exv4w1






Exhibit 4.1





 

 





DENBURY RESOURCES INC.,




Issuer



•%
Senior Subordinated Notes Due 2021



 





INDENTURE



Dated
as of February •, 2011



 





WELLS FARGO BANK, NATIONAL ASSOCIATION



Trustee




 

 



 









 





CROSS-REFERENCE TABLE




	 	 	 	 
	TIA	 	Indenture
	Section	 	Section
	310

	(a)(1)
	 	7.10
	 

	(a)(2)
	 	7.10
	 

	(a)(3)
	 	N.A.
	 

	(a)(4)
	 	N.A.
	 

	(a)(5)
	 	7.10
	 

	(b)
	 	7.08; 7.10
	 

	(c)
	 	N.A.
	311

	(a)
	 	7.11
	 

	(b)
	 	7.11
	 

	(c)
	 	N.A.
	312

	(a)
	 	2.05
	 

	(b)
	 	13.03
	 

	(c)
	 	13.03
	313

	(a)
	 	7.06
	 

	(b)(1)
	 	7.06
	 

	(b)(2)
	 	7.06
	 

	(c)
	 	13.02
	 

	(d)
	 	7.06
	314

	(a)
	 	4.02; 4.11; 13.02
	 

	(b)
	 	N.A.
	 

	(c)(1)
	 	2.02; 13.04
	 

	(c)(2)
	 	2.02; 13.04
	 

	(c)(3)
	 	N.A.
	 

	(d)
	 	N.A.
	 

	(e)
	 	13.05
	 

	(f)
	 	N.A.
	315

	(a)
	 	7.01
	 

	(b)
	 	7.05; 13.02
	 

	(c)
	 	7.01
	 

	(d)
	 	7.01
	 

	(e)
	 	6.11
	316

	(a)(last sentence)
	 	13.06
	 

	(a)(1)(A)
	 	6.05
	 

	(a)(1)(B)
	 	6.04
	 

	(a)(2)
	 	N.A.
	 

	(b)
	 	6.07
	 

	(c)
	 	N.A.
	317

	(a)(1)
	 	6.08
	 

	(a)(2)
	 	6.09
	 

	(b)
	 	2.04
	318

	(a)
	 	13.01
	 

	(b)
	 	N.A.
	 

	(c)
	 	N.A.






N.A. means Not Applicable.






 




			
	Note:	 	This Cross-Reference Table shall not, for any purpose, be deemed to be part of the
Indenture.




 









 










TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 1	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Definitions and Incorporation by Reference	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01.
	 	Definitions	 	 	1	 
	Section 1.02.
	 	Other Definitions	 	 	26	 
	Section 1.03.
	 	Incorporation by Reference of Trust Indenture Act	 	 	26	 
	Section 1.04.
	 	Rules of Construction	 	 	27	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 2	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	The Securities	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01.
	 	Form and Dating	 	 	27	 
	Section 2.02.
	 	Execution and Authentication	 	 	27	 
	Section 2.03.
	 	Registrar and Paying Agent	 	 	28	 
	Section 2.04.
	 	Paying Agent To Hold Money in Trust	 	 	28	 
	Section 2.05.
	 	Securityholder Lists	 	 	29	 
	Section 2.06.
	 	Transfer and Exchange	 	 	29	 
	Section 2.07.
	 	Replacement Securities	 	 	29	 
	Section 2.08.
	 	Outstanding Securities	 	 	29	 
	Section 2.09.
	 	Temporary Securities	 	 	30	 
	Section 2.10.
	 	Cancellation	 	 	30	 
	Section 2.11.
	 	Defaulted Interest	 	 	30	 
	Section 2.12.
	 	CUSIP Numbers	 	 	30	 
	Section 2.13.
	 	Issuance of Additional Securities	 	 	30	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 3	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Redemption	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01.
	 	Notices to Trustee	 	 	31	 
	Section 3.02.
	 	Selection of Securities To Be Redeemed	 	 	31	 
	Section 3.03.
	 	Notice of Redemption	 	 	31	 
	Section 3.04.
	 	Effect of Notice of Redemption	 	 	32	 
	Section 3.05.
	 	Deposit of Redemption Price	 	 	32	 
	Section 3.06.
	 	Securities Redeemed in Part	 	 	32	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 4	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Covenants	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01.
	 	Payment of Securities	 	 	33	 
	Section 4.02.
	 	SEC Reports	 	 	33	 
	Section 4.03.
	 	Limitation on Indebtedness	 	 	34	 
	Section 4.04.
	 	Incurrence of Layered Indebtedness	 	 	36	 
	Section 4.05.
	 	Limitation on Restricted Payments	 	 	36	 
	Section 4.06.
	 	Limitation on Restrictions on Distributions from Restricted Subsidiaries	 	 	38	 
	Section 4.07.
	 	Limitation on Sales of Assets and Subsidiary Stock	 	 	38	 
	Section 4.08.
	 	Limitation on Affiliate Transactions	 	 	41	 
	Section 4.09.
	 	Change of Control	 	 	41	 
	Section 4.10.
	 	Limitation on Liens	 	 	43	 
	Section 4.11.
	 	Compliance Certificate	 	 	43	 
	Section 4.12.
	 	Further Instruments and Acts	 	 	43	 
	Section 4.13.
	 	Future Subsidiary Guarantors	 	 	43	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 5	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Successor Company	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01.
	 	When Company May Merge or Transfer Assets	 	 	43	 
	Section 5.02.
	 	When Subsidiary Guarantors May Merge or Transfer Assets	 	 	44	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 6	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Defaults and Remedies	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01.
	 	Events of Default	 	 	45	 
	Section 6.02.
	 	Acceleration	 	 	47	 
	Section 6.03.
	 	Other Remedies	 	 	47	 
	Section 6.04.
	 	Waiver of Past Defaults	 	 	47	 
	Section 6.05.
	 	Control by Majority	 	 	48	 
	Section 6.06.
	 	Limitation on Suits	 	 	48	 
	Section 6.07.
	 	Rights of Holders To Receive Payment	 	 	48	 
	Section 6.08.
	 	Collection Suit by Trustee	 	 	48	 
	Section 6.09.
	 	Trustee May File Proofs of Claim	 	 	48	 
	Section 6.10.
	 	Priorities	 	 	49	 
	Section 6.11.
	 	Undertaking for Costs	 	 	49	 
	Section 6.12.
	 	Waiver of Stay or Extension Laws	 	 	49	 






ii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE 7	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Trustee	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.01.
	 	Duties of Trustee	 	 	50	 
	Section 7.02.
	 	Rights of Trustee	 	 	51	 
	Section 7.03.
	 	Individual Rights of Trustee	 	 	51	 
	Section 7.04.
	 	Trustee’s Disclaimer	 	 	51	 
	Section 7.05.
	 	Notice of Defaults	 	 	52	 
	Section 7.06.
	 	Reports by Trustee to Holders	 	 	52	 
	Section 7.07.
	 	Compensation and Indemnity	 	 	52	 
	Section 7.08.
	 	Replacement of Trustee	 	 	53	 
	Section 7.09.
	 	Successor Trustee by Merger	 	 	53	 
	Section 7.10.
	 	Eligibility; Disqualification	 	 	54	 
	Section 7.11.
	 	Preferential Collection of Claims Against Company	 	 	54	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 8	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Discharge of Indenture; Defeasance	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01.
	 	Discharge of Liability on Securities; Defeasance	 	 	54	 
	Section 8.02.
	 	Conditions to Defeasance	 	 	55	 
	Section 8.03.
	 	Application of Trust Money	 	 	56	 
	Section 8.04.
	 	Repayment to Company	 	 	56	 
	Section 8.05.
	 	Indemnity for Government Obligations	 	 	56	 
	Section 8.06.
	 	Reinstatement	 	 	56	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 9	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Amendments	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01.
	 	Without Consent of Holders	 	 	57	 
	Section 9.02.
	 	With Consent of Holders	 	 	58	 
	Section 9.03.
	 	Compliance with Trust Indenture Act	 	 	59	 
	Section 9.04.
	 	Revocation and Effect of Consents and Waivers	 	 	59	 
	Section 9.05.
	 	Notation on or Exchange of Securities	 	 	59	 
	Section 9.06.
	 	Trustee To Sign Amendments	 	 	59	 
	Section 9.07.
	 	Payment for Consent	 	 	59	 






iii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 10	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Subordination of the Securities	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.01.
	 	Agreement To Subordinate	 	 	60	 
	Section 10.02.
	 	Liquidation, Dissolution, Bankruptcy	 	 	60	 
	Section 10.03.
	 	Default on Designated Senior Indebtedness	 	 	60	 
	Section 10.04.
	 	Acceleration of Payment of Securities	 	 	61	 
	Section 10.05.
	 	When Distribution Must Be Paid Over	 	 	61	 
	Section 10.06.
	 	Subrogation	 	 	61	 
	Section 10.07.
	 	Relative Rights	 	 	61	 
	Section 10.08.
	 	Subordination May Not Be Impaired by Company	 	 	62	 
	Section 10.09.
	 	Rights of Trustee and Paying Agent	 	 	62	 
	Section 10.10.
	 	Distribution or Notice to Representative	 	 	62	 
	Section 10.11.
	 	Article 10 Not To Prevent Events of Default or Limit Right To Accelerate	 	 	62	 
	Section 10.12.
	 	Trust Moneys Not Subordinated	 	 	62	 
	Section 10.13.
	 	Trustee Entitled To Rely	 	 	62	 
	Section 10.14.
	 	Trustee To Effectuate Subordination	 	 	63	 
	Section 10.15.
	 	Trustee Not Fiduciary for Holders of Senior Indebtedness of the Company	 	 	63	 
	Section 10.16.
	 	Reliance by Holders of Senior Indebtedness of the Company on Subordination Provisions	 	 	63	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 11	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Subsidiary Guarantees	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.01.
	 	Subsidiary Guarantees	 	 	63	 
	Section 11.02.
	 	Limitation on Liability	 	 	65	 
	Section 11.03.
	 	Successors and Assigns	 	 	65	 
	Section 11.04.
	 	No Waiver	 	 	66	 
	Section 11.05.
	 	Modification	 	 	66	 
	Section 11.06.
	 	Release of Subsidiary Guarantor	 	 	66	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 12	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Subordination of Subsidiary Guarantees	 	 	 	 
	 
	 	 	 	 	 	 
	Section 12.01.
	 	Agreement To Subordinate	 	 	66	 
	Section 12.02.
	 	Liquidation, Dissolution, Bankruptcy	 	 	67	 
	Section 12.03.
	 	Default on Designated Senior Indebtedness of Subsidiary Guarantor	 	 	67	 






iv









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 12.04.
	 	Demand for Payment	 	 	68	 
	Section 12.05.
	 	When Distribution Must Be Paid Over	 	 	68	 
	Section 12.06.
	 	Subrogation	 	 	68	 
	Section 12.07.
	 	Relative Rights	 	 	68	 
	Section 12.08.
	 	Subordination May Not Be Impaired by Subsidiary Guarantor	 	 	69	 
	Section 12.09.
	 	Rights of Trustee and Paying Agent	 	 	69	 
	Section 12.10.
	 	Distribution or Notice to Representative	 	 	69	 
	Section 12.11.
	 	Article 12 Not To Prevent Defaults Under a Subsidiary Guarantee or Limit Right To Demand Payment	 	 	69	 
	Section 12.12.
	 	Trustee Entitled To Rely	 	 	69	 
	Section 12.13.
	 	Trustee To Effectuate Subordination	 	 	70	 
	Section 12.14.
	 	Trustee Not Fiduciary for Holders of Senior Indebtedness of Subsidiary Guarantor	 	 	70	 
	Section 12.15.
	 	Reliance by Holders of Senior Indebtedness on Subordination Provisions	 	 	70	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 13	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Miscellaneous	 	 	 	 
	 
	 	 	 	 	 	 
	Section 13.01.
	 	Trust Indenture Act Controls	 	 	70	 
	Section 13.02.
	 	Notices	 	 	70	 
	Section 13.03.
	 	Communication by Holders with Other Holders	 	 	71	 
	Section 13.04.
	 	Certificate and Opinion as to Conditions Precedent	 	 	71	 
	Section 13.05.
	 	Statements Required in Certificate or Opinion	 	 	71	 
	Section 13.06.
	 	When Securities Disregarded	 	 	72	 
	Section 13.07.
	 	Rules by Trustee, Paying Agent and Registrar	 	 	72	 
	Section 13.08.
	 	Legal Holidays	 	 	72	 
	Section 13.09.
	 	Governing Law	 	 	72	 
	Section 13.10.
	 	No Recourse Against Others	 	 	72	 
	Section 13.11.
	 	Successors	 	 	73	 
	Section 13.12.
	 	Multiple Originals	 	 	73	 
	Section 13.13.
	 	Table of Contents; Headings	 	 	73	 
	Section 13.14.
	 	Severability	 	 	73	 
	 
	 	 	 	 	 	 
	Exhibit 1
	 	Form of Supplemental Indenture	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit A
	 	Form of Security	 	 	 	 







v











 





          INDENTURE
dated as of February •, 2011, among DENBURY RESOURCES INC., a Delaware
corporation (the “Company”), certain of the Company’s subsidiaries signatory hereto (each,
a “Subsidiary Guarantor” and, collectively, the “Subsidiary Guarantors”) and WELLS
FARGO BANK, NATIONAL ASSOCIATION (the “Trustee”).




          Each party agrees as follows for the benefit of the other parties and for the equal and
ratable benefit of the Holders of the Company’s $350,000,000 aggregate principal amount of •%
Senior Subordinated Notes due 2021 issued on the Issue Date (the “Securities”):




ARTICLE 1




Definitions and Incorporation by Reference



          Section 1.01. Definitions.




          “Additional Assets” means (i) any property or assets (other than Indebtedness and
Capital Stock) in the Oil and Gas Business; (ii) 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
another Restricted Subsidiary; or (iii) Capital Stock constituting a noncontrolling interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that any
such Restricted Subsidiary described in clauses (ii) or (iii) above is primarily engaged in the Oil
and Gas Business.




          “Additional Securities” means, subject to the Company’s compliance with Section 4.03,
•% Senior Subordinated Notes Due 2021 issued from time to time after the Issue Date under the terms
of this Indenture (other than pursuant to Section 2.06, 2.07, 2.09, 3.06 or 9.05 of this
Indenture).




          “Adjusted Consolidated Net Tangible Assets” or “ACNTA” means (without
duplication), as of the date of determination, (a) the sum of (i) the discounted future net revenue
from proved crude oil and natural gas reserves of the Company and its Restricted Subsidiaries
calculated in accordance with SEC guidelines before any state or federal income taxes, as estimated
in a reserve report prepared as of the end of the Company’s most recently completed fiscal year,
which reserve report is prepared or reviewed by independent petroleum engineers, as increased by,
as of the date of determination, the discounted future net revenue of (A) estimated proved crude
oil and natural gas reserves of the Company and its Restricted Subsidiaries attributable to
acquisitions consummated since the date of such year-end reserve report, and (B) estimated crude
oil and natural gas reserves of the Company and its Restricted Subsidiaries attributable to
extensions, discoveries and other additions and upward determinations of estimates of proved crude
oil and natural gas reserves (including previously estimated development costs incurred during the
period and the accretion of discount since the prior year end) due to exploration, development or
exploitation, production or other activities which reserves were not reflected in such year-end
reserve report which would, in the case of determinations made pursuant to clauses (A) and (B), in
accordance with standard industry practice, result in such determinations, in each case calculated
in accordance with SEC guidelines (utilizing the prices utilized in such year-end reserve report),
and decreased by, as of the date of determination, the discounted future net revenue attributable
to (C) estimated proved












 



2



oil and gas reserves of the Company and its Restricted Subsidiaries reflected in such year-end
reserve report produced or disposed of since the date of such year-end reserve report and (D)
reductions in the estimated crude oil and natural gas reserves of the Company and its Restricted
Subsidiaries reflected in such year-end reserve report since the date of such year-end reserve
report attributable to downward determinations of estimates of proved crude oil and natural gas
reserves due to exploration, development or exploitation, production or other activities conducted
or otherwise occurring since the date of such year-end reserve report which would, in the case of
determinations made pursuant to clauses (C) and (D), in accordance with standard industry practice,
result in such determinations, in each case calculated in accordance with SEC guidelines (utilizing
the prices utilized in such year-end reserve report); provided, however, that, in
the case of each of the determinations made pursuant to clauses (A) through (D), such increases and
decreases shall be as estimated by the Company’s engineers, except that if as a result of such
acquisitions, dispositions, discoveries, extensions or revisions, there is a Material Change which
is an increase, then such increases and decreases in the discounted future net revenue shall be
confirmed in writing by an independent petroleum engineer, (ii) the capitalized costs that are
attributable to crude oil and natural gas properties of the Company and its Restricted Subsidiaries
to which no proved crude oil and natural gas reserves are attributed, based on the Company’s books
and records as of a date no earlier than the date of the Company’s latest annual or quarterly
financial statements, (iii) the Net Working Capital on a date no earlier than the date of the
Company’s latest annual or quarterly financial statements and (iv) the greater of (I) the net book
value on a date no earlier than the date of the Company’s latest annual or quarterly financial
statements and (II) 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 financial statements (provided that the Company shall not be
required to obtain such an appraisal of such assets if no such appraisal has been performed), minus
(b) to the extent not otherwise taken into account in the immediately preceding clause (a), the sum
of (i) noncontrolling interests, (ii) any natural gas balancing liabilities of the Company and its
Restricted Subsidiaries reflected in the Company’s latest audited financial statements, (iii) the
discounted future net revenue, calculated in accordance with SEC guidelines (utilizing the same
prices utilized in the Company’s year-end reserve report), attributable to reserves subject to
participation interests, overriding royalty interests or other interests of third parties, pursuant
to participation, partnership, vendor financing or other agreements then in effect, or which
otherwise are required to be delivered to third parties, (iv) the discounted future net revenue,
calculated in accordance with SEC guidelines (utilizing the same prices utilized in the Company’s
year-end reserve report), attributable to reserves that are required to be delivered to third
parties to fully satisfy the obligations of the Company and its Restricted Subsidiaries with
respect to Volumetric Production Payments on the schedules specified with respect thereto and (v)
the discounted future net revenue, calculated in accordance with SEC guidelines, attributable to
reserves subject to Dollar-Denominated Production Payments that, based on the estimates of
production included in determining the discounted future net revenue specified in the immediately
preceding clause
(a)(i) (utilizing the same prices utilized in the Company’s year-end reserve
report), would be necessary to satisfy fully the obligations of the Company and its Restricted
Subsidiaries with respect to Dollar-Denominated Production Payments on the schedules specified with
respect thereto.




          “Affiliate” of any specified Person means any other Person, directly or indirectly,
controlling or controlled by or under direct or indirect common control with such specified












 



3



Person. For the purposes of this definition, “control” when used with respect to any
Person means the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.
For purposes of Sections 4.05, 4.07 and 4.08 only, “Affiliate” shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting power of the Voting
Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Capital
Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.




          “Asset Disposition” means any sale, lease, transfer or other disposition (or series of
related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary,
including any disposition by means of a merger, consolidation or similar transaction (each referred
to for the purposes of this definition as a “disposition”), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a Restricted Subsidiary), (ii) all
or substantially all the assets of any division or line of business of the Company or any
Restricted Subsidiary or (iii) any other assets of the Company or any Restricted Subsidiary outside
of the ordinary course of business of the Company or such Restricted Subsidiary. Notwithstanding
the foregoing, none of the following shall be deemed to be an Asset Disposition: (1) a disposition
by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly
Owned Subsidiary, (2) for purposes of Section 4.07 only, a disposition that constitutes a
Restricted Payment permitted by Section 4.05, a disposition of all or substantially all the assets
of the Company in compliance with Section 5.01 or a disposition that constitutes a Change of
Control pursuant to clause (iii) of the definition thereof, (3) the sale or transfer (whether or
not in the ordinary course of business) of crude oil and natural gas properties or direct or
indirect interests in real property; provided, however, that at the time of such
sale or transfer such properties do not have associated with them any proved reserves, (4) the
abandonment, farm-out, lease or sublease of developed or undeveloped crude oil and natural gas
properties in the ordinary course of business, (5) the trade or exchange by the Company or any
Restricted Subsidiary of any crude oil and natural gas property owned or held by the Company or
such Restricted Subsidiary for any crude oil and natural gas property owned or held by another
Person, (6) the sale or transfer of hydrocarbons or other mineral products or surplus or obsolete
equipment or (7) a single transaction or series of related transactions that involve the
disposition of assets with a fair market value of less than $20.0 million, in each case in the
ordinary course of business.




