Document:

Exhibit
10.3

 

 

 

 

THIRD SUPPLEMENTAL INDENTURE

 

Dated as of July 23, 2009

 

among

 

TICKETMASTER ENTERTAINMENT, INC.

 

The Guarantors Party Hereto

 

and

 

THE BANK OF NEW YORK MELLON,

 

as Trustee

 

 

 

 

THIS
THIRD SUPPLEMENTAL INDENTURE (this “Supplemental
Indenture”), entered into as of July 23, 2009, among TICKETMASTER ENTERTAINMENT, INC., a
Delaware corporation formerly known as Ticketmaster (the “Issuer”), the guarantors party hereto (the “Guarantors”), and THE BANK
OF NEW YORK MELLON, as trustee (the “Trustee”).

 

RECITALS

 

WHEREAS,
the Issuer, the guarantors named therein and the Trustee entered into the
Indenture, dated as of July 28, 2008 (the “Indenture”), relating to the Issuer’s 10.75% Senior Notes due
2016 (the “Notes”);

 

WHEREAS,
the Issuer, the guarantors named therein and the Trustee entered into the First
Supplemental Indenture, dated as of August 20, 2008 (the “First Supplemental Indenture”), pursuant to which FLMG Holdings
Corp., a Delaware corporation, unconditionally guaranteed all of the Issuer’s
obligations under the Notes and the Indenture on the terms set forth in the
Indenture;

 

WHEREAS,
the Issuer, the guarantors named therein and the Trustee entered into the
Second Supplemental Indenture, dated as of April 30, 2009 (the “Second Supplemental Indenture”), pursuant to which certain
Domestic Restricted Subsidiaries unconditionally guaranteed all of the Issuer’s
obligations under the Notes and the Indenture on the terms set forth in the
Indenture;

 

WHEREAS,
Front Line Management Group, Inc., a Guarantor and subsidiary of the
Issuer, has formed Morris Artists Management LLC, a Delaware limited liability
company (the “New Guarantor”), and the New
Guarantor became a Domestic Restricted Subsidiary of the Issuer;

 

WHEREAS,
as a result of the formation of the New Guarantor and its subsequent
acquisition of certain assets from third parties, Sections 4.13 and 9.01 of the
Indenture require the New Guarantor to execute and deliver to the Trustee this
Supplemental Indenture pursuant to which the New Guarantor shall
unconditionally guarantee all of the Issuer’s obligations under the Notes and
the Indenture on the terms set forth in the Indenture;

 

WHEREAS,
the Issuer changed its name from Ticketmaster to Ticketmaster Entertainment, Inc.
on October 29, 2008;

 

WHEREAS,
the Issuer desires to amend the Notes pursuant to Section 9.01 of the
Indenture to reflect the change in the Issuer’s name and for the Trustee to
place an appropriate notation on the Notes pursuant to Section 9.05 of the
Indenture to reflect the change in the Issuer’s name;

 

WHEREAS,
the Guarantors, including the New Guarantor, and the Issuer have requested that
the Trustee execute and deliver this Supplemental Indenture; and

 

1

 

WHEREAS,
all things necessary have been done to make this Supplemental Indenture, when
executed and delivered by the Guarantors, including the New Guarantor, and the
Issuer, the legal, valid and binding agreement of the Guarantors, including the
New Guarantor, and the Issuer, in accordance with its terms.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and intending to be legally bound, the parties to this Supplemental
Indenture hereby agree as follows:

 

Section 1.  Capitalized terms used herein and not
otherwise amended or defined herein are used as defined in the Indenture.

 

Section 2.  The Indenture shall be amended such that the
defined term “Issuer” is amended to mean Ticketmaster Entertainment, Inc.

 

Section 3.  The Trustee shall place an appropriate
notation on the Notes to reflect the change in the name of the Issuer from
Ticketmaster to Ticketmaster Entertainment, Inc.

 

Section 4.  The New Guarantor, by its execution of this
Supplemental Indenture, agrees to be a Guarantor under the Indenture and to be
bound by the terms of the Indenture applicable to Guarantors, including, but
not limited to, Article 10 thereof.

 

Section 5.  This Supplemental Indenture shall be governed
by and construed in accordance with the laws of the State of New York.

 

Section 6.  This Supplemental Indenture may be signed in
various counterparts which together will constitute one and the same
instrument.

 

Section 7.  This Supplemental Indenture is an amendment
supplemental to the Indenture and the Indenture, the First Supplemental
Indenture, the Second Supplemental Indenture and this Supplemental Indenture
will henceforth be read together.

 

Section 8.  The recitals contained herein are made by the
Issuer and the Guarantors, including the New Guarantor, and not by the Trustee,
and the Trustee assumes no responsibility for the correctness thereof.  The Trustee makes no representation as to the
validity or sufficiency of this Supplemental Indenture.  All rights, protections, privileges,
indemnities and benefits granted or afforded to the Trustee under the Indenture
shall be deemed incorporated herein by this reference and shall be deemed
applicable to all actions taken, suffered or omitted by the Trustee under this
Supplemental Indenture.

 

[Signature Pages Follow]

 

2

 

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

 

 

	
   

  	
   

  	
  TICKETMASTER
  ENTERTAINMENT, INC., as Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Regan

  
	
   

  	
   

  	
  Name:

  	
  Brian
  Regan

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  	
   

  	
  and
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FLMG HOLDINGS CORP.,

  
	
   

  	
   

  	
  IAC PARTNER MARKETING, INC.,

  
	
   

  	
   

  	
  MICROFLEX 2001 LLC,

  
	
   

  	
   

  	
  TICKETMASTER ADVANCE TICKETS, LLC,

  
	
   

  	
   

  	
  TICKETMASTER CALIFORNIA GIFT CERTIFICATES L.L.C.,

  
	
   

  	
   

  	
  TICKETMASTER CHINA VENTURES, L.L.C.,

  
	
   

  	
   

  	
  TICKETMASTER EDCS LLC,

  
	
   

  	
   

  	
  TICKETMASTER FLORIDA GIFT CERTIFICATES L.L.C.,

  
	
   

  	
   

  	
  TICKETMASTER GEORGIA GIFT CERTIFICATES L.L.C.,

  
	
   

  	
   

  	
  TICKETMASTER INDIANA HOLDINGS CORP.,

  
	
   

  	
   

  	
  TICKETMASTER L.L.C.,

  
	
   

  	
   

  	
  TICKETMASTER MULTIMEDIA HOLDINGS LLC,

  
	
   

  	
   

  	
  TICKETMASTER NEW VENTURES HOLDINGS, INC.,

  
	
   

  	
   

  	
  TICKETMASTER WEST VIRGINIA GIFT CERTIFICATES
  L.L.C.,

  
	
   

  	
   

  	
  TICKETMASTER-INDIANA, L.L.C.,

  
	
   

  	
   

  	
  TM VISTA INC.,

  
	
   

  	
   

  	
  as Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Regan

  
	
   

  	
   

  	
  Name:

  	
  Brian
  Regan

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  	
   

  	
  and
  Chief Financial Officer

  

 

Signature
Page to Third Supplemental Indenture

 

 

	
   

  	
   

  	
  ECHOMUSIC,
  LLC,

  
	
   

  	
   

  	
  EVENTINVENTORY.COM,
  INC.,

  
	
   

  	
   

  	
  NETTICKETS.COM,
  INC.,

  
	
   

  	
   

  	
  OPENSEATS,
  INC.,

  
	
   

  	
   

  	
  PACIOLAN,
  INC.,

  
	
   

  	
   

  	
  PREMIUM
  INVENTORY, INC.,

  
	
   

  	
   

  	
  SHOW
  ME TICKETS, LLC,

  
	
   

  	
   

  	
  THE
  V.I.P. TOUR COMPANY,

  
	
   

  	
   

  	
  TICKETSNOW.COM,
  INC.,

  
	
   

  	
   

  	
  TNOW
  ENTERTAINMENT GROUP, INC.,

  
	
   

  	
   

  	
  as
  Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Regan

  
	
   

  	
   

  	
  Name:

  	
  Brian
  Regan

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FRONT
  LINE MANAGEMENT GROUP, INC.,

  
	
   

  	
   

  	
  AZOFF
  PROMOTIONS LLC,

  
	
   

  	
   

  	
  FRONT
  LINE BCC LLC,

  
	
   

  	
   

  	
  ILAA,
  INC.,

  
	
   

  	
   

  	
  ILA
  MANAGEMENT, INC.,

  
	
   

  	
   

  	
  ENTERTAINERS
  ART GALLERY LLC,

  
	
   

  	
   

  	
  MORRIS
  ARTISTS MANAGEMENT LLC,

  
	
   

  	
   

  	
  as
  Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Hodgson

  
	
   

  	
   

  	
  Name:

  	
  Colin
  Hodgson

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FEA
  MERCHANDISE INC.,

  
	
   

  	
   

  	
  SPALDING
  ENTERTAINMENT, LLC,

  
	
   

  	
   

  	
  as
  Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Hodgson

  
	
   

  	
   

  	
  Name:

  	
  Colin
  Hodgson

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  

 

Signature
Page to Third Supplemental Indenture

 

 

	
   

  	
   

  	
  TICKETWEB,
  LLC,

  
	
   

  	
   

  	
  as
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Riley

  
	
   

  	
   

  	
  Name:

  	
  Chris
  Riley

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President, Deputy General Counsel and Secretary

  

 

Signature
Page to Third Supplemental Indenture

 

 

 

	
   

  	
   

  	
   THE BANK OF NEW YORK MELLON,

  
	
   

  	
   

  	
   as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sherma Thomas

  
	
   

  	
   

  	
  Name:

  	
  Sherma Thomas

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  

 

Signature
Page to Third Supplemental Indentureex4_1.htm

Exhibit 4.1

 

91⁄8% Senior Notes due 2019

 

__________________

 

 

 

EIGHTH SUPPLEMENTAL INDENTURE

 

Dated as of August 14, 2009

 

AMONG

 

QUICKSILVER RESOURCES INC.,

 

THE SUBSIDIARY GUARANTORS PARTIES HERETO

 

AND

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

as TRUSTEE

 

 

TO

 

 

INDENTURE

 

Dated as of December 22, 2005

 

AMONG

 

QUICKSILVER RESOURCES, INC.

 

AND

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

as TRUSTEE

 

 

 

 

 

TABLE OF CONTENTS

 

	 	 	 Page
	
ARTICLE I
	
91⁄8% SENIOR NOTES DUE 2019
	
1

	
Section 1.01
	
Establishment
	
1

	
Section 1.02
	
Definitions
	
2

	
Section 1.03
	
Payment of Principal and Interest
	
28

	
Section 1.04
	
Denominations
	
28

	
Section 1.05
	
Global Securities
	
28

	
Section 1.06
	
Transfer
	
29

	
Section 1.07
	
Defeasance and Covenant Defeasance
	
29

	
Section 1.08
	
Redemption at the Option of the Company
	
31

	
Section 1.09
	
Paying Agent
	
33

	
Section 1.10
	
Additional Notes
	
33

	
ARTICLE II
	
SUBSIDIARY GUARANTEES
	
33

	
Section 2.01
	
Guarantee.
	
33

	
Section 2.02
	
Limitation on Subsidiary Guarantor Liability
	
34

	
Section 2.03
	
Releases of Subsidiary Guarantees
	
34

	
ARTICLE III
	
PARTICULAR COVENANTS OF THE COMPANY WITH RESPECT TO THE NOTES
	
35

	
Section 3.01
	
Effectiveness of Covenants
	
35

	
Section 3.02
	
Limitation on Indebtedness
	
35

	
Section 3.03
	
Limitation on Restricted Payments
	
38

	
Section 3.04
	
Limitation on Liens
	
42

	
Section 3.05
	
Limitation on Sale/Leaseback Transactions
	
42

	
Section 3.06
	
Limitation on Restrictions on Distributions from Restricted Subsidiaries
	
43

	
Section 3.07
	
Limitation on Sales of Assets and Subsidiary Stock
	
44

	
Section 3.08
	
Limitation on Affiliate Transactions
	
47

	
Section 3.09
	
Limitation on Sale of Capital Stock of Restricted Subsidiaries
	
48

	
Section 3.10
	
SEC Reports
	
48

	
Section 3.11
	
Merger and Consolidation
	
48

	
Section 3.12
	
Future Subsidiary Guarantors
	
49

	
Section 3.13
	
Limitation on Lines of Business
	
49

	
Section 3.14
	
Payments for Consent
	
50

	
Section 3.15
	
Offer to Repurchase Upon Change of Control
	
50

	
ARTICLE IV
	
EVENTS OF DEFAULT WITH RESPECT TO THE NOTES
	
51

	
ARTICLE V
	
MODIFICATION AND WAIVER
	
52

	
Section 5.01
	
Without Consent of Holders
	
52

	
Section 5.02
	
With Consent of Holders
	
52

	
ARTICLE VI
	
MISCELLANEOUS PROVISIONS
	
53

	
Section 6.01
	
Recitals by the Company
	
53

	
Section 6.02
	
Ratification and Incorporation of Original Indenture
	
53

	
Section 6.03
	
Executed in Counterparts
	
53

	
Section 6.04
	
New York Law to Govern
	
53

	
Section 6.05
	
Successors and Assigns
	
53

	
Section 6.06
	
Separability
	
53

	
Section 6.07
	
Force Majeure
	
53

	
Section 6.08
	
Senior Indebtedness
	
53

	 	 	 
	
Exhibit A
	
Form of Global Note
	
A-1

	
Exhibit B
	
Form of Supplemental Indenture to be Delivered by Subsequent Guarantors
	
B-1

 

 

 

 

 

THIS EIGHTH SUPPLEMENTAL INDENTURE is made as of the 14th day of August, 2009, by and among QUICKSILVER RESOURCES INC., a Delaware corporation (the “Company”), the Subsidiary Guarantors (as
herein defined) parties hereto and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association duly organized and existing under the laws of the United States of America (as successor in interest to JPMorgan Chase Bank, National Association (the “Initial Trustee”)), as trustee (the “Trustee”):

 

WHEREAS, the Company and the Initial Trustee executed and delivered an Indenture, dated as of December 22, 2005 (the “Original Indenture”), to provide for the issuance by the Company from time to time of unsecured debentures, notes, and other evidences of indebtedness (the “Securities”), to be issued in one or more
series as provided in the Original Indenture;

 

WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as supplemented by this Eighth Supplemental Indenture, is herein called the “Indenture”;

 

WHEREAS, in the fourth quarter of 2006, the Trustee assumed and succeeded to all of the rights and obligations of the Initial Trustee under the Original Indenture, as supplemented on or before such date;

 

WHEREAS, under the Original Indenture, a new series of senior notes may at any time be established by the Board of Directors of the Company in accordance with the provisions of the Original Indenture and the terms of such series may be described by a supplemental indenture executed by the Company and the Trustee;

 

WHEREAS, the Company proposes to create under the Indenture a new series of senior notes;

 

WHEREAS, additional senior notes of other series hereafter established, except as may be limited in the Original Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified, and all senior notes issued by the Company of any one series need not be issued
at the same time and, unless otherwise so provided, may be reopened for issuances of additional senior notes of such series; and

 

WHEREAS, all conditions necessary to authorize the execution and delivery of this Eighth Supplemental Indenture and make it a valid and binding obligation of the Company and the Subsidiary Guarantors, in accordance with its terms, have been done or performed.

 

NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

91⁄8% SENIOR NOTES DUE 2019

 

Section 1.01   Establishment.  There is hereby established a new series of senior notes to be issued under the Indenture, to be designated as the Company’s 91⁄8% Senior
Notes due 2019 (the “Notes”).

 

There are to be authenticated and delivered Notes, initially limited in aggregate principal amount to $300,000,000, and no further Notes shall be authenticated and delivered except as provided by the terms of the Original Indenture and the terms of this Eighth Supplemental Indenture; provided, however,
that the aggregate principal amount of the Notes may be increased in the future, without the consent of the Holders, on the same terms and as part of the same series as the Notes.  The Notes shall be issued in fully registered form without coupons.

 

 

 

 

 

The Notes shall be issued in the form of one or more Global Securities (as defined below) in substantially the form set out in Exhibit A hereto.  The initial Depositary with respect to the Notes shall be The Depository Trust Company.

 

Each Note shall be dated the date of authentication thereof and shall bear interest from the date of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

 

Section 1.02   Definitions.  The following defined terms used herein with respect to the Notes shall, unless the context otherwise requires, have the meanings specified
below; provided, however, that all amounts of Adjusted Consolidated Net Tangible Assets, Consolidated Coverage Ratio, Consolidated EBITDA, Consolidated Income Taxes, Consolidated Interest Expense, Consolidated Net Income or Net Working Capital (i) as of any date or (ii) in relation to any period or portion thereof that, in either case, precedes the Issue Date, shall be the
amount thereof as calculated as of such date or in relation to such period or portion thereof under the indenture governing the 2016 Senior Subordinated Notes as supplemented or amended prior to the Issue Date.  Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.

 

“2015 Senior Notes” means the Company’s 81⁄4% Senior Notes due 2015.

 

“2016 Senior Notes” means the Company’s 113⁄4% Senior Notes due 2016.

 

“2016 Senior Subordinated Notes” means the Company’s 71⁄8% Senior Subordinated Notes due 2016.

 

“Acquired Indebtedness” means Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation
of, such Person becoming a Restricted Subsidiary or such acquisition.  Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (i) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets.

