not apply to distinctions between
categories of Indebtedness that exist by reason of any Liens arising or created
in respect of some but not all such Indebtedness.
Section 4.17. Business Activities.
The Company and the Parent shall not, and shall not permit any
Subsidiary to, engage in any material respect in any business other than the
Oil and Gas Business.
ARTICLE 5
SUCCESSORS
Section 5.1. Merger, Consolidation, or Sale of
Substantially All Assets.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to another Person,
and the Company may not permit any of its Restricted Subsidiaries to enter into
any such transaction or series of transactions if such transaction or series of
transactions would, in the aggregate, result in a sale, assignment, transfer,
lease, conveyance, or other disposition of all or substantially all of the
properties or assets of the Company to another Person, unless (i) the Company
is the surviving corporation of any such consolidation or merger or (a) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (the "Surviving
<PAGE> 54
46
Entity") is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia and (b) such Surviving
Entity assumes all the obligations of the Company under the Notes and the
Indenture pursuant to a supplemented indenture in a form reasonably
satisfactory to the Trustee; (ii) immediately before and after giving effect to
such transaction no Default or Event of Default exists; (iii) immediately after
giving effect to such transaction on a pro forma basis (and treating any
Indebtedness not previously an obligation of the Company or any Subsidiary
Guarantor which becomes the obligation of the Company or any Subsidiary
Guarantor as a result of such transaction as having been incurred at the time
of such transaction), the Consolidated Net Worth of the Company or the
Surviving Entity (if the Company is not the continuing obligor under this
Indenture) is equal to or greater than the Consolidated Net Worth of the
Company immediately prior to such transaction and (iv) except in the case of a
merger of the Company with or into a Wholly Owned Restricted Subsidiary of the
Company, the Company or Surviving Entity (if the Company is not the continuing
obligor under the Indenture) will, at the time of such transaction and after
giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the test set forth in the first
paragraph of Section 4.9 hereof. Notwithstanding the foregoing clauses (iii)
and (iv), (a) any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company and (b) the
Company may merge with an Affiliate incorporated solely for the purpose of
reincorporating in another jurisdiction.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.1 hereof, the Surviving
Entity shall succeed to, and be substituted for (so that from and after the
date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the Surviving Entity and not to the Company), 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; provided,
however, that the predecessor Company shall not be relieved from the obligation
to pay the principal of and interest on the Notes except in the case of a sale
of all of the Company's assets that meets the requirements of Section 5.1
hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest, if
any, on the Notes when the same becomes due and payable and the
Default continues for a period of 30 days, whether or not such payment
is prohibited by the provisions of Article 10 hereof;
(2) the Company defaults in the payment of the Stated
Price of or premium, if any, on the Notes when the same become due and
payable at maturity, upon redemption or otherwise, whether or not such
payment is prohibited by the provisions of Article 10 hereof or of
Article 10 of the Senior Subordinated Note Indenture, as the case may
be;
(3) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or
performed pursuant to Article 5 hereof;
(4) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or
performed pursuant to Sections 4.3, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.16 and 4.17 hereof and the Default continues for the
period and after the notice specified below;
(5) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Notes or this
Indenture and the Default continues for consecutive days after the
notice specified below;
(6) except as permitted herein, any Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or the Parent or a
Subsidiary Guarantor, or any Person acting on behalf of the Parent or
a Subsidiary Guarantor, shall deny or disaffirm the Parent's or such
Subsidiary Guarantor's obligation under its Guarantee;
(7) the Parent fails to issue Preferred Stock for gross
proceeds in the amount of $132 million pursuant to the Rights Offering
and Standby Commitment or either thereof within 90 days following the
original date of issuance of the Notes;
(8) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any Subsidiary Guarantor, whether such Indebtedness now
exists or shall be created hereafter, which default (a) is caused by a
failure to pay such Indebtedness prior to the expiration of the grace
period after final maturity (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its final maturity and,
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in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which
there is then existing a Payment Default or the maturity of which has
been so accelerated, aggregates $10.0 million or more; provided, that
if any such default is cured or waived or any such acceleration
rescinded, or such Indebtedness is repaid, within a period of 10 days
from the continuation of such default beyond the applicable grace
period or the occurrence of such acceleration, as the case may be,
such Event of Default under the Indenture and any consequential
acceleration of the Notes shall be automatically rescinded;
(9) a final judgment or order or final judgments or
orders are rendered against the Company or any Restricted Subsidiary
that are unsatisfied and that require the payment of money, either
individually or in an aggregate amount, that is more than $10.0
million over the coverage under applicable insurance policies and
either (a) a creditor has commenced an enforcement proceeding upon
such judgement (other than a judgment that is stayed by reason of
pending appeal or otherwise) or (b) a 60-day period transpired during
which a stay of such judgment, order, judgments or orders (by reason
of pending appeal or otherwise) was not in effect;
(10) the Company, the Parent or any Subsidiary Guarantor
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding,
(b) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(c) consents to the appointment of a Custodian of
it or for all or substantially all of its property, or
(d) makes a general assignment for the benefit of
its creditors;
(11) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company, the Parent
or any Subsidiary Guarantor, in an involuntary case or
proceeding,
(b) appoints a Custodian of the Company, the
Parent or any Subsidiary Guarantor, or for all or
substantially all of the property of the Company, the Parent
or any Subsidiary Guarantor, or
(c) orders the liquidation of the Company, the
Parent or any Subsidiary Guarantor,
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and in each case the order or decree remains unstayed and in effect
for 60 consecutive days.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
A Default under clause (4) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount at stated maturity of the then outstanding Notes notify the
Company and the Trustee, of the Default and the Company does not cure the
Default within 30 consecutive days after receipt of the notice. A Default
under clause (5) is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least 25% in aggregate principal amount at stated
maturity of the then outstanding Notes notify the Company and the Trustee, of
the Default and the Company does not cure the Default within 60 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in clauses (10) and (11) of Section 6.1 hereof) relating to the
Company, the Parent or any Subsidiary Guarantor occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by written notice to the Company and the
Trustee, may declare the unpaid principal amount of and any accrued and unpaid
interest on all the Notes, or if such an Event of Default shall occur prior to
July 1, 2001, the Accreted Value of the Notes, to be due and payable
immediately. If payment of the Notes is accelerated because of an Event of
Default, the Company or the Trustee shall notify the holders of Designated
Senior Debt of such acceleration. Upon such declaration such principal (or, if
prior to July 1, 2001, Accreted Value) and interest shall be due and payable
immediately; provided, however, that so long as any Designated Senior Debt or
any commitment therefor is outstanding, any such notice or declaration shall
not become effective until the earlier of (a) five Business Days after such
notice is delivered to the representative for the Designated Senior Debt or (b)
the acceleration of any Designated Senior Debt and thereafter, payments on the
Notes pursuant to this Article 6 shall be made only to the extent permitted
pursuant to Article 10 herein. Notwithstanding the foregoing, if any Event of
Default specified in clause (10) or (11) of Section 6.1 hereof relating to the
Company, the Parent, or any Subsidiary Guarantor occurs, such an amount shall
ipso facto become and be immediately due and payable without any declaration or
other act or notice on the part of the Trustee or any Holder.
After a declaration of acceleration under this Indenture, but
before a judgment or decree for payment of the money due on the Notes under
this Article 6 has been obtained by the Trustee, Holders of a majority in
aggregate principal amount or Accreted Value, as the case may be, of the then
outstanding Notes by written notice to the Company and the Trustee may rescind
an acceleration and its consequences if (i) the Company, the Parent or any
Subsidiary Guarantor has paid or deposited with the Trustee a sum sufficient to
pay (a) 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 and (b) all overdue interest on the Notes, if any, (ii)
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the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (iii) all existing Events of Default (except
nonpayment of principal, premium, if any, or interest that has become due
solely because of the acceleration) have been cured or waived.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium,
if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal
amount of the Notes then outstanding by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal
amount of the then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 6.5. Control by Majority.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability, it being understood that (subject to
Section 7.1) the Trustee shall have no duty to ascertain whether or not such
actions or forebearances are unduly prejudicial to such holders.
Section 6.6. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
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(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.7. Rights of Holders of Notes to Receive
Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company, the Parent or
any Subsidiary Guarantor for the whole amount of principal of, premium, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and 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.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company, the Parent or any of the Subsidiary Guarantors (or any other
obligor upon the Notes), its creditors or its property and shall be entitled
and empowered to collect, receive and distribute any money or
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other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due 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 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment
of the same shall be secured by a Lien on, and shall be paid out of, any and
all distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding; provided, however, that the Trustee may, on
behalf of the Holders, vote for the election of a trustee in bankruptcy or
similar official and may be a member of the creditors' committee.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall, subject to the provisions of Article 10, pay out the money in the
following order:
First: to the Trustee, its agents and attorneys for amounts
due under Sections 6.8 and 7.7 hereof, including payment of all
compensation, expense and liabilities incurred, and all advances made,
by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and accrued interest, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, and
accrued interest, as the case may be, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as 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 attorneys' fees,
<PAGE> 61
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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
does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant
to Section 6.7 hereof, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee
need perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any notices,
requests, statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
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54
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under
this Indenture at the request of any Holders, unless such Holder shall have
furnished to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
Section 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company, the
Parent or any Subsidiary Guarantor shall be sufficient if signed by an Officer
of the Company, the Parent or such Subsidiary Guarantor.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have furnished to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
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(g) Except with respect to Sections 4.1 and 4.4 hereof,
the Trustee shall have no duty to inquire as to the performance of the
Company's and the Parent's covenants in Article 4 hereof. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of
Default except (i) any Event of Default occurring pursuant to Sections 4.1, 4.4
and 6.1(1) or (2) hereof or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual knowledge.
For the purposes of this clause (g) only, "actual knowledge" shall mean the
actual fact or statement of knowing, without any duty to make investigation
with regard thereto.
(h) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties hereunder.
(i) the Trustee shall not be bound to ascertain or inquire as
to the performance or observance of any covenants, conditions, or agreements on
the part of the Company, except as otherwise set forth herein, but the Trustee
may require of the Company full information and advice as to the performance of
the covenants, conditions and agreements contained herein and shall be entitled
in connection herewith to examine the books, records and premises of the
Company.
(j) The permissive rights of the Trustee to perform the acts
enumerated in this Indenture shall not be construed as a duty and the Trustee
shall not be answerable for other than its negligence or willful misconduct.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Parent, the Subsidiary Guarantors or any Affiliate of the Company or the Parent
with the same rights it would have if it were not Trustee. However, in the
event that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Notes, or
the Guarantees, it shall not be accountable for the Company's use of the
proceeds from the Notes or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, it shall not be responsible
for the use or application of any money received by any Paying Agent other than
the Trustee, and it shall not be responsible for any statement or recital
herein or in any certificate delivered pursuant hereto or any statement in the
Notes or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.
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Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is actually known to the Trustee, the Trustee shall mail to Holders of
Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on, any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
Section 7.6. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15,
1997 following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2) and transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Parent and the Company and filed with
the Commission and each stock exchange on which the Notes are listed in
accordance with TIA Section 313(d). The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange.
Section 7.7. Compensation and Indemnity.
The Company, the Parent and the Subsidiary Guarantors shall
pay to the Trustee from time to time reasonable compensation for its acceptance
of this Indenture and services hereunder, including, without limitation,
extraordinary services such as default administration. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company, the Parent and the Subsidiary Guarantors shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation
for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company, the Parent and the Subsidiary Guarantors shall
indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company, the Parent and the
Subsidiary Guarantors (including this Section 7.7) and investigating or
defending itself against any claim (whether asserted by the Company, the
Parent, the Subsidiary Guarantors or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith. The Trustee shall notify
the Company, the
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Parent and the Subsidiary Guarantors promptly of any claim for which it may
seek indemnity. Failure by the Trustee to so notify the Company, the Parent
and the Subsidiary Guarantors shall not relieve the Company, the Parent and the
Subsidiary Guarantors of their obligations hereunder. The Company, the Parent
and the Subsidiary Guarantors shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Company, the Parent and the Subsidiary Guarantors shall pay the reasonable fees
and expenses of such counsel. The Company, the Parent and the Subsidiary
Guarantors need not pay for any settlement made without their consent, which
consent shall not be unreasonably withheld.
The obligations of the Company, the Parent and the Subsidiary
Guarantors under this Section 7.7 are joint and several and shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's, the Parent's and the Subsidiary
Guarantors' payment obligations in this Section, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee,
except that held in trust to pay principal and interest on particular Notes.
Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(10) or (11) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount, of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7
hereof shall continue for the benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
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Section 7.11. Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
Section 8.2. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.2, the Company and the Parent and the
Subsidiary Guarantors shall, subject to the satisfaction of the conditions set
forth in Section 8.4 hereof, be deemed to have been discharged from their
obligations with respect to all outstanding Notes and the Guarantees thereof on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive payments in respect of the principal
of, premium, if any, and interest on such Notes when such payments are due from
the trust fund described in Section 8.4 hereof, and as more fully set forth in
such Section, (b) the Company's obligations with respect to such Notes under
Article 2 and Section 4.2 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8,
the Company may exercise its option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 hereof.
Section 8.3. Covenant Defeasance.
Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.3, the Company, the Parent and the
Subsidiary Guarantors shall, subject to the satisfaction of the conditions set
forth in Section 8.4 hereof, be released from their obligations under the
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covenants contained in Sections 4.3, 4.5, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.16 and 4.17 hereof and in clause (iv) of Section 5.1 and the
covenants contained in the Guarantees with respect to the outstanding Notes on
and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any compliance certificate, 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 (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
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 Section 6.1 hereof, but,
except as specified above, the remainder of this Indenture, such Notes and such
Guarantees shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.1 hereof of the option applicable to this Section 8.3
hereof, subject to the satisfaction of the conditions set forth in Section 8.4
hereof, Sections 6.1 (3) (but only with respect to the Company's failure to
observe or perform the covenants, conditions and agreements of the Company
under clause (iv) of Section 5.1), 6.1 (4), 6.1 (8) and 6.1 (9) hereof shall
not constitute Events of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company or the Parent must irrevocably deposit
with the Trustee, in trust, for the benefit of the Holders of the
Notes, cash in United States dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if
any, and interest, on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company
must specify whether the Notes are being defeased to maturity or to a
particular redemption date;
(b) in the case of an election under Section 8.2 hereof,
the Company or the Parent shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that (A) the Company or the Parent has received
from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm
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 and will be subject to federal income tax
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on the same amounts, in the same manner and at the same times as would
have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof,
the Company or the Parent shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied
to such deposit) or insofar as Section 6.1(10) or 6.1(11) hereof is
concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under,
any material agreement or instrument (other than this Indenture) to
which the Company, the Parent or any of their respective Subsidiaries
is a party or by which the Company, the Parent or any of their
respective Subsidiaries is bound; and
(f) the Company and the Parent shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
Section 8.5. Deposited Money and Government Securities to
be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company, the Parent and the Subsidiary Guarantors shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the cash or non-callable Government Securities deposited
pursuant to Section 8.4 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 Notes.
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Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
Section 8.6. Repayment to Company.
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,
premium, if any, or interest on any Note and remaining unclaimed for two years
after such principal, premium, if any, or interest has become due and payable
shall be paid to the Company on its request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a 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 the New York Times and The Wall Street
Journal (national edition), 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 notification or publication, any unclaimed balance of such money
then remaining shall be repaid to the Company.
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the obligations of the Company, the Parent
and the Subsidiary Guarantors under this Indenture, the Notes and the
Guarantees shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3 hereof, as the case may be; provided, however,
that if the Company, the Parent or any Subsidiary Guarantor makes any payment
of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company, the Parent or such Subsidiary
Guarantor shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes.
Notwithstanding Section 9.2 of this Indenture, the Company,
the Parent, the Subsidiary Guarantors and the Trustee may amend or supplement
this Indenture, the Notes or the Guarantees without the consent of any Holder
of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Note;
or
(e) to comply with requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company, the Parent and each of the Subsidiary
Guarantors, as the case may be, authorizing the execution of any such amended
or supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 7.2 hereof, the Trustee shall join with the Company, the
Parent and the Subsidiary Guarantors in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders of Notes.
Except as provided below in this Section 9.2, the Company, the
Parent, the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture, the Notes and the Guarantees with the consent of the Holders of at
least a majority in aggregate principal amount (at maturity) of the Notes then
outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for the Notes), and,
subject to Sections 6.4 and 6.7 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this
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Indenture, the Notes or the Guarantees may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for the Notes).
Notwithstanding the foregoing, without the consent of at least
66 2/3% in aggregate principal amount of the Notes then outstanding (including
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes), no waiver or amendment to this Indenture may make any change
in the provisions of Sections 3.9, 4.10 and 4.13 hereof that adversely affect
the rights of any Holder of Notes. In addition, any amendment to the
provisions of Article 10 of this Indenture shall require the consent of the
Holders of at least 66 2/3% in aggregate principal amount of the Notes then
outstanding if such amendment would adversely affect the rights of Holders of
Notes; provided that, no amendment may be made to the provisions of Article 10
of this Indenture that adversely affects the rights of any holder of Senior
Debt then outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to consent) consent to such change.
Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company, the Parent or any
Subsidiary Guarantor with any provision of this Indenture, the Notes or the
Guarantees. However, without the consent of each Holder affected, an amendment
or waiver may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of
the Notes (except as provided above with respect to Sections 3.9, 4.10
and 4.13 hereof);
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated
in the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of premium if any, or interest on the
Notes; or
(g) make any change in the foregoing amendment and waiver
provisions.
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Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company and each of the Subsidiary Guarantors, as
the case may be, authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt
by the Trustee of the documents described in Section 7.2 hereof, the Trustee
shall join with the Company, the Parent and the Subsidiary Guarantors in the
execution of such amended or supplemental indenture unless such amended or
supplemental indenture affects the Trustee's own rights, duties or immunities
under this indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.
Section 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
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Section 9.6. Trustee to Sign Amendment, etc.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
None of the Company, the Parent or any Subsidiary Guarantor may sign an
amendment or supplemental Indenture until its respective Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.1) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that there has been compliance
with all conditions precedent.
ARTICLE 10
SUBORDINATION
Section 10.1. Agreement to Subordinate.
The Company, the Parent, and each Subsidiary Guarantor agree,
and each Holder by accepting a Note and the related Guarantee agrees, that (i)
the Indebtedness evidenced by (a) the Notes, including, but not limited to, the
payment of principal of, premium, if any, and interest on the Notes, and any
other payment Obligation of the Company in respect of the Notes is subordinated
in right of payment, to the extent and in the manner provided in this Article,
to the prior payment in full in cash of all Senior Debt of the Company (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed) and (b) the Guarantees and other payment Obligations in respect of
the Guarantees are subordinated in right of payment, to the extent and in the
manner provided in this Article, to the prior payment in full in cash of all
Senior Debt of, (x) in the case of a Guarantee made by the Parent, the Parent
and (y) in the case of a Guarantee made by a Subsidiary Guarantor, such
Subsidiary Guarantor and (ii) the subordination is for the benefit of the
Holders of Senior Debt.
Section 10.2. Certain Definitions.
"Bankruptcy Law" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"Senior Debt" means (i) Indebtedness and other payment
Obligations of the Company or any Subsidiary of the Company under or in respect
of any Credit Facility or Indebtedness and other payment Obligations of the
Parent under any guarantee thereof, whether for principal, interest (including
interest accruing after the filing of a petition initiating any proceeding
pursuant to any
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Bankruptcy Law, whether or not the claim for such interest is allowed as a
claim in such proceeding), reimbursement obligations, fees, commissions,
expenses, indemnities or other amounts and (ii) any other Indebtedness of the
Company or any Subsidiary of the Company permitted under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes. Notwithstanding anything to the contrary in the
foregoing sentence, Senior Debt will not include (w) any Indebtedness of the
Company to any of its Subsidiaries or other Affiliates, or (x) any Indebtedness
that is incurred in violation of this Indenture (other than Indebtedness under
any Credit Agreement or any other Credit Facility that is incurred on the basis
of a representation by the Company to the applicable lenders that it is
permitted to incur such Indebtedness under this Indenture).
A "distribution" may consist of cash, securities or other
property, by set-off or otherwise.
All Designated Senior Debt now or hereafter existing and all
other Obligations relating thereto shall not be deemed to have been paid in
full unless the holders or owners thereof shall have received payment in full
in cash (or other form of payment consented to by the holders of such
Designated Senior Debt) with respect to such Designated Senior Debt and all
other Obligations with respect thereto.
Section 10.3. Liquidation; Dissolution; Bankruptcy.
(a) Upon any payment or distribution of cash, property or
securities to creditors of the Company in a liquidation or dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, or in an assignment for the
benefit of creditors or any marshalling of the Company's assets and
liabilities:
(1) the holders of Senior Debt of the Company shall be
entitled to receive payment in full in cash of all Obligations in
respect of such Senior Debt (including interest after the commencement
of any such proceeding at the rate specified in the applicable Senior
Debt, whether or not a claim for such interest would be allowed in
such proceeding) before the Holders of Notes shall be entitled to
receive any payment or distribution with respect to the Notes and
related Obligations (except that Holders of Notes may receive payments
made from any defeasance trust created pursuant to Section 8.1 hereof
provided that the applicable deposit does not violate Article 8 or 10
of this Indenture); and
(2) until all Obligations with respect to Senior Debt of
the Company (as provided in subsection (1) above) are paid in full in
cash, any payment or distribution to which the Holders of Notes and
the related Guarantees would be entitled shall be made to holders of
Senior Debt of the Company (except that Holders of Notes and the
related Guarantees may receive payments made from any defeasance trust
created pursuant to Section 8.1 hereof provided that the applicable
deposit does not violate Article 8 or 10 of this Indenture).
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(b) Upon any payment or distribution of cash, property or
securities to creditors of the Parent in a liquidation or dissolution of the
Parent or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Parent or its property, or in an assignment for the
benefit of creditors or any marshalling of the Parent's assets and liabilities:
(1) the holders of Senior Debt of the Parent shall be
entitled to receive payment in full in cash of all Obligations in
respect of such Senior Debt (including interest after the commencement
of any such proceeding at the rate specified in the applicable Senior
Debt, whether or not a claim for such interest would be allowed in
such proceeding) before the Holders of Notes and the related
Guarantees shall be entitled to receive any payment or distribution
with respect to the Guarantee made by the Parent (except that Holders
of Notes and the related Guarantees may receive payments made from any
defeasance trust created pursuant to Section 8.1 hereof provided that
the applicable deposit does not violate Article 8 or 10 of this
Indenture); and
(2) until all Obligations with respect to Senior Debt of
the Parent (as provided in subsection (1) above) are paid in full in
cash, any payment or distribution to which the Holders of Notes and
the related Guarantees would be entitled shall be made to holders of
Senior Debt of the Parent (except that Holders of Notes and the
related Guarantees may receive payments made from any defeasance trust
created pursuant to Section 8.1 hereof provided that the applicable
deposit does not violate Article 8 or 10 hereof).