          “Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time
of determination, the present value (discounted at the interest rate implicit in the Sale/Leaseback
Transaction, compounded 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 (i) the sum of the products of
the numbers of years from the date of determination to the dates of each successive scheduled












 



4



principal payment of such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments.




          “Board of Directors” means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board.




          “Business Day” means each day which is not a Legal Holiday.




          “Capital Lease Obligation” means an obligation that is required to be classified and
accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the
amount of Indebtedness represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.




          “Capital Stock” of any Person means any and all shares, interests, rights to purchase,
warrants, options, participations 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.




          “Change of Control” means the occurrence of any of the following events:





     (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that for purposes of this clause (i) such person shall be deemed to have
“beneficial ownership” of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or indirectly,
of more than 40% of the total voting power of the Voting Stock of the Company (for the
purposes of this clause (i), such person shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation, if such person is the
beneficial owner (as defined in this clause (i)), directly or indirectly, of more than 40%
of the voting power of the Voting Stock of such parent corporation);




     (ii) during any period of two consecutive years from and after the Issue Date,
individuals who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by a vote of a
majority of the directors of the Company then still in office who were either directors at
the beginning of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of Directors then in
office;




     (iii) the shareholders of the Company shall have approved any plan of liquidation or
dissolution of the Company; or




     (iv) the merger or consolidation of the Company with or into another Person or the
merger of another Person with or into the Company, or the sale, lease, conveyance or









 



5



transfer of all or substantially all the assets of the Company and its Restricted
Subsidiaries, taken as a whole, to another Person, and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of the Voting Stock of
the Company are changed into or exchanged for cash, securities or property, unless pursuant
to such transaction such securities are changed into or exchanged for, in addition to any
other consideration, securities of the surviving corporation that represent immediately
after such transaction, at least a majority of the aggregate voting power of the Voting
Stock of the surviving corporation.



          “Code” means the Internal Revenue Code of 1986, as amended.




          “Company” means the party named as such in the preamble to this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of any provision
contained herein and required by the TIA, each other obligor on the indenture securities.




          “Consolidated Coverage Ratio” as of any date of determination means the ratio of (i)
the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters
ending at least 45 days prior to the date of such determination to (ii) Consolidated Interest
Expense for such four fiscal quarters; provided, however, that (1) if the Company
or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding or if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense
for such period shall 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 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, (2) if the
Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged on the date of the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for
such period shall be calculated on a pro forma basis as if such discharge had occurred on the first
day of such period and as if the Company or such Restricted Subsidiary had not earned the interest
income actually earned during such period in respect of cash or Temporary Cash Investments used to
repay, repurchase, defease or otherwise discharge such Indebtedness, (3) if since the beginning of
such period the Company or any Restricted Subsidiary shall have made any Asset Disposition (other
than an Asset Disposition involving assets having a fair market value of less than the greater of
two and one-half percent (2.5%) of Adjusted Consolidated Net Tangible Assets as of the end of the
Company’s then most recently completed fiscal year and $3.0 million), then EBITDA for such period
shall be reduced by an amount equal to 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
EBITDA (if negative) directly attributable thereto for such period and Consolidated Interest
Expense for such period shall 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












 



6



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), (4) 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 an acquisition (including by way of lease) of assets, including any
acquisition of assets occurring in connection with a transaction requiring a calculation to be made
hereunder, EBITDA and Consolidated Interest Expense for such period shall 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 (5) 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 made
any Asset Disposition, any Investment or acquisition of assets that would have required an
adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary
during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition
occurred on the first day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred
in connection therewith, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating
rate of interest and is being given pro forma effect, the interest of such
Indebtedness shall 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).




          “Consolidated Current Liabilities” as of the date of determination means the aggregate
amount of liabilities of the Company and its consolidated Restricted Subsidiaries which would
properly be classified as current liabilities (including taxes accrued as estimated) on a
consolidated balance sheet of the Company and its Restricted Subsidiaries at such date, after
eliminating (i) all intercompany items between the Company and any Restricted Subsidiary and (ii)
all current maturities of long-term Indebtedness, all as determined in accordance with GAAP
consistently applied.




          “Consolidated Interest Expense” means, for any period, the total interest expense of
the Company and its Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, plus, to the extent not included in such total interest expense, and to the
extent incurred by the Company or its Restricted Subsidiaries, without duplication, (i) interest
expense attributable to Capital Lease Obligations and imputed interest with respect to Attributable
Debt, (ii) capitalized interest, (iii) non-cash interest expense, (iv) commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers’ acceptance financing,
(v) net costs (including amortization of fees and up-front payments) associated with interest rate
caps and other interest rate and currency options that, at the time entered into, resulted in the
Company and its Restricted Subsidiaries being net payees as to future payouts under such caps or
options, and interest rate and currency swaps and forwards for which the Company or any of its
Restricted Subsidiaries has paid a premium, (vi) dividends












 



7



(excluding dividends paid in shares of Capital Stock which is not Disqualified Stock) in
respect of all Disqualified Stock held by Persons other than the Company or a Wholly Owned
Subsidiary and (vii) interest accruing on any Indebtedness of any other Person to the extent such
Indebtedness is Guaranteed by the Company or any Restricted Subsidiary or secured by a Lien on
assets of the Company or any Restricted Subsidiary to the extent such Indebtedness constitutes
Indebtedness of the Company or any Restricted Subsidiary (whether or not such Guarantee or Lien is
called upon); provided, however, “Consolidated Interest Expense” shall not
include any (x) amortization of costs relating to original debt issuances other than the
amortization of debt discount related to the issuance of zero coupon securities or other securities
with an original issue price of not more than 90% of the principal thereof, (y) Consolidated
Interest Expense with respect to any Indebtedness Incurred pursuant to Section 4.03(b)(8) and (z)
noncash interest expense Incurred in connection with interest rate caps and other interest rate and
currency options that, at the time entered into, resulted in the Company and its Restricted
Subsidiaries being either neutral or net payors as to future payouts under such caps or options.




          “Consolidated Net Income” means, for any period, the net income of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP; provided,
however, that there shall not be included in such Consolidated Net Income: (i) any net
income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except
that (A) subject to the exclusion contained in clause (iv) below, the Company’s equity in the net
income of any such Person for such period shall 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 paid to a Restricted Subsidiary, to the limitations contained in clause (iii)
below) and (B) the Company’s equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income; (ii) any net income (or loss) of any Person
acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition; (iii) any net income of any Restricted Subsidiary (other than a
Subsidiary Guarantor) if such Restricted 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 exclusion
contained in clause (iv) below, the Company’s equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Restricted Subsidiary during such period to the Company
or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution paid to another 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 shall be included in determining such Consolidated Net Income; (iv) any gain or loss
realized upon the sale or other disposition of any assets of the Company or its Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed
of in the ordinary course of business and any gain or loss realized upon the sale or other
disposition of any Capital Stock of any Person; (v) extraordinary gains or losses; (vi) any
non-cash compensation expense realized for grants of performance shares, stock options or stock
awards to officers, directors and employees of the Company or any of its Restricted Subsidiaries;
(vii) any write-downs of non-current assets; provided, however, that any ceiling
limitation write-downs under SEC guidelines shall be treated as capitalized costs, as if such
write-downs had not occurred; and (viii) the cumulative effect of a change in












 



8



accounting principles. Notwithstanding the foregoing, for the purposes of Section 4.05 only,
there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances
or other transfers of assets from Unrestricted Subsidiaries to the Company or a Restricted
Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted
Payments permitted under Section 4.05(a)(3)(E).




          “Consolidated Net Tangible Assets”, as of any date of determination, means the total
amount of assets (less accumulated depreciation and amortization, allowances for doubtful
receivables, other applicable reserves and other properly deductible items) which would appear on a
balance sheet of the Company and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP, and after giving effect to purchase accounting and after deducting therefrom
Consolidated Current Liabilities and, to the extent otherwise included, the amounts of: (i)
noncontrolling interests in Restricted Subsidiaries held by Persons other than the Company or a
Restricted Subsidiary; (ii) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors; (iii) any revaluation or other write-up in book
value of assets subsequent to the Issue Date as a result of a change in the method of valuation in
accordance with GAAP consistently applied; (iv) unamortized debt discount and expenses and other
unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names,
copyrights, licenses, organization or developmental expenses and other intangible items; (v)
treasury stock; (vi) cash set apart and held in a sinking or other analogous fund established for
the purpose of redemption or other retirement of Capital Stock to the extent such obligation is not
reflected in Consolidated Current Liabilities; and (vii) Investments in and assets of Unrestricted
Subsidiaries.




          “Consolidated Net Worth” means the total of the amounts shown on the balance sheet of
the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being made, as (i) the par or
stated value of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified
Stock.




          “Credit
Agreement” means the Credit
Agreement among the Company as Borrower, JPMorgan
Chase Bank, N.A. as Administrative Agent, and certain other financial
institutions, dated March 9, 2010, as amended
(or any successor thereto or replacement thereof), including any related
notes, guarantees, collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, restated, modified, renewed, refunded, replaced, refinanced
or increased in whole or in part, from time to time.




          “Credit Facilities” means, with respect to the Company or any Restricted Subsidiary,
one or more debt facilities (including the Credit Agreement) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, term loans, production
payments, receivables financing (including through the sale of receivables to












 



9



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.




          “Currency Agreement” means in respect of a Person any foreign exchange contract,
currency swap agreement or other similar agreement to which such Person is a party or a
beneficiary.




          “Default” means any event which is, or after notice or passage of time or both would
be, an Event of Default.




          “Designated Senior Indebtedness” in respect of a Person means (i) all the obligations
of such Person under any Credit Facility (including the Credit Agreement) and (ii) any other Senior
Indebtedness of such Person which, at the date of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders thereof are committed to
lend up to, at least $20 million and is specifically designated by such Person in the instrument
evidencing or governing such Senior Indebtedness as “Designated Senior Indebtedness” for
purposes of this Indenture.




          “Disqualified Stock” means, with respect any Person, any Capital Stock that by its
terms (or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, (i) matures or is mandatorily redeemable pursuant
to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable, in whole or in part, at the option of the holder
thereof, in each case described in the immediately preceding clauses (i), (ii) or (iii), on or
prior to the Stated Maturity of the Securities; provided, however, that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an “asset sale” or “change of control” occurring prior to the Stated Maturity of the
Securities shall not constitute Disqualified Stock if (x) the “asset sale” or “change of control”
provisions applicable to such Capital Stock are not more favorable to the holders of such Capital
Stock than the provisions of Sections 4.07 and 4.09 and (y) any such requirement only becomes
operative after compliance with such corresponding terms applicable to the Securities, including
the purchase of any Securities tendered pursuant thereto. The amount of any Disqualified Stock
that does not have a fixed redemption, repayment or repurchase price will be calculated in
accordance with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed,
repaid or repurchased on any date on which the amount of such Disqualified Stock is to be
determined pursuant to the Indenture; provided, however, that if such Disqualified
Stock could not be required to be redeemed, repaid or repurchased at the time of such
determination, the redemption, repayment or repurchase price will be the book value of such
Disqualified Stock as reflected in the most recent financial statements of such Person.




          “Dollar-Denominated Production Payments” means production payment obligations recorded
as liabilities in accordance with GAAP, together with all undertakings and obligations in
connection therewith.













 



10




          “DTC” means The Depository Trust Company, its nominees and their respective successors
and assigns, or such other depository institution hereinafter appointed by the Company.




          “EBITDA” for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in calculating such
Consolidated Net Income: (a) provision for taxes based on income or profits, (b) depletion and
depreciation expense, (c) amortization expense, (d) exploration expense (if applicable to the
Company after the Issue Date), (e) unrealized foreign exchange losses and (f) all other non-cash
charges, including non-cash charges taken pursuant to the “Derivatives and Hedging” topic of FASC
(excluding any such non-cash charge to the extent that it represents an accrual of or reserve for
cash charges in any future period or amortization of a prepaid cash expense that was paid in a
prior period except such amounts as the Company determines in good faith are nonrecurring), and
less, to the extent included in calculating such Consolidated Net Income and in excess of
any costs or expenses attributable thereto and deducted in calculating such Consolidated Net
Income, the sum of (w) the amount of deferred revenues that are amortized during such period and
are attributable to reserves that are subject to Volumetric Production Payments, (x) amounts
recorded in accordance with GAAP as repayments of principal and interest pursuant to
Dollar-Denominated Production Payments, (y) unrealized foreign exchange gains and (z) all other
non-cash unrealized gains, including non-cash unrealized gains taken pursuant to the “Derivatives
and Hedging” topic of FASC. Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depletion, depreciation, amortization, exploration and other non-cash
charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA
only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary
was included in calculating Consolidated Net Income and only if a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its stockholders.











 



11




          “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          “Existing Senior Subordinated Notes” means the Company’s 71/2% Senior Subordinated Notes
Due 2015 issued under an indenture dated as of December 7, 2005, the subsequent issue of the
Company’s 71/2% Senior Subordinated Notes Due 2015 under the indenture dated as of December 7, 2005,
as supplemented by the first supplemental indenture dated as of April 3, 2007, the Company’s
71/2% Senior Subordinated Notes Due 2013
issued under an indenture dated as of March 25, 2003, the Company’s 6.25% Senior Subordinated Notes due 2014 issued under an indenture dated as of
April 2, 2004, the Company’s 6.0% Senior Subordinated Notes due 2015 issued under an indenture
dated as of July 13, 2005, the Company’s 9.75% Senior Subordinated Notes due 2016 issued under an
indenture dated as of February 13, 2009, the Company’s 9.5% Senior Subordinated Notes due 2016
issued under an indenture dated as of November 23, 2005, the Company’s 7.25% Senior Subordinated
Notes due 2017 issued under an indenture dated as of
November 23, 2005, and the Company’s
81/4% Senior
Subordinated Notes due 2020 issued under an indenture dated as of February 10, 2010.




          “FASC” means Financial Accounting Standards Codification issued by the Financial
Accounting Standards Board.




          “GAAP” means generally accepted accounting principles in the United States of America
as in effect on the Issue Date, including those set forth in (i) the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii)
statements and pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the accounting profession,
and (iv) the rules and regulations of the SEC governing the inclusion of financial statements
(including pro forma financial statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins
and similar written statements from the accounting staff of the SEC.




          “Government Securities” means securities that are:





(1) direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged; or




(2) obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States
of America,


which, in either case, are not callable or redeemable at the option of the issuers thereof, and
shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act), as custodian with respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of the Government












 



12



Securities or the specific payment of principal of or interest on the Government Securities
evidenced by such depository receipt.




          “Guarantee” means, without duplication, any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation,
direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement conditions or otherwise)
or (ii) entered into for the purpose 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” shall not include
endorsements for collection or deposit in the ordinary course of business. The term
“Guarantee” used as a verb has a corresponding meaning.




          “Guarantee Agreement” means a supplemental indenture, substantially in the form
attached hereto as Exhibit 1, pursuant to which a Subsidiary Guarantor or any other Person becomes
subject to the applicable terms and conditions of this Indenture.




          “Hedging Obligations” of any Person means the obligations of such Person pursuant to
any Oil and Gas Hedging Contract, Interest Rate Agreement or Currency Agreement.




          “Holder” or “Securityholder” means the Person in whose name a Security is
registered on the Registrar’s books.




          “Incur” means issue, 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 Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary.
The term “Incurrence” when used as a noun shall have a correlative meaning. The accretion
of principal of a non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.




          “Indebtedness” means, with respect to any Person on any date of determination (without
duplication), (i) the principal of and premium (if any) in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback
Transactions entered into by such Person; (iii) all obligations of such Person issued or assumed as
the deferred purchase price of property (which purchase price is due more than six months after the
date of taking delivery of title to such property), including all obligations of such Person for
the deferred purchase price of property under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business); (iv) all obligations of such Person
for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing obligations (other
than obligations described in (i) through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not drawn upon












 



13



or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth
Business Day following receipt by such Person of a demand for reimbursement following payment on
the letter of credit); (v) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock (but excluding any accrued
dividends); (vi) all obligations of such Person relating to any Production Payments; (vii) all
obligations of the type referred to in clauses (i) through (vi) of other Persons and all dividends
of other Persons for the payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee
(including, with respect to any Production Payment, any warranties or guarantees of production or
payment by such Person with respect to such Production Payment but excluding other contractual
obligations of such Person with respect to such Production Payment); and (viii) all obligations of
the type referred to in clauses (i) through (vii) of other Persons secured by any Lien on any
property or asset of such first-mentioned Person (whether or not such obligation is assumed by such
first-mentioned Person), the amount of such obligation being deemed to be the lesser of the value
of such property or assets or the amount of the obligation so secured. The amount of Indebtedness
of any Person at any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, assuming the contingency giving rise to
the obligation was to have occurred on such date, of any Guarantees outstanding at such date.




          None of the following shall constitute Indebtedness: (i) indebtedness arising from agreements
providing for indemnification or adjustment of purchase price or from guarantees securing any
obligations of the Company or any of its Subsidiaries pursuant to such agreements, incurred or
assumed in connection with the disposition of any business, assets or Subsidiary of the Company,
other than guarantees or similar credit support by the Company or any of its Subsidiaries of
Indebtedness incurred by any Person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition; (ii) any trade payables or other similar
liabilities to trade creditors and other accrued current liabilities incurred in the ordinary
course of business as the deferred purchase price of property; (iii) any liability for Federal,
state, local or other taxes owed or owing by such Person; (iv) amounts due in the ordinary course
of business to other royalty and working interest owners; (v) obligations arising from guarantees
to suppliers, lessors, licensees, contractors, franchisees or customers incurred in the ordinary
course of business; (vi) obligations (other than express Guarantees of indebtedness for borrowed
money) in respect of Indebtedness of other Persons arising in connection with (A) the sale or
discount of accounts receivable, (B) trade acceptances and (C) endorsements of instruments for
deposit in the ordinary course of business; (vii) obligations in respect of performance bonds
provided by the Company or its Subsidiaries in the ordinary course of business and refinancing
thereof; (viii) obligations arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument drawn against insufficient funds in the ordinary course of
business; provided, however, that such obligation is extinguished within two
Business Days of its Incurrence; (ix) obligations in respect of any obligations under workers’
compensation laws and similar legislation; (x) any obligation in respect of any Oil and Gas Hedging
Contract; and (xi) any unrealized losses or charges in respect of Hedging Obligations (including
those resulting from the application of the “Derivatives and Hedging” topic of the FASC).













 



14




          “Indenture” means this Indenture as amended or supplemented from time to time,
including the provisions of the TIA that are deemed to be a part of and govern this Indenture and
any supplemental indenture, respectively.




          “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap
agreement or other financial agreement or arrangement designed to protect the Company or any
Restricted Subsidiary against fluctuations in interest rates.




          “Investment” in any Person means any direct or indirect advance, loan (other than
advances to customers or joint interest partners or drilling partnerships sponsored by the Company
or any Restricted Subsidiary in the ordinary course of business that are recorded as accounts
receivable on the balance sheet of the lender) or other extensions of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account or use of others),
or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued
by such Person. Except as otherwise provided for herein, the amount of an Investment shall be its
fair value at the time the Investment is made and without giving effect to subsequent changes in
value. For purposes of the definition of “Unrestricted Subsidiary”, the definition of “Restricted
Payment” and Section 4.05, (i) “Investment” shall include the portion (proportionate to the
Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in
an Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the Company’s “Investment”
in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the
Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred to or from an
Unrestricted Subsidiary shall 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.




          “Issue Date”
means February •, 2011.




          “Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind (including any conditional sale or other title retention agreement or lease in the nature
thereof).




          “Limited Recourse Production Payments” means, with respect to any Production Payments,
Indebtedness, the terms of which limit the liability of the Company and its Restricted Subsidiaries
solely to the hydrocarbons covered by such Production Payments; provided, however,
that no default with respect to such Indebtedness would permit any holder of any other Indebtedness
of the Company or any Restricted Subsidiary to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated maturity.