 

“Additional Assets” means:

 

	
  
	
(1)
	
any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in the Oil and Gas Business;

 

	
  
	
(2)
	
capital expenditures by the Company or a Restricted Subsidiary in the Oil and Gas Business;

 

	
  
	
(3)
	
the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary; or

 

	
  
	
(4)
	
Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

 

provided, however, that, in the case of clauses (3) and (4), such Restricted Subsidiary is primarily engaged in the Oil and Gas Business.

 

“Adjusted Consolidated Net Tangible Assets” means (without duplication), as of the date of determination, the remainder of:

 

	
  
	
(a)
	
the sum of:

 

 

2

 

 

	
  
	
(i)
	
estimated discounted future net revenues from proved oil and gas reserves of the Company and its Restricted Subsidiaries calculated in accordance with SEC guidelines before any provincial, territorial, state, federal or foreign income taxes, as estimated by the Company in a reserve report prepared as of the end of the Company’s most recently completed fiscal year for which audited financial statements are available,
as increased by, as of the date of determination, the estimated discounted future net revenues from

 

	
  
	
(A)
	
estimated proved oil and gas reserves acquired since such year end, which reserves were not reflected in such year end reserve report, and

 

	
  
	
(B)
	
estimated oil and gas reserves attributable to upward revisions of estimates of proved oil and gas reserves since such year end due to exploration, development, exploitation or other activities, in each case calculated in accordance with SEC guidelines (utilizing the prices for the fiscal quarter ending prior to the date of determination) and decreased by, as of the date of determination, the estimated discounted future
net revenues from

 

	
  
	
(C)
	
estimated proved oil and gas reserves included therein that shall have been produced or disposed of since such year end, and

 

	
  
	
(D)
	
estimated oil and gas reserves included therein that are subsequently removed from the proved oil and gas reserves of the Company and its Restricted Subsidiaries as so calculated due to downward revisions of estimates of proved oil and gas reserves since such year end due to changes in geological conditions or other factors which would, in accordance with standard industry practice, cause such revisions, in each case
calculated on a pre-tax basis and substantially in accordance with SEC guidelines (utilizing the prices for the fiscal quarter ending prior to the date of determination), in each case as estimated by the Company’s petroleum engineers or any independent petroleum engineers engaged by the Company for that purpose;

 

	
  
	
(ii)
	
the capitalized costs that are attributable to oil and gas properties of the Company and its Restricted Subsidiaries to which no proved oil and gas reserves are attributable, based on the Company’s books and records as of a date no earlier than the date of the Company’s latest annual or quarterly consolidated financial statements;

 

	
  
	
(iii)
	
the Net Working Capital on a date no earlier than the date of the Company’s latest annual or quarterly consolidated financial statements; and

 

	
  
	
(iv)
	
the greater of

 

	
  
	
(A)
	
the net book value of other tangible assets of the Company and its Restricted Subsidiaries, as of a date no earlier than the date of the Company’s latest annual or quarterly consolidated financial statements, and

 

 

3

 

 

	
  
	
(B)
	
the appraised value, as estimated by independent appraisers, of other tangible assets of the Company and its Restricted Subsidiaries, as of a date no earlier than the date of the Company’s latest audited consolidated financial statements (provided that the Company shall not be required to obtain any appraisal of any assets); minus

 

	
  
	
(b)
	
the sum of:

 

	
  
	
(i)
	
any amount included in (a)(i) through (a)(iv) above that is attributable to Minority Interests;

 

	
  
	
(ii)
	
any net gas balancing liabilities of the Company and its Restricted Subsidiaries reflected in the Company’s latest audited consolidated financial statements;

 

	
  
	
(iii)
	
to the extent included in (a)(i) above, the estimated discounted future net revenues, calculated in accordance with SEC guidelines (utilizing the prices utilized in the Company’s year end reserve report), attributable to reserves which are required to be delivered to third parties to fully satisfy the obligations of the Company and its Restricted Subsidiaries with respect to Volumetric Production Payments (determined,
if applicable, using the schedules specified with respect thereto); and

 

	
  
	
(iv)
	
to the extent included in (a)(i) above, the estimated discounted future net revenues, calculated in accordance with SEC guidelines, attributable to reserves subject to Dollar-Denominated Production Payments which, based on the estimates of production and price assumptions included in determining the estimated discounted future net revenues specified in (a)(i) above, would be necessary to fully satisfy the payment obligations
of the Company and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments (determined, if applicable, using the schedules specified with respect thereto).

 

If the Company changes its method of accounting from the full cost method of accounting to the successful efforts or a similar method, “Adjusted Consolidated Net Tangible Assets” will continue to be calculated as if the Company were still using the full cost method of accounting.

 

“Affiliate” of any specified Person means any other Person, that directly or indirectly, is in Control of, is Controlled by, or is under common Control with, such Person.

 

“Applicable Premium” means, with respect to a Note at any Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at August 15, 2014 (such redemption price being described in Section 1.08(a) of this
Eighth Supplemental Indenture exclusive of any accrued interest) plus (2) all required interest payments due on such Note through August 15, 2014 (but excluding accrued and unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the then outstanding principal amount of such Note.

 

“Asset Disposition” means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of the Oil and Gas Business), transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock
of a Subsidiary (other than directors’ qualifying shares), property or other assets (each

 

 

4

 

 

referred to for the purposes of this definition as a “disposition”) by the Company or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction.

 

Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions:

 

	
  
	
(1)
	
a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary;

 

	
  
	
(2)
	
the sale of Cash Equivalents in the ordinary course of business;

 

	
  
	
(3)
	
a disposition of Hydrocarbons or mineral products in the ordinary course of the Oil and Gas Business;

 

	
  
	
(4)
	
a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business;

 

	
  
	
(5)
	
transactions permitted by Section 3.11 of this Eighth Supplement Indenture;

 

	
  
	
(6)
	
an issuance of Capital Stock by a Restricted Subsidiary to the Company or to a Wholly-Owned Subsidiary;

 

	
  
	
(7)
	
for purposes of Section 3.07 of this Eighth Supplemental Indenture only, the making of a Permitted Investment or a disposition subject to Section 3.03 of this Eighth Supplemental Indenture;

 

	
  
	
(8)
	
an Asset Swap effected in compliance with Section 3.07 of this Eighth Supplemental Indenture;

 

	
  
	
(9)
	
dispositions of assets with an aggregate fair market value since the Issue Date of less than $5 million;

 

	
  
	
(10)
	
dispositions in connection with the creation, encumbrance or existence of Permitted Liens or the exercise of any rights or remedies with respect thereto;

 

	
  
	
(11)
	
dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

 

	
  
	
(12)
	
the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business and which do not materially interfere with the business of the Company and its Restricted Subsidiaries;

 

	
  
	
(13)
	
any Production Payments and Reserve Sales, provided that any such Production Payments and Reserve Sales, other than incentive compensation programs on terms that are reasonably customary in the Oil and Gas Business for geologists, geophysicists and other providers of technical services to the Company or a Restricted Subsidiary, shall have been created,
Incurred, issued, assumed or Guaranteed in connection with the acquisition or financing of, and no later than 60 days after the acquisition of, the property that is subject thereto;

 

	
  
	
(14)
	
the sale or transfer (whether or not in the ordinary course of the Oil and Gas Business) of oil and/or gas properties or direct or indirect interests in real property; provided that, at

 

 

5

 

 

	
  
	
 
	
the time of such sale or transfer, such properties do not have associated with them any proved reserves capable of being produced in material economic quantities; and

 

	
  
	
(15)
	
the abandonment, farm-out, exchange, lease or sublease of developed or undeveloped oil and/or gas properties or interests therein in the ordinary course of business or in exchange for oil and/or gas properties or interests therein owned or held by another Person.

 

“Asset Swap” means any concurrent purchase and sale or exchange of oil and gas properties or interests therein or other assets or properties used or useful in the Oil and Gas Business, including Capital Stock of any Person who holds any such properties, interests or assets, between the Company or any of its Restricted Subsidiaries
and another Person; provided that any cash received must be applied in accordance with Section 3.07 of this Eighth Supplemental Indenture.

 

“Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded semi-annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).

 

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

 

“Bank Indebtedness” means any and all amounts, whether outstanding on the Issue Date or Incurred after the Issue Date, payable by the Company under or in respect of a Credit Facility, and any related notes, collateral documents, letters of credit and guarantees and any Interest Rate Agreement entered into in connection with the
Credit Facility, including principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company at the rate specified therein, whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof.

 

“Board of Directors” means, as to any Person, the board of directors of such Person or a duly authorized committee of such board of directors.

 

“Capital Lease” means, with respect to any Person, any lease of property (whether real, personal or mixed) by such Person or its Subsidiaries as lessee that would be capitalized on a balance sheet of such Person or its Subsidiaries prepared in conformity with GAAP, other than, in the case of such Person or its Subsidiaries, any
such lease under which such Person or any of its Subsidiaries is the lessor.

 

“Capital Lease Obligations” means, with respect to any Person, the capitalized amount of all obligations of such Person and its Subsidiaries under Capital Leases, as determined on a consolidated basis in conformity with GAAP.

 

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

 

“Cash Equivalents” means:

 

	
  
	
(1)
	
securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States (provided that the full

 

 

6

 

 

	
  
	
 
	
faith and credit of the United States is pledged in support thereof), having a maturity within one year after the date of acquisition thereof;

 

	
  
	
(2)
	
marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year after the date of acquisition thereof and, at the time of such acquisition, having a credit rating of at least “A” or the equivalent thereof from either Standard & Poor’s Ratings Services or Moody’s
Investors Service, Inc. (or an equivalent rating by another nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments);

 

	
  
	
(3)
	
certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year after the date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at the time of acquisition at least “A” or the equivalent thereof by Standard & Poor’s Ratings Services or “A” or the
equivalent thereof by Moody’s Investors Service, Inc. (or an equivalent rating by another nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments), and having combined capital and surplus in excess of $500 million;

 

	
  
	
(4)
	
repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) above entered into with any bank meeting the qualifications specified in clause (3) above;

 

	
  
	
(5)
	
commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by Standard & Poor’s Ratings Services or “P-2” or the equivalent thereof by Moody’s Investors Service, Inc. (or an equivalent rating by another nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments), and in any case maturing
within one year after the date of acquisition thereof; and

 

	
  
	
(6)
	
interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (5) above.

 

“Change of Control” means:

 

	
  
	
(1)
	
Any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that such person or group has the
right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of the Company held by a parent entity of the Company, if such person or group “beneficially owns”
(as defined above), directly or indirectly, more than 50% of the voting power of the Voting Stock of such parent entity); or

 

	
  
	
(2)
	
the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or

 

	
  
	
(3)
	
the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any “person”

 

 

7

 

 

	
  
	
 
	
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder; or

 

	
  
	
(4)
	
the adoption by the stockholders of the Company of a plan or proposal for the liquidation or dissolution of the Company.

 

“Commodity Agreements” means, in respect of any Person, any futures contract, forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement in respect of Hydrocarbons purchased, used, produced, processed or sold by such Person and designed to protect such Person against fluctuations
in Hydrocarbon prices.

 

“Common Stock” means, with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of, such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such
common stock.

 

“Consolidated Coverage Ratio” means, as of any date of determination, the ratio of (x) the aggregate amount of Consolidated EBITDA for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which consolidated financial statements of the Company are in existence to (y)
Consolidated Interest Expense for such four fiscal quarters; provided, however, that:

 

	
  
	
(1)
	
if the Company or any Restricted Subsidiary:

 

	
  
	
(a)
	
has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be deemed to be (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from
the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or

 

	
  
	
(b)
	
has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently
repaid and the related commitment terminated), Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period;

 

	
  
	
(2)
	
if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition or the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is such an Asset Disposition:

 

 

8

 

 

	
  
	
(a)
	
the Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the absolute value of the Consolidated EBITDA (if negative) directly attributable thereto for such period; and

 

	
  
	
(b)
	
Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);

 

	
  
	
(3)
	
if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary or is merged with or into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction giving rise to the need to calculate the Consolidated Coverage
Ratio, which constitutes all or substantially all of a company, division, operating unit, segment, business, group of related assets or line of business, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and

 

	
  
	
(4)
	
if since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period shall have Incurred any Indebtedness or discharged any Indebtedness, made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made
by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such Asset Disposition or Investment or acquisition of assets occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Securities Act).  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months).  If any Indebtedness that is being given pro forma
effect bears an interest rate at the option of the Company, the interest rate shall be calculated by applying such optional rate chosen by the Company.

 

“Consolidated EBITDA” for any period means, without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income:

 

	
  
	
(1)
	
Consolidated Interest Expense;

 

	
  
	
(2)
	
Consolidated Income Taxes;

 

 

9

 

 

	
  
	
(3)
	
consolidated depletion, depreciation and amortization expenses;

 

	
  
	
(4)
	
consolidated impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 “Goodwill and Other Intangibles;”

 

	
  
	
(5)
	
consolidated exploration expenses, if applicable;

 

	
  
	
(6)
	
(a) any write-off of deferred financing costs, (b) any capitalized interest and (c) the interest portion of any deferred payment obligations; and

 

	
  
	
(7)
	
other consolidated non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation);

 

less, to the extent included in calculating such Consolidated Net Income and in excess of any costs or expenses attributable thereto that were deducted in calculating such Consolidated Net Income, the sum of (x) the amount of deferred revenues that are amortized during such period and are attributable to reserves that are subject to Volumetric
Production Payments and (y) amounts recorded in accordance with GAAP as repayments of principal and interest pursuant to Dollar-Denominated Production Payments.

 

Notwithstanding the preceding sentence, the items described in clauses (2) through (6) above relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (2) through (6) above are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would not be prohibited at the date of determination to be dividended to the Company by such Restricted Subsidiary pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders, except for restrictions under any Credit Facility.

 

“Consolidated Income Taxes” means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority which taxes or other payments are (x) calculated by reference to the income or profits of such Person or such Person and its Subsidiaries
or (y) any franchise taxes or equity taxes (in each case to the extent included in computing Consolidated Net Income for such period), regardless of whether such taxes or payments are required to be remitted to any governmental authority.

 

“Consolidated Interest Expense” means, for any period, the consolidated interest expense of the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, plus, to the extent not included in such interest expense:

 

	
  
	
(1)
	
interest expense attributable to Capital Lease Obligations and the interest portion of rent expense associated with Attributable Indebtedness in respect of the relevant lease giving rise thereto, determined as if such lease were a Capital Lease in accordance with GAAP and the interest component of any deferred payment obligations;

 

	
  
	
(2)
	
amortization of debt discount and debt issuance cost (provided that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense);

 

	
  
	
(3)
	
non-cash interest expense;

 

 

10

 

 

	
  
	
(4)
	
commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

 

	
  
	
(5)
	
the interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries;

 

	
  
	
(6)
	
costs associated with Hedging Obligations (including amortization of fees); provided, however, that if Hedging Obligations result in net benefits rather than costs, such net benefits shall be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits are
otherwise reflected in Consolidated Net Income;

 

	
  
	
(7)
	
the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period;

 

	
  
	
(8)
	
the product of (a) all dividends paid or payable in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of such Person or on Preferred Stock of its Restricted Subsidiaries, which dividends are payable to a party other than the Company or a Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then
current combined federal, state, provincial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP;

 

	
  
	
(9)
	
Receivables Fees; and

 

	
  
	
(10)
	
the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust.

 

For the purpose of calculating the Consolidated Coverage Ratio in connection with the Incurrence of any Indebtedness described in the final paragraph of the definition of “Indebtedness,” the calculation of Consolidated Interest Expense shall include all interest expense (including any amounts described in clauses (1) through (10)
above) relating to any Indebtedness of the Company or any Restricted Subsidiary described in the final paragraph of the definition of “Indebtedness.”

 

For purposes of the foregoing, total interest expense will be determined (i) after giving effect to any net payments made or received by the Company and its Subsidiaries with respect to Interest Rate Agreements and (ii) exclusive of amounts classified as other comprehensive income in the balance sheet of the Company.  Notwithstanding
anything to the contrary contained herein, commissions, discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to which the Company or its Restricted Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest Expense.

 

“Consolidated Net Income” means, for any period, the net consolidated income (loss) of the Company and its consolidated Restricted Subsidiaries determined in accordance with GAAP; provided, however,
that there will not be included in such Consolidated Net Income:

 

	
  
	
(1)
	
any net income (loss) of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:

 

	
  
	
(a)
	
subject to the limitations contained in clauses (3), (4) and (5) below, the Company’s equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a

 

 

11

 

 

	
  
	
 
	
dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (2) below); and

 

	
  
	
(b)
	
the Company’s equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary;

 

	
  
	
(2)
	
any net income (but not loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:

 

	
  
	
(a)
	
subject to the limitations contained in clauses (3), (4) and (5) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of
a dividend to another Restricted Subsidiary, to the limitation contained in this clause); provided, however, that the net income of a Special Entity that does not Guarantee the Notes will not be included in such Consolidated Net Income except for the amount of cash actually distributed by such Special Entity during such period to the Company or a Restricted Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitation contained in this clause); and

 

	
  
	
(b)
	
the Company’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;

 

	
  
	
(3)
	
any after-tax gain (loss) realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person;

 

	
  
	
(4)
	
any after-tax extraordinary gain or loss;

 

	
  
	
(5)
	
the cumulative effect of a change in accounting principles;

 

	
  
	
(6)
	
any asset impairment writedowns on Oil and Gas Properties under GAAP or SEC guidelines; and

 

	
  
	
(7)
	
any unrealized non-cash gains or losses on charges in respect of Hedging Obligations (including those resulting from the application of SFAS 133).

