ex4_1.htm
Exhibit
4.1
11¾%
Senior Notes due 2016
__________________
SEVENTH
SUPPLEMENTAL INDENTURE
Dated
as of June 25, 2009
AMONG
QUICKSILVER
RESOURCES INC.,
THE
SUBSIDIARY GUARANTORS PARTIES HERETO
AND
THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
as
TRUSTEE
TO
INDENTURE
Dated
as of December 22, 2005
AMONG
QUICKSILVER
RESOURCES, INC.
AND
THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
as
TRUSTEE
TABLE OF
CONTENTS
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Page
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ARTICLE
I
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11¾%
SENIOR NOTES DUE 2016
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1
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Section
1.01
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Establishment
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1
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Section
1.02
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Definitions
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2
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Section
1.03
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Payment
of Principal and Interest
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28
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Section
1.04
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Denominations
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28
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Section
1.05
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Global
Securities
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28
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Section
1.06
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Transfer
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29
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Section
1.07
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Defeasance
and Covenant Defeasance.
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29
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Section
1.08
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Redemption
at the Option of the Company.
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32
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Section
1.09
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Paying
Agent
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33
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Section
1.10
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Additional
Notes
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33
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ARTICLE
II
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SUBSIDIARY
GUARANTEES
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33
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Section
2.01
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Guarantee.
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33
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Section
2.02
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Limitation
on Subsidiary Guarantor Liability
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34
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Section
2.03
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Releases
of Subsidiary Guarantees
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34
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ARTICLE
III
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PARTICULAR
COVENANTS OF THE COMPANY WITH RESPECT TO THE NOTES
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35
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Section
3.01
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Effectiveness
of Covenants
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35
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Section
3.02
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Limitation
on Indebtedness.
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35
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Section
3.03
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Limitation
on Restricted Payments
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39
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Section
3.04
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Limitation
on Liens
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42
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Section
3.05
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Limitation
on Sale/Leaseback Transactions
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43
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Section
3.06
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Limitation
on Restrictions on Distributions from Restricted
Subsidiaries
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43
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Section
3.07
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Limitation
on Sales of Assets and Subsidiary Stock
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45
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Section
3.08
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Limitation
on Affiliate Transactions
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47
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Section
3.09
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Limitation
on Sale of Capital Stock of Restricted Subsidiaries
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48
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Section
3.10
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SEC
Reports
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48
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Section
3.11
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Merger
and Consolidation
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48
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Section
3.12
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Future
Subsidiary Guarantors
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50
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Section
3.13
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Limitation
on Lines of Business
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50
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Section
3.14
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Payments
for Consent
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50
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Section
3.15
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Offer
to Repurchase Upon Change of Control.
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50
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ARTICLE
IV
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EVENTS
OF DEFAULT WITH RESPECT TO THE NOTES
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51
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ARTICLE
V
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MODIFICATION
AND WAIVER
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52
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Section
5.01
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Without
Consent of Holders.
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52
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Section
5.02
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With
Consent of Holders
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53
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ARTICLE
VI
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MISCELLANEOUS
PROVISIONS
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53
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Section
6.01
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Recitals
by the Company
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53
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Section
6.02
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Ratification
and Incorporation of Original Indenture
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53
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Section
6.03
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Executed
in Counterparts
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53
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Section
6.04
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New
York Law to Govern
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53
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Section
6.05
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Successors
and Assigns
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53
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Section
6.06
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Separability
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53
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Section
6.07
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Force
Majeure
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53
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Section
6.08
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Senior
Indebtedness
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54
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Exhibit
A
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Form
of Global Note
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A-1
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Exhibit
B
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Form
of Supplemental Indenture to be Delivered by Subsequent
Guarantors
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B-1
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THIS
SEVENTH SUPPLEMENTAL INDENTURE is made as of the 25th day of
June, 2009, by and among QUICKSILVER RESOURCES INC., a Delaware corporation (the
“Company”), the Subsidiary Guarantors (as herein defined) parties hereto and THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly
organized and existing under the laws of the United States of America (as
successor in interest to JPMorgan Chase Bank, National Association (the “Initial
Trustee”)), as trustee (the “Trustee”):
WHEREAS,
the Company and the Initial Trustee executed and delivered an Indenture, dated
as of December 22, 2005 (the “Original Indenture”), to provide for the issuance
by the Company from time to time of unsecured debentures, notes, and other
evidences of indebtedness (the “Securities”), to be issued in one or more series
as provided in the Original Indenture;
WHEREAS,
the Original Indenture is incorporated herein by this reference and the Original
Indenture, as supplemented by this Seventh Supplemental Indenture, is herein
called the “Indenture”;
WHEREAS,
in the fourth quarter of 2006, the Trustee assumed and succeeded to all of the
rights and obligations of the Initial Trustee under the Original Indenture, as
supplemented on or before such date;
WHEREAS,
under the Original Indenture, a new series of senior notes may at any time be
established by the Board of Directors of the Company in accordance with the
provisions of the Original Indenture and the terms of such series may be
described by a supplemental indenture executed by the Company and the
Trustee;
WHEREAS,
the Company proposes to create under the Indenture a new series of senior
notes;
WHEREAS,
additional senior notes of other series hereafter established, except as may be
limited in the Original Indenture as at the time supplemented and modified, may
be issued from time to time pursuant to the Indenture as at the time
supplemented and modified, and all senior notes issued by the Company of any one
series need not be issued at the same time and, unless otherwise so provided,
may be reopened for issuances of additional senior notes of such series;
and
WHEREAS,
all conditions necessary to authorize the execution and delivery of this Seventh
Supplemental Indenture and make it a valid and binding obligation of the Company
and the Subsidiary Guarantors, in accordance with its terms, have been done or
performed.
NOW
THEREFORE, in consideration of the agreements and obligations set forth herein
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE
I
11¾%
SENIOR NOTES DUE 2016
Section
1.01 Establishment. There
is hereby established a new series of senior notes to be issued under the
Indenture, to be designated as the Company’s 11¾% Senior
Notes due 2016 (the “Notes”).
There are
to be authenticated and delivered Notes, initially limited in aggregate
principal amount to $600,000,000, and no further Notes shall be authenticated
and delivered except as provided by the terms of the Original Indenture and the
terms of this Seventh Supplemental Indenture; provided,
however,
that the aggregate principal amount of the Notes may be increased in the future,
without the consent of the Holders, on the same terms and as part of the same
series as the Notes. The Notes shall be issued in fully registered
form without coupons.
The Notes
shall be issued in the form of one or more Global Securities (as defined below)
in substantially the form set out in Exhibit A hereto. The initial
Depositary with respect to the Notes shall be The Depository Trust
Company.
Each Note
shall be dated the date of authentication thereof and shall bear interest from
the date of original issuance thereof or from the most recent Interest Payment
Date to which interest has been paid or duly provided for.
Section
1.02 Definitions. The
following defined terms used herein with respect to the Notes shall, unless the
context otherwise requires, have the meanings specified below; provided,
however,
that all amounts of Adjusted Consolidated Net Tangible Assets, Consolidated
Coverage Ratio, Consolidated EBITDA, Consolidated Income Taxes, Consolidated
Interest Expense, Consolidated Net Income or Net Working Capital (i) as of
any date or (ii) in relation to any period or portion thereof that, in
either case, precedes the Issue Date, shall be the amount thereof as calculated
as of such date or in relation to such period or portion thereof under the
indenture governing the 2016 Senior Subordinated Notes as supplemented or
amended prior to the Issue Date. Capitalized terms used herein for
which no definition is provided herein shall have the meanings set forth in the
Original Indenture.
“2015
Senior Notes” means the Company’s 8¼% Senior Notes due 2015.
“2016
Senior Subordinated Notes” means the Company’s 7⅛% Senior Subordinated Notes due
2016.
“Acquired
Indebtedness” means Indebtedness (i) of a Person or any of its Subsidiaries
existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed
in connection with the acquisition of assets from such Person, in each case
whether or not Incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition. Acquired Indebtedness shall be deemed to have been
Incurred, with respect to clause (i) of the preceding sentence, on the date such
Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the
preceding sentence, on the date of consummation of such acquisition of
assets.
“Additional
Assets” means:
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(1)
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any
property or assets (other than Indebtedness and Capital Stock) to be used
by the Company or a Restricted Subsidiary in the Oil and Gas
Business;
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(2)
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capital
expenditures by the Company or a Restricted Subsidiary in the Oil and Gas
Business;
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(3)
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the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or a Restricted
Subsidiary; or
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(4)
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Capital
Stock constituting a minority interest in any Person that at such time is
a Restricted Subsidiary;
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provided,
however,
that, in the case of clauses (3) and (4), such Restricted Subsidiary is
primarily engaged in the Oil and Gas
Business.
“Adjusted
Consolidated Net Tangible Assets” means (without duplication), as of the date of
determination, the remainder of:
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(i)
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estimated
discounted future net revenues from proved oil and gas reserves of the
Company and its Restricted Subsidiaries calculated
in
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accordance
with SEC guidelines before any provincial, territorial, state, federal or
foreign income taxes, as estimated by the Company in a reserve report
prepared as of the end of the Company’s most recently completed fiscal
year for which audited financial statements are available, as increased
by, as of the date of determination, the estimated discounted future net
revenues from
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(A)
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estimated
proved oil and gas reserves acquired since such year end, which reserves
were not reflected in such year end reserve report,
and
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(B)
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estimated
oil and gas reserves attributable to upward revisions of estimates of
proved oil and gas reserves since such year end due to exploration,
development, exploitation or other activities, in each case calculated in
accordance with SEC guidelines (utilizing the prices for the fiscal
quarter ending prior to the date of determination), and decreased by, as
of the date of determination, the estimated discounted future net revenues
from
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(C)
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estimated
proved oil and gas reserves included therein that shall have been produced
or disposed of since such year end,
and
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(D)
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estimated
oil and gas reserves included therein that are subsequently removed from
the proved oil and gas reserves of the Company and its Restricted
Subsidiaries as so calculated due to downward revisions of estimates of
proved oil and gas reserves since such year end due to changes in
geological conditions or other factors which would, in accordance with
standard industry practice, cause such revisions, in each case calculated
on a pre-tax basis and substantially in accordance with SEC guidelines
(utilizing the prices for the fiscal quarter ending prior to the date of
determination), in each case as estimated by the Company’s petroleum
engineers or any independent petroleum engineers engaged by the Company
for that purpose;
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(ii)
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the
capitalized costs that are attributable to oil and gas properties of the
Company and its Restricted Subsidiaries to which no proved oil and gas
reserves are attributable, based on the Company’s books and records as of
a date no earlier than the date of the Company’s latest annual or
quarterly consolidated financial
statements;
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(iii)
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the
Net Working Capital on a date no earlier than the date of the Company’s
latest annual or quarterly consolidated financial statements;
and
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(A)
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the
net book value of other tangible assets of the Company and its Restricted
Subsidiaries, as of a date no earlier than the date of the Company’s
latest annual or quarterly consolidated financial statements,
and
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(B)
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the
appraised value, as estimated by independent appraisers, of other tangible
assets of the Company and its Restricted Subsidiaries, as of a date no
earlier than the date of the Company’s latest audited consolidated
financial statements (provided
that the Company shall not be required to obtain any appraisal of any
assets); minus
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(i)
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any
amount included in (a)(i) through (a)(iv) above that is attributable to
Minority Interests;
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(ii)
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any
net gas balancing liabilities of the Company and its Restricted
Subsidiaries reflected in the Company’s latest audited consolidated
financial statements;
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(iii)
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to
the extent included in (a)(i) above, the estimated discounted future net
revenues, calculated in accordance with SEC guidelines (utilizing the
prices utilized in the Company’s year end reserve report), attributable to
reserves which are required to be delivered to third parties to fully
satisfy the obligations of the Company and its Restricted Subsidiaries
with respect to Volumetric Production Payments (determined, if applicable,
using the schedules specified with respect thereto);
and
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(iv)
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to
the extent included in (a)(i) above, the estimated discounted future net
revenues, calculated in accordance with SEC guidelines, attributable to
reserves subject to Dollar-Denominated Production Payments which, based on
the estimates of production and price assumptions included in determining
the estimated discounted future net revenues specified in (a)(i) above,
would be necessary to fully satisfy the payment obligations of the Company
and its Restricted Subsidiaries with respect to Dollar-Denominated
Production Payments (determined, if applicable, using the schedules
specified with respect thereto).
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If the
Company changes its method of accounting from the full cost method of accounting
to the successful efforts or a similar method, “Adjusted Consolidated Net
Tangible Assets” will continue to be calculated as if the Company were still
using the full cost method of accounting.
“Affiliate”
of any specified Person means any other Person, that directly or indirectly, is
in Control of, is Controlled by, or is under common Control with, such
Person.
“Applicable
Premium” means, with respect to a Note at any Redemption Date, the greater of
(i) 1.0% of the principal amount of such Note and (ii) the excess of (A)
the present value at such time of (1) the redemption price of such Note at
July 1, 2013 (such redemption price being described in Section 1.08(a) of this
Seventh Supplemental Indenture exclusive of any accrued interest) plus
(2) all required interest payments due on such Note through July 1, 2013
(but excluding accrued and unpaid interest to the Redemption Date), computed
using a discount rate equal to the Treasury Rate plus 50 basis points, over (B)
the then outstanding principal amount of such Note.
“Asset
Disposition” means any direct or indirect sale, lease (other than an operating
lease entered into in the ordinary course of the Oil and Gas Business),
transfer, issuance or other disposition, or a series of related sales, leases,
transfers, issuances or dispositions that are part of a common plan, of shares
of Capital Stock of a Subsidiary (other than directors’ qualifying shares),
property or other assets (each
referred
to for the purposes of this definition as a “disposition”) by the Company or any
of its Restricted Subsidiaries, including any disposition by means of a merger,
consolidation or similar transaction.
Notwithstanding
the preceding, the following items shall not be deemed to be Asset
Dispositions:
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(1)
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a
disposition by a Restricted Subsidiary to the Company or by the Company or
a Restricted Subsidiary to a Wholly-Owned
Subsidiary;
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(2)
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the
sale of Cash Equivalents in the ordinary course of
business;
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(3)
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a
disposition of Hydrocarbons or mineral products in the ordinary course of
the Oil and Gas Business;
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(4)
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a
disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of the Company and its
Restricted Subsidiaries and that is disposed of in each case in the
ordinary course of business;
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(5)
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transactions
permitted by Section 3.11 of this Seventh Supplement
Indenture;
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(6)
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an
issuance of Capital Stock by a Restricted Subsidiary to the Company or to
a Wholly-Owned Subsidiary;
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(7)
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for
purposes of Section 3.07 of this Seventh Supplemental Indenture only, the
making of a Permitted Investment or a disposition subject to Section 3.03
of this Seventh Supplemental
Indenture;
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(8)
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an
Asset Swap effected in compliance with Section 3.07 of this Seventh
Supplemental Indenture;
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(9)
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dispositions
of assets with an aggregate fair market value since the Issue Date of less
than $5 million;
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(10)
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dispositions
in connection with the creation, encumbrance or existence of Permitted
Liens or the exercise of any rights or remedies with respect
thereto;
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(11)
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dispositions
of receivables in connection with the compromise, settlement or collection
thereof in the ordinary course of business or in bankruptcy or similar
proceedings and exclusive of factoring or similar
arrangements;
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(12)
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the
licensing or sublicensing of intellectual property or other general
intangibles and licenses, leases or subleases of other property in the
ordinary course of business and which do not materially interfere with the
business of the Company and its Restricted
Subsidiaries;
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(13)
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any
Production Payments and Reserve Sales, provided
that any such Production Payments and Reserve Sales, other than incentive
compensation programs on terms that are reasonably customary in the Oil
and Gas Business for geologists, geophysicists and other providers of
technical services to the Company or a Restricted Subsidiary, shall have
been created, Incurred, issued, assumed or Guaranteed in connection with
the acquisition or financing of, and no later than 60 days after the
acquisition of, the property that is subject
thereto;
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(14)
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the
sale or transfer (whether or not in the ordinary course of the Oil and Gas
Business) of oil and/or gas properties or direct or indirect interests in
real property; provided
that at the
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time
of such sale or transfer such properties do not have associated with them
any proved reserves capable of being produced in material economic
quantities; and
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(15)
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the
abandonment, farm-out, exchange, lease or sublease of developed or
undeveloped oil and/or gas properties or interests therein in the ordinary
course of business or in exchange for oil and/or gas properties or
interests therein owned or held by another
Person.
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“Asset
Swap” means any concurrent purchase and sale or exchange of oil and gas
properties or interests therein or other assets or properties used or useful in
the Oil and Gas Business, including Capital Stock of any Person who holds any
such properties, interests or assets, between the Company or any of its
Restricted Subsidiaries and another Person; provided
that any cash received must be applied in accordance with Section 3.07 of this
Seventh Supplemental Indenture.
“Attributable
Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time
of determination, the present value (discounted at the interest rate borne by
the Notes, compounded semi-annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
“Average
Life” means, as of the date of determination, with respect to any Indebtedness
or Preferred Stock, the quotient obtained by dividing (1) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of such Indebtedness or redemption
or similar payment with respect to such Preferred Stock multiplied by the amount
of such payment by (2) the sum of all such payments.
“Bank
Indebtedness” means any and all amounts, whether outstanding on the Issue Date
or Incurred after the Issue Date, payable by the Company under or in respect of
a Credit Facility, and any related notes, collateral documents, letters of
credit and guarantees and any Interest Rate Agreement entered into in connection
with the Credit Facility, including principal, premium, if any, interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company at the rate specified
therein, whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
all other amounts payable thereunder or in respect thereof.
“Board of
Directors” means, as to any Person, the board of directors of such Person or a
duly authorized committee of such board of directors.
“Capital
Lease” means, with respect to any Person, any lease of property (whether real,
personal, or mixed) by such Person or its Subsidiaries as lessee that would be
capitalized on a balance sheet of such Person or its Subsidiaries prepared in
conformity with GAAP, other than, in the case of such Person or its
Subsidiaries, any such lease under which such Person or any of its Subsidiaries
is the lessor.
“Capital
Lease Obligations” means, with respect to any Person, the capitalized amount of
all obligations of such Person and its Subsidiaries under Capital Leases, as
determined on a consolidated basis in conformity with GAAP.
“Capital
Stock” of any Person means any and all shares, interests, rights to purchase,
warrants, options, participation or other equivalents of or interests in
(however designated) equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
“Cash
Equivalents” means:
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(1)
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securities
issued or directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality of the United States (provided
that the full
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faith
and credit of the United States is pledged in support thereof), having a
maturity within one year after the date of acquisition
thereof;
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(2)
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marketable
general obligations issued by any state of the United States of America or
any political subdivision of any such state or any public instrumentality
thereof maturing within one year after the date of acquisition thereof
and, at the time of such acquisition, having a credit rating of at least
“A” or the equivalent thereof from either Standard & Poor’s Ratings
Services or Moody’s Investors Service, Inc. (or an equivalent rating by
another nationally recognized rating agency if both of the two named
rating agencies cease publishing ratings of
investments);
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(3)
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certificates
of deposit, time deposits, eurodollar time deposits, overnight bank
deposits or bankers’ acceptances having maturities of not more than one
year after the date of acquisition thereof issued by any commercial bank
the long-term debt of which is rated at the time of acquisition at least
“A” or the equivalent thereof by Standard & Poor’s Ratings Services,
or “A” or the equivalent thereof by Moody’s Investors Service, Inc. (or an
equivalent rating by another nationally recognized rating agency if both
of the two named rating agencies cease publishing ratings of investments),
and having combined capital and surplus in excess of $500
million;
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(4)
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repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clauses (1), (2) and (3) above
entered into with any bank meeting the qualifications specified in clause
(3) above;
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(5)
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commercial
paper rated at the time of acquisition thereof at least “A-2” or the
equivalent thereof by Standard & Poor’s Ratings Services or “P-2” or
the equivalent thereof by Moody’s Investors Service, Inc. (or an
equivalent rating by another nationally recognized rating agency if both
of the two named rating agencies cease publishing ratings of investments),
and in any case maturing within one year after the date of acquisition
thereof; and
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(6)
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interests
in any investment company or money market fund which invests 95% or more
of its assets in instruments of the type specified in clauses (1) through
(5) above.