(c) Upon any payment or distribution of cash, property or
securities to creditors of a Subsidiary Guarantor in a liquidation or
dissolution of such Subsidiary Guarantor or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to such Subsidiary
Guarantor or its property, or in an assignment for the benefit of creditors or
any marshalling of such Subsidiary Guarantor's assets and liabilities:
(1) the holders of Senior Debt of such Subsidiary
Guarantor shall be entitled to receive payment in full in cash of all
Obligations in respect of such Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the
applicable Senior Debt, whether or not a claim for such interest would
be allowed in such proceeding) before the Holders of Notes and the
related Guarantees shall be entitled to receive any payment or
distribution with respect to the Guarantee made by such Subsidiary
Guarantor (except that Holders of Notes and the related Guarantees may
receive payments made from any defeasance trust created pursuant to
Section 8.1 hereof provided that the applicable deposit does not
violate Article 8 or 10 of this Indenture); and
(2) until all Obligations with respect to Senior Debt of
such Subsidiary Guarantor (as provided in subsection (1) above) are
paid in full in cash, any payment or distribution to which the Holders
of Notes and the related Guarantees would be entitled shall be made to
holders of Senior Debt of such Subsidiary Guarantor (except that
Holders of Notes and the related Guarantees may receive payments made
from any defeasance trust created pursuant
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to Section 8.1 hereof provided that the applicable deposit does not
violate Article 8 or 10 of this Indenture).
Under the circumstances described in this Section 10.3, the
Company, the Parent, any Subsidiary Guarantor or any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person making any
payment or distribution of cash or other property or securities is authorized
or instructed to make any payment or distribution to which the Holders of the
Notes and the related Guarantees would otherwise be entitled (other than
payments made from any defeasance trust referred to in the second parenthetical
clause of each of clauses (a)(1), (b)(1), (c)(1), (a)(2), (b)(2) and (c)(2)
above, which shall be delivered or paid to the Holders of Notes as set forth in
such clauses) directly to the holders of the Senior Debt of the Company, the
Parent and any Subsidiary Guarantor, as applicable, (pro rata to such holders
on the basis of the respective amounts of Senior Debt of the Company, the
Parent and any Subsidiary Guarantor, as applicable, held by such holders) or
their Representatives, or to any trustee or trustees under any other indenture
pursuant to which any such Senior Debt may have been issued, as their
respective interests appear, to the extent necessary to pay all such Senior
Debt in full, in cash or cash equivalents after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of such
Senior Debt.
To the extent any payment of or distribution in respect of
Senior Debt (whether by or on behalf of the Company, the Parent 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 Debt
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred. To the extent
the obligation to repay any Senior Debt 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 Debt for all purposes
hereof as if such declaration, invalidity or setting aside had not occurred.
Section 10.4. Default on Designated Senior Debt.
The Company, the Parent and the Subsidiary Guarantors may not make
any payment (whether by redemption, purchase, retirement, defeasance or
otherwise) to the Trustee or any Holder in respect of Obligations with respect
to the Notes and the related Guarantees and may not acquire from the Trustee or
any Holder any Notes (other than payments and other distributions made from any
defeasance trust created pursuant to Section 8.1 hereof if the applicable
deposit does not violate Article 8 or 10 of this Indenture) until all principal
and other Obligations with respect to the Senior Debt of the Company have been
paid in full if:
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(i) a default in the payment of any principal of,
premium, if any, or interest on Designated Senior Debt occurs; or
(ii) a default, other than a payment default, on
Designated Senior Debt occurs and is continuing that then permits, or
with the giving of notice or passage of time or both (unless cured or
waived) would permit, holders of the Designated Senior Debt as to
which such default relates to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Person who is a Representative of the holders of such Designated
Senior Debt. If the Trustee receives any such Payment Blockage
Notice, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until 360 days shall have elapsed
since the date of commencement of the payment blockage period
resulting from the immediately prior Payment Blockage Notice. No
nonpayment default in respect of any Designated Senior Debt that
existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
The Company shall resume payments on and distributions in
respect of the Notes and may acquire them and the Parent and any Subsidiary
Guarantor shall resume making payments and distributions pursuant to the
Guarantees upon:
(1) in the case of a default referred to in Section
10.4(i) hereof the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section
10.4(ii) hereof, the earliest of (1) the date on which such nonpayment
default is cured or waived, (2) the date the applicable Payment
Blockage Notice is retracted by written notice to the Trustee from the
Person who is a Representative of the holders of the relevant
Designated Senior Debt and (3) 179 days after the date on which the
applicable Payment Blockage Notice is received unless (A) any of the
events described in Section 10.4(i) hereof has occurred and is
continuing or (B) a Default or Event of Default under Section 6.1(10)
or (11) has occurred,
if this Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.5. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.6. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any
payment or distribution of or in respect of any Obligations with respect to the
Notes or the Guarantees at a time when such
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payment or distribution is prohibited by Section 10.3 or Section 10.4 hereof,
such payment or distribution shall be held by the Trustee (if the Trustee has
actual knowledge that such payment or distribution is prohibited by Section
10.3 or 10.4) or such Holder, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Debt as their interests
may appear or their Representative under the indenture or other agreement (if
any) pursuant to which such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt 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 Debt, and, except as provided in
Section 10.12, shall not be liable to any such holders if the Trustee shall pay
over or distribute to or on behalf of Holders of Notes or the Company, the
Parent, the Subsidiary Guarantors or any other Person money or assets to which
any holders of Senior Debt shall be entitled by virtue of this Article 10,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
Section 10.7. Notice by Company.
The Company, the Parent and the Subsidiary Guarantors shall
promptly notify the Trustee and the Paying Agent of any facts known to the
Company, the Parent or any Subsidiary Guarantor that would cause a payment of
any Obligations with respect to the Notes or the related Guarantees to violate
this Article, but failure to give such notice shall not affect the
subordination of the Notes and the related Guarantees to the Senior Debt as
provided in this Article.
Section 10.8. Subrogation.
After all Senior Debt is paid in full and until the Notes are
paid in full, Holders of Notes and the related Guarantees shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Notes and
the Guarantees including, but not limited to, the Senior Subordinated Notes) to
the rights of holders of Senior Debt to receive distributions and payments
applicable to Senior Debt to the extent that distributions and payments
otherwise payable to the Holders of Notes and the related Guarantees have been
applied to the payment of Senior Debt. A payment or distribution made under
this Article to holders of Senior Debt that otherwise would have been made to
Holders of Notes and related Guarantees is not, as between the Company and
Holders of Notes, a payment by the Company on the Notes.
Section 10.9. Relative Rights.
This Article defines the relative rights of Holders of Notes
and the related Guarantees and holders of Senior Debt. Nothing in this
Indenture shall:
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(1) impair, as between the Company and Holders of Notes,
the obligation of the Company, which is absolute and unconditional, to
pay the Stated Price of and interest on the Notes in accordance with
their terms;
(2) affect the relative rights of Holders of Notes and
the related Guarantees and creditors of the Company other than their
rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions
and payments otherwise payable to Holders of Notes and the related
Guarantees.
If the Company fails because of this Article to pay the Stated
Price of or interest on a Note on the due date, the failure is still a Default
or Event of Default.
Section 10.10. Subordination May Not Be Impaired by Company,
the Parent or the Subsidiary Guarantors.
No right of any present or future holders of any Senior Debt
to enforce subordination as provided in this Article Ten will at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company, the Parent or any Subsidiary Guarantor or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company,
the Parent or any Subsidiary Guarantor with the terms of this Indenture,
regardless of any knowledge thereof that any such holder of Senior Debt may
have or otherwise be charged with. The provisions of this Article Ten are
intended to be for the benefit of, and shall be enforceable directly by, the
holders of Senior Debt.
Section 10.11. Payment, Distribution or Notice to
Representative.
Whenever a payment or distribution is to be made or a notice
given to holders of Senior Debt, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets or securities of
the Company, the Parent or any Subsidiary Guarantor referred to in this Article
10, the Trustee and the Holders of Notes and the related Guarantees shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any payment or distribution
to the Trustee or to the Holders of Notes and the related Guarantees for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the Parent or any 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 10.
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Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes and the Guarantees, unless the Trustee shall have
received at its Corporate Trust Office at least one Business Day prior to the
date of such payment written notice of facts that would cause the payment of
any Obligations with respect to the Notes or Guarantees to violate this
Article, which notice shall specifically refer to Section 10.3 or 10.4 hereof.
Only the Company or a Representative may give the notice. Nothing in this
Article 10 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder by the Holder's acceptance thereof
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authorizes and directs the Trustee on the Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 10, and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.9 hereof at least 30 days before the expiration of the
time to file such claim, each lender under the Credit Agreement is hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes and the related Guarantees.
Section 10.14. Amendments.
No amendment may be made to the provisions of or the
definitions of any terms appearing in this Article 10, or to the provisions of
Section 6.2 relating to the Designated Senior Debt, that adversely affects the
rights of any holder of Senior Debt then outstanding unless the holders of such
Senior Debt (or any group or Representative authorized to give a consent)
consent to such change.
Section 10.15. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 10.9 of
this Indenture, the holders of Senior Debt may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders to the holders of Senior Debt, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Debt or any instrument evidencing the same or any
agreement under which Senior Debt is outstanding or secured; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (c) release any Person liable in any manner for
the collection of Senior Debt; and (d) exercise or refrain from exercising any
rights against the Company, the Parent and each Subsidiary Guarantor and any
other Person.
ARTICLE 11
THE GUARANTEES
Section 11.1. The Guarantees.
Each of the Parent and the Subsidiary Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that:
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(a) the Stated Price of and premium and interest, on the Notes shall 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 premium and interest, on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
shall 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. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Parent and the Subsidiary
Guarantors shall be jointly and severally obligated to pay the same
immediately. The Parent and the Subsidiary Guarantors hereby agree that their
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder 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 of the Parent and the Subsidiary Guarantors hereby waives 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
covenant that this Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture. If
any Holder or the Trustee is required by any court or otherwise to return to
the Company, the Parent or the Subsidiary Guarantors, or any Custodian,
Trustee, liquidator or other similar official acting in relation to either the
Company, the Parent or the Subsidiary Guarantors, any amount paid by either to
the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each of the Parent
and the Subsidiary Guarantors agrees that it shall not be entitled to any right
of subrogation in relation to the Holders of Notes in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each of the Parent and the Subsidiary Guarantors further
agrees that, as between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby and (y) in
the event of any
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declaration of acceleration of such obligations as provided in Article 6, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Parent and the Subsidiary Guarantors for the purpose of this
Guarantee. The Parent and the Subsidiary Guarantors shall have the right to
seek contribution from any Guarantor not paying so long as the exercise of such
right does not impair the rights of the Holders under the Guarantees.
Section 11.2. Execution and Delivery of Guarantees.
(i) To evidence its Guarantee set forth in Section 11.1, each
of the Parent and the Subsidiary Guarantors hereby agrees that a notation of
such Guarantee substantially in the form of Exhibit C shall be endorsed by an
officer of the Parent or such Subsidiary Guarantor on each Note authenticated
and delivered by the Trustee, that this Indenture shall be executed on behalf
of the Parent or such Subsidiary Guarantor by its President or one of its Vice
Presidents and attested to by an Officer and that the Parent or such Subsidiary
Guarantor shall deliver to the Trustee an Opinion of Counsel that the foregoing
have been duly authorized, executed and delivered by the Parent or such
Subsidiary Guarantor and that such Guarantee is a valid and legally binding
obligation of Parent or such Subsidiary Guarantor, enforceable against such
Guarantor in accordance with its terms.
Each of the Parent and each Subsidiary Guarantor hereby agrees
that its Guarantee set forth in Section 11.1 shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Guarantee.
If an Officer whose signature is on this Indenture or on the
applicable Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee is endorsed, such Guarantee
shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Guarantees set forth in this Indenture on behalf of the Parent and the
Subsidiary Guarantors.
Section 11.3. Parent and Subsidiary Guarantors May
Consolidate, etc., on Certain Terms.
Neither the Parent nor any Subsidiary Guarantor may
consolidate with or merge with or into, another corporation or Person other
than the Parent, the Company, or another Subsidiary Guarantor, unless:
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(a) subject to the provisions of Section 11.4 hereof, the
Person formed by or surviving any such consolidation or merger assumes
all the obligations of the Parent or such Subsidiary Guarantor, as the
case may be, pursuant to a supplemental indenture in form reasonably
satisfactory to the Trustee in respect of the Notes, this Indenture
and the Parent's or such Subsidiary Guarantor's Guarantee;
(b) immediately after giving effect to such transaction,
no Default or Event of Default exists; and
(c) such transaction does not violate any of Sections
4.3, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16 and 4.17.
Notwithstanding the foregoing, none of the Parent or the Subsidiary Guarantors
shall be permitted to consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or entity
pursuant to the preceding sentence if such consolidation or merger would not be
permitted by Section 5.1 hereof.
In case of any such consolidation or merger 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
Guarantee endorsed upon the Notes and the due and punctual performance of all
of the covenants and conditions of this Indenture to be performed by the Parent
or such Subsidiary Guarantor, such successor corporation shall succeed to and
be substituted for the Parent or such Subsidiary Guarantor with the same effect
as if it had been named herein as a Parent or a Subsidiary Guarantor. Such
successor corporation thereupon may cause to be signed any or all of the
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Guarantees so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, nothing
contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of the Parent or any Subsidiary Guarantor with or into
the Company, the Parent or another Subsidiary Guarantor, or shall prevent any
sale or conveyance of the property of the Parent or any Subsidiary Guarantor as
an
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entirety or substantially as an entirety to the Company, the Parent or any
Subsidiary Guarantor.
Section 11.4. Releases of Guarantees.
In the event of a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor or a sale or other
disposition (including, without limitation, by foreclosure) of all of the
capital stock of any Subsidiary Guarantor, to any corporation or other Person
(including a Subsidiary that is not a Subsidiary Guarantor) by way of merger,
consolidation, or otherwise, in a transaction that does not violate any of the
covenants of this Indenture, then such Subsidiary Guarantor shall be released
and relieved of any obligations under its Guarantee and such acquiring
corporation or other Person, if other than the Parent or a Subsidiary Guarantor
shall have no obligation to assume or otherwise become liable under such
Guarantee; provided, if such acquiring corporation or other Person is other
than the Company or a Wholly Owned Restricted Subsidiary, that the Net Proceeds
of such sale or other disposition are applied in accordance with Section 4.10
hereof. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.10, the Trustee shall execute
any documents reasonably required in order to evidence the release of any
Subsidiary Guarantor from its obligations under its Guarantee.
Any Subsidiary Guarantor not released from its obligations
under its Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of such Subsidiary
Guarantor under this Indenture as provided in this Article 11.
Any Subsidiary Guarantor that is designated an Unrestricted
Subsidiary in accordance with the terms of this Indenture shall be released
from and relieved of its obligations under its Guarantee and any Restricted
Subsidiary that becomes a Material Restricted Subsidiary and any Unrestricted
Subsidiary that ceases to be an Unrestricted Subsidiary and, thereafter,
becomes a Material Restricted Subsidiary shall be required to execute a
Guarantee in accordance with the terms of this Indenture.
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Section 11.5. Limitation on Subsidiary Guarantor Liability.
For purposes hereof, each Subsidiary Guarantor's liability
shall be that amount from time to time equal to the aggregate liability of such
Subsidiary Guarantor thereunder, but shall be limited to the lesser of (i) the
aggregate amount of the Obligations of the Company under the Notes and this
Indenture and (ii) the amount, if any, which would not have (A) rendered such
Subsidiary Guarantor "insolvent" (as such term is defined in the federal
Bankruptcy Law and in the Debtor and Creditor Law of the State of New York) or
(B) left it with unreasonably small capital at the time its Guarantee of the
Notes was entered into, after giving effect to the incurrence of existing
Indebtedness immediately prior to such time; provided that, it shall be a
presumption in any lawsuit or other proceeding in which such Subsidiary
Guarantor is a party that the amount guaranteed pursuant to its Guarantee is
the amount set forth in clause (i) above unless any creditor, or representative
of creditors of such Subsidiary Guarantor, or debtor in possession or trustee
in bankruptcy of such Subsidiary Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of such Subsidiary Guarantor is limited to the
amount set forth in clause (ii). In making any determination as to the
solvency or sufficiency of capital of a Subsidiary Guarantor in accordance with
the previous sentence, the right of such Subsidiary Guarantor to contribution
from other Subsidiary Guarantors and the Parent and any other rights such
Subsidiary Guarantor may have, contractual or otherwise, shall be taken into
account.
Section 11.6. "Trustee" to Include Paying Agent.
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 Article 10 and this Article 11 shall in such case (unless
the context shall otherwise require) be construed as extending to and including
such Paying Agent within its meaning as fully and for all intents and purposes
as if such Paying Agent were named in Article 10 and this Article 11 in place
of the Trustee.
Section 11.7. Subordination of Guarantees.
The obligations of each of the Parent and the Subsidiary
Guarantors under its Guarantee pursuant to this Article 11 shall be junior and
subordinated to Senior Debt of the
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Parent or the Subsidiary Guarantor, as the case may be pursuant to Article 10
hereof. For the purposes of the foregoing sentence, the Trustee and the
Holders shall have the right to receive and/or retain payments or distributions
by or on behalf of any of the Guarantors only at such times as they may receive
and/or retain payments in respect of the Notes pursuant to this Indenture,
including Article 10 hereof.
ARTICLE 12
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control. If any provisions of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the letter provision
shall be deemed to apply to this Indenture as so modified or excluded, as the
case may be.
Section 12.2. Notices.
Any notice or communication by the Company, the Parent or the
Subsidiary Guarantors or the Trustee to the others is duly given if in writing
and delivered in Person or mailed by first class mail (registered or certified,
return receipt requested), telecopier or overnight air courier guaranteeing
next day delivery, to the others' address:
If to the Company, the Parent or any Subsidiary Guarantor:
Mesa Operating Co.
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
Telecopier No.: (214) 444-9001
Attention: Chief Financial Officer
With a copy to:
Baker & Botts, LLP
2001 Ross Avenue
700 Trammell Crow Center
Dallas, Texas 75201-2980
Telecopier No.: 914-953-6503
Attention: Carlos A. Fierro
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If to the Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Telecopier No.: (312) 461-3525
Attention: Indenture Trust Administration
Division
The Company, the Parent or any Subsidiary Guarantor or the
Trustee, by notice to the others may designate additional or different
addresses for subsequent notices or communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if by telecopy;
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company, the Parent or any Subsidiary Guarantor mails a
notice or communication to Holders, it shall mail a copy to the Trustee and
each Agent at the same time.
Section 12.3. Communication by Holders of Notes with Other
Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Parent, the Subsidiary Guarantors, the Trustee, the Registrar
and anyone else shall have the protection of TIA Section 312(c).
Section 12.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company, the Parent or
any Subsidiary Guarantor to the Trustee to take any action under this
Indenture, the Company, the Parent or such Subsidiary Guarantor, as the case
may be, shall furnish to the Trustee:
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(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 12.5 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture relating to the proposed action
have been complied with; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 12.5 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been complied with.
Section 12.5. Statements Required in Certificate or
Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
Section 12.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 12.7. No Personal Liability of Directors, Officers,
Employees and Stockholders.
No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Notes or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of Notes,
by accepting a Note, waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities
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under the federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
Section 12.8. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES.
Section 12.9. No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company, the Parent or their
respective Subsidiaries or of any other Person. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture and the Guarantees.
Section 12.10. Successors.
All agreements of the Company, the Parent and each Subsidiary
Guarantor in this Indenture, the Notes and the Guarantees shall bind its
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 12.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of
July 2, 1996
MESA Inc.
Attest: By
---------------------------------
Name:
------------------------------
Title:
- -------------------------- ------------------------------
Mesa Operating Co.
Attest: By
---------------------------------
Name:
------------------------------
Title:
- ------------------------------ ------------------------------
Harris Trust and Savings Bank, as
Trustee
Attest: By
---------------------------------
Name:
------------------------------
Title:
- ------------------------------ ------------------------------
<PAGE> 93
================================================================================
EXHIBIT A
(Face of Note)
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS
1271-1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE ISSUE PRICE,
AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THE
NOTES MAY BE OBTAINED BY CONTACTING THE ISSUER'S INVESTORS RELATIONS DEPT.,
TELEPHONE NO. (214) 402-7000.
11 5/8% Senior Subordinated Discount Notes due 2006
No. $
Cusip Number: ---------
MESA OPERATING CO.
promises to pay to
or registered assigns,
the principal sum of
Dollars on July 1, 2006.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
This Note shall not bear interest prior to July 1, 2001. From
July 2, 1996 through June 30, 2001, the Accreted Value of this Note will
increase as specified on the reverse side hereof.
Dated: ,
------------- -------
MESA OPERATING CO.
By
---------------------------------
Name:
Title:
A-1
<PAGE> 94
By
---------------------------------
Name:
Title:
This is one of the Notes referred
to in the within-mentioned (SEAL)
Indenture:
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
---------------------------------
Authorized Signatory
================================================================================
A-2
<PAGE> 95
(Back of Note)
11 5/8% Senior Subordinated Discount Note due 2006
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest. This Note shall not bear interest prior to
July 1, 2001; however, the Accreted Value of the Note will increase from July
2, 1996 through June 30, 2001 at a rate of 11 5/8% per annum, compounded semi-
annually on January 1 and July 1 of each year. From and after July 1, 2001,
Mesa Operating Co., a Delaware corporation (the "Company"), promises to pay
interest on the stated principal amount of this Note at the rate of 11 5/8% per
annum, which interest shall be payable in cash semiannually in arrears on
January 1 and July 1, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"); provided that the
first Interest Payment Date shall be January 1, 2002. Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from July 1, 2001. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
2. Method of Payment. On each Interest Payment Date the
Company will pay interest to the Person who is the Holder of record of this
Note as of the close of business on the December 15 or June 15 immediately
preceding such Interest Payment Date, even if this Note is cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. Principal,
premium if any and interest on this Note will be payable at the office or
agency of the Company maintained for such purpose within the City and State of
New York or, at the option of the Company, payment of interest, may be made by
check mailed to the Holder of this Note at its address set forth in the
register of Holders of Notes; provided that all payments with respect to the
Global Notes and definitive Notes having an aggregate principal amount of $5.0
million or more the Holders of which have given wire transfer instructions to
the Company at least 10 Business Days prior to the applicable payment date will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Such payment shall be 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.
3. Paying Agent and Registrar. Initially, Harris Trust
and Savings Bank, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company, MESA Inc. (the "Parent") or any Subsidiary
Guarantor or any other of the Company's or Parent's Subsidiaries may act in any
such capacity.
A-3
<PAGE> 96
4. Indenture. The Company issued the Notes under an
Indenture dated as of July 2, 1996 ("Indenture") among the Company, the Parent
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Notes are general unsecured obligations of the
Company and are limited to $264,000,000 in aggregate principal amount (at
maturity) and will mature on July 1, 2006.