 



15




          “Material Change” means an increase or decrease (excluding changes that result solely
from changes in prices and changes resulting from the Incurrence of previously estimated future
development costs) of more than 25% during a fiscal quarter in the discounted future net revenues
from proved crude oil and natural gas reserves of the Company and its Restricted Subsidiaries,
calculated in accordance with clause (a)(i) of the definition of Adjusted Consolidated Net Tangible
Assets; provided, however, that the following will be excluded from the calculation
of Material Change: (i) any acquisitions during the fiscal quarter of oil and gas reserves that
have been estimated by independent petroleum engineers and with respect to which a report or
reports of such engineers exist and (ii) any disposition of properties existing at the beginning of
such fiscal quarter that have been disposed of in compliance with Section 4.07.



          “Moody’s” means Moody’s Investors Service, Inc. and its successors.




          “Net Available Cash” from an Asset Disposition means cash payments received therefrom
(including any cash payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, 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 such properties or assets or received in any other noncash form) in each
case net of (i) all legal, title and recording tax expenses, commissions and other fees (including
financial and other advisory fees) and expenses incurred, and all Federal, state, provincial,
foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such
Asset Disposition, (ii) 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 or other security
agreement of any kind with respect to 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, (iii) all distributions and other payments required to be
made to noncontrolling interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) the deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property or other assets disposed
in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset
Disposition.




          “Net Cash Proceeds”, with respect to any issuance or sale of Capital Stock, means the
cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or
placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or payable as a result
thereof.




          “Net Present Value” means, with respect to any proved hydrocarbon reserves, the
discounted future net cash flows associated with such reserves, determined in accordance with the
rules and regulations (including interpretations thereof) of the SEC in effect on the Issue Date.













 



16




          “Net Working Capital” means (a) all current assets of the Company and its Restricted
Subsidiaries minus (b) all current liabilities of the Company and its Restricted
Subsidiaries, except current liabilities included in Indebtedness, determined in accordance with
GAAP.




          “Non-recourse Purchase Money Indebtedness” means Indebtedness (other than Capital
Lease Obligations) of the Company or any Subsidiary Guarantor incurred in connection with the
acquisition by the Company or such Subsidiary Guarantor in the ordinary course of business of fixed
assets used in the Oil and Gas Business (including office buildings and other real property used by
the Company or such Subsidiary Guarantor in conducting its operations) with respect to which (i)
the holders of such Indebtedness agree that they will look solely to the fixed assets so acquired
which secure such Indebtedness, and neither the Company nor any Restricted Subsidiary (a) is
directly or indirectly liable for such Indebtedness or (b) provides credit support, including any
undertaking, Guarantee, agreement or instrument that would constitute Indebtedness (other than the
grant of a Lien on such acquired fixed assets), and (ii) no default or event of default with
respect to such Indebtedness would cause, or permit (after notice or passage of time or otherwise),
any holder of any other Indebtedness of the Company or a Subsidiary Guarantor to declare a default
or event of default on such other Indebtedness or cause the payment, repurchase, redemption,
defeasance or other acquisition or retirement for value thereof to be accelerated or payable prior
to any scheduled principal payment, scheduled sinking fund payment or maturity.




          “Obligations” means with respect to any Indebtedness all obligations for principal,
premium, interest, penalties, fees, indemnifications, reimbursements, and other amounts payable
pursuant to the documentation governing such Indebtedness.




          “Officer” means the Chairman of the Board, the President, any Vice Chairman of the
Board, Vice President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Assistant Secretary of a Person.




          “Officers’ Certificate” means a certificate signed by two Officers.




          “Oil and Gas Business” means the business of the exploration for, and exploitation,
development, acquisition, production, processing (but not refining), marketing, storage and
transportation of, hydrocarbons, and other related energy and natural resource businesses
(including oil and gas services businesses related to the foregoing).




          “Oil and Gas Hedging Contract” means any oil and gas purchase or hedging agreement,
and other agreement or arrangement, in each case, that is designed to provide protection against
oil and gas price fluctuations.




          “Oil and Gas Liens” means (i) Liens on any specific property or any interest therein,
construction thereon or improvement thereto to secure all or any part of the costs incurred for
surveying, exploration, drilling, extraction, development, operation, production, construction,
alteration, repair or improvement of, in, under or on such property and the plugging and
abandonment of wells located thereon (it being understood that, in the case of oil and gas
producing properties, or any interest therein, costs incurred for “development” shall include costs












 



17



incurred for all facilities relating to such properties or to projects, ventures or other
arrangements of which such properties form a part or which relate to such properties or interests);
(ii) Liens on an oil or gas producing property to secure obligations Incurred or guarantees of
obligations Incurred in connection with or necessarily incidental to commitments for the purchase
or sale of, or the transportation or distribution of, the products derived from such property;
(iii) Liens arising under partnership agreements, oil and gas leases, overriding royalty
agreements, net profits agreements, production payment agreements, royalty trust agreements,
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, master limited partnership agreements, farm-out agreements, farm-in
agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering
or processing of oil, gas or other hydrocarbons, 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, that in all instances such Liens are limited to the
assets that are the subject of the relevant agreement, program, order or contract; (iv) Liens
arising in connection with Production Payments; and (v) Liens on pipelines or pipeline facilities
that arise by operation of law.




          “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.




          “Permitted Business Investment” means any investment made in the ordinary course of,
and of a nature that is or shall have become customary in, the Oil and Gas Business, including
investments or expenditures for actively exploiting, exploring for, acquiring, developing,
producing, processing, gathering, marketing or transporting oil and gas through agreements,
transactions, interests or arrangements which permit one to share risks or costs, comply with
regulatory requirements regarding local ownership or satisfy other objectives customarily achieved
through the conduct of Oil and Gas Business jointly with third parties, including (i) ownership
interests in oil and gas properties, processing facilities, gathering systems, pipelines or
ancillary real property interests and (ii) Investments in the form of or pursuant to operating
agreements, processing agreements, farm-in agreements, farm-out agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling agreements, joint bidding
agreements, service contracts, joint venture agreements, partnership agreements (whether general or
limited), subscription agreements, stock purchase agreements and other similar agreements
(including for limited liability Companies) with third parties, excluding, however, Investments in
corporations other than Restricted Subsidiaries.




          “Permitted Investment” means an Investment by the Company or any Restricted Subsidiary
in (i) a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a
Restricted Subsidiary; provided, however, that the primary business of such
Restricted Subsidiary is an Oil and Gas Business; (ii) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or transfers or conveys all












 



18



or substantially all its assets to, the Company or a Restricted Subsidiary; provided,
however, that such Person’s primary business is an Oil and Gas Business; (iii) Temporary
Cash Investments; (iv) receivables owing to the Company or any Restricted Subsidiary if created or
acquired in the ordinary course of 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; (v) 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; (vi) loans or advances to employees made in the ordinary
course of business; (vii) 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; (viii) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an Asset Disposition as permitted pursuant to Section
4.07; (ix) Permitted Business Investments; (x) Investments intended to promote the Company’s
strategic objectives in the Oil and Gas Business in an aggregate amount not to exceed 5.0% of ACNTA
(determined as of the date of the making of any such Investment) at any one time outstanding (which
Investments shall be deemed to be no longer outstanding only upon and to the extent of the return
of capital thereof); and (xi) Investments made pursuant to Hedging Obligations of the Company and
the Restricted Subsidiaries.




          “Permitted Liens” means, with respect to any Person, (a) Liens existing as of the
Issue Date; (b) Liens securing the Securities, any Subsidiary Guarantee and other obligations
arising under the Indenture; (c) any Lien existing on any property of a Person at the time such
Person is merged or consolidated with or into the Company or a Restricted Subsidiary or becomes a
Restricted Subsidiary (and not incurred in anticipation of or in connection with such transaction),
provided that such Liens are not extended to other property of the Company or the
Restricted Subsidiaries; (d) any Lien existing on any property at the time of the acquisition
thereof (and not incurred in anticipation of or in connection with such transaction),
provided that such Liens are not extended to other property of the Company or the
Restricted Subsidiaries; (e) any Lien incurred in the ordinary course of business incidental to the
conduct of the business of the Company or the Restricted Subsidiaries or the ownership of their
property including (i) easements, rights of way and similar encumbrances, (ii) rights or title of
lessors under leases (other than Capital Lease Obligations), (iii) rights of collecting banks
having rights of setoff, revocation, refund or chargeback with respect to money or instruments of
the Company or the Restricted Subsidiaries on deposit with or in the possession of such banks, (iv)
Liens imposed by law, including Liens under workers’ compensation or similar legislation and
mechanics’, carriers’, warehousemen’s, materialmen’s, suppliers’ and vendors’ Liens, (v) Liens
incurred to secure performance of obligations with respect to statutory or regulatory requirements,
performance or return-of-money bonds, surety bonds or other obligations of a like nature and
incurred in a manner consistent with industry practice and (vi) Oil and Gas Liens, in each case
which are not incurred in connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of property (other than trade accounts payable
arising in the ordinary course of business); (f) Liens for taxes, assessments and governmental
charges not yet due or the validity of which are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted, and for which adequate reserves have
been established to the extent required by GAAP as in effect at such time; (g) Liens incurred to
secure appeal bonds and judgment and attachment Liens, in each case in












 



19



connection with litigation or legal proceedings that are being contested in good faith by
appropriate proceedings, so long as reserves have been established to the extent required by GAAP
as in effect at such time and so long as such Liens do not encumber assets by an aggregate amount
(together with the amount of any unstayed judgments against the Company or any Restricted
Subsidiary but excluding any such Liens to the extent securing insured or indemnified judgments or
orders) in excess of $10.0 million; (h) Liens securing Hedging Obligations of the Company and its
Restricted Subsidiaries; (i) Liens securing purchase money Indebtedness or Capital Lease
Obligations, provided that such Liens attach only to the property acquired with the
proceeds of such purchase money Indebtedness or the property which is the subject of such Capital
Lease Obligations; (j) Liens securing Non-recourse Purchase Money Indebtedness granted in
connection with the acquisition by the Company or any Restricted Subsidiary in the ordinary course
of business of fixed assets used in the Oil and Gas Business (including the office buildings and
other real property used by the Company or such Restricted Subsidiary in conducting its
operations), provided that (i) such Liens attach only to the fixed assets acquired with the
proceeds of such Non-recourse Purchase Money Indebtedness and (ii) such Non-recourse Purchase Money
Indebtedness is not in excess of the purchase price of such fixed assets; (k) Liens resulting from
the deposit of funds or evidences of Indebtedness in trust for the purpose of decreasing or legally
defeasing Indebtedness of the Company or any Restricted Subsidiary so long as such deposit of funds
is permitted under Section 4.05; (l) Liens resulting from a pledge of Capital Stock of a Person
that is not a Restricted Subsidiary to secure obligations of such Person and any refinancings
thereof; (m) Liens to secure any permitted extension, renewal, refinancing, refunding or exchange
(or successive extensions, renewals, refinancings, refundings or exchanges), in whole or in part,
of or for any Indebtedness secured by Liens referred to in clauses (a), (b), (c), (d), (i) and (j)
above; provided, however, that (i) such new Lien shall be limited to all or part of
the same property (including future improvements thereon and accessions thereto) subject to the
original Lien and (ii) the Indebtedness secured by such Lien at such time is not increased to any
amount greater than the sum of (A) the outstanding principal amount or, if greater, the committed
amount of the Indebtedness secured by such original Lien immediately prior to such extension,
renewal, refinancing, refunding or exchange and (B) an amount necessary to pay any fees and
expenses, including premiums, related to such refinancing, refunding, extension, renewal or
replacement; and (n) Liens in favor of the Company or a Restricted Subsidiary. Notwithstanding
anything in this definition to the contrary, the term “Permitted Liens” shall not include Liens
resulting from the creation, Incurrence, issuance, assumption or Guarantee of any Production
Payments other than (i) any such Liens existing as of the Issue Date, (ii) Production Payments in
connection with the acquisition of any property after the Issue Date; provided that any
such Lien created in connection therewith is created, incurred, issued, assumed or Guaranteed in
connection with the financing of, and within 60 days after the acquisition of, such property and
(iii) Production Payments other than those described in clauses (i) and (ii) of this sentence, to
the extent such Production Payments constitute Asset Dispositions made pursuant to and in
compliance with Section 4.07 and (iv) incentive compensation programs for geologists, geophysicists
and other providers of technical services to the Company and any Restricted Subsidiary;
provided, however, that, in the case of the immediately foregoing clauses (i),
(ii), (iii) and (iv), any Lien created in connection with any such Production Payments shall be
limited to the property that is the subject of such Production Payments.













 



20




          “Permitted Marketing Obligations” means Indebtedness of the Company or any Restricted
Subsidiary under letter of credit or borrowed money obligations, or in lieu of or in addition to
such letters of credit or borrowed money, guarantees of such Indebtedness or other obligations of
the Company or any Restricted Subsidiary by any other Restricted Subsidiary, as applicable, related
to the purchase by the Company or any Restricted Subsidiary of hydrocarbons for which the Company
or such Restricted Subsidiary has contracts to sell; provided, however, that in the
event that such Indebtedness or obligations are guaranteed by the Company or any Restricted
Subsidiary, then either (i) the Person with which the Company or such Restricted Subsidiary has
contracts to sell has an investment grade credit rating from S&P or Moody’s, or in lieu thereof, a
Person guaranteeing the payment of such obligated Person has an investment grade credit rating from
S&P or Moody’s, or (ii) such Person posts, or has posted for it, a letter of credit in favor of the
Company or such Restricted Subsidiary with respect to all such Person’s obligations to the Company
or such Restricted Subsidiary under such contracts.




          “Person” means any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other entity.




          “Preferred Stock”, as applied to the Capital Stock of any Person, means Capital Stock
of any class or classes (however designated) which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of such Person.




          The term “principal” of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become due at the
relevant time.




          “Production Payments” means, collectively, Dollar-Denominated Production Payments and
Volumetric Production Payments.




          “Refinance” means, in respect of any Indebtedness, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or
replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have
correlative meanings.




          “Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the
Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with the
Indenture including Indebtedness that Refinances Refinancing Indebtedness; provided,
however, that (i) such Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being Refinanced, (ii) such 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, (iii) such Refinancing Indebtedness has an
aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred with original issue
discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the












 



21



Indebtedness being Refinanced and (iv) if the Indebtedness being Refinanced is Non-recourse
Purchase Money Indebtedness, such Refinancing Indebtedness satisfies clauses (i) and (ii) of the
definition of “Non-recourse Purchase Money Indebtedness”; provided, further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary
that Refinances Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted
Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.




          “Representative” means any trustee, agent or representative (if any) for an issue of
Senior Indebtedness of the Company or of any Subsidiary Guarantor.




          “Restricted Payment” with respect to any Person means (i) the declaration or payment
of any dividends or any other distributions of any sort in respect of its Capital Stock (including
any payment in connection with any merger or consolidation involving such Person) or similar
payment to the direct or indirect holders of its Capital Stock (other than (x) dividends or
distributions payable solely in its Capital Stock (other than Disqualified Stock), (y) dividends or
distributions payable solely to the Company or a Restricted Subsidiary, and (z) pro rata dividends
or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company held by any Person or of any Capital Stock of a
Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary),
including the exercise of any option to exchange any Capital Stock (other than into Capital Stock
of the Company that is not Disqualified Stock), (iii) the purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations of such Person (other
than the purchase, repurchase or other acquisition of Subordinated Obligations of such Person
purchased in anticipation of satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of acquisition) or (iv) the making of any
Investment (other than a Permitted Investment) in any Person.




          “Restricted Subsidiary” means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.




          “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Company,
Inc., and its successors.




          “Sale/Leaseback Transaction” means an arrangement relating to property owned on the
Issue Date or thereafter 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;
provided that the fair market value of such property (as reasonably determined by the Board
of Directors acting in good faith) is $10 million or more.




          “SEC” means the Securities and Exchange Commission.




          “Secured Indebtedness” means any Indebtedness of the Company secured by a Lien.













 



22




          “Senior Indebtedness” means with respect to any Person (i) Indebtedness of such
Person, and all obligations of such Person under any Credit Facility, whether outstanding on the
Issue Date or thereafter Incurred and (ii) accrued and unpaid interest (including interest accruing
on or after the filing of any petition in bankruptcy or for reorganization relating such Person to
the extent post-filing interest is allowed in such proceeding) in respect of (A) indebtedness of
such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or liable unless, with
respect to obligations described in the immediately preceding clause (i) or (ii), in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it is provided that
such obligations are not superior in right of payment to the Securities or the applicable
Subsidiary Guarantee; provided, however, that Senior Indebtedness shall not include
(1) any obligation of such Person to any Subsidiary of such Person, (2) any liability for Federal,
state, local or other taxes owed or owing by such Person, (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities), (4) any Indebtedness of such Person (and any
accrued and unpaid interest in respect thereof) which is subordinate or junior in any respect to
any other Indebtedness or other obligation of such Person or (5) that portion of any Indebtedness
which at the time of Incurrence is Incurred in violation of this Indenture (other than, in the case
of the Company or any Subsidiary Guarantor that Guarantees any Credit Facility, Indebtedness under
any Credit Facility that is Incurred on the basis of a representation by the Company or the
applicable Subsidiary Guarantor to the applicable lenders that such Person is permitted to Incur
such Indebtedness under this Indenture).




          “Senior Subordinated Indebtedness” means (i) with respect to the Company, the
Securities, the Existing Senior Subordinated Notes and any
other Indebtedness of the Company that specifically provides that such Indebtedness is to rank
pari passu with the Securities in right of payment and is not subordinated by its
terms in right of payment to any Indebtedness or other obligation of the Company which is not
Senior Indebtedness of the Company and (ii) with respect to each Subsidiary Guarantor, its
Guarantee of the Securities and the Existing Senior Subordinated Notes and any other Indebtedness
of such Person that specifically provides that such Indebtedness rank pari passu
with its applicable Subsidiary Guarantee in right of payment and is not subordinated by its terms
in right of payment to any Indebtedness or other obligation of such Person which is not Senior
Indebtedness of such Person.




          “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.




          “Stated Maturity” means, with respect to any security, the date specified in such
security as the fixed date on which the final payment of principal of such security is due and
payable, including pursuant to any mandatory redemption provision (but excluding any provision
providing for the repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).













 



23




          “Stock Offering” means a primary offering, whether public or private, of shares of
common stock of the Company.




          “Subordinated Obligation” means any Indebtedness of the Company or any Subsidiary
Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to, in the case of the Company, the Securities or, in the case of a
Subsidiary Guarantor, its Subsidiary Guarantee pursuant to a written agreement to that effect.




          “Subsidiary” means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting power of shares of
Capital Stock or other interests (including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person
and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.




          “Subsidiary Guarantor” means each Subsidiary designated as such on the signature pages
hereto and any other Subsidiary that has issued a Subsidiary Guarantee.




          “Subsidiary Guarantee” means a Guarantee by a Subsidiary Guarantor of the Company’s
obligations with respect to the Securities.




          “Temporary Cash Investments” means any of the following: (i) any investment in direct
obligations of the United States of America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof, (ii) investments in time deposit accounts,
certificates of deposit and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by the United States
of America, and which bank or trust company has capital, surplus and undivided profits aggregating
in excess of $200.0 million (or the foreign currency equivalent thereof) and has outstanding debt
which is rated “A” (or such similar equivalent rating) or higher by at least one nationally
recognized credit rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund distributor whose assets
consist of obligations of the types described in clauses (i), (ii), (iii), (iv) and (v) hereof,
(iii) repurchase obligations with a term of not more than 30 days for underlying securities of the
types described in clause (i) above entered into with a bank meeting the qualifications described
in clause (ii) above, (iv) investments in commercial paper, maturing not more than 180 days after
the date of acquisition, issued by a Person (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America or any foreign country recognized by
the United States of America with a rating at the time as of which any investment therein is made
of “P-2” (or higher) according to Moody’s or “A-2” (or higher) according to S&P or “R-1” (or
higher) by Dominion Bond Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case
of a Canadian issuer), (v) investments in securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the
United States of America, or by any political subdivision or taxing authority thereof, and rated at
least “A” by S&P or “A” by Moody’s and (vi) Investments in asset-backed securities maturing within
one year of the date of acquisition thereof












 



24



with a long-term rating at the time as of which any investment therein is made of “A3” (or
higher) by Dominion Bond Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case
of a Canadian issuer).



          “TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§
77aaa-77bbbb), as in effect on the date of this Indenture except as provided in Section 9.03;
provided, however, that, in the event the Trust Indenture Act of 1939 is amended
after such date, “TIA” means, to the extent required by any such amendments, the Trust
Indenture Act of 1939 as so amended.




          “Trustee” means the party named as such in the preamble to this Indenture until a
successor replaces it and, thereafter, means the successor.