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“Change
of Control” means:
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(1)
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Any
“person” or “group” of related persons (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than one or more Permitted
Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that such person or group shall be
deemed to have “beneficial ownership” of all shares that such person or
group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 50% of the total voting power of the Voting Stock of the Company
(or its successor by merger, consolidation or purchase of all or
substantially all of its assets) (for the purposes of this clause, such
person or group shall be deemed to beneficially own any Voting Stock of
the Company held by a parent entity of the Company, if such person or
group “beneficially owns” (as defined above), directly or indirectly, more
than 50% of the voting power of the Voting Stock of such parent entity);
or
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(2)
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the
first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors;
or
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(3)
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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
Restricted Subsidiaries taken as a whole to any
“person”
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(as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) other
than a Permitted Holder; or
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(4)
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the
adoption by the stockholders of the Company of a plan or proposal for the
liquidation or dissolution of the
Company.
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“Commodity
Agreements” means, in respect of any Person, any futures contract, forward
contract, commodity swap agreement, commodity option agreement or other similar
agreement or arrangement in respect of Hydrocarbons purchased, used, produced,
processed or sold by such Person and designed to protect such Person against
fluctuations in Hydrocarbon prices.
“Common
Stock” means with respect to any Person, any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or nonvoting) of such Person’s common stock whether or not outstanding on the
Issue Date, and includes, without limitation, all series and classes of such
common stock.
“Consolidated
Coverage Ratio” means as of any date of determination, the ratio of (x) the
aggregate amount of Consolidated EBITDA for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination for
which consolidated financial statements of the Company are in existence to (y)
Consolidated Interest Expense for such four fiscal quarters; provided,
however,
that:
|
(1)
|
if
the Company or any Restricted
Subsidiary:
|
|
(a)
|
has
Incurred any Indebtedness since the beginning of such period that remains
outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest
Expense for such period will be calculated after giving effect on a pro
forma basis to such Indebtedness as if such Indebtedness had been Incurred
on the first day of such period (except that in making such computation,
the amount of Indebtedness under any revolving credit facility outstanding
on the date of such calculation will be deemed to be (i) the average daily
balance of such Indebtedness during such four fiscal quarters or such
shorter period for which such facility was outstanding or (ii) if such
facility was created after the end of such four fiscal quarters, the
average daily balance of such Indebtedness during the period from the date
of creation of such facility to the date of such calculation) and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period;
or
|
|
(b)
|
has
repaid, repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of the period that is no longer outstanding on such
date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio involves a discharge of
Indebtedness (in each case other than Indebtedness Incurred under any
revolving credit facility unless such Indebtedness has been permanently
repaid and the related commitment terminated), Consolidated EBITDA and
Consolidated Interest Expense for such period will be calculated after
giving effect on a pro forma basis to such discharge of such Indebtedness,
including with the proceeds of such new Indebtedness, as if such discharge
had occurred on the first day of such
period;
|
|
(2)
|
if
since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Disposition or the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is such an
Asset Disposition:
|
|
(a)
|
the
Consolidated EBITDA for such period will be reduced by an amount equal to
the Consolidated EBITDA (if positive) directly attributable to the assets
which are the subject of such Asset Disposition for such period or
increased by an amount equal to the absolute value of the Consolidated
EBITDA (if negative) directly attributable thereto for such period;
and
|
|
(b)
|
Consolidated
Interest Expense for such period will be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of
the Company or any Restricted Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);
|
|
(3)
|
if
since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary
or is merged with or into the Company) or an acquisition of assets,
including any acquisition of assets occurring in connection with a
transaction giving rise to the need to calculate the Consolidated Coverage
Ratio, which constitutes all or substantially all of a company, division,
operating unit, segment, business, group of related assets or line of
business, Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period;
and
|
|
(4)
|
if
since the beginning of such period any Person that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period shall have
Incurred any Indebtedness or discharged any Indebtedness, made any Asset
Disposition or any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (2) or (3) above if made by the
Company or a Restricted Subsidiary during such period, Consolidated EBITDA
and Consolidated Interest Expense for such period will be calculated after
giving pro forma effect thereto as if such Asset Disposition or Investment
or acquisition of assets occurred on the first day of such
period.
|
For
purposes of this definition, whenever pro forma effect is to be given to any
calculation under this definition, the pro forma calculations will be determined
in good faith by a responsible financial or accounting officer of the Company
(including pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act). If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness will be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months). If any Indebtedness that is being given pro forma
effect bears an interest rate at the option of the Company, the interest rate
shall be calculated by applying such optional rate chosen by the
Company.
“Consolidated
EBITDA” for any period means, without duplication, the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income:
|
(1)
|
Consolidated
Interest Expense;
|
|
(2)
|
Consolidated
Income Taxes;
|
|
(3)
|
consolidated
depletion, depreciation and amortization
expenses;
|
|
(4)
|
consolidated
impairment charges recorded in connection with the application of
Financial Accounting Standard No. 142 “Goodwill and Other
Intangibles;”
|
|
(5)
|
consolidated
exploration expenses, if
applicable;
|
|
(6)
|
(a)
any write-off of deferred financing costs, (b) any capitalized interest,
and (c) the interest portion of any deferred payment obligations;
and
|
|
(7)
|
other
consolidated non-cash charges reducing Consolidated Net Income (excluding
any such non-cash charge to the extent 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 not included in the
calculation);
|
less, to
the extent included in calculating such Consolidated Net Income and in excess of
any costs or expenses attributable thereto that were deducted in calculating
such Consolidated Net Income, the sum of (x) the amount of deferred revenues
that are amortized during such period and are attributable to reserves that are
subject to Volumetric Production Payments, and (y) amounts recorded in
accordance with GAAP as repayments of principal and interest pursuant to
Dollar-Denominated Production Payments.
Notwithstanding
the preceding sentence, the items described in clauses (2) through (6) above
relating to amounts of a Restricted Subsidiary of a Person will be added to
Consolidated Net Income to compute Consolidated EBITDA of such Person only to
the extent (and in the same proportion) that the net income (loss) of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and, to the extent the amounts set forth in clauses (2) through (6)
above are in excess of those necessary to offset a net loss of such Restricted
Subsidiary or if such Restricted Subsidiary has net income for such period
included in Consolidated Net Income, only if a corresponding amount would not be
prohibited at the date of determination to be dividended to the Company by such
Restricted Subsidiary 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, except
for restrictions under any Credit Facility.
“Consolidated
Income Taxes” means, with respect to any Person for any period, taxes imposed
upon such Person or other payments required to be made by such Person by any
governmental authority which taxes or other payments are (x) calculated by
reference to the income or profits of such Person or such Person and its
Subsidiaries, or (y) any franchise taxes or equity taxes (in each case to the
extent included in computing Consolidated Net Income for such period),
regardless of whether such taxes or payments are required to be remitted to any
governmental authority.
“Consolidated
Interest Expense” means, for any period, the consolidated interest expense of
the Company and its consolidated Restricted Subsidiaries, whether paid or
accrued, plus, to the extent not included in such interest expense:
|
(1)
|
interest
expense attributable to Capital Lease Obligations and the interest portion
of rent expense associated with Attributable Indebtedness in respect of
the relevant lease giving rise thereto, determined as if such lease were a
Capital Lease in accordance with GAAP and the interest component of any
deferred payment obligations;
|
|
(2)
|
amortization
of debt discount and debt issuance cost (provided
that any amortization of bond premium will be credited to reduce
Consolidated Interest Expense unless, pursuant to GAAP, such amortization
of bond premium has otherwise reduced Consolidated Interest
Expense);
|
|
(3)
|
non-cash
interest expense;
|
|
(4)
|
commissions,
discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance
financing;
|
|
(5)
|
the
interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted
Subsidiaries;
|
|
(6)
|
costs
associated with Hedging Obligations (including amortization of fees);
provided,
however,
that if Hedging Obligations result in net benefits rather than costs, such
net benefits shall be credited to reduce Consolidated Interest Expense
unless, pursuant to GAAP, such net benefits are otherwise reflected in
Consolidated Net Income;
|
|
(7)
|
the
consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such
period;
|
|
(8)
|
the
product of (a) all dividends paid or payable, in cash, Cash Equivalents or
Indebtedness or accrued during such period on any series of Disqualified
Stock of such Person or on Preferred Stock of its Restricted Subsidiaries
payable to a party other than the Company or a Wholly-Owned Subsidiary,
times (b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state, provincial
and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with
GAAP;
|
|
(9)
|
Receivables
Fees; and
|
|
(10)
|
the
cash contributions to any employee stock ownership plan or similar trust
to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or
trust.
|
For the
purpose of calculating the Consolidated Coverage Ratio in connection with the
Incurrence of any Indebtedness described in the final paragraph of the
definition of “Indebtedness,” the calculation of Consolidated Interest Expense
shall include all interest expense (including any amounts described in clauses
(1) through (10) above) relating to any Indebtedness of the Company or any
Restricted Subsidiary described in the final paragraph of the definition of
“Indebtedness.”
For
purposes of the foregoing, total interest expense will be determined (i) after
giving effect to any net payments made or received by the Company and its
Subsidiaries with respect to Interest Rate Agreements and (ii) exclusive of
amounts classified as other comprehensive income in the balance sheet of the
Company. Notwithstanding anything to the contrary contained herein,
commissions, discounts, yield and other fees and charges Incurred in connection
with any transaction pursuant to which the Company or its Restricted
Subsidiaries may sell, convey or otherwise transfer or grant a security interest
in any accounts receivable or related assets shall be included in Consolidated
Interest Expense.
“Consolidated
Net Income” means, for any period, the net consolidated income (loss) of the
Company and its consolidated Restricted Subsidiaries determined in accordance
with GAAP; provided,
however,
that there will not be included in such Consolidated Net Income:
|
(1)
|
any
net income (loss) of any Person (other than the Company) if such Person is
not a Restricted Subsidiary, except
that:
|
|
(a)
|
subject
to the limitations contained in clauses (3), (4) and (5) below, the
Company’s equity in the net income of any such Person for such period will
be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a
|
|
dividend
or other distribution to a Restricted Subsidiary, to the limitations
contained in clause (2) below); and
|
|
(b)
|
the
Company’s equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period will be included in determining
such Consolidated Net Income to the extent such loss has been funded with
cash from the Company or a Restricted
Subsidiary;
|
|
(2)
|
any
net income (but not loss) of any Restricted Subsidiary if such Subsidiary
is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Restricted Subsidiary,
directly or indirectly, to the Company, except
that:
|
|
(a)
|
subject
to the limitations contained in clauses (3), (4) and (5) below, the
Company’s equity in the net income of any such Restricted Subsidiary for
such period will be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend to
another Restricted Subsidiary, to the limitation contained in this
clause); provided,
however,
that the net income of a Special Entity that does not Guarantee the Notes
will not be included in such Consolidated Net Income except for the amount
of cash actually distributed by such Special Entity during such period to
the Company or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitation contained in this clause);
and
|
|
(b)
|
the
Company’s equity in a net loss of any such Restricted Subsidiary for such
period will be included in determining such Consolidated Net
Income;
|
|
(3)
|
any
after tax gain (loss) realized upon the sale or other disposition of any
property, plant or equipment of the Company or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which
is not sold or otherwise disposed of in the ordinary course of business
and any gain (loss) realized upon the sale or other disposition of any
Capital Stock of any Person;
|
|
(4)
|
any
after tax extraordinary gain or
loss;
|
|
(5)
|
the
cumulative effect of a change in accounting
principles;
|
|
(6)
|
any
asset impairment writedowns on Oil and Gas Properties under GAAP or SEC
guidelines; and
|
|
(7)
|
any
unrealized non-cash gains or losses on charges in respect of Hedging
Obligations (including those resulting from the application of SFAS
133).
|
“Continuing
Directors” means the individuals who, as of the Issue Date, are directors of the
Company and any individual becoming a director of the Company subsequent to the
Issue Date whose election, nomination for election by the Company’s stockholders
or appointment, was approved by a majority of the then Continuing Directors
(either by a specific vote or by approval of the proxy statement of the Company
in which such individual is named as a nominee for election as a director,
without objection to such nomination).
“Control”
of a Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “Controlling” and
“Controlled” have meanings correlative of the foregoing.
“Credit
Facility” means, with respect to the Company or any Subsidiary Guarantor, one or
more credit facilities (including, without limitation, the Senior Secured Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, 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,
replaced or refinanced in whole or in part from time to time (including
successive amendments, restatements, modifications, renewals, refunds,
replacements or refinancings and whether or not with the original administrative
agent and lenders or another administrative agent or agents or other lenders and
whether provided under the original Senior Secured Credit Agreement or any other
credit or other agreement or indenture).
“Currency
Agreement” means in respect of a Person any foreign exchange contract, currency
swap agreement, futures contract, option contract or other similar agreement as
to which such Person is a party or a beneficiary.
“Default”
means any event which, with notice or passage of time or both, would constitute
an Event of Default.
“Disqualified
Stock” means, with respect to any Person, any Capital Stock of such Person which
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable) or upon the happening of any event:
|
(1)
|
matures
or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise;
|
|
(2)
|
is
convertible or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock which is convertible or exchangeable solely at
the option of the Company or a Restricted Subsidiary);
or
|
|
(3)
|
is
redeemable at the option of the holder of the Capital Stock in whole or in
part,
|
in each
case on or prior to the date that is 91 days after the earlier of the date (a)
of the Stated Maturity of the Notes or (b) the first date after the Issue Date
on which there are no Notes outstanding, provided
that only the portion of Capital Stock which so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such date will be deemed to be Disqualified
Stock; provided,
further,
that any Capital Stock that would constitute Disqualified Stock solely because
the holders thereof have the right to require the Company to repurchase such
Capital Stock upon the occurrence of a change of control or asset disposition
(each defined in a substantially identical manner to the corresponding
definitions in the Indenture) shall not constitute Disqualified Stock if the
terms of such Capital Stock (and all such securities into which it is
convertible or for which it is ratable or exchangeable) provide that the Company
may not repurchase or redeem any such Capital Stock (and all such securities
into which it is convertible or for which it is ratable or exchangeable)
pursuant to such provision prior to compliance by the Company with Section 3.15
and Section 3.07 of this Seventh Supplemental Indenture and such repurchase or
redemption complies with Section 3.03 of this Seventh Supplement
Indenture.
“Dollar-Denominated
Production Payments” means production payment obligations recorded as
liabilities in accordance with GAAP, together with all undertakings and
obligations in connection therewith.
“Domestic
Subsidiary” means any Restricted Subsidiary that is organized under the laws of
the United States of America or any state thereof or the District of
Columbia.
“Events
of Default” has the meaning set forth in Article IV.
“Foreign
Subsidiary” means any Restricted Subsidiary that is not organized under the laws
of the United States of America or any state thereof or the District of Columbia
and any Subsidiary of such Restricted Subsidiary.
“GAAP”
means generally accepted accounting principles in the United States of America
as in effect as of March 16, 2006, including those 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
approved by a significant segment of the accounting profession. All
ratios and computations based on GAAP contained in the Indenture will be
computed in conformity with GAAP.
“Guarantee”
means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Indebtedness of any other Person and any obligation,
direct or indirect, contingent or otherwise, of such Person:
|
(1)
|
to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise);
or
|
|
(2)
|
entered
into for purposes of assuring in any other manner the obligee of such
Indebtedness of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in
part);
|
provided,
however,
that the term “Guarantee” will not include endorsements for collection or
deposit in the ordinary course of business. The term “Guarantee” used
as a verb has a corresponding meaning.
“Guarantor
Senior Indebtedness” means, with respect to a Subsidiary Guarantor, the
following obligations, whether outstanding on the Issue Date or thereafter
issued, without duplication:
|
(1)
|
any
Guarantee of the Bank Indebtedness or the Notes by such Subsidiary
Guarantor and all other Guarantees by such Subsidiary Guarantor of Senior
Indebtedness of the Company or Guarantor Senior Indebtedness of any other
Subsidiary Guarantor; and
|
|
(2)
|
all
obligations consisting of principal of and premium, if any, accrued and
unpaid interest on, and fees and other amounts relating to, all other
Indebtedness of the Subsidiary Guarantor. Guarantor Senior
Indebtedness includes interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Subsidiary
Guarantor regardless of whether post-filing interest is allowed in such
proceeding.
|
Notwithstanding
anything to the contrary in the preceding paragraph, Guarantor Senior
Indebtedness will not include:
|
(1)
|
any
Indebtedness Incurred in violation of the
Indenture;
|
|
(2)
|
any
obligations of such Subsidiary Guarantor to the Company or another
Subsidiary;
|
|
(3)
|
any
liability for federal, state, local, foreign or other taxes owed or owing
by such Subsidiary Guarantor;
|
|
(4)
|
any
accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities);
|
|
(5)
|
any
Indebtedness, Guarantee or obligation of such Subsidiary Guarantor that is
expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or
|
|
obligation
of such Subsidiary Guarantor, including, without limitation, any Guarantor
Subordinated Obligations of such Subsidiary Guarantor;
or
|
“Guarantor
Subordinated Obligation” means, with respect to a Subsidiary Guarantor, any
Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date
or thereafter Incurred) which is expressly subordinate in right of payment to
the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee
pursuant to a written agreement.
“Hedging
Obligations” of any Person means the obligations of such Person pursuant to any
Interest Rate Agreement or Currency Agreement or Commodity
Agreement.
“Holder”
means a Person in whose name a Note is registered in the Security Registrar’s
books.
“Hydrocarbons”
means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, and all products,
by-products and all other substances refined, separated, settled or derived
therefrom or the processing thereof, and all other minerals and substances,
including, but not limited to, liquefied petroleum gas, natural gas, kerosene,
sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon
dioxide, helium, and any and all other minerals, ores, or substances of value,
and the products and proceeds therefrom, including, without limitation, all gas
resulting from the in-situ combustion of coal or lignite.
“Incur”
means issue, create, assume, Guarantee, incur or otherwise become liable for;
provided,
however,
that any Indebtedness or Capital Stock of a Person existing at the time such
Person becomes a Restricted Subsidiary (whether by merger, consolidation,
acquisition or otherwise) will be deemed to be Incurred by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary; and the terms
“Incurred” and “Incurrence” have meanings correlative to the
foregoing.
“Indebtedness”
means, as applied to any Person, without duplication:
|
(1)
|
all
obligations of such Person for borrowed
money;
|
|
(2)
|
all
obligations of such Person for the deferred purchase price of property or
services (other than property and services purchased, and expense accruals
and deferred compensation items arising, in the ordinary course of
business);
|
|
(3)
|
all
obligations of such Person evidenced by notes, bonds, debentures,
mandatorily redeemable preferred stock or other similar instruments (other
than performance, surety and appeals bonds arising in the ordinary course
of business);
|
|
(4)
|
all
payment obligations created or arising under any conditional sale,
deferred price or other title retention agreement with respect to property
acquired by such Person (unless the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such
property);
|
|
(5)
|
any
Capital Lease Obligation of such Person, other than obligations under oil
and gas leases entered into in the ordinary course of
business;
|
|
(6)
|
all
reimbursement, payment or similar obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities
(other than letters of credit in support of trade obligations or incurred
in connection with public liability insurance, workers’ compensation,
unemployment insurance, old-age pensions and other social security
benefits other than in respect of employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as
amended);
|
|
(7)
|
all
obligations of such Person, contingent or otherwise, under any guarantee
by such Person of the obligations of another Person of the type referred
to in clauses (1) through (6)
above;
|
|
(8)
|
the
principal component or liquidation preference of all obligations of such
Person with respect to the redemption, repayment or other repurchase of
any Disqualified Stock or, with respect to any Subsidiary that is not a
Subsidiary Guarantor, any Preferred Stock (but excluding, in each case,
any accrued dividends);
|
|
(9)
|
to
the extent not otherwise included in this definition, net obligations of
such Person under Commodity Agreements, Currency Agreements and Interest
Rate Agreements (the amount of any such obligations to be equal at any
time to the termination value of such agreement or arrangement giving rise
to such obligation that would be payable by such Person at such time);
and
|
|
(10)
|
all
obligations referred to in clauses (1) through (6) above secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage or security
interest in property (including without limitation accounts, contract
rights and general intangibles) owned by such Person and as to which such
Person has not assumed or become liable for the payment of such
obligations other than to the extent of the property subject to such
mortgage or security interest;
|
except
that Indebtedness of the type referred to in clauses (7) and (10) above will be
included within the definition of “Indebtedness” only to the extent of the least
of (a) the amount of the underlying Indebtedness referred to in the applicable
clause (1) through (6) above; (b) in the case of clause (7), the limit on
recoveries, if any, from such Person under obligations of the type referred to
in clause (7) above, and (c) in the case of clause (10), the aggregate value (as
determined in good faith by the board of directors or similar governing body of
such Person) of the property of such Person subject to such mortgage or security
interest.