 

“Continuing Directors” means the individuals who, as of the Issue Date, are directors of the Company and any individual becoming a director of the Company subsequent to the Issue Date whose election, nomination for election by the Company’s stockholders or appointment, was approved by a majority of the then Continuing Directors
(either by a specific vote or by approval of the proxy statement of the Company in which such individual is named as a nominee for election as a director, without objection to such nomination).

 

 

12

 

 

“Control” of a Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “Controlling” and “Controlled” have meanings correlative of the foregoing.

 

“Credit Facility” means, with respect to the Company or any Subsidiary Guarantor, one or more credit facilities (including, without limitation, the Senior Secured Credit Agreement) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including
through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (including successive amendments, restatements, modifications, renewals, refunds, replacements or refinancings and whether or not with the original administrative agent and lenders or another administrative agent or agents or
other lenders and whether provided under the original Senior Secured Credit Agreement or any other credit or other agreement or indenture).

 

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

 

“Default” means any event which, with notice or passage of time or both, would constitute an Event of Default.

 

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

 

	
  
	
(1)
	
matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

 

	
  
	
(2)
	
is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary); or

 

	
  
	
(3)
	
is redeemable at the option of the holder of the Capital Stock in whole or in part,

 

in each case on or prior to the date that is 91 days after the earlier of the date (a) of the Stated Maturity of the Notes or (b) the first date after the Issue Date on which there are no Notes outstanding, provided that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of
a change of control or asset disposition (each defined in a substantially identical manner to the corresponding definitions in the Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision
prior to compliance by the Company with Section 3.15 and Section 3.07 of this Eighth Supplemental Indenture and such repurchase or redemption complies with Section 3.03 of this Eighth Supplement Indenture.

 

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

 

“Domestic Subsidiary” means any Restricted Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.

 

“Events of Default” has the meaning set forth in Article IV.

 

 

13

 

 

“Foreign Subsidiary” means any Restricted Subsidiary that is not organized under the laws of the United States of America or any state thereof or the District of Columbia and any Subsidiary of such Restricted Subsidiary.

 

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of March 16, 2006, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession.  All ratios and computations based on GAAP contained in the Indenture will be computed in conformity with GAAP.

 

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

 

	
  
	
(1)
	
to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or

 

	
  
	
(2)
	
entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

 

provided, however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has
a corresponding meaning.

 

“Guarantor Senior Indebtedness” means, with respect to a Subsidiary Guarantor, the following obligations, whether outstanding on the Issue Date or thereafter issued, without duplication:

 

	
  
	
(1)
	
any Guarantee of the Bank Indebtedness or the Notes by such Subsidiary Guarantor and all other Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the Company or Guarantor Senior Indebtedness of any other Subsidiary Guarantor; and

 

	
  
	
(2)
	
all obligations consisting of principal of and premium, if any, accrued and unpaid interest on, and fees and other amounts relating to, all other Indebtedness of the Subsidiary Guarantor.  Guarantor Senior Indebtedness includes interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Subsidiary Guarantor regardless of whether post-filing interest is allowed
in such proceeding.

 

Notwithstanding anything to the contrary in the preceding paragraph, Guarantor Senior Indebtedness will not include:

 

	
  
	
(1)
	
any Indebtedness Incurred in violation of the Indenture;

 

	
  
	
(2)
	
any obligations of such Subsidiary Guarantor to the Company or another Subsidiary;

 

	
  
	
(3)
	
any liability for federal, state, local, foreign or other taxes owed or owing by such Subsidiary Guarantor;

 

	
  
	
(4)
	
any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities);

 

	
  
	
(5)
	
any Indebtedness, Guarantee or obligation of such Subsidiary Guarantor that is expressly subordinate or junior in right of payment to any other Indebtedness, Guarantee or

 

 

14

 

 

	
  
	
 
	
obligation of such Subsidiary Guarantor, including, without limitation, any Guarantor Subordinated Obligations of such Subsidiary Guarantor; or

 

	
  
	
(6)
	
any Capital Stock.

 

“Guarantor Subordinated Obligation” means, with respect to a Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate in right of payment to the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee pursuant
to a written agreement.

 

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement or Commodity Agreement.

 

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

 

“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, and all products, by-products and all other substances refined, separated, settled or derived therefrom or the processing thereof, and all other minerals and substances, including,
but not limited to, liquefied petroleum gas, natural gas, kerosene, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium, and any and all other minerals, ores, or substances of value, and the products and proceeds therefrom, including, without limitation, all gas resulting from the in-situ combustion of coal or lignite.

 

“Incur” means issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a
Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.

 

“Indebtedness” means, as applied to any Person, without duplication:

 

	
  
	
(1)
	
all obligations of such Person for borrowed money;

 

	
  
	
(2)
	
all obligations of such Person for the deferred purchase price of property or services (other than property and services purchased, and expense accruals and deferred compensation items arising, in the ordinary course of business);

 

	
  
	
(3)
	
all obligations of such Person evidenced by notes, bonds, debentures, mandatorily redeemable preferred stock or other similar instruments (other than performance, surety and appeals bonds arising in the ordinary course of business);

 

	
  
	
(4)
	
all payment obligations created or arising under any conditional sale, deferred price or other title retention agreement with respect to property acquired by such Person (unless the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property);

 

	
  
	
(5)
	
any Capital Lease Obligation of such Person, other than obligations under oil and gas leases entered into in the ordinary course of business;

 

	
  
	
(6)
	
all reimbursement, payment or similar obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities (other than letters of credit in support of trade obligations or incurred in connection with public liability insurance, workers’ compensation, unemployment insurance, old-age pensions and other social security benefits other than in respect of employee benefit plans
subject to the Employee Retirement Income Security Act of 1974, as amended);

 

 

15

 

 

	
  
	
(7)
	
all obligations of such Person, contingent or otherwise, under any guarantee by such Person of the obligations of another Person of the type referred to in clauses (1) through (6) above;

 

	
  
	
(8)
	
the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary that is not a Subsidiary Guarantor, any Preferred Stock (but excluding, in each case, any accrued dividends);

 

	
  
	
(9)
	
to the extent not otherwise included in this definition, net obligations of such Person under Commodity Agreements, Currency Agreements and Interest Rate Agreements (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time); and

 

	
  
	
(10)
	
all obligations referred to in clauses (1) through (6) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage or security interest in property (including without limitation accounts, contract rights and general intangibles) owned by such Person and as to which such Person has not assumed or become liable for the payment of such obligations
other than to the extent of the property subject to such mortgage or security interest;

 

except that Indebtedness of the type referred to in clauses (7) and (10) above will be included within the definition of “Indebtedness” only to the extent of the least of (a) the amount of the underlying Indebtedness referred to in the applicable clause (1) through (6) above, (b) in the case of clause (7), the limit on recoveries,
if any, from such Person under obligations of the type referred to in clause (7) above and (c) in the case of clause (10), the aggregate value (as determined in good faith by the board of directors or similar governing body of such Person) of the property of such Person subject to such mortgage or security interest.

 

In addition, “Indebtedness” of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if:

 

	
  
	
(1)
	
such Indebtedness is the obligation of a partnership or joint venture that is not a Restricted Subsidiary (a “Joint Venture”);

 

	
  
	
(2)
	
such Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a “General Partner”); and

 

	
  
	
(3)
	
there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary of such Person;

 

in which case, such Indebtedness shall be included in an amount not to exceed:

 

	
  
	
(a)
	
the lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or

 

	
  
	
(b)
	
if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount.

 

 

16

 

 

“Interest Payment Date” means February 15 and August 15 of each year, commencing February 15, 2010.

 

“Interest Rate Agreement” means with respect to any Person any interest rate protection agreement, interest rate futures contract, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as
to which such Person is party or a beneficiary.

 

“Investment” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of  any direct or indirect advance, loan (other than advances or extensions of credit to employees, directors or customers in the ordinary course of business) or other extensions of credit
(including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property or any payment for property or services), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that
none of the following will be deemed to be an Investment:

 

	
  
	
(1)
	
Hedging Obligations Incurred in the ordinary course of business and in compliance with the Indenture;

 

	
  
	
(2)
	
endorsements of negotiable instruments and documents in the ordinary course of business; and

 

	
  
	
(3)
	
an acquisition of assets, Capital Stock or other securities by the Company or a Subsidiary for consideration to the extent such consideration consists of Common Stock of the Company.

 

For purposes of Section 3.03 of this Eighth Supplemental Indenture,

 

	
  
	
(1)
	
“Investment” will include the portion (proportionate to the Company’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets (as conclusively determined by the Board of Directors
of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary; and

 

	
  
	
(2)
	
any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

 

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s Investors Service, Inc. and BBB- (or the equivalent) by Standard & Poor’s Ratings Services (or an equivalent rating by another nationally recognized rating agency if both of the two named rating agencies cease publishing
ratings of investments), in each case, with a stable or better outlook.

 

“Issue Date” means August 14, 2009.

 

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

 

 

17

 

 

“Minority Interest” means the percentage interest represented by any shares of stock of any class of Capital Stock of a Restricted Subsidiary that are not owned by the Company or a Restricted Subsidiary.

 

“Net Available Cash” from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when
received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of:

 

	
  
	
(1)
	
all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition;

 

	
  
	
(2)
	
all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition or by applicable law, be repaid out of the proceeds from such Asset Disposition;

 

	
  
	
(3)
	
all distributions and other payments required to be made to Minority Interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and

 

	
  
	
(4)
	
amounts accrued in accordance with GAAP in respect of liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition or liabilities incurred in connection with such Asset Disposition.

 

“Net Cash Proceeds” means, with respect to any issuance or sale of Capital Stock, the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually
Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).

 

“Net Working Capital” means (a) all current assets of the Company and its Restricted Subsidiaries except current assets under Commodity Agreements less (b) all current liabilities of the Company and its Restricted Subsidiaries, except current liabilities included in Indebtedness and any current liabilities under Commodity Agreements,
in each case as set forth in the consolidated financial statements of the Company prepared in accordance with GAAP.

 

“Non-Recourse Debt” means Indebtedness of a Person:

 

	
  
	
(1)
	
as to which neither the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise);

 

	
  
	
(2)
	
no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity;
and

 

 

18

 

 

	
  
	
(3)
	
the explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries.

 

“Oil and Gas Business” means (a) the business of acquiring, exploring, exploiting, developing, producing, operating and disposing of interests in oil, gas, liquid natural gas and other hydrocarbon properties, (b) the business of gathering, marketing, treating, processing, storing, refining, selling and transporting any production
from such interests or properties and products produced therefrom or in association therewith and (c) any business or activity relating to, arising from or necessary, appropriate or incidental to the activities described in the foregoing clauses (a) and (b) of this definition.

 

“Oil and Gas Properties” means all properties, including equity or other ownership interests therein, owned by such Person which contain or are believed to contain “proved oil and gas reserves” as defined in Rule 4-10 of Regulation S-X of the Securities Act.

 

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee.  The counsel may be an employee of or counsel to the Company or the Trustee.

 

“Permitted Business Investment” means any Investment made in the ordinary course of the business of the Company or any Restricted Subsidiary or that is of a kind or character that is customarily made in the conduct of the Oil and Gas Business, including investments or expenditures for actively exploiting, exploring for, acquiring,
developing, producing, processing, refining, gathering, marketing or transporting Hydrocarbons through agreements, transactions, interests or arrangements which permit one to share risks or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of the Oil and Gas Business jointly with third parties, including:

 

	
  
	
(1)
	
ownership interests in oil and gas properties, liquid natural gas facilities, refineries, drilling operations, processing facilities, gathering systems, pipelines or ancillary real property interests; and

 

	
  
	
(2)
	
Investments in the form of or pursuant to oil and gas leases, operating agreements, gathering agreements, processing agreements, farm-in agreements, farm-out agreements, development agreements, area of mutual interest agreements, unitization or pooling designations, declarations, orders and agreements, gas balancing or deferred production agreements, joint bidding agreements, service contracts, joint venture agreements,
partnership agreements (whether general or limited), subscription agreements, stock purchase agreements and other similar agreements (including for limited liability companies) with third parties.

 

“Permitted Holders” means the following:

 

	
  
	
(1)
	
the Company or any Subsidiary of the Company;

 

	
  
	
(2)
	
a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary of the Company; and

 

	
  
	
(3)
	
Mercury Exploration Company, Quicksilver Energy, L.P., The Discovery Fund, Pennsylvania Avenue Limited Partnership, Pennsylvania Management Company, the estate of Frank Darden, Lucy Darden, Anne Darden Self, Glenn Darden or Thomas Darden, and their respective successors, assigns, designees, heirs, beneficiaries, trusts, estates or Controlled affiliates.

 

“Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in:

 

 

19

 

 

	
  
	
(1)
	
a Restricted Subsidiary (other than a Special Entity that does not Guarantee the Notes) or a Person which will, upon the making of such Investment, become a Restricted Subsidiary (other than a Special Entity that does not Guarantee the Notes); provided, however, that the primary business
of such Restricted Subsidiary is the Oil and Gas Business;

 

	
  
	
(2)
	
another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person’s primary business is the Oil and Gas
Business;

 

	
  
	
(3)
	
cash and Cash Equivalents;

 

	
  
	
(4)
	
receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of the Oil and Gas Business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as
the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

 

	
  
	
(5)
	
payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

 

	
  
	
(6)
	
loans or advances to employees and directors made in the ordinary course of business of the Company or such Restricted Subsidiary;

 

	
  
	
(7)
	
Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

 

	
  
	
(8)
	
Investments made as a result of the receipt of non-cash consideration from an Asset Disposition that was made pursuant to and in compliance with Section 3.07 of this Eighth Supplemental Indenture;

 

	
  
	
(9)
	
Investments in existence on the Issue Date or made pursuant to agreements or commitments in effect on the Issue Date;

 

	
  
	
(10)
	
Commodity Agreements, Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Section 3.02 of this Eighth Supplemental Indenture;

 

	
  
	
(11)
	
Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount not to exceed $10 million outstanding at any one time (with the fair market value of such Investment being measured at the time made and without giving effect to subsequent changes in value);

 

	
  
	
(12)
	
Guarantees made in accordance with Section 3.02 of this Eighth Supplemental Indenture;

 

	
  
	
(13)
	
Investments in a Special Entity that does not Guarantee the Notes in an aggregate amount not to exceed 10% of Adjusted Consolidated Net Tangible Assets (with Adjusted Consolidated Net Tangible Assets and the fair market value of such Investment being measured at the time such Investment is made and without giving effect to subsequent changes in value);

 

 

20

 

 

	
  
	
(14)
	
Permitted Business Investments in an aggregate amount not to exceed 5% of Adjusted Consolidated Net Tangible Assets (with Adjusted Consolidated Net Tangible Assets and the fair market value of such Investment being measured at the time such Investment is made and without giving effect to subsequent changes in value); and

 

	
  
	
(15)
	
any Asset Swap made in accordance with Section 3.07 of this Eighth Supplemental Indenture.

 

In order to be a Permitted Investment, an Investment need not be permitted solely by one subsection of this definition but may be permitted in part by one such subsection and in part by one or more other subsections of this definition.  In the event an Investment meets the criteria of one or more of the subsections of this definition,
the Company, in its sole discretion, may classify (or subsequently reclassify) all or any portion of such Investment as being permitted by any one or more of such subsections.

 

“Permitted Liens” means, with respect to any Person:

 

	
  
	
(1)
	
Liens securing Indebtedness and related obligations of the Company or any Restricted Subsidiary Incurred pursuant to a Credit Facility outstanding on June 27, 2008 or permitted to be Incurred under the Indenture under clause (1) of the second paragraph of Section 3.02 of this Eighth Supplemental Indenture;

 

	
  
	
(2)
	
pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or earnest money, good faith or similar deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public, regulatory or statutory obligations of such Person or deposits of cash or Cash Equivalents
to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

 

	
  
	
(3)
	
Liens imposed by law, including carriers’, warehousemen’s, suppliers’, materialmen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if appropriate reserves or other provisions required by GAAP, if any, shall have been made in respect thereof;

 

	
  
	
(4)
	
Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings if appropriate reserves or other provisions required by GAAP shall have been made in respect thereof;

 

	
  
	
(5)
	
Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness;

 

	
  
	
(6)
	
encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, servitudes, permits, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or surface leases and other similar rights in respect of surface operations or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances)
as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

 

	
  
	
(7)
	
Liens securing Hedging Obligations;

 

 

21

 

 

	
  
	
(8)
	
leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

 

	
  
	
(9)
	
judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

 

	
  
	
(10)
	
Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capital Lease Obligations, purchase money obligations or other payments Incurred to finance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business; provided that:

 

	
  
	
(a)
	
the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under the Indenture and does not exceed the cost of the assets or property so acquired or constructed; and

 

	
  
	
(b)
	
such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

 

	
  
	
(11)
	
Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that:

 

	
  
	
(a)
	
such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board; and

 

	
  
	
(b)
	
such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;

 

	
  
	
(12)
	
Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

 

	
  
	
(13)
	
Liens existing on the Issue Date;

 

	
  
	
(14)
	
Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however,
that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary;

 

	
  
	
(15)
	
Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection
with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary;

 

	
  
	
(16)
	
Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or a Wholly-Owned Subsidiary;

 

 

22

 

 

	
  
	
(17)
	
Liens securing the Notes and Subsidiary Guarantees;

 

	
  
	
(18)
	
Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original
Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder;

 

	
  
	
(19)
	
any interest or title of a lessor under any Capital Lease Obligation or operating lease;

 

	
  
	
(20)
	
Liens in respect of Production Payments and Reserve Sales, which Liens shall be limited to the oil and gas property or other interest that is subject to such Production Payments and Reserve Sales;

 

	
  
	
(21)
	
Liens arising under oil and gas leases, farm-out agreements, farm-in agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering or processing of Hydrocarbons, partnership agreements, joint venture agreements, unitizations and pooling designations, declarations, orders and agreements, development agreements, operating agreements, production sales contracts, area of mutual interest
agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or geophysical permits or agreements, and other agreements which are customary in the Oil and Gas Business; provided, however, in all instances, that such Liens are limited to the assets that are subject to the relevant agreement,
program, order or contract;

 

	
  
	
(22)
	
Liens on pipelines or pipeline facilities that arise by operation of law; and

 

	
  
	
(23)
	
Liens securing Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations) in an aggregate principal amount outstanding at any one time not to exceed $10 million.