          “Trust Officer” means the Chairman of the Board, the President or any other officer or
assistant officer of the Trustee assigned by the Trustee to administer this Indenture.




          “Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from
time to time.




          “Unrestricted Subsidiary” means (i) Genesis Energy, LLC, (ii) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (iii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary
or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the Subsidiary
to be so designated has total assets of $1,000 or less or (B) if such Subsidiary has assets greater
than $1,000, such designation would be permitted under Section 4.05. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the Company could
Incur $1.00 of additional Indebtedness under Section 4.03(a) and (y) no Default shall have occurred
and be continuing. Any such designation by the Board of Directors shall be evidenced by the
Company to the Trustee by promptly filing with the Trustee a copy of the board resolution giving
effect to such designation and an Officers’ Certificate certifying that such designation complied
with the foregoing provisions.




          “U.S. Government Obligations” means direct obligations (or certificates representing
an ownership interest in such obligations) of the United States of America












 



25



(including any agency or instrumentality thereof) for the payment of which the full faith and
credit of the United States of America is pledged and which are not callable at the issuer’s
option.




          “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 Person means all classes of Capital Stock or other interests
(including partnership interests) of such Person then outstanding and normally entitled (without
regard to the occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof.




          “Wholly Owned Subsidiary” means a Restricted Subsidiary all the Capital Stock of which
(other than directors’ qualifying shares and shares held by other Persons to the extent such shares
are required by applicable law to be held by a Person other than the Company or a Restricted
Subsidiary) is owned by the Company or one or more Wholly Owned Subsidiaries.





 











 




26



          Section 1.02. Other Definitions.




	 	 	 
	 	 	Defined in
	Term	 	Section
	 
	 	 
	“Affiliate Transaction”
	 	4.08(a)
	“Bankruptcy Law”
	 	6.01
	“Blockage Notice”
	 	10.03
	“Company Order”
	 	2.02
	“covenant defeasance option”
	 	8.01(b)
	“Custodian”
	 	6.01
	“Event of Default”
	 	6.01
	“Excess Proceeds”
	 	4.07(a)
	“Excess Proceeds Offer”
	 	4.07(b)(i)
	“Excess Proceeds Payment”
	 	4.07(b)(i)
	“Excess Proceeds Payment Date”
	 	4.07(b)(ii)
	“Guaranteed Obligations”
	 	11.01
	“legal defeasance option”
	 	8.01(b)
	“Legal Holiday”
	 	13.08
	“pay the Securities”
	 	10.03
	“Paying Agent”
	 	2.03
	“Payment Blockage Period”
	 	10.03
	“Registrar”
	 	2.03
	“Subsidiary Guarantor Blockage Notice”
	 	12.03
	“Subsidiary Guarantor Payment Blockage Period”
	 	12.03
	“Successor Company”
	 	5.01
	“Unrestricted Affiliate”
	 	4.08(b)






          Section 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is
subject to the mandatory provisions of the TIA which are incorporated by reference in and made a
part of this Indenture. The following TIA terms have the following meanings:




          “Commission” means the SEC.




          “indenture securities” means the Securities.




          “indenture security holder” means a Securityholder.




          “indenture to be qualified” means this Indenture.




          “indenture trustee” or “institutional trustee” means the Trustee.




          “obligor” on the indenture securities means the Company and any other obligor on the
indenture securities.











 



27




          All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule have the meanings assigned to them by such
definitions.




          Section 1.04. Rules of Construction. Unless the context otherwise requires:





     (1) a term has the meaning assigned to it;




     (2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;




     (3) “or” is not exclusive;




     (4) “including” means including without limitation;




     (5) words in the singular include the plural and words in the plural include the
singular;




     (6) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured
Indebtedness merely by virtue of its nature as unsecured Indebtedness;




     (7) the principal amount of any noninterest bearing or other discount security at any
date shall be the principal amount thereof that would be shown on a balance sheet of the
Company dated such date prepared in accordance with GAAP; and




     (8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation
value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Stock, whichever is greater.



ARTICLE 2




The Securities



          Section 2.01. Form and Dating. The Securities and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the Company is subject, if
any, or depository procedure or usage (provided that any such notation, legend or endorsement is in
a form acceptable to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibit A are part of the terms of this Indenture.




          Section 2.02. Execution and Authentication. Two Officers shall sign the Securities
for the Company by manual signature.




          If an Officer whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.













 



28




          A Security shall not be valid until an authorized signatory of the Trustee manually signs the
certificate of authentication on the Security. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.




          On the Issue Date, upon receipt of a written order of the Company signed by two Officers of
the Company (a “Company Order”), the Trustee shall
authenticate and deliver $350,000,000
of •% Senior Subordinated Notes Due 2021 and, at any time and from time to time thereafter, the
Trustee shall, upon receipt of a Company Order, authenticate and deliver Securities for original
issue in an aggregate principal amount specified in such Company Order; provided that, in
each case, the Trustee shall be entitled to receive an Officers’ Certificate and an Opinion of
Counsel of the Company that it may reasonably request in connection with such authentication of
Securities. Such Company Order shall specify the amount of Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and, in the case of an
issuance of Additional Securities pursuant to Section 2.13 after the Issue Date, shall certify that
such issuance is in compliance with Section 4.03.




          The Trustee may appoint an authenticating agent reasonably acceptable to the Company to
authenticate the Securities. Unless limited by the terms of such appointment, an authenticating
agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An authenticating agent
has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.




          Section 2.03. Registrar and Paying Agent. The Company shall maintain an office or
agency where Securities may be presented for registration of transfer or for exchange, which office
shall maintain the names and addresses of Securityholders (the “Registrar”), and an office
or agency where Securities may be presented for payment (the “Paying Agent”). The
Registrar shall keep a register of the Securities and of their transfer and exchange. The Company
may have one or more co-registrars and one or more additional paying agents. The term “Paying
Agent” includes any additional paying agent.




          The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent
or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The
agreement shall implement the provisions of this Indenture that relate to such agent. The Company
shall notify the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07. The Company or any Wholly Owned
Subsidiary incorporated or organized within the United States of America may act as Paying Agent,
Registrar, co-registrar or transfer agent.




          The Company initially appoints the Trustee as Registrar and Paying Agent in connection with
the Securities.




          Section 2.04. Paying Agent To Hold Money in Trust. Prior to 11:00 a.m., New York City
time, on each due date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due.
The Company shall require each Paying Agent (other than the Trustee) to agree












 



29



in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Company in making any such payment.
If the Company or a Wholly Owned Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by
the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.




          Section 2.05. Securityholder Lists. The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in
writing at least five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.




          Section 2.06. Transfer and Exchange. The Securities shall be issued in registered
form and shall be transferable only upon the surrender of a Security for registration of transfer.
When a Security is presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if the requirements of this
Indenture and Section 8-401(a) of the Uniform Commercial Code are met.




          When Securities are presented to the Registrar or a co-registrar with a request to exchange
them for an equal principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met.




          Section 2.07. Replacement Securities. If a mutilated Security is surrendered to the
Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate and deliver a
replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met
and the Holder satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of
the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar
and any co-registrar from any loss which any of them may suffer if a Security is replaced. The
Company and the Trustee may charge the Holder for their expenses in replacing a Security.




          Every replacement Security is an additional obligation of the Company.




          Section 2.08. Outstanding Securities. Securities outstanding at any time are all
Securities authenticated by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section as not outstanding. A Security does not cease to
be outstanding because the Company or an Affiliate of the Company holds the Security.




          If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the
Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a
bona fide purchaser.













 



30




          If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and interest payable on that
date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date such Securities (or
portions thereof) cease to be outstanding and interest on them ceases to accrue.




          Section 2.09. Temporary Securities. Until definitive Securities are ready for
delivery, the Company may prepare and the Trustee shall authenticate and deliver temporary
Securities. Temporary Securities shall be substantially in the form of definitive Securities but
may have variations that the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities and deliver them in exchange for temporary Securities.




          Section 2.10. Cancellation. The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange, payment or cancellation.
The Trustee and no one else shall cancel and destroy (subject to the record retention requirements
of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company unless the Company
directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the Trustee for
cancellation.




          Section 2.11. Defaulted Interest. If the Company defaults in a payment of interest on
the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest
to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the
Persons who are Securityholders on a subsequent special record date as provided in the Securities
and in Section 4.01 hereof. The Company shall fix or cause to be fixed any such special record
date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.




          Section 2.12. CUSIP Numbers. The Company in issuing the Securities may use “CUSIP”
numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP”, numbers in notices of
redemption as a convenience to Holders; provided, however, that any such notice may state that no
representation made as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall not be affected by
any defect in or omission of such numbers.




          Section 2.13. Issuance of Additional Securities. The Company shall be entitled,
subject to its compliance with Section 4.03, to issue Additional Securities under this Indenture
which shall have identical terms as the Securities issued on the Issue Date, other than with
respect to the date of issuance and issue price. The Securities issued on the Issue Date and any
Additional Securities shall be treated as a single class for all purposes under this Indenture.













 



31




          With respect to any Additional Securities, the Company shall set forth in a resolution of the
Board of Directors and an Officers’ Certificate, a copy of each which shall be delivered to the
Trustee, the following information:





     (1) the aggregate principal amount of such Additional Securities to be authenticated
and delivered pursuant to this Indenture; and




     (2) the issue price, the issue date and the CUSIP number of such Additional Securities;
provided, however, that no Additional Securities may be issued at a price
that would cause such Additional Securities to have “original issue discount” within the
meaning of Section 1273 of the Code.



ARTICLE 3




Redemption



          Section 3.01. Notices to Trustee. If the Company elects to redeem Securities pursuant
to paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date,
the principal amount of Securities to be redeemed and the paragraph of the Securities pursuant to
which the redemption will occur.




          The Company shall give each notice to the Trustee provided for in this Section at least 45
days before the redemption date unless the Trustee consents to a shorter period. Such notice shall
be accompanied by an Officers’ Certificate and an Opinion of Counsel from the Company to the effect
that such redemption will comply with the conditions herein.




          Section 3.02. Selection of Securities To Be Redeemed. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or
by lot or by a method that complies with applicable legal and securities exchange requirements, if
any, and that the Trustee in its sole discretion considers fair and appropriate. The Trustee shall
make the selection from outstanding Securities not previously called for redemption. The Trustee
may select for redemption portions of the principal of Securities that have denominations larger
than $1,000. Securities and portions of them the Trustee selects shall be in amounts of $1,000 or
a whole multiple of $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The Trustee shall notify
the Company, the Registrar and each Paying Agent promptly of the Securities or portions of
Securities to be redeemed.




          Section 3.03. Notice of Redemption. At least 30 days but not more than 60 days before
a date for redemption of Securities, the Company shall mail a notice of redemption by
first-class mail to each Holder of Securities to be redeemed.




          The notice shall identify the Securities to be redeemed and shall state:





     (1) the redemption date;




     (2) the redemption price;









 



32



     (3) the name and address of the Paying Agent;




     (4) that Securities called for redemption must be surrendered to the Paying Agent to
collect the redemption price;




     (5) if fewer than all the outstanding Securities are to be redeemed, the identification
and principal amounts of the particular Securities to be redeemed;




     (6) that, unless the Company defaults in making such redemption payment or the Paying
Agent is prohibited from making such payment pursuant to the terms of this Indenture,
interest on Securities (or portions thereof) called for redemption ceases to accrue on and
after the redemption date; and




     (7) that no representation is made as to the correctness or accuracy of the CUSIP
number, if any, listed in such notice or printed on the Securities.



          At the Company’s request, the Trustee shall give the notice of redemption in the Company’s
name and at the Company’s expense. In such event, the Company shall provide the Trustee with the
information required by this Section.




          Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed,
Securities called for redemption become due and payable on the redemption date and at the
redemption price stated in the notice, subject to any condition or contingency stated therein.
Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in
the notice, plus accrued interest to the redemption date. Failure to give notice or any defect in
the notice to any Holder shall not affect the validity of the notice to any other Holder.




          Section 3.05. Deposit of Redemption Price. Prior to the redemption date, the Company
shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest
on all Securities to be redeemed on that date other than Securities or portions of Securities
called for redemption which have been delivered by the Company to the Trustee for cancellation.




          Section 3.06. Securities Redeemed in Part. Upon surrender of a Security that is
redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the
Holder (at the Company’s expense) a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.












 



33





ARTICLE 4




Covenants



          Section 4.01. Payment of Securities. The Company shall promptly pay the principal of
and interest on the Securities on the dates and in the manner provided in the Securities and in
this Indenture. Principal and interest shall be considered paid on the date due if on such date
the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not
prohibited from paying such money to the Securityholders on that date pursuant to the terms of this
Indenture.




          The Company shall pay interest on overdue principal at the rate specified therefor in the
Securities, and it shall pay interest on overdue installments of interest at the same rate to the
extent lawful.




          Section 4.02. SEC Reports. Notwithstanding that the Company may not at any time be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
file with the SEC and provide the Trustee and Securityholders with such annual reports and such
information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange
Act and applicable to a U.S. corporation subject to such Sections, such












 



34



information, documents and other reports to be so filed and provided at the times specified
for the filing of such information, documents and reports under such Sections. The Company also
shall comply with the other provisions of TIA § 314(a).




          Section 4.03. Limitation on Indebtedness. (a) The Company shall not, and shall not
permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness;
provided, however, that the Company or a Restricted Subsidiary may Incur
Indebtedness if, on the date of such Incurrence and after giving effect thereto, the Consolidated
Coverage Ratio equals or exceeds 2.25 to 1.0.




          (b) Notwithstanding Section 4.03(a), the Company and any Restricted Subsidiary may Incur the
following Indebtedness:





(1) Indebtedness Incurred pursuant to any Credit Facility, so long as the aggregate
amount of all Indebtedness outstanding under all Credit Facilities does not, at any
one time, exceed the aggregate amount of borrowing availability as of such date
under all Credit Facilities that determine availability on the basis of a borrowing
base or other asset-based calculation; provided, however, that in no
event shall such amount exceed the greater of (x) $500 million and (y) 75% of ACNTA
as of the date of such Incurrence;




(2) Indebtedness owed to and held by the Company or a Restricted Subsidiary;
provided, however, that any subsequent issuance or transfer of any
Capital Stock which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to
the Company or another Restricted Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof;




(3) Indebtedness of the Company represented by the Securities (other than any
Additional Securities);




(4) Indebtedness outstanding on the Issue Date (other than Indebtedness described in
paragraph (b) (1), (2) or (3) of this Section 4.03);




(5) Indebtedness of (A) a Restricted Subsidiary Incurred and outstanding on or prior
to the date on which such Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred in connection with, or to provide all or any portion of
the funds or credit support 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) and (B) the Company or a
Restricted Subsidiary Incurred for the purpose of financing all or any part of the
cost of acquiring oil and gas properties, another Person (other than a Person that
was, immediately prior to such acquisition, a Subsidiary of the Company) engaged in
the Oil and Gas Business or all or substantially all the assets of such a Person;
provided, however, that in the case of each of clause (A) and clause
(B) above, on the date of such Incurrence and after giving effect thereto, the
Consolidated Coverage Ratio equals or exceeds 2.0 to 1.0;









 



35



(6) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to Section
4.03(a) or Section 4.03(b)(3), (4), (5), this clause (6) or clause (7) below;
provided, however, that to the extent such Refinancing Indebtedness
directly or indirectly Refinances Indebtedness or Preferred Stock of a Restricted
Subsidiary described in Section 4.03(b)(5), such Refinancing Indebtedness shall be
Incurred only by such Restricted Subsidiary or the Company;




(7) Non-recourse Purchase Money Indebtedness;




(8) Indebtedness with respect to Production Payments; provided,
however, that any such Indebtedness shall be Limited Recourse Production
Payments; provided further, however, that the Net Present
Value of the reserves related to such Production Payments shall not exceed 30% of
ACNTA at the time of Incurrence;




(9) Indebtedness consisting of the Subsidiary Guarantees and any Guarantee by a
Subsidiary Guarantor of Indebtedness Incurred by the Company pursuant to paragraphs (b)(1) and (3) of this Section 4.03;




(10) Indebtedness consisting of Interest Rate Agreements directly related to
Indebtedness permitted to be Incurred by the Company and its Restricted Subsidiaries
pursuant to the Indenture;




(11) Indebtedness under Oil and Gas Hedging Contracts and Currency Agreements
entered into in the ordinary course of business for the purpose of limiting risks
that arise in the ordinary course of business of the Company and its Restricted
Subsidiaries;




(12) Indebtedness in respect of bid, performance or surety obligations issued by or
for the account of the Company or any Restricted Subsidiary in the ordinary course
of business, including Guarantees and letters of credit functioning as or supporting
such bid, performance or surety obligations (in each case other than for an
obligation for money borrowed);




(13) Indebtedness of the Company or a Restricted Subsidiary Incurred to finance
capital expenditures and Refinancing Indebtedness Incurred in respect thereof in an
aggregate amount which, when taken together with the amount of all other
Indebtedness Incurred pursuant to this clause (13) since the Issue Date and then
outstanding, does not exceed $20 million;




(14) Permitted Marketing Obligations;




(15) In-kind obligations relating to oil and gas balancing positions arising in the
ordinary course of business; and




(16) Indebtedness in an aggregate amount which, together with the amount of all
other Indebtedness of the Company and its Restricted Subsidiaries outstanding









 



36



on the date of such Incurrence (other than Indebtedness permitted by Section 4.03(a)
or Section 4.03(b)(1)-(15)) does not exceed $100 million.



          (c) Notwithstanding the foregoing, the Company shall not, and shall not permit any Subsidiary
Guarantor to, Incur any Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities or the relevant Subsidiary Guarantee, as the case may be, to at
least the same extent as such Subordinated Obligations.




          (d) For purposes of determining compliance with this Section 4.03, (i) in the event that an
item of Indebtedness meets the criteria of more than one of the types of Indebtedness described in
this Section 4.03, the Company, in its sole discretion, will classify such item of Indebtedness at
the time of Incurrence and only be required to include the amount and type of such Indebtedness in
one of the above clauses of this Section 4.03; provided that items of Indebtedness
outstanding under the Credit Agreement on the Issue Date will be treated as Incurred on the Issue
Date under Section 4.03(b)(1); and (ii) an item of Indebtedness may be divided and classified in
more than one of the types of Indebtedness described in this Section 4.03.




          Section 4.04. Incurrence of Layered Indebtedness. Notwithstanding paragraphs (a) and
(b) of Section 4.03 above, the Company shall not, and the Company shall not permit any Subsidiary
Guarantor to, Incur any Indebtedness if such Indebtedness is subordinate or junior in ranking in
any respect to any Senior Indebtedness of the Company or such Subsidiary Guarantor, as applicable,
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right
of payment to Senior Subordinated Indebtedness of such Person.




          Section 4.05. Limitation on Restricted Payments. (a) The Company shall not, and
shall not permit any Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if
at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a Default
shall have occurred and be continuing (or would result therefrom); (2) the Company is not able to
Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a); or (3) the aggregate amount
of such Restricted Payment and all other Restricted Payments since the Issue Date would exceed the
sum of (without duplication): (A) 50% of the aggregate Consolidated Net Income of the Company
accrued on a cumulative basis commencing on December 31, 2002, and ending on the last day of the
fiscal quarter ending on or immediately preceding the date of such proposed Restricted Payment (or,
if such aggregate Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B) the
aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock
(other than Disqualified Stock) subsequent to December 31, 2005 (other than an issuance or sale to
a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan
or to a trust established by the Company or any of its Subsidiaries for the benefit of their
employees); (C) the aggregate Net Cash Proceeds received by the Company from the issue or sale
subsequent to December 31, 2005 of its Capital Stock (other than Disqualified Stock) to an employee
stock ownership plan; provided, however, that if such employee stock ownership plan
incurs any Indebtedness with respect thereto, such aggregate amount shall be limited to an amount
equal to any increase in the Consolidated Net Worth of the Company resulting from principal
repayments made by such employee stock ownership plan with respect to such Indebtedness; (D) the
amount












 



37



by which Indebtedness of the Company is reduced on the Company’s balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company) subsequent to December 31, 2005,
of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other
property, distributed by the Company upon such conversion or exchange); and (E) an amount equal to
the sum of (i) the net reduction in Investments made subsequent to December 31, 2005 by the Company
or any Restricted Subsidiary in any Person resulting from dividends, repayments of loans or
advances or other transfers of assets, in each case to the Company or any Restricted Subsidiary
from such Person, and (ii) the portion (proportionate to the Company’s equity interest in such
Subsidiary) of the fair market value of the net assets of an Unrestricted Subsidiary at the time
such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case of any such Person or
Unrestricted Subsidiary, the amount of Investments previously made (and treated as a Restricted
Payment) by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.