In
addition, “Indebtedness” of any Person shall include Indebtedness described in
the preceding paragraph that would not appear as a liability on the balance
sheet of such Person if:
|
(1)
|
such
Indebtedness is the obligation of a partnership or joint venture that is
not a Restricted Subsidiary (a “Joint
Venture”);
|
|
(2)
|
such
Person or a Restricted Subsidiary of such Person is a general partner of
the Joint Venture (a “General Partner”);
and
|
|
(3)
|
there
is recourse, by contract or operation of law, with respect to the payment
of such Indebtedness to property or assets of such Person or a Restricted
Subsidiary of such Person;
|
in which
case, such Indebtedness shall be included in an amount not to
exceed:
|
(a)
|
the
lesser of (i) the net assets of the General Partner and (ii) the amount of
such obligations to the extent that there is recourse, by contract or
operation of law, to the property or assets of such Person or a Restricted
Subsidiary of such Person; or
|
|
(b)
|
if
less than the amount determined pursuant to clause (a) immediately above,
the actual amount of such Indebtedness that is recourse to such Person or
a Restricted Subsidiary of such Person, if the Indebtedness is evidenced
by a writing and is for a determinable
amount.
|
“Interest
Payment Date” means January 1 and July 1 of each year, commencing January 1,
2010.
“Interest
Rate Agreement” means with respect to any Person any interest rate protection
agreement, interest rate futures contract, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement as to which such Person is party or a beneficiary.
“Investment”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of any direct or indirect
advance, loan (other than advances or extensions of credit to employees,
directors or customers in the ordinary course of business) or other extensions
of credit (including by way of Guarantee or similar arrangement, but excluding
any debt or extension of credit represented by a bank deposit other than a time
deposit) or capital contribution to (by means of any transfer of cash or other
property or any payment for property or services), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by, such Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided
that none of the following will be deemed to be an Investment:
|
(1)
|
Hedging
Obligations Incurred in the ordinary course of business and in compliance
with the Indenture;
|
|
(2)
|
endorsements
of negotiable instruments and documents in the ordinary course of
business; and
|
|
(3)
|
an
acquisition of assets, Capital Stock or other securities by the Company or
a Subsidiary for consideration to the extent such consideration consists
of Common Stock of the Company.
|
For
purposes of Section 3.03 of this Seventh Supplemental Indenture,
|
(1)
|
“Investment”
will include the portion (proportionate to the Company’s equity interest
in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary)
of the fair market value of the net assets of such Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary; provided,
however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Company will be deemed to continue to have a permanent “Investment” in
an Unrestricted Subsidiary in an amount (if positive) equal to (a) the
Company’s “Investment” in such Subsidiary at the time of such
redesignation less (b) the portion (proportionate to the Company’s equity
interest in such Subsidiary) of the fair market value of the net assets
(as conclusively determined by the Board of Directors of the Company in
good faith) of such Subsidiary at the time that such Subsidiary is so
re-designated a Restricted Subsidiary;
and
|
|
(2)
|
any
property transferred to or from an Unrestricted Subsidiary will be valued
at its fair market value at the time of such transfer, in each case as
determined in good faith by the Board of Directors of the
Company.
|
“Investment
Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s Investors Service, Inc. and BBB- (or the equivalent) by Standard &
Poor’s Ratings Services (or an equivalent rating by another nationally
recognized rating agency if both of the two named rating agencies cease
publishing ratings of investments), in each case, with a stable or better
outlook.
“Issue
Date” means June 25, 2009.
“Lien”
means any mortgage, pledge, security interest, encumbrance, lien or similar
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
“Minority
Interest” means the percentage interest represented by any shares of stock of
any class of Capital Stock of a Restricted Subsidiary that are not owned by the
Company or a Restricted Subsidiary.
“Net
Available Cash” from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and net proceeds from
the sale or other disposition of any securities received as consideration, but
only as and when received, but excluding any other consideration received in the
form of assumption by the acquiring Person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other non-cash form) therefrom, in each case net
of:
|
(1)
|
all
legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses Incurred, and all federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP (after taking into account any available tax credits
or deductions and any tax sharing agreements), as a consequence of such
Asset Disposition;
|
|
(2)
|
all
payments made on any Indebtedness which is secured by any assets subject
to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law be repaid out of
the proceeds from such Asset
Disposition;
|
|
(3)
|
all
distributions and other payments required to be made to Minority Interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; and
|
|
(4)
|
amounts
accrued in accordance with GAAP in respect of liabilities associated with
the assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition or
liabilities incurred in connection with such Asset
Disposition.
|
“Net Cash
Proceeds” means, with respect to any issuance or sale of Capital Stock, the cash
proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees,
underwriters’ or placement agents’ fees, listing fees, discounts or commissions
and brokerage, consultant and other fees and charges actually Incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale (after taking into account any available tax
credit or deductions and any tax sharing arrangements).
“Net
Working Capital” means (a) all current assets of the Company and its Restricted
Subsidiaries except current assets under Commodity Agreements, less (b) all
current liabilities of the Company and its Restricted Subsidiaries, except
current liabilities included in Indebtedness and any current liabilities under
Commodity Agreements, in each case as set forth in the consolidated financial
statements of the Company prepared in accordance with GAAP.
“Non-Recourse
Debt” means Indebtedness of a Person:
|
(1)
|
as
to which neither the Company nor any Restricted Subsidiary (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);
|
|
(2)
|
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 Restricted Subsidiary to
declare a default under such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its Stated Maturity;
and
|
|
(3)
|
the
explicit terms of which provide there is no recourse against any of the
assets of the Company or its Restricted
Subsidiaries.
|
“Oil and
Gas Business” means (a) the business of acquiring, exploring, exploiting,
developing, producing, operating and disposing of interests in oil, gas, liquid
natural gas and other hydrocarbon properties, (b) the business of gathering,
marketing, treating, processing, storing, refining, selling and transporting any
production from such interests or properties and products produced therefrom or
in association therewith, and (c) any business or activity relating to, arising
from, or necessary, appropriate or incidental to the activities described in the
foregoing clauses (a) and (b) of this definition.
“Oil and
Gas Properties” means all properties, including equity or other ownership
interests therein, owned by such Person which contain or are believed to contain
“proved oil and gas reserves” as defined in Rule 4-10 of Regulation S-X of the
Securities Act.
“Opinion
of Counsel” means a written opinion from legal counsel who is acceptable to the
Trustee. The counsel may be an employee of or counsel to the Company
or the Trustee.
“Pari
Passu Indebtedness” means Indebtedness that ranks equally in right of payment to
the Notes.
“Permitted
Business Investment” means any Investment made in the ordinary course of the
business of the Company or any Restricted Subsidiary or that is of a kind or
character that is customarily made in the conduct of the Oil and Gas Business,
including investments or expenditures for actively exploiting, exploring for,
acquiring, developing, producing, processing, refining, gathering, marketing or
transporting Hydrocarbons 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 the Oil and Gas Business jointly with third
parties, including:
|
(1)
|
ownership
interests in oil and gas properties, liquid natural gas facilities,
refineries, drilling operations, processing facilities, gathering systems,
pipelines or ancillary real property interests;
and
|
|
(2)
|
Investments
in the form of or pursuant to oil and gas leases, operating agreements,
gathering agreements, processing agreements, farm-in agreements, farm-out
agreements, development agreements, area of mutual interest agreements,
unitization or pooling designations, declarations, orders and agreements,
gas balancing or deferred production agreements, joint bidding agreements,
service contracts, joint venture agreements, partnership agreements
(whether general or limited), subscription agreements, stock purchase
agreements and other similar agreements (including for limited liability
companies) with third parties.
|
“Permitted
Holders” means the following:
|
(1)
|
the
Company or any Subsidiary of the
Company;
|
|
(2)
|
a
trustee or other fiduciary holding securities under any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
Subsidiary of the Company; and
|
|
(3)
|
Mercury
Exploration Company, Quicksilver Energy, L.P., The Discovery Fund,
Pennsylvania Avenue Limited Partnership, Pennsylvania Management Company,
the estate of Frank Darden, Lucy Darden, Anne Darden Self, Glenn Darden or
Thomas Darden, and their respective successors, assigns, designees, heirs,
beneficiaries, trusts, estates or Controlled
affiliates.
|
“Permitted
Investment” means an Investment by the Company or any Restricted Subsidiary
in:
|
(1)
|
a
Restricted Subsidiary (other than a Special Entity that does not Guarantee
the Notes) or a Person which will, upon the making of such Investment,
become a Restricted Subsidiary (other than a Special Entity that does not
Guarantee the Notes); provided,
however,
that the primary business of such Restricted Subsidiary is the Oil and Gas
Business;
|
|
(2)
|
another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially
all its assets to, the Company or a Restricted Subsidiary; provided,
however,
that such Person’s primary business is the Oil and Gas
Business;
|
|
(3)
|
cash
and Cash Equivalents;
|
|
(4)
|
receivables
owing to the Company or any Restricted Subsidiary created or acquired in
the ordinary course of the Oil and Gas Business and payable or
dischargeable in accordance with customary trade terms; provided,
however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
|
|
(5)
|
payroll,
travel and similar advances to cover matters that are expected at the time
of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of
business;
|
|
(6)
|
loans
or advances to employees and directors made in the ordinary course of
business of the Company or such Restricted
Subsidiary;
|
|
(7)
|
Capital
Stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
|
|
(8)
|
Investments
made as a result of the receipt of non-cash consideration from an Asset
Disposition that was made pursuant to and in compliance with Section 3.07
of this Seventh Supplemental
Indenture;
|
|
(9)
|
Investments
in existence on the Issue Date or made pursuant to agreements or
commitments in effect on the Issue
Date;
|
|
(10)
|
Commodity
Agreements, Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which transactions or obligations are Incurred in
compliance with Section 3.02 of this Seventh Supplemental
Indenture;
|
|
(11)
|
Investments
by the Company or any of its Restricted Subsidiaries, together with all
other Investments pursuant to this clause (11), in an aggregate amount not
to exceed $10 million outstanding at any one time (with the fair
market value of such Investment being measured at the time made and
without giving effect to subsequent changes in
value);
|
|
(12)
|
Guarantees
made in accordance with Section 3.02 of this Seventh Supplemental
Indenture;
|
|
(13)
|
Investments
in a Special Entity that does not Guarantee the Notes in an aggregate
amount not to exceed 10% of Adjusted Consolidated Net Tangible Assets
(with Adjusted Consolidated Net Tangible Assets and the fair market value
of such Investment being
|
|
|
measured
at the time such Investment is made and without giving effect to
subsequent changes in value);
|
|
(14)
|
Permitted
Business Investments in an aggregate amount not to exceed 5% of Adjusted
Consolidated Net Tangible Assets (with Adjusted Consolidated Net Tangible
Assets and the fair market value of such Investment being measured at the
time such Investment is made and without giving effect to subsequent
changes in value); and
|
|
(15)
|
any
Asset Swap made in accordance with Section 3.07 of this Seventh
Supplemental Indenture.
|
In order
to be a Permitted Investment, an Investment need not be permitted solely by one
subsection of this definition but may be permitted in part by one such
subsection and in part by one or more other subsections of this
definition. In the event an Investment meets the criteria of one or
more of the subsections of this definition, the Company, in its sole discretion,
may classify (or subsequently reclassify) all or any portion of such Investment
as being permitted by any one or more of such subsections.
“Permitted
Liens” means, with respect to any Person:
|
(1)
|
Liens
securing Indebtedness and related obligations of the Company or any
Restricted Subsidiary Incurred pursuant to a Credit Facility outstanding
on June 27, 2008 or permitted to be Incurred under the Indenture under
clause (1) of the second paragraph of Section 3.02 of this Seventh
Supplemental Indenture;
|
|
(2)
|
pledges
or deposits by such Person under workmen’s compensation laws, unemployment
insurance laws or similar legislation, or earnest money, good faith or
similar deposits in connection with bids, tenders, contracts (other than
for the payment of Indebtedness) or leases to which such Person is a
party, or deposits to secure public, regulatory or statutory obligations
of such Person or deposits of cash or Cash Equivalents to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import or customs duties or for the payment of rent, in
each case Incurred in the ordinary course of
business;
|
|
(3)
|
Liens
imposed by law, including carriers’, warehousemen’s, suppliers’,
materialmen’s and mechanics’ Liens, in each case for sums not yet due or
being contested in good faith by appropriate proceedings if appropriate
reserves or other provisions required by GAAP, if any, shall have been
made in respect thereof;
|
|
(4)
|
Liens
for taxes, assessments or other governmental charges not yet subject to
penalties for non-payment or which are being contested in good faith by
appropriate proceedings if appropriate reserves or other provisions
required by GAAP shall have been made in respect
thereof;
|
|
(5)
|
Liens
in favor of issuers of surety or performance bonds or letters of credit or
bankers’ acceptances issued pursuant to the request of and for the account
of such Person in the ordinary course of its business; provided,
however,
that such letters of credit do not constitute
Indebtedness;
|
|
(6)
|
encumbrances,
easements or reservations of, or rights of others for, licenses, rights of
way, servitudes, permits, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning, building codes or surface
leases and other similar rights in respect of surface operations or other
restrictions (including, without limitation, minor defects or
irregularities in title and similar encumbrances) as to the use of real
properties or liens incidental to the conduct of the business of such
Person or to the ownership of its
|
|
|
properties
which do not in the aggregate materially adversely affect the value of
said properties or materially impair their use in the operation of the
business of such Person;
|
|
(7)
|
Liens
securing Hedging Obligations;
|
|
(8)
|
leases,
licenses, subleases and sublicenses of assets (including, without
limitation, real property and intellectual property rights) which do not
materially interfere with the ordinary conduct of the business of the
Company or any of its Restricted
Subsidiaries;
|
|
(9)
|
judgment
Liens not giving rise to an Event of Default so long as such Lien is
adequately bonded and any appropriate legal proceedings which may have
been duly initiated for the review of such judgment have not been finally
terminated or the period within which such proceedings may be initiated
has not expired;
|
|
(10)
|
Liens
for the purpose of securing the payment of all or a part of the purchase
price of, or Capital Lease Obligations, purchase money obligations or
other payments Incurred to finance the acquisition, improvement or
construction of, assets or property acquired or constructed in the
ordinary course of business; provided
that:
|
|
(a)
|
the
aggregate principal amount of Indebtedness secured by such Liens is
otherwise permitted to be Incurred under the Indenture and does not exceed
the cost of the assets or property so acquired or constructed;
and
|
|
(b)
|
such
Liens are created within 180 days of construction or acquisition of such
assets or property and do not encumber any other assets or property of the
Company or any Restricted Subsidiary other than such assets or property
and assets affixed or appurtenant
thereto;
|
|
(11)
|
Liens
arising solely by virtue of any statutory or common law provisions
relating to banker’s Liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a
depositary institution; provided
that:
|
|
(a)
|
such
deposit account is not a dedicated cash collateral account and is not
subject to restrictions against access by the Company in excess of those
set forth by regulations promulgated by the Federal Reserve Board;
and
|
|
(b)
|
such
deposit account is not intended by the Company or any Restricted
Subsidiary to provide collateral to the depository
institution;
|
|
(12)
|
Liens
arising from Uniform Commercial Code financing statement filings regarding
operating leases entered into by the Company and its Restricted
Subsidiaries in the ordinary course of
business;
|
|
(13)
|
Liens
existing on the Issue Date;
|
|
(14)
|
Liens
on property or shares of stock of a Person at the time such Person becomes
a Restricted Subsidiary; provided,
however,
that such Liens are not created, Incurred or assumed in connection with,
or in contemplation of, such other Person becoming a Restricted
Subsidiary; provided
further,
however,
that any such Lien may not extend to any other property owned by the
Company or any Restricted
Subsidiary;
|
|
(15)
|
Liens
on property at the time the Company or a Restricted Subsidiary acquired
the property, including any acquisition by means of a merger or
consolidation with or into the Company or any Restricted Subsidiary; provided,
however,
that such Liens are not created, Incurred or assumed in connection with,
or in contemplation of, such
acquisition;
|
|
|
provided
further,
however,
that such Liens may not extend to any other property owned by the Company
or any Restricted
Subsidiary;
|
|
(16)
|
Liens
securing Indebtedness or other obligations of a Restricted Subsidiary
owing to the Company or a Wholly-Owned
Subsidiary;
|
|
(17)
|
Liens
securing the Notes and Subsidiary
Guarantees;
|
|
(18)
|
Liens
securing Refinancing Indebtedness Incurred to refinance Indebtedness that
was previously so secured, provided
that any such Lien is limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or, under the written
arrangements under which the original Lien arose, could secure) the
Indebtedness being refinanced or is in respect of property that is the
security for a Permitted Lien
hereunder;
|
|
(19)
|
any
interest or title of a lessor under any Capital Lease Obligation or
operating lease;
|
|
(20)
|
Liens
in respect of Production Payments and Reserve Sales, which Liens shall be
limited to the oil and gas property or other interest that is subject to
such Production Payments and Reserve
Sales;
|
|
(21)
|
Liens
arising under oil and gas leases, farm-out agreements, farm-in agreements,
division orders, contracts for the sale, purchase, exchange,
transportation, gathering or processing of Hydrocarbons, partnership
agreements, joint venture agreements, unitizations and pooling
designations, declarations, orders and agreements, development agreements,
operating agreements, production sales contracts, area of mutual interest
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal
agreements, seismic or geophysical permits or agreements, and other
agreements which are customary in the Oil and Gas Business; provided,
however,
in all instances that such Liens are limited to the assets that are
subject to the relevant agreement, program, order or
contract;
|
|
(22)
|
Liens
on pipelines or pipeline facilities that arise by operation of law;
and
|
|
(23)
|
Liens
securing Indebtedness (other than Subordinated Obligations and Guarantor
Subordinated Obligations) in an aggregate principal amount outstanding at
any one time not to exceed $10
million.
|
“Person”
means any individual, partnership, corporation, limited liability company, joint
stock company, business trust, trust, unincorporated association, joint venture,
or other entity, or government or political subdivision or agency.
“Preferred
Stock,” as applied to the Capital Stock of any corporation, means Capital Stock
of any class or classes (however designated) which is preferred as to the
payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.
“Production
Payments and Reserve Sales” means the grant or transfer by the Company or a
Restricted Subsidiary to any Person of a royalty, overriding royalty, net
profits interest, production payment (whether volumetric or dollar denominated),
partnership or other interest in oil and gas properties or the right to receive
all or a portion of the production or the proceeds from the sale of production
attributable to such properties, under which the grantee or transferee thereof
has recourse solely to such production or proceeds of production, subject to the
obligation of the grantor or transferor to operate and maintain, or cause to be
operated and maintained, the related oil and gas properties or other related
interests in a reasonably prudent manner or other customary standard or subject
to the obligation of the grantor or
transferor to indemnify for
environmental, title or other matters customary in the Oil and Gas Business,
including any such grants or transfers pursuant to incentive compensation
programs on terms that are reasonably customary in the Oil and Gas Business for
geologists, geophysicists or other providers of technical services to the
Company or a Restricted Subsidiary.
“Rating
Agency” means Standard & Poor’s Ratings Services and Moody’s Investors
Service, Inc. or if Standard & Poor’s Ratings Services or Moody’s Investors
Service, Inc. or both shall not make a rating on the Notes publicly available, a
nationally recognized statistical rating agency or agencies, as the case may be,
selected by the Company (as certified by a resolution of the Board of Directors
or a committee thereof) which shall be substituted for Standard & Poor’s
Ratings Group, Inc. or Moody’s Investors Service, Inc. or both, as the case may
be.
“Receivables”
means a right to receive payment arising from a sale or lease of goods or the
performance of services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit and shall include, in any event, any items of property that would be
classified as an “account,” “chattel paper,” “payment intangible” or
“instrument” under the Uniform Commercial Code as in effect in the State of New
York and any “supporting obligations” as so defined.
“Receivables
Fees” means any fees or interest paid to purchasers or lenders providing the
financing in connection with a factoring agreement or other similar agreement,
including any such amounts paid by discounting the face amount of Receivables or
participations therein transferred in connection with a factoring agreement or
other similar arrangement, regardless of whether any such transaction is
structured as on-balance sheet or off-balance sheet or through a Restricted
Subsidiary or an Unrestricted Subsidiary.