 

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

 

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

 

“Production Payments and Reserve Sales” means the grant or transfer by the Company or a Restricted Subsidiary to any Person of a royalty, overriding royalty, net profits interest, production payment (whether volumetric or dollar denominated), partnership or other interest in oil and gas properties or the right to receive all or
a portion of the production or the proceeds from the sale of production attributable to such properties, under which the grantee or transferee thereof has recourse solely to such production or proceeds of production, subject to the obligation of the grantor or transferor to operate and maintain, or cause to be operated and maintained, the related oil and gas properties or other related interests in a reasonably prudent manner or other customary standard or subject to the obligation of the grantor or transferor
to indemnify for environmental, title or other matters customary in the Oil and Gas Business, including any such grants or transfers pursuant to incentive compensation programs on terms that are reasonably customary in the Oil and Gas Business for geologists, geophysicists or other providers of technical services to the Company or a Restricted Subsidiary.

 

 

23

 

 

“Rating Agency” means Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. or if Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. or both shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies,
as the case may be, selected by the Company (as certified by a resolution of the Board of Directors or a committee thereof) which shall be substituted for Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc. or both, as the case may be.

 

“Receivables” means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and
shall include, in any event, any items of property that would be classified as an “account,” “chattel paper,” “payment intangible” or “instrument” under the Uniform Commercial Code as in effect in the State of New York and any “supporting obligations” as so defined.

 

“Receivables Fees” means any fees or interest paid to purchasers or lenders providing the financing in connection with a factoring agreement or other similar agreement, including any such amounts paid by discounting the face amount of Receivables or participations therein transferred in connection with a factoring agreement or
other similar arrangement, regardless of whether any such transaction is structured as on-balance sheet or off-balance sheet or through a Restricted Subsidiary or an Unrestricted Subsidiary.

 

“Refinancing Indebtedness” means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, “refinance,” “refinances,” and “refinanced” shall have a correlative meaning) any Indebtedness
existing on the Issue Date or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that:

 

	
  
	
(1)
	
(a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity at least 91 days
later than the Stated Maturity of the Notes;

 

	
  
	
(2)
	
the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced;

 

	
  
	
(3)
	
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest
or premiums required by the instruments governing such existing Indebtedness and fees and expenses Incurred in connection therewith); and

 

	
  
	
(4)
	
if the Indebtedness being refinanced is subordinated in right of payment to the Notes or the Subsidiary Guarantees, such Refinancing Indebtedness is subordinated in right of payment to the Notes or the Subsidiary Guarantees on terms at least as favorable to the holders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

 

“Regular Record Date” means, with respect to each Interest Payment Date, the close of business on the immediately preceding February 1 or August 1, as the case may be.

 

 

24

 

 

“Restricted Investment” means any Investment other than a Permitted Investment.

 

“Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

 

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.

 

“Senior Indebtedness” means the Notes and, whether outstanding on the Issue Date or thereafter issued, created, Incurred or assumed, the 2015 Senior Notes, the 2016 Senior Notes, the Bank Indebtedness and all amounts payable by the Company under or in respect of all other Indebtedness of the Company, including premiums and accrued
and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company at the rate specified in the documentation with respect thereto whether or not a claim for post-filing interest is allowed in such proceeding) and fees relating thereto; provided, however, that Senior Indebtedness will not include:

 

	
  
	
(1)
	
any Indebtedness Incurred in violation of the Indenture;

 

	
  
	
(2)
	
any obligation of the Company to any Subsidiary;

 

	
  
	
(3)
	
any liability for federal, state, foreign, local or other taxes owed or owing by the Company;

 

	
  
	
(4)
	
any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities);

 

	
  
	
(5)
	
any Indebtedness, Guarantee or obligation of the Company that is expressly subordinate or junior in right of payment to any other Indebtedness, Guarantee or obligation of the Company, including, without limitation, any Subordinated Obligations; or

 

	
  
	
(6)
	
any Capital Stock.

 

“Senior Secured Credit Agreement” means (1) the Amended and Restated Credit Agreement, dated as of February 9, 2007, among the Company, JPMorgan Chase Bank, N.A., as global administrative agent, and the other agents and financial institutions from time to time party thereto, as amended; (2) the Amended and Restated Credit Agreement,
dated as of February 9, 2007, among Quicksilver Resources Canada Inc., JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent, JPMorgan Chase Bank, N.A., as global administrative agent, and the financial institutions from time to time party thereto, as amended; and (3) each such agreement as the same may be amended, supplemented or otherwise modified from time to time.

 

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

 

“Special Entity” means any Restricted Subsidiary that is not a Wholly-Owned Subsidiary that (i) is classified as a pass-through entity for U.S. federal, state, local and foreign income tax purposes and (ii) has no Indebtedness.

 

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal
prior to the date originally scheduled for the payment thereof.

 

 

25

 

 

“Subordinated Obligation” means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes pursuant to a written agreement.

 

“Subsidiary” of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of
such Person, or (3) one or more Subsidiaries of such Person.  Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

 

“Subsidiary Guarantee” means, individually, any Guarantee of payment of the Notes by a Subsidiary Guarantor pursuant to the terms of the Indenture and any supplemental indenture thereto, and, collectively, all such Guarantees.  Each such Subsidiary Guarantee will be in the form prescribed by the Indenture.

 

“Subsidiary Guarantor” means (i) each of Cowtown Pipeline Funding, Inc., Cowtown Pipeline Management, Inc., Cowtown Pipeline L.P. and Cowtown Gas Processing L.P. and (ii) any Restricted Subsidiary (other than a Foreign Subsidiary and, except to the extent it Guarantees the Notes, a Special Entity) created or acquired by the Company
or one or more of its Restricted Subsidiaries after the Issue Date.

 

“Treasury Rate” means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days prior to the Redemption Date (or, if such
Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the Redemption Date to August 15, 2014; provided, however, that if the period from the Redemption Date to August 15, 2014 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 August 15, 2014 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

 

“Unrestricted Subsidiary” means

 

	
  
	
(1)
	
each of Quicksilver Gas Services Holdings LLC, Quicksilver Gas Services Operating GP LLC, Quicksilver Gas Services GP LLC, Quicksilver Gas Services LP, Quicksilver Gas Services Operating LLC, Cowtown Gas Processing Partners L.P. and Cowtown Pipeline Partners L.P.;

 

	
  
	
(2)
	
any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

 

	
  
	
(3)
	
any Subsidiary of an Unrestricted Subsidiary.

 

The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly-acquired or newly-formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if:

 

 

26

 

 

	
  
	
(1)
	
such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;

 

	
  
	
(2)
	
all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation and at all times thereafter, consist of Non-Recourse Debt;

 

	
  
	
(3)
	
such designation and the Investment of the Company in such Subsidiary complies with Section 3.03 of this Eighth Supplemental Indenture;

 

	
  
	
(4)
	
such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Company and its Subsidiaries;

 

	
  
	
(5)
	
such Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation:

 

	
  
	
(a)
	
to subscribe for additional Capital Stock of such Person; or

 

	
  
	
(b)
	
to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

 

	
  
	
(6)
	
on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms materially less favorable to the Company than those that might have been reasonably obtained from Persons that are not Affiliates of the Company.

 

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complies with the foregoing conditions.  If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture, and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.

 

The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence
thereof and the Company could Incur at least $1.00 of additional Indebtedness under the first paragraph of Section 3.02 of this Eighth Supplemental Indenture on a pro forma basis taking into account such designation.

 

“U.S. Government Obligations” means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment
of which is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of
the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.

 

 

27

 

 

“Volumetric Production Payments” means production payment obligations recorded as deferred revenue in accordance with GAAP, together with all undertakings and obligations in connection therewith.

 

“Voting Stock” of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors.

 

“Wholly-Owned Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of which (other than directors’ qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.

 

Section 1.03   Payment of Principal and Interest.  The principal of the Notes shall be due at Stated Maturity (unless earlier redeemed).  The unpaid principal
amount of the Notes shall bear interest at the rate of 9.125% per year until paid or duly provided for, such interest to accrue from August 14, 2009 or from the most recent Interest Payment Date to which interest has been paid or duly provided for.  Interest shall be paid semi-annually in arrears on each Interest Payment Date, commencing February 15, 2010, to the Person or Persons in whose name a Note is registered at the close of business on the Regular Record Date for such Interest Payment Date, provided that
interest payable at the Stated Maturity or on a Redemption Date as provided herein will be paid to the Person to whom principal is payable.  Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Regular Record Date and may either be paid to the Person in whose name the Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders not less than 10 calendar days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Original Indenture.

 

Payments of interest on the Notes will include interest accrued to but excluding the respective Interest Payment Dates.  Interest payments for the Notes shall be computed and paid on the basis of a 360-day year consisting of twelve 30-day months.  In the event that any date on which interest is payable on the Notes is
not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable.

 

Subject, in the case of any Global Security, to any applicable requirements of the Depositary, payment of the principal, premium, if any, and interest due at the Stated Maturity of, or on a Redemption Date for, the Notes shall be made upon surrender of the Notes at the Corporate Trust Office of the Paying Agent.  The principal of
and interest on the Notes shall be paid in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of interest (including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to
such account at a banking institution in the United States as may be designated in writing to the Trustee at least 15 days prior to the date for payment by the Person entitled thereto.

 

Section 1.04   Denominations.  The Notes may be issued in denominations of $2,000, or integral multiples of $1,000 in excess thereof.

 

Section 1.05   Global Securities.  The Notes will be initially issued in the form of one or more Global Securities registered in the name of the Depositary (which
initially shall be The Depository Trust Company) or its nominee.  Except under the limited circumstances described below, Notes represented by such Global Securities will not be exchangeable for, and will not otherwise be issuable as, Notes in definitive form.  The Global Securities described above may not be transferred except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary
or its nominee.

 

 

28

 

 

Owners of beneficial interests in such Global Securities will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing a Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor
Depositary or its nominee.  The rights of holders of beneficial interests in such Global Securities shall be exercised only through the Depositary.

 

A Global Security shall be exchangeable for Notes registered in the names of Persons other than the Depositary or its nominee only as provided by Section 2.05 of the Original Indenture.  Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Notes registered in such names as the Depositary
shall direct.

 

Section 1.06   Transfer.  No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection therewith.

 

Section 1.07   Defeasance and Covenant Defeasance.  The provisions of Article V of the Original Indenture are hereby replaced in their entirety by this Section 1.07
with respect to the Notes.

 

(a)   Company’s and Subsidiary Guarantors’ Option to Effect Defeasance or Covenant Defeasance.  The Company and the Subsidiary Guarantors may elect, at
their option by Board Resolution at any time, to have either Section 1.07(b) or Section 1.07(c) applied to the Outstanding Notes, upon compliance with the conditions set forth below in this Section 1.07.

 

(b)   Defeasance and Discharge.  Upon the Company’s and the Subsidiary Guarantors’ exercise of the option provided in Section 1.07(a) to have this Section
1.07(b) applied to the Outstanding Notes, the Company and the Subsidiary Guarantors will be deemed to have been discharged from their obligations with respect to the Outstanding Notes as provided in this Section 1.07(b) on and after the date the conditions set forth in Section 1.07(d) are satisfied (hereinafter called “Defeasance”).  For this purpose, such Defeasance means that the Company and the Subsidiary Guarantors will be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Notes and to have satisfied all their other obligations under the Notes and this Eighth Supplemental Indenture (and the Trustee, at the expense of the Company, will execute proper instruments acknowledging the same), subject to the following which will survive until otherwise terminated or discharged hereunder: (i) the rights of Holders to receive, solely from the trust fund described in Section 1.07(d) and as more fully set forth in Section 1.07(d), payments in respect of the principal of
and any premium and interest on the Notes when payments are due, (ii) the Company’s obligations with respect to the Notes under Sections 2.05, 2.06, 2.07, 6.02, 6.03 and 10.06 of the Original Indenture, (iii) the rights, powers, trusts, duties, and immunities of the Trustee under the Original Indenture and this Eighth Supplemental Indenture and (iv) this Section 1.07.  Subject to compliance with this Section 1.07, the Company and the Subsidiary Guarantors may exercise their option provided in
Section 1.07(a) to have this Section 1.07(b) applied to the Outstanding Notes notwithstanding the prior exercise of its option provided in Section 1.07(a) to have Section 1.07(c) applied to the Outstanding Notes.

 

(c)   Covenant Defeasance.  Upon the Company’s and Subsidiary Guarantors’ exercise of the option provided in Section 1.07(a) to have this Section 1.07(c)
applied to the Outstanding Notes, (a) the Company will be released from its obligations under Article III of this Eighth Supplemental Indenture and Section 6.04 of the Original Indenture, and the Subsidiary Guarantors will be released from their Guarantees and (b) the occurrence of any event specified in clauses (3), (4), (6), (7), (8) (with respect to Significant Subsidiaries only), (9) or (10) of Article IV of this Eighth Supplemental Indenture will be deemed not to be or result in an Event of Default, in each
case with respect to the Outstanding Notes as provided in this Section 1.07(c) on and after the date the conditions set forth in Section 1.07(d) are satisfied (hereinafter called “Covenant Defeasance”).  For this purpose, such Covenant Defeasance means that the Company and Subsidiary Guarantors may omit to comply with and will have no liability in respect of any term, condition, or limitation set forth in any such specified Section, whether directly or indirectly by reason of any reference
elsewhere herein or in the Original Indenture to any such Section or provision or by reason of any reference in any such Section or provision to any other provision herein, in the Original

 

 

29

 

 

Indenture or in any other document, but the remainder of the Original Indenture, this Eighth Supplemental Indenture and the Notes will be unaffected thereby.

 

(d)   Conditions to Defeasance or Covenant Defeasance.  The following will be the conditions to application of either Section 1.07(b) or Section 1.07(c) to the Outstanding
Notes:

 

(i) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee that satisfies the requirements contemplated by Section 9.08 of the Original Indenture and agrees to comply with the provisions of this Section 1.07 applicable to it) as trust funds
in trust for the benefit of the Holders of Outstanding Notes (A) money in an amount, or (B) U.S. Government Obligations that through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, without reinvestment, not later than one day before the due date of any payment, money in an amount or (C) a combination thereof, in each case sufficient to pay and discharge, and which will be applied by the Trustee (or any such other qualifying trustee) to pay and discharge,
the principal of and any premium and interest on the Notes at the Stated Maturity or on any earlier date or dates on which the Notes shall be subject to redemption and the Company shall have given the Trustee irrevocable instructions satisfactory to the Trustee to give notice to the Holders of the redemption of the Notes, all in accordance with the terms of the Original Indenture, this Eighth Supplemental Indenture and the Notes.

 

(ii) In the case of an election under Section 1.07(b), the Company shall have delivered to the Trustee an Opinion of Counsel (from a counsel who shall not be an employee of the Company) to the effect that (i) the Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date of the Original Indenture there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon, such opinion shall confirm that, the Holders of the Outstanding Notes will not recognize gain or loss for federal income tax purposes as a result of the deposit, Defeasance, and discharge to be effected with respect to the Notes and will be subject to federal income tax on the same amount, in the same manner, and at the same times
as would be the case if such deposit, Defeasance, and discharge were not to occur.

 

(iii) In the case of an election under Section 1.07(c), the Company shall have delivered to the Trustee an Opinion of Counsel (from a counsel who shall not be an employee of the Company) to the effect that the Holders of the Outstanding Notes will not recognize gain or loss for federal income
tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to the Notes and will be subject to federal income tax on the same amount, in the same manner, and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur.

 

(iv) The Company shall have delivered to the Trustee an Officer’s Certificate to the effect that the Notes, if then listed on any securities exchange, will not be delisted solely as a result of such deposit.

 

(v) No Event of Default or event that (after notice or lapse of time or both) would become an Event of Default shall have occurred and be continuing at the time of such deposit or, with regard to any Event of Default or any such event specified in Sections 8.01(a)(vi) and (vii) of the Original
Indenture, at any time on or prior to the 90th calendar day after the date of such deposit (it being understood that this condition will not be deemed satisfied until after such 90th calendar day).

 

(vi) Such Defeasance or Covenant Defeasance will not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all Notes are in default within the meaning of such Act).