          (b) The provisions of Section 4.05(a) shall not prohibit: (i) dividends paid within 60 days
after the date of declaration thereof if at such date of declaration such dividend would have
complied with this Section 4.05; provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or result therefrom);
provided, further, however, that such dividend shall be included in the
calculation of the amount of Restricted Payments; (ii) any purchase or redemption of Capital Stock
or Subordinated Obligations of the Company 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 of the Company or an employee stock
ownership plan or to a trust established by the Company or any of its Subsidiaries for the benefit
of their employees); provided, however, that (A) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale shall be excluded from the calculation of amounts under Section 4.05(a)(3)(B) (but
only to the extent that such Net Cash Proceeds were used to purchase or redeem such Capital Stock
as provided in this clause (ii)); (iii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company; provided, however, that such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value shall be excluded in the calculation of the
amount of Restricted Payments; (iv) the repurchase of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from employees, former employees, directors
or former directors of the Company or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors), pursuant to the terms of the
agreements (including employment agreements) or plans (or amendments thereto) approved by the Board
of Directors under which such individuals purchase or sell or are granted the option to purchase or
sell, shares of such common stock; provided, however, that the aggregate amount of
such repurchases shall not exceed $3.0 million in any calendar year; provided,
further, however, that such repurchases shall be excluded in the calculation of the
amount of Restricted Payments; (v) loans made to officers, directors or employees of the Company or
any Restricted Subsidiary approved by the Board of Directors (or a duly authorized officer), the
net cash proceeds of which are used solely (A) to purchase common stock of the Company in
connection with a restricted












 



38



stock or employee stock purchase plan, or to exercise stock options received pursuant to an
employee or director stock option plan or other incentive plan, in a principal amount not to exceed
the exercise price of such stock options or (B) to refinance loans, together with accrued interest
thereon, made pursuant to item (A) of this clause (v); provided, however, that such
loans shall be excluded in the calculation of the amount of Restricted Payments; or (vi) other
Restricted Payments in an aggregate amount not to exceed $40.0 million; provided,
however, that such Restricted Payments shall be excluded in the calculation of the amount
of Restricted Payments.




          Section 4.06. Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary (a) to pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness owed to the Company or a Restricted Subsidiary, (b) to
make any loans or advances to the Company or a Restricted Subsidiary or (c) to transfer any of its
property or assets to the Company or a Restricted Subsidiary, except: (i) any encumbrance or
restriction in the Credit Agreement on the Issue Date or pursuant to any other agreement in effect
on the Issue Date; (ii) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or
prior to the date on which such Restricted Subsidiary was acquired by the Company (other than
Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit
support 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) and
outstanding on such date; (iii) any encumbrance or restriction pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of
this covenant or this clause (iii) or contained in any amendment to an agreement referred to in
clause (i) or (ii) of this covenant or this clause (iii); provided, however, that
the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such
refinancing agreement or amendment are no less favorable to the Securityholders than encumbrances
and restrictions with respect to such Restricted Subsidiary contained in such agreements; (iv) any
such encumbrance or restriction consisting of customary nonassignment provisions in leases
governing leasehold interests to the extent such provisions restrict the transfer of the lease or
the property leased thereunder; (v) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such security agreements or
mortgages; and (vi) any restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary pending the closing of such sale or disposition.




          Section 4.07. Limitation on Sales of Assets and Subsidiary Stock. (a) The Company
will not, and will not permit any Restricted Subsidiary to, directly or indirectly, consummate any
Asset Disposition unless (1) the Company or such Restricted Subsidiary receives consideration at
least equal to the fair market value (such fair market value to be
determined in good faith by an Officer or an officer of
such Restricted Subsidiary with responsibility for such transaction, or the Board of Directors if
the Asset Disposition exceeds $50.0 million, which determination shall be












 



39



conclusive
evidence of compliance with this provision), of the equity and assets subject to
such Asset Disposition; (2) at least 75% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of cash or cash equivalents, Additional Assets or any
combination thereof (collectively, the “Cash Consideration”); and (3) an amount equal to
100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such
Restricted Subsidiary, as the case may be) (A) first, to the extent the Company elects (or is
required by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Company or any Subsidiary Guarantor or Indebtedness (other than any
Disqualified Stock) of a Wholly Owned Subsidiary that is not a Subsidiary Guarantor (in each case
other than Indebtedness owed to the Company or an Affiliate of the Company) within 540 days from
the later of the date of such Asset Disposition or the receipt of such Net Available Cash, and such prepayment, repayment, redemption or purchase permanently retires, or reduces the related loan commitment (if any) for, such Indebtedness in an amount equal to the principal amount so prepaid, repaid, redeemed or purchased; (B)
second, to the extent of the balance of such Net Available Cash after application in accordance
with clause (A), to the extent the Company elects, to acquire Additional Assets or to make capital
expenditures in the Oil and Gas Business within 540 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; and (C) third, to the extent of the balance
of such Net Available Cash after application in accordance with clauses (A) and (B), to make an
offer to the holders of the Notes (and to holders of other Senior Subordinated Indebtedness of the
Company designated by the Company) to purchase Notes (and such other Senior Subordinated
Indebtedness of the Company) pursuant to and subject to the
conditions contained in the Indenture; which purchase permanently reduces the outstanding amount of such Notes (and such other Senior Subordinated Indebtedness) in an amount equal to the principal amount purchased.




          Pending application of Net Available Cash pursuant to this covenant, such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit Indebtedness. 



          Notwithstanding the foregoing provisions of this covenant, the Company and the Restricted
Subsidiaries will not be required to apply any Net Available Cash in accordance with this covenant
except to the extent that the aggregate Net Available Cash from all Asset Dispositions, which is
not applied in accordance with this covenant, exceeds
$40.0 million during any calendar year.




          For the purposes of this covenant, the following are deemed to be cash or cash equivalents (i)
any liabilities, as shown on the Company’s or such Restricted Subsidiary’s most recent balance
sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Subsidiary Guaranty) that are
assumed by the transferee of any such Asset Dispositions pursuant to (A) a customary novation agreement that
releases the Company or such Restricted Subsidiary from further liability or (B) an assignment
agreement that includes, in lieu of such a release, the agreement of the transferee or its parent
company to indemnify and hold harmless the Company or such Restricted Subsidiary from and against
any loss, liability or cost in respect of such assumed liability












 



40



or (ii) any non-Cash Consideration received by the Company or any Restricted
Subsidiary from the transferee that is converted, monetized, sold or exchanged by the Company or
such Restricted Subsidiary into cash or cash equivalents within 120 days of receipt.
Notwithstanding the foregoing, the 75% limitation referred to in Section 4.07(a)(2) above shall be
deemed satisfied with respect to any Asset Disposition in which the cash or cash equivalents
portion of the consideration received therefrom, determined in accordance with the foregoing
provision on an after-tax basis, is equal to or greater than what the after-tax proceeds would have
been had such Asset Disposition complied with the aforementioned 75% limitation. The requirement
of Section 4.07(a)(3)(B) above shall be deemed to be satisfied if an agreement (including a lease,
whether a capital lease or an operating lease) committing to make the acquisitions or expenditures
referred to therein is entered into by the Company or its Restricted Subsidiary within the time
period specified in such clause and such Net Available Cash is subsequently applied in accordance
with such agreement within six months following such agreement.




          (b) In the event of an Asset Disposition that requires the purchase of Notes (and other Senior
Subordinated Indebtedness of the Company) pursuant to clause (a) (3) (C) of this covenant, the
Company shall make such offer to purchase Notes (an “Offer”) on or before the 541st day
after the later of the date of such Asset Disposition or the receipt of such Net Available Cash,
and shall purchase Notes tendered pursuant to an offer by the Company for the Notes (and such other
Senior Subordinated Indebtedness of the Company) at a purchase price of 100% of their principal
amount (or, in the event such other Senior Subordinated Indebtedness of the Company was issued with
significant original issue discount greater than 2.5%, 100% of the accreted value thereof) without premium, plus
accrued but unpaid interest (or, in respect of such other Senior Subordinated Indebtedness of the
Company, such lesser price, if any, as may be provided for by the terms of such Senior Subordinated
Indebtedness of the Company) in accordance with the procedures (including prorating in the event of
oversubscription) set forth in the Indenture. If the aggregate purchase price of the securities
tendered exceeds the Net Available Cash allotted to their purchase, the Company will select the
securities to be purchased on a pro rata basis but in round denominations, which in the case of the
Notes will be denominations of $1,000 principal amount or multiples thereof. The Company shall not
be required to make such an offer to purchase Notes (and other Senior Subordinated Indebtedness of
the Company) pursuant to this covenant if the Net Available Cash not applied or invested as
provided in clause (a) (3) (A) or (B) of this covenant is less than $20.0 million (which lesser
amount shall be carried forward for purposes of determining whether such an offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition). Upon completion of such
an offer to purchase, Net Available Cash will be deemed to be reduced by the aggregate amount of
such offer.




          (c) 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 covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its obligations under this
covenant by virtue of its compliance with such securities laws or regulations.














 



41




          Section 4.08. Limitation on Affiliate Transactions. (a) The Company shall not, and
shall not permit any Restricted Subsidiary to, enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with any Affiliate of the Company (an “Affiliate
Transaction”) unless the terms thereof (1) are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of such transaction in
arm’s-length dealings with a Person who is not such an Affiliate, (2) if such Affiliate Transaction
involves an amount in excess of $15.0 million, are set forth in writing and have been approved by
the Board of Directors, including a majority of the members of the Board of Directors having no
personal stake in such Affiliate Transaction, and (3) if such Affiliate Transaction involves an
amount in excess of $25.0 million, have been determined by a nationally recognized investment
banking firm or other qualified independent appraiser to be fair, from a financial standpoint, to
the Company and its Restricted Subsidiaries.




          (b) The provisions of Section 4.08(a) shall not prohibit (i) any sale of hydrocarbons or other
mineral products to an Affiliate of the Company or the entering into or performance of Oil and Gas
Hedging Contracts, gas gathering, transportation or processing contracts or oil or natural gas
marketing or exchange contracts with an Affiliate of the Company, in each case, in the ordinary
course of business, so long as the terms of any such transaction are approved by a majority of the
members of the Board of Directors who are disinterested with respect to such transaction, (ii) the
sale to an Affiliate of the Company of Capital Stock of the Company that does not constitute
Disqualified Stock, and the sale to an Affiliate of the Company of Indebtedness (including
Disqualified Stock) of the Company in connection with an offering of such Indebtedness in a market
transaction and on terms substantially identical to those of other purchasers in such market
transaction, (iii) transactions contemplated by any employment agreement or other compensation plan
or arrangement existing on the Issue Date or thereafter entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business, (iv) the payment of reasonable fees to
directors of the Company and its Restricted Subsidiaries who are not employees of the Company or
any Restricted Subsidiary, (v) transactions between or among the Company and its Restricted
Subsidiaries, (vi) transactions between the Company or any of its Restricted Subsidiaries and
Persons that are controlled (as defined in the definition of “Affiliate”) by the Company
(an “Unrestricted Affiliate”); provided that no other Person that controls (as so
defined) or is under common control (as so defined) with the Company holds any Investments in such
Unrestricted Affiliate; (vii) Restricted Payments that are permitted by the provisions of Section
4.05; and (viii) loans or advances to employees in the ordinary course of business and approved by
the Company’s Board of Directors in an aggregate principal amount not to exceed $2.5 million
outstanding at any one time.




          Section 4.09. Change of Control. (a) Upon the occurrence of a Change of Control,
each Holder shall have the right to require that the Company purchase such Holder’s Securities at a
purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest on the relevant interest payment date), in accordance with
the terms contemplated in Section 4.09(b). In the event that at the time of such Change of Control
the terms of the Indebtedness under the Credit Agreement restrict or prohibit the












 



42



purchase of Securities pursuant to this Section, then prior to the mailing of the notice to
Holders provided for in Section 4.09(b) below, but in any event within 30 days following any Change
of Control, the Company shall (i) repay in full the Indebtedness under the Credit Agreement or (ii)
obtain the requisite consent under the agreements governing the Indebtedness under the Credit
Agreement to permit the purchase of the Securities as provided for in Section 4.09(b).




          (b) Within 30 days following a Change of Control, the Company shall mail a notice to each
Holder with a copy to the Trustee stating: (1) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase such Holder’s Securities at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the relevant record date
to receive interest on the relevant interest payment date); (2) the circumstances and relevant
facts regarding such Change of Control (including information with respect to pro forma historical
income, cash flow and capitalization, in each case after giving effect to such Change of Control);
(3) the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date
such notice is mailed); and (4) the instructions determined by the Company, consistent with this
Section 4.09, that a Holder must follow in order to have its Securities purchased.




          (c) Holders electing to have a Security purchased will be required to surrender the Security,
with an appropriate form duly completed, to the Company at the address specified in the notice at
least three Business Days prior to the purchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security purchased.




          (d) On the purchase date, all Securities purchased by the Company under this Section shall be
delivered to the Trustee for cancelation, and the Company shall pay the purchase price plus accrued
and unpaid interest, if any, to the Holders entitled thereto.




          (e) The Company shall 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 purchase of
Securities pursuant to this Section 4.09. To the extent that the provisions of any securities laws
or regulations conflict with the provisions of this Section 4.09, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have breached its obligations
under this Section 4.09 by virtue thereof.




          (f) The Company will not be required to make an offer to purchase Securities as a result of a
Change of Control pursuant to this Section 4.09 if a third party (i) makes such offer in the
manner, at the times and otherwise in compliance with the requirements set forth in Section 4.09(b)
and (ii) purchases all Securities validly tendered and not withdrawn under such an offer.




          Section 4.10. Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, enter into, create, incur, assume or suffer to












 



43



exist any Lien on or with respect to any property of the Company or such Restricted
Subsidiary, whether owned on the Issue Date or acquired after the Issue Date, or any interest
therein or any income or profits therefrom, unless the Securities or any Subsidiary Guarantee of
such Restricted Subsidiary, as applicable, are secured equally and ratably with (or prior to) any
and all other Indebtedness secured by such Lien, except that the Company and its Restricted
Subsidiaries may enter into, create, incur, assume or suffer to exist Permitted Liens and Liens
securing Senior Indebtedness.




          Section 4.11. Compliance Certificate. The Company shall deliver to the Trustee within
120 days after the end of each fiscal year of the Company an Officers’ Certificate stating that in
the course of the performance by the signers of their duties as Officers of the Company they would
normally have knowledge of any Default and whether or not the signers know of any Default that
occurred during such fiscal year. If they do, the certificate shall describe the Default, its
status and what action the Company is taking or proposes to take with respect thereto. The Company
also shall comply with TIA § 314(a)(4).




          Section 4.12. Further Instruments and Acts. Upon request of the Trustee, the Company
will execute and deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.




          Section 4.13. Future Subsidiary Guarantors. The Company shall cause each Restricted
Subsidiary that represents at least 10% of the book assets of, or 10% of the ACNTA of the Company
and its Restricted Subsidiaries, taken as a whole, and that has an aggregate of $15.0 million or
more of Indebtedness and Preferred Stock outstanding at any time to promptly Guarantee the
Securities pursuant to a Supplemental Indenture substantially in the form attached hereto as
Exhibit 1.




ARTICLE 5




Successor Company



          Section 5.01. When Company May Merge or Transfer Assets. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a
series of related transactions, all or substantially all the assets of the Company and its
Restricted Subsidiaries, taken as a whole, to, any Person, unless:





     (i) (A) the resulting, surviving or transferee Person (the “Successor Company”)
shall be a Person organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and (B) the Successor Company (if not the Company)
shall expressly assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the
Securities and this Indenture;




     (ii) immediately after giving effect to such transaction (and treating any Indebtedness
which becomes an obligation of the Successor Company or any Restricted Subsidiary as a
result of such transaction as having been Incurred by the Successor Company or any
Subsidiary as a result of such transaction as having been Incurred by









 



44



such Successor Company or such Subsidiary at the time of such transaction), no Default
shall have occurred and be continuing;




     (iii) immediately after giving effect to such transaction, the Successor Company would
be able to incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a);




     (iv) immediately after giving effect to such transaction, the Successor Company shall
have Adjusted Consolidated Net Tangible Assets that are not less than the Adjusted
Consolidated Net Tangible Assets prior to such transaction;




     (v) in the case of a conveyance, transfer or lease of all or substantially all the
assets of the Company and its Restricted Subsidiaries, taken as a whole, such assets shall
have been so conveyed, transferred or leased as an entirety or virtually as an entirety to
one Person; and




     (vi) the Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with this Indenture;


provided, however, that clauses (iii) and (iv) shall not be applicable to any such
transaction solely between the Company and any Restricted Subsidiary.




          The Successor Company shall be the successor to the Company and shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under this Indenture, and
the predecessor Company, except in the case of a lease, shall be released from the obligation to
pay the principal of and interest on the Securities.




          Section 5.02. When Subsidiary Guarantors May Merge or Transfer Assets. The Company
will not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or substantially all of its
assets to any Person unless: (i) the resulting, surviving or transferee Person (if not such
Subsidiary) shall be a Person organized and existing under the laws of the jurisdiction under which
such Subsidiary was organized or under the laws of the United States of America, or any State
thereof or the District of Columbia, and, if such Person is not the Company, such Person shall
expressly assume, by executing a Guarantee Agreement, all the obligations of such Subsidiary, if
any, under its Subsidiary Guarantee; (ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the
resulting, surviving or transferee Person as a result of such transaction as having been issued by
such Person at the time of such transaction), no Default shall have occurred and be continuing;
(iii) in the case of a conveyance, transfer or lease of all or substantially all the assets of a
Subsidiary Guarantor, such assets shall have been so conveyed, transferred or leased as an entirety
or virtually as an entirety to one Person; and (iv) the Company delivers to the Trustee an
Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guarantee Agreement, if any, complies with this Indenture. The provisions of
clauses (i) and (ii) above shall not apply to any one or more












 



45



transactions which constitute an Asset Disposition if the Company has complied with the
applicable provisions of Section 4.07.




ARTICLE 6




Defaults and Remedies



          Section 6.01. Events of Default. An “Event of Default” occurs if:





     (1) the Company defaults in any payment of interest on any Security when the same
becomes due and payable, whether or not such payment shall be prohibited by Article 10, and
such default continues for a period of 30 consecutive days;




     (2) the Company (i) defaults in the payment of the principal of any Security when the
same becomes due and payable at its Stated Maturity, upon optional redemption, upon required
purchase, upon declaration of acceleration or otherwise, whether or not such payment shall
be prohibited by Article 10 or (ii) fails to redeem or purchase Securities when required
pursuant to this Indenture or the Securities, whether or not such redemption or purchase
shall be prohibited by Article 10;




     (3) the Company fails to comply with Section 5.01;




     (4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07 (other
than a failure to purchase Securities when required under Section 4.07), 4.08, 4.09 (other
than a failure to purchase Securities when required under Section 4.09), 4.10, 4.11 or 4.13
and such failure continues for 30 consecutive days after the notice specified below;




     (5) the Company fails to comply with any of its agreements contained in the Securities
or in this Indenture (other than those referred to in (1), (2), (3) or (4) above) and such
failure continues for 60 consecutive days after the notice specified below;




     (6) Indebtedness of the Company (other than Limited Recourse Production Payments and
Non-recourse Purchase Money Indebtedness) is not paid within any applicable grace period
after final maturity or the maturity of such Indebtedness is accelerated by the holders
thereof because of a default (and such acceleration is not rescinded or annulled) and the
total amount of such Indebtedness unpaid or accelerated exceeds $20.0 million;




     (7) the Company or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:




     (A) commences a voluntary case;




     (B) consents to the entry of an order for relief against it in an involuntary
case;









 



46



     (C) consents to the appointment of a Custodian of it or for any substantial
part of its property; or




     (D) makes a general assignment for the benefit of its creditors;




     or takes any comparable action under any foreign laws relating to insolvency;




     (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:




     (A) is for relief against the Company or any Significant Subsidiary in an
involuntary case;




     (B) appoints a Custodian of the Company or any Significant Subsidiary or for
any substantial part of its property; or




     (C) orders the winding up or liquidation of the Company or any Significant
Subsidiary;




or any similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days;




     (9) any judgment or decree for the payment of money in an uninsured or unindemnified
amount in excess of $10.0 million or its foreign currency equivalent at the time is rendered
against the Company or a Significant Subsidiary and is not discharged and either (A) an
enforcement proceeding has been commenced by any creditor upon such judgment or decree or
(B) there is a period of 60 days following the entry of such judgment or decree during which
such judgment or decree is not discharged, waived, bonded or the execution thereof stayed,
in either case 10 days after the notice specified below; or




     (10) any Subsidiary Guarantee ceases or otherwise fails to be in full force and effect
(other than in accordance with the terms of such Subsidiary Guarantee) or any Subsidiary
Guarantor denies or disaffirms its obligations under its Subsidiary Guarantee if such
default continues for a period of 10 days after the notice specified below.