“Refinancing
Indebtedness” means Indebtedness that is Incurred to refund, refinance, replace,
exchange, renew, repay or extend (including pursuant to any defeasance or
discharge mechanism) (collectively, “refinance,” “refinances,” and “refinanced”
shall have a correlative meaning) any Indebtedness existing on the Issue Date or
Incurred in compliance with the Indenture (including Indebtedness of the Company
that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of
any Restricted Subsidiary that refinances Indebtedness of another Restricted
Subsidiary) including Indebtedness that refinances Refinancing Indebtedness,
provided,
however,
that:
|
(1)
|
(a)
if the Stated Maturity of the Indebtedness being refinanced is earlier
than the Stated Maturity of the Notes, the Refinancing Indebtedness has a
Stated Maturity no earlier than the Stated Maturity of the Indebtedness
being refinanced or (b) if the Stated Maturity of the Indebtedness being
refinanced is later than the Stated Maturity of the Notes, the Refinancing
Indebtedness has a Stated Maturity at least 91 days later than the Stated
Maturity of the Notes;
|
|
(2)
|
the
Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life
of the Indebtedness being
refinanced;
|
|
(3)
|
such
Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is
equal to or less than the sum of the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced (plus, without
duplication, any additional Indebtedness Incurred to pay interest or
premiums required by the instruments governing such existing Indebtedness
and fees and expenses Incurred in connection therewith);
and
|
|
(4)
|
if
the Indebtedness being refinanced is subordinated in right of payment to
the Notes or the Subsidiary Guarantees, such Refinancing Indebtedness is
subordinated in right of payment to the Notes or the Subsidiary Guarantees
on terms at least as favorable to
the
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holders
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or
refunded.
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“Regular
Record Date” means, with respect to each Interest Payment Date, the close of
business on the immediately preceding June 15 or December 15, as the case may
be.
“Restricted
Investment” means any Investment other than a Permitted
Investment.
“Restricted
Subsidiary” means any Subsidiary of the Company other than an Unrestricted
Subsidiary.
“Sale/Leaseback
Transaction” means an arrangement relating to property now owned or hereafter
acquired whereby the Company or a Restricted Subsidiary transfers such property
to a Person and the Company or a Restricted Subsidiary leases it from such
Person.
“Senior
Indebtedness” means the Notes and, whether outstanding on the Issue Date or
thereafter issued, created, Incurred or assumed, the 2015 Senior Notes, the Bank
Indebtedness and all amounts payable by the Company under or in respect of all
other Indebtedness of the Company, including premiums and accrued and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company at the rate specified
in the documentation with respect thereto whether or not a claim for post-filing
interest is allowed in such proceeding) and fees relating thereto; provided,
however,
that Senior Indebtedness will not include:
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(1)
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any
Indebtedness Incurred in violation of the
Indenture;
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(2)
|
any
obligation of the Company to any
Subsidiary;
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(3)
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any
liability for federal, state, foreign, local or other taxes owed or owing
by the Company;
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(4)
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any
accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities);
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(5)
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any
Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness,
Guarantee or obligation of the Company, including, without limitation, any
Subordinated Obligations; or
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“Senior
Secured Credit Agreement” means (1) the Amended and Restated Credit Agreement,
dated as of February 9, 2007, among the Company, JPMorgan Chase Bank, N.A., as
global administrative agent, and the other agents and financial institutions
from time to time party thereto, as amended; (2) the Amended and Restated Credit
Agreement, dated as of February 9, 2007, among Quicksilver Resources Canada
Inc., JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative
agent, JPMorgan Chase Bank, N.A., as global administrative agent, and the
financial institutions from time to time party thereto, as amended; and (3) each
such agreement as the same may be amended, supplemented or otherwise modified
from time to time.
“Significant
Subsidiary” means any Restricted Subsidiary that would be a “Significant
Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.
“Special
Entity” means any Restricted Subsidiary that is not a Wholly-Owned Subsidiary
that (i) is classified as a pass-through entity for U.S. federal, state,
local and foreign income tax purposes and (ii) has no
Indebtedness.
“Stated
Maturity” means, with respect to any security, the date specified in such
security as the fixed date on which the payment of principal of such security is
due and payable, including pursuant to any mandatory redemption provision, but
shall not include any contingent obligations to repay, redeem or repurchase any
such principal prior to the date originally scheduled for the payment
thereof.
“Subordinated
Obligation” means any Indebtedness of the Company (whether outstanding on the
Issue Date or thereafter Incurred) that is subordinate or junior in right of
payment to the Notes pursuant to a written agreement.
“Subsidiary”
of any Person means (a) any corporation, association or other business entity
(other than a partnership, joint venture, limited liability company or similar
entity) of which more than 50% of the total ordinary 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 (or persons
performing similar functions) or (b) any partnership, joint venture limited
liability company or similar entity of which more than 50% of the capital
accounts, distribution rights, total equity and voting interests or general or
limited partnership interests, as applicable, is, in the case of clauses (a) and
(b), at the time owned or controlled, directly or indirectly, by (1) such
Person, (2) such Person and one or more Subsidiaries of such Person, or (3) one
or more Subsidiaries of such Person. Unless otherwise specified
herein, each reference to a Subsidiary will refer to a Subsidiary of the
Company.
“Subsidiary
Guarantee” means, individually, any Guarantee of payment of the Notes by a
Subsidiary Guarantor pursuant to the terms of the Indenture and any supplemental
indenture thereto, and, collectively, all such Guarantees. Each such
Subsidiary Guarantee will be in the form prescribed by the
Indenture.
“Subsidiary
Guarantor” means (i) Cowtown Pipeline Funding, Inc., Cowtown Pipeline
Management, Inc., Cowtown Pipeline L.P. and Cowtown Gas Processing L.P., and
(ii) any Restricted Subsidiary (other than a Foreign Subsidiary and, except to
the extent it Guarantees the Notes, a Special Entity) created or acquired by the
Company or one or more of its Restricted Subsidiaries after the Issue
Date.
“Treasury
Rate” means the yield to maturity at the time of computation of United States
Treasury securities with a constant maturity (as compiled and published in the
most recent Federal Reserve Statistical Release H.15 (519) which has become
publicly available at least two Business Days prior to the Redemption Date (or,
if such Statistical Release is no longer published, any publicly available
source or similar market data)) most nearly equal to the period from the
Redemption Date to July 1, 2013; provided,
however,
that if the period from the Redemption Date to July 1, 2013 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to July 1, 2013 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be
used.
“Unrestricted
Subsidiary” means
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(1)
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each
of Quicksilver Gas Services Holdings LLC, Quicksilver Gas Services
Operating GP LLC, Quicksilver Gas Services GP LLC, Quicksilver Gas
Services LP, Quicksilver Gas Services Operating LLC, Cowtown Gas
Processing Partners L.P. and Cowtown Pipeline Partners
L.P.;
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(2)
|
any
Subsidiary of the Company that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors of the
Company in the manner provided below;
and
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(3)
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any
Subsidiary of an Unrestricted
Subsidiary.
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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:
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(1)
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such
Subsidiary or any of its Subsidiaries does not own any Capital Stock or
Indebtedness of or have any Investment in, 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;
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(2)
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all
the Indebtedness of such Subsidiary and its Subsidiaries shall, at the
date of designation and at all times thereafter, consist of Non-Recourse
Debt;
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(3)
|
such
designation and the Investment of the Company in such Subsidiary complies
with Section 3.03 of this Seventh Supplemental
Indenture;
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(4)
|
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 its
Subsidiaries;
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(5)
|
such
Subsidiary is a Person with respect to which neither the Company nor any
of its Restricted Subsidiaries has any direct or indirect
obligation:
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(a)
|
to
subscribe for additional Capital Stock of such Person;
or
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(b)
|
to
maintain or preserve such Person’s financial condition or to cause such
Person to achieve any specified levels of operating results;
and
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(6)
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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
materially less favorable to the Company than those that might have been
reasonably obtained from Persons that are not Affiliates of the
Company.
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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 Officers’ Certificate
certifying that such designation complies 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
under the first paragraph of Section 3.02 of this Seventh Supplemental Indenture
on a pro forma basis taking into account such designation.
“U.S.
Government Obligations” 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 of 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 depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such U.S. Government
Obligations or a specific payment of principal of or interest on any such U.S.
Government Obligations held by such custodian for the account of the holder of
such depositary 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
depositary receipt from any amount received by the custodian in respect of the
U.S. Government Obligations or the specific payment of principal of or interest
on the U.S. Government Obligations evidenced by such depositary
receipt.
“Volumetric
Production Payments” means production payment obligations recorded as deferred
revenue in accordance with GAAP, together with all undertakings and obligations
in connection therewith.
“Voting
Stock” of a corporation means all classes of Capital Stock of such corporation
then outstanding and normally entitled to vote in the election of
directors.
“Wholly-Owned
Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of which
(other than directors’ qualifying shares) is owned by the Company or another
Wholly-Owned Subsidiary.
Section
1.03 Payment of
Principal and Interest. The principal of the Notes shall be
due at Stated Maturity (unless earlier redeemed). The unpaid
principal amount of the Notes shall bear interest at the rate of 11.75% per year
until paid or duly provided for, such interest to accrue from June 25, 2009
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for. Interest shall be paid semi-annually in arrears on
each Interest Payment Date, commencing January 1, 2010, to the Person or Persons
in whose name a Note is registered at the close of business on the Regular
Record Date for such Interest Payment Date, provided
that interest payable at the Stated Maturity or on a Redemption Date as provided
herein will be paid to the Person to whom principal is payable. Any
such interest that is not so punctually paid or duly provided for will forthwith
cease to be payable to the Holders on such Regular Record Date and may either be
paid to the Person in whose name the Note (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders not less than 10 calendar days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Original Indenture.
Payments
of interest on the Notes will include interest accrued to but excluding the
respective Interest Payment Dates. Interest payments for the Notes
shall be computed and paid on the basis of a 360-day year consisting of twelve
30-day months. In the event that any date on which interest is
payable on the Notes is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on the date the payment was originally
payable.
Subject,
in the case of any Global Security, to any applicable requirements of the
Depositary, payment of the principal, premium, if any, and interest due at the
Stated Maturity of, or on a Redemption Date for, the Notes shall be made upon
surrender of the Notes at the Corporate Trust Office of the Paying
Agent. The principal of and interest on the Notes shall be paid 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. Payments of
interest (including interest on any Interest Payment Date) will be made, subject
to such surrender where applicable, at the option of the Company, (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register or (ii) by wire transfer at such place and to
such account at a banking institution in the United States as may be designated
in writing to the Trustee at least 15 days prior to the date for payment by the
Person entitled thereto.
Section
1.04 Denominations. The
Notes may be issued in denominations of $2,000, or integral multiples of $1,000
in excess thereof.
Section
1.05 Global
Securities. The Notes will be initially issued in the form of
one or more Global Securities registered in the name of the Depositary (which
initially shall be The Depository Trust Company) or its
nominee. Except under the limited circumstances described below,
Notes represented by
such Global Securities will not be
exchangeable for, and will not otherwise be issuable as, Notes in definitive
form. The Global Securities described above may not be transferred
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or to a
successor Depositary or its nominee.
Owners of
beneficial interests in such Global Securities will not be considered the
Holders thereof for any purpose under the Indenture, and no Global Security
representing a Note shall be exchangeable, except for another Global Security of
like denomination and tenor to be registered in the name of the Depositary or
its nominee or to a successor Depositary or its nominee. The rights
of holders of beneficial interests in such Global Securities shall be exercised
only through the Depositary.
A Global
Security shall be exchangeable for Notes registered in the names of Persons
other than the Depositary or its nominee only as provided by Section 2.05 of the
Original Indenture. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Notes registered in such
names as the Depositary shall direct.
Section
1.06 Transfer. No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
therewith.
Section
1.07 Defeasance
and Covenant Defeasance. The provisions of Article V of the
Original Indenture are hereby replaced in their entirety by this Section 1.07
with respect to the Notes.
(a) Company’s
and Subsidiary Guarantors’ Option to Effect Defeasance or Covenant
Defeasance. The Company and the Subsidiary Guarantors may
elect, at their option by Board Resolution at any time, to have either Section
1.07(b) or Section 1.07(c) applied to the Outstanding Notes, upon compliance
with the conditions set forth below in this Section 1.07.
(b) Defeasance
and Discharge. Upon the Company’s and the Subsidiary
Guarantors’ exercise of the option provided in Section 1.07(a) to have this
Section 1.07(b) applied to the Outstanding Notes, the Company and the Subsidiary
Guarantors will be deemed to have been discharged from their obligations with
respect to the Outstanding Notes as provided in this Section 1.07(b) on and
after the date the conditions set forth in Section 1.07(d) are satisfied
(hereinafter called “Defeasance”). For this purpose, such Defeasance
means that the Company and the Subsidiary Guarantors will be deemed to have paid
and discharged the entire indebtedness represented by the Outstanding Notes and
to have satisfied all their other obligations under the Notes and this Seventh
Supplemental Indenture (and the Trustee, at the expense of the Company, will
execute proper instruments acknowledging the same), subject to the following
which will survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders to receive, solely from the trust fund described in Section
1.07(d) and as more fully set forth in Section 1.07(d), payments in respect of
the principal of and any premium and interest on the Notes when payments are
due, (ii) the Company’s obligations with respect to the Notes under Sections
2.05, 2.06, 2.07, 6.02, 6.03 and 10.06 of the Original Indenture, (iii) the
rights, powers, trusts, duties, and immunities of the Trustee under the Original
Indenture and this Seventh Supplemental Indenture and (iv) this Section
1.07. Subject to compliance with this Section 1.07, the Company and
the Subsidiary Guarantors may exercise their option provided in Section 1.07(a)
to have this Section 1.07(b) applied to the Outstanding Notes notwithstanding
the prior exercise of its option provided in Section 1.07(a) to have Section
1.07(c) applied to the Outstanding Notes.
(c) Covenant
Defeasance. Upon the Company’s and Subsidiary Guarantors’
exercise of the option provided in Section 1.07(a) to have this Section 1.07(c)
applied to the Outstanding Notes, (a) the Company will be released from its
obligations under Article III of this Seventh Supplemental Indenture and Section
6.04 of the Original Indenture, and the Subsidiary Guarantors will be released
from their Guarantees and (b) the occurrence of any event specified in clauses
(3), (4), (6), (7), (8) (with respect to Significant Subsidiaries only), (9) or
(10) of Article IV of this Seventh Supplemental Indenture will be deemed not to
be or result in an Event of Default, in each case with respect to the
Outstanding Notes as provided in this Section 1.07(c) on and after the date the
conditions set forth in Section 1.07(d) are satisfied
(hereinafter
called “Covenant Defeasance”). For this purpose, such Covenant
Defeasance means that the Company and Subsidiary Guarantors may omit to comply
with and will have no liability in respect of any term, condition, or limitation
set forth in any such specified Section, whether directly or indirectly by
reason of any reference elsewhere herein or in the Original Indenture to any
such Section or provision or by reason of any reference in any such Section or
provision to any other provision herein, in the Original ndenture or in any
other document, but the remainder of the Original Indenture, this Seventh
Supplemental Indenture and the Notes will be unaffected thereby.
(d) Conditions
to Defeasance or Covenant Defeasance. The following will be
the conditions to application of either Section 1.07(b) or Section 1.07(c) to
the Outstanding Notes:
(i) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another trustee that satisfies
the requirements contemplated by Section 9.08 of the Original Indenture and
agrees to comply with the provisions of this Section 1.07 applicable to it) as
trust funds in trust for the benefit of the Holders of Outstanding Notes (A)
money in an amount, or (B) U.S. Government Obligations that through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, without reinvestment, not later than one day
before the due date of any payment, money in an amount or (C) a combination
thereof, in each case sufficient to pay and discharge, and which will be applied
by the Trustee (or any such other qualifying trustee) to pay and discharge, the
principal of and any premium and interest on the Notes at the Stated Maturity or
on any earlier date or dates on which the Notes shall be subject to redemption
and the Company shall have given the Trustee irrevocable instructions
satisfactory to the Trustee to give notice to the Holders of the redemption of
the Notes, all in accordance with the terms of the Original Indenture, this
Seventh Supplemental Indenture and the Notes.
(ii) In the case of an election under Section
1.07(b), the Company shall have delivered to the Trustee an Opinion of Counsel
(from a counsel who shall not be an employee of the Company) to the effect that
(i) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the date of the Original 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 shall confirm that, the Holders
of the Outstanding Notes will not recognize gain or loss for federal income tax
purposes as a result of the deposit, Defeasance, and discharge to be effected
with respect to the Notes and will be subject to federal income tax on the same
amount, in the same manner, and at the same times as would be the case if such
deposit, Defeasance, and discharge were not to occur.
(iii) In the case of an election under Section
1.07(c), the Company shall have delivered to the Trustee an Opinion of Counsel
(from a counsel who shall not be an employee of the Company) to the effect that
the Holders of the Outstanding Notes will not recognize gain or loss for federal
income tax purposes as a result of the deposit and Covenant Defeasance to be
effected with respect to the Notes and will be subject to federal income tax on
the same amount, in the same manner, and at the same times as would be the case
if such deposit and Covenant Defeasance were not to
occur.
(iv) The Company shall have delivered to the
Trustee an Officer’s Certificate to the effect that the Notes, if then listed on
any securities exchange, will not be delisted solely as a result of such
deposit.
(v) No Event of Default or event that (after
notice or lapse of time or both) would become an Event of Default shall have
occurred and be continuing at the time of such deposit or, with regard to any
Event of Default or any such event specified in Sections 8.01(a)(vi) and (vii)
of the Original Indenture, at any time on or prior to the 90th calendar day
after the date of such deposit (it being understood that this condition will not
be deemed satisfied until after such 90th calendar
day).
(vi) Such Defeasance or Covenant Defeasance will
not cause the Trustee to have a conflicting interest within the meaning of the
Trust Indenture Act (assuming all Notes are in default within the meaning of
such Act).
(vii) Such Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under, any
other agreement or instrument to which the Company or any Subsidiary Guarantor
is a party or by which it is bound.
(viii) The Company shall have delivered to the
Trustee a certificate from a nationally recognized firm of independent
accountants or other Person acceptable to the Trustee expressing their opinion
that the payments of principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited money without
investment will provide the cash at such times and in such amounts as will be
sufficient to pay the principal of and any premium and interest when due on the
Notes at the Stated Maturity or on any earlier date or dates on which the Notes
shall be subject to redemption.
(ix) The Company shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
all conditions precedent with respect to such Defeasance or Covenant Defeasance
have been complied with.
(x) Such Defeasance or Covenant Defeasance will
not result in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act of 1940, as amended,
unless such trust will be qualified under such Act or will be exempt from
regulation thereunder.
(e) Deposited
Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous
Provisions.
(i) Subject to the provisions of Section 6.03(e)
of the Original Indenture, all money and U.S. Government Obligations (including
the proceeds thereof) deposited with the Trustee or other qualifying trustee
(solely for purposes of this Section 1.07(e) and Section 1.07(f), the Trustee
and any such other trustee are referred to collectively as the Trustee) pursuant
to Section 1.07(d) in respect of the Notes will be held in trust and applied by
the Trustee, in accordance with the provisions of the Notes, the Original
Indenture and this Seventh Supplemental Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders, of all sums due
and to become due thereon in respect of principal and any premium and interest,
but money so held in trust need not be segregated from other funds except to the
extent required by law.
(ii) The Company will pay and indemnify the
Trustee against any tax, fee, or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 1.07(d) or the
principal and interest received in respect thereof other than any such tax, fee,
or other charge that by law is for the account of the Holders of Outstanding
Notes.
(iii) Notwithstanding anything in this Section
1.07 to the contrary, the Trustee will deliver or pay to the Company from time
to time upon a Company Request any money or U.S. Government Obligations held by
it as provided in Section 1.07(d) with respect to Notes that are in excess of
the amount thereof that would then be required to be deposited to effect an
equivalent Defeasance or Covenant Defeasance with respect to the
Notes.