 

(vii) Such Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company or any Subsidiary Guarantor is a party or by which it is bound.

 

 

30

 

 

(viii) The Company shall have delivered to the Trustee a certificate from a nationally recognized firm of independent accountants or other Person acceptable to the Trustee expressing its opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S.
Government Obligations plus any deposited money without investment will provide the cash at such times and in such amounts as will be sufficient to pay the principal of and any premium and interest when due on the Notes at the Stated Maturity or on any earlier date or dates on which the Notes shall be subject to redemption.

 

(ix) The Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with.

 

(x) Such Defeasance or Covenant Defeasance will not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940, as amended, unless such trust will be qualified under such Act or will be exempt from regulation thereunder.

 

(e)   Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions.

 

(i) Subject to the provisions of Section 6.03(e) of the Original Indenture, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee (solely for purposes of this Section 1.07(e) and Section 1.07(f), the Trustee and any
such other trustee are referred to collectively as the Trustee) pursuant to Section 1.07(d) in respect of the Notes will be held in trust and applied by the Trustee, in accordance with the provisions of the Notes, the Original Indenture and this Eighth Supplemental Indenture, to the payment, either directly or through any such Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders, of all sums due and to become due thereon in respect of principal and any
premium and interest, but money so held in trust need not be segregated from other funds except to the extent required by law.

 

(ii) The Company will pay and indemnify the Trustee against any tax, fee, or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 1.07(d) or the principal and interest received in respect thereof other than any such tax, fee, or other charge
that by law is for the account of the Holders of Outstanding Notes.

 

(iii) Notwithstanding anything in this Section 1.07 to the contrary, the Trustee will deliver or pay to the Company from time to time upon a Company Request any money or U.S. Government Obligations held by it as provided in Section 1.07(d) with respect to Notes that are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent Defeasance or Covenant Defeasance with respect to the Notes.

 

(f)   Reinstatement.   If the Trustee or the Paying Agent is unable to apply any money in accordance with this Section 1.07 with respect to the Notes by reason
of any order or judgment of any court or governmental authority enjoining, restraining, or otherwise prohibiting such application, then the Company’s and the Subsidiary Guarantors’ obligations under the Original Indenture, this Eighth Supplemental Indenture and the Notes will be revived and reinstated as though no deposit had occurred pursuant to this Section 1.07 with respect to Notes until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section
1.07(e) with respect to Notes in accordance with this Section 1.07; provided, however, that if the Company or any Subsidiary Guarantor makes any payment of principal of or any premium or interest on any Note following the reinstatement of its obligations, the Company and the Subsidiary Guarantors will be subrogated to the rights of the Holders to receive such payment from the money
so held in trust.

 

Section 1.08   Redemption at the Option of the Company.

 

 

31

 

 

(a)   Except as described in this Section 1.08, the Notes are not redeemable until August 15, 2014.  On and after August 15, 2014, the Company may redeem all or, from time to time, a part of the Notes upon not less than 30 nor more
than 60 days’ notice, at the following Redemption Prices (expressed as a percentage of principal amount) plus accrued and unpaid interest on the Notes, if any, to the applicable Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period beginning on August 15 of the years indicated below:

 

	
Year
	
Percentage

	
2014
	
104.563%

	
2015
	
103.042%

	
2016
	
101.521%

	
2017 and thereafter
	
100.000%

(b)   Prior to August 15, 2012, the Company may on any one or more occasions redeem up to 35% of the original principal amount of the Notes (which includes Additional Notes (as defined below), if any) with the Net Cash Proceeds of one or
more equity offerings at a Redemption Price of 109.125% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date); provided that:

 

(i)           at least 65% of such aggregate principal amount of the Notes (which includes Additional Notes, if any) remains outstanding after each such redemption; and

 

(ii)           each such redemption occurs within 90 days after the closing of such equity offering.

 

(c)   In addition, at any time prior to August 15, 2014, the Company may redeem the Notes, in whole but not in part, at a Redemption Price equal to 100% of the principal amount thereof plus the Applicable Premium plus accrued and unpaid interest,
if any, to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date).

 

(d)   If the optional Redemption Date is on or after a Regular Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the
close of business on the Regular Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption.

 

(e)   In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee:

 

(i)           in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed; or

 

(ii)           if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion may deem to be fair and appropriate.

 

No Note of $2,000 in aggregate principal amount or less will be redeemed in part.  If any Note is to be redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof will
be issued in the name of the Holder upon cancellation of the original Note.  Notes called for redemption become due on the date fixed for redemption.  On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

 

 

32

 

 

(f)   The Company shall notify the Trustee of the Redemption Price with respect to the redemption promptly after the calculation thereof.  The Trustee shall not be responsible for calculating the Redemption Price.

 

Section 1.09   Paying Agent.  The Trustee shall initially serve as Paying Agent with respect to the Notes, with the place of payment initially being the corporate
trust office of the Trustee in New York, New York.

 

Section 1.10   Additional Notes.  Subject to the terms and conditions contained herein, the Company may from time to time, without the consent of the existing Holders
create and issue additional notes (the “Additional Notes”) having the same terms and conditions as the Notes in all respects, except for issue date, issue price and the first payment of interest thereon.  Such Additional Notes, at the Company’s determination and in accordance with the provisions of the Indenture, will be consolidated with and form a single series with the previously outstanding Notes for all purposes of the Indenture, including, without limitation, amendments, waivers,
and redemptions.  The aggregate principal amount of the Additional Notes, if any, shall be unlimited.

 

ARTICLE II

 

SUBSIDIARY GUARANTEES

 

Section 2.01   Guarantee.

 

(a)   Subject to this Article II, each of the Subsidiary Guarantors hereby, jointly and severally, fully and unconditionally Guarantees, on a senior basis, to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Company hereunder or thereunder, that:

 

(1)   the principal of, premium, if any, and interest on the Notes will be promptly paid in full when due, whether at Stated Maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof, and

 

(2)   in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.

 

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately.  Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

 

(b)   The Subsidiary Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.

 

(c)   Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and

 

 

33

 

 

covenants that this Subsidiary Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and the Indenture.

 

(d)   If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary
Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.

 

(e)   Each Subsidiary Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.  Each
Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article IV hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations
as provided in Article IV hereof, such obligations (whether or not due and payable) will forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee.

 

(f)   The Subsidiary Guarantors will have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantee.

 

Section 2.02   Limitation on Subsidiary Guarantor Liability.  Each Subsidiary Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act, any bankruptcy, insolvency or reorganization law or any similar federal or state law to the extent applicable to any Subsidiary Guarantee.  To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations
of such Subsidiary Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under this Article II, result in the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.

 

Section 2.03   Releases of Subsidiary Guarantees.  The Subsidiary Guarantee of a Subsidiary Guarantor will be released:

 

(1)   in connection with any sale, disposition or other transfer (including through merger or consolidation), other than by lease, of (x) the Capital Stock of such Subsidiary Guarantor following which
such Subsidiary Guarantor is no longer a Subsidiary of the Company or (y) all or substantially all the assets of the applicable Subsidiary Guarantor, in each case, to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company if such sale, disposition or other transfer is made in compliance with the applicable provisions of the Indenture and all of the obligations of the Subsidiary Guarantor under any Credit Facility and related documentation
and any other agreements relating to any other Indebtedness of the Company or its Restricted Subsidiaries terminate upon consummation of such transaction;

 

(2)   in connection with the defeasance of the Notes and the Subsidiary Guarantees, to the extent that the obligations of the Company have been discharged thereby; or

 

 

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(3)   if the Company designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture.

 

ARTICLE III

 

PARTICULAR COVENANTS OF THE COMPANY WITH RESPECT TO THE NOTES

 

Section 3.01   Effectiveness of Covenants.  From and after the first day on which:

 

(1)   the Notes have an Investment Grade Rating from both of the Ratings Agencies; and

 

(2)   no Default has occurred and is continuing under the Indenture;

 

the Company and its Restricted Subsidiaries will cease to be subject to Sections 3.02, 3.03, 3.06, 3.07, 3.08, 3.09, 3.13 and clauses (4) and (6) of Section 3.11 of this Eighth Supplemental Indenture.

 

(collectively, the “Suspended Covenants”).  If at any time the credit rating of the Notes is downgraded from an Investment Grade Rating by either Rating Agency, then the Suspended Covenants will thereafter be reinstated and again be applicable pursuant to the terms of the Indenture, unless and until the Notes subsequently
attain an Investment Grade Rating.  Neither the failure of the Company or any of its Subsidiaries to comply with a Suspended Covenant after the Notes attain an Investment Grade Rating and before any reinstatement of the Suspended Covenants nor compliance by the Company or any of its Subsidiaries with any contractual obligation entered into in compliance with the Indenture during that period will constitute a Default, Event of Default or breach of any kind under the Indenture, the Notes or the Subsidiary
Guarantees.

 

During any period when the Suspended Covenants are not in effect, the Board of Directors of the Company may not designate any of the Company’s Subsidiaries as Unrestricted Subsidiaries pursuant to the Indenture.

 

Section 3.02   Limitation on Indebtedness.

 

The Company may not, and may not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); except, that the Company and any Restricted Subsidiary may Incur Indebtedness if on the date thereof:

 

(1)   the Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is at least 2.25 to 1.0; and

 

(2)   no Default or Event of Default shall have occurred and be continuing or would occur as a consequence of Incurring the Indebtedness or the transactions relating to such Incurrence.

 

The first paragraph of this Section 3.02 will not prohibit the Incurrence of the following Indebtedness:

 

(1)   Indebtedness of the Company and its Restricted Subsidiaries Incurred pursuant to a Credit Facility in an aggregate principal amount up to the greater of (x) $1.2 billion or (y) 30% of Adjusted Consolidated
Net Tangible Assets, in each case, determined as of the date of the Incurrence of the Indebtedness;

 

(2)   Guarantees of Indebtedness Incurred in accordance with the provisions of the Indenture; provided that if the Indebtedness that is
being Guaranteed is Guaranteed by a

 

 

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Subsidiary Guarantor and is (a) Senior Indebtedness or Guarantor Senior Indebtedness, then the related Guarantee shall rank equally in right of payment to the Subsidiary Guarantee or (b) a Subordinated Obligation or a Guarantor Subordinated Obligation, then the related Guarantee shall be subordinated in right of payment to the Subsidiary Guarantee;

 

(3)   Indebtedness of the Company owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any Wholly-Owned Subsidiary; provided, however,
that:

 

(a)   if the Company is the obligor on the Indebtedness, the Indebtedness is subordinated in right of payment to all obligations with respect to the Notes;

 

(b)   if a Subsidiary Guarantor is the obligor on the Indebtedness and the Company or a Subsidiary Guarantor is not the obligee, such Indebtedness is subordinated in right of payment to the Subsidiary
Guarantees of that Subsidiary Guarantor; and

 

(c)   any subsequent issuance or transfer of Capital Stock, sale or other transfer of any such Indebtedness or other event that results in any such Indebtedness being held by a Person other than the Company
or a Wholly-Owned Subsidiary of the Company shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Subsidiary, as the case may be, as of the date such Indebtedness first became held by such Person;

 

(4)   Indebtedness represented by (a) the Notes issued on the Issue Date and the Subsidiary Guarantees, (b) any Indebtedness (other than the Indebtedness described in clauses (1), (2), (3), (6), (8),
(9) and (10) of this paragraph) outstanding on the Issue Date and (c) any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (4) or clause (5) of this paragraph or Incurred pursuant to the first paragraph of this Section 3.02;

 

(5)   Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred (a) to provide all
or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary was acquired by the Company or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that, at the time such Restricted Subsidiary is acquired by the Company, the Company would have been able to Incur
$1.00 of additional Indebtedness pursuant to the first paragraph of this Section 3.02 after giving effect to the Incurrence of such Indebtedness;

 

(6)   Indebtedness under Currency Agreements, Commodity Agreements and Interest Rate Agreements; provided that, in the case of Currency
Agreements or Commodity Agreements, such Currency Agreements or Commodity Agreements are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of business and, in the case of Currency Agreements, Commodity Agreements and Interest Rate Agreements, such Currency Agreements, Commodity Agreements and Interest Rate Agreements are entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries (as determined in good faith by the
Board of Directors or senior management of the Company);

 

(7)   the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations with respect to assets
other than Capital Stock or other Investments, in each case Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvements of property used in the business of the Company or the Restricted Subsidiary, in an aggregate principal amount not to exceed $20 million at any time outstanding;

 

 

36

 

 

(8)   Indebtedness Incurred in respect of workers’ compensation claims, self-insurance obligations, bid, reimbursement, performance, surety, appeal and similar bonds, completion guarantees provided
by the Company or a Restricted Subsidiary in the ordinary course of business, or required by regulatory authorities in connection with the conduct by the Company and its Restricted Subsidiaries of their businesses, including supporting Guarantees and letters of credit (in each case other than for an obligation for money borrowed);

 

(9)   Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed
in connection with the disposition of any business, assets or Capital Stock of the Company or a Restricted Subsidiary;

 

(10)   Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds
in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of the Incurrence; and

 

(11)   in addition to the items referred to in clauses (1) through (10) of this paragraph, Indebtedness of the Company and its Restricted Subsidiaries in an aggregate outstanding principal amount which,
when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (11) and then outstanding, will not exceed $40 million at any time outstanding.

 

The Company may not Incur any Indebtedness under the preceding paragraph if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations of the Company unless such Indebtedness will be subordinated to the Notes to at least the same extent as such Subordinated Obligations.  No Subsidiary Guarantor
may Incur any Indebtedness under the preceding paragraph if the proceeds thereof are used, directly or indirectly, to refinance any Guarantor Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness will be subordinated to the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee to at least the same extent as such Guarantor Subordinated Obligations.

 

For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this Section 3.02:

 

(1)   Indebtedness permitted by this Section 3.02 need not be permitted solely by one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more
other provisions of this Section 3.02 permitting such Indebtedness;

 

(2)   in the event that Indebtedness meets the criteria of more than one of the provisions permitting the Incurrence of Indebtedness described in the first and second paragraphs above, the Company, in
its sole discretion, may classify (or subsequently reclassify) such item of Indebtedness as being permitted by one or more such provisions;

 

(3)   all Indebtedness outstanding on the date of the Indenture under the Senior Secured Credit Agreement shall be deemed initially Incurred on the Issue Date under clause (1) of the second paragraph
of this Section 3.02 and not the first paragraph or clause (4) of the second paragraph of this Section 3.02;

 

(4)   Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

 

 

37

 

 

(5)   if obligations in respect of letters of credit are Incurred pursuant to a Credit Facility and are being treated as Incurred pursuant to clause (1) of the second paragraph of this Section 3.02 and
the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

 

(6)   no item of Indebtedness will be given effect more than once in any calculation contemplated by this Section 3.02 and no individual item or related items of Indebtedness will be given effect at an
aggregate amount in excess of the aggregate amount required to satisfy and discharge the principal amount of such item or related items of Indebtedness;

 

(7)   the principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor, will be equal to the greater
of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof; and

 

(8)   the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

 

Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for purposes of this Section 3.02.  The
amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

 

In addition, the Company will not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt.  If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted
Subsidiary as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Section 3.02, the Company shall be in Default of this Section 3.02).

 

For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date the Indebtedness was Incurred, in the case
of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and the refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of the refinancing, such U.S. dollar-dominated restriction shall be deemed not
to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced.  Notwithstanding any other provision of this Section 3.02, the maximum amount of Indebtedness that the Company may Incur pursuant to this Section 3.02 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies.  The principal amount of any Indebtedness Incurred to refinance other Indebtedness,
if Incurred in a different currency from the Indebtedness being refinanced, will be calculated based on the currency exchange rate applicable to the currencies in which the Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

 

Section 3.03   Limitation on Restricted Payments.  The Company will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to:

 

 

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(1)   pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in respect of its Capital Stock in connection with any merger or consolidation involving the
Company or any of its Restricted Subsidiaries) except:

 

(a)   dividends or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase Capital Stock of the Company; and

 

(b)   dividends or distributions payable to the Company or a Restricted Subsidiary (and if the Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of Capital Stock on a pro rata
basis);

 

(2)   purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect parent of the Company held by Persons other than the Company or a Restricted Subsidiary
(other than in exchange for Capital Stock of the Company or any direct or indirect parent of the Company (other than Disqualified Stock));

 

(3)   purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations or
Guarantor Subordinated Obligations (other than the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement); or

 

(4)   make any Restricted Investment in any Person;

 

(any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) of this paragraph being referred to herein as a “Restricted Payment”), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:

 

(a)   a Default shall have occurred and be continuing (or would result therefrom); or

 

(b)   the Company is not able to Incur an additional $1.00 of Indebtedness pursuant to the first paragraph under Section 3.02 above after giving effect, on a pro forma basis, to the Restricted Payment;
or

 

(c)   the aggregate amount of the Restricted Payment and all other Restricted Payments made subsequent to March 16, 2006 would exceed the sum of:

 

(i)   50% of Consolidated Net Income for the period (treated as one accounting period) from October 1, 2005 to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment
for which financial statements are in existence (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit);

 

(ii)   100% of the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to March 16,
2006 (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of the Company or an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan, option plan or similar trust is financed by loans from or

 

 

39

 

 

Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination);

 

(iii)   the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to March 16, 2006 of any Indebtedness of the Company or its Restricted Subsidiaries convertible into or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair market value of any other property, distributed by the Company upon such conversion or exchange); and

 

(iv)   the amount equal to payments received by the Company or any Restricted Subsidiary in respect of, or the net reduction in, Restricted Investments made by the Company or any of its Restricted Subsidiaries
in any Person resulting from:

 

(A)   repurchases or redemptions of such Restricted Investments by the Person in which such Restricted Investments are made, proceeds realized upon the sale of such Restricted Investment to an unaffiliated
purchaser or payments in respect of such Restricted Investment, whether through interest payments, principal payments, dividends, distributions or otherwise, by such Person to the Company or any Restricted Subsidiary; or

 

(B)   the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary;

 

which amount in each case under clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under clause (iv) to the extent it is already
included in Consolidated Net Income.