5. Optional Redemption.
(a) The Notes are not redeemable at the Company's option
prior to July 1, 2001. From and after July 1, 2001, the Notes will be subject
to redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon from July 1, 2001 to the applicable redemption date, if
redeemed during the twelve-month period beginning on July 1, of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.813%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.875%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.938%
2004 and thereafter . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
Paragraph 5, prior to July 1, 1999 the Company may, at its option, on any one
or more occasions, redeem up to $88 million of the aggregate principal amount
(at maturity) of Notes at a redemption price equal to 110% of the Accreted
Value (at the redemption date) thereof, with the net proceeds of sales of
Equity Interests (other than Disqualified Stock) of the Company or Parent;
provided that at least $176 million aggregate principal amount (at maturity) of
Notes must remain outstanding immediately after the occurrence of such
redemption; and provided, further, that any such redemption shall occur within
60 days of the date after the closing of the related sale of such Equity
Interests.
"Accreted Value" with respect to any Note means, as of the
date of issuance of the Notes, 56.855% of the offering price of the stated
principal amount of such Note, and as of any date after such date of issuance
and prior to July 1, 2001 as of which the Accreted Value is being calculated
(the "Accreted Value Calculation Date") (a) if the Accreted Value Calculation
Date is a January 1 or July 1 interest payment dates, the percentage of the
stated principal amount of such Note as of such date as shown in the table
below or (b) if the Accreted Value Calculation Date is not a January 1 or July
1, an amount equal to the sum of (i) the Accreted Value of such Note as of the
January 1 or July 1, as the case may be, immediately preceding the Accreted
Value Calculation Date, plus (ii) the accrued amortization of the original
issue discount from (but excluding) such immediately preceding January 1 or
July 1 to (and including) the Accreted Value Calculation Date,
A-4
<PAGE> 97
calculated as the product of (x) 5.8125 % of annual coupon rate of the Accreted
Value of such Note as of such immediately proceeding January 1 or July 1 and
(y) a fraction, the numerator of which is the number of days from (but
excluding) such immediately preceding January 1 or July 1 to (and including)
the Accreted Value Calculation Date (assuming a 360-day year of twelve 30-day
months), and the denominator of which is 180. The Accreted Value of each Note
as of each January 1 and July 1 prior to July 1, 2001 shall be an amount in
dollars equal to a percentage of the stated principal amount of such Note as
set forth below:
<TABLE>
<CAPTION>
January 1 June 1
Payment Date Payment Date
------------ ------------
<S> <C> <C>
1997 60.141% 63.636%
1998 67.335% 71.249%
1999 75.390% 79.772%
2000 84.409% 89.315%
2001 94.507% 100.00%
</TABLE>
On and after July 1, 2001, the Accreted Value of each Note
shall be equal to 100% of the stated principal amount thereof.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to prior to July 1, 2001, 101% of the Accreted
Value of the Notes on the date of purchase and, on July 1, 2001 and thereafter,
101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, thereon to the date of purchase (the "Change of Control
Payment"). The right of the Holders of the Notes to require the Company to
repurchase such Notes upon a Change of Control may not be waived by the Trustee
without the approval of the Holders of the Notes required by Section 9.2 of the
Indenture. Within 30 days following any Change of Control, the Company will
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by the Indenture and described in such notice. The
Change of Control Payment shall be made on a business day not less than 30 days
nor more than 60 days after such notice is mailed. The Parent, the Company and
each Subsidiary Guarantor will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
A-5
<PAGE> 98
(b) If the Company or a Restricted Subsidiary consummates
any Asset Sales permitted by the Indenture, when the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall make an Asset Sale Offer to
purchase the maximum principal amount of Notes and any other Pari Passu
Indebtedness to which the Asset Sale Offer applies that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to, in the
case of the Notes, prior to July 1, 2001, 100% of the Accreted Value thereof on
the date of purchase and, thereafter, 100% of the principal amount of the
Notes, plus, after July 1, 2001, accrued but unpaid interest thereon, if any,
to the date of purchase or, in the case of any Pari Passu Indebtedness, 100% of
the principal amount thereof (or with respect to discount Pari Passu
Indebtedness, accreted value thereof on the date of purchase, in each case, in
accordance with the procedures set forth in Section 3.9 of the Indenture or the
agreements governing the Pari Passu Indebtedness, as applicable. To the extent
that the aggregate principal amount (or accreted value, as the case may be) of
Notes and Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the sum of (i) the aggregate
Accreted Value (or, if after July 1, 2001, the principal amount) of Notes
surrendered by Holders thereof and (ii) the aggregate principal amount or
accreted value, as the case may be, of Pari Passu Indebtedness surrendered by
holders or lenders thereof exceeds the amount of Excess Proceeds, the Trustee
and the trustee or other lender representative for the Pari Passu Indebtedness
shall select the Notes and the other Pari Passu Indebtedness to be purchased on
a pro rata basis, based on the aggregate principal amount (or accreted value,
as applicable) thereof surrendered in such Asset Sale Offer. Upon completion
of such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
8. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or on the aggregate principal amount of the Notes called for redemption, as the
case may be.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons and only in denominations of $1,000 principal
amount (at maturity) and integral multiples of $1,000. The transfer of Notes
may be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion
of a Note selected for redemption, except for the unredeemed portion of any
Note being redeemed in part. Also, it need not exchange or register the
transfer of any Note for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a
Note may be treated as its owner for all purposes.
A-6
<PAGE> 99
11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate principal amount (at
maturity) of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or the tender offer or
exchange offer for, such Notes), and any existing Default or Event of Default
under, or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes. Without the consent of any Holder of a Note, the
Indenture or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
obligations to Holders of the Notes in case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include:
(i) default for 30 consecutive days in the payment when due of interest on the
Notes (whether or not prohibited by the provisions of Article 10 of the
Indenture; (ii) default in payment when due of the Stated Price of or premium,
if any, on the Notes (whether or not prohibited by the provisions of Article 10
of the Indenture); (iii) failure by the Company to comply with the provisions
of Article 5 of the Indenture; (iv) failure by the Company for 30 consecutive
days after notice from the Trustee or the Holders of at least 25% in aggregate
principal amount at stated maturity of the Notes then outstanding to comply
with the provisions of Sections 4.3, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13,
4.14, 4.16 and 4.17 of the Indenture; (v) failure by the Company for 60
consecutive days after notice from the Trustee or the Holders of at least 25%
in aggregate principal amount at stated maturity of the Notes then outstanding
to comply with any of its other agreements or covenants in, or provisions of,
this Note or in the Indenture; (vi) except as permitted by the Indenture, any
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or the
Parent or a Subsidiary Guarantor or any Person acting on behalf of the Parent
or a Subsidiary Guarantor, shall deny or disaffirm the Parent's or such
Subsidiary Guarantor's obligations under its Guarantee; (vii) the failure by
the Parent to issue Preferred Stock for gross proceeds in the amount of $132
million pursuant to the Rights Offering and Standby Commitment or either
thereof within 90 days following the date of issuance of the Notes; (viii)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any Subsidiary Guarantor whether such Indebtedness
or guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its final
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there is then existing a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more provided, that if any such
default is cured or waived or any such acceleration rescinded, or such
Indebtedness
A-7
<PAGE> 100
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 Indentures and any
consequential acceleration of the Notes shall be automatically rescinded; (ix)
a final judgment or order or final judgments or orders are rendered against the
Company or any Restricted Subsidiary that are unsatisfied and that require the
payment in money, either individually or in an aggregate amount, that is more
than $10.0 million over the coverage under applicable insurance policies and
either (a) a creditor has commenced an enforcement proceeding upon such
judgment (other than a judgment that is stayed by reason of pending appeal or
otherwise) or (b) a 60-day period transpired during which a stay of such
judgment, order, judgments or orders (by reason of pending appeal or otherwise)
was not in effect; and (x) certain events of bankruptcy or insolvency with
respect to the Company, the Parent or any Subsidiary Guarantor. If any Event
of Default (other than an Event of Default described in clause (x) above)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, the Parent or any Subsidiary Guarantor, all outstanding
Notes will become due and payable without further action or notice. Holders of
the Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount at stated maturity of the then outstanding Notes may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders
of the Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest. The Holders of
a majority in aggregate principal amount at stated maturity of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or premium on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required, within 5 Business days after
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
"Stated Price" means, with respect to any Note as of any date
of determination, (i) the Accreted Value thereof on the date of determination,
if such date is on or prior to July 1, 2001 or (ii) 100% of the principal
amount thereof plus accrued but unpaid interest thereon to the date of
determination, if such date is after July 1, 2001, and in the cases, and only
the cases, of an optional redemption effected pursuant to the provisions of
Sections 3.7 and 4.13 of the Indenture, the premium (if any) payable pursuant
to such Sections, as applicable.
13. Subordination. The Notes are subordinated to Senior
Debt of the Company. To the extent provided in the Indenture, Senior Debt must
be paid before the Notes may be paid. The Company agrees, and each Holder by
accepting a Note agrees, that the Indebtedness evidenced by the Notes,
including, but not limited to, the payment of principal of, premium, if any,
and interest on the Notes, and any other payment Obligation of the Company in
respect of the Notes is subordinated in right of payment, to the extent and in
the manner provided in the Indenture, to the
A-8
<PAGE> 101
prior payment in full in cash of all Senior Debt of the Company (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed) and authorizes the Trustee to give effect and appoints the Trustee
as attorney-in-fact for such purpose.
14. Trustee Dealings with Company. The Indenture
contains certain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security
or otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue or
resign.
15. No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company, as such, shall have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes, by accepting a Note, waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
16. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
17. Abbreviations. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act.
18. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
Mesa Operating Co.
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
Telecopier No.: (214) 444-9001
Attention: Secretary
A-9
<PAGE> 102
[NOTE: THE FORM OF GUARANTEE ATTACHED AS EXHIBIT C TO THE INDENTURE IS TO BE
ATTACHED TO THIS NOTE.]
A-10
<PAGE> 103
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. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------
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 Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-11
<PAGE> 104
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.13 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.13
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.13 of the Indenture, state
the principal amount at maturity you elect to have purchased: $
---------------
Date:
----------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the
face of this Security)
Signature Guarantee:*
-------------------------
- ------------------------
*/ Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-12
<PAGE> 105
EXHIBIT B
(Form of Legend for Global Note)
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (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.
B-1
<PAGE> 106
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES
[To be attached to Global Note]
The following exchanges of a part of this Global Note for
definitive Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Note Signature of authorized
Principal Amount Principal Amount following such officer of Trustee
Date of Exchange of this Global Note of this Global Note decrease (or increase) or Note Custodian
---------------- ------------------- ------------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
B-2
<PAGE> 107
EXHIBIT C
Guarantee
Each of the Parent and the Subsidiary Guarantors, if any,
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the Stated Price of and premium and interest on the Notes shall 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 premium and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same
shall 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. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Parent and the Subsidiary
Guarantors shall be jointly and severally obligated to pay the same
immediately.
The obligations of the Parent and the Subsidiary Guarantors
to the Holders of Notes and to the Trustee pursuant to this Guarantee and the
Indenture (including the subordination provisions thereof) are expressly set
forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Guarantee. The terms of Article 11 of
the Indenture are incorporated herein by reference.
This is a continuing Guarantee and shall remain in full force
and effect and shall be binding upon each of the Parent and the Subsidiary
Guarantors and its respective successors and assigns to the extent set forth in
the Indenture until full and final payment of all of the Company's Obligations
under the Notes and the Indenture and shall inure to the benefit of the Trustee
and the Holders of Notes and their successors and assigns and, in the event of
any transfer or assignment of rights by any Holder of Notes 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. Notwithstanding the foregoing, any Subsidiary
Guarantor that satisfies the provisions of Section 11.4 of the Indenture shall
be released of its
C-1
<PAGE> 108
obligations hereunder. This is a Guarantee of payment and not a guarantee of
collection.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability
will be that amount from time to time equal to the aggregate liability of such
Subsidiary Guarantor hereunder but shall be limited to the lesser of (i) the
aggregate amount of the obligations of the Company under the Notes and the
Indenture and (ii) the amount, if any, which would not have (A) rendered such
Subsidiary Guarantor "insolvent" (as such term is defined in the federal
Bankruptcy Law and in the Debtor and Creditor law of the State of New York) or
(B) left it with unreasonably small capital at the time its Guarantee of the
Notes was entered into, after giving effect to the incurrence of existing
Indebtedness immediately prior to such time; provided that, it shall be a
presumption in any lawsuit or other proceeding in which such Subsidiary
Guarantor is a party that the amount guaranteed pursuant to its Guarantee is
the amount set forth in clause (i) above unless any creditor, or representative
of creditors of such Subsidiary Guarantor, or debtor in possession or trustee
in bankruptcy of such Guarantor, otherwise proves in such a lawsuit that the
aggregate liability of such Subsidiary Guarantor is limited to the amount set
forth in clause (ii). The Indenture provides that, in making any determination
as to the solvency or sufficiency of capital of a Subsidiary Guarantor in
accordance with the previous sentence, the right of such Subsidiary Guarantor
to contribution from other Subsidiary Guarantors and the Parent and any other
rights such Subsidiary Guarantor may have, contractual or otherwise, shall be
taken into account.
C-2
<PAGE> 109
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
MESA INC.,
a Texas corporation
By:
------------------------------------
Name:
---------------------------------
Title:
---------------------------------
[ANY SUBSIDIARY GUARANTORS]
By:
------------------------------------
Name:
---------------------------------
Title:
---------------------------------
C-3
<PAGE> 1
EXECUTION COPY
================================================================================
MESA OPERATING CO.
As Issuer
MESA INC.
As a Guarantor
10 5/8% SENIOR SUBORDINATED NOTES DUE 2006
__________________
INDENTURE
Dated as of July 2, 1996
__________________
__________________
HARRIS TRUST AND SAVINGS BANK
As Trustee
__________________
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3; 12.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3-10.5
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
</TABLE>
- ----------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 1.3. Incorporation By Reference of Trust Indenture Act . . . . . . . . . . . . . . . . 22
Section 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 2
THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.4. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.5. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.7. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.8. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.9. Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.10. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.13. Book-Entry Provisions for Global Notes . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 3
REDEMPTION AND PREPAYMENT . . . . . . . . . . . . . . . . . . . . . 30
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.2. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.6. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.7. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
i
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 3.8. Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.9. Offer to Purchase By Application of Excess Proceeds . . . . . . . . . . . . . . . 34
ARTICLE 4
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.1. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.4. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.6. Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.8. Dividend and Other Payment Restrictions Affecting Subsidiaries . . . . . . . . . 42
Section 4.9. Incurrence of Indebtedness and Issuance of Disqualified Stock . . . . . . . . . . 43
Section 4.10. Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.11. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.13. Offer to Repurchase Upon Change of Control . . . . . . . . . . . . . . . . . . . 49
Section 4.14. Additional Subsidiary Guarantees . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.15. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.16. No Senior Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.17. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 5
SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.1. Merger, Consolidation, or Sale of Substantially All Assets . . . . . . . . . . . 51
Section 5.2. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 6
DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
ii
<PAGE> 6
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.7. Rights of Holders of Notes to Receive Payment . . . . . . . . . . . . . . . . . . 57
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 7
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.6. Reports by Trustee to Holders of the Notes . . . . . . . . . . . . . . . . . . . 63
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.9. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . 66
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . 66
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance . . . . . . . . . . . . 66
Section 8.2. Legal Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.4. Conditions to Legal or Covenant Defeasance . . . . . . . . . . . . . . . . . . . 68
Section 8.5. Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.6. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
iii
<PAGE> 7
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . 70
Section 9.1. Without Consent of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.2. With Consent of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.5. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.6. Trustee to Sign Amendment, etc. . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 10
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.1. Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.2. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.3. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 75
Section 10.4. Default on Designated Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.5. Acceleration of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.6. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.7. Notice by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.8. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.9. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.10. Subordination May Not Be Impaired by Company . . . . . . . . . . . . . . . . . . 82
Section 10.11. Payment, Distribution or Notice to Representative . . . . . . . . . . . . . . . . 82
Section 10.12. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.13. Authorization to Effect Subordination . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.14. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.15. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 11
THE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.1. The Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.2. Execution and Delivery Guarantees . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.3. Parent and Subsidiary Guarantors May Consolidate, etc., on Certain Terms . . . . 86
Section 11.4. Releases of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
iv
<PAGE> 8
<TABLE>
<CAPTION>
Page
<S> <C>
Section 11.5. Limitation on Subsidiary Guarantor Liability . . . . . . . . . . . . . . . . . . 88
Section 11.6. "Trustee" to Include Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 11.7. Subordination of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 12
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 12.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 12.3. Communication by Holders of Notes with Other Holders of Notes . . . . . . . . . . 90
Section 12.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . 90
Section 12.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . 91
Section 12.6. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 12.7. No Personal Liability of Directors, Officers, Employees and Stockholders . . . . 91
Section 12.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 12.9. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . 92
Section 12.10. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 12.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 12.12. Counterpart Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 12.13. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . 92
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF LEGEND FOR GLOBAL NOTE
Exhibit C FORM OF GUARANTEE
</TABLE>
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INDENTURE dated as of July 2, 1996 among Mesa Operating Co., a
Delaware corporation (the "Company"), as issuer MESA INC., a Texas Corporation
(the "Parent"), as a guarantor and Harris Trust and Savings Bank, as trustee
(the "Trustee").
The Company, the Parent and the Trustee agree as follows for
the benefit of each other and for the equal and ratable benefit of the Holders
of the 10 5/8% Senior Subordinated Notes due 2006 of the Company (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"Acquired Debt" means, with respect to any specified Person or
any Subsidiary of such Person (i) Indebtedness of any other Person existing at
the time such other Person is merged with or into or became a Subsidiary of
such specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control; further provided, however, that in no
event shall any limited partner of DNR that is a beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of less than 10% of the aggregate
voting power of the Capital Stock of the Company or the Parent be deemed to be
an Affiliate of the Company or the Parent.
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"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition (but excluding the creation of a Lien) by the Company or any of its
Restricted Subsidiaries of any assets including, without limitation, by way of
a sale and leaseback; provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole shall be governed by Sections 4.13 and/or 5.1
hereof and not by Section 4.10 hereof), and (ii) the issue or sale by the
Company or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Subsidiaries (including the sale by a Restricted Subsidiary of Equity
Interests in an Unrestricted Subsidiary), in the case of either clause (i) or
(ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $5.0 million or (b) for net proceeds
in excess of $5.0 million. Notwithstanding the foregoing, the following shall
not be deemed to be Asset Sales: (1) a transfer of assets by the Company to a
Restricted Subsidiary of the Company or by a Restricted Subsidiary of the
Company to the Company or to another Restricted Subsidiary of the Company (in
the case of a transfer to a Subsidiary that is not a Wholly Owned Restricted
Subsidiary, transfers will be excluded from this definition only to the extent
of the Company's or the Restricted Subsidiary's interest in such Subsidiary
after giving effect to such transfer), (2) an issuance of Equity Interests by a
Restricted Subsidiary of the Company to the Company or to another Restricted
Subsidiary of the Company (in the case of an issuance of Equity Interests to a
Subsidiary that is not a Wholly Owned Restricted Subsidiary, issuances will be
excluded from this definition only to the extent of the Company's or the
Restricted Subsidiary's interest in such Subsidiary after giving effect to such
issuance), (3) a Permitted Investment or a Restricted Payment that is permitted
by Section 4.7, (4) the abandonment, farm-out, lease or sublease of undeveloped
oil and gas properties in the ordinary course of business, (5) the trade or
exchange by the Company or any Restricted Subsidiary of the Company of any oil
and gas property owned or held by the Company or such Restricted Subsidiary for
any oil and gas property owned or held by another Person, which the Board of
Directors of the Company determines in good faith to be of approximately
equivalent value, (6) the sale or transfer of hydrocarbons or other mineral
products or other inventory or
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surplus or obsolete equipment in the ordinary course of business or (7) sale of
hydrocarbons pursuant to Permitted Marketing Obligations.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended to the extent the
lease payments during such extension period are required to be capitalized on a
balance sheet in accordance with GAAP).
"Bankruptcy Code" means Title 11 of the United States Code, as
amended.
"Board of Directors" means the Board of Directors of the
Company or the Parent, as applicable, or any authorized committee of such Board
of Directors.
"Borrowing Base" means, as of any date, the aggregate amount
of borrowing availability as of such date under all Credit Facilities that
determine availability on the basis of a borrowing base or other asset-based
calculation, provided that in no event shall the Borrowing Base exceed $600.0
million.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
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profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any lender party to the
Credit Agreement or with any domestic commercial bank having capital and
surplus in excess of $500 million and a Thompson Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having a rating of at
least P1 from Moody's or a rating of at least A1 from S&P and (vi) money market
mutual or similar funds having assets in excess of $100,000,000.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole or the Parent and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than a Permitted Investor, (ii) the adoption by the shareholders of
the Company or the Parent of a plan relating to the liquidation or dissolution
of the Company or the Parent, (iii) after no shares of the Series B Preferred
Stock remain outstanding (a) Continuing Directors cease for any reason to
constitute a majority of the members of the Board of Directors of the Company
or the Parent for a period of two consecutive years or (b) an event or series
of events by which any person or other entity, other than a Permitted Investor,
or any group of Persons or other entities acting in concert as a partnership or
other group, other than a group of Permitted Investors, shall, as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases, merger, consolidation or otherwise, have become the beneficial owner
(within the meaning
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of rule 13d-3 under the Exchange Act) of 35% or more of the aggregate voting
power of the then outstanding Capital Stock of the Parent having the right to
elect directors under ordinary circumstances.
"Closing Date" the date of the closing of the sale of the
Notes offered pursuant to the Offering.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period plus (i) an amount equal to any extraordinary loss
plus any net loss realized in connection with an Asset Sale (together with any
related provision for taxes), to the extent such losses were included in
computing such Consolidated Net Income, plus (ii) provision for taxes based on
income or profits of such Person and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Interest Rate Hedging Agreements), to the extent that any such expense was
included in computing such Consolidated Net Income, plus (iv) depreciation,
depletion and amortization expenses (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) for such Person and its Restricted Subsidiaries for
such period to the extent that such depreciation, depletion and amortization
expenses were included in computing such Consolidated Net Income, plus (v)
exploration expenses for such Person and its Restricted Subsidiaries for such
period to the extent such exploration expenses were included in computing such
Consolidated Net Income, plus (vi) other non-cash charges (excluding any such
non-cash charge to the extent that it represents an accrual of or reserve
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for cash charges in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such other noncash charges were included in
computing such Consolidated Net Income, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation,
depletion and amortization, exploration and other non-cash charges and expenses
of, a Restricted Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in same proportion) that the Net Income of such Restricted Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, 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, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded and (iv) the cumulative effect of a change in accounting
principles shall be excluded. Notwithstanding the foregoing, for the purpose
of
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Section 4.8 only, there shall be excluded from Consolidated Net Income any
dividends or other distributions paid in cash by Unrestricted Subsidiaries to
the referent Person or a Restricted Subsidiary thereof to the extent such
dividend or other distributions increase the amount of Restricted Payments
pursuant to Subsection 4.8(c)(iv)(A).