(f) Reinstatement. If
the Trustee or the Paying Agent is unable to apply any money in accordance with
this Section 1.07 with respect to the Notes by reason of any order or judgment
of any court or governmental authority enjoining, restraining, or otherwise
prohibiting such application, then the Company’s and the Subsidiary Guarantors’
obligations under the Original Indenture, this Seventh Supplemental Indenture
and the Notes will be revived and reinstated as though no deposit had occurred
pursuant to this Section 1.07 with respect to Notes until such time as the
Trustee or Paying Agent is permitted to apply all money held in trust pursuant
to Section 1.07(e) with respect to Notes in accordance with this Section 1.07;
provided,
however,
that if the Company or any Subsidiary Guarantor makes any payment of principal
of or any premium or interest on any Note following the reinstatement of
its
obligations, the Company and the
Subsidiary Guarantors will be subrogated to the rights of the Holders to receive
such payment from the money so held in trust.
Section
1.08 Redemption
at the Option of the
Company.
(a) Except
as described in this Section 1.08, the Notes are not redeemable until July 1,
2013. On and after July 1, 2013, the Company may redeem all or, from
time to time, a part of the Notes upon not less than 30 nor more than 60 days’
notice, at the following Redemption Prices (expressed as a percentage of
principal amount) plus accrued and unpaid interest on the Notes, if any, to the
applicable Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date to receive interest due on the relevant Interest
Payment Date), if redeemed during the twelve-month period beginning on July 1 of
the years indicated below:
Year
|
Percentage
|
2013
|
105.875%
|
2014
|
102.938%
|
2015
|
100.000%
|
(b) Prior
to July 1, 2012, the Company may on any one or more occasions redeem up to 35%
of the original principal amount of the Notes (which includes Additional Notes
(as defined below), if any) with the Net Cash Proceeds of one or more equity
offerings at a Redemption Price of 111.75% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date to receive
interest due on the relevant Interest Payment Date); provided
that:
(i) at
least 65% of such aggregate principal amount of the Notes (which includes
Additional Notes, if any) remains outstanding after each such redemption;
and
(ii) each
such redemption occurs within 90 days after the closing of such equity
offering.
(c) In
addition, at any time prior to July 1, 2013, the Company may redeem the Notes,
in whole but not in part, at a Redemption Price equal to 100% of the principal
amount thereof plus the Applicable Premium plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date to receive interest due on the relevant Interest
Payment Date).
(d) If
the optional Redemption Date is on or after a Regular Record Date and on or
before the related Interest Payment Date, the accrued and unpaid interest, if
any, will be paid to the Person in whose name the Note is registered at the
close of business on the Regular Record Date, and no additional interest will be
payable to Holders whose Notes will be subject to redemption.
(e) In
the case of any partial redemption, selection of the Notes for redemption will
be made by the Trustee:
(i) in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed; or
(ii) if
the Notes are not listed, then on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion may deem to be fair and
appropriate.
No Note
of $2,000 in aggregate principal amount or less will be redeemed in
part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note will state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder upon
cancellation of the original Note. Notes called for
redemption become due on the date
fixed for redemption. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
(f) The
Company shall notify the Trustee of the Redemption Price with respect to the
redemption promptly after the calculation thereof. The Trustee shall
not be responsible for calculating the Redemption Price.
Section
1.09 Paying
Agent. The Trustee shall initially serve as Paying Agent with
respect to the Notes, with the place of payment initially being the corporate
trust office of the Trustee in New York, New York.
Section
1.10 Additional
Notes. Subject to the terms and conditions contained herein,
the Company may from time to time, without the consent of the existing Holders
create and issue additional notes (the “Additional Notes”) having the same terms
and conditions as the Notes in all respects, except for issue date, issue price
and the first payment of interest thereon. Such Additional Notes, at
the Company’s determination and in accordance with the provisions of the
Indenture, will be consolidated with and form a single series with the
previously outstanding Notes for all purposes of the Indenture, including,
without limitation, amendments, waivers, and redemptions. The
aggregate principal amount of the Additional Notes, if any, shall be
unlimited.
ARTICLE
II
SUBSIDIARY
GUARANTEES
Section
2.01 Guarantee.
(a) Subject
to this Article II, each of the Subsidiary Guarantors hereby, jointly and
severally, fully and unconditionally Guarantees, on a senior basis, 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 the Indenture, the Notes or the obligations of the Company hereunder or
thereunder, that:
(1) the
principal of, premium, if any, and interest on the Notes will be promptly paid
in full when due, whether at Stated Maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of 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 will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof, and
(2) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise.
Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately. Each Subsidiary Guarantor
agrees that this is a guarantee of payment and not a guarantee of
collection.
(b) The
Subsidiary Guarantors hereby agree that their obligations hereunder are
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or the 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.
(c) Each
Subsidiary Guarantor 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 covenants that this Subsidiary Guarantee
will not be discharged except by complete performance of the obligations
contained in the Notes and the Indenture.
(d) If
any Holder or the Trustee is required by any court or otherwise to return to the
Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Subsidiary Guarantors, any amount paid by either to the Trustee or such Holder,
this Subsidiary Guarantee, to the extent theretofore discharged, will be
reinstated in full force and effect.
(e) Each
Subsidiary Guarantor agrees that it will not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed
hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (1) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article IV hereof for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (2) in
the event of any declaration of acceleration of such obligations as provided in
Article IV hereof, such obligations (whether or not due and payable) will
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Subsidiary Guarantee.
(f) The
Subsidiary Guarantors will have the right to seek contribution from any
non-paying Subsidiary Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Subsidiary Guarantee.
Section
2.02 Limitation
on Subsidiary Guarantor Liability. Each Subsidiary Guarantor,
and by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Subsidiary Guarantee of such Subsidiary
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act, any
bankruptcy, insolvency or reorganization law or any similar federal or state law
to the extent applicable to any Subsidiary Guarantee. To effectuate
the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of such Subsidiary Guarantor will
be limited to the maximum amount that will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Subsidiary
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Subsidiary Guarantor in respect of the obligations of such
other Subsidiary Guarantor under this Article II, result in the obligations of
such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
Section
2.03 Releases of
Subsidiary Guarantees. The Subsidiary Guarantee of a
Subsidiary Guarantor will be released:
(1) in
connection with any sale, disposition or other transfer (including through
merger or consolidation), other than by lease, of (x) the Capital Stock of such
Subsidiary Guarantor following which such Subsidiary Guarantor is no longer a
Subsidiary of the Company or (y) all or substantially all the assets of the
applicable Subsidiary Guarantor, in each case, to a Person that is not (either
before or after giving effect to such transaction) the Company or a Restricted
Subsidiary of the Company if such sale, disposition or other transfer is made in
compliance with the applicable provisions of the Indenture and all of the
obligations of the Subsidiary Guarantor under any Credit Facility and related
documentation and any other agreements relating to any other Indebtedness of the
Company or its Restricted Subsidiaries terminate upon consummation of such
transaction;
(2) in
connection with the defeasance of the Notes and the Subsidiary Guarantees, to
the extent that the obligations of the Company have been discharged thereby;
or
(3) if
the Company designates any Restricted Subsidiary that is a Subsidiary Guarantor
as an Unrestricted Subsidiary in accordance with the applicable provisions of
the Indenture.
ARTICLE
III
PARTICULAR
COVENANTS OF THE COMPANY WITH RESPECT TO THE NOTES
Section
3.01 Effectiveness
of Covenants. From and after the first day on
which:
(1) the
Notes have an Investment Grade Rating from both of the Ratings Agencies;
and
(2) no
Default has occurred and is continuing under the Indenture;
the
Company and its Restricted Subsidiaries will cease to be subject to Sections
3.02, 3.03, 3.06, 3.07, 3.08, 3.09, 3.13 and clauses (4) and (6) of Section 3.11
of this Seventh Supplemental Indenture.
(collectively,
the “Suspended Covenants”). If at any time the credit rating of the
Notes is downgraded from an Investment Grade Rating by either Rating Agency,
then the Suspended Covenants will thereafter be reinstated and again be
applicable pursuant to the terms of the Indenture, unless and until the Notes
subsequently attain an Investment Grade Rating. Neither the failure
of the Company or any of its Subsidiaries to comply with a Suspended Covenant
after the Notes attain an Investment Grade Rating and before any reinstatement
of the Suspended Covenants nor compliance by the Company or any of its
Subsidiaries with any contractual obligation entered into in compliance with the
Indenture during that period will constitute a Default, Event of Default or
breach of any kind under the Indenture, the Notes or the Subsidiary
Guarantees.
During
any period when the Suspended Covenants are not in effect, the Board of
Directors of the Company may not designate any of the Company’s Subsidiaries as
Unrestricted Subsidiaries pursuant to the Indenture.
Section
3.02 Limitation
on Indebtedness.
The
Company may not, and may not permit any of its Restricted Subsidiaries to, Incur
any Indebtedness (including Acquired Indebtedness); except, that the Company and
any Restricted Subsidiary may Incur Indebtedness if on the date
thereof:
(1) the
Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is
at least 2.25 to 1.0; and
(2) no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence of Incurring the Indebtedness or the transactions relating to
such Incurrence.
The first
paragraph of this Section 3.02 will not prohibit the Incurrence of the following
Indebtedness:
(1) Indebtedness
of the Company and its Restricted Subsidiaries Incurred pursuant to a Credit
Facility in an aggregate principal amount up to the greater of (x) $1.2 billion
or (y) 30% of Adjusted Consolidated Net Tangible Assets, in each case,
determined as of the date of the Incurrence of the Indebtedness;
(2) Guarantees
of Indebtedness Incurred in accordance with the provisions of the Indenture;
provided
that if the Indebtedness that is being Guaranteed is Guaranteed by a Subsidiary
Guarantor and is (a) Senior Indebtedness or Guarantor Senior Indebtedness, then
the related Guarantee shall rank equally in right of payment to the Subsidiary
Guarantee or (b) a Subordinated Obligation or a Guarantor Subordinated
Obligation, then the related Guarantee shall be subordinated in right of payment
to the Subsidiary
Guarantee;
(3) Indebtedness
of the Company owing to and held by any Wholly-Owned Subsidiary or Indebtedness
of a Restricted Subsidiary owing to and held by the Company or any Wholly-Owned
Subsidiary; provided,
however,
that:
(a) if
the Company is the obligor on the Indebtedness, the Indebtedness is subordinated
in right of payment to all obligations with respect to the Notes;
(b) if
a Subsidiary Guarantor is the obligor on the Indebtedness and the Company or a
Subsidiary Guarantor is not the obligee, such Indebtedness is subordinated in
right of payment to the Subsidiary Guarantees of that Subsidiary Guarantor;
and
(c) any
subsequent issuance or transfer of Capital Stock, sale or other transfer of any
such Indebtedness or other event that results in any such Indebtedness being
held by a Person other than the Company or a Wholly-Owned Subsidiary of the
Company shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be, as of the
date such Indebtedness first became held by such Person;
(4) Indebtedness
represented by (a) the Notes issued on the Issue Date, and the Subsidiary
Guarantees, (b) any Indebtedness (other than the Indebtedness described in
clauses (1), (2), (3), (6), (8), (9) and (10) of this paragraph) outstanding on
the Issue Date, and (c) any Refinancing Indebtedness Incurred in respect of any
Indebtedness described in this clause (4) or clause (5) of this paragraph or
Incurred pursuant to the first paragraph of this Section 3.02;
(5) Indebtedness
of a Restricted Subsidiary Incurred and outstanding on the date on which such
Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred (a) to provide all or any portion of the funds utilized to consummate
the transaction or series of related transactions pursuant to which such
Restricted Subsidiary was acquired by the Company or (b) otherwise in connection
with, or in contemplation of, such acquisition); provided,
however,
that, at the time such Restricted Subsidiary is acquired by the Company, the
Company would have been able to Incur $1.00 of additional Indebtedness pursuant
to the first paragraph of this Section 3.02 after giving effect to the
Incurrence of such Indebtedness;
(6) Indebtedness
under Currency Agreements, Commodity Agreements and Interest Rate Agreements;
provided
that, in the case of Currency Agreements or Commodity Agreements, such Currency
Agreements or Commodity Agreements are related to business transactions of the
Company or its Restricted Subsidiaries entered into in the ordinary course of
business and, in the case of Currency Agreements, Commodity Agreements and
Interest Rate Agreements, such Currency Agreements, Commodity Agreements and
Interest Rate Agreements are entered into for bona fide hedging purposes of the
Company or its Restricted Subsidiaries (as determined in good faith by the Board
of Directors or senior management of the Company);
(7) the
Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money
obligations with respect to assets other than Capital Stock or other
Investments, in each case Incurred for the purpose of financing all or any part
of the purchase price or cost of construction or
improvements
of property used in the business of the Company or the Restricted Subsidiary, in
an aggregate principal amount not to exceed $20 million at any time
outstanding;
(8) Indebtedness
Incurred in respect of workers’ compensation claims, self-insurance obligations,
bid, reimbursement, performance, surety, appeal and similar bonds, completion
guarantees provided by the Company or a Restricted Subsidiary in the ordinary
course of business, or required by regulatory authorities in connection with the
conduct by the Company and its
Restricted Subsidiaries of their businesses, including supporting Guarantees and
letters of credit (in each case other than for an obligation for money
borrowed);
(9) Indebtedness
arising from agreements of the Company or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, Incurred or assumed in connection with the disposition of any business,
assets or Capital Stock of the Company or a Restricted Subsidiary;
(10) Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business; provided,
however,
that such Indebtedness is extinguished within five Business Days of the
Incurrence; and
(11) in
addition to the items referred to in clauses (1) through (10) of this paragraph,
Indebtedness of the Company and its Restricted Subsidiaries in an aggregate
outstanding principal amount which, when taken together with the principal
amount of all other Indebtedness Incurred pursuant to this clause (11) and then
outstanding, will not exceed $40 million at any time outstanding.
The
Company may not Incur any Indebtedness under the preceding paragraph if the
proceeds thereof are used, directly or indirectly, to refinance any Subordinated
Obligations of the Company unless such Indebtedness will be subordinated to the
Notes to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor may Incur any Indebtedness under
the preceding paragraph if the proceeds thereof are used, directly or
indirectly, to refinance any Guarantor Subordinated Obligations of such
Subsidiary Guarantor unless such Indebtedness will be subordinated to the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee to at
least the same extent as such Guarantor Subordinated Obligations.
For
purposes of determining compliance with, and the outstanding principal amount of
any particular Indebtedness Incurred pursuant to and in compliance with, this
Section 3.02:
(1) Indebtedness
permitted by this Section 3.02 need not be permitted solely by one provision
permitting such Indebtedness but may be permitted in part by one such provision
and in part by one or more other provisions of this Section 3.02 permitting such
Indebtedness;
(2) in
the event that Indebtedness meets the criteria of more than one of the
provisions permitting the Incurrence of Indebtedness described in the first and
second paragraphs above, the Company, in its sole discretion, may classify (or
subsequently reclassify) such item of Indebtedness as being permitted by one or
more such provisions;
(3) all
Indebtedness outstanding on the date of the Indenture under the Senior Secured
Credit Agreement shall be deemed initially Incurred on the Issue Date under
clause (1) of the second paragraph of this Section 3.02 and not the first
paragraph or clause (4) of the second paragraph of this Section
3.02;
(4) Guarantees
of, or obligations in respect of letters of credit relating to, Indebtedness
which is otherwise included in the determination of a particular amount of
Indebtedness shall not be included;
(5) if
obligations in respect of letters of credit are Incurred pursuant to a Credit
Facility and are being treated as Incurred pursuant to clause (1) of the second
paragraph of this Section 3.02 and the letters of credit relate to other
Indebtedness, then such other Indebtedness shall not be included;
(6) no
item of Indebtedness will be given effect more than once in any calculation
contemplated by this Section 3.02 and no individual item or related items of
Indebtedness will be given effect at an aggregate amount in excess of the
aggregate amount required to satisfy and discharge the principal amount of such
item or related items of Indebtedness;
(7) the
principal amount of any Disqualified Stock of the Company or a Restricted
Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a
Subsidiary Guarantor, will be equal to the greater of the maximum mandatory
redemption or repurchase price (not including, in either case, any redemption or
repurchase premium) or the liquidation preference thereof; and
(8) the
amount of Indebtedness issued at a price that is less than the principal amount
thereof will be equal to the amount of the liability in respect thereof
determined in accordance with GAAP.
Accrual
of interest, accrual of dividends, the accretion of accreted value, the payment
of interest in the form of additional Indebtedness and the payment of dividends
in the form of additional shares of Preferred Stock or Disqualified Stock will
not be deemed to be an Incurrence of Indebtedness for purposes of this Section
3.02. The amount of any Indebtedness outstanding as of any date shall
be (i) the accreted value thereof in the case of any Indebtedness issued with
original issue discount and (ii) the principal amount or liquidation preference
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
In
addition, the Company will not permit any of its Unrestricted Subsidiaries to
Incur any Indebtedness or issue any shares of Disqualified Stock, other than
Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes
a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to
be Incurred by a Restricted Subsidiary as of such date (and, if such
Indebtedness is not permitted to be Incurred as of such date under this Section
3.02, the Company shall be in Default of this Section 3.02).
For
purposes of determining compliance with any U.S. dollar-denominated restriction
on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency will be calculated based on
the relevant currency exchange rate in effect on the date the Indebtedness was
Incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; provided
that if such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and the refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of the refinancing, such
U.S. dollar-dominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being
refinanced. Notwithstanding any other provision of this Section 3.02,
the maximum amount of Indebtedness that the Company may Incur pursuant to this
Section 3.02 shall not be deemed to be exceeded solely as a result of
fluctuations in the exchange rate of currencies. The principal amount
of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, will be calculated
based on the currency exchange rate applicable to the currencies in which the
Refinancing Indebtedness is denominated that is in effect on the date of such
refinancing.
Section
3.03 Limitation
on Restricted Payments. The Company will not, and will not
permit any of its Restricted Subsidiaries, directly or indirectly,
to:
(1) pay
any dividend or make any distribution on or in respect of its Capital Stock
(including any payment in respect of its Capital Stock in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries) except:
(a) dividends
or distributions payable in Capital Stock of the Company (other than
Disqualified Stock) or in options, warrants or other rights to purchase Capital
Stock of the Company; and
(b) dividends
or distributions payable to the Company or a Restricted Subsidiary (and if the
Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of
Capital Stock on a pro rata basis);
(2) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any direct or indirect parent of the Company held by Persons other than the
Company or a Restricted Subsidiary (other than in exchange for Capital Stock of
the Company or any direct or indirect parent of the Company (other than
Disqualified Stock));
(3) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations or Guarantor Subordinated Obligations (other than the
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of Subordinated Obligations or Guarantor Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year (or, in the case of the 2016
Senior Subordinated Notes or any Refinancing Indebtedness in respect thereof, 45
days) of the date of purchase, repurchase, redemption, defeasance or other
acquisition or retirement); or
(4) make
any Restricted Investment in any Person;
(any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Restricted Investment referred to in clauses (1)
through (4) of this paragraph being referred to herein as a “Restricted
Payment”), if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(a) a
Default shall have occurred and be continuing (or would result therefrom);
or
(b) the
Company is not able to Incur an additional $1.00 of Indebtedness pursuant to the
first paragraph under Section 3.02 above after giving effect, on a pro forma
basis, to the Restricted Payment; or
(c) the
aggregate amount of the Restricted Payment and all other Restricted Payments
made subsequent to March 16, 2006 would exceed the sum of:
(i) 50%
of Consolidated Net Income for the period (treated as one accounting period)
from October 1, 2005 to the end of the most recent fiscal quarter ending prior
to the date of such Restricted Payment for which financial statements are in
existence (or, in case such Consolidated Net Income is a deficit, minus 100% of
such deficit);
(ii) 100%
of the aggregate Net Cash Proceeds received by the Company from the issue or
sale of its Capital Stock (other than
Disqualified
Stock) or other capital contributions subsequent to March 16, 2006 (other than
Net Cash Proceeds received from an issuance or sale of such Capital Stock to a
Subsidiary of the Company or an employee stock ownership plan, option plan or
similar trust to the extent such sale to an employee stock ownership plan,
option plan or similar trust is financed by loans from or Guaranteed by the
Company or any Restricted Subsidiary unless such loans have been repaid with
cash on or prior to the date of determination);
(iii) the
amount by which Indebtedness of the Company or its Restricted Subsidiaries is
reduced on the Company’s balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) subsequent to March 16, 2006 of any
Indebtedness of the Company or its Restricted Subsidiaries convertible into or
exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash, or the fair market value of any other property,
distributed by the Company upon such conversion or exchange); and
(iv) the
amount equal to payments received by the Company or any Restricted Subsidiary in
respect of, or the net reduction in, Restricted Investments made by the Company
or any of its Restricted Subsidiaries in any Person resulting from:
(A) repurchases
or redemptions of such Restricted Investments by the Person in which such
Restricted Investments are made, proceeds realized upon the sale of such
Restricted Investment to an unaffiliated purchaser or payments in respect of
such Restricted Investment, whether through interest payments, principal
payments, dividends, distributions or otherwise, by such Person to the Company
or any Restricted Subsidiary; or
(B) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in
each case as provided in the definition of “Investment”) not to exceed, in the
case of any Unrestricted Subsidiary, the amount of Investments previously made
by the Company or any Restricted Subsidiary in such Unrestricted
Subsidiary;
which
amount in each case under clause (iv) was included in the calculation of
the amount of Restricted Payments; provided,
however,
that no amount will be included under clause (iv) to the extent it is already
included in Consolidated Net Income.