 

The provisions of the preceding paragraph will not prohibit:

 

(1)   any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock or Subordinated Obligations or Guarantor Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however,
that (a) such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the Net Cash Proceeds from such sale of Capital Stock will be excluded from clause (c)(ii) of the preceding paragraph;

 

(2)   any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor Subordinated Obligations made by exchange for, or out of the proceeds
of the substantially concurrent sale of, Subordinated Obligations or any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Guarantor Subordinated Obligations made by exchange for or out of the proceeds of the substantially concurrent sale of Guarantor Subordinated Obligations that, in each case, is permitted

 

 

40

 

 

to be Incurred under Section 3.02 of this Eighth Supplemental Indenture and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or
retirement will be excluded in subsequent calculations of the amount of Restricted Payments;

 

(3)   any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for or out of the proceeds of
the substantially concurrent sale of Disqualified Stock of the Company or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred under Section 3.02 of this Eighth Supplemental Indenture and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement
will be excluded in subsequent calculations of the amount of Restricted Payments;

 

(4)   dividends paid within 60 days after the date of declaration if at such date of declaration the dividend would have complied with this provision; provided, however,
that such dividends will be included in subsequent calculations of the amount of Restricted Payments;

 

(5)   so long as no Default or Event of Default has occurred and is continuing,

 

(a)   the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital
Stock of the Company or any Restricted Subsidiary or any direct or indirect parent of the Company held by any existing or former employees or directors of the Company or any Subsidiary of the Company or their assigns, estates or heirs, in each case in accordance with the terms of employee stock option or stock purchase agreements or other agreements to compensate employees or directors; provided that such purchases, redemptions, acquisitions, cancellations
or retirements pursuant to this clause will not exceed $2.0 million in the aggregate during any calendar year; provided further, however, that the amount of any such purchases, redemptions, acquisitions, cancellations or retirements will be included in subsequent calculations of the amount of Restricted Payments; and

 

(b)   loans or advances to employees or directors of the Company or any Subsidiary of the Company the proceeds of which are used to purchase Capital Stock of the Company, in an aggregate amount not in
excess of $2.0 million at any one time outstanding; provided, however, that the amount of such loans and advances will be included in subsequent calculations of the amount of Restricted Payments;

 

(6)   so long as no Default or Event of Default has occurred and is continuing, the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued in
accordance with the terms of the Indenture to the extent such dividends are included in the definition of “Consolidated Interest Expense;” provided, however, that the payment of such dividends will be excluded in subsequent calculations of the amount of Restricted Payments;

 

(7)   repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided, however,
that such repurchases will be excluded from subsequent calculations of the amount of Restricted Payments;

 

(8)   the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (i) at a purchase price not greater than 101% of the principal amount
of such Subordinated Obligation in the event of a Change of Control in accordance with provisions similar to Section 3.15 of this Eighth Supplemental

 

 

41

 

 

Indenture or (ii) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to Section 3.07 of this Eighth Supplemental Indenture; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other
acquisition or retirement, the Company has made the Change of Control Offer or Asset Disposition Offer, as applicable, as required with respect to the Notes and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer; provided, however, that such repurchases will be excluded from
subsequent calculations of the amount of Restricted Payments;

 

(9)   any redemption of share purchase rights at a redemption price not to exceed $0.01 per right; provided, however,
that such redemption will be included in subsequent calculations of the amount of Restricted Payments;

 

(10)   the payment of cash in lieu of fractional shares of Capital Stock in connection with any transaction otherwise permitted under the Indenture; provided, however,
that such payment will be included in subsequent calculations of the amount of Restricted Payments;

 

(11)   payments to dissenting stockholders not to exceed $5 million (x) pursuant to applicable law or (y) in connection with the settlement or other satisfaction of legal claims made pursuant to
or in connection with a consolidation, merger or transfer of assets in connection with a transaction that is not prohibited by the Indenture; provided, however, that such payments will be included in subsequent calculations of the amount of Restricted Payments; and

 

(12)   Restricted Payments in an amount not to exceed $25 million; provided, however,
that the amount of the Restricted Payments will be included in subsequent calculations of the amount of Restricted Payments.

 

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.  The fair market value of any
cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value is estimated in good faith by the Board of Directors of the Company to exceed $25 million.

 

Section 3.04   Limitation on Liens.  The Company may not, and may not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer
to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Restricted Subsidiaries), whether owned on the Issue Date or acquired after that date, which Lien secures any Indebtedness, unless contemporaneously with the Incurrence of such Lien effective provision is made to secure the Indebtedness due with respect to the Notes or, with respect to Liens on any Restricted Subsidiary’s property or assets, any Subsidiary Guarantee of such Restricted Subsidiary,
equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations or Guarantor Subordinated Obligations, as the case may be) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured.

 

Section 3.05   Limitation on Sale/Leaseback Transactions.  The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction
with respect to any property unless:

 

(1)   the Company or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the Attributable Indebtedness with respect to such Sale/Leaseback Transaction pursuant
to Section 3.02 of this Eighth Supplemental Indenture and (B) create a Lien on such property securing such Attributable Indebtedness without equally and ratably securing the Notes pursuant to Section 3.04 of this Eighth Supplemental Indenture;

 

 

42

 

 

(2)   the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair market value (as determined by the Board of
Directors) of such property; and

 

(3)   to the extent the Sale/Leaseback Transaction involves an Asset Disposition, the Company applies the proceeds of such transaction in compliance with Section 3.07 of this Eighth Supplemental
Indenture.

 

Section 3.06   Limitation on Restrictions on Distributions from Restricted Subsidiaries.  The Company may not, and may not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

 

(1)   pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company or any Restricted Subsidiary (the priority of any Preferred Stock
in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock and any subordination of any such Indebtedness or other obligations being deemed not to constitute such encumbrances or restrictions);

 

(2)   make any loans or advances to the Company or any Restricted Subsidiary (the subordination of loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred by
the Company or any Restricted Subsidiary being deemed not to constitute such an encumbrance or restriction); or

 

(3)   transfer any of its property or assets to the Company or any Restricted Subsidiary.

 

The preceding provisions will not prohibit:

 

(a)   any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date, including, without limitation, the Indenture, the Notes and the Senior Secured Credit Agreement
in effect on such date;

 

(b)   any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Capital Stock or Indebtedness Incurred by a Restricted Subsidiary on or before the
date on which the Restricted Subsidiary was acquired by the Company (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company or in contemplation of the transaction or transactions) and outstanding on such date; provided that
any such encumbrance or restriction shall not extend to any assets or property of the Company or any other Restricted Subsidiary other than the assets and property so acquired;

 

(c)   any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement effecting a refunding, replacement or refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (a) or (b) of this paragraph or this clause (c) or contained in any amendment to an agreement referred to in clause (a) or (b) of this paragraph or this clause (c), including successive refundings, replacements or refinancings; provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement are
no less favorable in any material respect to the Holders than the encumbrances and restrictions contained in such agreements referred to in clauses (a) or (b) of this paragraph on the

 

 

43

 

 

Issue Date or the date such Restricted Subsidiary became a Restricted Subsidiary, whichever is applicable;

 

(d)   in the case of clause (3) of the first paragraph of this Section 3.06, any encumbrance or restriction:

 

(i)   that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any
such lease, license or other contract;

 

(ii)   contained in mortgages, pledges or other security agreements permitted under the Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the extent such encumbrances or restrictions
restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or

 

(iii)   pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary;

 

(e)   (i) purchase money obligations for property acquired in the ordinary course of business and (ii) Capital Lease Obligations permitted under the Indenture, in each case, that impose encumbrances or
restrictions of the nature described in clause (3) of the first paragraph of this Section 3.06 on the property so acquired;

 

(f)   any restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition;

 

(g)   customary encumbrances or restrictions imposed pursuant to any agreement referred to in the definition of “Permitted Business Investment;”

 

(h)   net worth provisions in leases and other agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business; and

 

(i)   encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order.

 

Section 3.07   Limitation on Sales of Assets and Subsidiary Stock.  The Company may not, and may not permit any of its Restricted Subsidiaries to, make any Asset Disposition
unless:

 

(1)           the Company or the Restricted Subsidiary, as the case may be, receives consideration at the time of the Asset Disposition at least equal to the fair market value of the assets subject to the Asset Disposition (determined on the date of contractually agreeing to such
Asset Disposition), as determined in good faith by senior management of the Company or, if the consideration with respect to such Asset Disposition exceeds $10 million, the Board of Directors of the Company (including as to the value of all non-cash consideration); and

 

(2)           at least 75% of the consideration from the Asset Disposition received by the Company or the Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents.

 

 

44

 

 

The Company or such Restricted Subsidiary, as the case may be, may elect to apply all or any portion of the Net Available Cash from such Asset Disposition either:

 

(1)           to prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or retire Senior Indebtedness of the Company (other than Disqualified Stock) or Indebtedness of a Wholly-Owned Subsidiary (other than any Disqualified Stock or Guarantor Subordinated Obligation
of a Wholly-Owned Subsidiary Guarantor) (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within 365 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that, in connection with any prepayment, repayment, purchase, repurchase, redemption, defeasance, or acquisition of Indebtedness
pursuant to this clause (1), the Company or such Restricted Subsidiary will retire such Indebtedness and, in the case of revolving Indebtedness, will cause the related commitment (if any) to be permanently reduced in an amount equal to the principal amount so retired; or

 

(2)           to invest in Additional Assets or make Permitted Business Investments within 365 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash;

 

provided that, pending the final application of any such Net Available Cash in accordance with clauses (1) or (2) above, the Company and its Restricted Subsidiaries may temporarily reduce Senior Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited
by the Indenture.

 

Any Net Available Cash from Asset Dispositions that is not applied or invested as provided in the preceding paragraph will be deemed to constitute “Excess Proceeds.”  On the 366th day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds $20 million, the Company must make an offer (“Asset
Disposition Offer”) to all Holders and to the extent required by the terms of other Senior Indebtedness, to all holders of other Senior Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase such Senior Indebtedness with the proceeds from any Asset Disposition (“Pari Passu Notes”), to purchase the maximum principal amount of Notes and any Pari Passu Notes to which the Asset Disposition Offer applies that may be purchased out of the Excess Proceeds,
at an offer price in cash in an amount equal to 100% of the principal amount of the Notes and Pari Passu Notes plus accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in the Indenture or the agreements governing the Pari Passu Notes, as applicable, in each case in integral multiples of $1,000.  To the extent that the aggregate amount of Notes and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less
than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in the Indenture.  If the aggregate principal amount of Notes surrendered by Holders thereof and other Pari Passu Notes surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and Pari Passu Notes to be purchased pro rata on the basis of the aggregate principal amount of tendered Notes and
Pari Passu Notes.  Upon completion of the Asset Disposition Offer, the amount of Excess Proceeds will be reset at zero.

 

The Asset Disposition Offer must remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “Asset Disposition Offer Period”).  No later than five Business Days after the termination of the Asset Disposition Offer Period (the “Asset
Disposition Purchase Date”), the Company will purchase the principal amount of Notes and Pari Passu Notes required to be purchased pursuant to the Asset Disposition Offer (the “Asset Disposition Offer Amount”) or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Notes and Pari Passu Notes validly tendered in response to the Asset Disposition Offer.

 

If the Asset Disposition Purchase Date is on or after a Regular Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders who tender Notes pursuant
to the Asset Disposition Offer.

 

 

45

 

 

On or before the Asset Disposition Purchase Date, the Company must, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount of Notes and Pari Passu Notes or portions of Notes and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to the Asset Disposition
Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Notes and Pari Passu Notes so validly tendered and not properly withdrawn, in each case in integral multiples of $1,000.  The Company or the Paying Agent, as the case may be, must promptly (but in any case not later than five Business Days after the termination of the Asset Disposition Offer Period) mail or deliver to each tendering Holder or holder or lender of Pari Passu Notes, as the
case may be, an amount equal to the purchase price of the Notes or Pari Passu Notes so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Company for purchase, and the Company must promptly issue a new Note, and the Trustee, upon delivery of an Officers’ Certificate from the Company, must authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that
each such new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.  In addition, the Company must take any and all other actions required by the agreements governing the Pari Passu Notes.  Any Note not so accepted must be promptly mailed or delivered by the Company to the Holder thereof.  The Company will publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date.

 

For the purposes of this Section 3.07, the following will be deemed to be cash:

 

(1)           the assumption by the transferee of Indebtedness (other than Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness of a Wholly-Owned Subsidiary (other than Guarantor Subordinated Obligations or Disqualified Stock of any Wholly-Owned Subsidiary that
is a Subsidiary Guarantor) and the release of the Company or the Restricted Subsidiary from all liability on such Indebtedness in connection with the Asset Disposition; and

 

(2)           securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash within 60 days after consummation of the Asset Disposition.

 

The Company may not, and may not permit any Restricted Subsidiary to, engage in any Asset Swaps, unless:

 

(1)   at the time of entering into the Asset Swap and immediately after giving effect to the Asset Swap, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence
thereof;

 

(2)   in the event the Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Board of Directors of the Company
in good faith, in excess of $10 million, the terms of the Asset Swap have been approved by a majority of the members of the Board of Directors of the Company; and

 

(3)   in the event the Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Board of Directors of the Company
in good faith, in excess of $25 million, the Company has received a written opinion from an independent investment banking firm of nationally recognized standing that the Asset Swap is fair to the Company or the Restricted Subsidiary, as the case may be, from a financial point of view.

 

The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to the Indenture.  To the extent that the provisions of any securities laws or regulations conflict with provisions of this
Section 3.07, the Company will comply with the applicable securities laws and

 

 

46

 

 

regulations and will be deemed not to have breached its obligations under the Indenture by virtue of such compliance.

 

Section 3.08   Limitation on Affiliate Transactions.  The Company may not, and may not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) unless:

 

(1)   the terms of the Affiliate Transaction are not materially less favorable to the Company or the Restricted Subsidiary, as the case may be, than those that might reasonably have been obtained in a
comparable transaction at the time of such transaction on an arm’s-length basis from a Person that is not an Affiliate of the Company;

 

(2)   in the event the Affiliate Transaction involves an aggregate consideration in excess of $10 million, the terms of the transaction have been approved by a majority of the members of the Board of
Directors of the Company having no personal stake in the transaction, if any (and such majority determines that the Affiliate Transaction satisfies the criteria in clause (1) above); and

 

(3)   in the event the Affiliate Transaction involves an aggregate consideration in excess of $25 million, the Company has received a written opinion from an independent investment banking, accounting
or appraisal firm of nationally recognized standing to the effect that the terms of the Affiliate Transaction are not materially less favorable than those that might reasonably have been obtained in a comparable transaction at the time of such transaction on an arm’s-length basis from a Person that is not an Affiliate of the Company.

 

The preceding paragraph will not apply to:

 

(1)   any Restricted Payment (other than a Restricted Investment) permitted to be made pursuant to Section 3.03 of this Eighth Supplemental Indenture;

 

(2)   any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options
to purchase Capital Stock of the Company, restricted stock plans, long-term incentive plans, stock appreciation rights plans,  participation plans or similar employee plans and/or insurance and indemnification arrangements provided to or for the benefit of employees and directors approved by the Board of Directors of the Company;

 

(3)   loans or advances to employees, officers or directors in the ordinary course of business of the Company or any of its Restricted Subsidiaries, but in any event not to exceed $2.5 million in the
aggregate outstanding at any one time with respect to all loans or advances made since the Issue Date;

 

(4)   any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and Guarantees issued by the Company or a Restricted Subsidiary for the benefit of the Company
or a Restricted Subsidiary, as the case may be, in accordance with Section 3.02 of this Eighth Supplemental Indenture; or

 

(5)   the performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any agreement to which the Company or any of its Restricted Subsidiaries is a party as of or
on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date will be so excluded only if its terms are not more disadvantageous to the Holders than the terms of the agreements in effect on the Issue Date.

 

 

47

 

 

Section 3.09   Limitation on Sale of Capital Stock of Restricted Subsidiaries.  The Company may not, and may not permit any Restricted Subsidiary to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Restricted Subsidiary or issue any of the Capital Stock of a Restricted Subsidiary (other than, if necessary, shares of its Voting Stock constituting directors’ qualifying shares) to any Person except:

 

(1)   to the Company or a Wholly-Owned Subsidiary; or

 

(2)   in compliance with Section 3.07 of this Eighth Supplemental Indenture and if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would continue to be a Restricted
Subsidiary.

 

Notwithstanding the preceding paragraph, the Company or any Restricted Subsidiary may sell all of the Capital Stock of a Restricted Subsidiary as long as the Company complies with the terms of Section 3.07 of this Eighth Supplemental Indenture.