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending prior to the
taking of any action for the purpose of which the determination is being made
and for which financial statements are available (but in no event ending more
than 135 days prior to the taking of such action), as (i) the par or stated
value of all outstanding Capital Stock of the Company, plus (ii) paid-in
capital or capital surplus relating to such Capital Stock, plus (iii) any
retained earnings or earned surplus, less (a) any accumulated deficit and (b)
any amounts attributable to Disqualified Stock.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company or the Parent, as the case
may be, who (i) was a member of such Board of Directors immediately after the
first date on which no shares of Series B Preferred Stock were outstanding or
(ii) was nominated for election or elected to such Board of Directors with the
approval of (a) a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election or (b) a majority of those
directors who were previously approved by Continuing Directors.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.2 hereof or such other
address as to which the Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated
as of July 2, 1996, by and among the Company, the Parent, The Chase Manhattan
Bank, N.A. as administrative agent and as a lender, Bankers Trust Company, as
syndication agent and as a lender, Societe Generale, Southwest Agency, as
documentation agent and as a lender, and certain other banks, financial
institutions and other entities, as lenders, providing for up to
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$525.0 million of Indebtedness, including any related notes, letters of credit
issued thereunder, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, restated,
modified, renewed, refunded, increased, replaced or refinanced, in whole or in
part, from time to time, whether or not with the same lenders or agents.
"Credit Facilities" means one or more debt facilities
(including, without limitation, the Credit Agreement) or commercial paper
facilities with banks or other lenders providing for revolving credit loans,
term loans, production payment financing, receivables financing (including
through the sale of receivables to such lenders or to special purpose entities
formed to borrow from such lenders against such receivables) or letters of
credit, in each case, as amended, restated, modified, renewed, refunded,
increased, replaced or refinanced in whole or in part from time to time.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Depository" means, with respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another
Person designated as Depository by the Company, which must be a clearing
agency registered under the Exchange Act.
"Designated Senior Debt" means (i) the Credit Agreement and
(ii) any other Senior Debt of the Company and its Subsidiaries permitted under
this Indenture the principal amount of which is $25 million or more and that
has been designated by the Company as "Designated Senior Debt."
"Discount Notes" the 11 5/8% Senior Subordinated Discount
Notes issued by the Company due July 1, 2006.
"Discount Notes Indenture" means the Indenture dated as of
July 2, 1996 among the Company, the Parent, and Harris Trust and Savings Bank,
as trustee, pursuant to which the Discount Notes were issued, as the same may
be amended, supplemented or otherwise modified from time to time.
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"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, (i) matures or
is mandatorily redeemable for cash, pursuant to a sinking fund obligation or
otherwise, or redeemable for cash at the option of the Holder thereof, in whole
or in part, on or prior to the date that is 91 days after the date on which the
Notes mature, or (ii) requires the payment of cash dividends or other cash
distributions on or prior to the date that is 91 days after the date on which
the Notes mature.
"DNR" means DNR-MESA Holdings, L.P., a Delaware limited
partnership.
"Dollar-Denominated Production Payments" means production
payment obligations recorded as liabilities in accordance with GAAP, together
with all undertakings and obligations in connection therewith.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock) and,
with respect to any employee benefit plans, stock appreciation rights.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Debt" means Indebtedness of the Parent and its
Subsidiaries in existence after giving effect to the application of the
proceeds of the Recapitalization on the Closing Date, in an aggregate principal
amount not to exceed $12,900,000, together with all accrued and unpaid interest
thereon and all premiums payable with respect thereto until such amounts are
repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees,
redeems or pays any Indebtedness (other than revolving credit borrowings) or
issues or redeems Disqualified Stock subsequent to the commencement of the
period for which the Fixed Charge Coverage
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Ratio is being calculated but prior to the date on which the calculation of the
Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption or payment of Indebtedness, or
such issuance or redemption of Disqualified Stock, as if the same had occurred
at the beginning of the applicable four-quarter reference period. In addition,
for purposes of making the computation referred to above, (i) acquisitions that
have been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date (including, without
limitation, any acquisition to occur on the Calculation Date) shall be deemed
to have occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated without
giving effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income, (ii) the net proceeds of Indebtedness incurred or
Disqualified Stock issued by the Company or any of its Restricted Subsidiaries
pursuant to the first paragraph of Section 4.9 hereof during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have been received by the Company or any
such Restricted Subsidiary on the first day of the four-quarter reference
period and applied to its intended use on such date, (iii) the Consolidated
Cash Flow attributable to discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of prior to the Calculation
Date, shall be excluded and (iv) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges shall not be
obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment
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obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees incurred in respect of letter of credit
or bankers' acceptance financings; (ii) the consolidated interest expense of
such Person and its Restricted Subsidiaries that was capitalized during such
period; (iii) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or any of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or any of its Restricted Subsidiaries (whether or
not such guarantee or Lien is called upon) and (iv) all cash dividend payments
(and non-cash dividend payments (unless paid in Equity Interests which are not
Disqualified Stock) in the case of a Person that is a Restricted Subsidiary) on
any series of preferred stock of such Person or any of its Restricted
Subsidiaries owned by Persons other than the Company or a Restricted
Subsidiary. For purposes of the definition of Fixed Charges, (i) interest on a
Capital Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Board of Directors of such Person (as evidenced by
a resolution of the Board of Directors of the Company) to be the rate of
interest implicit in such Capital Lease Obligation in accordance with GAAP,
(ii) interest on Indebtedness that is determined on a fluctuating basis shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest of such Indebtedness in effect on the date Fixed Charges are being
calculated, subject to the proviso in clause (iii), (iii) interest on
Indebtedness that may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate actually chosen,
or, if none, then based upon such optional rate chosen as the Company may
designate, (provided, that for the period following the date on which the rate
actually chosen ceases to be in effect, the Company may designate an optional
rate other than that actually chosen, which optional rate shall be deemed to
accrue at a fixed per annum equal to the rate of interest on such optional rate
in effect on the date Fixed Charges are being calculated) and (iv) Fixed
Charges shall be increased or reduced by the net cost (including amortization
of discount) or benefit associated with obligations under Interest Rate Hedging
Agreements attributable to such period.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
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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 have been approved by a
significant segment of the accounting profession, which are in effect from time
to time.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) 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
Government Security or a specific payment of principal of or interest on any
such Government Security 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 Government Security or the specific payment of principal of
or interest on the Government Security evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantee" means each of the Guarantees of the Notes by the
Parent and Subsidiary Guarantors hereunder.
"Guarantors" means each of (i) the Parent, and (ii) any
Restricted Subsidiary of the Company that executes a Guarantee in accordance
with the provisions of this Indenture, and, in each case, their respective
successors and assigns.
"Holder" means a Person in whose name a Note is registered on
the Registrar's books.
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"Indebtedness" means, with respect to any Person, without
duplication, (a) any indebtedness of such Person, whether or not contingent,
(i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or
similar instruments, (iii) evidenced by letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances, (iv) representing
Capital Lease Obligations, (v) representing the balance deferred and unpaid of
the purchase price of any property, except any such balance that constitutes an
accrued expense or trade payable, (vi) representing any obligations in respect
of Interest Rate Hedging Agreements or Oil and Gas Hedging Contracts, and (vii)
in respect of any Production Payment, (b) all indebtedness of others of the
type referred to in clauses (a), (c), (d) or (e) secured by a Lien on any asset
of such Person (whether or not such indebtedness is assumed by such Person,
except that the amount of such indebtedness not assumed shall be deemed to be
the lesser of the value of such asset and the amount of such indebtedness so
secured), (c) obligations of such Person in respect of production imbalances
and (d) Attributable Debt of such Person, (e) Acquired Debt of such Person and
(f) to the extent not otherwise included in the foregoing, the guarantee by
such Person of any indebtedness of any other Person, of the type referred to in
the preceding clauses (a), (c), (d) or (e).
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Interest Rate Hedging Agreements" means, with respect to any
Person, the obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Investments" means, with respect to any Person, all
investments by such Person (including investments by such Person in Affiliates)
in the form of direct or indirect loans (including guarantees of Indebtedness
or other obligations, but excluding trade credit and other ordinary course
advances customarily made in the Oil and Gas Business), advances or capital
contributions (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are
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or would be classified as investments on a balance sheet prepared in accordance
with GAAP; provided that the following shall not constitute Investments: (i)
an acquisition of assets, Equity Interests or other securities by the Company
for consideration consisting of Equity Interests (other than Disqualified
Stock) in the Company, (ii) Interest Rate Hedging Agreements entered into in
accordance with the limitations set forth in clause (h) of the definition of
"Permitted Indebtedness" set forth in Section 4.9 hereof and (iii) Oil and Gas
Hedging Contracts entered into in accordance with the limitations set forth in
clause (i) of the definition of "Permitted Indebtedness" set forth in Section
4.9 hereof and (iv) Permitted Marketing Transactions. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of the Company (other
than MEV) such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Equity Interests of such Subsidiary not sold or
disposed of.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, the City of Chicago or at a place
of payment are authorized by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquid Securities" means securities (i) of an issuer that is
not an Affiliate of the Company and (ii) that are publicly traded on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market;
provided, that securities meeting the requirements of clauses (i) and (ii)
above
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shall be treated as Liquid Securities from the date of receipt thereof until
the earlier of (x) the date on which such securities are sold or exchanged for
cash or cash equivalents and (y) 180 days following the date of the closing of
the Asset Sale in connection with which such Liquid Securities were received.
In the event such securities are not sold or exchanged for cash or cash
equivalents within such 180-day period, for purposes of determining whether the
transaction pursuant to which the Company or a Restricted Subsidiary received
the securities was in compliance with the provisions of Section 4.10 hereof,
such securities shall be deemed not to have been Liquid Securities at any time.
"Material Restricted Subsidiary" means any Restricted
Subsidiary of the Company, which, as of the relevant date of determination,
would be a "significant subsidiary" as defined in Reg. Section 230.405
promulgated pursuant to the Securities Act as in effect on the date of issuance
of the Notes, assuming the Company is the "registrant" referred to in such
definition, except that the 10% amounts referred to in such definition shall be
deemed to be 5%.
"MEV" means Mesa Environmental Ventures Co. and its
Subsidiaries
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or
loss, together with any related provision for taxes on such extraordinary or
nonrecurring gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in
<PAGE> 24
16
respect of any Asset Sale (including, without limitation, any cash received
upon the sale or other disposition of Liquid Securities or any other any
non-cash consideration received in any Asset Sale, but excluding cash amounts
placed in escrow, until such amounts are released to the Company), net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees and expenses, and sales commissions) and
any relocation expenses incurred as a result thereof, taxes paid or payable as
a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts paid to minority interest
holders, amounts required to be applied to the repayment of Indebtedness (other
than Indebtedness under any Credit Facility) secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve for adjustment
in respect of the sale price of such asset or assets established in accordance
with GAAP and any reserve established for future liabilities.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides any guarantee
or credit support of any kind (including any undertaking, guarantee, indemnity
or agreement or instrument that would constitute Indebtedness) or (b) is
directly or indirectly liable (as a guarantor or otherwise); (ii) no default
with respect to which (including any rights that the holders thereof may have
to take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of
the Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) the explicit terms of which provide
that there is no recourse against any of the assets of the Company or its
Restricted Subsidiaries.
"Note Custodian" means the Trustee or the Registrar, as
custodian with respect to the Notes in global form, or any successor entity
thereto or any entity acting as custodian with respect to Notes in global form.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any
<PAGE> 25
17
Indebtedness and, with respect to Obligations under the Credit Agreement,
includes "Obligations" as defined therein.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary, the Assistant Secretary or any Vice-President of
such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company, by two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, that meets the requirements of
Section 12.5 hereof.
"Oil and Gas Business" means (i) the acquisition, exploration,
exploitation, development, operation and disposition of interests in oil, gas
and other hydrocarbon properties, (ii) the gathering, marketing, treating,
processing, storage, selling and transporting of any production from such
interests or properties, (iii) any business relating to or arising from
exploration for or development, production, treatment, processing, storage,
transportation or marketing of oil, gas and other minerals and products
produced in association therewith and (iv) any activity that is ancillary or
necessary or desirable to facilitate the activities described in clauses (i)
through (iii) of this definition.
"Oil and Gas Hedging Contracts" means any oil and gas purchase
or hedging agreement, and other agreement or arrangement, in each case, that is
designed to provide protection against oil and gas price fluctuations.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
12.5 hereof. The counsel may be an employee of or counsel to the Company, the
Parent, any Subsidiary Guarantor or the Trustee.
<PAGE> 26
18
"Pari Passu Indebtedness" means indebtedness which ranks pari
passu in right of payment to the Notes, including the Discount Notes.
"Permitted Business Investments" means investments made in the
ordinary course of, and of a nature that is or shall have become customary in,
the Oil and Gas Business as a means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, marketing or transporting oil and
gas through agreements, transactions, interests or arrangements which permit
one to share risks or costs, comply with regulatory requirements regarding
local ownership or satisfy other objectives customarily achieved through the
conduct of Oil and Gas Business jointly with third parties, including, without
limitation, (i) ownership interests in oil and gas properties, processing
facilities, gathering systems or ancillary real property interests and (ii)
Investments in the form of or pursuant to operating agreements, processing
agreements, farm-in agreements, farm-out agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling agreements,
joint bidding agreements, service contracts, joint venture agreements,
partnership agreements (whether general or limited), limited liability company
agreements, subscription agreements, stock purchase agreements and other
similar agreements with third parties.
"Permitted Investments" means (a) any Investment in the
Company or in a Restricted Subsidiary of the Company; (b) any Investment in
Cash Equivalents or securities issued or directly and fully guaranteed or
insured by the United States government or any agency or instrumentality
thereof having maturities of not more than one year from the date of
acquisition; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person if, as a result of such Investment and any related
transactions that at the time of such Investment are contractually mandated to
occur, (i) such Person becomes a Restricted Subsidiary of the Company or (ii)
such Person is merged, consolidated or amalgamated with or into, or transfers
or conveys all or substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company; (d) any Investment made
as a result of the receipt of non-cash consideration from an Asset Sale that
was made pursuant to and in compliance with Section 4.10 hereof; (e) other
Investments having an aggregate fair market value (measured on
<PAGE> 27
19
the date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (e) that are at the time outstanding (net of repayments,
dividends and distributions received with respect to such Investments), not to
exceed $37.5 million; (f) Permitted Business Investments; (g) any Investment
acquired by the Company in exchange for Equity Interests in the Company or the
Parent (other than Disqualified Stock); (h) Investments in Unrestricted
Subsidiaries with net cash proceeds contributed to the common equity capital of
the Company or a Restricted Subsidiary since the date of this Indenture,
provided that the amount of any such net cash proceeds that are used for any
such Investment shall be excluded from clause (c)(ii) of the first paragraph of
Section 4.7 hereof and (i) Investments received in connection with any good
faith settlement of a bankruptcy proceeding.
"Permitted Investor" means any Person who is or was (i) a
holder of Shares of the Series B Preferred Stock or (ii) an Affiliate of a
Person described in the immediately preceding clause (i).
"Permitted Liens" means (i) Liens securing Senior Debt under
the Credit Agreement, (ii) Liens securing Indebtedness of a Subsidiary and
Liens securing Senior Debt, in each case, that is outstanding on the date of
issuance of the Notes (after giving effect to the Recapitalization and the use
of the proceeds therefrom) and Liens securing Senior Debt that is permitted by
the terms of the Indentures to be incurred, (iii) Liens in favor of the Company
or any Restricted Subsidiary, (iv) Liens on property or assets existing at the
time of acquisition thereof by the Company or any Subsidiary of the Company and
Liens on property or assets of a Subsidiary existing at the time it became a
Subsidiary; provided, that such Liens were in existence prior to the
contemplation of the acquisition and do not extend to any property or assets
other than the acquired property or assets or the property or assets of the
acquired Subsidiary, (v) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance or
other kinds of social security, or to secure the payment or performance of
tenders, statutory or regulatory obligations, surety or appeal bonds, bids,
leases, government contracts and other contracts (other than for borrowed
money), performance and return-of-money bonds or other obligations of a like
nature
<PAGE> 28
20
incurred in the ordinary course of business (including, without limitation,
lessee or operator obligations under statutes, governmental regulations or
instruments related to the ownership, exploration and production of oil, gas
and minerals on state or federal lands or waters), (vi) Liens existing on the
date of the Indentures (after giving effect to the Recapitalization and the use
of proceeds therefrom), (vii) Liens for taxes, assessments and governmental
charges and claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded; provided, that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor, (viii)
statutory liens of landlords, mechanics, suppliers, vendors, warehousemen,
carriers and other like Liens arising in the ordinary course of business, (ix)
pre-judgment Liens and judgment Liens not giving rise to an Event of Default so
long as any appropriate legal proceeding that 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,
(x) Liens on, or related to, properties or assets to secure all or part of the
costs incurred in the ordinary course of the Oil and Gas Business for the
exploration, drilling, development, production, processing, transportation,
marketing or storage or operation thereof and to support trade letters of
credit and bankers' acceptances issued or created in the ordinary course of
business, (xi) Liens encumbering pipelines or pipeline facilities that arise
under operation of law, (xii) 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 or natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements and other agreements that are customary in
the Oil and Gas Business, (xiii) Liens reserved in oil and gas mineral leases
for bonus and rental payments and for compliance with the terms of such leases,
(xiv) Liens constituting survey exceptions, encumbrances, easements, and
reservations of, and rights to others for, rights-of-way, zoning and other
restrictions as to the use of real properties, and minor defects of title
which, in the case of any of the foregoing, do not secure the payment of
borrowed money, and in the aggregate do not materially adversely affect the
value of the assets of the Company and its Restricted Subsidiaries, taken as a
whole, or materially impair the use of such properties for the
<PAGE> 29
21
purposes for which such properties are held by the Company or such
Subsidiaries, (xv) Liens not otherwise permitted by clauses (i) through (xiv)
that are incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding, (xvi) Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries, (xvii)
any interest or title of a lessor under any Capital Lease Obligation and
(xviii) purchase money Liens; provided, however, that (a) the related purchase
money Indebtedness shall not be secured by any property or assets of the
Company or any Restricted Subsidiary other than the property and assets so
acquired and the proceeds thereof and (b) the Lien securing such Indebtedness
shall be created no later than 10 days after such acquisition.
"Permitted Marketing Transaction" means (i) a transaction in
which the Company or any Subsidiary of the Parent either (a) establishes a
position using New York Mercantile Exchange Crude Oil or Natural Gas Futures
contracts to purchase hydrocarbons for future delivery to it or (b) purchases
or commits to purchase hydrocarbons for future delivery to it, and
contemporaneous with such purchase transaction either (1) establishes one or
more positions using New York Mercantile Exchange Crude Oil or Natural Gas
Futures contracts to resell at a date subsequent to such delivery date or (2)
enters into a contract with a Person to resell at a date subsequent to such
delivery date, a similar aggregate quantity and quality of hydrocarbons as so
purchased by the Company or such Subsidiary, as applicable, at an aggregate
price greater than the Indebtedness incurred for the hydrocarbons so purchased
by the Company or such Subsidiary or (ii) any other purchase by the Company or
any Subsidiary of the Parent of hydrocarbons for which the Company or such
Subsidiary has contracts to sell.
"Permitted Refinancing Debt" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Indebtedness incurred under a Credit
Facility) of the Company or any of its Restricted Subsidiaries; provided that:
(i) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Debt does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so
<PAGE> 30
22
extended, refinanced, renewed, replaced, defeased or refunded, plus the amount
of premiums and prepayment penalties and other amounts required to be paid to
the holders of such Indebtedness in connection therewith and reasonable fees
and expenses incurred in connection therewith; (ii) such Permitted Refinancing
Debt has a final maturity date on or later than the final maturity date of, and
has a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; (iii) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is subordinated
in right of payment to the Notes, such Permitted Refinancing Debt has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Notes at least to the same extent as the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; and (iv)
such Indebtedness is incurred either by the Company or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock" means the collective reference to the Series
A Preferred Stock and the Series B Preferred Stock.
"Production Payments" means Dollar-Denominated Production
Payments and Volumetric Production Payments, collectively.
"Recapitalization" means the use of the net proceeds by the
Parent and the Company from (i) the sale of the Notes and the Discount Notes,
(ii) the credit facility pursuant to the Credit Agreement, (iii) the sale of
the Series B Preferred Stock pursuant to the Stock Purchase Agreement and (iv)
the sale of the Series A Preferred Stock pursuant to the Rights Offering along
with cash and investment balances of the Parent and the Company to repay and/or
refinance substantially all of the Parent's, the Company's and their respective
Subsidiaries' outstanding Indebtedness.
<PAGE> 31
23
"Repurchase Offer" means an offer made by the Company to
purchase all or any portion of a Holder's Notes pursuant to Section 4.10 or
4.13 hereof.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers 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.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Subsidiary" means any direct or indirect
Subsidiary of the Company that is not an Unrestricted Subsidiary.
"Rights Offering" means the rights offering by the Parent
whereby it will distribute to holders of its common stock transferrable rights
to purchase a pro rata portion of approximately 58,400,000 shares of Series A
Preferred Stock.
"S&P" means Standard & Poor's Ratings Group and its
successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Series A 8% Cumulative
Convertible Preferred Stock of the Parent.
"Series B Preferred Stock" means the Series B 8% Cumulative
Convertible Preferred Stock of the Parent.
"Standby Commitment" means the standby commitment provided by
DNR pursuant to which it will purchase additional shares of Series B Preferred
Stock equal to the number of shares of Series A Preferred Stock, if any, not
purchased in the Rights Offering.
<PAGE> 32
24
"Stock Purchase Agreement" means the Stock Purchase Agreement
dated April 26, 1996 between the Parent and DNR, as the same may be amended,
supplemented, or otherwise modified from time to time.
"Subordinated Indebtedness" means any Indebtedness of the
Company or any Restricted Subsidiary (whether outstanding on the date of the
issuance of the Notes or thereafter incurred) which is subordinate or junior in
right of payment to the Notes pursuant to a written agreement.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means any Restricted Subsidiary of the
Company that executes a Guarantee in accordance with the provisions of this
Indenture and any successor or assign of such Subsidiary that becomes obligated
under any Guarantee pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Total Assets" means, with respect to the Company, the total
consolidated assets of the Company and its Restricted Subsidiaries, as shown on
the most recent balance sheet of the Company.