The
provisions of the preceding paragraph will not prohibit:
(1) any
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of Capital Stock, Disqualified Stock or Subordinated Obligations or Guarantor
Subordinated Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
or an employee stock ownership plan or similar trust to the extent such sale to
an employee stock ownership plan or similar trust is financed by loans from or
Guaranteed by the Company or any Restricted Subsidiary unless such loans have
been repaid with cash on or prior to the date of determination); provided,
however,
that (a) such purchase, repurchase, redemption, defeasance, acquisition or
retirement will be excluded in subsequent calculations of the amount of
Restricted Payments and (b) the Net Cash Proceeds from such sale of Capital
Stock will be excluded from clause (c)(ii) of the preceding
paragraph;
(2) any
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of Subordinated Obligations or Guarantor Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Subordinated Obligations or any purchase, repurchase, redemption, defeasance or
other acquisition or retirement of Guarantor Subordinated Obligations made by
exchange for or out of the proceeds of the substantially concurrent sale of
Guarantor Subordinated Obligations that, in each case, is permitted to be
Incurred under Section 3.02 of this Seventh Supplemental Indenture and that in
each case constitutes Refinancing Indebtedness; provided,
however,
that such purchase, repurchase, redemption,
defeasance, acquisition or retirement will be excluded in subsequent
calculations of the amount of Restricted
Payments;
(3) any
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange
for or out of the proceeds of the substantially concurrent sale of Disqualified
Stock of the Company or such Restricted Subsidiary, as the case may be, that, in
each case, is permitted to be Incurred under Section 3.02 of this Seventh
Supplemental Indenture and that in each case constitutes Refinancing
Indebtedness; provided,
however,
that such purchase, repurchase, redemption, defeasance, acquisition or
retirement will be excluded in subsequent calculations of the amount of
Restricted Payments;
(4) dividends
paid within 60 days after the date of declaration if at such date of declaration
the dividend would have complied with this provision; provided,
however,
that such dividends will be included in subsequent calculations of the amount of
Restricted Payments;
(5) so
long as no Default or Event of Default has occurred and is
continuing,
(a) the
purchase, redemption or other acquisition, cancellation or retirement for value
of Capital Stock, or options, warrants, equity appreciation rights or other
rights to purchase or acquire Capital Stock of the Company or any Restricted
Subsidiary or any direct or indirect parent of the Company held by any existing
or former employees or directors of the Company or any Subsidiary of the Company
or their assigns, estates or heirs, in each case in accordance with the terms of
employee stock option or stock purchase agreements or other agreements to
compensate employees or directors; provided
that such purchases, redemptions, acquisitions, cancellations or retirements
pursuant to this clause will not exceed $2.0 million in the aggregate during any
calendar year; provided
further,
however,
that the amount of any such purchases, redemptions, acquisitions, cancellations
or retirements will be included in subsequent calculations of the amount of
Restricted Payments; and
(b) loans
or advances to employees or directors of the Company or any Subsidiary of the
Company the proceeds of which are used to purchase Capital Stock of the Company,
in an aggregate amount not in excess of $2.0 million at any one time
outstanding; provided,
however,
that the amount of such loans and advances will be included in subsequent
calculations of the amount of Restricted Payments;
(6) so
long as no Default or Event of Default has occurred and is continuing, the
declaration and payment of dividends to holders of any class or series of
Disqualified Stock of the Company issued in accordance with the terms of the
Indenture to the extent such dividends are included in the definition of
“Consolidated Interest Expense;” provided,
however,
that the payment of such dividends will be excluded in subsequent calculations
of the amount of Restricted Payments;
(7) repurchases
of Capital Stock deemed to occur upon the exercise of stock options, warrants or
other convertible securities if such Capital Stock represents a portion
of
the
exercise price thereof; provided,
however,
that such repurchases will be excluded from subsequent calculations of the
amount of Restricted Payments;
(8) the
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value of any Subordinated Obligation (i) at a purchase price not greater
than 101% of the principal amount of such Subordinated Obligation in the event
of a Change of Control in accordance with provisions similar to Section 3.15 of
this Seventh Supplemental Indenture or (ii) at a purchase price not greater than
100% of the principal amount thereof in accordance with provisions similar to
Section 3.07 of this Seventh Supplemental Indenture; provided
that, prior to or simultaneously with such purchase, repurchase, redemption,
defeasance or other acquisition or retirement, the Company has made the Change
of Control Offer or Asset Disposition Offer, as applicable, as required with
respect to the Notes and has completed the repurchase or redemption of all Notes
validly tendered for payment in connection with such Change of Control Offer or
Asset Disposition Offer; provided,
however,
that such repurchases will be excluded from subsequent calculations of the
amount of Restricted Payments;
(9) any
redemption of share purchase rights at a redemption price not to exceed $0.01
per right; provided,
however,
that such redemption will be included in subsequent calculations of the amount
of Restricted Payments;
(10) the
payment of cash in lieu of fractional shares of Capital Stock in connection with
any transaction otherwise permitted under the Indenture; provided,
however,
that such payment will be included in subsequent calculations of the amount of
Restricted Payments;
(11) payments
to dissenting stockholders not to exceed $5 million (x) pursuant to
applicable law or (y) in connection with the settlement or other satisfaction of
legal claims made pursuant to or in connection with a consolidation, merger or
transfer of assets in connection with a transaction that is not prohibited by
the Indenture; provided,
however,
that such payments will be included in subsequent calculations of the amount of
Restricted Payments;
(12) any
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of the 2016 Senior Subordinated Notes at any time on or after November 1, 2015;
provided,
however,
that after giving effect to such purchase, repurchase, redemption, defeasance or
other acquisition or retirement of the 2016 Senior Subordinated Notes, the
Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is
at least 3.25 to 1.0; provided
further,
however,
such purchase, repurchase, redemption, defeasance, acquisition or retirement
will be excluded in subsequent calculations of the amount of Restricted
Payments; and
(13) Restricted
Payments in an amount not to exceed $25 million; provided,
however,
that the amount of the Restricted Payments will be included in subsequent
calculations of the amount of Restricted Payments.
The
amount of all Restricted Payments (other than cash) shall be the fair market
value on the date of the Restricted Payment of the asset(s) or securities
proposed to be paid, transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any cash Restricted Payment shall
be its face amount and any non-cash Restricted Payment shall be determined
conclusively by the Board of Directors of the Company acting in good faith, such
determination to be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing if such fair market
value is estimated in good faith by the Board of Directors of the Company to
exceed $25 million.
Section
3.04 Limitation
on Liens. The Company may not, and may not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to
exist any Lien (other than Permitted Liens) upon any of its property or assets
(including Capital Stock of Restricted Subsidiaries), whether owned on the Issue
Date or acquired after that date, which Lien secures any Indebtedness, unless
contemporaneously with the Incurrence of such Lien effective provision is made
to secure the Indebtedness
due with
respect to the Notes or, with respect to Liens on any Restricted Subsidiary’s
property or assets, any Subsidiary Guarantee of such Restricted Subsidiary,
equally and ratably with (or prior to in the case of Liens with respect to
Subordinated Obligations or Guarantor Subordinated Obligations, as the case may
be) the Indebtedness secured by such Lien for so long as such Indebtedness is so
secured.
Section
3.05 Limitation
on Sale/Leaseback Transactions. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction with respect to any property unless:
(1) the
Company or such Restricted Subsidiary would be entitled to (A) Incur
Indebtedness in an amount equal to the Attributable Indebtedness with respect to
such Sale/Leaseback Transaction pursuant to Section 3.02 of this Seventh
Supplemental Indenture and (B) create a Lien on such property securing such
Attributable Indebtedness without equally and ratably securing the Notes
pursuant to Section 3.04 of this Seventh Supplemental Indenture;
(2) the
net proceeds received by the Company or any Restricted Subsidiary in connection
with such Sale/Leaseback Transaction are at least equal to the fair market value
(as determined by the Board of Directors) of such property; and
(3) to
the extent the Sale/Leaseback Transaction involves an Asset Disposition, the
Company applies the proceeds of such transaction in compliance with
Section 3.07 of this Seventh Supplemental Indenture.
Section
3.06 Limitation
on Restrictions on Distributions from Restricted
Subsidiaries. The Company may not, and may not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to:
(1) pay
dividends or make any other distributions on its Capital Stock or pay any
Indebtedness or other obligations owed to the Company or any Restricted
Subsidiary (the priority of any Preferred Stock in receiving dividends or
liquidating distributions prior to dividends or liquidating distributions being
paid on Common Stock and any subordination of any such Indebtedness or other
obligations being deemed not to constitute such encumbrances or
restrictions);
(2) make
any loans or advances to the Company or any Restricted Subsidiary (the
subordination of loans or advances made to the Company or any Restricted
Subsidiary to other Indebtedness Incurred by the Company or any Restricted
Subsidiary being deemed not to constitute such an encumbrance or restriction);
or
(3) transfer
any of its property or assets to the Company or any Restricted
Subsidiary.
The
preceding provisions will not prohibit:
(a) any
encumbrance or restriction pursuant to an agreement in effect at or entered into
on the Issue Date, including, without limitation, the Indenture, the Notes and
the Senior Secured Credit Agreement in effect on such date;
(b) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement relating to any Capital Stock or Indebtedness Incurred by a
Restricted Subsidiary on or before the date on which the Restricted Subsidiary
was acquired by the Company (other than Capital Stock or Indebtedness Incurred
as consideration in, or to provide all or any portion of the funds utilized to
consummate, the transaction or series of related transactions pursuant to which
such
Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the Company or in
contemplation of the transaction or transactions) and outstanding on such date;
provided
that any such encumbrance or restriction shall not extend to any assets or
property of the Company or any other Restricted Subsidiary other than the assets
and property so acquired;
(c) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement effecting a refunding, replacement or refinancing of Indebtedness
Incurred pursuant to an agreement referred to in clause (a) or (b) of this
paragraph
or this clause (c) or contained in any amendment to an agreement referred to in
clause (a) or (b) of this paragraph or this clause (c), including successive
refundings, replacements or refinancings; provided,
however,
that the encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such agreement are no less favorable in any material
respect to the Holders than the encumbrances and restrictions contained in such
agreements referred to in clauses (a) or (b) of this paragraph on the Issue Date
or the date such Restricted Subsidiary became a Restricted Subsidiary, whichever
is applicable;
(d) in
the case of clause (3) of the first paragraph of this Section 3.06, any
encumbrance or restriction:
(i) that
restricts in a customary manner the subletting, assignment or transfer of any
property or asset that is subject to a lease, license or similar contract, or
the assignment or transfer of any such lease, license or other
contract;
(ii) contained
in mortgages, pledges or other security agreements permitted under the Indenture
securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such encumbrances or restrictions restrict the transfer of the property subject
to such mortgages, pledges or other security agreements; or
(iii) pursuant
to customary provisions restricting dispositions of real property interests set
forth in any reciprocal easement agreements of the Company or any Restricted
Subsidiary;
(e) (i)
purchase money obligations for property acquired in the ordinary course of
business and (ii) Capital Lease Obligations permitted under the Indenture, in
each case, that impose encumbrances or restrictions of the nature described in
clause (3) of the first paragraph of this Section 3.06 on the property so
acquired;
(f) any
restriction with respect to a Restricted Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or indirect
sale or disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition;
(g) customary
encumbrances or restrictions imposed pursuant to any agreement referred to in
the definition of “Permitted Business Investment;”
(h) net
worth provisions in leases and other agreements entered into by the Company or
any Restricted Subsidiary in the ordinary course of business; and
(i) encumbrances
or restrictions arising or existing by reason of applicable law or any
applicable rule, regulation or order.
Section
3.07 Limitation
on Sales of Assets and Subsidiary Stock. The Company may not,
and may not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless:
(1) the
Company or the Restricted Subsidiary, as the case may be, receives consideration
at the time of the Asset Disposition at least equal to the fair market value of
the assets subject to the Asset Disposition (determined on the date of
contractually agreeing to such Asset Disposition), as determined in good faith
by senior management of the Company or, if the consideration
with respect to such Asset Disposition exceeds $10 million, the Board of
Directors of the Company (including as to the value of all non-cash
consideration); and
(2) at
least 75% of the consideration from the Asset Disposition received by the
Company or the Restricted Subsidiary, as the case may be, is in the form of cash
or Cash Equivalents.
The
Company or such Restricted Subsidiary, as the case may be, may elect to apply
all or any portion of the Net Available Cash from such Asset Disposition
either:
(1) to
prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or
retire Senior Indebtedness of the Company (other than Disqualified Stock) or
Indebtedness of a Wholly-Owned Subsidiary (other than any Disqualified Stock or
Guarantor Subordinated Obligation of a Wholly-Owned Subsidiary Guarantor) (in
each case other than Indebtedness owed to the Company or an Affiliate of the
Company) within 365 days from the later of the date of such Asset Disposition or
the receipt of such Net Available Cash; provided,
however,
that, in connection with any prepayment, repayment, purchase, repurchase,
redemption, defeasance, or acquisition of Indebtedness pursuant to this clause
(1), the Company or such Restricted Subsidiary will retire such Indebtedness
and, in the case of revolving Indebtedness, will cause the related commitment
(if any) to be permanently reduced in an amount equal to the principal amount so
retired; or
(2) to
invest in Additional Assets or make Permitted Business Investments within 365
days from the later of the date of such Asset Disposition or the receipt of such
Net Available Cash;
provided
that, pending the final application of any such Net Available Cash in accordance
with clauses (1) or (2) above, the Company and its Restricted Subsidiaries may
temporarily reduce Senior Indebtedness or otherwise invest such Net Available
Cash in any manner not prohibited by the
Indenture.
Any Net
Available Cash from Asset Dispositions that is not applied or invested as
provided in the preceding paragraph will be deemed to constitute “Excess
Proceeds.” On the 366th day after an Asset Disposition, if the
aggregate amount of Excess Proceeds exceeds $20 million, the Company must make
an offer (“Asset Disposition Offer”) to all Holders and to the extent required
by the terms of other Senior Indebtedness, to all holders of other Senior
Indebtedness outstanding with similar provisions requiring the Company to make
an offer to purchase such Senior Indebtedness with the proceeds from any Asset
Disposition (“Pari Passu Notes”), to purchase the maximum principal amount of
Notes and any Pari Passu Notes to which the Asset Disposition Offer applies that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount of the Notes and Pari Passu Notes
plus accrued and unpaid interest to the date of purchase, in accordance with the
procedures set forth in the Indenture or the agreements governing the Pari Passu
Notes, as applicable, in each case in integral multiples of
$1,000. To the extent that the aggregate amount of Notes and Pari
Passu Notes so validly tendered and not properly withdrawn pursuant to an Asset
Disposition Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes, subject to the other
covenants contained in the Indenture. If the aggregate principal
amount of Notes surrendered by Holders thereof and other Pari Passu Notes
surrendered by holders or lenders, collectively, exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and Pari Passu Notes to be
purchased pro rata on the basis of the aggregate principal amount of tendered
Notes and Pari Passu Notes. Upon completion of the Asset Disposition
Offer, the amount of Excess Proceeds will be reset at zero.
The Asset
Disposition Offer must remain open for a period of 20 Business Days following
its commencement, except to the extent that a longer period is required by
applicable law (the “Asset Disposition Offer Period”). No later than
five Business Days after the termination of the Asset Disposition Offer Period
(the “Asset Disposition Purchase Date”), the Company will purchase the principal
amount of Notes and Pari Passu Notes required to be purchased pursuant to the
Asset Disposition Offer (the “Asset Disposition
Offer Amount”) or, if less than the Asset Disposition Offer Amount has been so
validly tendered, all Notes and Pari Passu Notes validly tendered in response to
the Asset Disposition Offer.
If the
Asset Disposition Purchase Date is on or after a Regular Record Date and on or
before the related Interest Payment Date, any accrued and unpaid interest will
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 will be payable to
Holders who tender Notes pursuant to the Asset Disposition Offer.
On or
before the Asset Disposition Purchase Date, the Company must, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Asset Disposition Offer Amount of Notes and Pari Passu Notes or portions of
Notes and Pari Passu Notes so validly tendered and not properly withdrawn
pursuant to the Asset Disposition Offer, or if less than the Asset Disposition
Offer Amount has been validly tendered and not properly withdrawn, all Notes and
Pari Passu Notes so validly tendered and not properly withdrawn, in each case in
integral multiples of $1,000. The Company or the Paying Agent, as the
case may be, must promptly (but in any case not later than five Business Days
after the termination of the Asset Disposition Offer Period) mail or deliver to
each tendering Holder or holder or lender of Pari Passu Notes, as the case may
be, an amount equal to the purchase price of the Notes or Pari Passu Notes so
validly tendered and not properly withdrawn by such holder or lender, as the
case may be, and accepted by the Company for purchase, and the Company must
promptly issue a new Note, and the Trustee, upon delivery of an Officers’
Certificate from the Company, must authenticate and mail or deliver such new
Note to such Holder, in a principal amount equal to any unpurchased portion of
the Note surrendered; provided
that each such new Note will be in a principal amount of $2,000 or an integral
multiple of $1,000 in excess thereof. In addition, the Company must
take any and all other actions required by the agreements governing the Pari
Passu Notes. Any Note not so accepted must be promptly mailed or
delivered by the Company to the Holder thereof. The Company will
publicly announce the results of the Asset Disposition Offer on the Asset
Disposition Purchase Date.
For the
purposes of this Section 3.07, the following will be deemed to be
cash:
(1) the
assumption by the transferee of Indebtedness (other than Subordinated
Obligations or Disqualified Stock) of the Company or Indebtedness of a
Wholly-Owned Subsidiary (other than Guarantor Subordinated Obligations or
Disqualified Stock of any Wholly-Owned Subsidiary that is a Subsidiary
Guarantor) and the release of the Company or the Restricted Subsidiary from all
liability on such Indebtedness in connection with the Asset Disposition;
and
(2) securities,
notes or other obligations received by the Company or any Restricted Subsidiary
from the transferee that are converted by the Company or such Restricted
Subsidiary into cash within 60 days after consummation of the Asset
Disposition.
The
Company may not, and may not permit any Restricted Subsidiary to, engage in any
Asset Swaps, unless:
(1) at
the time of entering into the Asset Swap and immediately after giving effect to
the Asset Swap, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(2) in
the event the Asset Swap involves the transfer by the Company or any Restricted
Subsidiary of assets having an aggregate fair market value, as determined by the
Board of Directors of the Company in good faith, in excess of $10 million, the
terms of the Asset
Swap have
been approved by a majority of the members of the Board of Directors of the
Company; and
(3) in
the event the Asset Swap involves the transfer by the Company or any Restricted
Subsidiary of assets having an aggregate fair market value, as determined by the
Board of Directors of the Company in good faith, in excess of $25 million, the
Company has received a written opinion from an independent investment banking
firm of nationally recognized standing that the Asset Swap is fair to the
Company or the Restricted Subsidiary, as the case may be, from a financial point
of view.
The
Company will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of Notes pursuant to the Indenture. To
the extent that the provisions of any securities laws or regulations conflict
with provisions of this Section 3.07, the Company will comply with the
applicable securities laws and regulations and will be deemed not to have
breached its obligations under the Indenture by virtue of such
compliance.