 

Section 3.10   SEC Reports.  Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the SEC (to the extent the SEC will accept such filing), and make available to the Trustee and the registered Holders, the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that are specified in Sections 13 and 15(d) of the Exchange Act.  If the SEC will not accept such filings, the Company will nevertheless make available such Exchange Act information to the Trustee and
the Holders as if the Company were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

 

If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries and any such Unrestricted Subsidiary has $10.0 million of net assets and its assets exceed its liabilities by more than 5% of the amount by which the consolidated assets of the Company and its Subsidiaries exceed consolidated liabilities of the Company and
its Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes to the financial statements and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Company and its Restricted Subsidiaries.

 

Section 3.11   Merger and Consolidation.  The Company may not consolidate with or merge with or into any other Person, or transfer all or substantially all its properties
and assets to another Person, unless:

 

(1)   the Company is the continuing or surviving Person in the consolidation or merger; or

 

(2)   the Person (if other than the Company) formed by the consolidation or into which the Company is merged or to which all or substantially all of the Company’s properties and assets are transferred
is a corporation, partnership, limited liability company, business trust, trust or other legal entity organized and validly existing under the laws of the United States, any state thereof or the District of Columbia, and expressly assumes, by a supplemental indenture, all of the Company’s obligations under the Notes and the Indenture; and

 

(3)   immediately after the transaction and the Incurrence or anticipated Incurrence of any Indebtedness to be Incurred in connection therewith, no Event of Default exists; and

 

(4)   immediately after giving effect to such transaction, the continuing or surviving Person would be able to Incur at least an additional $1.00 of Indebtedness pursuant to the first paragraph of Section
3.02 of this Eighth Supplemental Indenture; and

 

 

48

 

 

(5)   each Subsidiary Guarantor shall have by supplemental indenture confirmed that its Subsidiary Guarantee shall apply to such Person’s obligations (if other than the Company) in respect of the
Indenture and the Notes shall continue to be in effect; and

 

(6)   an Officer’s Certificate is delivered to the Trustee to the effect that the conditions set forth above have been satisfied and an Opinion of Counsel has been delivered to the Trustee to the
effect that the conditions set forth above have been satisfied.

 

For purposes of the first paragraph of this Section 3.11, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of its Subsidiaries, would constitute all or substantially
all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

 

The continuing, surviving or successor Person will succeed to and be substituted for the Company with the same effect as if it had been named in the Indenture as a party thereof, and thereafter the predecessor Person will be relieved of all obligations and covenants under the Indenture and the Notes.

 

Notwithstanding clauses (3) and (4) above and clause (1)(b) below, (x) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or another Restricted Subsidiary and (y) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company
in another jurisdiction; provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company will not be required to comply with clause (5) above.

 

The Company may not permit any Subsidiary Guarantor to consolidate with or merge with or into any Person (other than another Subsidiary Guarantor) and may not permit the conveyance, transfer or lease of substantially all of the assets of any Subsidiary Guarantor  (other than to another Subsidiary Guarantor) unless:

 

(1)           (a) the Person formed by the consolidation or into which the Subsidiary Guarantor merged or to which all or substantially all of the Subsidiary Guarantor’s properties and assets are transferred is a corporation, partnership, limited liability company, business trust,
trust or other legal entity organized and validly existing under the laws of the United States, any state thereof, or the District of Columbia and such Person (if not such Subsidiary Guarantor) will expressly assume, by supplemental indenture, all the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee; (b) immediately after the transaction and the Incurrence or anticipated Incurrence of any Indebtedness to be Incurred in connection therewith, no Event of Default exists; and (c) the Company
will deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each to the effect that the conditions set forth above have been satisfied; or

 

(2)           the transaction is made in compliance with Section 3.07 of this Eighth Supplemental Indenture.

 

Section 3.12   Future Subsidiary Guarantors.  The Company will cause each Restricted Subsidiary (other than a Foreign Subsidiary or a Special Entity) created or acquired
by the Company or one or more of its Restricted Subsidiaries after the Issue Date to execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which such Subsidiary Guarantor will unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of and premium, if any and interest on the Notes on a senior basis.

 

Section 3.13   Limitation on Lines of Business.  The Company may not, and may not permit any Restricted Subsidiary to, engage in any business other than the Oil and
Gas Business.

 

 

49

 

 

Section 3.14   Payments for Consent.  Neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fees or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment.

 

Section 3.15   Offer to Repurchase Upon Change of Control.

 

(a)   If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Notes as described under Section 1.08 of this Eighth Supplemental Indenture, the Company will be required to offer to repurchase from each
Holder all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date).

 

(b)   Within 30 days following any Change of Control, unless the Company has exercised its right to redeem the Notes as described under Section 1.08 of this Eighth Supplemental Indenture, the Company will mail a notice (the “Change
of Control Offer”) to each Holder, with a copy to the Trustee, stating:

 

(1)   that a Change of Control has occurred and that the Company is offering to purchase the Holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued
and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on a Regular Record Date to receive interest on the relevant Interest Payment Date) (the “Change of Control Payment”);

 

(2)   the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the “Change of Control Payment Date”); and

 

(3)   the procedures determined by the Company, consistent with the Indenture, that a Holder must follow in order to have its Notes repurchased.

 

(c)   On the Change of Control Payment Date, the Company will, to the extent lawful:

 

(1)   accept for payment all Notes or portions of Notes (in integral multiples of $1,000 in excess of $2,000) properly tendered pursuant to the Change of Control Offer;

 

(2)   deposit with the Paying Agent for the Notes an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes so tendered; and

 

(3)   deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased
by the Company.

 

(d)   The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for the Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new
Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.

 

(e)   If the Change of Control Payment Date is on or after a Regular Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest will be paid to the Person in

 

 

50

 

 

whose name a Note is registered at the close of business on the Regular Record Date, and no additional interest will be payable to Holders who tender pursuant to the Change of Control Offer.

 

(f)   The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in
the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under the Change of Control Offer.

 

(g)   A Change of Control Offer may be made in advance of a Change of Control, conditioned upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of the making of the Change of Control Offer.

 

(h)   The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 3.15.  To
the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will be deemed not to have breached its obligations described in the Indenture by virtue of such compliance.

 

ARTICLE IV

 

EVENTS OF DEFAULT WITH RESPECT TO THE NOTES

 

The term “Event of Default,” whenever used in the Original Indenture or this Eighth Supplemental Indenture with respect to the Notes, means any one of the following events:

 

(1)   failure to pay principal of or premium, if any, on any Note when due at its Stated Maturity;

 

(2)   failure to pay any interest on any Note when due, which failure continues for 30 calendar days;

 

(3)   failure by the Company or any Subsidiary Guarantor to comply with its obligations under Section 3.11 of this Eighth Supplemental Indenture;

 

(4)   failure by the Company to comply with any of its obligations under Article III of this Eighth Supplemental Indenture (other than a failure to purchase Notes which will constitute an Event of Default
under clause (5) below and other than a failure to comply with Section 3.11 of this Eighth Supplemental Indenture which is covered by clause (3) above), which failure or breach continues for 30 calendar days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Notes a written notice specifying such default or breach and requiring it to be remedied and stating that such
notice is a “Notice of Default” under the Indenture;

 

(5)   failure to redeem or repurchase any Note when required to do so under the terms thereof;

 

(6)   failure to perform, or breach of, any other covenant of the Company in the Indenture (other than a covenant included in the Indenture solely for the benefit of a series of debt securities other
than the Notes), which failure or breach continues for 60 calendar days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding

 

 

51

 

 

Notes a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture;

 

(7)   any nonpayment at maturity or other default (beyond any applicable grace period) under any agreement or instrument relating to any other Indebtedness of the Company or a Significant Subsidiary,
the unpaid principal amount of which is not less than $15 million, which default results in the acceleration of the maturity of the Indebtedness prior to its Stated Maturity or occurs at the final maturity thereof;

 

(8)   Events of Default of the type and subject to the conditions set forth in clauses (vi) and (vii) of Section 8.01(a) of the Original Indenture;

 

(9)   failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $15 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 calendar days; or

 

(10)   any Subsidiary Guarantee of a Significant Subsidiary or group of Subsidiary Guarantors that, taken together as of the latest audited consolidated financial statements for the Company and its Restricted
Subsidiaries, would constitute a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding, or any Subsidiary Guarantor that is a Significant Subsidiary or group of Subsidiary Guarantors that, taken together as of the latest audited consolidated financial statements of the Company and its Restricted Subsidiaries, would constitute a Significant Subsidiary denies or disaffirms its obligations under the
Indenture or its Subsidiary Guarantee.

 

ARTICLE V

 

MODIFICATION AND WAIVER

 

Section 5.01   Without Consent of Holders.

 

(a)   The provisions of Section 10.01 of the Original Indenture shall apply to the Notes.

 

(b)   The Company, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture or the Notes without the consent of any Holder to add Subsidiary Guarantees with respect to the Notes.

 

Section 5.02   With Consent of Holders.  Without the consent of each Holder affected, no amendment or waiver with respect to the Notes under this Article V or under
Article X of the Original Indenture may, without the consent of each Holder of an outstanding Note affected thereby:

 

(a)   reduce the principal amount of, the rate of interest on, or the premium, if any, payable upon the repurchase of, the Notes; or

 

(b)   change the time at which any Note may be redeemed or repurchased as described above under Section 1.08; Section 3.07 or Section 3.15 of this Eighth Supplemental Indenture; or

 

(c)   change the ranking or priority of the Notes in a manner that would adversely affect the Holders; or

 

 

52

 

 

(d)   modify the Subsidiary Guarantees in any manner adverse to the Holders.

 

ARTICLE VI

 

MISCELLANEOUS PROVISIONS

 

Section 6.01   Recitals by the Company.  The recitals in this Eighth Supplemental Indenture are made by the Company only and not by the Trustee, and the Trustee assumes
no responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Eighth Supplemental Indenture or of the Notes.  The Trustee shall not be accountable for the use or application by the Company of the Notes or the proceeds thereof.  All of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect of the Notes and of this
Eighth Supplemental Indenture as fully and with like effect as if set forth herein in full.

 

Section 6.02   Ratification and Incorporation of Original Indenture.  As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and
the Original Indenture and this Eighth Supplemental Indenture shall be read, taken and construed as one and the same instrument.

 

Section 6.03   Executed in Counterparts.  This Eighth Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts shall together constitute but one and the same instrument.

 

Section 6.04   New York Law to Govern.  This Eighth Supplemental Indenture and each Note shall be governed by and construed in accordance with the law of the State
of New York.

 

Section 6.05   Successors and Assigns.  All covenants and agreements in this Eighth Supplemental Indenture and each Note by the Company shall bind its successors and
assigns, whether so expressed or not.

 

Section 6.06   Separability.  In case any provision in this Eighth Supplemental Indenture or in any Note shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 6.07   Force Majeure.  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising
out of or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable
under the circumstances.

 

Section 6.08   Senior Indebtedness.  The Company and each Subsidiary Guarantor hereby designate the obligations with respect to Notes and the Subsidiary Guarantees
as Senior Indebtedness which is senior in right of payment in full to any Subordinated Obligation of the Company or any Subsidiary Guarantor.  The Company and each Subsidiary Guarantor further designate the obligations with respect to the Notes and the Subsidiary Guarantees as “Designated Senior Indebtedness” (as defined by (i) the indenture for the 1.875% Convertible Subordinated Debentures by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (as
successor in interest to JPMorgan Chase Bank, National Association), dated as of November 1, 2004, as amended and supplemented (the “2024 Convertible Subordinated Debentures Indenture”), and (ii) the indenture for the 2016 Senior Subordinated Notes by and among the Company, each Subsidiary Guarantor and The Bank of New York Mellon Trust Company, N.A., as trustee (as successor in interest to JPMorgan Chase Bank, National Association) dated March 16, 2006, as amended and supplemented (the “2016
Senior Subordinated Notes Indenture”)), for all purposes under (x) the 2024 Convertible Subordinated Debentures Indenture and (y)

 

 

53

 

 

the 2016 Senior Subordinated Notes Indenture, with respect to the Notes and the Subsidiary Guarantees, respectively.

 

 

54

 

IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written.

 

	Attest:	 	 	
QUICKSILVER RESOURCES INC.
	 
	 	 	 	 	 
	
 
	 	By:	
 
	 
	
Name: John C. Cirone
	 	 	
Name: Philip Cook
	 
	

Title: Secretary

	 	 	

Title: Senior Vice President - Chief Financial Officer

	 

 

 

	 	 	 	

COWTOWN PIPELINE FUNDING, INC.,

as Subsidiary Guarantor

	 
	Attest:	 	 	
 
	 
	 	 	 	 	 
	
 
	 	By:	
 
	 
	
Name: John C. Cirone
	 	 	
Name: Philip Cook
	 
	

Title: Secretary

	 	 	

Title: Senior Vice President - Chief Financial Officer

	 

 

 

	 	 	 	

COWTOWN PIPELINE MANAGEMENT, INC.,

as Subsidiary Guarantor

	 
	Attest:	 	 	
 
	 
	 	 	 	 	 
	
 
	 	By:	
 
	 
	
Name: John C. Cirone
	 	 	
Name: Philip Cook
	 
	

Title: Secretary

	 	 	

Title: Senior Vice President - Chief Financial Officer

	 

 

 

 

 

 

	 	 	
COWTOWN PIPELINE L.P.,

as Subsidiary Guarantor
	 
	 	 	 	 	 
	Attest:	 	By:	

COWTOWN PIPELINE MANAGEMENT, INC.,

its general partner

	 
	 	 	 	 	 
	
 
	 	By:	
 
	 
	
Name: John C. Cirone
	 	 	
Name: Philip Cook
	 
	

Title: Secretary

	 	 	

Title: Senior Vice President - Chief Financial Officer

	 

 

 

	 	 	

COWTOWN GAS PROCESSING L.P.,

as Subsidiary Guarantor

	 
	 	 	 	 	 
	Attest:	 	By:	

COWTOWN PIPELINE MANAGEMENT, INC.,

its general partner

	 
	 	 	 	 	 
	
 
	 	By:	
 
	 
	
Name: John C. Cirone
	 	 	
Name: Philip Cook
	 
	

Title: Secretary

	 	 	

Title: Senior Vice President - Chief Financial Officer

	 

 

 

	Attest:	 	

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

	 
	 	 	 	 	 
	
 
	 	By:	
 
	 
	
Name: Mauri J. Cowen
	 	 	
Name: Rafael Martinez
	 
	

Title: Vice President

	 	 	

Title: Senior Associate

	 

 

 

 

 

 

EXHIBIT A

 

[FORM OF GLOBAL NOTE]

 

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

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE THEREOF.  THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, AND NO SUCH TRANSFER
MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.  EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS SECURITY WILL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

 

 

 

 

 

 

CUSIP No. 74837RAG9

ISIN No. US74837RAG92

 

[Face of Note]

 

91⁄8% Senior Notes due 2019

 

Principal amount at Maturity $ ______________

 

QUICKSILVER RESOURCES INC.

 

Quicksilver Resources Inc., a Delaware corporation (the “Company”) promises to pay to ______________, or registered assigns, the principal sum of ______________ Dollars on August 15, 2019 or such greater or lesser amount as may be indicated on Schedule A hereto.

 

	Interest Payment Dates:   	February 15 and August 15, commencing February 15, 2010
	 	 
	Regular Record Dates:	February 1 and August 1

 

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

 

	
Dated:
	 	 
	 	 	 
	
 
	
QUICKSILVER RESOURCES INC.
	 
	 	 	 	 
	
 
	
By: 
	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

	Attest:
	 
	By:	 	 

                                                    

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This is one of the Global Securities referred

to in the within-mentioned Indenture:

 

	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
	 	
as Trustee
	 
	 	 	 
	 	 	 
	By:	 	 
	 	Authorized Signatory	 

 

 

A-2

 

 

[FORM OF REVERSE OF NOTE]

 

91⁄8% Senior Notes due 2019

 

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

(1)           Interest.  Quicksilver Resources Inc., a Delaware corporation (together with its permitted successors, the “Company”), promises to pay interest on the principal amount of this Note at
9.125% per annum from August 14, 2009 until the principal hereof is paid or made available for payment.  The Company shall pay interest, if any, semi-annually in arrears on February 15 and August 15 of each such year, commencing February 15, 2010 or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”).  Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance[; provided that if this Note is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further,
that the first Interest Payment Date shall be the first of February 15 or August 15 to occur after the date of issuance, unless such February 15 or August 15 occurs within one calendar month of such date of issuance, in which case the first Interest Payment Date shall be the second of February 15 or August 15 to occur after the date of issuance]1.  Interest
shall be computed on the basis of a 360-day year of twelve 30-day months.

 

(2)           Method of Payment.  The Company shall pay interest on the Notes (except defaulted interest) to the Person in whose name(s) this Note is registered at the close of business on the February 1 or August
1 next preceding the Interest Payment Date (each, a “Regular Record Date”); provided that interest payable at the Stated Maturity or on a Redemption Date as provided in the Indenture will be paid to the Person to whom principal is payable.  The Notes shall be payable as to principal of or premium, if any, or interest at the office or agency of the Company maintained for such purpose within or without the City and State of New
York, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the Security Register or by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least 15 days prior to the date for payment by the Person entitled thereto.  Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender
for payment of public and private debts.