"Trustee" means the party named as such in the preamble to
this Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
<PAGE> 33
25
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company which at the time of determination shall be an Unrestricted Subsidiary
(as designated 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 (including any newly
acquired or newly formed Subsidiary or a Person becoming a Subsidiary through
merger or consolidation or Investment therein) to be an Unrestricted Subsidiary
only if: (a) such Subsidiary does not own any Capital Stock of, or own or hold
any Lien on any property of, any other Subsidiary of the Company which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary; (b) all the Indebtedness of such Subsidiary shall at the date of
designation, and will at all times thereafter consist of, Non-Recourse Debt;
(c) the Company certifies that such designation was permitted by Section 4.7;
(d) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly, all or
substantially all of the business of the Company and the Subsidiaries; (e) such
Subsidiary does not, directly or indirectly, own any Indebtedness of or Equity
Interest in, and has no Investments in, the Company or any Restricted
Subsidiary; (f) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (1) to subscribe for additional Equity Interests or (2) to maintain
or preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and (g) on the date such
Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary with terms substantially less favorable to the
Company than those that might have been obtained from Persons who are not
Affiliates of the Company and (h) the Board of Directors of the Company shall
have made a determination (as set forth in the resolution approving such
designation, creation or purchase) that the designation, creation and operation
of the Unrestricted Subsidiary is not reasonably expected to materially and
adversely affect the financial condition, business, or operations of the
Company and its Restricted Subsidiaries taken together as a whole (which
resolution shall be conclusive evidence of compliance with this provision).
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a resolution
<PAGE> 34
26
of the Board of Directors of the Company giving effect to such designation and
an Officer's Certificate certifying that such designation complied with the
foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail
to meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred as of
such date. The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, that
immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof and the Company could incur at least $1.00 of additional Indebtedness
(excluding Permitted Indebtedness) pursuant to Section 4.9 on a pro forma basis
taking into account such designation.
"Volumetric Production Payments" means production payment
obligations recorded as deferred revenue in accordance with GAAP, together with
all undertakings and obligations in connection therewith.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means, with respect to
any Person, a Restricted Subsidiary of such Person, all of the outstanding
Capital Stock or other ownership interests of which (other than directors'
qualifying shares) are owned, directly or indirectly, by such Person or by one
or more Wholly Owned Restricted Subsidiaries of such Person.
<PAGE> 35
27
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . 4.11
"Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . 3.9
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . 10.2
"Change of Control Offer" . . . . . . . . . . . . . . . . . . 4.13
"Change of Control Payment" . . . . . . . . . . . . . . . . . 4.13
"Change of Control Payment Date" . . . . . . . . . . . . . . . 4.13
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . 8.3
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"DTC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . 6.1
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . 4.10
"Global Note Holder" . . . . . . . . . . . . . . . . . . . . . 2.1
"incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . 8.2
"Notice of Default" . . . . . . . . . . . . . . . . . . . . . 6.1
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . 3.9
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . 3.9
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Payment Blockage Notice" . . . . . . . . . . . . . . . . . . 10.4
"Payment Default" . . . . . . . . . . . . . . . . . . . . . . 6.1
"Permitted Indebtedness" . . . . . . . . . . . . . . . . . . . 4.9
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . 3.9
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . 4.7
"Senior Debt" . . . . . . . . . . . . . . . . . . . . . . . . 10.2
</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 Notes;
<PAGE> 36
28
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" with respect to the Notes means the Company and with
respect to the Guarantees means the Parent and any Subsidiary Guarantor and any
successor obligor upon the Notes and the Guarantees, respectively.
All other terms used in this indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by rule enacted by
the Commission under the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement of
successor sections or rules adopted by the Commission from time to
time.
<PAGE> 37
29
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Guarantees of the
Parent and the Subsidiary Guarantors, if any, shall be substantially in the
form of Exhibit C hereto, the terms of which are incorporated in and made part
of this indenture. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Note shall be dated the
date of its issuance and shall show the date of its authentication. The Notes
will be fully registered as to principal and interest in minimum denominations
of $1,000 and integral multiples of $1,000 in excess thereof.
The Notes offered and sold may be issued initially in the form
of one or more fully registered Global Notes, with, or on behalf of, The
Depository Trust Company and registered in the name of Cede & Co., as nominee
of the Depository (such nominee being referred to herein as the "Global Note
Holder"), or will remain in the custody of the Registrar pursuant to the Fast
Balance Certificate Agreement between the Depository and the Registrar and
shall bear the legend set forth as Exhibit B. Except as set forth in Section
2.6, the Global Notes may be transferred, in whole and not in part, only to
another nominee of the Depository or to a successor of the Depository or its
nominee.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, Parent, any Subsidiary Guarantor and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions
and (as to the Trustee, to the extent such terms and provisions pertain to the
Trustee) to be bound thereby.
Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the legend on Exhibit B). Notes issued
in certificated form shall be substantially in the form of Exhibit A attached
hereto (but without including the legend on Exhibit B). Each Global Note shall
represent such of the outstanding Notes as shall be
<PAGE> 38
30
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee or the Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6 hereof.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers, authenticate Notes for original issue up to the aggregate
principal amount of $325,000,000. The aggregate principal amount of Notes
outstanding at any time may not exceed $325,000,000, except as provided in
Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.
<PAGE> 39
31
Section 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York where (i) Notes may be presented for
registration of transfer or for exchange ("Registrar") and (ii) Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company shall notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries
may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC")to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent, including the
Trustee (who shall be deemed to have agreed by its execution of this
Indenture), to agree in writing that the Paying Agent shall hold in trust for
the benefit of Holders or the Trustee (unless the Paying Agent is the Trustee,
in which case it shall hold in trust for the Holders) all money held by the
Paying Agent for the payment of principal, premium, if any, or interest, on the
Notes, and shall notify the Trustee of any default by the Company, the Parent
or any Subsidiary Guarantor in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it
to the Trustee. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company, the Parent or a Subsidiary) shall have no
further liability for the
<PAGE> 40
32
money. If the Company, the Parent or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Parent or a Subsidiary
Guarantor, the Trustee shall serve as sole Paying Agent for the Notes.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company, the Parent and/or the
Subsidiary Guarantors shall furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Notes and the
Company, the Parent and the Subsidiary Guarantors shall otherwise comply with
TIA Section 312(a).
Section 2.6. Transfer and Exchange.
Subject to the provisions of Section 2.13, when Notes are
presented to the Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Notes surrendered for transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer duly executed
by the Holder thereof (or his attorney duly authorized in writing) in form
satisfactory to the Company and to the Registrar. In order to permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's written request. No
service charge shall be made for any registration of transfer or exchange or of
redemption, but the Company may, by notice to the Trustee, require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or other
governmental charge payable upon exchanges or transfers pursuant to Sections
2.2, 2.3, 3.6, 3.7(b) or 3.9). The Registrar shall not be required to register
the
<PAGE> 41
33
transfer of or exchange of any Note (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Notes and ending at the close of business on the day of such mailing and (ii)
selected for redemption in whole or in part pursuant to Article Three, except
the unredeemed portion of any Note being redeemed in part.
Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes, and
neither the Trustee, any Agent nor the Company shall be affected by notice to
the contrary.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the
Trustee, upon the receipt of a written authentication order of the Company
signed by two Officers of the Company, shall authenticate a replacement Note if
the Trustee's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may
suffer if a Note is replaced. The Company and the Trustee may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.9 hereof, a
<PAGE> 42
34
Note does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue. Notes will also cease to be outstanding for certain purposes hereunder
as provided in Article 8 hereof.
If the Paying Agent (other than the Company, the Parent, a
Subsidiary or an Affiliate of any thereof) holds, on a redemption date or
maturity date, money sufficient to pay Notes payable on that date, then on and
after that date such Notes shall be deemed to be no longer outstanding and
shall cease to accrue interest.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, the Parent, any Subsidiary Guarantor, or by any Affiliate of
the Company, the Parent or any Subsidiary Guarantor, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee actually knows are registered in the names of the
Company, the Parent, any Subsidiary Guarantor or any of their Affiliates or are
certified as such by the Company in an Officer's Certificate delivered to the
Trustee shall be so disregarded.
When the Company, the Parent, any Subsidiary Guarantor or any
of their Affiliates repurchases or otherwise acquires Notes, the Company shall
notify the Trustee, in writing, of the aggregate principal amount of such Notes
so repurchased or otherwise acquired. The Trustee may require an Officer's
Certificate listing Notes owned by the Company, the Parent, any Subsidiary
Guarantor or any of their Affiliates.
<PAGE> 43
35
Section 2.10. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.1 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the
<PAGE> 44
36
special record date, the related payment date and the amount of such interest
to be paid.
Section 2.13. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in the
name of Cede & Co., as the nominee of The Depository Trust Company, (ii) be
delivered to the Registrar as custodian for such Depository and (iii) bear
legends as set forth in Exhibit B.
(b) Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Registrar or the Trustee as
its custodian, or under the Global Note, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Note 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 Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(c) Transfers of Global Notes shall be limited to transfers
in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Notes may be
transferred or exchanged for Certificated Notes in accordance with the rules
and procedures of the Depository. In addition, Certificated Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in Global Notes if (i) the Company notifies the Registrar that the Depository
is unwilling or unable to continue as Depository for any Global Note and a
successor Depository is not appointed by the Company within 90 days of such
notice or (ii) the Company, at its option, notifies the Registrar in writing
that it elects to cause the issuance of Notes in definitive form under the
Indenture or (iii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue Certificated
Notes.
(d) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Note to
<PAGE> 45
37
beneficial owners pursuant to paragraph (c), the Registrar shall (if one or
more Certificated Notes are to be issued) reflect on its books and records the
date and a decrease in the principal amount of the Global Note in an amount
equal to the principal amount of the beneficial interest in the Global Note to
be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Certificated Notes of like tenor and
amount.
(e) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to the second sentence of paragraph (c),
the Global Notes shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depository in exchange
for its beneficial interest in the Global Notes, an equal aggregate principal
amount of Certificated Notes of authorized denominations.
(f) The Holder of any Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, then it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date,
an Officers' Certificate setting forth (i) the paragraph of the Notes and/or
Section of this Indenture pursuant to which the redemption shall occur, (ii)
the redemption date, (iii) the principal amount of Notes to be redeemed and
(iv) the redemption price.
Section 3.2. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption shall be made by the
<PAGE> 46
38
Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed, or, if the Notes
are not so listed, on a pro rata basis, by lot or by such method as the Trustee
shall deem fair and appropriate; provided that no Notes of $1,000 or less shall
be redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof shall be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
unless the Company defaults in payment of the redemption price, interest ceases
to accrue on Notes or portions of them called for redemption. Except as
provided in this Section 3.2, provisions of this Indenture that apply to Notes
called for redemption also apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
Subject to the provisions of Section 3.9 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder of Notes to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
<PAGE> 47
39
(c) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption cease to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or printed on
the Notes.
At the Company's request and expense, the Trustee shall give
the notice of redemption in the Company's name; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.3 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.5. Deposit of Redemption Price.
On or prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying
<PAGE> 48
40
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay
the redemption price of and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.1 hereof.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the receipt of a written authentication order of the
Company signed by two Officers of the Company, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in clause (b) of this Section
3.7, the Company shall not have the option to redeem the Notes pursuant to this
Section 3.7 prior to July 1, 2001. From and after July 1, 2001, the Company
shall have the option to redeem the Notes, in whole or in part, at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 1 of each of
the years indicated below:
<PAGE> 49
41
<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
---- ----------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . 105.313%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 103.542%
2003 . . . . . . . . . . . . . . . . . . . . . . . . 101.771%
2004 and thereafter . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
Section 3.7, at any time prior to July 1, 1999, the Company may, at its option,
on any one or more occasions, redeem up to $108,333,000 in aggregate principal
amount of Notes at a redemption price of 110% of the principal amount thereof,
plus accrued and unpaid interest thereon to the redemption date with the net
proceeds of sales of Equity Interests (other than Disqualified Stock) in the
Company or Parent; provided that at least $216,667,000 in aggregate principal
amount of Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 60
days of the date after the closing of the related sale of such Equity
Interests.
(c) Any redemption pursuant to this Section 3.7 shall be
made pursuant to the provisions of Sections 3.1 through 3.6 hereof.
Section 3.8. Mandatory Redemption.
Except as set forth under Sections 4.10 and 4.13 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Section 3.9. Offer to Purchase By Application of Excess
Proceeds.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an offer to all Holders of Notes and, to
the extent required by the terms thereof, to all holders or lenders of other
Pari Passu Indebtedness, to purchase
<PAGE> 50
42
Notes and any such Pari Passu Indebtedness (an "Asset Sale Offer"), it shall
follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof, giving effect to any
related offer for Pari Passu Indebtedness pursuant to Section 4.10, (the "Offer
Amount") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to the Asset Sale Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer. The
Asset Sale Offer shall be made to all Holders. The notice, which shall govern
the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to
this Section 3.9 and Section 4.10 hereof and the length of time the
Asset Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment
shall continue to accrue interest;
(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Asset
<PAGE> 51
43
Sale Offer shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may only elect to have all of such
Note purchased and may not elect to have only a portion of such Note
purchased;
(f) that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the
Note, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Note completed, or transfer by book-entry transfer,
to the Company, a Depository, if appointed by the Company, or a Paying
Agent at the address specified in the notice at least three Business
Days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their
election if the Company, the Depository or the Paying Agent, as the
case may be, receives, not later than the expiration of the Offer
Period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased) in the manner provided in Section 4.10; and
(i) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall
<PAGE> 52
44
deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with
the terms of this Section 3.9. The Company, the Depository or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a
new Note, and the Trustee, upon receipt of a written authentication order of
the Company signed by two Officers of the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1 through 3.6 hereof.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Parent,
the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the
due date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all such amounts then due.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the then applicable interest rate
on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of
<PAGE> 53
45
interest (without regard to any applicable grace period) at the same rate to
the extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where principal,
premium, if any, and interest on the Notes will be paid and where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the following office of an
Affiliate of the Trustee as one such office or agency of the Company in
accordance with Section 2.3: Harris Trust Company of New York, 77 Water
Street, New York, New York 10005.
Section 4.3. Reports.
(a) To the extent permitted by the Exchange Act, the
Company shall file with the Commission and provide, within 15 days after such
filing, the Trustee and Holders and prospective Holders (upon request) with the
annual reports and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act. In the event that the
<PAGE> 54
46
Company is not permitted to file such reports, documents and information with
the Commission, the Company will provide substantially similar information to
the Trustees, the Holders and prospective Holders (upon request) as if the
Company were subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act. The Company shall at all times comply with TIA Section
314(a)
(b) The Company shall be deemed to have satisfied the
provisions of Section 4.3(a) if the Parent files and provides reports,
documents and information of the types otherwise so required, in each case
within the applicable time periods, and the Company is not required to file
such reports, documents and information separately under the applicable rules
and regulations of the Commission (after giving effect to any exemptive relief)
because of the filings by the Parent.
Section 4.4. Compliance Certificate.
(a) Each of the Parent and the Company shall deliver to
the Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Parent and its
Subsidiaries and the Company and its Subsidiaries, as the case may be, during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Parent or the Company, as the
case may be, 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 his or her knowledge the Parent or the
Company, as the case may be, 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 of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Parent or the Company, as the case may be, is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, premium, if any, or interest on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Parent or the Company, as the case may be, is taking or
proposes to take with respect thereto. As of the date hereof,
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47
each of the Parent's and the Company's fiscal year ends on December 31 of each
calendar year. In the event the Company changes its fiscal year, it shall
promptly notify the Trustee of such change.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
fiscal year-end financial statements delivered pursuant to Section 4.3(a) above
shall be accompanied by a written statement of the Parent's or the Company's,
as the case may be, independent public accountants (who shall be a firm of
established national reputation) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, within five Business Days of any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.5. Taxes.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
Section 4.6. Stay, Extension and Usury Laws.
Each of the Company, the Parent and the Subsidiary Guarantors
covenants (to the extent that it may lawfully do so) that it shall 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 wherever enacted, now or at
any time
<PAGE> 56
48
hereafter in force, that may affect the covenants or the performance of this
Indenture; and each of the Company, the Parent and the Subsidiary Guarantors
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 4.7. Restricted Payments.
The Company shall not and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
Equity Interests (including, without limitation, any payment to holders of the
Company's Equity Interests in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's
Equity Interests in their capacity as such (other than dividends or
distributions (a) payable in Equity Interests (other than Disqualified Stock)
of the Company, (b) to the extent necessary to permit the Parent to pay
overhead, tax liabilities, legal, accounting or other professional fees and
expenses and any fees and expenses associated with registration statements
filed with the Commission and subsequent ongoing public reporting requirements,
in each case to the extent actually incurred by the Parent in connection with
acting as a holding company for the Company and its Subsidiaries or (c) to the
extent necessary to permit the Parent to perform its obligations to pay fees,
expenses and indemnification under Sections 5.4, 5.5, 5.15, 8.3, 9.2 and 9.3 of
the Stock Purchase Agreement; (ii) purchase, redeem, defease or otherwise
acquire or retire for value any Equity Interests of the Company or any direct
or indirect parent or other Affiliate of the Company that is not a Wholly Owned
Restricted Subsidiary of the Company; (iii) make any principal payment on, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except any scheduled principal
payment or sinking fund payment or at final maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
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49
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.9 hereof; and
(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date of this Indenture (excluding
Restricted Payments permitted by clauses (2), (3), (5) and (6) of the
next succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first month after the
date of this Indenture to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company
since the date of this Indenture (A) as capital contributions to the
Company (other than from a Subsidiary of the Company or from the
Rights Offering or the Standby Commitment) and (B) from the issue,
sale or exercise since the date of this Indenture of Equity Interests
in the Company or the Parent or of debt securities of the Company or
the Parent that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of this Indenture is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the
net proceeds of such sale, liquidation or repayment and (B) the
initial amount of such Restricted Investment, plus (iv) the amount
equal to the net reduction in Investments in Unrestricted Subsidiaries
resulting from (A) payments of
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50
dividends or interest or other transfers of assets to the Company or
any Restricted Subsidiary from Unrestricted Subsidiaries, (B) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
or (C) the receipt of proceeds by the Company or any Restricted
Subsidiary from the sale or other disposition of any portion of any
Investment in an Unrestricted Subsidiary not to exceed the amount of
Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included
in the calculation of the amount of Restricted Payments.
The foregoing provisions shall not prohibit (1) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of
this Indenture and such dividend (a) shall be deemed paid on the date of such
date of declaration for purposes of clauses (a) and (b) in the next preceding
paragraph and (b) shall be included in the determination of Restricted Payments
pursuant to clause (c) of the preceding paragraph only when declared and not
when paid; (2) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Subsidiary of the Company)
of other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of the preceding paragraph; (3) the defeasance,
redemption or repurchase of Subordinated Indebtedness with the net cash
proceeds from an incurrence of subordinated Permitted Refinancing Debt or the
substantially concurrent sale (other than to a Subsidiary of the Company) of
Equity Interests of the Company or the Parent (other than Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of the preceding paragraph; (4) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company, the Parent or any Subsidiary of the Company (x) held by any of
the Company's (or any of its Subsidiaries') employees pursuant to any
management equity subscription agreement, stock option agreement or any other
agreement with such employee, or (y) in connection with a
<PAGE> 59
51
tender offer to eliminate odd lots of such Equity Interests; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $2.0 million in any fiscal year (plus the
aggregate cash proceeds received by the Company during such fiscal year from
any issuance of Equity Interests by the Company or the Parent to any Permitted
Investors or employee of the Company or any of its Subsidiaries); and provided
further that no Default or Event of Default shall have occurred and be
continuing immediately after such transaction; (5) repurchases of Equity
Interests deemed to occur upon exercise of stock options if such Equity
Interests represent a portion of the exercise price of such options; (6) the
defeasance, redemption, repurchase or repayment of the Existing Debt if any of
the Existing Debt is subordinated to the Notes.
The amount of all Restricted Payments (other than cash) shall
be the fair market value (as determined in good faith by a resolution of the
Board of Directors of the Company set forth in an Officers' Certificate
delivered to the Trustee, which determination shall be conclusive evidence of
compliance with this provision) on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Company or the applicable Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later
than ten days after the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.7 were computed.
In computing Consolidated Net Income for purposes of this
Section 4.7, (i) the Company shall use audited financial statements for the
portion 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 on 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
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52
notwithstanding any subsequent adjustments made in good faith to the Company's
financial statements affecting Consolidated Net Income of the Company for any
period.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated shall be deemed to be Restricted Payments at
the time of such designation and shall reduce the amount available for
Restricted Payments under clause (c) of the first paragraph of this covenant
and/or the applicable provisions of the second paragraph of this covenant, as
appropriate. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation shall only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Section 4.8. Dividend and Other Payment Restrictions
Affecting Subsidiaries.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(x) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (y) pay any indebtedness owed by it to the Company
or any of its Restricted Subsidiaries, (ii) make loans or advances to the
Company or any of its Restricted Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
the Credit Agreement as in effect as of the date of this Indenture, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof or any other Credit Facility,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements, refinancings or other Credit
Facilities
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53
are no more restrictive with respect to such dividend and other payment
restrictions than those contained in the Credit Agreement as in effect on the
date of this Indenture, (b) this Indenture and the Discount Notes Indenture and
the Notes and the Discount Notes, (c) applicable law, (d) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except, in the case of Indebtedness, to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person and its Subsidiaries, or the
property or assets of the Person and its Subsidiaries, so acquired, provided
that, in the case of Indebtedness, such Indebtedness was permitted by the terms
of this Indenture to be incurred, (e) by reason of customary non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices, (f) capital leases and purchase money
obligations for property leased or acquired in the ordinary course of business
that impose restrictions of the nature described in clause (iii) above on the
property so leased or acquired, (g) restrictions in the form of Liens which are
not prohibited pursuant to Section 4.12 and which are customary limitations on
the transfer of collateral and customary restrictions contained in stock
purchase agreements or asset sales agreements limiting the transfer of assets
pending the closing of the sale or (h) Permitted Refinancing Debt, provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Debt are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced.
Section 4.9. Incurrence of Indebtedness and Issuance of
Disqualified Stock.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and the Company shall not and shall not
permit any of its Restricted Subsidiaries to, issue any Disqualified Stock;
provided, however, subject to the limitations set forth below, the Company and
the Subsidiary Guarantors may incur Indebtedness
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54
(including Acquired Debt) or issue shares of Disqualified Stock if:
(i) the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.5 to 1, determined on a pro
forma basis as set forth in the definition of Fixed Charge Coverage
Ratio; and
(ii) no Default or Event of Default shall have occurred
and be continuing at the time such additional Indebtedness is incurred
or such Disqualified Stock is issued or would occur as a consequence
of the incurrence of the additional Indebtedness or the issuance of
the Disqualified Stock.