          The foregoing will constitute “Events of Default” whatever the reason for any such Event of
Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.




          The term “Bankruptcy Law” means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors. The term “Custodian” means any receiver,
trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.




          A Default under clause (4), (5), (9) or (10) is not an Event of Default until the Trustee or
the Holders of at least 25% in principal amount of the Securities notify the Company of the Default
and the Company does not cure such Default within the time specified after receipt












 



47



of such notice. Such notice must specify the Default, demand that it be remedied and state
that such notice is a “Notice of Default”.




          The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written
notice, in the form of an Officers’ Certificate, of any Event of Default under clause (3) or (6)
and any event which with the giving of notice or the lapse of time would become an Event of Default
under clause (4), (5), (9) or (10), describing its status and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have knowledge of any
Default or Event of Default unless one of its Trust Officers receives written notice thereof from
the Company or any of the Holders.




          Section 6.02. Acceleration. If an Event of Default (other than an Event of Default
specified in Section 6.01(7) or (8) with respect to the Company) occurs and is continuing, the
Trustee by written notice to the Company, or the Holders of at least 25% in principal amount of the
outstanding Securities by written notice to the Company and the Trustee, may declare the principal
of and accrued but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company occurs and is continuing,
the principal of and interest on all the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of the Trustee or any
Securityholders. The Holders of a majority in principal amount of the outstanding Securities by
written notice to the Trustee may rescind any such acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.




          Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal of or interest on the
Securities or to enforce the performance of any provision of the Securities or this Indenture.




          The Trustee may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair
the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative.




          Section 6.04. Waiver of Past Defaults. The Holders of a majority in principal amount
of the Securities by written notice to the Trustee may waive an existing or past Default and its
consequences except (i) a Default in the payment of the principal of or interest on a Security or
(ii) a Default in respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed cured, but no such
waiver shall extend to any subsequent or other Default or impair any consequent right.
















 



48



          Section 6.05. Control by Majority. The Holders of a majority in principal amount
of the outstanding Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the
rights of other Securityholders or would involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the
Trustee shall be entitled to be furnished with indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such action.




          Section 6.06. Limitation on Suits. A Securityholder may not pursue any remedy with
respect to this Indenture or the Securities unless:





     (1) the Holder gives to the Trustee written notice stating that an Event of Default is
continuing;




     (2) the Holders of at least 25% in principal amount of the outstanding Securities make
a written request to the Trustee to pursue the remedy;




     (3) such Holder or Holders furnish, if required by the Trustee, to the Trustee
reasonable security or indemnity against any loss, liability or expense;




     (4) the Trustee does not comply with the request within 60 days after receipt of the
request and the furnishing of the required security or indemnity; and




     (5) the Holders of a majority in principal amount of the outstanding Securities do not
give the Trustee a direction inconsistent with the request during such 60-day period.



          A Securityholder may not use this Indenture to prejudice the rights of another Securityholder
or to obtain a preference or priority over another Securityholder.




          Section 6.07. Rights of Holders To Receive Payment. Notwithstanding any other
provision of this Indenture, the right of any Holder to receive payment of principal of, premium
(if any) or interest on the Securities held by such Holder, on or after the respective due dates
expressed in the Securities, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of such Holder.




          Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section
6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount then due and owing (together
with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.




          Section 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of
claim and other papers or documents as may be necessary or advisable in order to have the claims of
the Trustee and the Securityholders allowed in any judicial proceedings relative to












 



49



the Company or any Subsidiary Guarantor their respective creditors or their respective
property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders
in any election of a trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to
the Trustee and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other
amounts due the Trustee under Section 7.07.




          Section 6.10. Priorities. If the Trustee collects any money or property pursuant to
this Article 6, it shall pay out the money or property in the following order:





     FIRST: to the Trustee for amounts due under Section 7.07;




     SECOND: to holders of Senior Indebtedness to the extent required by Article 10 or 12;




     THIRD: to Securityholders for amounts due and unpaid on the Securities for principal
and interest, ratably, without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest, respectively; and




     FOURTH: to the Company.



          The Trustee may fix a record date and payment date for any payment to Securityholders pursuant
to this Section. At least 15 days before such record date, the Company shall mail to each
Securityholder and the Trustee a notice that states the record date, the payment date and amount to
be paid.




          Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.07 or a suit by Holders of more than an aggregate of 10% in principal amount of the
Securities.




          Section 6.12. Waiver of Stay or Extension Laws. The Company (to the extent it may
lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and shall not hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as though no such law
had been enacted.










 



50




ARTICLE 7




Trustee



          Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a prudent Person would exercise or use under
the circumstances in the conduct of such Person’s own affairs.





     (b) Except during the continuance of an Event of Default:




     (1) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and




     (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine such certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.



          (c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:





     (1) this paragraph does not limit the effect of paragraph (b) of this Section;




     (2) the Trustee shall not be liable for any error of judgment made in good faith by a
Trust Officer unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and




     (3) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 6.05.



          (d) Every provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section.




          (e) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company.




          (f) Money held in trust by the Trustee need not be segregated from other funds except to the
extent required by law.




          (g) No provision of this Indenture shall require the Trustee to advance, expend or risk its
own funds or otherwise incur financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers. The Trustee, however, may so advance or expend
its own funds if, in its own reasonable judgment, the Trustee believes that












 



51



repayment of such funds or adequate indemnity against such risk or liability has been
reasonably assured to it.




          (h) Every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Section and to the
provisions of the TIA.




          (i) Notwithstanding anything to the contrary herein, the Trustee shall have no duty to review
the reports and information documents required to be provided by Section 4.02 for the purposes of
determining compliance with any provisions of this Indenture.




          Section 7.02. Rights of Trustee. (a) The Trustee may rely on any document believed
by it to be genuine and to have been signed or presented by the proper person. The Trustee need
not investigate any fact or matter stated in the document.




          (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.




          (c) The Trustee may act through agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.




          (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers; provided,
however, that the Trustee’s conduct does not constitute wilful misconduct or negligence.




          (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to
legal matters relating to this Indenture and the Securities shall be full and complete
authorization and protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such counsel.




          (f) The Trustee shall not be charged with knowledge of any Default or Event of Default unless
either (1) a Trust Officer shall have actual knowledge of such Default or Event of Default or (2)
written notice of such Default or Event of Default shall have been given to the Trustee by the
Company or any other obligor on such Securities or by any Holder of the Securities.




          Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any
other capacity may become the owner or pledgee of Securities and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.




          Section 7.04. Trustee’s Disclaimer. The Trustee shall not be responsible for and
makes no representation as to the validity or adequacy of this Indenture or the Securities, it
shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall
not be responsible for any statement of the Company in the Indenture or in any document issued in












 



52



connection with the sale of the Securities or in the Securities other than the Trustee’s
certificate of authentication.




          Section 7.05. Notice of Defaults. If a Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of or interest on
any Security (including payments pursuant to the mandatory redemption provisions of such Security,
if any), the Trustee may withhold the notice if and so long as the Trust Officer responsible for
administering this Indenture and the Securities in good faith determines that withholding notice is
not opposed to the interests of Securityholders.




          Section 7.06. Reports by Trustee to Holders. Within sixty (60) days after February 13
of each year, beginning with February 13, 2011, the Trustee shall mail to each Securityholder a
brief report dated as of February 13 of such year, that complies with TIA § 313(a). The Trustee
also shall comply with TIA § 313(b).




          A copy of each report at the time of its mailing to Securityholders shall be filed with the
SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to
notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.




          Section 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from
time to time reasonable compensation for its services, including extraordinary services such as
default administration. The Trustee’s compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants
and experts. The Company shall indemnify the Trustee against any and all loss, liability or
expense (including attorneys’ fees) arising out of its acceptance of this trust or incurred by it
in connection with the administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture against the Company (including under
Section 7.07). The Trustee shall notify the Company promptly of any claim (whether asserted by any
Securityholder or the Company) for which it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and
expenses of such counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee’s own wilful misconduct,
negligence or bad faith.




          To secure the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the Trustee other than money
or property held in trust to pay principal of and interest on particular Securities.




          The Company’s payment obligations pursuant to this Section shall survive the resignation or
removal of the Trustee and the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(7) or (8) with respect












 



53



to the Company, the expenses are intended to constitute expenses of administration under the
Bankruptcy Law.




          Section 7.08. Replacement of Trustee. The Trustee may resign at any time by so
notifying the Company. The Holders of a majority in principal amount outstanding of the Securities
may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. A holder
may petition a court of competent jurisdiction to remove the Trustee in the manner and under the
circumstances contemplated by TIA § 310(b)(iii). The Company shall remove the Trustee if:





     (1) the Trustee fails to comply with Section 7.10;




     (2) the Trustee is adjudged bankrupt or insolvent;




     (3) a receiver or other public officer takes charge of the Trustee or its property; or




     (4) the Trustee otherwise becomes incapable of acting.



          If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal
amount outstanding of the Securities and such Holders do not reasonably promptly appoint a
successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in
such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.




          A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee
to the successor Trustee, subject to the lien provided for in Section 7.07.




          If a successor Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor Trustee.




          If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.




          Notwithstanding the replacement of the Trustee pursuant to this Section, the Company’s
obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.




          Section 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges
or converts into, or transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Trustee.













 



54




          In case at the time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the
name of the successor to the Trustee; and in all such cases such certificates shall have the full
force which it is anywhere in the Securities or in this Indenture provided that the certificate of
the Trustee shall have.




          Section 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy
the requirements of TIA § 310(a). The Trustee shall have a combined capital and surplus of at
least $50.0 million as set forth in its most recent annual report of condition. The Trustee shall
comply with TIA § 310(b); provided, however, that there shall be excluded from the
operation of TIA § 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA § 310(b)(1) are met.




          Section 7.11. Preferential Collection of Claims Against Company. The Trustee shall
comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee
who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.




ARTICLE 8




Discharge of Indenture; Defeasance



          Section 8.01. Discharge of Liability on Securities; Defeasance. (a) When (i) the
Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant
to Section 2.07) for cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3
hereof and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or
upon redemption all outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’
Certificate and an Opinion of Counsel and at the cost and expense of the Company.




          (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all its
obligations under the Securities and this Indenture (“legal defeasance option”) or (ii) its
obligations under Sections 4.02, 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and 4.13 and the
operation of Sections 6.01(4), 6.01(6), 6.01(7) (but only with respect to Significant
Subsidiaries), 6.01(8) (but only with respect to Significant Subsidiaries), 6.01(9) and 6.01(10)
and its obligations under Sections 5.01(iii), (iv) and (v) and under Section 5.02 (“covenant
defeasance option”). The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option.










 



55




          If the Company exercises its legal defeasance option, payment of the Securities may not be
accelerated because of an Event of Default. If the Company exercises its covenant defeasance
option, payment of the Securities may not be accelerated because of an Event of Default specified
in Section 6.01(4), 6.01(6), 6.01(7) (but only with respect to Significant Subsidiaries), 6.01(8)
(but only with respect to Significant Subsidiaries), 6.01(9) or 6.01(10) or because of the failure
of the Company to comply with Section 5.01(iii), (iv) or (v) or with Section 5.02. If the Company
exercises its legal defeasance option or its covenant defeasance option, each Subsidiary Guarantor
will be released from all its obligations with respect to its Subsidiary Guarantee.




          Upon satisfaction of the conditions set forth herein and upon request of the Company, the
Trustee shall acknowledge in writing the discharge of those obligations that the Company
terminates.




          (c) Notwithstanding clauses (a) and (b) above, the Company’s obligations in Sections 2.03,
2.04, 2.05, 2.07, 7.07, 7.08 and this Article 8 shall survive until the Securities have been paid
in full. Thereafter, the Company’s obligations in Sections 7.07, 8.04 and 8.05 shall survive.




          Section 8.02. Conditions to Defeasance. The Company may exercise its legal defeasance
option or its covenant defeasance option only if:





     (1) the Company irrevocably deposits in trust with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Securities to
maturity or redemption, as the case may be;




     (2) the Company delivers to the Trustee a certificate from a nationally recognized firm
of independent accountants expressing its opinion that the payments of principal of and
interest when due and without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times and in such amounts
as will be sufficient to pay principal and interest when due on all the Securities to
maturity or redemption, as the case may be;




     (3) 123 days pass after the deposit is made and during the 123-day period no Default
specified in Section 6.01(7) or (8) with respect to the Company occurs which is continuing
at the end of the period;




     (4) the deposit does not constitute a default under any other agreement binding on the
Company and is not prohibited by Article 10;




     (5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the
trust resulting from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940;




     (6) in the case of the legal defeasance option, the Company shall have delivered to the
Trustee an Opinion of Counsel stating 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 this
Indenture there has been a change in the applicable Federal income tax









 



56



law, in either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have been the case if such
legal defeasance had not occurred;




     (7) in the case of the covenant defeasance option, the Company shall have delivered to
the Trustee an Opinion of Counsel to the effect that the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not occurred; and




     (8) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent to the defeasance and discharge of the
Securities as contemplated by this Article 8 have been complied with.



          Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for
the redemption of Securities at a future date in accordance with Article 3.




          Section 8.03. Application of Trust Money. The Trustee shall hold in trust money or
U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the
deposited money and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on the Securities.
Money and securities so held in trust are not subject to Article 10.




          Section 8.04. Repayment to Company. The Trustee and the Paying Agent shall promptly
turn over to the Company upon request any money or securities held by them at any time which, in
the opinion of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the amount thereof that
would then be required for the Company to exercise its legal defeasance option or its covenant
defeasance option pursuant to this Article 8.




          Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay
to the Company upon written request any money held by them for the payment of principal or interest
that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must
look to the Company for payment as general creditors.




          Section 8.05. Indemnity for Government Obligations. The Company shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited
U.S. Government Obligations or the principal and interest received on such U.S. Government
Obligations.




          Section 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company’s obligations under this
Indenture and the Securities shall be revived and reinstated as though no deposit had












 



57



occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8;
provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.




ARTICLE 9




Amendments



          Section 9.01. Without Consent of Holders. The Company, the Subsidiary Guarantors and
the Trustee may amend this Indenture or the Securities without notice to or consent of any
Securityholder:





     (1) to cure any ambiguity, omission, defect or inconsistency;




     (2) to comply with Article 5;




     (3) to provide for uncertificated Securities in addition to or in place of certificated
Securities; provided, however, that the uncertificated Securities are issued
in registered form for purposes of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code;




     (4) to make any change in Article 10 or 12 that would limit or terminate the benefits
available to any holder of Senior Indebtedness of the Company or any Subsidiary Guarantor
(or Representatives therefor) under Article 10 or 12;




     (5) to add guarantees with respect to the Securities (including any Subsidiary
Guarantee) or to secure the Securities;




     (6) to add to the covenants of the Company for the benefit of the Holders or to
surrender any right or power herein conferred upon the Company or the Subsidiary Guarantors;




     (7) to comply with any requirements of the SEC in connection with qualifying this
Indenture under the TIA; or




     (8) to make any change that does not adversely affect the rights of any Securityholder.



          An amendment under this Section may not make any change that adversely affects the rights
under Article 10 or 12 of any holder of Senior Indebtedness of the Company or of a Subsidiary
Guarantor then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.




          After an amendment under this Section becomes effective, the Company shall mail to
Securityholders a notice briefly describing such amendment. The failure to give such










 



58



notice to all Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment under this Section.




          Section 9.02. With Consent of Holders. The Company, the Subsidiary Guarantors and the
Trustee may amend this Indenture or the Securities without notice to any Securityholder but with
the written consent of the Holders of at least a majority in principal amount of the Securities.
Without the consent of each Securityholder affected, however, an amendment may not:





     (1) reduce the amount of Securities whose Holders must consent to an amendment;




     (2) reduce the rate of or extend the time for payment of interest on any Security;




     (3) reduce the principal of or extend the Stated Maturity of any Security;




     (4) reduce the premium payable upon a required purchase (to the extent the Company has
at the time become obligated by the terms of the Indenture to effect a required purchase) or
the redemption of any Security or change the time at which any Security may be redeemed in
accordance with Article 3 and paragraph 5 of the Securities;




     (5) make any Security payable in money other than that stated in the Security;




     (6) make any change in Article 10 or 12 or that adversely affects the rights of any
Securityholder under Article 10 or 12;




     (7) make any change in Section 6.04 or 6.07 or the second sentence of this Section; or




     (8) make any change in any Subsidiary Guarantee that would adversely affect the
Securityholders.



          It shall not be necessary for the consent of the Holders under this Section to approve the
particular form of any proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.




          An amendment under this Section may not make any change that adversely affects the rights
under Article 10 or 12 of any holder of Senior Indebtedness then outstanding unless the holders of
such Senior Indebtedness (or any group or representative thereof authorized to give a consent)
consent to such change.




          After an amendment under this Section becomes effective, the Company shall mail to
Securityholders a notice briefly describing such amendment. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity of an amendment
under this Section.













 



59




          Section 9.03. Compliance with Trust Indenture Act. Every amendment to this Indenture
or the Securities shall comply with the TIA as then in effect.




          Section 9.04. Revocation and Effect of Consents and Waivers. A consent to an
amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder
of that Security or portion of the Security that evidences the same debt as the consenting Holder’s
Security, even if notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or
portion of the Security if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall
bind every Securityholder.




          The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Securityholders entitled to give their consent or take any other action described
above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed,
then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at
such record date (or their duly designated proxies), and only those Persons, shall be entitled to
give such consent or to revoke any consent previously given or to take any such action, whether or
not such Persons continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.




          Section 9.05. Notation on or Exchange of Securities. If an amendment changes the
terms of a Security, the Trustee may require the Holder of the Security to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security
that reflects the changed terms. Failure to make the appropriate notation or to issue a new
Security shall not affect the validity of such amendment.




          Section 9.06. Trustee To Sign Amendments. The Trustee shall sign any amendment
authorized pursuant to this Article 9 if the amendment does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign
it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture.




          Section 9.07. Payment for Consent. Neither the Company nor any Affiliate of the
Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid or agreed to be paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.













 



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ARTICLE 10




Subordination of the Securities



          Section 10.01. Agreement To Subordinate. The Company agrees, and each Securityholder
by accepting a Security agrees, that the Indebtedness evidenced by the Securities are senior
unsecured, general obligations of the Company, subordinated in right of payment, to the extent and
in the manner provided in this Article 10, to the prior payment of all Senior Indebtedness of the
Company, whether outstanding on the Issue Date or thereafter incurred, including the Company’s
obligations under the Credit Agreement, and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. The Securities shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company, and only
Indebtedness of the Company which is Senior Indebtedness shall rank senior to the Securities in
accordance with the provisions set forth herein. All provisions of this Article 10 shall be
subject to Section 10.12.




          Section 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or distribution
of the assets of the Company upon a total or partial liquidation or a total or partial dissolution
of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:





     (1) subject to the provisions of Section 10.12, holders of Senior Indebtedness of the
Company shall be entitled to receive payment in full of such Senior Indebtedness before
Securityholders shall be entitled to receive any payment of principal of or interest on the
Securities; and




     (2) until the Senior Indebtedness of the Company is paid in full, any payment or
distribution to which Securityholders would be entitled but for this Article 10 shall be
made to holders of such Senior Indebtedness as their interests may appear, except that
Securityholders may receive shares of stock and any debt securities that are subordinated to
such Senior Indebtedness to at least the same extent as the Securities.