 

(3)           Paying Agent and Registrar.  Initially, The Bank of New York Mellon Trust Company, N.A., the Trustee under the Indenture, shall act as Paying Agent and Registrar.  The Company may change
any Paying Agent or Registrar without notice to any Holder.  The Company or any of its Subsidiaries may act in any such capacity.

 

(4)           Indenture.  The Company issued the Notes under an Indenture, dated as of December 22, 2005 (the “Original Indenture”), between the Company and the Trustee, as supplemented by the Eighth
Supplemental Indenture, dated as of August 14, 2009, among the Company the Subsidiary Guarantors (as defined therein) parties thereto and the Trustee (the “Eighth Supplemental Indenture; and together with the Original Indenture, the “Indenture”).  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.  The Notes are senior obligations of the Company initially in the aggregate principal amount of $300,000,000.  Subject to compliance with Section 1.11 of the Eighth Supplemental Indenture, the Company is permitted to
issue Additional Notes under the Indenture in an unlimited principal amount.  Any such Additional Notes that are

 
1           Insert if Notes are Additional Notes.

 

 

A-3

 

 

actually issued shall be treated as issued and outstanding Notes for all purposes of the Indenture, unless the context clearly indicates otherwise.

 

(5)           Guarantees.  This Note is guaranteed by the Persons, if any, specified as Subsidiary Guarantors in the Indenture to the extent provided in the Indenture.  The Subsidiary Guarantees are equal
in rank to the Senior Indebtedness of the applicable Subsidiary Guarantor in the manner and to the extent provided in the Indenture.

 

(6)           Optional Redemption.

 

(a)           Except as set forth in Section 1.08 of the Eighth Supplemental Indenture and clauses (b) and (c) of this Paragraph 6, the Notes are not redeemable until August 15, 2014.  On and after August 15, 2014, the Company may redeem all or, from time to time, a part of
the Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest on the Notes (the “Redemption Price”), if any, to the applicable redemption date (subject to the right of Holders of record on the Regular Record Date to receive interest due on the relevant Interest Payment Date) (a “Redemption Date”), if redeemed during the twelve-month period beginning on August 15 of
the years indicated below:

 

	
YEAR
	
Percentage

	 	 
	
2014
	
104.563%

	
2015
	
103.042%

	
2016
	
101.521%

	
2017 and thereafter
	
100.000%

 

(b)           Notwithstanding the provisions of clause (a) of this Paragraph 6, prior to August 15, 2012, the Company may on any one or more occasions redeem up to 35% of the original principal amount of the Notes (which includes Additional Notes, if any) issued under the Indenture at
a redemption price equal to 109.125% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date), with the Net Cash Proceeds of one or more equity offerings; provided that (1) at least 65% of such aggregate principal amount of Notes (which includes any Additional Notes,
if any) issued under the Indenture remains Outstanding immediately after the occurrence of such redemption; and (2) each such redemption shall occur within 90 days of the date of the closing of such equity offering.

 

(c)           In addition, at any time prior to August 15, 2014, the Company may redeem the Notes, in whole but not in part, at a Redemption Price equal to 100% of the principal amount thereof plus the Applicable Premium plus accrued and unpaid interest, if any, to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date).

 

(7)           Offer to Repurchase Upon Change of Control.  Upon the occurrence of a Change of Control, the Company will be required to offer to repurchase from each Holder all or any part (equal to $2,000 or an
integral multiple of $1,000 in excess thereof) of such Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”) at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, thereon to the date of purchase (the “Change of Control Payment”).  Within 30 days following any Change of Control, the Company shall mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.

 

(8)           Notice of Redemption.  Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its address appearing
in the Securities Register.  The Company shall notify the Trustee of the Redemption Price with

 

 

A-4

 

 

respect to the redemption promptly after the calculation thereof.  The Trustee shall not be responsible for calculating the Redemption Price.

 

(9)           Denominations, Transfer, Exchange.  The Notes are in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.  The transfer
of Notes may be registered and Notes may be exchanged as provided in the Indenture.  Every Note presented or surrendered for registration of transfer or exchange will (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument or instruments of transfer, in form reasonably satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.  The Company need not exchange or register
the transfer of any Notes for a period of 15 days before the mailing of the notice of redemption or any Note so selected for redemption in whole or in part, except in the case of Notes to be redeemed in part, the portion thereof not being redeemed.  No service charge will be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

 

(10)           Persons Deemed Owners.  The registered Holder may be treated as its owner for all purposes.

 

(11)           Amendment, Supplement and Waiver.  Subject to certain exceptions, the Indenture, the Subsidiary Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes, and any existing default or compliance with any provision of the Indenture, the Subsidiary Guarantees or the Notes (other than a Default or Event of Default in the payment of the principal of or premium, if any, or interest on the Notes) or compliance with any provision of the Indenture, the Subsidiary Guarantee or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes.  Without the consent of any Holder, the
Indenture, the Subsidiary Guarantee or the Notes may be amended or supplemented (a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company under the Indenture and in the Notes, all to the extent otherwise permitted under the Indenture; (b) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (c) to add any additional Events of Default; (d) to add
to or change any of the provisions of the Indenture to such extent as may be necessary to permit or facilitate the issuance of Notes in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Notes in uncertificated form; (e) to add to, change or eliminate any of the provisions of the Indenture in respect of the Notes, provided that any such addition, change or
elimination (i) will not apply to any of the Notes created prior to the execution of such supplemental indenture and entitled to the benefit of such provision, or (ii) will become effective only when there are no Notes Outstanding (as defined in the Original Indenture); (f) to establish the terms or form of Securities of any series as permitted by Sections 2.01 and 2.02 of the Original Indenture; (g) to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee
with respect to the Notes and to add to or change any of the provisions of the Indenture as may be necessary to provide for or facilitate the administration of the trusts under the Indenture by more than one Trustee, pursuant to the requirements of Section 9.10 of the Original Indenture; or (h) to cure any ambiguity, to correct or supplement any provision of the Indenture which may be defective or inconsistent with any other provision of the Indenture, or to make any other provisions with respect to matters
or questions arising under the Indenture, provided that such action pursuant to this clause (h) will not adversely affect the interests of the Holders in any material respect.

 

(12)           Events of Default.  Events of Default include (a) failure to pay principal of or premium, if any, on any Note when due at its Stated Maturity; (b) failure to pay any interest on any Note when due,
which failure continues for 30 calendar days; (c) failure by the Company or any Subsidiary Guarantor to comply with its obligations under Section 3.11 of the Eighth Supplemental Indenture; (d) failure by the Company to comply with any of its obligations under Article III of the Eighth Supplemental Indenture (in each case, other than a failure to purchase Notes which will constitute an Event of Default under clause (e) of this paragraph and other than a failure to comply with Section 3.11 of the Eighth Supplemental
Indenture which is covered by clause (c) of this paragraph), which failure or breach continues for 30 calendar days

 

 

A-5

 

 

after written notice thereof has been given to the Company as provided in the Indenture; (e) failure to redeem or repurchase any Note when required to do so under the terms thereof; (f) failure to perform, or breach of, any other covenant of the Company in the Indenture (other than a covenant included in the Indenture solely for the benefit
of a series of debt securities other than the Notes), which failure or breach continues for 60 calendar days after written notice thereof has been given to the Company as provided in the Indenture; (g) any nonpayment at maturity or other default (beyond any applicable grace period) under any agreement or instrument relating to any other Indebtedness of the Company or a Significant Subsidiary, the unpaid principal amount of which is not less than $15 million, which default results in the acceleration of the maturity
of the Indebtedness prior to its Stated Maturity or occurs at the final maturity thereof; (h) specified events of bankruptcy, insolvency, or reorganization involving the Company or a Significant Subsidiary; (i) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess
of $15 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days; or (j) any Subsidiary Guarantee of a Significant Subsidiary or group of Subsidiary Guarantors that taken together as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary ceases to be in full force and effect (except
as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding or any Subsidiary Guarantor that is a Significant Subsidiary or group of Subsidiary Guarantors that taken together as of the latest audited consolidated financial statements of the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary denies or disaffirms its obligations under the Indenture or its Subsidiary Guarantee.  If any Event of Default (other than an Event of Default
specified in clause (h) of this paragraph) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal amount of all the Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default specified in clause (h) of this paragraph, all outstanding Notes shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder.  However,
at any time after a declaration of acceleration with respect to the Notes has been made, but before a judgment or decree based on such acceleration has been obtained, the holders of a majority in principal amount of the Notes may, under specified circumstances, rescind and annul such acceleration.

 

Subject to the duty of the Trustee to act with the required standard of care during an Event of Default, the Trustee will have no obligation to exercise any of its rights or powers under the Indenture at the request or direction of the Holders unless Holders shall have furnished to the Trustee reasonable security or indemnity.  Subject
to the provisions of the Indenture, including those requiring security or indemnification of the Trustee, the Holders of a majority in principal amount of the Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Notes.  Pursuant to the Trust Indenture Act, the Trustee is required, within 90 calendar days after the occurrence of a Default in respect
of the Notes, to give to the Holders notice of all uncured Defaults known to it, except that (other than in the case of a Default of the character contemplated in clause (a) or (b) of the immediately preceding paragraph) the Trustee may withhold notice if and so long as it in good faith determines that the withholding of notice is in the interests of the Holders.

 

No Holder will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless:  (a) the Holder has previously given to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in aggregate principal amount of the outstanding Notes have requested the
Trustee to institute a proceeding in respect of the Event of Default; (c) the Holder or Holders have furnished reasonable indemnity to the Trustee to institute the proceeding as Trustee; (d) the Trustee has not received from the Holders of a majority in principal amount of the outstanding Notes a direction inconsistent with the request; and (e) the Trustee has failed to institute the proceeding within 60 calendar days.  However, the limitations described above do not apply to a suit instituted by a
Holder for enforcement of payment of principal and interest on or after the applicable due dates for the payment of such principal and interest.

 

 

A-6

 

 

(13)           Trustee Dealings with Company.  The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to the terms of the Indenture, may otherwise deal with
the Company with the same rights it would have if it were not Trustee.

 

(14)           No Recourse Against Others.  No director, officer, employee, incorporator, Affiliate or stockholder of the Company or any of the Subsidiary Guarantors, as such, will have any liability for any obligations
of the Company or such Subsidiary Guarantor under the Notes, the Indenture, the Subsidiary Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for the issuance of the Notes.

 

(15)           Authentication.  This Note shall not be valid until authenticated by the manual signature of the Trustee or an Authenticating Agent.

 

(16)           Abbreviations.  Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants
with rights of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

(17)           CUSIP, ISIN or Other Similar Numbers.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP, ISIN or other similar
numbers to be printed on the Notes and the Trustee may use CUSIP, ISIN or other similar numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

(18)           Governing Law.  This Note shall be governed by and construed in accordance with the laws of the State of New York.

 

(19)           Senior Indebtedness.  The Company and each Subsidiary Guarantor hereby designate the obligations with respect to the Notes and Subsidiary Guarantees as Senior Indebtedness which is senior in right
of payment in full to any Subordinated Obligation of the Company or any Subsidiary Guarantor.  The Company and each Subsidiary Guarantor further designate the obligations with respect to the Notes and the Subsidiary Guarantees as “Designated Senior Indebtedness” (as defined by the (i) 2024 Convertible Subordinated Debentures Indenture and (ii) the 2016 Senior Subordinated Notes Indenture) for all purposes under the (x) 2024 Convertible Subordinated Debentures Indenture and (y) 2016 Senior
Subordinated Notes Indenture, with respect the Notes and the Subsidiary Guarantees, respectively.

 

 

A-7

 

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below and have your signature guaranteed:  (I) or (we)assign and transfer this Note to

 

	 	 
	(Insert assignee's soc. sec. or tax I.D. no.)	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	(Print or type assignee's name, address and zip code)	 
	  	
 

	and irrevocably appoint  	  	
agent

	to transfer this Note on the books of the Company. The agent may substitute another to act for him. 	 
	 	 
	 	 
	  	  	  	  	  	  	  
	
Date:
	 	 	
Your Name:
	 
	 	 	 	
(Print your name exactly as it appears on the face of this Note)
	 
	 	 	 	 	 	 	 
	 	 	 	 	
Your Signature:
	 
	 	 	 	
(Sign exactly as your name appears on  the face of this Note)
	 
	
 
	  	  	

 

	 	 	 	
Signature Guarantee*:

 
*           Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

 

A-8

 

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

 

The following exchanges of a part of this Global Note for an interest in another Global Note, or exchanges of a part of another Global Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
	
Amount of decrease in Principal Amount of this Global Note
	
Amount of increase in Principal Amount of this Global Note
	
Principal Amount of this Global Note following such decrease (or increase)
	
Signature of authorized officer of Trustee or

Note Custodian

 

 

 

A-9

 

 

EXHIBIT B

 

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

This SUPPLEMENTAL INDENTURE, dated as of ________________, 20__, among __________________ (the “Guaranteeing Subsidiary”), a subsidiary of Quicksilver Resources Inc. (or its permitted successor), a Delaware corporation (the “Company”), the Company, the other Subsidiary Guarantors (as defined in the Indenture referred
to herein) and The Bank of New York Mellon Trust Company, N.A., as Trustee.

 

W I T N E S S E T H

 

WHEREAS, the Company and the Trustee entered into an Indenture (the “Original Indenture”), dated as of December 22, 2005, as supplemented by an Eighth Supplemental Indenture, dated as of August 14, 2009 among the Company, the Subsidiary Guarantors and the Trustee (the “Eighth Supplemental Indenture”; and together
with the Original Indenture, the “Indenture”), pursuant to which the Company has issued $300,000,000 of aggregate principal amount of 91⁄8% Senior Notes due 2019 (the “Notes”);

 

WHEREAS, Section 5.01(b) of the Eighth Supplemental Indenture provides that the Company, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture in order to add Subsidiary Guarantees with respect to the Notes, without the consent of the Holders; and

 

WHEREAS, all acts and things prescribed by the Indenture, by law and by the certificate of incorporation and the bylaws (or comparable constituent documents) of the Company, the Subsidiary Guarantors, the Guaranteeing Subsidiary and the Trustee necessary to make this Supplemental Indenture a valid instrument legally binding on the Company,
the Subsidiary Guarantors, the Guaranteeing Subsidiary and the Trustee, in accordance with its terms, have been duly done and performed;

 

NOW THEREFORE, to comply with the provisions of the Indenture, and in consideration of the foregoing, the Guaranteeing Subsidiary, the Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

 

ARTICLE 1

 

Section 1.01    This Supplemental Indenture is supplemental to the Indenture and does and shall be deemed to form a part of, and shall be construed in connection with and as part of, the Indenture for any and all purposes.

 

Section 1.02    This Supplemental Indenture shall become effective immediately upon its execution and delivery by the Guaranteeing Subsidiary, the Company, the Subsidiary Guarantors and the Trustee.

 

ARTICLE 2

 

Section 2.01    The Guaranteeing Subsidiary hereby agrees to be bound by the terms, conditions and other provisions of the Indenture with all attendant rights, duties and obligations stated therein, on a joint and several basis with the Subsidiary Guarantors parties hereto
and thereto, with the same force and effect as if originally named as a Subsidiary Guarantor therein and as if such party executed the Indenture on the date thereof.

 

 

B-1

 

 

ARTICLE 3

 

Section 3.01    Except as specifically modified herein, the Indenture and the Notes are in all respects ratified and confirmed (mutatis mutandis) and shall remain in full force and effect in accordance with their terms.

 

Section 3.02    All capitalized terms used but not defined herein shall have the same respective meanings ascribed to them in the Indenture.

 

Section 3.03    Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Supplemental Indenture.  This Supplemental Indenture is executed and accepted
by the Trustee subject to all of the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto.

 

Section 3.04    THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

Section 3.05    The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

 

Section 3.06    The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Supplemental Indenture.

 

Section 3.07    The recitals hereto are statements only of the Company, the Subsidiary Guarantors and the Guaranteeing Subsidiary and shall not be considered statements of or attributable to the Trustee.

 

Section 3.08    The Guaranteeing Subsidiary hereby designates the obligations with respect to the Notes and the Subsidiary Guarantees as Senior Indebtedness which is senior in right of payment in full to any Subordinated Obligation of the Company or any Subsidiary Guarantor.  The
Guaranteeing Subsidiary further designates the obligations with respect to the Notes and the Subsidiary Guarantees as “Designated Senior Indebtedness” (as defined by the (i) 2024 Convertible Subordinated Debentures Indenture and (ii) the 2016 Senior Subordinated Notes Indenture) for all purposes under (x) the 2024 Convertible Subordinated Debentures Indenture and (y) the 2016 Senior Subordinated Notes Indenture, with respect to the Notes and the Subsidiary Guarantees, respectively.

 

 

B-2

 

 

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

 

 

	 	 	
[GUARANTEEING SUBSIDIARY]
	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	
 
	 
	 	 	 	
Name:
	 
	
 
	 	 	

Title:

	 

 

 

	 	 	
QUICKSILVER RESOURCES INC.
	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	
 
	 
	 	 	 	
Name:
	 
	
 
	 	 	

Title:

	 

 

 

	 	 	
[EXISTING SUBSIDIARY GUARANTORS ]
	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	
 
	 
	 	 	 	
Name:
	 
	
 
	 	 	

Title:

	 

 

 

	 	 	

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

	 
	 	 	 	 	 
	 	 	By:	
 
	 
	 	 	 	
Name:
	 
	
 
	 	 	

Title:

	 

 

 

B-3

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