Notwithstanding the foregoing, this Indenture shall not
prohibit any of the following (collectively, "Permitted Indebtedness"): (a)
the Indebtedness evidenced by the Notes and the Discount Notes; (b) the
incurrence by the Company of Indebtedness pursuant to Credit Facilities, so
long as the aggregate principal amount of all Indebtedness outstanding under
all Credit Facilities does not, at any one time, exceed the greater of (1)
$525.0 million or (2) the Borrowing Base; (c) the guarantee by any Restricted
Subsidiary (including any Subsidiary Guarantor) of any Indebtedness that is
permitted by this Indenture to be incurred by the Company; provided that such
Subsidiary, if not a Subsidiary Guarantor, becomes a Subsidiary Guarantor
hereunder; (d) all Indebtedness of the Company and its Restricted Subsidiaries
in existence as of the date of the Indenture after giving effect to the
Recapitalization and the application of the proceeds thereof; (e) intercompany
Indebtedness between or among the Company, the Parent and any of the Company's
Restricted Subsidiaries; provided, however, that (i) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinate to the
payment in full of all Obligations with respect to the Notes and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company, the Parent or a
Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is
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55
not the Company, the Parent or a Restricted Subsidiary shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be; (f) Indebtedness of the Company or
any Restricted Subsidiary related to any Permitted Marketing Transaction
including, without limitation, under letters of credit or guarantees of
Indebtedness or other obligations of a party to a Permitted Marketing
Transaction, provided, that in the event that the Company or any Restricted
Subsidiary guarantees such Indebtedness or other obligations of another party,
then either (1) the Person who is obligated to purchase hydrocarbons from such
party has an investment grade credit rating from S&P or Moody's, or in lieu
thereof, a Person guaranteeing the payment of such obligated Person has an
investment grade credit rating from S&P or Moody's or (2) such Person posts, or
has posted for it, a letter of credit in favor of the Company or such
Subsidiary Guarantor with respect to all of such Person's obligations under
such contracts, (g) in addition to Indebtedness under any Credit Facility,
Indebtedness in connection with one or more standby letters of credit,
guarantees, performance bonds or other reimbursement obligations, in each case,
issued in the ordinary course of business and not in connection with the
borrowing of money or the obtaining of advances or credit (other than advances
or credit on open account, includible in current liabilities, for goods and
services in the ordinary course of business and on terms and conditions which
are customary in the Oil and Gas Business, and other than the extension of
credit represented by such letter of credit guarantee or performance bond
itself), not to exceed in the aggregate at any given time outstanding 5.0% of
Total Assets; (h) Indebtedness under Interest Rate Hedging Agreements entered
into for the purpose of limiting interest rate risks, provided that the
obligations under such agreements are related to payment obligations on
Indebtedness otherwise permitted by the terms of this covenant and that the
aggregate notional principal amount of such agreements does not exceed 105% of
the principal amount of the Indebtedness to which such agreements relate; (i)
Indebtedness under Oil and Gas Hedging Contracts, provided that such contracts
were entered into in the ordinary course of business for the purpose of
limiting risks that arise in the ordinary course of business of the Company and
its Subsidiaries; (j) the incurrence by the Company and Subsidiary Guarantors
of Indebtedness not otherwise permitted to be incurred pursuant to this
paragraph, provided that the aggregate principal amount (or accreted value, as
applicable) of
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56
all Indebtedness incurred pursuant to this clause (j), together with all
Permitted Refinancing Debt incurred pursuant to clause (k) of this paragraph in
respect of Indebtedness previously incurred pursuant to this clause (j), does
not exceed $25.0 million at any one time outstanding; (k) Permitted Refinancing
Debt incurred in exchange for, or the net proceeds of which are used to
refinance, extend, renew, replace, defease or refund, Indebtedness that was
permitted by this Indenture to be incurred (including Indebtedness previously
incurred pursuant to this clause (k)); or (l) production imbalances arising in
the ordinary course of business and consistent with past practices.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries (other than MEV) to, engage in an Asset Sale unless (i)
the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by a resolution of the Board of Directors of
the Company set forth in an Officers' Certificate delivered to the Trustee,
which determination shall be conclusive evidence of compliance with this
provision) of the assets or Equity Interests issued or sold or otherwise
disposed of and (ii) at least 80% of the consideration therefor received by the
Company or such Restricted Subsidiary (after deducting expenses associated with
such asset sale) is in the form of cash, Cash Equivalents, oil and gas
properties owned or held by another Person which are to be used in the Oil and
Gas Business of the Company or its Restricted Subsidiaries or any combination
thereof; provided that the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet or, with
respect to plugging and abandonment obligations and other similar liabilities,
in the notes thereto), of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability and (y) any Liquid
Securities received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash within 180 days after closing such Asset Sale, shall be deemed to
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57
be cash for purposes of this provision to the extent of the liabilities assumed
or cash received.
Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds, at its option, for one or
more of the following purposes: (a) to reduce Senior Debt of the Company and
its Subsidiaries, (b) to make Permitted Business Investments, (c) to acquire
controlling interests in other Oil and Gas Businesses to the extent such
Investments are not Permitted Business Investments, (d) to make capital
expenditures in respect of the Company's or its Restricted Subsidiaries' Oil
and Gas Business, and (e) to purchase assets that are used or useful in the Oil
and Gas Business. Pending the final application of any such Net Proceeds, the
Company may temporarily reduce Senior Debt of the Company and its Subsidiaries
that is revolving debt or otherwise invest such Net Proceeds in any manner that
is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
shall (after the expiration of the periods specified in this paragraph) be
deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall make an Asset Sale Offer to purchase the maximum
principal amount of Notes and any other Pari Passu Indebtedness to which the
Asset Sale Offer applies that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to, in the case of the Notes, 100% of
the principal amount thereof plus accrued and unpaid interest thereon to the
date of purchase or, in the case of any other Pari Passu Indebtedness, 100% of
the principal amount thereof (or with respect to discount Pari Passu
Indebtedness, the accreted value thereof) on the date of purchase, in each
case, in accordance with the procedures set forth in Section 3.9 hereof or the
agreements governing Pari Passu Indebtedness, as applicable. To the extent
that the aggregate amount (or accreted value, as the case may be) of Notes and
Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes and such proceeds will no longer be considered
"Excess Proceeds" for the purposes of this Section 4.10. If the sum of (i) the
aggregate principal amount of Notes surrendered by Holders thereof, and (ii)
the aggregate principal amount or accreted value, as the case may be, of other
Pari Passu
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58
Indebtedness surrendered by holders or lenders thereof, exceeds the amount of
Excess Proceeds, the Trustee and the trustee or other lender representatives
for the Pari Passu Indebtedness shall select the Notes and other Pari Passu
Indebtedness to be purchased on a pro rata basis, based on the aggregate
principal amount (or accreted value, as applicable) thereof surrendered in such
Asset Sale Offer.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any of
its Affiliates (each of the foregoing, an "Affiliate Transaction"), unless (i)
such Affiliate Transaction is on terms that are no less favorable to the
Company or such Subsidiary, as the case may be, than would be available in a
comparable transaction by the Company or such Subsidiary in arm's length
dealings with an unrelated third party or, in the event no comparable
transaction with an unaffiliated Person is available, on terms that are fair
from a financial point of view to the Company or such Subsidiary, as the case
may be, (ii) with respect to an Affiliate Transaction or series of related
Affiliate Transactions involving payments in excess of $1,000,000 in the
aggregate, the Company delivers an Officers' Certificate to the Trustee
certifying that such Affiliate Transaction complies with clause (i) above,
(iii) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving payments in excess of $5,000,000 but less than
$15,000,000 in the aggregate, the Company delivers an Officer's Certificate to
the Trustee certifying that (a)
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such Affiliate Transaction or series of related Affiliate Transactions complies
with clause (i) above and (b) such Affiliate Transaction or series of related
Affiliate Transactions has been approved by a resolution adopted by a majority
of the members of the Board of Directors of the Company who are disinterested
with respect to such Affiliate Transaction or series of related Affiliate
Transactions (which resolution shall be conclusive evidence of compliance with
this provision) and (iv) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving payments of $15,000,000 or more in the
aggregate, (A) the Company delivers an Officer's Certificate certifying that
(a) such Affiliate Transaction or series of related Affiliate Transactions
complies with clause (i) above and (b) such Affiliate Transaction has been
approved by a resolution adopted by a majority of the members of the Board of
Directors of the Company who are disinterested with respect to such Affiliate
Transaction and (B) the Company shall have received a written opinion of a firm
of investment bankers nationally recognized in the United States that such
Affiliate Transaction or series of related Affiliate Transactions is fair from
a financial point of view to the Company or such Subsidiary (which resolution
and fairness opinion shall be conclusive evidence of compliance with this
provision), provided, however, that the foregoing shall not apply to (1) the
Recapitalization, the payment of fees, expenses and indemnifications under
Sections 5.4, 5.5, 5.15, 8.3, 9.2 and 9.3 of the Stock Purchase Agreement or
any transaction effected pursuant to the terms of the Series A Preferred Stock
or Series B Preferred Stock as in effect on the date of this Indenture, (2)
Permitted Investments and Restricted Payments that are permitted by Section 4.7
hereof, (3) loans or advances to officers, directors and employees of the
Company or any Subsidiary made in the ordinary course of business and
consistent with past practices of the Company and its Subsidiaries not to
exceed in the aggregate at any one time outstanding $2.5 million, (4) the
payment of reasonable and customary regular fees to directors of the Company or
any of its Subsidiaries who are not employees of the Company or any Subsidiary,
(5) any indemnification or similar payment made to any director or officer (A)
in accordance with the corporate charter or by-laws of the Company or any
Subsidiary, (B) under any agreement or (C) under applicable law, (6)
obligations of the Company or any Subsidiary under employee compensation and
other benefit arrangements entered into or provided for in the ordinary course
of business, (7) any transaction relating to the disposition of the Company's
Investment in MEV or (8) any transaction between or among the Company, the
Parent and its Restricted Subsidiaries.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien (other than Permitted Liens) upon any of its property
or assets, now owned or hereafter acquired securing Indebtedness (other than
Senior Debt), unless prior to or contemporaneously therewith the Notes
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are directly secured equally and ratably, provided that (i) if such secured
Indebtedness is Pari Passu Indebtedness, the Lien securing such Pari Passu
Indebtedness shall be subordinate and junior to, or pari passu with, the Lien
securing the Notes and (ii) if such secured Indebtedness is Subordinated
Indebtedness, the Lien securing such Subordinated Indebtedness shall be
subordinate and junior to the Lien securing the Notes at least to the same
extent as such Subordinated Indebtedness is subordinated to the Notes.
Section 4.13. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest if any, thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder stating: (1) and describing the
transaction or transactions that constitute the Change of Control; (2) that the
Change of Control Offer is being made pursuant to this Section 4.13 and that
all Notes tendered shall be accepted for payment; (3) the purchase price and
the purchase date described below (the "Change of Control Payment Date"); (4)
that any Note not tendered shall continue to accrue interest, if any; (5) that,
unless the Company defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest, if any, after the Change of Control Payment Date; (6)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer shall be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date; (7) that Holders shall be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement
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that such Holder is withdrawing his election to have the Notes purchased; and
(8) that Holders whose Notes are being purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof. The Company, the Parent and each
Subsidiary Guarantor shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable to such party in connection
with the repurchase of the Notes as a result of a Change of Control.
(b) On a Business Day that is no earlier than 30 days nor
later than 60 days from the date that the Company mails or causes to be mailed
notice of the Change of Control to the Holders (the "Change of Control Payment
Date"), the Company shall, to the extent lawful, (i) accept for payment all
Notes or portions thereof properly tendered pursuant to the Change of Control
Offer, (ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered and
(iii) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount
of Notes or portions thereof being purchased by the Company. The Paying Agent
shall promptly mail to each Holder of Notes so tendered the Change of Control
Payment for such Notes, and the Trustee shall promptly authenticate and mail
(or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
The Change of Control provisions described above shall be
applicable whether or not any other provisions of this Indenture are
applicable.
The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section
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4.13 and purchases all Notes (or portions thereof) validly tendered and not
withdrawn under such Change of Control Offer.
Section 4.14. Additional Subsidiary Guarantees.
In the event that the Company or any of its Restricted
Subsidiaries shall acquire or create a Material Restricted Subsidiary after the
date of this Indenture, such newly acquired or created Material Restricted
Subsidiary shall be deemed to make the guarantee set forth in Section 11.1 and
the Company shall cause such Material Restricted Subsidiary to evidence such
guarantee in the manner set forth in Section 11.2. Notwithstanding the
foregoing, this Section 4.14 shall not apply to any newly acquired or created
Subsidiary that has been properly designated as an Unrestricted Subsidiary in
accordance with this Indenture for so long as it continues to constitute an
Unrestricted Subsidiary.
Section 4.15. Corporate Existence.
Subject to Article 5 hereof, the Company, the Parent and the
Restricted Subsidiaries shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its corporate existence, and the
corporate, partnership or other existence of each of the Restricted
Subsidiaries, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Company or any such
Restricted Subsidiary and (ii) the rights (charter, partnership agreement and
statutory), licenses and franchises of the Company, the Parent and the
Restricted Subsidiaries; provided, however, that the Company, the Parent and
the Restricted Subsidiaries shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any
of the Restricted Subsidiaries, if the Board of Directors of the relevant
Person shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and the Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.9 hereof, (i) the
Company shall not incur, create, issue, assume, guarantee
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or otherwise become liable for any Indebtedness that is subordinate or junior
in right of payment to any Senior Debt of the Company and senior in any respect
in right of payment to the Notes and (ii) the Parent and the Subsidiary
Guarantors shall not directly or indirectly incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate
or junior in right of payment to any guarantees issued in respect of Senior
Debt of the Company and senior in any respect in right of payment to the
Guarantees; provided, however, that the foregoing limitations shall not apply
to distinctions between categories of Indebtedness that exist by reason of any
Liens arising or created in respect of some but not all such Indebtedness.
Section 4.17. Business Activities.
The Company and the Parent shall not, and shall not permit any
Subsidiary to, engage in any material respect in any business other than the
Oil and Gas Business.
ARTICLE 5
SUCCESSORS
Section 5.1. Merger, Consolidation, or Sale of Substantially
All Assets.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to another Person,
and the Company may not permit any of its Restricted Subsidiaries to enter into
any such transaction or series of transactions if such transaction or series of
transactions would, in the aggregate, result in a sale, assignment, transfer,
lease, conveyance, or other disposition of all or substantially all of the
properties or assets of the Company to another Person, unless (i) the Company
is the surviving corporation of any such consolidation or merger or (a) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (the "Surviving Entity") is a
corporation organized or existing under the laws of the United States, any
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state thereof or the District of Columbia and (b) such Surviving Entity assumes
all the obligations of the Company under the Notes and the Indenture pursuant
to a supplemented indenture in a form reasonably satisfactory to the Trustee;
(ii) immediately before and after giving effect to such transaction no Default
or Event of Default exists; (iii) immediately after giving effect to such
transaction on a pro forma basis (and treating any Indebtedness not previously
an obligation of the Company or any Subsidiary Guarantor which becomes the
obligation of the Company or any Subsidiary Guarantor as a result of such
transaction as having been incurred at the time of such transaction), the
Consolidated Net Worth of the Company or the Surviving Entity (if the Company
is not the continuing obligor under this Indenture) is equal to or greater than
the Consolidated Net Worth of the Company immediately prior to such transaction
and (iv) except in the case of a merger of the Company with or into a Wholly
Owned Restricted Subsidiary of the Company, the Company or Surviving Entity (if
the Company is not the continuing obligor under the Indenture) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four- quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the test set forth in the first paragraph of Section 4.9 hereof.
Notwithstanding the foregoing clauses (iii) and (iv), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating in another
jurisdiction.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.1 hereof, the Surviving
Entity shall succeed to, and be substituted for (so that from and after the
date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the Surviving Entity and not to the Company), 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; provided,
however, that the predecessor Company shall not be relieved from
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the obligation to pay the principal of and interest on the Notes except in the
case of a sale of all of the Company's assets that meets the requirements of
Section 5.1 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest, if
any, on the Notes when the same becomes due and payable and the
Default continues for a period of 30 days, whether or not such payment
is prohibited by the provisions of Article 10 hereof;
(2) the Company defaults in the payment of the principal
of or premium, if any, on the Notes or the Discount Notes when the
same become due and payable at maturity, upon redemption or otherwise,
whether or not such payment is prohibited by the provisions of Article
10 hereof or of Article 10 of the Discount Note Indenture, as the case
may be;
(3) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or
performed pursuant to Article 5 hereof;
(4) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or
performed pursuant to Sections 4.3, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.16 and 4.17 hereof and the Default continues for the
period and after the notice specified below;
(5) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Notes or this
Indenture and the Default continues for consecutive days after the
notice specified below;
(6) except as permitted herein, any Guarantee shall be held
in any judicial proceeding to be unenforceable or
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invalid or shall cease for any reason to be in full force and effect
or the Parent or a Subsidiary Guarantor, or any Person acting on
behalf of the Parent or a Subsidiary Guarantor, shall deny or
disaffirm the Parent's or such Subsidiary Guarantor's obligation under
its Guarantee;
(7) the Parent fails to issue Preferred Stock for gross
proceeds in the amount of $132 million pursuant to the Rights Offering
and Standby Commitment or either thereof within 90 days following the
original date of issuance of the Notes;
(8) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any Subsidiary Guarantor, whether such Indebtedness now
exists or shall be created hereafter, which default (a) is caused by a
failure to pay such Indebtedness prior to the expiration of the grace
period after final maturity (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its final maturity and,
in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which
there is then existing a Payment Default or the maturity of which has
been so accelerated, aggregates $10.0 million or more; provided, that
if any such default is cured or waived or any such acceleration
rescinded, or such Indebtedness is repaid, within a period of 10 days
from the continuation of such default beyond the applicable grace
period or the occurrence of such acceleration, as the case may be,
such Event of Default under the Indenture and any consequential
acceleration of the Notes shall be automatically rescinded;
(9) a final judgment or order or final judgments or
orders are rendered against the Company or any Restricted Subsidiary
that are unsatisfied and that require the payment of money, either
individually or in an aggregate amount, that is more than $10.0
million over the coverage under applicable insurance policies and
either (a) a creditor has commenced an enforcement proceeding upon
such judgment (other than a judgment that is stayed by reason of
pending appeal or otherwise) or (b) a 60-day period transpired during
which a stay of such judgment, order, judgments or
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orders (by reason of pending appeal or otherwise) was not in effect;
(10) the Company, the Parent or any Subsidiary Guarantor
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding,
(b) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(c) consents to the appointment of a Custodian of
it or for all or substantially all of its property or
(d) makes a general assignment for the benefit of
its creditors;
(11) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company, the Parent
or any Subsidiary Guarantor, in an involuntary case or
proceeding,
(b) appoints a Custodian of the Company, the
Parent or any Subsidiary Guarantor, or for all or
substantially all of the property of the Company, the Parent
or any Subsidiary Guarantor, or
(c) orders the liquidation of the Company, the
Parent or any Subsidiary Guarantor,
and in each case the order or decree remains unstayed and in effect
for 60 consecutive days.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
A Default under clause (4) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the then outstanding Notes notify the Company and the
Trustee, of the Default and the
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Company does not cure the Default within 30 consecutive days after receipt of
the notice. A Default under clause (5) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the then outstanding Notes notify the Company and the
Trustee, of the Default and the Company does not cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in clauses (10) and (11) of Section 6.1 hereof) relating to the
Company, the Parent or any Subsidiary Guarantor occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by written notice to the Company and the
Trustee, may declare the unpaid principal amount of and any accrued and unpaid
interest on all the Notes to be due and payable immediately. If payment of the
Notes is accelerated because of an Event of Default, the Company or the Trustee
shall notify the holders of Designated Senior Debt of such acceleration. Upon
such declaration the principal and interest shall be due and payable
immediately; provided, however, that so long as any Designated Senior Debt or
any commitment therefor is outstanding, any such notice or declaration shall
not become effective until the earlier of (a) five Business Days after such
notice is delivered to the representative for the Designated Senior Debt or (b)
the acceleration of any Designated Senior Debt and thereafter, payments on the
Notes pursuant to this Article 6 shall be made only to the extent permitted
pursuant to Article 10 herein. Notwithstanding the foregoing, if any Event of
Default specified in clause (10) or (11) of Section 6.1 hereof relating to the
Company, the Parent, or any Subsidiary Guarantor occurs, such an amount shall
ipso facto become and be immediately due and payable without any declaration or
other act or notice on the part of the Trustee or any Holder.
After a declaration of acceleration under this Indenture, but
before a judgment or decree for payment of principal, premium, if any, and
interest on the Notes due under this Article 6 has been obtained by the
Trustee, Holders of a majority in principal amount of the then outstanding
Notes by
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written notice to the Company and the Trustee may rescind an acceleration and
its consequences if (i) the Company, the Parent or any Subsidiary Guarantor has
paid or deposited with the Trustee a sum sufficient to pay (a) 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 and
(b) all overdue interest on the Notes, if any, (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction and
(iii) all existing Events of Default (except nonpayment of principal, premium,
if any, or interest that has become due solely because of the acceleration)
have been cured or waived.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium,
if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal
amount of the Notes then outstanding by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal
amount of the then outstanding Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been
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cured for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
Section 6.5. Control by Majority.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability it being understood that (subject to
Section 7.1) the Trustee shall have no duty to ascertain whether or not such
actions or forebearances are unduly prejudicial to such holders.
Section 6.6. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
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A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.7. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company, the Parent or
any Subsidiary Guarantor for the whole amount of principal of, premium, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and 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.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company, the Parent or any of the Subsidiary Guarantors (or any other
obligor upon the Notes), its creditors or its property and shall be entitled
and empowered to collect, receive and distribute any money or other property
payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments
to the
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Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.7 hereof out of the
estate in any such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding provided, however, that the Trustee may, on
behalf of the Holders, vote for the election of a trustee in bankruptcy or
similar official and may be a member of the creditors' committee.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall, subject to the provisions of Article 10, pay out the money in the
following order:
First: to the Trustee, its agents and attorneys for amounts
due under Sections 6.8 and 7.7 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and accrued interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for principal, premium, if any, and accrued interest, as the case may
be, respectively; and
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Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as 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 attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee
need perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
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(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any notices,
requests, statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under
this Indenture at the request of any Holders, unless such Holder shall have
furnished to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee
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need not be segregated from other funds except to the extent required by law.
Section 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company, the
Parent or any Subsidiary Guarantor shall be sufficient if signed by an Officer
of the Company, the Parent or such Subsidiary Guarantor.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have furnished to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
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(g) Except with respect to Sections 4.1 and 4.4 hereof,
the Trustee shall have no duty to inquire as to the performance of the
Company's and the Parent's covenants in Article 4 hereof. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of
Default except (i) any Event of Default occurring pursuant to Sections 4.1, 4.4
and 6.1(1) or (2) hereof or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual knowledge.
For the purposes of this clause (g) only, "actual knowledge" shall mean the
actual fact or statement of knowing, without any duty to make investigation
with regard thereto.
(h) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties hereunder.
(i) the Trustee shall not be bound to ascertain or inquire as
to the performance or observance of any covenants, conditions, or agreements on
the part of the Company, except as otherwise set forth herein, but the Trustee
may require of the Company full information and advice as to the performance of
the covenants, conditions and agreements contained herein and shall be entitled
in connection herewith to examine the books, records and premises of the
Company.