          Section 10.03. Default on Designated Senior Indebtedness. The Company may not pay the
principal of, premium (if any) or interest on the Securities or make any deposit pursuant to
Section 8.01 and may not repurchase, redeem or otherwise retire any Securities (collectively,
“pay the Securities”) if (i) any Designated Senior Indebtedness of the Company is not paid
when due or (ii) any other default on Designated Senior Indebtedness of the Company occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless,
in either case, (x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Designated Senior Indebtedness has been paid in full; provided,
however, that the Company may pay the Securities without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the Representative of
the Designated Senior Indebtedness with respect to which either of the events set forth in clause
(i) or (ii) of this sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence) with respect to
any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice












 



61



as may be required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a “Payment Blockage Period”)
commencing upon the receipt by the Trustee (with a copy to the Company) of written notice (a
“Blockage Notice”) of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (i) by written
notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice,
(ii) because the default giving rise to such Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness has been repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence, unless the holders of such Designated
Senior Indebtedness giving such Blockage Notice or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Company shall resume payments
on the Securities after the end of such Payment Blockage Period. The Securities shall not be
subject to more than one Payment Blockage Period in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness of the Company during such
period. For purposes of this Section, no default or event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Payment Blockage Period by the Representative of such
Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such
default or event of default shall have been cured or waived for a period of not less than 90
consecutive days.




          Section 10.04. Acceleration of Payment of Securities. If payment of the Securities is
accelerated because of an Event of Default, the Company or the Trustee (upon receipt of the
requisite information from the Company) shall promptly notify the holders of Designated Senior
Indebtedness (or their Representatives) of the Company of the acceleration.




          Section 10.05. When Distribution Must Be Paid Over. If a distribution is made to
Securityholders that because of this Article 10 should not have been made to them, the
Securityholders who receive the distribution shall hold it in trust for holders of Senior
Indebtedness of the Company and pay it over to them as their interests may appear.




          Section 10.06. Subrogation. After all Senior Indebtedness of the Company is paid in
full and until the Securities are paid in full, Securityholders shall be subrogated to the rights
of holders of such Senior Indebtedness to receive distributions applicable to such Senior
Indebtedness. A distribution made under this Article 10 to holders of Senior Indebtedness of the
Company which otherwise would have been made to Securityholders is not, as between the Company and
Securityholders, a payment by the Company on such Senior Indebtedness.




          Section 10.07. Relative Rights. This Article 10 defines the relative rights of
Securityholders and holders of Senior Indebtedness of the Company. Nothing in this Indenture
shall:





     (1) impair, as between the Company and Securityholders, the obligation of the Company,
which is absolute and unconditional, to pay principal of and interest on the Securities in
accordance with their terms; or









 



62



     (2) prevent the Trustee or any Securityholder from exercising its available remedies
upon a Default, subject to the rights of holders of Senior Indebtedness of the Company to
receive distributions otherwise payable to Securityholders.



          Section 10.08. Subordination May Not Be Impaired by Company. No right of any holder
of Senior Indebtedness of the Company to enforce the subordination of the Indebtedness evidenced by
the Securities shall be impaired by any act or failure to act by the Company or by its failure to
comply with this Indenture.




          Section 10.09. Rights of Trustee and Paying Agent. Notwithstanding Section 10.03, the
Trustee or Paying Agent may continue to make payments on the Securities and shall not be charged
with knowledge of the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the
Trustee receives notice satisfactory to it that payments may not be made under this Article 10.
The Company, the Registrar or co-registrar, the Paying Agent, a Representative or a holder of
Senior Indebtedness may give the notice; provided, however, that, if an issue of
Senior Indebtedness of the Company has a Representative, only the Representative may give the
notice.




          The Trustee in its individual or any other capacity may hold Senior Indebtedness of the
Company with the same rights it would have if it were not Trustee. The Registrar and co-registrar
and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the
rights set forth in this Article 10 with respect to any such Senior Indebtedness which may at any
time be held by it, to the same extent as any other holder of such Senior Indebtedness; and nothing
in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07.




          Section 10.10. Distribution or Notice to Representative. Whenever a distribution is
to be made or a notice given to holders of Senior Indebtedness of the Company, the distribution may
be made and the notice given to their Representative (if any).




          Section 10.11. Article 10 Not To Prevent Events of Default or Limit Right To
Accelerate. The failure to make a payment pursuant to the Securities by reason of any
provision in this Article 10 shall not be construed as preventing the occurrence of a Default.
Nothing in this Article 10 shall have any effect on the right of the Securityholders or the Trustee
to accelerate the maturity of the Securities.




          Section 10.12. Trust Moneys Not Subordinated. Notwithstanding anything contained
herein to the contrary, payment from the money or the proceeds of U.S. Government Obligations
deposited in trust with the Trustee in accordance with the provisions of Article 8 for the payment
of principal of and interest on the Securities shall not be subordinated to the prior payment of
any Senior Indebtedness of the Company or subject to the restrictions set forth in this Article 10,
and none of the Securityholders shall be obligated to pay over any such amount to the Company or
any holder of such Senior Indebtedness of the Company or any other creditor of the Company.




          Section 10.13. Trustee Entitled To Rely. Upon any payment or distribution pursuant to
this Article 10, the Trustee and the Securityholders shall be entitled to rely (i) upon












 



63



any order or decree of a court of competent jurisdiction in which any proceedings of the
nature referred to in Section 10.02 are pending, (ii) upon a certificate of the liquidating trustee
or agent or other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior Indebtedness of the
Company for the purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of such Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any Person as a holder of Senior
Indebtedness of the Company to participate in any payment or distribution pursuant to this Article
10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 10, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the right of such Person
to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.




          Section 10.14. Trustee To Effectuate Subordination. Each Securityholder by accepting
a Security authorizes and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness of the Company as provided in this Article 10 and appoints the
Trustee as attorney-in-fact for any and all such purposes.




          Section 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness of the
Company. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Company. The Trustee undertakes to perform or to observe only such of the
covenants and obligations as are specifically set forth in this Article 10, and no implied
covenants or obligations with respect to such holders of such Senior Indebtedness shall be implied
in this Indenture against the Trustee.




          Section 10.16. Reliance by Holders of Senior Indebtedness of the Company on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement and a consideration
to each holder of any Senior Indebtedness of the Company, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire and continue to
hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.




ARTICLE 11




Subsidiary Guarantees



          Section 11.01. Subsidiary Guarantees. Each Subsidiary Guarantor, jointly and
severally, as primary obligor and not merely as surety, hereby irrevocably, fully and
unconditionally Guarantees on a senior subordinated basis to each Holder and to the Trustee and












 



64



its successors and assigns (a) the full and punctual payment of principal of and interest on
the Securities when due, whether at Stated Maturity, by acceleration, by redemption or otherwise,
and all other monetary obligations of the Company under this Indenture and the Securities and (b)
the full and punctual performance within applicable grace periods of all other obligations of the
Company under this Indenture and the Securities (all the foregoing obligations hereinafter
collectively called the “Guaranteed Obligations”). Each Subsidiary Guarantor further
agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice or further assent from such Subsidiary Guarantor, and that such Subsidiary Guarantor shall
remain bound under this Article 11 notwithstanding any extension or renewal of any such Guaranteed
Obligation.




          Each Subsidiary Guarantor waives presentation to, demand of, payment from and protest to the
Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment.
Each Subsidiary Guarantor waives notice of any default under the Securities or the Guaranteed
Obligations. The obligations of each Subsidiary Guarantor hereunder shall not be affected by (a)
the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the Securities or any other
agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver,
amendment or modification of any of the terms or provisions of this Indenture, the Securities or
any other agreement; (d) the release of any security held by any Holder or the Trustee for the
Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any
right or remedy against any other guarantor of the Guaranteed Obligations; or (f) except as
provided in Section 11.06, any change in the ownership of such Subsidiary Guarantor.




          Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein constitutes a
Guarantee of payment, performance and compliance when due (and not a Guarantee of collection) and
waives any right to require that any resort be had by any Holder or the Trustee to any security
held for payment of the Guaranteed Obligations.




          Each Subsidiary Guarantee is, to the extent and manner set forth in Article 12, subordinated
and subject in right of payment to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness of the Subsidiary Guarantor giving such Subsidiary Guarantee and each
Subsidiary Guarantee is hereby made subject to such provisions of this Indenture.




          Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06, the obligations of each
Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Subsidiary Guarantor herein shall not be discharged or impaired or otherwise
affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce
any remedy under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Guaranteed Obligations, or by any other act or thing or omission or delay












 



65



to do any other act or thing which may or might in any manner or to any extent vary the risk
of such Subsidiary Guarantor or would otherwise operate as a discharge of such Subsidiary Guarantor
as a matter of law or equity.




          Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of
principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by
any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.




          In furtherance of the foregoing and not in limitation of any other right which any Holder or
the Trustee has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the
failure of the Company to pay the principal of or interest on any Guaranteed Obligation when and as
the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Guaranteed Obligation, each Subsidiary Guarantor shall, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of such
Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations (but only
to the extent not prohibited by law) and (iii) all other monetary Guaranteed Obligations of the
Company to the Holders and the Trustee.




          Each Subsidiary Guarantor agrees that it shall not be entitled to any right of subrogation in
respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations and all obligations to which the Guaranteed Obligations are subordinated as provided in
Article 12. Each Subsidiary Guarantor further agrees that, as between it, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations
Guaranteed hereby may be accelerated as provided in Article 6 for the purposes of such Subsidiary
Guarantor’s Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Guaranteed Obligations Guaranteed hereby, and (y) in
the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article
6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and
payable by such Subsidiary Guarantor for the purposes of this Section.




          Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including
reasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights under
this Section.




          Section 11.02. Limitation on Liability. Any term or provision of this Indenture to
the contrary notwithstanding, the maximum, aggregate amount of the obligations guaranteed hereunder
by any Subsidiary Guarantor shall not exceed the maximum amount that can be hereby guaranteed
without rendering this Indenture, as it relates to such Subsidiary Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting
the rights of creditors generally.




          Section 11.03. Successors and Assigns. This Article 11 shall be binding upon each
Subsidiary Guarantor and its successors and assigns and shall ensure to the benefit of the












 



66



successors and assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that
party in this Indenture and in the Securities shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this Indenture.




          Section 11.04. No Waiver. Neither a failure nor a delay on the part of either the
Trustee or the Holders in exercising any right, power or privilege under this Article 11 shall
operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise of any right, power or privilege. The rights, remedies and benefits of the
Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law, in equity, by
statute or otherwise.




          Section 11.05. Modification. No modification, amendment or waiver of any provision of
this Article 11, nor the consent to any departure by any Subsidiary Guarantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by the Trustee, and then such
waiver or consent shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in the same, similar or other
circumstances.




          Section 11.06. Release of Subsidiary Guarantor. This Subsidiary Guarantee as to any
Subsidiary Guarantor shall terminate and be of no further force or effect (i) upon the sale
(including any sale pursuant to any exercise of remedies by a holder of Senior Indebtedness of such
Subsidiary Guarantor) or other disposition (including by way of consolidation or merger) of such
Subsidiary Guarantor or (ii) upon the sale or disposition of all or substantially all of the assets
of such Subsidiary Guarantor, in each case other than to the Company or an Affiliate of the
Company; provided, however, that such sale or transfer shall be deemed to
constitute an Asset Disposition and the Company shall comply with all applicable provisions of
Section 4.06 with respect to such Asset Disposition.




ARTICLE 12




Subordination of Subsidiary Guarantees



          Section 12.01. Agreement To Subordinate. Each Subsidiary Guarantor agrees, and each
Securityholder by accepting a Security agrees, that the Obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee are subordinated in right of payment, to the extent and in the
manner provided in this Article 12, to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness of such Subsidiary Guarantor and that the subordination is for the benefit of
and enforceable by the holders of such Senior Indebtedness. The Obligations of each Subsidiary
Guarantor under its Subsidiary Guarantee shall in all respects rank pari passu with
all other Senior Subordinated Indebtedness of such Subsidiary Guarantor and only Senior
Indebtedness of such Subsidiary Guarantor (including such Subsidiary Guarantor’s Guarantees of
Senior Indebtedness of the Company) shall rank senior to the Subsidiary Guarantee of such
Subsidiary Guarantor in accordance with the provisions set forth herein.













 



67




          Section 12.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or distribution
of the assets of any Subsidiary Guarantor to creditors upon a total or partial liquidation or a
total or partial dissolution of such Subsidiary Guarantor or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to such Subsidiary Guarantor or its
property:





     (1) holders of Senior Indebtedness of such Subsidiary Guarantor shall be entitled to
receive payment in full of such Senior Indebtedness in cash or cash equivalents before
Securityholders shall be entitled to receive any payment pursuant to the Subsidiary
Guarantee of such Subsidiary Guarantor; and




     (2) until the Senior Indebtedness of such Subsidiary Guarantor is paid in full in cash
or cash equivalents, any distribution to which Securityholders would be entitled but for
this Article 12 shall be made to holders of such Senior Indebtedness as their interests may
appear, except that Securityholders may receive shares of stock and any debt securities of
such Subsidiary Guarantor that are subordinated to Senior Indebtedness, and to any debt
securities received by holders of Senior Indebtedness, of such Subsidiary Guarantor to at
least the same extent as the Subsidiary Guarantee of such Subsidiary Guarantor are
subordinated to Senior Indebtedness of such Subsidiary Guarantor.



          Section 12.03. Default on Designated Senior Indebtedness of Subsidiary Guarantor. No
Subsidiary Guarantor may make any payment pursuant to its Subsidiary Guarantee or repurchase,
redeem or otherwise retire or defease any Securities or other Obligations (collectively, “pay
its Subsidiary Guarantee”) if (i) any Designated Senior Indebtedness of such Subsidiary
Guarantor is not paid when due or (ii) any other default on Designated Senior Indebtedness of such
Subsidiary Guarantor occurs and the maturity of such Designated Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded or (y) such Designated Senior Indebtedness has been paid
in full; provided, however, that such Subsidiary Guarantor may pay its Subsidiary
Guarantee without regard to the foregoing if such Subsidiary Guarantor and the Trustee receive
written notice approving such payment from the Representative of the Designated Senior Indebtedness
with respect to which either of the events set forth in clause (i) or (ii) of this sentence has
occurred and is continuing. During the continuance of any default (other than a default described
in clause (i) or (ii) of the preceding sentence) with respect to any Designated Senior Indebtedness
of such Subsidiary Guarantor pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, such Subsidiary Guarantor may not pay its Guarantee for
a period (a “Subsidiary Guarantor Payment Blockage Period”) commencing upon the receipt by
the Trustee (with a copy to such Subsidiary Guarantor) of written notice (a “Subsidiary
Guarantor Blockage Notice”) of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Subsidiary Guarantor Payment
Blockage Period and ending 179 days thereafter (or earlier if such Subsidiary Guarantor Payment
Blockage Period is terminated (i) by written notice to the Trustee and such Subsidiary Guarantor
from the Person or Persons who gave such Subsidiary Guarantor Blockage Notice, (ii) because the
default giving rise to such Subsidiary Guarantor Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness has been repaid in full). Notwithstanding the
provisions












 



68



described in the immediately preceding sentence (but subject to the provisions contained in
the first sentence of this Section), unless the holders of Designated Senior Indebtedness giving
such Subsidiary Guarantor Blockage Notice or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, such Subsidiary Guarantor shall
resume payments pursuant to its Subsidiary Guarantee after the end of such Subsidiary Guarantor
Payment Blockage Period. A Subsidiary Guarantee shall not be subject to more than one Subsidiary
Guarantor Payment Blockage Period in any consecutive 360-day period, irrespective of the number of
defaults with respect to Designated Senior Indebtedness of such Subsidiary Guarantor during such
period. For purposes of this Section, no default or event of default which existed or was
continuing on the date of the commencement of any Subsidiary Guarantor Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Subsidiary Guarantor Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent Subsidiary Guarantor
Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of default shall have
been cured or waived for a period of not less than 90 consecutive days.




          Section 12.04. Demand for Payment. If a demand for payment is made on a Subsidiary
Guarantor pursuant to Article 11, the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representatives) of such Subsidiary Guarantor of such demand.




          Section 12.05. When Distribution Must Be Paid Over. If a distribution is made to
Securityholders that because of this Article 12 should not have been made to them, the
Securityholders who receive the distribution shall hold it in trust for holders of the relevant
Senior Indebtedness and pay it over to them or their Representative as their interests may appear.




          Section 12.06. Subrogation. After all Senior Indebtedness of a Subsidiary Guarantor
is paid in full and until the Securities are paid in full, Securityholders shall be subrogated to
the rights of holders of such Senior Indebtedness to receive distributions applicable to Senior
Indebtedness. A distribution made under this Article 12 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the relevant Subsidiary
Guarantor and Securityholders, a payment by such Subsidiary Guarantor on such Senior Indebtedness.




          Section 12.07. Relative Rights. This Article 12 defines the relative rights of
Securityholders and holders of Senior Indebtedness of a Subsidiary Guarantor. Nothing in this
Indenture shall:





     (1) impair, as between such Subsidiary Guarantor and Securityholders, the obligation of
such Subsidiary Guarantor, which is absolute and unconditional, to pay the Obligations to
the extent set forth in Article 11; or




     (2) prevent the Trustee or any Securityholder from exercising its available remedies
upon a default by such Subsidiary Guarantor under its Subsidiary Guarantee, subject to the
rights of holders of Senior Indebtedness of such Subsidiary Guarantor to receive
distributions otherwise payable to Securityholders.









 



69


          Section 12.08. Subordination May Not Be Impaired by Subsidiary Guarantor. No right of
any holder of Senior Indebtedness of any Subsidiary Guarantor to enforce the subordination of the
Obligations of such Subsidiary Guarantor shall be impaired by any act or failure to act by such
Subsidiary Guarantor or by its failure to comply with this Indenture.




          Section 12.09. Rights of Trustee and Paying Agent. Notwithstanding Section 12.03, the
Trustee or Paying Agent may continue to make payments pursuant to any Subsidiary Guarantee and
shall not be charged with knowledge of the existence of facts that would prohibit the making of any
such payments unless, not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments may not be made
under this Article 12. The Company, such Subsidiary Guarantor, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness of such Subsidiary Guarantor may
give the notice; provided, however, that, if an issue of Senior Indebtedness of
such Subsidiary Guarantor has a Representative, only the Representative may give the notice.




          The Trustee in its individual or any other capacity may hold Senior Indebtedness of any
Subsidiary Guarantor with the same rights it would have if it were not Trustee. The Registrar and
co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled
to all the rights set forth in this Article 12 with respect to any Senior Indebtedness of any
Subsidiary Guarantor which may at any time be held by it, to the same extent as any other holder of
such Senior Indebtedness of such Subsidiary Guarantor; and nothing in Article 7 shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article 12 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 7.07.




          Section 12.10. Distribution or Notice to Representative. Whenever a distribution is
to be made or a notice given to holders of Senior Indebtedness of any Subsidiary Guarantor, the
distribution may be made and the notice given to their Representative (if any).




          Section 12.11. Article 12 Not To Prevent Defaults Under a Subsidiary Guarantee or Limit
Right To Demand Payment. The failure to make a payment pursuant to a Subsidiary Guarantee by
reason of any provision in this Article 12 shall not be construed as preventing the occurrence of a
default under such Subsidiary Guarantee. Nothing in this Article 12 shall have any effect on the
right of the Securityholders or the Trustee to make a demand for payment on any Subsidiary
Guarantor pursuant to its Subsidiary Guarantee.




          Section 12.12. Trustee Entitled To Rely. Upon any payment or distribution pursuant to
this Article 12, the Trustee and the Securityholders shall be entitled to rely (i) upon any order
or decree of a court of competent jurisdiction in which any proceedings of the nature referred to
in Section 12.02 are pending, (ii) upon a certificate of the liquidating trustee or agent or other
Person making such payment or distribution to the Trustee or to the Securityholders or (iii) upon
the Representative for the holders of Senior Indebtedness of any Subsidiary Guarantor for the
purpose of ascertaining the Persons entitled to participate in such payment or distribution, the
holders of such Senior Indebtedness and other Indebtedness of such Subsidiary Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 12. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of Senior












 



70



Indebtedness of such Subsidiary Guarantor to participate in any payment or distribution
pursuant to this Article 12, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of such Subsidiary
Guarantor held by such Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person under this Article
12, and, if such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by
the Trustee pursuant to this Article 12.




          Section 12.13. Trustee To Effectuate Subordination. Each Securityholder by accepting
a Security authorizes and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness of any Subsidiary Guarantor as provided in this Article 12 and
appoints the Trustee as attorney-in-fact for any and all such purposes.




          Section 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of Subsidiary
Guarantor. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of any Subsidiary Guarantor and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of such Senior Indebtedness shall be entitled by virtue of this Article
12 or otherwise.