Section
3.08 Limitation
on Affiliate Transactions. The Company may not, and may not
permit any of its Restricted Subsidiaries to, directly or indirectly, enter into
or conduct any transaction (including the purchase, sale, lease or exchange of
any property or the rendering of any service) with any Affiliate of the Company
(an “Affiliate Transaction”) unless:
(1) the
terms of the Affiliate Transaction are not materially less favorable to the
Company or the Restricted Subsidiary, as the case may be, than those that might
reasonably have been obtained in a comparable transaction at the time of such
transaction on an arm’s-length basis from a Person that is not an Affiliate of
the Company;
(2) in
the event the Affiliate Transaction involves an aggregate consideration in
excess of $10 million, the terms of the transaction have been approved by a
majority of the members of the Board of Directors of the Company having no
personal stake in the transaction, if any (and such majority determines that the
Affiliate Transaction satisfies the criteria in clause (1) above);
and
(3) in
the event the Affiliate Transaction involves an aggregate consideration in
excess of $25 million, the Company has received a written opinion from an
independent investment banking, accounting or appraisal firm of nationally
recognized standing to the effect that the terms of the Affiliate Transaction
are not materially less favorable than those that might reasonably have been
obtained in a comparable transaction at the time of such transaction on an
arm’s-length basis from a Person that is not an Affiliate of the
Company.
The
preceding paragraph will not apply to:
(1) any
Restricted Payment (other than a Restricted Investment) permitted to be made
pursuant to Section 3.03 of this Seventh Supplemental Indenture;
(2) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment agreements and other
compensation arrangements, options to purchase Capital Stock of the Company,
restricted stock plans, long-term incentive plans, stock appreciation rights
plans, participation plans or similar employee plans and/or insurance
and indemnification arrangements provided to or for the benefit of employees and
directors approved by the Board of Directors of the Company;
(3) loans
or advances to employees, officers or directors in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, but in any event
not to
exceed $2.5
million in the aggregate outstanding at any one time with respect to all loans
or advances made since the Issue Date;
(4) any
transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries and Guarantees issued by the Company or a Restricted
Subsidiary for the benefit of the Company or a Restricted Subsidiary, as the
case may be, in accordance with Section 3.02 of this Seventh Supplemental
Indenture; or
(5) the
performance of obligations of the Company or any of its Restricted Subsidiaries
under the terms of any agreement to which the Company or any of its Restricted
Subsidiaries is a party as of or on the Issue Date, as these agreements may be
amended, modified, supplemented, extended or renewed from time to time; provided,
however,
that any future amendment, modification, supplement, extension or renewal
entered into after the Issue Date will be so excluded only if its terms are not
more disadvantageous to the Holders than the terms of the agreements in effect
on the Issue Date.
Section
3.09 Limitation
on Sale of Capital Stock of Restricted Subsidiaries. The
Company may not, and may not permit any Restricted Subsidiary to, transfer,
convey, sell, lease or otherwise dispose of any Capital Stock of any Restricted
Subsidiary or issue any of the Capital Stock of a Restricted Subsidiary (other
than, if necessary, shares of its Voting Stock constituting directors’
qualifying shares) to any Person except:
(1) to
the Company or a Wholly-Owned Subsidiary; or
(2) in
compliance with Section 3.07 of this Seventh Supplemental Indenture and if
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would continue to be a Restricted Subsidiary.
Notwithstanding
the preceding paragraph, the Company or any Restricted Subsidiary may sell all
of the Capital Stock of a Restricted Subsidiary as long as the Company complies
with the terms of Section 3.07 of this Seventh Supplemental
Indenture.
Section
3.10 SEC
Reports. Notwithstanding that the Company may not be subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company will file with the SEC (to the extent the SEC will accept such filing),
and make available to the Trustee and the registered Holders, the annual reports
and the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) that are
specified in Sections 13 and 15(d) of the Exchange Act. If the SEC
will not accept such filings, the Company will nevertheless make available such
Exchange Act information to the Trustee and the Holders as if the Company were
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act.
If the
Company has designated any of its Subsidiaries as Unrestricted Subsidiaries and
any such Unrestricted Subsidiary has $10.0 million of net assets and its assets
exceed its liabilities by more than 5% of the amount by which the consolidated
assets of the Company and its Subsidiaries exceed consolidated liabilities of
the Company and its Subsidiaries, then the quarterly and annual financial
information required by the preceding paragraph shall include a reasonably
detailed presentation, either on the face of the financial statements or in the
footnotes to the financial statements and in Management’s Discussion and
Analysis of Financial Condition and Results of Operations, of the financial
condition and results of operations of the Company and its Restricted
Subsidiaries.
Section
3.11 Merger and
Consolidation. The Company may not consolidate with or merge
with or into any other Person, or transfer all or substantially all its
properties and assets to another Person, unless:
(1) the
Company is the continuing or surviving Person in the consolidation or merger;
or
(2) the
Person (if other than the Company) formed by the consolidation or into which the
Company is merged or to which all or substantially all of the Company’s
properties and assets are transferred is a corporation, partnership, limited
liability company, business trust, trust or other legal entity organized and
validly existing under the laws of the United States, any state thereof, or the
District of Columbia, and expressly assumes, by a supplemental indenture, all of
the Company’s obligations under the Notes and the Indenture; and
(3) immediately
after the transaction and the Incurrence or anticipated Incurrence of any
Indebtedness to be Incurred in connection therewith, no Event of Default exists;
and
(4) immediately
after giving effect to such transaction, the continuing or surviving Person
would be able to Incur at least an additional $1.00 of Indebtedness pursuant to
the first paragraph of Section 3.02 of this Seventh Supplemental Indenture;
and
(5) each
Subsidiary Guarantor shall have by supplemental indenture confirmed that its
Subsidiary Guarantee shall apply to such Person’s obligations (if other than the
Company) in respect of the Indenture and the Notes shall continue to be in
effect; and
(6) an
Officer’s Certificate is delivered to the Trustee to the effect that the
conditions set forth above have been satisfied and an Opinion of Counsel has
been delivered to the Trustee to the effect that the conditions set forth above
have been satisfied.
For
purposes of the first paragraph of this Section 3.11, the sale, lease,
conveyance, assignment, transfer, or other disposition of all or substantially
all of the properties and assets of one or more Subsidiaries of the Company,
which properties and assets, if held by the Company instead of its Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The
continuing, surviving or successor Person will succeed to and be substituted for
the Company with the same effect as if it had been named in the Indenture as a
party thereof, and thereafter the predecessor Person will be relieved of all
obligations and covenants under the Indenture and the Notes.
Notwithstanding
clauses (3) and (4) above and clause (1)(b) below, (x) any Restricted Subsidiary
may consolidate with, merge into or transfer all or part of its properties and
assets to the Company or another Restricted Subsidiary and (y) the Company may
merge with an Affiliate incorporated solely for the purpose of reincorporating
the Company in another jurisdiction; provided
that, in the case of a Restricted Subsidiary that merges into the Company, the
Company will not be required to comply with clause (5) above.
The
Company may not permit any Subsidiary Guarantor to consolidate with or merge
with or into any Person (other than another Subsidiary Guarantor) and may not
permit the conveyance, transfer or lease of substantially all of the assets of
any Subsidiary Guarantor (other than to another Subsidiary Guarantor)
unless:
(1) (a)
the Person formed by the consolidation or into which the Subsidiary Guarantor
merged or to which all, or substantially all of the Subsidiary Guarantor’s
properties and assets are transferred is a corporation, partnership, limited
liability company, business trust, trust or other legal entity organized and
validly existing under the laws of the United States, any state thereof, or the
District of Columbia and such Person (if not such Subsidiary Guarantor) will
expressly assume, by supplemental indenture, all the obligations of such
Subsidiary Guarantor
under its
Subsidiary Guarantee; (b) immediately after the transaction and the Incurrence
or anticipated Incurrence of any Indebtedness to be Incurred in connection
therewith, no Event of Default exists; and (c) the Company will deliver to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each to the effect
that the conditions set forth above have been satisfied; or
(2) the
transaction is made in compliance with Section 3.07 of this Seventh Supplemental
Indenture.
Section
3.12 Future
Subsidiary Guarantors. The Company will cause each Restricted
Subsidiary (other than a Foreign Subsidiary or a Special Entity) created or
acquired by the Company or one or more of its Restricted Subsidiaries after the
Issue Date to execute and deliver to the Trustee a Subsidiary Guarantee pursuant
to which such Subsidiary Guarantor will unconditionally Guarantee, on a joint
and several basis, the full and prompt payment of the principal of, premium, if
any and interest on the Notes on a senior basis.
Section
3.13 Limitation
on Lines of Business. The Company may not, and may not permit
any Restricted Subsidiary to, engage in any business other than the Oil and Gas
Business.
Section
3.14 Payments
for Consent. Neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fees or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered to
be paid or is paid to all Holders that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or amendment.
Section
3.15 Offer to
Repurchase Upon Change of Control.
(a) If
a Change of Control occurs, unless the Company has exercised its right to redeem
all of the Notes as described under Section 1.08 of this Seventh Supplemental
Indenture, the Company will be required to offer to repurchase from each Holder
all or any part (equal to $2,000 or an integral multiple of $1,000 in excess
thereof) of such Holder’s Notes at a purchase price in cash equal to 101% of the
principal amount of the Notes plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on the relevant Interest Payment
Date).
(b) Within
30 days following any Change of Control, unless the Company has exercised its
right to redeem the Notes as described under Section 1.08 of this Seventh
Supplemental Indenture, the Company will mail a notice (the “Change of Control
Offer”) to each Holder, with a copy to the Trustee, stating:
(1) that
a Change of Control has occurred and that the Company is offering to purchase
the Holder’s Notes at a purchase price in cash equal to 101% of the principal
amount of the Notes plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of holders of record on a Regular Record Date to
receive interest on the relevant Interest Payment Date) (the “Change of Control
Payment”);
(2) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed) (the “Change of Control Payment Date”);
and
(3) the
procedures determined by the Company, consistent with the Indenture, that a
Holder must follow in order to have its Notes repurchased.
(c) On
the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept
for payment all Notes or portions of Notes (in integral multiples of $1,000 in
excess of $2,000) properly tendered pursuant to the Change of Control
Offer;
(2) deposit
with the Paying Agent for the Notes an amount equal to the Change of Control
Payment in respect of all Notes or portions of Notes so tendered;
and
(3) deliver
or cause to be delivered to the Trustee the Notes so accepted together with an
Officers’ Certificate stating the aggregate principal amount of Notes or
portions of Notes being purchased by the Company.
(d) The
Paying Agent will promptly mail to each Holder of Notes so tendered the Change
of Control Payment for the Notes, and the Trustee will promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
provided
that each new Note will be in a principal amount of $2,000 or an integral
multiple of $1,000 in excess thereof.
(e) If
the Change of Control Payment Date is on or after a Regular Record Date and on
or before the related Interest Payment Date, any accrued and unpaid interest
will be paid to the Person in whose name a Note is registered at the close of
business on the Regular Record Date, and no additional interest will be payable
to Holders who tender pursuant to the Change of Control Offer.
(f) The
Company will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under the Change of
Control Offer.
(g) A
Change of Control Offer may be made in advance of a Change of Control,
conditioned upon such Change of Control, if a definitive agreement is in place
for the Change of Control at the time of the making of the Change of Control
Offer.
(h) The
Company will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of Notes pursuant to this Section
3.15. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the Indenture, the Company will comply
with the applicable securities laws and regulations and will be deemed not to
have breached its obligations described in the Indenture by virtue of such
compliance.
ARTICLE
IV
EVENTS
OF DEFAULT WITH RESPECT TO THE NOTES
The term
“Event of Default,” whenever used in the Original Indenture or this Seventh
Supplemental Indenture with respect to the Notes, means any one of the following
events:
(1) failure
to pay principal of or premium, if any, on any Note when due at its Stated
Maturity;
(2) failure
to pay any interest on any Note when due, which failure continues for 30
calendar days;
(3) failure
by the Company or any Subsidiary Guarantor to comply with its obligations under
Section 3.11 of this Seventh Supplemental Indenture;
(4) failure
by the Company to comply with any of its obligations under Article III of this
Seventh Supplemental Indenture (other than a failure to purchase Notes which
will constitute an Event of Default under clause (5) below and other than a
failure to comply with Section 3.11 of this Seventh Supplemental Indenture which
is covered by clause (3) above), which failure or breach continues for 30
calendar days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Notes a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” under the Indenture;
(5) failure
to redeem or repurchase any Note when required to do so under the terms
thereof;
(6) failure
to perform, or breach of, any other covenant of the Company in the Indenture
(other than a covenant included in the Indenture solely for the benefit of a
series of debt securities other than the Notes), which failure or breach
continues for 60 calendar days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding Notes a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a “Notice of Default” under the
Indenture;
(7) any
nonpayment at maturity or other default (beyond any applicable grace period)
under any agreement or instrument relating to any other Indebtedness of the
Company or a Significant Subsidiary, the unpaid principal amount of which is not
less than $15 million, which default results in the acceleration of the maturity
of the Indebtedness prior to its Stated Maturity or occurs at the final maturity
thereof;
(8) Events
of Default of the type and subject to the conditions set forth in clauses (vi)
and (vii) of Section 8.01(a) of the Original Indenture;
(9) failure
by the Company or any Significant Subsidiary or group of Restricted Subsidiaries
that, taken together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary to pay final judgments aggregating in excess of $15 million (net of
any amounts that a reputable and creditworthy insurance company has acknowledged
liability for in writing), which judgments are not paid, discharged or stayed
for a period of 60 calendar days; or
(10) any
Subsidiary Guarantee of a Significant Subsidiary or group of Subsidiary
Guarantors that taken together as of the latest audited consolidated financial
statements for the Company and its Restricted Subsidiaries would constitute a
Significant Subsidiary ceases to be in full force and effect (except as
contemplated by the terms of the Indenture) or is declared null and void in a
judicial proceeding or any Subsidiary Guarantor that is a Significant Subsidiary
or group of Subsidiary Guarantors that taken together as of the latest audited
consolidated financial statements of the Company and its Restricted Subsidiaries
would constitute a Significant Subsidiary denies or disaffirms its obligations
under the Indenture or its Subsidiary Guarantee.
ARTICLE
V
MODIFICATION
AND WAIVER
Section
5.01 Without
Consent of Holders.
(a) The
provisions of Section 10.01 of the Original Indenture shall apply to the
Notes.
(b) The
Company, the Subsidiary Guarantors and the Trustee may amend or supplement the
Indenture or the Notes without the consent of any Holder to add Subsidiary
Guarantees with respect to the Notes.
Section
5.02 With
Consent of Holders. Without the consent of each Holder
affected, no amendment or waiver with respect to the Notes under this Article V
or under Article X of the Original Indenture may, without the consent of each
Holder of an outstanding Note affected thereby:
(a) reduce
the principal amount of, the rate of interest on, or the premium, if any,
payable upon the repurchase of, the Notes; or
(b) change
the time at which any Note may be redeemed or repurchased as described above
under Section 1.08; Section 3.07 or Section 3.15 of this Seventh Supplemental
Indenture; or
(c) change
the ranking or priority of the Notes in a manner that would adversely affect the
Holders; or
(d) modify
the Subsidiary Guarantees in any manner adverse to the Holders.
ARTICLE
VI
MISCELLANEOUS
PROVISIONS
Section
6.01 Recitals by
the Company. The recitals in this Seventh Supplemental
Indenture are made by the Company only and not by the Trustee, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Seventh Supplemental
Indenture or of the Notes. The Trustee shall not be accountable for
the use or application by the Company of the Notes or the proceeds
thereof. All of the provisions contained in the Original Indenture in
respect of the rights, privileges, immunities, powers and duties of the Trustee
shall be applicable in respect of the Notes and of this Seventh Supplemental
Indenture as fully and with like effect as if set forth herein in
full.
Section
6.02 Ratification
and Incorporation of Original Indenture. As supplemented
hereby, the Original Indenture is in all respects ratified and confirmed, and
the Original Indenture and this Seventh Supplemental Indenture shall be read,
taken and construed as one and the same instrument.
Section
6.03 Executed in
Counterparts. This Seventh Supplemental Indenture may be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts shall together constitute but one and
the same instrument.
Section
6.04 New York
Law to Govern. This Seventh Supplemental Indenture and each
Note shall be governed by and construed in accordance with the law of the State
of New York.
Section
6.05 Successors
and Assigns. All covenants and agreements in this Seventh
Supplemental Indenture and each Note by the Company shall bind its successors
and assigns, whether so expressed or not.
Section
6.06 Separability. In
case any provision in this Seventh Supplemental Indenture or in any Note 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
6.07 Force
Majeure. In no event shall the Trustee be responsible or
liable for any failure or delay in the performance of its obligations hereunder
arising out of or caused by, directly or indirectly, forces beyond its control,
including strikes, work stoppages, accidents, acts of war or
terrorism,
civil or
military disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services; it being understood that the Trustee shall use
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the
circumstances.
Section
6.08 Senior
Indebtedness. The Company and each Subsidiary Guarantor hereby
designate the obligations with respect to Notes and the Subsidiary Guarantees as
Senior Indebtedness which is senior in right of payment in full to any
Subordinated Obligation of the Company or any Subsidiary
Guarantor. The Company and each Subsidiary Guarantor further
designate the obligations with respect to the Notes and the Subsidiary
Guarantees as “Designated Senior Indebtedness” (as defined by (i) the
indenture for the 1.875% Convertible Subordinated Debentures by and between the
Company and The Bank of New York Mellon Trust Company, N.A., as trustee (as
successor in interest to JPMorgan Chase Bank, National Association), dated as of
November 1, 2004, as amended and supplemented (the “2024 Convertible
Subordinated Debentures Indenture”), and (ii) the indenture for the 2016 Senior
Subordinated Notes by and among the Company, each Subsidiary Guarantor and The
Bank of New York Mellon Trust Company, N.A., as trustee (as successor in
interest to JPMorgan Chase Bank, National Association) dated March 16, 2006, as
amended and supplemented (the “2016 Senior Subordinated Notes Indenture”)), for
all purposes under (x) the 2024 Convertible Subordinated Debentures Indenture
and (y) the 2016 Senior Subordinated Notes Indenture, with respect to the Notes
and the Subsidiary Guarantees, respectively.
IN
WITNESS WHEREOF, each party hereto has caused this instrument to be signed in
its name and behalf by its duly authorized officers, all as of the day and year
first above written.
Attest: |
|
QUICKSILVER
RESOURCES INC. |
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By: |
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Name:
John C. Cirone
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Name:
Philip Cook
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Title:
Secretary
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Title:
Senior Vice President - Chief Financial Officer
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COWTOWN
PIPELINE FUNDING, INC., |
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as
Subsidiary Guarantor |
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Attest: |
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By: |
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Name:
John C. Cirone
|
|
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Name:
Philip Cook
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Title:
Secretary
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|
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Title:
Senior Vice President - Chief Financial Officer
|
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COWTOWN
PIPELINE MANAGEMENT, INC., |
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as
Subsidiary Guarantor |
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Attest: |
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/s/
John C. Cirone
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By: |
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Name:
John C. Cirone
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Name:
Philip Cook
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Title:
Secretary
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Title:
Senior Vice President - Chief Financial Officer
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COWTOWN
PIPELINE L.P., |
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as
Subsidiary Guarantor |
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Attest: |
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By: |
COWTOWN
PIPELINE MANAGEMENT, INC., |
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its
general partner |
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By: |
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Name:
John C. Cirone
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Name:
Philip Cook
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Title:
Secretary
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Title:
Senior Vice President - Chief Financial Officer
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COWTOWN
GAS PROCESSING L.P., |
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as
Subsidiary Guarantor |
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Attest: |
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By: |
COWTOWN
PIPELINE MANAGEMENT, INC., |
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its
general partner |
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By: |
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Name:
John C. Cirone
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Name:
Philip Cook
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Title:
Secretary
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Title:
Senior Vice President - Chief Financial Officer
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Attest: |
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THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A. |
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as
Trustee |
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By: |
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Name:
Mauri J. Cowen
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Name:
Rafael Martinez
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Title:
Vice President
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Title:
Assistant Treasurer
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EXHIBIT
A
[FORM OF
GLOBAL NOTE]
UNLESS
THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO QUICKSILVER RESOURCES INC. OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE
THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR
EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN DTC OR
A NOMINEE THEREOF, AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY
AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE
FOR, OR IN LIEU OF, THIS SECURITY WILL BE A GLOBAL SECURITY SUBJECT TO THE
FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
CUSIP No.
74837RAF1
ISIN No.
US74837RAF10
[Face of
Note]
11¾%
Senior Notes due 2016
Principal
amount at Maturity $ ______________
QUICKSILVER
RESOURCES INC.
Quicksilver
Resources Inc., a Delaware corporation (the “Company”) promises to pay to
______________, or registered assigns, the principal sum of ______________ Dollars
on January 1, 2016 or such greater or lesser amount as may be indicated on
Schedule A hereto.