(j) The permissive rights of the Trustee to perform the acts
enumerated in this Indenture shall not be construed as a duty and the Trustee
shall not be answerable for other than its negligence or willful misconduct.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Parent, the Subsidiary Guarantors or any Affiliate of the Company or the Parent
with the same rights it would have if it were not Trustee. However, in the
event that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
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Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Notes, or
the Guarantees, it shall not be accountable for the Company's use of the
proceeds from the Notes or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, it shall not be responsible
for the use or application of any money received by any Paying Agent other than
the Trustee, and it shall not be responsible for any statement or recital
herein or in any certificate delivered pursuant hereto or any statement in the
Notes or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is actually known to the Trustee, the Trustee shall mail to Holders of
Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on, any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
Section 7.6. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15,
1997 following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2) and transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Parent and the Company and filed with
the Commission and each stock exchange on which the Notes are listed in
accordance with TIA Section 313(d). The
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Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.7. Compensation and Indemnity.
The Company, the Parent and the Subsidiary Guarantors shall
pay to the Trustee from time to time reasonable compensation for its acceptance
of this Indenture and services hereunder, including, without limitation,
extraordinary services such as default administration. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company, the Parent and the Subsidiary Guarantors shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation
for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company, the Parent and the Subsidiary Guarantors shall
indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company, the Parent and the
Subsidiary Guarantors (including this Section 7.7) and investigating or
defending itself against any claim (whether asserted by the Company, the
Parent, the Subsidiary Guarantors or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith. The Trustee shall notify
the Company, the Parent and the Subsidiary Guarantors promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company,
the Parent and the Subsidiary Guarantors shall not relieve the Company, the
Parent and the Subsidiary Guarantors of their obligations hereunder. The
Company, the Parent and the Subsidiary Guarantors shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company, the Parent and the Subsidiary Guarantors shall pay the
reasonable fees and expenses of such counsel. The Company, the Parent and the
Subsidiary Guarantors need not pay for any settlement made without their
consent, which consent shall not be unreasonably withheld.
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The obligations of the Company, the Parent and the Subsidiary
Guarantors under this Section 7.7 are joint and several and shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's, the Parent's and the Subsidiary
Guarantors' payment obligations in this Section, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee,
except that held in trust to pay principal and interest on particular Notes.
Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(10) or (11) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
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(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7
hereof shall continue for the benefit of the retiring Trustee.
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Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
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Section 8.2. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.2, the Company and the Parent and the
Subsidiary Guarantors shall, subject to the satisfaction of the conditions set
forth in Section 8.4 hereof, be deemed to have been discharged from their
obligations with respect to all outstanding Notes and the Guarantees thereof on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive payments in respect of the principal
of, premium, if any, and interest on such Notes when such payments are due from
the trust fund described in Section 8.4 hereof, and as more fully set forth in
such Section, (b) the Company's obligations with respect to such Notes under
Article 2 and Section 4.2 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8,
the Company may exercise its option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 hereof.
Section 8.3. Covenant Defeasance.
Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.3, the Company, the Parent and the
Subsidiary Guarantors shall, subject to the satisfaction of the conditions set
forth in Section 8.4 hereof, be released from their obligations under the
covenants contained in Sections 4.3, 4.5, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.16 and 4.17 hereof and in clause (iv) of Section 5.1 and the
covenants contained in the Guarantees with respect to the outstanding Notes on
and after the date the conditions set forth
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below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any compliance
certificate, 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 (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, 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 Section 6.1
hereof, but, except as specified above, the remainder of this Indenture, such
Notes and such Guarantees shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.1 hereof of the option applicable to this
Section 8.3 hereof, subject to the satisfaction of the conditions set forth in
Section 8.4 hereof, Sections 6.1(3) (but only with respect to the Company's
failure to observe or perform the covenants, conditions and agreements of the
Company under clause (iv) of Section 5.1), 6.1(4), 6.1(8) and 6.1(9) hereof
shall not constitute Events of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company or the Parent must irrevocably deposit
with the Trustee, in trust, for the benefit of the Holders of the Notes, cash
in United States dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium, if any, and interest, on the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may
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be, and the Company must specify whether the Notes are being defeased to
maturity or to a particular redemption date;
(b) in the case of an election under Section 8.2 hereof,
the Company or the Parent shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company or the Parent has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date of
this Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm 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 and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof,
the Company or the Parent shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee confirming
that the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit) or
insofar as Section 6.1(10) or 6.1(11) hereof is concerned, at any time in the
period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which the
Company, the Parent or any of their respective Subsidiaries is a party or by
which the Company, the Parent or any of their respective Subsidiaries is bound;
and
(f) the Company and the Parent shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel,
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each stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
Section 8.5. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company, the Parent and the Subsidiary Guarantors shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the cash or non-callable Government Securities deposited
pursuant to Section 8.4 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 Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
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Section 8.6. Repayment to Company.
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,
premium, if any, or interest on any Note and remaining unclaimed for two years
after such principal, premium, if any, or interest has become due and payable
shall be paid to the Company on its request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a 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 the New York Times and The Wall Street
Journal (national edition), 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 notification or publication, any unclaimed balance of such money
then remaining shall be repaid to the Company.
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the obligations of the Company, the Parent
and the Subsidiary Guarantors under this Indenture, the Notes and the
Guarantees shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3 hereof, as the case may be; provided, however,
that if the Company, the Parent or any Subsidiary Guarantor makes any payment
of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company, the Parent or such Subsidiary
Guarantor shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of Notes.
Notwithstanding Section 9.2 of this Indenture, the Company,
the Parent, the Subsidiary Guarantors and the Trustee may amend or supplement
this Indenture, the Notes or the Guarantees without the consent of any Holder
of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Note;
or
(e) to comply with requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company, the Parent and each of the Subsidiary
Guarantors, as the case may be, authorizing the execution of any such amended
or supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 7.2 hereof, the Trustee shall join with the Company, the
Parent and the Subsidiary Guarantors in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
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Section 9.2. With Consent of Holders of Notes.
Except as provided below in this Section 9.2, the Company, the
Parent, the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture, the Notes and the Guarantees with the consent of the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for the Notes), and, subject to Sections
6.4 and 6.7 hereof, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of, premium, if
any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Notes or the Guarantees may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for the Notes).
Notwithstanding the foregoing, without the consent of at least
66 2/3% in aggregate principal amount of the Notes then outstanding (including
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes), no waiver or amendment to this Indenture may make any change
in the provisions of Sections 3.9, 4.10 and 4.13 hereof that adversely affect
the rights of any Holder of Notes. In addition, any amendment to the
provisions of Article 10 of this Indenture shall require the consent of the
Holders of at least 66 2/3% in aggregate principal amount of the Notes then
outstanding if such amendment would adversely affect the rights of Holders of
Notes; provided that, no amendment may be made to the provisions of Article 10
of this Indenture that adversely affects the rights of any holder of Senior
Debt then outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to consent) consent to such change.
Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company, the Parent or any
Subsidiary Guarantor with any provision of this Indenture, the Notes or the
Guarantees. However, without the consent of each Holder affected, an
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amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of
the Notes (except as provided above with respect to Sections 3.9, 4.10
and 4.13 hereof);
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated
in the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of premium if any, or interest on the
Notes; or
(g) make any change in the foregoing amendment and waiver
provisions.
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company and each of the Subsidiary Guarantors, as
the case may be, authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt
by the Trustee of the documents described in Section 7.2 hereof, the Trustee
shall join with the Company, the Parent and the Subsidiary Guarantors in the
execution of such amended or supplemental indenture unless such amended or
supplemental indenture affects the Trustee's own rights, duties or immunities
under this indenture or otherwise, in which case the Trustee may
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in its discretion, but shall not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.
Section 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment, supplement or waiver.
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Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.6. Trustee to Sign Amendment, etc.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
None of the Company, the Parent or any Subsidiary Guarantor may sign an
amendment or supplemental Indenture until its respective Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.1) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that there has been compliance
with all conditions precedent.
ARTICLE 10
SUBORDINATION
Section 10.1. Agreement to Subordinate.
The Company, the Parent, and each Subsidiary Guarantor agree,
and each Holder by accepting a Note and the related Guarantee agrees, that (i)
the Indebtedness evidenced by (a) the Notes, including, but not limited to, the
payment of principal of, premium, if any, and interest on the Notes, and any
other payment Obligation of the Company in respect of the Notes is subordinated
in right of payment, to the extent and in the manner provided in this Article,
to the prior payment in full in cash of all Senior Debt of the Company (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed), and (b) the Guarantees and other payment Obligations in respect of
the Guarantees are subordinated in right of payment, to the extent and in the
manner provided in this Article, to the prior payment in full in cash of all
Senior Debt of, (x) in the case of a Guarantee made by the Parent, the Parent
and (y) in the case of a Guarantee made by a Subsidiary Guarantor, such
Subsidiary Guarantor and (ii) the subordination is for the benefit of the
Holders of Senior Debt.
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Section 10.2. Certain Definitions.
"Bankruptcy Law" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"Senior Debt" means (i) Indebtedness and other payment
Obligations of the Company or any Subsidiary of the Company under or in respect
of any Credit Facility or Indebtedness and other payment Obligations of the
Parent under any guarantee thereof, whether for principal, interest (including
interest accruing after the filing of a petition initiating any proceeding
pursuant to any Bankruptcy Law, whether or not the claim for such interest is
allowed as a claim in such proceeding), reimbursement obligations, fees,
commissions, expenses, indemnities or other amounts and (ii) any other
Indebtedness of the Company or any Subsidiary of the Company permitted under
the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes. Notwithstanding anything to the
contrary in the foregoing sentence, Senior Debt will not include (w) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates, or
(x) any Indebtedness that is incurred in violation of this Indenture (other
than Indebtedness under any Credit Agreement or any other Credit Facility that
is incurred on the basis of a representation by the Company to the applicable
lenders that it is permitted to incur such Indebtedness under this Indenture).
A "distribution" may consist of cash, securities or other
property, by set-off or otherwise.
All Designated Senior Debt now or hereafter existing and all
other Obligations relating thereto shall not be deemed to have been paid in
full unless the holders or owners thereof shall have received payment in full
in cash (or other form of payment consented to by the holders of such
Designated Senior Debt) with respect to such Designated Senior Debt and all
other Obligations with respect thereto.
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Section 10.3. Liquidation; Dissolution; Bankruptcy.
(a) Upon any payment or distribution of cash, property or
securities to creditors of the Company in a liquidation or dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, or in an assignment for the
benefit of creditors or any marshalling of the Company's assets and
liabilities:
(1) the holders of Senior Debt of the Company shall be
entitled to receive payment in full in cash of all Obligations in
respect of such Senior Debt (including interest after the commencement
of any such proceeding at the rate specified in the applicable Senior
Debt, whether or not a claim for such interest would be allowed in
such proceeding) before the Holders of Notes shall be entitled to
receive any payment or distribution with respect to the Notes and
related Obligations (except that Holders of Notes may receive payments
made from any defeasance trust created pursuant to Section 8.1 hereof
provided that the applicable deposit does not violate Article 8 or 10
of this Indenture); and
(2) until all Obligations with respect to Senior Debt of
the Company (as provided in subsection (1) above) are paid in full in
cash, any payment or distribution to which the Holders of Notes and
the related Guarantees would be entitled shall be made to holders of
Senior Debt of the Company (except that Holders of Notes and the
related Guarantees may receive payments made from any defeasance trust
created pursuant to Section 8.1 hereof provided that the applicable
deposit does not violate Article 8 or 10 of this Indenture).
(b) Upon any payment or distribution of cash, property or
securities to creditors of the Parent in a liquidation or dissolution of the
Parent or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Parent or its property, or in an assignment for the
benefit of creditors or any marshalling of the Parent's assets and liabilities:
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(1) the holders of Senior Debt of the Parent shall be
entitled to receive payment in full in cash of all Obligations in
respect of such Senior Debt (including interest after the commencement
of any such proceeding at the rate specified in the applicable Senior
Debt, whether or not a claim for such interest would be allowed in
such proceeding) before the Holders of Notes and the related
Guarantees shall be entitled to receive any payment or distribution
with respect to the Guarantee made by the Parent (except that Holders
of Notes and the related Guarantees may receive payments made from any
defeasance trust created pursuant to Section 8.1 hereof provided that
the applicable deposit does not violate Article 8 or 10 of this
Indenture); and
(2) until all Obligations with respect to Senior Debt of
the Parent (as provided in subsection (1) above) are paid in full in
cash, any payment or distribution to which the Holders of Notes and
the related Guarantees would be entitled shall be made to holders of
Senior Debt of the Parent (except that Holders of Notes and the
related Guarantees may receive payments made from any defeasance trust
created pursuant to Section 8.1 hereof provided that the applicable
deposit does not violate Article 8 or 10 of this Indenture).
(c) Upon any payment or distribution of cash, property or
securities to creditors of a Subsidiary Guarantor in a liquidation or
dissolution of such Subsidiary Guarantor or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to such Subsidiary
Guarantor or its property, or in an assignment for the benefit of creditors or
any marshalling of such Subsidiary Guarantor's assets and liabilities:
(1) the holders of Senior Debt of such Subsidiary
Guarantor shall be entitled to receive payment in full in cash of all
Obligations in respect of such Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the
applicable Senior Debt, whether or not a claim for such interest would
be allowed in such proceeding) before the Holders of Notes and the
related Guarantees shall be entitled to receive any payment or
distribution with respect to the Guarantee made
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by such Subsidiary Guarantor (except that Holders of Notes and the
related Guarantees may receive payments made from any defeasance trust
created pursuant to Section 8.1 hereof provided that the applicable
deposit does not violate Article 8 or 10 of this Indenture); and
(2) until all Obligations with respect to Senior Debt of
such Subsidiary Guarantor (as provided in subsection (1) above) are
paid in full in cash, any payment or distribution to which the Holders
of Notes and the related Guarantees would be entitled shall be made to
holders of Senior Debt of such Subsidiary Guarantor (except that
Holders of Notes and the related Guarantees may receive payments made
from any defeasance trust created pursuant to Section 8.1 hereof
provided that the applicable deposit does not violate Article 8 or 10
of this Indenture).
Under the circumstances described in this Section 10.3, the
Company, the Parent, any Subsidiary Guarantor or any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person making any
payment or distribution of cash or other property or securities is authorized
or instructed to make any payment or distribution to which the Holders of the
Notes and the related Guarantees would otherwise be entitled (other than
payments made from any defeasance trust referred to in the second parenthetical
clause of each of clauses (a)(1), (b)(1), (c)(1), (a)(2), (b)(2) and (c)(2)
above, which shall be delivered or paid to the Holders of Notes as set forth in
such clauses) directly to the holders of the Senior Debt of the Company, the
Parent and any Subsidiary Guarantor, as applicable, (pro rata to such holders
on the basis of the respective amounts of Senior Debt of the Company, the
Parent and any Subsidiary Guarantor, as applicable, held by such holders) or
their Representatives, or to any trustee or trustees under any other indenture
pursuant to which any such Senior Debt may have been issued, as their
respective interests appear, to the extent necessary to pay all such Senior
Debt in full, in cash or cash equivalents after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of such
Senior Debt.
To the extent any payment of or distribution in respect of
Senior Debt (whether by or on behalf of the Company, the Parent or any
Subsidiary Guarantor, as proceeds of security or
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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 Debt or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred. To the extent the obligation to repay any Senior Debt 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 Debt for all
purposes hereof as if such declaration, invalidity or setting aside had not
occurred.
Section 10.4. Default on Designated Senior Debt.
The Company, the Parent and the Subsidiary Guarantors may not
make any payment (whether by redemption, purchase, retirement, defeasance or
otherwise) to the Trustee or any Holder in respect of Obligations with respect
to the Notes and the related Guarantees and may not acquire from the Trustee or
any Holder any Notes (other than payments and other distributions made from any
defeasance trust created pursuant to Section 8.1 hereof if the applicable
deposit does not violate Article 8 or 10 of this Indenture) until all principal
and other Obligations with respect to the Senior Debt of the Company have been
paid in full if:
(i) a default in the payment of any principal of,
premium, if any, or interest on Designated Senior Debt occurs; or
(ii) a default, other than a payment default, on
Designated Senior Debt occurs and is continuing that then permits, or
with the giving of notice or passage of time or both (unless cured or
waived) would permit, holders of the Designated Senior Debt as to
which such default relates to accelerate its maturity and the Trustee
receives a notice of
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the default (a "Payment Blockage Notice") from a Person who is a
Representative of the holders of such Designated Senior Debt. If the
Trustee receives any such Payment Blockage Notice, no subsequent
Payment Blockage Notice shall be effective for purposes of this
Section unless and until 360 days shall have elapsed since the date of
commencement of the payment blockage period resulting from the
immediately prior Payment Blockage Notice. No nonpayment default in
respect of any Designated Senior Debt that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company shall resume payments on and distributions in
respect of the Notes and may acquire them and the Parent and any Subsidiary
Guarantor shall resume making payments and distributions pursuant to the
Guarantees upon:
(1) in the case of a default referred to in Section
10.4(i) hereof the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section
10.4(ii) hereof, the earliest of (1) the date on which such nonpayment
default is cured or waived, (2) the date the applicable Payment
Blockage Notice is retracted by written notice to the Trustee from the
Person who is a Representative of the holders of the relevant
Designated Senior Debt and (3) 179 days after the date on which the
applicable Payment Blockage Notice is received unless (A) any of the
events described in Section 10.4(i) hereof has occurred and is
continuing or (B) a Default or Event of Default under Section 6.1(10)
or (11) has occurred,
if this Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.5. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
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Section 10.6. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any
payment or distribution of or in respect of any Obligations with respect to the
Notes or the Guarantees at a time when such payment or distribution is
prohibited by Section 10.3 or Section 10.4 hereof, such payment or distribution
shall be held by the Trustee (if the Trustee has actual knowledge that such
payment or distribution is prohibited by Section 10.3 or 10.4) or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered to,
the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to
which such Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to
Senior Debt remaining unpaid to the extent necessary to pay such Obligations in
full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt 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 Debt, and, except as provided in
Section 10.12, shall not be liable to any such holders if the Trustee shall pay
over or distribute to or on behalf of Holders of Notes or the Company, the
Parent, the Subsidiary Guarantors or any other Person money or assets to which
any holders of Senior Debt shall be entitled by virtue of this Article 10,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
Section 10.7. Notice by Company.
The Company, the Parent and the Subsidiary Guarantors shall
promptly notify the Trustee and the Paying Agent of any facts known to the
Company, the Parent or any Subsidiary Guarantor that would cause a payment of
any Obligations with respect to the Notes or the related Guarantees to violate
this Article, but failure to give such notice shall not affect the
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subordination of the Notes and the related Guarantees to the Senior Debt as
provided in this Article.
Section 10.8. Subrogation.
After all Senior Debt is paid in full and until the Notes are
paid in full, Holders of Notes and the related Guarantees shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Notes and
the Guarantees including, but not limited to, the Discount Notes) to the rights
of holders of Senior Debt to receive distributions and payments applicable to
Senior Debt to the extent that distributions and payments otherwise payable to
the Holders of Notes and the related Guarantees have been applied to the
payment of Senior Debt. A payment or distribution made under this Article to
holders of Senior Debt that otherwise would have been made to Holders of Notes
and the related Guarantees is not, as between the Company and Holders of Notes,
a payment by the Company on the Notes.
Section 10.9. Relative Rights.
This Article defines the relative rights of Holders of Notes
and the related Guarantees and holders of Senior Debt. Nothing in this
Indenture shall:
(1) impair, as between the Company and Holders of Notes,
the obligation of the Company, which is absolute and unconditional, to
pay principal of and interest on the Notes in accordance with their
terms;
(2) affect the relative rights of Holders of Notes and
the related Guarantees and creditors of the Company other than their
rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions
and payments otherwise payable to Holders of Notes and the related
Guarantees.
If the Company fails because of this Article to pay principal
of or interest on a Note on the due date, the failure is still a Default or
Event of Default.
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Section 10.10. Subordination May Not Be Impaired by Company,
the Parent or the Subsidiary Guarantors.
No right of any present or future holders of any Senior Debt
to enforce subordination as provided in this Article Ten will at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company, the Parent or any Subsidiary Guarantor or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company,
the Parent or any Subsidiary Guarantor with the terms of this Indenture,
regardless of any knowledge thereof that any such holder of Senior Debt may
have or otherwise be charged with. The provisions of this Article Ten are
intended to be for the benefit of, and shall be enforceable directly by, the
holders of Senior Debt.
Section 10.11. Payment, Distribution or Notice to
Representative.
Whenever a payment or distribution is to be made or a notice
given to holders of Senior Debt, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets or securities of
the Company, the Parent or any Subsidiary Guarantor referred to in this Article
10, the Trustee and the Holders of Notes and the related Guarantees shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any payment or distribution
to the Trustee or to the Holders of Notes and the related Guarantees for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the Parent, or any 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 10.
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would
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prohibit the making of any payment or distribution by the Trustee, and the
Trustee and the Paying Agent may continue to make payments on the Notes and the
Guarantees, unless the Trustee shall have received at its Corporate Trust
Office at least one Business Day prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes or Guarantees to violate this Article, which notice shall
specifically refer to Section 10.3 or 10.4 hereof. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.7
hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.9 hereof at least 30 days before the expiration of the time to file
such claim, each lender under the Credit Agreement is hereby authorized to file
an appropriate claim for and on behalf of the Holders of the Notes and the
related Guarantees.
Section 10.14. Amendments.
No amendment may be made to the provisions of or the
definitions of any terms appearing in this Article 10, or to the provisions of
Section 6.2 relating to the Designated Senior Debt, that adversely affects the
rights of any holder of Senior Debt then outstanding unless the holders of such
Senior Debt (or any group or Representative authorized to give a consent)
consent to such change.
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Section 10.15. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 10.9 of
this Indenture, the holders of Senior Debt may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders to the holders of Senior Debt, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Debt or any instrument evidencing the same or any
agreement under which Senior Debt is outstanding or secured; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (c) release any Person liable in any manner for
the collection of Senior Debt; and (d) exercise or refrain from exercising any
rights against the Company, the Parent and each Subsidiary Guarantor and any
other Person.
ARTICLE 11
THE GUARANTEES
Section 11.1. The Guarantees.
Each of the Parent and the Subsidiary Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and premium and interest, on the Notes shall 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 premium and interest, on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
shall 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. Failing payment when due of any amount so
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guaranteed or any performance so guaranteed for whatever reason, the Parent and
the Subsidiary Guarantors shall be jointly and severally obligated to pay the
same immediately. The Parent and the Subsidiary Guarantors hereby agree that
their obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
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 of the Parent and the Subsidiary Guarantors hereby waives
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 covenant that this Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture. If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Parent or the Subsidiary Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in relation to
either the Company, the Parent or the Subsidiary Guarantors, any amount paid by
either to the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each of the Parent
and the Subsidiary Guarantors agrees that it shall not be entitled to any right
of subrogation in relation to the Holders of Notes in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each of the Parent and the Subsidiary Guarantors further
agrees that, as between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 6, such obligations (whether or not due and payable) shall forthwith
become due and payable by the Parent and the Subsidiary Guarantors for the
purpose of this Guarantee. The Parent and the Subsidiary Guarantors shall have
the right to seek contribution from any Guarantor not paying so long as the
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exercise of such right does not impair the rights of the Holders under the
Guarantees.