          Section 12.15. Reliance by Holders of Senior Indebtedness on Subordination Provisions.
Each Securityholder by accepting a Security acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a consideration to each
holder of any Senior Indebtedness of any Subsidiary Guarantor, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire and continue to
hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall
be deemed conclusively to have relied on such subordination provisions in acquiring and continuing
to hold, or in continuing to hold, such Senior Indebtedness.




ARTICLE 13




Miscellaneous



          Section 13.01. Trust Indenture Act Controls. If any provision of this Indenture
limits, qualifies or conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.




          Section 13.02. Notices. Any notice or communication shall be in writing and delivered
in person or mailed by first-class mail addressed as follows:




          if to the Company or any Subsidiary Guarantor:













 



71



Denbury Resources Inc.

5320 Legacy Drive

Plano, Texas 775024



Attention of Corporate Secretary



if to the Trustee:



Wells Fargo Bank, National Association

•



Attention of •




          The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.




          Any notice or communication mailed to a Securityholder shall be mailed to the Securityholder
at the Securityholder’s address as it appears on the registration books of the Registrar and shall
be sufficiently given if so mailed within the time prescribed.




          Failure to mail a notice or communication to a Securityholder or any defect in it shall not
affect its sufficiency with respect to other Securityholders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the addressee receives it.




          Section 13.03. Communication by Holders with Other Holders. Securityholders may
communicate pursuant to TIA § 312(b) with other Securityholders with respect to their rights under
this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA § 312(c).




          Section 13.04. Certificate and Opinion as to Conditions Precedent. Upon any request
or application by the Company to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:





     (1) an Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been complied with; and




     (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent have been
complied with.



          Section 13.05. Statements Required in Certificate or Opinion. Each certificate or
opinion with respect to compliance with a covenant or condition provided for in this Indenture
shall include:














 




72



     (1) a statement that the individual making such certificate or opinion has read
such covenant or condition;




     (2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;




     (3) a statement that, in the opinion of such individual, he has made such examination
or investigation as is necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and




     (4) a statement as to whether or not, in the opinion of such individual, such covenant
or condition has been complied with.


Any Officers’ Certificate may be based, insofar as it relates to legal matters, upon an Opinion of
Counsel, unless any such Officer knows or in the exercise of reasonable care should have known that
such Opinion of Counsel is erroneous. Any Opinion of Counsel may be based, insofar as it relates
to factual matters, information with respect to which is in possession of the Company, upon an
Officers’ Certificate, unless such counsel knows or in the exercise of reasonable care should have
known that such Officers’ Certificate is erroneous.




          Section 13.06. When Securities Disregarded. In determining whether the Holders of the
required principal amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be disregarded and deemed not
to be outstanding, except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities which the Trustee
actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such determination.




          Section 13.07. Rules by Trustee, Paying Agent and Registrar. The Trustee may make
reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent
may make reasonable rules for their functions.




          Section 13.08. Legal Holidays. A “Legal Holiday” is a Saturday, a Sunday or a
day on which banking institutions are not required to be open in the State of New York or in the
State of Texas. If a payment date is a Legal Holiday, payment shall be made on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue with respect to such payment for the
intervening period. If a regular record date is a Legal Holiday, the record date shall not be
affected.




          Section 13.09. Governing Law. This Indenture and the Securities shall be governed by,
and construed in accordance with, the laws of the State of New York.




          Section 13.10. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any obligations of the
Company under the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each Securityholder shall












 



73



waive and release all such liability. The waiver and release shall be part of the
consideration for the issue of the Securities.




          Section 13.11. Successors. All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.




          Section 13.12. Multiple Originals. The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.




          Section 13.13. Table of Contents; Headings. The table of contents, cross-reference
sheet and headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not intended to be considered a part hereof and shall not modify
or restrict any of the terms or provisions hereof.




          Section 13.14. Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.















 



 




          IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date
first written above.




	 	 	 	 	 
	 	DENBURY RESOURCES INC.,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	SUBSIDIARY GUARANTORS:

	 
	 
	 	DENBURY AIR, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	DENBURY GATHERING & MARKETING, INC.,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	DENBURY GREEN PIPELINE-TEXAS, LLC,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	DENBURY GULF COAST PIPELINES, LLC,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	DENBURY HOLDINGS, INC.,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	DENBURY MARINE, L.L.C.,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 









 





	 	 	 	 	 
	 	DENBURY ONSHORE, LLC,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	DENBURY OPERATING COMPANY,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	DENBURY PIPELINE HOLDINGS, LLC,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	GREENCORE PIPELINE COMPANY LLC,

 	 
	 	By:  	 	 
	 	 	Name:  	Mark C. Allen 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 




 











 



 

	 	 	 	 	 



	 	 	 	 	 
	 	TRUSTEE:



WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 	 
	 	by  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





 











 





EXHIBIT 1




FORM OF SUPPLEMENTAL INDENTURE




          SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of
        , among [SUBSIDIARY GUARANTOR] (the “New Subsidiary Guarantor”), a subsidiary of Denbury
Resources Inc. (or its successor) (the “Company”), DENBURY RESOURCES INC., a Delaware
corporation, on behalf of itself and the Subsidiary Guarantors (the “Existing Subsidiary
Guarantors”) under the Indenture referred to below, and WELLS FARGO BANK, NATIONAL ASSOCIATION,
as trustee under the indenture referred to below (the “Trustee”).




WITNESSETH:




          WHEREAS the Company has heretofore executed and delivered to the Trustee an Indenture (the
“Indenture”) dated as of •, 2011, providing for the issuance of •% Senior Subordinated
Notes Due 2021 (the “Securities”);




          WHEREAS Section 4.13 of the Indenture provides that under certain circumstances the Company is
required to cause the New Subsidiary Guarantor to execute and deliver to the Trustee a supplemental
indenture pursuant to which the New Subsidiary Guarantor shall unconditionally guarantee all of the
Company’s obligations under the Securities pursuant to a Subsidiary Guarantee on the terms and
conditions set forth herein; and




          WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company and Existing
Subsidiary Guarantors are authorized to execute and deliver this Supplemental Indenture;




          NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantor, the
Company, the Existing Subsidiary Guarantors and the Trustee mutually covenant and agree for the
equal and ratable benefit of the holders of the Securities as follows:




          1. Definitions. (a) Capitalized terms used herein without definition shall have the
meanings assigned to them in the Indenture.




          (b) For all purposes of this Supplement, except as otherwise herein expressly provided or
unless the context otherwise requires: (i) the terms and expressions used herein shall have the
same meanings as corresponding terms and expressions used in the Indenture; and (ii) the words
“herein,” “hereof” and “hereby” and other words of similar import used in this Supplement refer to
this Supplement as a whole and not to any particular section hereof.




          2. Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees, jointly and
severally with all other Subsidiary Guarantors, to guarantee the Company’s obligations under the
Securities on the terms and subject to the conditions set forth in Article 11 of the Indenture and
to be bound by all other applicable provisions of the Indenture.












 








          3. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as
expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental
Indenture shall form a part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.




          4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.




          5. Trustee Makes No Representation. The Trustee makes no representation as to the
validity or sufficiency of this Supplemental Indenture.




          6. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement.




          7. Effect of Headings. The Section headings herein are for convenience only and shall
not effect the construction thereof.













 








          IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed as of the date first above written.




	 	 	 	 	 
	 	[NEW SUBSIDIARY GUARANTOR],

 	 
	 	by  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DENBURY RESOURCES INC., on behalf of itself and the
Existing Subsidiary Guarantors,

 	 
	 	by  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee,

 	 
	 	by  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 









 





	 	 	 	 	 




EXHIBIT A




[FORM OF FACE OF SECURITY]




[Global Securities Legend]


UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.



TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.



THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES. UPON WRITTEN REQUEST, DENBURY RESOURCES INC. WILL PROMPTLY MAKE AVAILABLE TO A HOLDER OF
THIS NOTE INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF OID, THE ISSUE DATE AND THE YIELD TO
MATURITY OF THIS NOTE. HOLDERS SHOULD DIRECT THEIR REQUESTS TO THE FOLLOWING ADDRESS: DENBURY
RESOURCES INC., [INSERT ADDRESS], ATTENTION: [INSERT NAME OR TITLE OF APPROPRIATE PERSON].




CUSIP No. _______

ISIN No. _______




			
	 
	No. _________
	 	$_________






•%
Senior Subordinated Notes Due 2021




          Denbury Resources Inc., a Delaware corporation, promises to pay to Cede & Co., or registered
assigns, the principal sum of
$_________ Dollars on •, 2021.




          Interest Payment Dates: • and •.













 



2




          Record Dates: • and •.




          Additional provisions of this Security are set forth on the other side of this Security.



Dated:




	 	 	 	 	 
	 	DENBURY RESOURCES INC.

 	 
	 	by  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	TRUSTEE’S CERTIFICATE OF
AUTHENTICATION



WELLS FARGO BANK, NATIONAL ASSOCIATION



as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.

 	 	 
	by  	 	 	 
	 	Authorized Signatory 	 	 
	 	 	 	 









 





	 	 	 	 	 




FORM OF REVERSE SIDE OF SECURITY




•%
Senior Subordinated Notes Due 2021




	1.	 	Interest





          Denbury Resources Inc., a Delaware corporation (such corporation, and its successors and
assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises
to pay interest on the principal amount of this Security at the rate per annum shown above. The
Company will pay interest semiannually on • and
• of each year, commencing •, 2011. Interest on
the Securities will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from February •, 2011. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate
borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.





	2.	 	Method of Payment





          The Company will pay interest on the Securities (except defaulted interest) to the Persons who
are registered holders of Securities at the close of business on the • or • next preceding the
interest payment date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United States that at the
time of payment is legal tender for payment of public and private debts. Payments in respect of
the Securities represented by a Global Security (including principal, premium, if any, and
interest) will be made by wire transfer of immediately available funds to the accounts specified by
The Depository Trust Company. The Company will make all payments in respect of a certificated
Security (including principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a certificated
Security will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank
in the United States if such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date as the Trustee may
accept in its discretion).





	3.	 	Paying Agent and Registrar





          Initially, Wells Fargo Bank, National Association (the “Trustee”), will act as Paying Agent
and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any Wholly Owned Subsidiary may act as Paying Agent, Registrar or
co-registrar.





	4.	 	Indenture





          The
Company issued the Securities under an Indenture dated as of February •, 2011
(“Indenture”), among the Company, the Subsidiary Guarantors and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the Indenture by












 



2



reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect
on the date of the Indenture (the “Act”). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of those terms.




          The Securities are general unsecured obligations of the Company. The Company shall be
entitled, subject to its compliance with Section 4.03 of the Indenture, to issue Additional
Securities pursuant to Section 2.13 of the Indenture. The Securities issued on the Issue Date and
any Additional Securities will be treated as a single class for all purposes under the Indenture.
The Indenture contains covenants that limit the ability of the Company and its subsidiaries to
incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital
stock; make investments; engage in transactions with affiliates; transfer or sell assets; guarantee
indebtedness; restrict dividends or other payments of subsidiaries; and consolidate, merge or
transfer all or substantially all of its assets and the assets of its subsidiaries. These
covenants are subject to important exceptions and qualifications.





	5.	 	Optional Redemption





          (a) Optional Redemption. Except as set forth below, the Company shall not be entitled to
redeem the Securities prior to •, 2016. On and after
•, 2016, the Company shall be entitled at its
option to redeem all or a portion of the Securities upon not less than 30 nor more than 60 days’
notice, at the redemption prices (expressed in percentages of principal amount on the redemption
date), plus accrued and unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant interest payment date),
if redeemed during the 12-month period commencing on • of the years set forth below:




	 	 	 	 	 
	Period	 	Redemption Price
	2016
	 	 	•	%
	2017
	 	 	•	%
	2018
	 	 	•	%
	2019 and thereafter
	 	 	100.0000	%






          (b)
Option Redemption Upon Equity Offerings. Prior to •, 2014, the Company may at its option
on one or more occasions redeem Securities (which includes Additional Securities, if any) in an
aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities
(which includes Additional Securities, if any) originally issued at a redemption price (expressed
as a percentage of principal amount) of •%, plus accrued and unpaid interest to the redemption
date, with the net cash proceeds from one or more Stock Offerings; provided,
however, that





     (1) at least 65% of such aggregate principal amount of Securities (which includes
Additional Securities, if any) remains outstanding immediately after the occurrence of each
such redemption (other than Securities held, directly or indirectly, by the Company or its
Affiliates); and









 



3



     (2) each such redemption occurs within 60 days after the date of the related Stock
Offering.



          (c)
Make-Whole Redemption. At any time prior to •, 2016, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to each Holder’s registered address, the Company
may redeem Securities, in whole or 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 record date to
receive interest due on the relevant interest payment date).





     “Applicable Premium” means, with respect to a Security on any date of
redemption, the greater of (1) 1.0% of the principal amount of such Security and (2) the
excess, if any, of (a) the present value as of such date of redemption of (i) the redemption
price of such Security on •, 2016 plus (ii) all required interest payments due on such
Security through •, 2016 (excluding accrued but unpaid interest to the date of redemption),
computed using a discount rate equal to the Treasury Rate as of such date of redemption plus
50 basis points, over (b) the then-outstanding principal of such Security.




     “Treasury Rate” means as of any date of redemption of Securities 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) that 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 •, 2016; provided, however, that if the period from the redemption date
to •, 2016 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 •, 2016 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a constant maturity
of one year will be used.




	6.	 	Notice of Redemption





          Notice of redemption will be mailed at least 30 days but not more than 60 days before the
redemption date to each Holder of Securities to be redeemed at its registered address. Securities
in denominations larger than $1,000 principal amount may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on
all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are satisfied, on and
after such date interest ceases to accrue on such Securities (or such portions thereof) called for
redemption.













 



4




	7.	 	Put Provisions





          Upon a Change of Control, any Holder of Securities will have the right to cause the Company to
repurchase all or any part of the Securities of such Holder at a purchase price equal to 101% of
the principal amount of the Securities to be repurchased on the date of purchase plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of holders of record on
the relevant record date to receive interest due on the relevant interest payment date) as provided
in, and subject to the terms of, the Indenture.





	8.	 	Subordination





          The Securities are subordinated to Senior Indebtedness of the Company, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness of the Company must be
paid in full in cash before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact
for such purpose.





	9.	 	Guaranties





          The payment by the Company of the principal of, and premium and interest on, the Securities is
fully and unconditionally guaranteed on a joint and several senior subordinated basis by each of
the Subsidiary Guarantors on the terms set forth in the Indenture.





	10.	 	Denominations; Transfer; Exchange





          The Securities are in registered form without coupons in denominations of $2,000 principal
amount and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.













 



5





	11.	 	Persons Deemed Owners





          The registered Holder of this Security may be treated as the owner of it for all purposes.





	12.	 	Unclaimed Money





          If money for the payment of principal, premium (if any) or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an
abandoned property law designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.





	13.	 	Discharge and Defeasance





          Subject to certain conditions, the Company at any time shall be entitled to terminate some or
all of its obligations under the Securities and the Indenture, including the Subsidiary Guarantees,
if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of
principal and interest on the Securities to redemption or maturity, as the case may be.





	14.	 	Amendment, Waiver





          Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities
may be amended with the written consent of the Holders of at least a majority in principal amount
of the Securities then outstanding and (ii) any default or noncompliance with any provisions may be
waived with the written consent of the Holders of at least a majority in principal amount of the
Securities then outstanding. Subject to certain exceptions set forth in the Indenture, without
notice to or the consent of any Securityholder, the Company, the Subsidiary Guarantors and the
Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities (provided that the uncertificated
Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code), or to
make any change to the subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness (or its Representative) of the Company or
any Subsidiary Guarantor, or to add guarantees (including Subsidiary Guarantees) with respect to
the Securities, or to secure the Securities, or to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power conferred on the Company or any
Subsidiary Guarantor, or to make any change that does not adversely affect the rights of any
Securityholder, or to comply with any requirement of the SEC in connection with qualifying the
Indenture under the Act. No amendment may be made to the subordination provisions of the Indenture
that adversely affects the rights of any holder of Senior Indebtedness of the Company or of any
Subsidiary Guarantor then outstanding unless the holders of such Senior Indebtedness (or their
Representative) consent to such change.













 



6





	15.	 	Defaults and Remedies





          Under the Indenture, Events of Default include (i) default for 30 days in payment of interest
on the Securities when due; (ii) default in payment of principal on the Securities at maturity,
upon redemption pursuant to paragraph 5 of the Securities, upon declaration or acceleration or
otherwise, or failure by the Company to redeem or purchase Securities when required; (iii) failure
by the Company to comply with its obligations under certain covenants; (iv) failure by the Company
to comply with other agreements in the Indenture or the Securities, in certain cases subject to
notice and lapse of time; (v) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company or any Significant Subsidiary
(other than Limited Recourse Indebtedness) if the amount accelerated (or so unpaid) exceeds $20.0
million; (vi) certain events of bankruptcy, insolvency or reorganization with respect to the
Company or a Significant Subsidiary; (vii) any judgment or decree for the payment of money in
excess of $20.0 million is rendered against the Company or a Significant Subsidiary, remains
outstanding for a period of 60 days following such judgment or decree and is not discharged, waived
or stayed within 10 days after notice; or (viii) any Subsidiary Guarantee ceases or otherwise fails
to be in full force and effect (other than in accordance with the terms of such Subsidiary
Guarantee) or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary
Guarantee if such default continues for a period of 10 days after notice thereof to the Company.
If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable immediately. Certain events of bankruptcy,
insolvency or reorganization are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default. A default under clauses
(iv), (v), (vii) or (viii) will not constitute an Event of Default until the Trustee or the Holders
of 25% in principal amount of the outstanding Securities notifies the Company of the default and
the Company does not cure such default within the time specified after receipt of such notice.




          Securityholders may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives
reasonable indemnity or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in
payment of principal or interest) if it determines that withholding notice is in the interest of
the Holders.





	16.	 	Trustee Dealings with the Company





          Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities and may otherwise
deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.













 



7





	17.	 	No Recourse Against Others





          A director, officer, employee, stockholder, incorporator, or member, as such, of the Company
or any Subsidiary Guarantor shall not have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Securities, any Subsidiary Guarantee, or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.





	18.	 	Authentication





          This Security shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the other side of this
Security.





	19.	 	Abbreviations





          Customary abbreviations may be used in the name of a Securityholder 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 Gift
to Minors Act).





	20.	 	CUSIP Numbers





          The Company has caused CUSIP numbers to be printed on the Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.



21. Governing Law




          THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.




          The Company will furnish to any Securityholder upon written request and without charge to the
Securityholder a copy of the Indenture which has in it the text of this Security in larger type.
Requests may be made to:




Denbury Resources Inc.

5320 Legacy Drive

Plano, Texas 75024

Attention of Chief Financial Officer










 



8


ASSIGNMENT FORM



To assign this Security, fill in the form below:



I or we assign and transfer this Security to




     (Print or type assignee’s name, address and zip code)



     (Insert assignee’s soc. sec. or tax I.D. No.)


and irrevocably appoint                      agent to transfer this Security on the books of
the Company. The agent may substitute another to act for him.




	 	 	 	 	 
	 	 	 
	Date: ___________	Your Signature  	 	 




 
Sign exactly as your name appears on the other side of this Security.












 








[TO BE ATTACHED TO GLOBAL SECURITIES]




SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY



          The following increases or decreases in this Global Security have been made:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal amount of	 	 	 	 
	 	 	Amount of decrease	 	 	Amount of increase	 	 	this Global Security	 	 	Signature of	 
	 	 	in Principal amount	 	 	in Principal amount	 	 	following such	 	 	authorized officer of	 
	Date of	 	of this Global	 	 	of this Global	 	 	decrease or	 	 	Trustee or Securities	 
	Exchange	 	Security	 	 	Security	 	 	increase)	 	 	Custodian	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 











 






OPTION OF HOLDER TO ELECT PURCHASE




          If you want to elect to have this Security purchased by the Company pursuant to Section 4.07
or 4.09 of the Indenture, check the box:




o



          If you want to elect to have only part of this Security purchased by the Company pursuant to
Section 4.07 or 4.09 of the Indenture, state the amount in principal amount: $______.




	 	 	 	 	 
	 	 	 
	Dated: ___________	Your Signature:  	 	 
	 	 	Sign exactly as your name appears on the other side of this Security.) 	 
	 


Signature Guarantee:
_______________________________________________________________

               
                 
    (Signature must be guaranteed)





     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Registrar, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the United
States Securities Exchange Act of 1934, as amended.