Interest
Payment Dates:
|
January
1 and July 1, commencing January 1, 2010
|
|
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Regular
Record Dates:
|
June
15 and December
15
|
Additional
provisions of this Note are set forth on the other side of this
Note.
Dated:
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QUICKSILVER
RESOURCES INC. |
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By: |
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Name:
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Title:
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TRUSTEE’S
CERTIFICATE OF AUTHENTICATION
This is
one of the Global Securities referred
to in the
within-mentioned Indenture:
THE BANK
OF NEW YORK MELLON TRUST COMPANY, N.A.
[FORM OF
REVERSE OF NOTE]
11¾%
Senior Notes due 2016
Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.
(1) Interest. Quicksilver
Resources Inc., a Delaware corporation (together with its permitted successors,
the “Company”), promises to pay interest on the principal amount of this Note at
11.75% per annum from June 25, 2009 until the principal hereof is paid or
made available for payment. The Company shall pay interest, if any,
semi-annually in arrears on January 1 and July 1 of each such year, commencing
January 1, 2010 or if any such day is not a Business Day, on the next succeeding
Business Day (each an “Interest Payment Date”). Interest on the Notes
shall accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance[; provided that if this Note
is authenticated between a Regular Record Date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided, further, that the first
Interest Payment Date shall be the first of January 1 or July 1 to occur after
the date of issuance, unless such January 1 or July 1 occurs within one
calendar month of such date of issuance, in which case the first Interest
Payment Date shall be the second of January 1 or July 1 to occur after the
date of issuance]1. Interest
shall be computed on the basis of a 360-day year of twelve 30-day
months.
(2) Method of
Payment. The Company shall pay interest on the Notes (except
defaulted interest) to the Person in whose name(s) this Note is registered at
the close of business on the June 15 or December 15 next preceding the Interest
Payment Date (each, a “Regular Record Date”); provided
that interest payable at the Stated Maturity or on a Redemption Date as provided
in the Indenture will be paid to the Person to whom principal is
payable. The Notes shall be payable as to principal of or premium, if
any, or interest at the office or agency of the Company maintained for such
purpose within or without 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 Holders at
their addresses set forth in the Security Register or by wire transfer at such
place and to such account at a banking institution in the United States as may
be designated in writing to the Trustee at least 15 days prior to the date for
payment by the Person entitled thereto. 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, The Bank of New York Mellon
Trust Company, N.A., the Trustee under the Indenture, shall act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.
(4) Indenture. The
Company issued the Notes under an Indenture, dated as of December 22, 2005 (the
“Original Indenture”), between the Company and the Trustee, as supplemented by
the Seventh Supplemental Indenture, dated as of June 25, 2009, among the Company
the Subsidiary Guarantors (as defined therein) parties thereto and the Trustee
(the “Seventh Supplemental Indenture; and together with the Original Indenture,
the “Indenture”). The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code
§§ 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. To the extent any provision of this Note conflicts with the
express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are senior obligations of the
Company initially in the aggregate principal amount of
$600,000,000. Subject to compliance with Section 1.11 of the Seventh
Supplemental Indenture, the Company is permitted to issue Additional Notes under
the Indenture in an unlimited principal amount. Any such
Additional
__________________
Notes
that are actually issued shall be treated as issued and outstanding Notes for
all purposes of the Indenture, unless the context clearly indicates
otherwise.
(5) Guarantees. This
Note is guaranteed by the Persons, if any, specified as Subsidiary Guarantors in
the Indenture to the extent provided in the Indenture. The Subsidiary
Guarantees are equal in rank to the Senior Indebtedness of the applicable
Subsidiary Guarantor in the manner and to the extent provided in the
Indenture.
(6) Optional
Redemption.
(a) Except
as set forth in Section 1.08 of the Seventh Supplemental Indenture and clauses
(b) and (c) of this Paragraph 6, the Notes are not redeemable until July 1,
2013. On and after July 1, 2013, the Company may redeem all or, from
time to time, a part of the Notes upon not less than 30 nor more than 60 days’
notice, at the following redemption prices (expressed as a percentage of
principal amount) plus accrued and unpaid interest on the Notes (the “Redemption
Price”), if any, to the applicable redemption date (subject to the right of
Holders of record on the Regular Record Date to receive interest due on the
relevant Interest Payment Date) (a “Redemption Date”), if redeemed during the
twelve-month period beginning on July 1 of the years indicated
below:
YEAR
|
Percentage
|
|
|
2013
|
105.875%
|
2014
|
102.938%
|
2015
|
100.000%
|
(b) Notwithstanding
the provisions of clause (a) of this Paragraph 6, prior to July 1, 2012, the
Company may on any one or more occasions redeem up to 35% of the original
principal amount of the Notes (which includes Additional Notes, if any) issued
under the Indenture at a redemption price equal to 111.75% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
to receive interest due on the relevant Interest Payment Date), with the Net
Cash Proceeds of one or more equity offerings; provided
that (1) at least 65% of such aggregate principal amount of Notes (which
includes any Additional Notes, if any) issued under the Indenture remains
Outstanding immediately after the occurrence of such redemption; and (2) each
such redemption shall occur within 90 days of the date of the closing of such
equity offering.
(c) In
addition, at any time prior to July 1, 2013, the Company may redeem the Notes,
in whole but not in part, at a Redemption Price equal to 100% of the principal
amount thereof plus the Applicable Premium plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date to receive interest due on the relevant Interest
Payment Date).
(7) Offer to
Repurchase Upon Change of Control. Upon the occurrence of a
Change of Control, the Company will be required to offer to repurchase from each
Holder all or any part (equal to $2,000 or an integral multiple of $1,000 in
excess 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 setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(8) Notice of
Redemption. Notice of redemption shall 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 address appearing in the Securities
Register. The Company shall notify the Trustee of the Redemption
Price with respect to the redemption promptly after the calculation
thereof. The Trustee shall not be responsible for calculating the
Redemption Price.
(9) Denominations,
Transfer, Exchange. The Notes are in registered form without
coupons in minimum denominations of $2,000 and integral multiples of $1,000 in
excess thereof. The transfer of Notes may be registered and Notes may
be exchanged as provided in the Indenture. Every Note presented or
surrendered for registration of transfer or exchange will (if so required by the
Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer, in form reasonably satisfactory to the
Company and the Security Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing. The Company need not exchange or
register the transfer of any Notes for a period of 15 days before the mailing of
the notice of redemption or any Note so selected for redemption in whole or in
part, except in the case of Notes to be redeemed in part, the portion thereof
not being redeemed. No service charge will be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
(10) Persons
Deemed Owners. The registered Holder may be treated as its
owner for all purposes.
(11) Amendment,
Supplement and Waiver. Subject to certain exceptions, the
Indenture, the Subsidiary Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes, and any existing default or compliance with any provision of the
Indenture, the Subsidiary Guarantees or the Notes (other than a Default or Event
of Default in the payment of the principal of or premium, if any, or interest on
the Notes) or compliance with any provision of the Indenture, the Subsidiary
Guarantee or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the Notes. Without the consent of any
Holder, the Indenture, the Subsidiary Guarantee or the Notes may be amended or
supplemented (a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company under the
Indenture and in the Notes, all to the extent otherwise permitted under the
Indenture; (b) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;
(c) to add any additional Events of Default; (d) to add to or change any of the
provisions of the Indenture to such extent as may be necessary to permit or
facilitate the issuance of Notes in bearer form, registrable or not registrable
as to principal, and with or without interest coupons, or to permit or
facilitate the issuance of Notes in uncertificated form; (e) to add to, change
or eliminate any of the provisions of the Indenture in respect of the Notes,
provided
that any such addition, change or elimination (i) will not apply to
any of the Notes created prior to the execution of such supplemental indenture
and entitled to the benefit of such provision, or (ii) will become
effective only when there are no Notes Outstanding (as defined in the Original
Indenture); (f) to establish the terms or form of Securities of any series as
permitted by Sections 2.01 and 2.02 of the Original Indenture; (g) to evidence
and provide for the acceptance of appointment under the Indenture by a successor
Trustee with respect to the Notes and to add to or change any of the provisions
of the Indenture as may be necessary to provide for or facilitate the
administration of the trusts under the Indenture by more than one Trustee,
pursuant to the requirements of Section 9.10 of the Original Indenture; or
(h) to cure any ambiguity, to correct or supplement any provision of the
Indenture which may be defective or inconsistent with any other provision of the
Indenture, or to make any other provisions with respect to matters or questions
arising under the Indenture, provided
that such action pursuant to this clause (h) will not adversely affect the
interests of the Holders in any material respect.
(12) Events of
Default. Events of Default include (a) failure to pay
principal of or premium, if any, on any Note when due at its Stated Maturity;
(b) failure to pay any interest on any Note when due, which failure continues
for 30 calendar days; (c) failure by the Company or any Subsidiary Guarantor to
comply with its obligations under Section 3.11 of the Seventh Supplemental
Indenture; (d) failure by the Company to comply with any of its obligations
under Article III of the Seventh Supplemental Indenture (in each case, other
than a failure to purchase Notes which will constitute an Event of Default under
clause (e) of this paragraph and other than a failure to comply with Section
3.11 of the Seventh Supplemental Indenture which is covered by clause (c) of
this paragraph), which failure or breach continues for 30 calendar days after
written notice thereof has been given to the Company as provided in the
Indenture; (e) failure to redeem or repurchase any Note when required to do so
under the terms thereof; (f) failure to perform, or breach of, any other
covenant of the Company in the Indenture (other than a covenant
included
in the
Indenture solely for the benefit of a series of debt securities other than the
Notes), which failure or breach continues for 60 calendar days after written
notice thereof has been given to the Company as provided in the Indenture; (g)
any nonpayment at maturity or other default (beyond any applicable grace period)
under any agreement or instrument relating to any other Indebtedness of the
Company or a Significant Subsidiary, the unpaid principal amount of which is not
less than $15 million, which default results in the acceleration of the maturity
of the Indebtedness prior to its Stated Maturity or occurs at the final maturity
thereof; (h) specified events of bankruptcy, insolvency, or reorganization
involving the Company or a Significant Subsidiary; (i) failure by the Company or
any Significant Subsidiary or group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for the
Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary to pay final judgments aggregating in excess of $15 million (net of
any amounts that a reputable and creditworthy insurance company has acknowledged
liability for in writing), which judgments are not paid, discharged or stayed
for a period of 60 days; or (j) any Subsidiary Guarantee of a Significant
Subsidiary or group of Subsidiary Guarantors that taken together as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries would constitute a Significant Subsidiary ceases to be
in full force and effect (except as contemplated by the terms of the Indenture)
or is declared null and void in a judicial proceeding or any Subsidiary
Guarantor that is a Significant Subsidiary or group of Subsidiary Guarantors
that taken together as of the latest audited consolidated financial statements
of the Company and its Restricted Subsidiaries would constitute a Significant
Subsidiary denies or disaffirms its obligations under the Indenture or its
Subsidiary Guarantee. If any Event of Default (other than an Event of
Default specified in clause (h) of this paragraph) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare the principal amount of all the Notes to be due
and payable immediately. Notwithstanding the foregoing, in the case
of an Event of Default specified in clause (h) of this paragraph, all
outstanding Notes shall become due and payable immediately without any
declaration or other act on the part of the Trustee or any
Holder. However, at any time after a declaration of acceleration with
respect to the Notes has been made, but before a judgment or decree based on
such acceleration has been obtained, the holders of a majority in principal
amount of the Notes may, under specified circumstances, rescind and annul such
acceleration.
Subject
to the duty of the Trustee to act with the required standard of care during an
Event of Default, the Trustee will have no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of the Holders,
unless Holders shall have furnished to the Trustee reasonable security or
indemnity. Subject to the provisions of the Indenture, including
those requiring security or indemnification of the Trustee, the Holders of a
majority in principal amount of the Notes will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Notes. Pursuant to the Trust Indenture Act, the
Trustee is required, within 90 calendar days after the occurrence of a Default
in respect of the Notes, to give to the Holders notice of all uncured Defaults
known to it, except that (other than in the case of a Default of the character
contemplated in clause (a) or (b) of the immediately preceding paragraph) the
Trustee may withhold notice if and so long as it in good faith determines that
the withholding of notice is in the interests of the Holders.
No Holder
will have any right to institute any proceeding with respect to the Indenture or
for any remedy thereunder unless: (a) the Holder has previously given
to the Trustee written notice of a continuing Event of Default; (b) the Holders
of at least 25% in aggregate principal amount of the outstanding Notes have
requested the Trustee to institute a proceeding in respect of the Event of
Default; (c) the Holder or Holders have furnished reasonable indemnity to the
Trustee to institute the proceeding as Trustee; (d) the Trustee has not received
from the Holders of a majority in principal amount of the outstanding Notes a
direction inconsistent with the request; and (e) the Trustee has failed to
institute the proceeding within 60 calendar days. However, the
limitations described above do not apply to a suit instituted by a Holder for
enforcement of payment of the principal of and interest on or after the
applicable due dates for the payment of such principal and
interest.
(13) Trustee
Dealings with Company. The Trustee, in its individual or any
other capacity, may become the owner or pledgee of Notes and, subject to the
terms of the Indenture, may otherwise deal with the Company with the same rights
it would have if it were not Trustee.
(14) No Recourse
Against Others. No director, officer, employee, incorporator,
Affiliate or stockholder of the Company or any of the Subsidiary Guarantors, as
such, will have any liability for any obligations of the Company or such
Subsidiary Guarantor under the Notes, the Indenture, the Subsidiary Guarantee or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
(15) Authentication. This
Note shall not be valid until authenticated by the manual signature of the
Trustee or an Authenticating Agent.
(16) 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 rights of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
(17) CUSIP, ISIN
or Other Similar Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP, ISIN or other similar numbers to be printed on the
Notes and the Trustee may use CUSIP, ISIN or other similar 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.
(18) Governing
Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York.
(19) Senior
Indebtedness. The Company and each Subsidiary Guarantor hereby
designate the obligations with respect to the Notes and Subsidiary Guarantees as
Senior Indebtedness which is senior in right of payment in full to any
Subordinated Obligation of the Company or any Subsidiary
Guarantor. The Company and each Subsidiary Guarantor further
designate the obligations with respect to the Notes and the Subsidiary
Guarantees as “Designated Senior Indebtedness” (as defined by the (i) 2024
Convertible Subordinated Debentures Indenture and (ii) the 2016 Senior
Subordinated Notes Indenture) for all purposes under the (x) 2024 Convertible
Subordinated Debentures Indenture and (y) 2016 Senior Subordinated Notes
Indenture, with respect the Notes and the Subsidiary Guarantees,
respectively.
ASSIGNMENT
FORM
To assign
this Note, fill in the form below and have your signature
guaranteed: (I) or (we) assign
and transfer this Note to
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(Insert
assignee’s soc. sec. or tax I.D. no.)
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(Print
or type assignee’s name, address and zip code)
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and
irrevocably appoint
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agent
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to
transfer this Note on the books of the Company. The agent may
substitute another to act for him.
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Date:
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Your
Name: |
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(Print
your name exactly as it appears on the face of this
Note)
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Your
Signature: |
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(Sign
exactly as your name appears on the face of this
Note)
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Signature
Guarantee*:
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__________________
* Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the
Trustee).
SCHEDULE
OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The
following exchanges of a part of this Global Note for an interest in another
Global Note, or exchanges of a part of another Global Note for an interest in
this Global Note, have been made:
Date
of Exchange
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Amount
of decrease in Principal Amount of this Global Note
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Amount
of increase in Principal Amount of this Global Note
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Principal
Amount of this Global Note following such decrease (or
increase)
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Signature
of authorized officer of Trustee or
Note
Custodian
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EXHIBIT
B
[FORM OF
SUPPLEMENTAL INDENTURE
TO BE
DELIVERED BY SUBSEQUENT GUARANTORS]
This
SUPPLEMENTAL INDENTURE, dated as of ________________, 20__, among
__________________ (the “Guaranteeing Subsidiary”), a subsidiary of Quicksilver
Resources Inc. (or its permitted successor), a Delaware corporation (the
“Company”), the Company, the other Subsidiary Guarantors (as defined in the
Indenture referred to herein) and The Bank of New York Mellon Trust Company,
N.A., as Trustee.
W I T N E
S S E T H
WHEREAS,
the Company and the Trustee entered into an Indenture (the “Original
Indenture”), dated as of December 22, 2005, as supplemented by a Seventh
Supplemental Indenture, dated as of June 25, 2009 among the Company, the
Subsidiary Guarantors and the Trustee (the “Seventh Supplemental Indenture”; and
together with the Original Indenture, the “Indenture”), pursuant to which the
Company has issued $600,000,000 of aggregate principal amount of 11¾% Senior
Notes due 2016 (the “Notes”);
WHEREAS,
Section 5.01(b) of the Seventh Supplemental Indenture provides that the Company,
the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture
in order to add Subsidiary Guarantees with respect to the Notes, without the
consent of the Holders; and
WHEREAS,
all acts and things prescribed by the Indenture, by law and by the certificate
of incorporation and the bylaws (or comparable constituent documents) of the
Company, the Subsidiary Guarantors, the Guaranteeing Subsidiary and the Trustee
necessary to make this Supplemental Indenture a valid instrument legally binding
on the Company, the Subsidiary Guarantors, the Guaranteeing Subsidiary and the
Trustee, in accordance with its terms, have been duly done and
performed;
NOW
THEREFORE, to comply with the provisions of the Indenture, and in consideration
of the foregoing, the Guaranteeing Subsidiary, the Company, the Subsidiary
Guarantors and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders as follows:
ARTICLE
1
Section
1.01 This
Supplemental Indenture is supplemental to the Indenture and does and shall be
deemed to form a part of, and shall be construed in connection with and as part
of, the Indenture for any and all purposes.
Section
1.02 This
Supplemental Indenture shall become effective immediately upon its execution and
delivery by the Guaranteeing Subsidiary, the Company, the Subsidiary Guarantors
and the Trustee.
ARTICLE
2
Section
2.01 The
Guaranteeing Subsidiary hereby agrees to be bound by the terms, conditions and
other provisions of the Indenture with all attendant rights, duties and
obligations stated therein, on a joint and several basis with the Subsidiary
Guarantors parties hereto and thereto, with the same force and effect as if
originally named as a Subsidiary Guarantor therein and as if such party executed
the Indenture on the date thereof.
ARTICLE
3
Section
3.01 Except
as specifically modified herein, the Indenture and the Notes are in all respects
ratified and confirmed (mutatis mutandis) and shall remain in full force and
effect in accordance with their terms.
Section
3.02 All
capitalized terms used but not defined herein shall have the same respective
meanings ascribed to them in the Indenture.
Section
3.03 Except
as otherwise expressly provided herein, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed, by the Trustee by
reason of this Supplemental Indenture. This Supplemental Indenture is
executed and accepted by the Trustee subject to all of the terms and conditions
set forth in the Indenture with the same force and effect as if those terms and
conditions were repeated at length herein and made applicable to the Trustee
with respect hereto.
Section
3.04 THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
Section
3.05 The
parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
Section
3.06 The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Supplemental Indenture.
Section
3.07 The
recitals hereto are statements only of the Company, the Subsidiary Guarantors
and the Guaranteeing Subsidiary and shall not be considered statements of or
attributable to the Trustee.
Section
3.08 The
Guaranteeing Subsidiary hereby designates the obligations with respect to the
Notes and the Subsidiary Guarantees as Senior Indebtedness which is senior in
right of payment in full to any Subordinated Obligation of the Company or any
Subsidiary Guarantor. The Guaranteeing Subsidiary further designates
the obligations with respect to the Notes and the Subsidiary Guarantees as
“Designated Senior Indebtedness” (as defined by the (i) 2024 Convertible
Subordinated Debentures Indenture and (ii) the 2016 Senior Subordinated Notes
Indenture) for all purposes under (x) the 2024 Convertible Subordinated
Debentures Indenture and (y) the 2016 Senior Subordinated Notes Indenture, with
respect to the Notes and the Subsidiary Guarantees, respectively.
IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to
be duly executed and attested, all as of the date first above
written.
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[GUARANTEEING
SUBSIDIARY] |
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By: |
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Name:
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Title:
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QUICKSILVER
RESOURCES INC. |
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By: |
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Name:
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Title:
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[EXISTING
SUBSIDIARY GUARANTORS] |
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By: |
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Name:
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Title:
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THE
BANK OF NEW YORK MELLON TRUST COMPANY N.A., |
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as
Trustee |
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By: |
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Name:
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Title:
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