Section 11.2. Execution and Delivery of Guarantees.
(i) To evidence its Guarantee set forth in Section 11.1, each
of the Parent and the Subsidiary Guarantors hereby agrees that a notation of
such Guarantee substantially in the form of Exhibit C shall be endorsed by an
officer of the Parent or such Subsidiary Guarantor on each Note authenticated
and delivered by the Trustee, that this Indenture shall be executed on behalf
of the Parent or such Subsidiary Guarantor by its President or one of its Vice
Presidents and attested to by an Officer and that the Parent or such Subsidiary
Guarantor shall deliver to the Trustee an Opinion of Counsel that the foregoing
have been duly authorized, executed and delivered by the Parent or such
Subsidiary Guarantor and that such Guarantee is a valid and legally binding
obligation of Parent or such Subsidiary Guarantor, enforceable against such
Guarantor in accordance with its terms.
Each of the Parent and each Subsidiary Guarantor hereby agrees
that its Guarantee set forth in Section 11.1 shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Guarantee.
If an Officer whose signature is on this Indenture or on the
applicable Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee is endorsed, such Guarantee
shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Guarantees set forth in this Indenture on behalf of the Parent and the
Subsidiary Guarantors.
Section 11.3. Parent and Subsidiary Guarantors May
Consolidate, etc., on Certain Terms.
Neither the Parent nor any Subsidiary Guarantor may
consolidate with or merge with or into, another corporation or Person other
than the Parent, the Company, or another Subsidiary Guarantor, unless:
<PAGE> 113
105
(a) subject to the provisions of Section 11.4 hereof, the
Person formed by or surviving any such consolidation or merger assumes
all the obligations of the Parent or such Subsidiary Guarantor, as the
case may be, pursuant to a supplemental indenture in form reasonably
satisfactory to the Trustee in respect of the Notes, this Indenture
and the Parent's or such Subsidiary Guarantor's Guarantee;
(b) immediately after giving effect to such transaction,
no Default or Event of Default exists; and
(c) such transaction does not violate any of Sections
4.3, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16 and 4.17.
Notwithstanding the foregoing, none of the Parent or the Subsidiary Guarantors
shall be permitted to consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or entity
pursuant to the preceding sentence if such consolidation or merger would not be
permitted by Section 5.1 hereof.
In case of any such consolidation or merger 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
Guarantee endorsed upon the Notes and the due and punctual performance of all
of the covenants and conditions of this Indenture to be performed by the Parent
or such Subsidiary Guarantor, such successor corporation shall succeed to and
be substituted for the Parent or such Subsidiary Guarantor with the same effect
as if it had been named herein as a Parent or a Subsidiary Guarantor. Such
successor corporation thereupon may cause to be signed any or all of the
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Guarantees so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, nothing
contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of the Parent or any Subsidiary Guarantor with or into
the Company, the Parent or another Subsidiary
<PAGE> 114
106
Guarantor, or shall prevent any sale or conveyance of the property of the
Parent or any Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company, the Parent or any Subsidiary Guarantor.
Section 11.4. Releases of Guarantees.
In the event of a sale or other disposition of all or
substantially all of the assets of any Subsidiary Guarantor or a sale or other
disposition (including, without limitation, by foreclosure) of all of the
capital stock of any Subsidiary Guarantor, to any corporation or other Person
(including a Subsidiary that is not a Subsidiary Guarantor) by way of merger,
consolidation, or otherwise, in a transaction that does not violate any of the
covenants of this Indenture, then such Subsidiary Guarantor shall be released
and relieved of any obligations under its Guarantee and such acquiring
corporation or other Person, if other than the Parent or a Subsidiary Guarantor
shall have no obligation to assume or otherwise become liable under such
Guarantee; provided, if such acquiring corporation or other Person is other
than the Company or a Wholly Owned Restricted Subsidiary, that the Net Proceeds
of such sale or other disposition are applied in accordance with Section 4.10
hereof. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.10, the Trustee shall execute
any documents reasonably required in order to evidence the release of any
Subsidiary Guarantor from its obligations under its Guarantee.
Any Subsidiary Guarantor not released from its obligations
under its Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of such Subsidiary
Guarantor under this Indenture as provided in this Article 11.
Any Subsidiary Guarantor that is designated an Unrestricted
Subsidiary in accordance with the terms of this Indenture shall be released
from and relieved of its obligations under its Guarantee and any Restricted
Subsidiary that becomes a Material Restricted Subsidiary and any Unrestricted
Subsidiary
<PAGE> 115
107
that ceases to be an Unrestricted Subsidiary and, thereafter, becomes a
Material Restricted Subsidiary shall be required to execute a Guarantee in
accordance with the terms of this Indenture.
Section 11.5. Limitation on Subsidiary Guarantor Liability.
For purposes hereof, each Subsidiary Guarantor's liability
shall be that amount from time to time equal to the aggregate liability of such
Subsidiary Guarantor thereunder, but shall be limited to the lesser of (i) the
aggregate amount of the Obligations of the Company under the Notes and this
Indenture and (ii) the amount, if any, which would not have (A) rendered such
Subsidiary Guarantor "insolvent" (as such term is defined in the federal
Bankruptcy Law and in the Debtor and Creditor Law of the State of New York) or
(B) left it with unreasonably small capital at the time its Guarantee of the
Notes was entered into, after giving effect to the incurrence of existing
Indebtedness immediately prior to such time; provided that, it shall be a
presumption in any lawsuit or other proceeding in which such Subsidiary
Guarantor is a party that the amount guaranteed pursuant to its Guarantee is
the amount set forth in clause (i) above unless any creditor, or representative
of creditors of such Subsidiary Guarantor, or debtor in possession or trustee
in bankruptcy of such Subsidiary Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of such Subsidiary Guarantor is limited to the
amount set forth in clause (ii). In making any determination as to the
solvency or sufficiency of capital of a Subsidiary Guarantor in accordance with
the previous sentence, the right of such Subsidiary Guarantor to contribution
from other Subsidiary Guarantors and the Parent and any other rights such
Subsidiary Guarantor may have, contractual or otherwise, shall be taken into
account.
Section 11.6. "Trustee" to Include Paying Agent.
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 Article 10 and this Article 11 shall in such case (unless
the context shall otherwise require) be construed as extending to and including
such Paying Agent within its meaning as fully and for all intents
<PAGE> 116
108
and purposes as if such Paying Agent were named in Article 10 and this Article
11 in place of the Trustee.
Section 11.7. Subordination of Guarantees.
The obligations of each of the Parent and the Subsidiary
Guarantors under its Guarantee pursuant to this Article 11 shall be junior and
subordinated to the Senior Debt of the Parent or the Subsidiary Guarantor, as
the case may be pursuant to Article 10 hereof. For the purposes of the
foregoing sentence, the Trustee and the Holders shall have the right to receive
and/or retain payments or distributions by or on behalf of any of the
Guarantors only at such times as they may receive and/or retain payments in
respect of the Notes pursuant to this Indenture, including Article 10 hereof.
ARTICLE 12
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control. If any provisions of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the letter provision
shall be deemed to apply to this Indenture as so modified or excluded, as the
case may be.
Section 12.2. Notices.
Any notice or communication by the Company, the Parent or the
Subsidiary Guarantors or the Trustee to the others is duly given if in writing
and delivered in Person or mailed by first class mail (registered or certified,
return receipt requested), telecopier or overnight air courier guaranteeing
next day delivery, to the others' address:
<PAGE> 117
109
If to the Company, the Parent or any Subsidiary Guarantor:
Mesa Operating Co.
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
Telecopier No.: (214) 444-9001
Attention: Chief Financial Officer
With a copy to:
Baker & Botts, LLP
2001 Ross Avenue
700 Trammell Crow Center
Dallas, Texas 75201-2980
Telecopier No.: 914-953-6503
Attention: Carlos A. Fierro
If to the Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Telecopier No.: (312) 461-3525
Attention: Indenture Trust Administration
Division
The Company, the Parent or any Subsidiary Guarantor or the
Trustee, by notice to the others may designate additional or different
addresses for subsequent notices or communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if by telecopy;
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day
<PAGE> 118
110
delivery to its address shown on the register kept by the Registrar. Any
notice or communication shall also be so mailed to any Person described in TIA
Section 313(c), to the extent required by the TIA. Failure to mail a notice
or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company, the Parent or any Subsidiary Guarantor mails a
notice or communication to Holders, it shall mail a copy to the Trustee and
each Agent at the same time.
Section 12.3. Communication by Holders of Notes with Other
Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Parent, the Subsidiary Guarantors, the Trustee, the Registrar
and anyone else shall have the protection of TIA Section 312(c).
Section 12.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company, the Parent or
any Subsidiary Guarantor to the Trustee to take any action under this
Indenture, the Company, the Parent or such Subsidiary Guarantor, as the case
may be, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 12.5 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture relating to the proposed action
have been complied with; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 12.5 hereof) stating
<PAGE> 119
111
that, in the opinion of such counsel, all such conditions precedent
and covenants have been complied with.
Section 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
Section 12.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 12.7. No Personal Liability of Directors, Officers,
Employees and Stockholders.
No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Notes or this Indenture or for any claim based on, in respect
of, or by reason of, such
<PAGE> 120
112
obligations or their creation. Each Holder of Notes, by accepting a Note,
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
Section 12.8. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES.
Section 12.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company, the Parent or their
respective Subsidiaries or of any other Person. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture and the Guarantees.
Section 12.10. Successors.
All agreements of the Company, the Parent and each Subsidiary
Guarantor in this Indenture, the Notes and the Guarantees shall bind its
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
<PAGE> 121
113
Section 12.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE> 122
114
SIGNATURES
Dated as of
July 2, 1996
MESA Inc.
Attest: By
-------------------------------------
Name:
----------------------------------
Title:
- ---------------------------------- ----------------------------------
Mesa Operating Co.
Attest: By
-------------------------------------
Name:
----------------------------------
Title:
- ---------------------------------- ----------------------------------
Harris Trust and Savings Bank, as Trustee
Attest: By
-------------------------------------
Name:
----------------------------------
Title:
- ---------------------------------- ----------------------------------
<PAGE> 123
================================================================================
EXHIBIT A
(Face of Note)
10 5/8% Senior Subordinated Notes due 2006
No. $
Cusip Number: -----------
MESA OPERATING CO.
promises to pay to
or registered assigns,
the principal sum of
DOLLARS on July 1, 2006.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
Dated: ,
---------------- -------
MESA OPERATING CO.
By
----------------------------------
Name:
Title:
By
----------------------------------
Name:
Title:
This is one of the Notes referred
to in the within-mentioned (SEAL)
Indenture:
A-1
<PAGE> 124
Harris Trust & Savings Bank,
as Trustee
By
--------------------------------
Authorized Signatory
================================================================================
A-2
<PAGE> 125
(Back of Note)
10 5/8% Senior Subordinated Note due 2006
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest. Mesa Operating Co., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate of 10 5/8% per annum, which interest shall be payable in cash
semiannually in arrears on January 1 and July 1, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"); provided that the first Interest Payment Date shall be January 1, 1997.
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of original
issuance. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
2. Method of Payment. On each Interest Payment Date the
Company will pay interest to the Person who is the Holder of record of this
Note as of the close of business on the December 15 or June 15 immediately
preceding such Interest Payment Date, even if this Note is cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. Principal,
premium if any and interest on this Note will be payable at the office or
agency of the Company maintained for such purpose within the City and State of
New York or, at the option of the Company, payment of interest, may be made by
check mailed to the Holder of this Note at its address set forth in the
register of Holders of Notes; provided that all payments with respect to the
Global Notes and definitive Notes having an aggregate principal amount of $5.0
million or more the Holders of which have given wire transfer instructions to
the Company at least 10 Business Days prior to the applicable payment date will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Such payment shall be in such coin
or currency of the United
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<PAGE> 126
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. Paying Agent and Registrar. Initially, Harris Trust
and Savings Bank, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company, MESA Inc. (the "Parent") or any Subsidiary
Guarantor or any other of the Company's or Parent's Subsidiaries may act in any
such capacity.
4. Indenture. The Company issued the Notes under an
Indenture dated as of July 2, 1996 ("Indenture") among the Company, the Parent
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Notes are general unsecured obligations of the
Company equal in an aggregate principal amount to $325,000,000 and will mature
on July 1, 2006.
5. Optional Redemption.
(a) The Notes are not redeemable at the Company's option
prior to July 1, 2001. From and after July 1, 2001, the Notes will be subject
to redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on July 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.313%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.542%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.771%
2004 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
Paragraph 5, prior to July 1, 1999 the Company may, at its
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<PAGE> 127
option, on any one or more occasions, redeem up to $108,333,000 in aggregate
principal amount of Notes at a redemption price equal to 110% of the principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the
redemption date, with the net proceeds of sales of Equity Interests (other than
Disqualified Stock) of the Company or Parent; provided that at least
$216,667,000 in aggregate principal amount of Notes must remain outstanding
immediately after the occurrence of such redemption; and provided, further,
that any such redemption shall occur within 60 days after the date of the
closing of the related sale of such Equity Interests.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, thereon to the date of purchase (the
"Change of Control Payment"). The right of the Holders of the Notes to require
the Company to repurchase such Notes upon a Change of Control may not be waived
by the Trustee without the approval of the Holders of the Notes required by
Section 9.2 of the Indenture. Within 30 days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes pursuant to the procedures required by the Indenture and described in
such notice. The Change of Control Payment shall be made on a business day not
less than 30 days nor more than 60 days after such notice is mailed. The
Parent, the Company and each Subsidiary Guarantor will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations
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are applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
(b) If the Company or a Restricted Subsidiary consummates
any Asset Sales permitted by the Indenture, when the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall make an Asset Sale Offer to
purchase the maximum principal amount of Notes and any other Pari Passu
Indebtedness to which the Asset Sale Offer applies that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to, in the
case of the Notes, 100% of the principal amount thereof, plus accrued and
unpaid interest thereon to the date of purchase or, in the case of any Pari
Passu Indebtedness, 100% of the principal amount thereof (or with respect to
discount Pari Passu Indebtedness, the accreted value thereof) on the date of
purchase, in each case, in accordance with the procedures set forth in Section
3.9 of the Indenture or the agreements governing the Pari Passu Indebtedness,
as applicable. To the extent that the aggregate principal amount (or accreted
value, as the case may be) of Notes, and Pari Passu Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
sum of (i) the aggregate principal amount of Notes surrendered by Holders
thereof and (ii) the aggregate principal amount or accreted value, as the case
may be, of Pari Passu Indebtedness surrendered by holders or lenders thereof
exceeds the amount of Excess Proceeds, the Trustee and the trustee or other
lender representative for the Pari Passu Indebtedness shall select the Notes
and the other Pari Passu Indebtedness to be purchased on a pro rata basis,
based on the aggregate principal amount (or accreted value, as applicable)
thereof surrendered in such Asset Sale Offer. Upon completion of such Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
8. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to
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<PAGE> 129
accrue on Notes or on the aggregate principal amount of the Notes called for
redemption, as the case may be.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in minimum denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Note for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a
Note may be treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or the tender offer or exchange offer for, such
Notes), and any existing Default or Event of Default under, or compliance with
any provision of the Indenture or the Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes.
Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.
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<PAGE> 130
12. Defaults and Remedies. Events of Default include:
(i) default for 30 consecutive days in the payment when due of interest on the
Notes (whether or not prohibited by the provisions of Article 10 of the
Indenture); (ii) default in payment when due of the principal of or premium, if
any, on the Notes (whether or not prohibited by the provisions of Article 10 of
the Indenture); (iii) failure by the Company to comply with the provisions of
Article 5 of the Indenture; (iv) failure by the Company for 30 consecutive days
after notice from the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding to comply with the provisions of
Sections 4.3, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, and 4.17 of
the Indenture; (v) failure by the Company for 60 consecutive days after notice
from the Trustee or the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding to comply with any of its other agreements or
covenants in, or provisions of, this Note or in the Indenture; (vi) except as
permitted by the Indenture, any Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be
in full force and effect or the Parent or a Subsidiary Guarantor or any Person
acting on behalf of the Parent or a Subsidiary such Guarantor, shall deny or
disaffirm the Parent's or such Subsidiary Guarantor's obligations under its
Guarantee; (vii) the failure by the Parent to issue Preferred Stock for gross
proceeds in the amount of $132 million pursuant to the Rights Offering and
Standby Commitment or either thereof within 90 days following the date of
issuance of the Notes; (viii) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any Subsidiary
Guarantor whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (a) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its final maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there is then existing a Payment Default or
the maturity of which has been so accelerated, aggregates $10.0 million or more
provided, that if any such default is cured or waived or any such acceleration
rescinded, or such Indebtedness
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<PAGE> 131
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 Indentures and any
consequential acceleration of the Notes shall be automatically rescinded; (ix)
a final judgment or order or final judgments or orders are rendered against the
Company or any Restricted Subsidiary that are unsatisfied and that require the
payment in money, either individually or in an aggregate amount, that is more
than $10.0 million over the coverage under applicable insurance policies and
either (a) a creditor has commenced an enforcement proceeding upon such
judgment (other than a judgment that is stayed by reason of pending appeal or
otherwise) or (b) a 60-day period transpired during which a stay of such
judgment, order, judgments or orders (by reason of pending appeal or otherwise)
was not in effect; and (x) certain events of bankruptcy or insolvency with
respect to the Company, the Parent or any Subsidiary Guarantor. If any Event
of Default (other than an Event of Default described in clause (x) above)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, the Parent or any Subsidiary Guarantor, all outstanding
Notes will become due and payable without further action or notice. Holders of
the Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice
of any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest or premium
on, or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required, within 5 Business days after becoming aware of any Default
or
A-9
<PAGE> 132
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Subordination. The Notes are subordinated to Senior
Debt of the Company. To the extent provided in the Indenture, Senior Debt must
be paid before the Notes may be paid. The Company agrees, and each Holder by
accepting a Note agrees, that the Indebtedness evidenced by the Notes,
including, but not limited to, the payment of principal of, premium, if any,
and interest on the Notes, and any other payment Obligation of the Company in
respect of the Notes is subordinated in right of payment, to the extent and in
the manner provided in the Indenture, to the prior payment in full in cash of
all Senior Debt of the Company (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed) and authorizes the Trustee
to give effect and appoints the Trustee as attorney-in-fact for such purpose.
14. Trustee Dealings with Company. The Indenture
contains certain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security
or otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue or
resign.
15. No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company, as such, shall have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes, by accepting a Note, waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
16. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
A-10
<PAGE> 133
17. Abbreviations. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act.
18. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
Mesa Operating Co.
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
Telecopier No.: (214) 444-9001
Attention: Secretary
[NOTE: THE FORM OF GUARANTEE ATTACHED AS EXHIBIT C TO THE INDENTURE IS TO BE
ATTACHED TO THIS NOTE.]
A-11
<PAGE> 134
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. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
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 Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-12
<PAGE> 135
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.13 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.13
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.13 of the Indenture, state
the principal amount you elect to have purchased: $
-------------------
Date:
-------------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the
face of this Security)
Signature Guarantee:*
-------------------------
- -------------------------
*/ Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-13
<PAGE> 136
EXHIBIT B
(Form of Legend for Global Note)
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (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.
B-1
<PAGE> 137
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES
[To be attached to Global Note]
The following exchanges of a part of this Global Note for
definitive Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Note Signature of authorized
Principal Amount Principal Amount following such officer of Trustee
Date of Exchange of this Global Note of this Global Note decrease (or increase) or Note Custodian
---------------- ------------------- ------------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
B-2
<PAGE> 138
EXHIBIT C
Guarantee
Each of the Parent and the Subsidiary Guarantors, if any,
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and premium and interest on the Notes shall 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 premium and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same
shall 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. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Parent and the Subsidiary
Guarantors shall be jointly and severally obligated to pay the same
immediately.
The obligations of the Parent and the Subsidiary Guarantors to the
Holders of Notes and to the Trustee pursuant to this Guarantee and the
Indenture (including the subordination provisions thereof) are expressly set
forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Guarantee. The terms of Article 11 of
the Indenture are incorporated herein by reference.
This is a continuing Guarantee and shall remain in full force
and effect and shall be binding upon each of the Parent and the Subsidiary
Guarantors and its respective successors and assigns to the extent set forth in
the Indenture until full and final payment of all of the Company's Obligations
under the Notes and the Indenture and shall inure to the benefit of the Trustee
and the Holders of Notes and their successors and assigns and, in the event of
any transfer or assignment of rights by any Holder of Notes 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. Notwithstanding the foregoing, any Subsidiary
Guarantor that satisfies the provisions of Section 11.4 of the Indenture shall
be released of its
C-1
<PAGE> 139
obligations hereunder. This is a Guarantee of payment and not a guarantee of
collection.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability
will be that amount from time to time equal to the aggregate liability of such
Subsidiary Guarantor hereunder but shall be limited to the lesser of (i) the
aggregate amount of the obligations of the Company under the Notes and the
Indenture and (ii) the amount, if any, which would not have (A) rendered such
Subsidiary Guarantor "insolvent" (as such term is defined in the federal
Bankruptcy Law and in the Debtor and Creditor law of the State of New York) or
(B) left it with unreasonably small capital at the time its Guarantee of the
Notes was entered into, after giving effect to the incurrence of existing
Indebtedness immediately prior to such time; provided that, it shall be a
presumption in any lawsuit or other proceeding in which such Subsidiary
Guarantor is a party that the amount guaranteed pursuant to its Guarantee is
the amount set forth in clause (i) above unless any creditor, or representative
of creditors of such Subsidiary Guarantor, or debtor in possession or trustee
in bankruptcy of such Guarantor, otherwise proves in such a lawsuit that the
aggregate liability of such Subsidiary Guarantor is limited to the amount set
forth in clause (ii). The Indenture provides that, in making any determination
as to the solvency or sufficiency of capital of a Subsidiary Guarantor in
accordance with the previous sentence, the right of such Subsidiary Guarantor
to contribution from other Subsidiary Guarantors and the Parent and any other
rights such Subsidiary Guarantor may have, contractual or otherwise, shall be
taken into account.
C-2
<PAGE> 140
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
MESA INC.,
a Texas corporation
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
[ANY SUBSIDIARY GUARANTORS]
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
C-3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MESA,
INC. AND SUBSIDIARIES JUNE 30, 1996, FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 174,391
<SECURITIES> 4
<RECEIVABLES> 48,123
<ALLOWANCES> 2,730
<INVENTORY> 2,236
<CURRENT-ASSETS> 225,270
<PP&E> 1,956,888
<DEPRECIATION> 908,209
<TOTAL-ASSETS> 1,413,459
<CURRENT-LIABILITIES> 206,895
<BONDS> 1,083,029
<COMMON> 0
0
643
<OTHER-SE> 73,071
<TOTAL-LIABILITY-AND-EQUITY> 1,413,459
<SALES> 151,965
<TOTAL-REVENUES> 151,965
<CGS> 0
<TOTAL-COSTS> 105,582
<OTHER-EXPENSES> 40,779
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,913
<INCOME-PRETAX> 5,604
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,604
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
